UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4386
Van Kampen Tax Free Trust
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
1221 Avenue of the Americas, New York, New York 10020
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas, New York, New York 10020
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: 9/30
Date of reporting period: 3/31/06
Item 1. Reports to Shareholders.
The Trust's semi-annual report transmitted to shareholders pursuant to Rule
30e-1 under the Investment Company Act of 1940 is as follows:
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
Insured Tax Free Income Fund performed during the semiannual period. The
portfolio management team will provide an overview of the market
conditions and discuss some of the factors that affected investment
performance during the reporting period. In addition, this report
includes the fund's financial statements and a list of fund investments
as of March 31, 2006.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS FOR THE
FUND BEING OFFERED. THE PROSPECTUS CONTAINS INFORMATION ABOUT THE FUND,
INCLUDING THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES. PLEASE
READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT A MUTUAL FUND WILL ACHIEVE ITS
INVESTMENT OBJECTIVE. FUNDS ARE SUBJECT TO MARKET RISK, WHICH IS THE
POSSIBILITY THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL
DECLINE AND THAT THE VALUE OF FUND SHARES MAY THEREFORE BE LESS THAN WHAT
YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS
FUND.
INCOME MAY SUBJECT CERTAIN INDIVIDUALS TO THE FEDERAL ALTERNATIVE MINIMUM
TAX (AMT).
<Table>
<Caption>
---------------------------------------------------------------------------------------
NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
---------------------------------------------------------------------------------------
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
---------------------------------------------------------------------------------------
</Table>
Performance Summary as of 3/31/06
<Table>
<Caption>
A SHARES B SHARES C SHARES I SHARES
since 12/14/84 since 5/03/93 since 8/13/93 since 8/12/05
- ---------------------------------------------------------------------------------------------------
W/MAX W/MAX W/MAX
AVERAGE 4.75% 4.00% 1.00%
ANNUAL W/O SALES SALES W/O SALES SALES W/O SALES SALES W/O SALES
TOTAL RETURNS CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE CHARGES
Since Inception 7.58% 7.33% 4.77% 4.77% 4.41% 4.41% 1.78%
10-year 5.34 4.83 4.77 4.77 4.52 4.52 --
5-year 4.91 3.89 4.12 3.87 4.10 4.10 --
1-year 4.40 -0.55 3.67 -0.27 3.62 2.63 --
6-month 1.45 -3.36 1.07 -2.83 1.02 0.04 1.58
- ---------------------------------------------------------------------------------------------------
SEC Yield 3.29% 2.74% 2.74% 3.04%
</Table>
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS AND
PRINCIPAL VALUE WILL FLUCTUATE AND FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
The returns shown in this report do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
Performance of share classes will vary due to differences in sales charges and
expenses. Average annual total return with sales charges includes payment of the
maximum sales charge of 4.75 percent for Class A shares, a contingent deferred
sales charge of 4.00 percent for Class B shares (in year one and declining to
zero after year six), a contingent deferred sales charge of 1.00 percent for
Class C shares in year one and combined Rule 12b-1 fees and service fees of up
to 0.25 percent for Class A shares and up to 1.00 percent for Class B and C
shares. The since inception and 10-year returns for Class B shares reflect their
conversion into Class A shares seven years after purchase. The since inception
returns for Class C shares reflect their conversion into Class A shares ten
years after purchase. Class I shares are available for purchase exclusively by
investors through (i) tax-exempt retirement plans with assets of at least $1
million (including 401(k) plans, 457 plans, employer-sponsored 403(b) plans,
profit sharing and money purchase plans, defined benefit plans and non-qualified
deferred compensation plans), (ii) fee-based investment programs with assets of
at least $1 million and (iii) institutional clients with assets of at least $1
million. Class I shares are offered without any sales charges on purchases or
sales and do not include combined Rule 12b-1 fees and service fees. Figures
shown above assume reinvestment of all dividends and capital gains. SEC yield is
a calculation for determining the amount of portfolio income, excluding
non-income items as prescribed by the SEC. Yields are subject to change.
The Lehman Brothers Municipal Bond Index is generally representative of
investment-grade, tax-exempt bonds. The index does not include any expenses,
fees or sales charges, which would lower performance. The index is unmanaged and
should not be considered an investment. It is not possible to invest directly in
an index. Index data source: Lipper Inc.
1
Fund Report
FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 2006
MARKET CONDITIONS
Despite the shadow of rising oil prices, the devastation of the Gulf Coast
hurricanes, and emerging weakness in the housing market, the economy continued
to grow during the six-month period ended March 31, 2006. This expansion was
more modest in the fourth quarter of 2005, but gained considerable momentum in
the first quarter.
Against the backdrop of growth and good employment data, the Federal Open Market
Committee (the "Fed") continued raising the federal funds target rate during the
period, implementing four additional increases of 25 basis points each. The
final hike of the period represented the fifteenth consecutive increase -- the
longest stretch of increases in 25 years. As the period came to a close, market
observers speculated about the Fed's near-term intentions, given the central
bank's view that although longer-term inflation appeared contained, commodity
prices could amplify inflationary pressures.
Returns across the municipal bond market varied significantly. As investors
sought income opportunities, lower rated bonds outpaced investment-grade bonds
by a wide margin. Long-term bonds earned the best returns, broadly speaking,
while bonds in the three-to-seven year range posted the most muted gains.
Municipal bond issuance was robust during the final months of 2005. (In fact,
2005 marked a record high for municipal bond volume.) The tide changed in the
first quarter of 2006, however. As rising rates discouraged issuers from
refinancing debt, national municipal issuance dropped by 30 percent versus the
same period a year ago. While supply ebbed, the market's appetite for municipal
bonds remained strong, with particularly heavy demand from high yield municipal
bond funds.
2
PERFORMANCE ANALYSIS
The fund returned 1.45 percent for the six months ended March 31, 2006 (Class A
shares, unadjusted for sales charges). In comparison, the fund's benchmark, the
Lehman Brothers Municipal Bond Index, returned 0.98 percent for the period.
TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 2006
<Table>
<Caption>
- ------------------------------------------------------------------------
LEHMAN BROTHERS
CLASS A CLASS B CLASS C CLASS I MUNICIPAL BOND INDEX
1.45% 1.07% 1.02% 1.58% 0.98%
- ------------------------------------------------------------------------
</Table>
The performance for the four share classes varies because each has different
expenses. The fund's total return figures assume the reinvestment of all
distributions, but do not reflect the deduction of any applicable sales charges.
Such costs would lower performance. Past performance is no guarantee of future
results. See Performance Summary for standardized performance information and
index definition.
We managed the fund according to our long-standing "relative value" discipline.
Our strategy involved buying bonds when our research indicates they are
attractively valued, and then selling them when they reach our return targets.
We then invested the proceeds into bonds which we believe offer greater future
total return prospects. We used rigorous research to seek fundamentally strong
issues with high liquidity. (Liquid securities are those for which there is a
robust market of purchasers and sellers.)
The fund invests in insured securities, with all bonds holding a credit rating
of AAA. Throughout the period, we followed a variety of strategies to pursue
yield within the parameters of our quality-driven approach.
We positioned the portfolio to reflect our view that yields would continue to
rise, with the yields of short-term bonds rising more rapidly than those of
long-term bonds. Reflecting this analysis, we kept the fund's duration shorter
than that of its benchmark; and this strategy served the fund well. (Duration is
a measure of interest rate sensitivity.)
The fund also benefited from our view that the long-term segment of the yield
curve was most compelling. We sold shorter-maturity bonds that were pre-
refunded, capturing appreciation gains. We redeployed these assets into longer-
term bonds (generally those with maturities of 25 to 30 years), favoring issues
with premium coupons and defensive characteristics. In contrast, we avoided
non-callable bonds and zero-coupon bonds, as these tend to underperform during
periods of rising interest rates.
The fund's preference for well-known issues with dual tax exemption status
enhanced performance. Such bonds enjoyed strong demand, while providing the
liquidity we seek. Within its well-diversified portfolio, the fund maintained a
bias to the essential services sector of the market; and this emphasis proved
3
advantageous as well. As of the close of the period, the fund's largest sector
weightings were in the Public Education, Airports and Water & Sewer sectors.
We also found attractive yield opportunities by broadening the portfolio to
include securities insured by less well-known, but financially sound companies
with AAA ratings. These bonds often offered higher yields than comparable issues
insured by the most recognized companies.
A small stake in inverse floating rate securities, representing 4.93 percent of
assets at the close of the period, also buoyed performance.
While these factors served the fund in good stead during the period, the fund's
relative gains were tempered by its underweighting to the transportation sector
relative to its Lehman benchmark.
There is no guarantee that any sectors mentioned will continue to perform as
discussed herein or that securities in such sectors will be held by the fund in
the future.
4
<Table>
<Caption>
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 3/31/06
California 16.5%
Illinois 12.2
Texas 8.9
Florida 8.7
Washington 7.3
Georgia 4.8
Pennsylvania 3.2
Oklahoma 3.1
Colorado 3.0
Indiana 2.9
Michigan 2.7
Louisiana 2.5
New York 2.3
South Carolina 1.9
Arizona 1.8
North Carolina 1.6
Nevada 1.5
Alaska 1.5
Alabama 1.4
North Dakota 1.1
South Dakota 1.1
Arkansas 0.8
District of Columbia 0.6
New Jersey 0.6
Ohio 0.6
Wisconsin 0.5
Oregon 0.5
Missouri 0.4
Nebraska 0.3
Massachusetts 0.3
Utah 0.3
Puerto Rico 0.3
New Hampshire 0.2
Iowa 0.2
Mississippi 0.2
West Virginia 0.1
-----
Total Long-Term Investments 95.9%
Short-Term Investments 4.0
-----
Total Investments 99.9
Other Assets in Excess of Liabilities 0.1
-----
Net Assets 100.0%
<Caption>
CREDIT QUALITY AS OF 3/31/06
AAA/Aaa 100.0%
Based upon the highest quality ratings as issued by Standard & Poor's
or Moody's.
<Caption>
TOP FIVE SECTORS AS OF 3/31/06
Public Education 17.2%
Airports 13.5
Water & Sewer 10.0
Wholesale Electric 9.3
Higher Education 8.3
</Table>
5
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities in the sectors shown
above. Securities are classified by sectors that represent broad groupings of
related industries. Van Kampen is a wholly owned subsidiary of a global
securities firm which is engaged in a wide range of financial services
including, for example, securities trading and brokerage activities, investment
banking, research and analysis, financing and financial advisory services.
Rating allocations based upon ratings as issued by Standard & Poor's and
Moody's, respectively.
6
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
Each Van Kampen fund provides a complete schedule of portfolio holdings
in its semiannual and annual reports within 60 days of the end of the
fund's second and fourth fiscal quarters by filing the schedule
electronically with the Securities and Exchange Commission (SEC). The
semiannual reports are filed on Form N-CSRS and the annual reports are
filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
reports to fund shareholders, and makes these reports available on its
public Web site, www.vankampen.com. In addition to the semiannual and
annual reports that Van Kampen delivers to shareholders and makes
available through the Van Kampen public Web site, each fund files a
complete schedule of portfolio holdings with the SEC for the fund's first
and third fiscal quarters on Form N-Q. Van Kampen does not deliver the
reports for the first and third fiscal quarters to shareholders, nor are
the reports posted to the Van Kampen public Web site. You may, however,
obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS
filings) by accessing the SEC's Web site, http://www.sec.gov. You may
also review and copy them at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the SEC's Public
Reference Room may be obtained by calling the SEC at (800) SEC-0330. You
can also request copies of these materials, upon payment of a duplicating
fee, by electronic request at the SEC's e-mail address
(publicinfo@sec.gov) or by writing the Public Reference section of the
SEC, Washington, DC 20549-0102.
You may obtain copies of a fund's fiscal quarter filings by contacting
Van Kampen Client Relations at (800) 847-2424.
7
HOUSEHOLDING NOTICE
To reduce fund expenses, the fund attempts to eliminate duplicate
mailings to the same address. The fund delivers a single copy of certain
shareholder documents to investors who share an address, even if the
accounts are registered under different names. The fund's prospectuses
and shareholder reports (including annual privacy notices) will be
delivered to you in this manner indefinitely unless you instruct us
otherwise. You can request multiple copies of these documents by either
calling (800) 341-2911 or writing to Van Kampen Investor Services at 1
Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, IL 60181. Once Investor
Services has received your instructions, we will begin sending individual
copies for each account within 30 days.
PROXY VOTING POLICY AND PROCEDURES AND PROXY VOTING RECORD
You may obtain a copy of the fund's Proxy Voting Policy and Procedures
without charge, upon request, by calling toll free (800) 847-2424 or by
visiting our Web site at www.vankampen.com. It is also available on the
Securities and Exchange Commission's Web site at http://www.sec.gov.
You may obtain information regarding how the fund voted proxies relating
to portfolio securities during the most recent twelve-month period ended
June 30 without charge by visiting our Web site at www.vankampen.com.
This information is also available on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
8
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments of Class A Shares
and contingent deferred sales charge on redemptions of Class B and Class C
Shares; and (2) ongoing costs, including management fees; distribution and
service (12b-1) fees; and other Fund expenses. This example is intended to help
you understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period 10/1/05 - 3/31/06.
ACTUAL EXPENSE
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing cost of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or contingent deferred sales charges. Therefore, the second line
of the table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your cost would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
-------------------------------------------------
10/1/05 3/31/06 10/1/05-3/31/06
Class A
Actual..................................... $1,000.00 $1,014.53 $4.37
Hypothetical............................... 1,000.00 1,020.53 4.38
(5% annual return before expenses)
Class B
Actual..................................... 1,000.00 1,010.69 8.17
Hypothetical............................... 1,000.00 1,016.73 8.20
(5% annual return before expenses)
Class C
Actual..................................... 1,000.00 1,010.16 8.17
Hypothetical............................... 1,000.00 1,016.73 8.20
(5% annual return before expenses)
Class I
Actual..................................... 1,000.00 1,015.81 3.16
Hypothetical............................... 1,000.00 1,021.73 3.18
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 0.87%, 1.63%,
1.63%, and 0.63% for Class A, B, C and I Shares, respectively, multiplied by
the average account value over the period, multiplied by 182/365 (to reflect
the one-half year period).
Assumes all dividends and distributions were reinvested.
9
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED)
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
MUNICIPAL BONDS 95.9%
ALABAMA 1.4%
$ 1,385 Alabama St Brd Ed Rev Calhoun Cmnty College
(AMBAC Insd)................................... 5.000% 05/01/21 $ 1,457,754
200 Alabama St Brd Ed Rev Calhoun Cmnty College
(AMBAC Insd)................................... 5.000 05/01/22 210,198
2,255 Alabama St Brd Ed Rev George C Wallace Cmnty
College (AMBAC Insd) (a)....................... 5.250 07/01/23 2,408,791
2,145 Birmingham, AL Wtrwks & Swr Brd Ser A (FGIC
Insd) (a)...................................... 5.000 01/01/21 2,243,649
3,590 Clarke & Mobile Cnty AL Gas Dist Rev (AMBAC
Insd) (a)...................................... 5.250 01/01/21 3,838,895
3,120 Huntsville, AL Hlthcare Auth Ser A (MBIA
Insd).......................................... 5.400 06/01/22 3,365,076
2,500 Huntsville, AL Hlthcare Auth Ser A (MBIA
Insd).......................................... 5.500 06/01/27 2,705,500
--------------
16,229,863
--------------
ALASKA 1.5%
2,000 Alaska St Hsg Fin Corp Gen Hsg Ser A
(FGIC Insd).................................... 5.000 12/01/30 2,063,020
1,000 Alaska St Hsg Fin Corp Gen Hsg Ser A
(FGIC Insd).................................... 5.250 12/01/41 1,048,150
8,045 Alaska St Intl Arpt Rev Rols RR II 527 (Inverse
Fltg) (Acquired 03/10/06, Cost $8,922,388)
(MBIA Insd) (a) (b)............................ 6.710 10/01/24 8,780,957
4,000 Alaska St Intl Arpt Rev Ser A Rfdg (AMT) (MBIA
Insd).......................................... 5.000 10/01/21 4,140,480
1,425 Anchorage, AK Wtr Rev Rfdg (AMBAC Insd)........ 6.000 09/01/19 1,539,997
--------------
17,572,604
--------------
ARIZONA 1.8%
1,940 Arizona St Univ Ctf Partn Resh Infrastructure
Proj (AMBAC Insd).............................. 5.250 09/01/23 2,068,215
1,225 Arizona St Univ Ctf Partn Resh Infrastructure
Proj (AMBAC Insd).............................. 5.250 09/01/24 1,305,078
2,900 Arizona Tourism & Sports Auth Multi Purp Stad
Fac Ser A (MBIA Insd).......................... 5.375 07/01/22 3,112,744
5,000 Maricopa Cnty, AZ Pollutn Ctl Corp Pollutn Ctl
Rev El Paso Elec Co Ser A Rfdg (FGIC Insd)..... 4.800 08/01/40 4,995,500
640 Pima Cnty, AZ Indl Dev Auth Indl Rev Lease
Oblig Irvington Proj Tucson Elec Pwr Co Ser A
Rfdg (FSA Insd)................................ 7.250 07/15/10 645,517
1,875 Scottsdale, AZ Indl Dev Hosp Scottsdale Mem
Hosp Ser A Rfdg (AMBAC Insd)................... 6.000 09/01/12 1,969,200
1,750 Scottsdale, AZ Indl Dev Hosp Scottsdale Mem
Hosp Ser A Rfdg (AMBAC Insd)................... 6.125 09/01/17 1,839,582
1,000 University AZ Ctf Partn Ser A (AMBAC Insd)..... 5.000 06/01/23 1,043,650
1,000 University AZ Ctf Partn Ser B (AMBAC Insd)..... 5.000 06/01/22 1,044,420
960 University AZ Ctf Partn Ser B (AMBAC Insd)..... 5.000 06/01/24 1,001,165
</Table>
10 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
ARIZONA (CONTINUED)
$ 300 University AZ Ctf Partn Ser C (AMBAC Insd)..... 5.000% 06/01/21 $ 313,785
1,885 University AZ Ctf Partn Ser C (AMBAC Insd)..... 5.000 06/01/22 1,968,732
--------------
21,307,588
--------------
ARKANSAS 0.8%
2,500 Arkansas St Dev Fin Auth Rev St Agy Fac
Donaghey Plaza Proj (FSA Insd)................. 5.000 06/01/29 2,595,750
6,265 Little Rock, AR Sch Dist Ser B Rfdg (FSA
Insd).......................................... 5.500 02/01/25 6,608,761
--------------
9,204,511
--------------
CALIFORNIA 16.5%
4,000 Bay Area Govt Assn CA Rev Tax Alloc CA Redev
Pool Ser A (XLCA Insd)......................... 5.250 09/01/35 4,223,880
3,225 Bay Area Govt Assn CA Rev Tax Alloc Ser A
(AMBAC Insd) (c)............................... 4.500 09/01/25 3,177,657
3,205 Bell, CA Cmnty Hsg Auth Lease Rev Rfdg (AMBAC
Insd).......................................... 5.000 10/01/30 3,336,565
3,310 Bell, CA Cmnty Hsg Auth Lease Rev Rfdg (AMBAC
Insd).......................................... 5.000 10/01/36 3,419,991
3,500 California Ed Fac Auth Rev Occidental College
Ser A (MBIA Insd).............................. 5.000 10/01/36 3,646,440
3,000 California St Pub Wks Brd UCLA Replacement Hosp
Ser A (FSA Insd)............................... 5.375 10/01/20 3,234,420
3,000 California St Pub Wks Brd UCLA Replacement Hosp
Ser A (FSA Insd)............................... 5.000 10/01/22 3,111,960
5,000 California Stwide Cmnty Depooled Fin Pg Ser
2004A (FSA Insd)............................... 5.250 10/01/24 5,348,050
4,615 California Stwide Cmnty Dev Auth Wtr & Wastewtr
Rev Ser D (FSA Insd) (a)....................... 5.000 10/01/26 4,833,613
3,000 California Stwide Cmnty Pooled Fin Pg Ser 2004A
(FSA Insd)..................................... 5.000 10/01/29 3,118,950
4,000 California Stwide Cmnty Pooled Fin Pg Ser 2004A
(FSA Insd)..................................... 5.250 10/01/34 4,225,160
2,980 California Stwide Cmnty Pooled Fin Pg Ser 2004C
(FSA Insd) (a)................................. 5.000 10/01/29 3,098,157
7,430 Capistrano, CA Uni Sch Dist (FGIC Insd) (a).... 5.000 09/01/25 7,738,419
7,995 Capistrano, CA Uni Sch Dist (FGIC Insd) (a).... 5.000 09/01/26 8,320,636
8,600 Capistrano, CA Uni Sch Dist (FGIC Insd) (a).... 5.000 09/01/27 8,943,570
3,500 Capistrano, CA Uni Sch Dist (FGIC Insd)........ 5.000 09/01/29 3,637,095
5,000 Chino Vly Uni Sch Dist CA Election 2002 Ser C
(MBIA Insd).................................... 5.250 08/01/30 5,371,650
3,225 Coronado, CA Cmnty Dev Agy Tax Alloc Coronado
Cmnty Dev Proj (AMBAC Insd).................... 5.000 09/01/30 3,341,293
425 Earlimart, CA Elem Sch Dist Ser 1 (AMBAC
Insd).......................................... 6.700 08/01/21 546,269
10,000 Golden St Tob Securitization Corp CA Tob
Settlement Rev Enhanced Asset Bkd Ser A (AMBAC
Insd).......................................... 5.000 06/01/30 10,268,900
</Table>
See Notes to Financial Statements 11
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
$10,000 Golden St Tob Securitization Corp CA Tob
Settlement Rev Enhanced Asset Bkd Ser A (FGIC
Insd).......................................... 5.000% 06/01/38 $ 10,277,000
265 Golden West Sch Fin Auth CA Rev Ser A Rfdg
(MBIA Insd) (a)................................ 5.750 08/01/19 306,740
690 Jurupa, CA Univ Sch Dist Election 2001 (FGIC
Insd).......................................... 5.000 08/01/26 716,323
940 Lancaster, CA Redev Agy Tax Alloc Comb Fire
Prot Fac Proj Rfdg (XLCA Insd)................. 5.250 12/01/18 1,009,964
3,360 Loma Linda, CA Redev Agy Tax Alloc Ser A (XLCA
Insd).......................................... 5.250 07/01/30 3,573,562
2,500 Long Beach, CA Bd Fin Auth Rev Redev Hsg & Gas
Util Fin Ser A1 (AMBAC Insd)................... 5.000 08/01/40 2,570,075
3,600 Los Angeles, CA Wtr & Pwr Rev Pwr Sys Sub Ser
A-1 (FSA Insd)................................. 5.000 07/01/40 3,730,572
10,000 Merced, CA Irr Dist Rev Ctf Partn Elec Sys Proj
(XLCA Insd).................................... 5.250 09/01/36 10,503,500
1,165 North Monterey Cnty, CA Uni Sch Dist Election
2002 Ser B (FGIC Insd)......................... 4.750 08/01/29 1,182,929
2,070 Pacifica, CA Wastewtr Rev Rfdg (AMBAC Insd)
(a)............................................ 5.250 10/01/23 2,217,156
5,000 Palm Springs, CA Fin Lease Rev Convention Ctr
Proj Ser A (MBIA Insd)......................... 5.500 11/01/29 5,512,400
2,375 Poway, CA Ctf Partn City Office Bldg Proj
(AMBAC Insd)................................... 5.000 01/01/23 2,459,384
2,250 Riverside, CA Ctf Partn (AMBAC Insd) (a)....... 5.000 09/01/23 2,336,715
1,840 Rohnert Park, CA Swr Sys Rev Ctf Partn Spl Term
(AMBAC Insd)................................... 5.000 06/01/30 1,907,675
3,200 Rohnert Park, CA Swr Sys Rev Ctf Partn Spl Term
(AMBAC Insd) (a)............................... 5.000 06/01/36 3,307,968
3,770 San Diego Cnty, CA Ctf Partn Edgemont Proj &
Regl Sys Rfdg (AMBAC Insd) (a)................. 5.000 02/01/21 3,940,894
9,085 San Jose, CA Arpt Rev Ser A Rfdg (FSA Insd).... 5.375 03/01/18 9,809,529
3,000 San Jose, CA Redev Agy Tax Alloc Ser A (MBIA
Insd).......................................... 5.000 08/01/25 3,123,570
2,570 San Marcos, CA Pub Fac Auth Rols RR II 514
(Inverse Fltg) (Acquired 02/10/06, Cost
$2,852,751) (AMBAC Insd) (b)................... 6.719 10/01/31 2,789,761
2,785 Santa Monica, CA Cmnty College Ser A Rfdg
(AMBAC Insd)................................... 5.000 02/01/27 2,880,553
1,775 Sierra, CA Jt Cmnty College Impt Dist 2 Westn
Nevada Ser A (FGIC Insd) (a)................... 5.000 08/01/28 1,845,379
1,960 Sierra, CA Jt Cmnty College Impt Dist 2 Westn
Nevada Ser A (FGIC Insd) (a)................... 5.000 08/01/29 2,037,714
5,380 South Orange Cnty CA Pub Fin Auth Spl Tax Rev
Ladera Ranch Ser A (AMBAC Insd)................ 5.000 08/15/27 5,614,945
2,000 South Tahoe CA Jt Pwr Fin Redev Proj Area No 1
Ser A Rfdg (AMBAC Insd)........................ 5.000 10/01/35 2,071,140
</Table>
12 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
$ 3,560 Southern CA Pub Pwr Auth Rev Proj Ser A Rfdg
(FSA Insd) (a)................................. 5.000% 01/01/19 $ 3,762,493
2,110 Val Verde, CA Uni Sch Dist Ctf Sch Constr Proj
Ser B Rfdg (FGIC Insd) (a)..................... 5.000 01/01/22 2,206,448
2,150 Val Verde, CA Uni Sch Dist Ctf Sch Constr Proj
Ser B Rfdg (FGIC Insd)......................... 5.000 01/01/25 2,234,000
2,370 Val Verde, CA Uni Sch Dist Ctf Sch Constr Proj
Ser B Rfdg (FGIC Insd)......................... 5.000 01/01/30 2,453,898
1,750 Vallejo City, CA Uni Sch Ser A Rfdg (MBIA
Insd).......................................... 5.900 08/01/25 2,074,572
--------------
191,399,534
--------------
COLORADO 3.0%
3,745 Colorado Ed & Cultural Fac Auth Rev Charter Sch
Aurora Academy Sch Proj Ser A Rfdg (XLCA Insd)
(a)............................................ 5.250 02/15/34 3,945,769
2,500 Colorado Ed & Cultural Fac Auth Rev Charter Sch
Bromley Sch Proj Rfdg (XLCA Insd).............. 5.250 09/15/32 2,657,900
1,000 Colorado Ed & Cultural Fac Auth Rev Charter Sch
Woodrow Wilson Sch Proj Ser A Rfdg (XLCA
Insd).......................................... 5.250 12/01/34 1,061,830
2,505 Denver, CO City & Cnty Arpt Rev Ser B (XLCA
Insd).......................................... 5.750 11/15/16 2,767,574
4,310 Denver, CO City & Cnty Arpt Rev Ser B (XLCA
Insd).......................................... 5.750 11/15/17 4,764,145
3,525 Denver, CO City & Cnty Arpt Rev Ser B (XLCA
Insd).......................................... 5.750 11/15/18 3,893,785
2,165 Denver, CO City & Cnty Arpt Rev Ser B (XLCA
Insd).......................................... 5.750 11/15/20 2,394,468
5,000 Denver, CO City & Cnty Arpt Rev Sys Ser A (XLCA
Insd).......................................... 5.000 11/15/25 5,215,100
2,000 Fremont Cnty, CO Ctf Partn & Impt Ser A Rfdg
(MBIA Insd).................................... 5.250 12/15/26 2,115,980
1,175 Thornton, CO Ctf Partn (AMBAC Insd)............ 5.375 12/01/19 1,265,592
3,080 Thornton, CO Ctf Partn (AMBAC Insd) (a)........ 5.375 12/01/21 3,301,668
1,650 Thornton, CO Ctf Partn (AMBAC Insd)............ 5.375 12/01/22 1,768,750
--------------
35,152,561
--------------
DISTRICT OF COLUMBIA 0.6%
1,000 District of Columbia Ctf Partn Dist Pub Safety
& Emergency (AMBAC Insd)....................... 5.500 01/01/19 1,077,970
2,000 District of Columbia Ctf Partn Dist Pub Safety
& Emergency (AMBAC Insd)....................... 5.500 01/01/20 2,157,300
4,000 Metropolitan Washington DC Arpt Ser A (AMT)
(FSA Insd)..................................... 5.000 10/01/32 4,120,280
--------------
7,355,550
--------------
</Table>
See Notes to Financial Statements 13
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
FLORIDA 8.7%
$ 1,000 Brevard Cnty, FL Sch Brd Ctf Partn Ser A (AMBAC
Insd).......................................... 5.400% 07/01/12 $ 1,080,410
500 Dade Cnty, FL Aviation Rev Ser B (MBIA Insd)... 5.600 10/01/26 514,030
1,000 Dade Cnty, FL Ed Fac Auth Rev Exchanged From
Univ of Miami Ser B (MBIA Insd)................ 5.750 04/01/20 1,021,660
750 Dade Cnty, FL Wtr & Swr Sys Rev (FGIC Insd).... 5.375 10/01/16 782,647
140 Escambia Cnty, FL Hlth Fac Auth Rev (AMBAC
Insd).......................................... 5.950 07/01/20 147,416
1,000 Escambia Cnty, FL Util Auth Util Sys Rev (FGIC
Insd).......................................... 5.250 01/01/24 1,043,540
1,000 Florida Intergovnmtl Fin Ser C1 (AMBAC Insd)... 5.125 02/01/31 1,028,780
575 Florida Muni Ln Council Rev Ser B (MBIA
Insd).......................................... 5.750 11/01/14 624,858
1,185 Florida St Brd Ed Cap Outlay Pub Ed Ser C (FGIC
Insd).......................................... 5.000 06/01/23 1,234,924
1,250 Florida St Brd Ed Lottery Rev Ser A (FGIC
Insd).......................................... 6.000 07/01/12 1,367,300
1,000 Florida St Brd Ed Lottery Rev Ser A (FGIC
Insd).......................................... 6.000 07/01/14 1,093,840
2,750 Florida St Brd Ed Lottery Rev Ser B (FGIC
Insd).......................................... 5.250 07/01/13 2,864,867
750 Florida St Brd of Regt Hsg Rev (MBIA Insd)..... 5.750 07/01/14 813,090
1,365 Florida St Correctional Privatization Commn Ctf
Partn (MBIA Insd).............................. 5.375 08/01/14 1,471,183
1,750 Florida St Div Bd Fin Dept Gen Svc Rev Dept
Environmental Prot Presvtn 2000 Ser A
(AMBAC Insd)................................... 5.000 07/01/12 1,795,132
1,500 Florida St Div Bd Fin Dept Gen Svc Rev Dept
Environmental Prot Presvtn 2000 Ser B (FSA
Insd).......................................... 5.250 07/01/11 1,564,305
1,340 Gulf Breeze, FL Rev Loc Govt (FGIC Insd) (d)... 5.150 12/01/20 1,410,095
500 Gulf Breeze, FL Rev Loc Govt (Variable Rate
Coupon) (FGIC Insd)............................ 5.650 12/01/20 530,940
1,000 Indian River Cnty, FL Hosp Rev Rfdg (FSA
Insd).......................................... 6.100 10/01/18 1,031,440
1,750 Jea, FL Wtr & Swr Sys Rev Ser A (MBIA Insd).... 5.375 10/01/30 1,776,880
1,000 Key West, FL Util Brd Elec Rev Cap Apprec Ser D
(Escrowed to Maturity) (AMBAC Insd)............ * 10/01/13 715,440
8,490 Miami-Dade Cnty, FL Sch Brd Ser B (a) (c)...... 5.000 11/01/21 8,964,846
5,890 Miami-Dade Cnty, FL Aviation Rev Miami Intl
Arpt Ser A (AMT) (CIFG Insd)................... 5.000 10/01/38 6,026,412
1,000 Miami-Dade Cnty, FL Hlth Fac Miami Childrens
Hosp Ser A Rfdg (AMBAC Insd)................... 5.125 08/15/26 1,036,760
5,000 Miami-Dade Cnty, FL Pub Fac Rev Jackson Hlth
Sys Ser A (MBIA Insd).......................... 5.000 06/01/31 5,163,000
1,000 Orange Cnty, FL Sch Brd Ctf Partn Ser A (AMBAC
Insd).......................................... 5.250 08/01/14 1,073,100
5,000 Orange Cnty, FL Sch Brd Ctf Partn Ser B (FGIC
Insd).......................................... 5.000 08/01/24 5,236,050
1,000 Orlando, FL Cmnty Redev Agy Tax Rep Drive
Universal Blvd Rfdg (AMBAC Insd)............... 5.125 04/01/20 1,056,650
</Table>
14 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
$ 3,275 Palm Beach Cnty, FL Sch Brd Ctf Ser A (AMBAC
Insd).......................................... 5.000% 08/01/18 $ 3,449,688
800 Palm Beach Cnty, FL Sch Brd Ctf Ser A (AMBAC
Insd).......................................... 5.125 08/01/26 830,144
2,000 Palm Beach Cnty, FL Sch Brd Ctf Ser A Rfdg (FSA
Insd).......................................... 5.000 08/01/21 2,101,080
4,000 Palm Beach Cnty, FL Sch Brd Ctf Ser C
(FSA Insd)..................................... 5.000 08/01/21 4,151,320
4,000 Palm Beach Cnty, FL Sch Brd Ctf Ser C
(FSA Insd)..................................... 5.000 08/01/22 4,146,840
750 Polk Cnty, FL Sch Brd Ctf Partn Master Lease
Ser A (FSA Insd)............................... 5.500 01/01/16 807,263
1,000 Port Saint Lucie, FL Spl Assmt Rev Util Svc
Area No 3 & 4A (MBIA Insd)..................... 5.000 10/01/18 1,035,770
1,505 Reedy Creek, FL Impt Dist FL Util Ser 1 (AMBAC
Insd).......................................... 5.000 10/01/24 1,581,063
535 Saint Johns Cnty, FL Indl Dev Auth Professional
Golf Proj Rfdg (MBIA Insd)..................... 5.250 09/01/12 576,318
1,000 Saint Lucie Cnty, FL Sch Brd Ctf Ser A (FSA
Insd).......................................... 5.000 07/01/21 1,037,390
3,245 Santa Rosa Bay Brdg Auth FL Rev Cap Apprec
(MBIA Insd).................................... * 07/01/18 1,880,185
4,000 Sunrise, FL Util Sys Rev Rfdg (AMBAC Insd)..... 5.200 10/01/22 4,390,400
10,000 Tallahassee, FL Hlth Fac Rev Tallahassee Mem
Regl Med Ser A Rfdg (MBIA Insd) (e)............ 6.625 12/01/13 10,122,800
2,610 University Cent FL Ctf Partn UCF Convocation
Corp Ser A (FGIC Insd) (a)..................... 5.000 10/01/26 2,721,264
2,740 University Cent FL Ctf Partn UCF Convocation
Corp Ser A (FGIC Insd) (a)..................... 5.000 10/01/27 2,852,477
1,000 Village Ctr Cmnty Dev Dist FL Ser A (MBIA
Insd).......................................... 5.200 11/01/25 1,057,250
3,735 Volusia Cnty, FL Ed Fac Auth Rev Ed Fac Embry
Riddle Ser B Rfdg (AMBAC Insd)................. 5.250 10/15/19 3,941,433
1,000 Volusia Cnty, FL Ed Fac Auth Rev Ed Fac Embry
Riddle Ser B Rfdg (AMBAC Insd)................. 5.250 10/15/22 1,052,590
--------------
100,204,870
--------------
GEORGIA 4.8%
4,345 Albany Dougherty, GA Inner City Auth Rev Albany
St Univ Student Hsg Ser A (XLCA Insd).......... 5.000 07/01/25 4,539,395
4,590 Bleckley-Cochran, GA Dev Auth Student Hsg Fac
Rev MGC Real Estate Fndtn Ser A (CIFG Insd)
(a)............................................ 5.000 07/01/25 4,777,639
11,355 Bleckley-Cochran, GA Dev Auth Student Hsg Fac
Rev MGC Real Estate Fndtn Ser A (CIFG Insd)
(a)............................................ 5.000 07/01/36 11,697,580
5,115 Douglasville-Douglas Cnty, GA Wtr & Swr Auth
Rev (MBIA Insd)................................ 5.000 06/01/27 5,339,907
</Table>
See Notes to Financial Statements 15
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
GEORGIA (CONTINUED)
$14,530 Georgia Muni Elec Auth Pwr Rev 2005 Ser Y
(AMBAC Insd)................................... 6.400% 01/01/13 $ 16,255,873
9,445 Georgia Muni Elec Auth Pwr Rev 2005 Ser Y (MBIA
Insd).......................................... 6.500 01/01/17 11,029,682
160 Georgia Muni Elec Auth Pwr Rev 2005 Ser Y
(Prerefunded @ 01/01/11) (AMBAC Insd).......... 6.400 01/01/13 178,538
145 Georgia Muni Elec Auth Pwr Rev 2005 Ser Y
(Prerefunded @ 01/01/14) (MBIA Insd)........... 6.500 01/01/17 169,415
860 Georgia Muni Elec Auth Pwr Rev Ser Y (Escrowed
to Maturity) (AMBAC Insd)...................... 6.400 01/01/13 967,122
410 Georgia Muni Elec Auth Pwr Rev Ser Y (Escrowed
to Maturity) (MBIA Insd)....................... 6.500 01/01/17 482,504
--------------
55,437,655
--------------
ILLINOIS 12.2%
1,105 Bolingbrook, IL Cap Apprec Ser C Rfdg (MBIA
Insd).......................................... * 01/01/19 617,231
2,845 Chicago, IL Brd Ed Cap Apprec Sch Reform B 1
(FGIC Insd).................................... * 12/01/19 1,530,126
1,500 Chicago, IL Brd Ed Cap Apprec Sch Reform Ser A
(FGIC Insd).................................... * 12/01/19 803,520
1,020 Chicago, IL Brd Ed Cap Apprec Sch Reform Ser A
(FGIC Insd).................................... * 12/01/25 405,175
2,000 Chicago, IL Lakefront Millenium Pkg Fac (MBIA
Insd) (f)...................................... 0/5.700 01/01/25 2,154,100
2,000 Chicago, IL Lakefront Millenium Pkg Fac (MBIA
Insd) (f)...................................... 0/5.750 01/01/29 2,149,260
5,925 Chicago, IL Midway Arpt Rev Second Lien Ser B
Rfdg (AMBAC Insd) (a).......................... 5.000 01/01/21 6,191,447
6,220 Chicago, IL Midway Arpt Rev Second Lien Ser B
Rfdg (AMBAC Insd) (a).......................... 5.000 01/01/22 6,490,508
8,000 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Ser A (FGIC Insd)......................... 5.000 01/01/33 8,283,600
1,000 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Ser A Rfdg (MBIA Insd).................... 5.000 01/01/29 1,038,330
2,840 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Ser E Rfdg (CIFG Insd) (a)................ 5.250 01/01/21 3,011,224
2,975 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Ser E Rfdg (CIFG Insd) (a)................ 5.250 01/01/22 3,152,370
3,120 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Ser E Rfdg (CIFG Insd).................... 5.250 01/01/23 3,303,893
1,430 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Ser E Rfdg (CIFG Insd).................... 5.250 01/01/24 1,513,326
5,000 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Ser E Rfdg (CIFG Insd).................... 5.000 01/01/34 5,130,450
</Table>
16 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
ILLINOIS (CONTINUED)
$ 8,750 Chicago, IL O'Hare Intl Arpt Rev Rols RR II
239-2 (Inverse Fltg) (Acquired 08/18/03, Cost
$9,500,313) (AMT) (FSA Insd) (b)............... 8.180% 01/01/20 $ 10,376,013
10,000 Chicago, IL O'Hare Intl Arpt Rev Rols RR II
239-3 (Inverse Fltg) (Acquired 08/18/03, Cost
$10,760,100) (AMT) (FSA Insd) (a) (b).......... 8.180 01/01/21 11,844,600
6,000 Chicago, IL O'Hare Intl Arpt Rev Rols RR II
494-1 (Inverse Fltg) (Acquired 12/16/05, Cost
$6,736,860) (MBIA Insd) (b).................... 7.216 01/01/24 6,838,020
5,000 Chicago, IL Pk Dist Ser A (FGIC Insd).......... 5.000 01/01/31 5,197,200
615 Chicago, IL Pk Dist Ser C (FGIC Insd).......... 5.500 01/01/19 658,407
3,230 Chicago, IL Proj Ser A Rfdg (FGIC Insd)........ 5.375 01/01/34 3,375,899
4,950 Chicago, IL Proj Ser A Rfdg (MBIA Insd)........ 5.500 01/01/38 5,279,769
145 Chicago, IL Proj Ser A Rfdg (AMBAC Insd)....... 5.625 01/01/39 157,115
50 Chicago, IL Proj Ser A Rfdg (Prerefunded @
01/01/11) (MBIA Insd).......................... 5.500 01/01/38 54,293
290 Cook Cnty, IL Sch Dist No 100 Berwyn South Cap
Apprec (FSA Insd) (a).......................... 8.200 12/01/14 372,638
345 Cook Cnty, IL Sch Dist No 100 Berwyn South Cap
Apprec (FSA Insd) (a).......................... 8.100 12/01/16 456,780
2,605 Cook Cnty, IL Sch Dist No 122 Cap Apprec (FGIC
Insd) (a)...................................... * 12/01/17 1,544,869
2,995 Cook Cnty, IL Sch Dist No 122 Cap Apprec (FGIC
Insd) (a)...................................... * 12/01/18 1,685,796
4,210 Cook Cnty, IL Sch Dist No 122 Cap Apprec (FGIC
Insd) (a)...................................... * 12/01/19 2,255,213
4,050 Cook Cnty, IL Sch Dist No 122 Cap Apprec (FGIC
Insd).......................................... * 12/01/20 2,063,759
3,000 Du Page Cnty, IL Cmnty High Sch (FSA Insd)..... 5.600 01/01/22 3,267,960
750 Du Page Cnty, IL Cmnty High Sch Rfdg (FSA
Insd).......................................... 5.000 12/01/17 791,828
1,860 Grundy Kendall & Will Cntys (AMBAC Insd)....... 5.500 05/01/20 1,982,276
1,180 Grundy Kendall & Will Cntys (AMBAC Insd)....... 5.500 05/01/21 1,257,125
2,000 Illinois Dev Fin Auth Rev Sch Dist Pgm Rockford
Sch 205 (FSA Insd)............................. 6.650 02/01/11 2,245,080
5,025 Illinois Dev Fin Auth Rev Sch Dist Pgm Rockford
Sch 205 (FSA Insd)............................. 6.650 02/01/12 5,144,595
4,800 Illinois Fin Auth Rev Swedish American Hosp
(AMBAC Insd)................................... 5.000 11/15/31 4,921,392
2,000 Illinois Med Dist (MBIA Insd).................. 5.250 06/01/32 2,083,480
3,500 Illinois Muni Elec Agy Pwr Supply Sys Rev Rfdg
(FSA Insd)..................................... 5.000 02/01/21 3,598,665
1,200 Lake Cnty, IL Cmnty Cons Sch Dist No 50
Woodland Cap Apprec Ser B (FGIC Insd).......... * 12/01/14 829,380
6,790 Lake Cnty, IL Cmnty Unit Sch Dist No 60
Waukegan Cap Apprec Ser A (FSA Insd)........... * 12/01/17 4,017,575
</Table>
See Notes to Financial Statements 17
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
ILLINOIS (CONTINUED)
$ 1,000 Madison & St Clair Cnty, IL Sch Dist No 10
Collinsville Rfdg (FGIC Insd).................. 5.000% 02/01/21 $ 1,047,570
3,000 McHenry & Kane Cnty, IL Cmnty Cons Sch Dist No
158 Cap Apprec (FGIC Insd)..................... * 01/01/17 1,855,440
4,000 McHenry & Kane Cnty, IL Cmnty Cons Sch Dist No
158 Cap Apprec (FGIC Insd)..................... * 01/01/18 2,349,520
1,330 McHenry Cnty, IL Cmnty High Sch Dist No 154 Cap
Apprec (FGIC Insd)............................. * 01/01/16 865,936
6,000 Metropolitan Pier & Expo Auth IL Dedicated St
Tax Rev McCormick Pl Expn Ser A (MBIA Insd).... 5.250 06/15/42 6,319,200
175 Peoria, IL Ser B Rfdg (FGIC Insd).............. 5.000 01/01/20 184,051
1,000 Southern IL Univ Rev Cap Apprec Hsg & Aux Ser A
(MBIA Insd).................................... * 04/01/20 523,990
--------------
141,219,994
--------------
INDIANA 2.9%
990 Indiana Bd Bk Spl Pgm Ser A (Escrowed to
Maturity) (AMBAC Insd)......................... 9.750 08/01/09 1,093,039
6,745 Indiana Hlth Fac Fin Auth Hosp Rev Cmnty Proj
Ser A (AMBAC Insd)............................. 5.000 05/01/35 6,943,236
2,335 Lake Cnty, IN Bldg Corp First Mtg (MBIA Insd)
(a)............................................ 5.750 08/01/11 2,514,445
1,550 Marion Cnty, IN Convention & Rec Lease Rent Ser
A Rfdg (AMBAC Insd)............................ 5.000 06/01/21 1,607,986
1,700 New Prarie Utd Sch Bldg Corp Ind Rfdg (FSA
Insd) (a)...................................... 5.000 07/05/18 1,788,026
2,000 Plainfield, IN Cmnty High Sch Bldg Corp First
Mgt (FGIC Insd)................................ 5.000 07/15/27 2,079,140
2,555 Plainfield, IN Cmnty High Sch Bldg Corp First
Mtg (FGIC Insd)................................ 5.000 07/15/28 2,658,171
1,055 Plainfield, IN Cmnty High Sch Bldg Corp First
Mtg (FGIC Insd)................................ 5.000 01/15/30 1,095,058
1,900 South Harrison, IN 2000 Sch Bldg Corp Ser A
(FSA Insd)..................................... 5.250 01/15/25 2,025,818
5,780 Wawasee Cmnty Sch Corp IN New Elem & Remodeling
Bldg Corp First Mtg Rfdg (FSA Insd) (a)........ 5.000 07/15/24 6,086,456
4,900 Wayne Twp, IN Marion Cnty Sch First Mtg Rfdg
(FGIC Insd).................................... 5.000 07/15/27 5,133,338
--------------
33,024,713
--------------
IOWA 0.2%
2,375 Iowa Fin Auth Hosp Fac Rev Trinity Regl Hosp
Proj (FSA Insd)................................ 5.750 07/01/17 2,473,349
--------------
</Table>
18 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
LOUISIANA 2.5%
$ 4,065 Calcasieu Parish, LA Mem Hosp Svc Dist Hosp Rev
Lake Charles Mem Hosp Proj Ser A (Connie Lee
Insd).......................................... 6.375% 12/01/12 $ 4,385,159
5,530 Calcasieu Parish, LA Mem Hosp Svc Dist Hosp Rev
Lake Charles Mem Hosp Proj Ser A (Connie Lee
Insd).......................................... 6.500 12/01/18 6,591,539
7,500 Lafayette, LA Util Rev (MBIA Insd)............. 5.250 11/01/24 7,981,725
655 Louisiana Loc Govt Environment BRCC Fac Corp
Proj (MBIA Insd)............................... 5.375 12/01/16 703,522
2,035 Louisiana Loc Govt Environment BRCC Fac Corp
Proj (MBIA Insd) (a)........................... 5.375 12/01/17 2,180,848
2,150 Louisiana Loc Govt Environment BRCC Fac Corp
Proj (MBIA Insd) (a)........................... 5.375 12/01/18 2,304,091
2,165 Louisiana Loc Govt Environment BRCC Fac Corp
Proj (MBIA Insd)............................... 5.375 12/01/19 2,320,166
2,295 Louisiana Loc Govt Environment BRCC Fac Corp
Proj (MBIA Insd)............................... 5.375 12/01/20 2,459,483
680 New Orleans, LA Home Mtg Auth Single Family Mtg
Rev 1985 Ser A (MBIA Insd)..................... * 09/15/16 229,296
--------------
29,155,829
--------------
MASSACHUSETTS 0.3%
2,700 Massachusetts Muni Whsl Elec Co Nuclear Mix 1-A
(MBIA Insd).................................... 5.250 07/01/13 2,903,256
175 Massachusetts Muni Whsl Elec Co Proj No 6-A
(MBIA Insd).................................... 5.250 07/01/16 187,520
--------------
3,090,776
--------------
MICHIGAN 2.7%
125 Chippewa Valley, MI Sch Bldg & Site (FSA
Insd).......................................... 5.000 05/01/20 131,855
5,000 Detroit, MI City Sch Dist Sch Bldg & Site Impt
Ser A Rfdg (FSA Insd).......................... 5.000 05/01/25 5,212,950
1,400 Huron, MI Sch Dist (FSA Insd).................. 5.250 05/01/21 1,478,876
10,000 Michigan Muni Bd Auth Rev Sch Dist City of
Detroit (FSA Insd)............................. 5.000 06/01/19 10,474,900
5,000 Michigan Muni Bd Auth Rev Sch Dist City of
Detroit (FSA Insd)............................. 5.000 06/01/20 5,225,900
2,520 Southgate, MI Cmnty Sch Dist Rfdg (FGIC Insd)
(a)............................................ 5.000 05/01/22 2,648,495
2,675 Wayne Charter Cnty, MI Arpt Rev Ser C Rfdg
(FGIC Insd).................................... 5.375 12/01/17 2,871,559
2,840 Wayne Charter Cnty, MI Arpt Rev Ser C Rfdg
(FGIC Insd).................................... 5.375 12/01/20 3,048,683
--------------
31,093,218
--------------
</Table>
See Notes to Financial Statements 19
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
MISSISSIPPI 0.2%
$ 1,000 Harrison Cnty, MS Wastewtr Mgmt & Solid
Wastewtr Treatment Fac Ser A Rfdg (FGIC
Insd).......................................... 8.500% 02/01/13 $ 1,249,130
1,050 Tupelo, MS Pub Sch Dist Rfdg (FSA Insd)........ 5.000 11/01/15 1,112,444
--------------
2,361,574
--------------
MISSOURI 0.4%
1,170 Mehlville, MO Sch Dist No R-9 Ctf Partn Ser A
(FSA Insd)..................................... 5.500 03/01/16 1,251,736
1,225 Mehlville, MO Sch Dist No R-9 Ctf Partn Ser A
(FSA Insd)..................................... 5.500 03/01/17 1,308,766
900 Saint Louis Cnty MO Regl Contv & Sports Complex
Auth Convtn & Sports Fac Rfdg (AMBAC Insd)..... 5.250 08/15/17 959,274
940 Saint Louis, MO Arpt Rev Cap Impt Pgm Ser A
(MBIA Insd).................................... 5.375 07/01/17 1,005,960
--------------
4,525,736
--------------
NEBRASKA 0.3%
3,620 Saunders Cnty, NE (FSA Insd) (a)............... 5.000 11/01/35 3,699,097
--------------
NEVADA 1.5%
5,020 Clark Cnty, NV Arpt Rev Rols RR II 292-3
(Inverse Fltg) (Acquired 07/30/04, Cost
$5,493,386) (AMT) (FGIC Insd) (b).............. 7.673 07/01/22 5,744,135
10,000 Director St, NV Dept Business & Ind Las Vegas
Monorail Proj First Tier (AMBAC Insd).......... 5.625 01/01/32 10,732,400
935 Reno, NV Cap Impt Rev (FGIC Insd).............. 5.125 06/01/26 969,623
--------------
17,446,158
--------------
NEW HAMPSHIRE 0.2%
2,500 New Hampshire St Tpk Sys Rev Ser C Rfdg
(Inverse Fltg) (FGIC Insd)..................... 10.511 11/01/17 2,688,700
--------------
NEW JERSEY 0.6%
4,000 New Jersey Econ Dev Auth Rev Motor Vehicle Sur
Rev Ser A (MBIA Insd).......................... 5.000 07/01/23 4,174,120
2,760 Newark, NJ Hsg Auth Port Auth Newark Marine
Term (MBIA Insd)............................... 5.500 01/01/28 2,991,260
--------------
7,165,380
--------------
NEW YORK 2.3%
5,000 Long Island Pwr Auth NY Gen Ser A (XLCA Insd).. 5.000 12/01/26 5,224,700
5,470 New York City Hlth & Hosp Hlth Sys Ser A (FSA
Insd).......................................... 5.000 02/15/21 5,685,299
11,300 New York City Sub Ser F-1 (XLCA Insd).......... 5.000 09/01/22 11,866,582
3,105 New York St Dorm Auth Rev Insd Brooklyn Law Sch
Ser B (XLCA Insd) (a).......................... 5.375 07/01/21 3,344,861
--------------
26,121,442
--------------
</Table>
20 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
NORTH CAROLINA 1.6%
$ 5,000 North Carolina Eastn Muni Pwr Agy Sys Rev Ser A
Rfdg (AMBAC Insd).............................. 5.250% 01/01/20 $ 5,393,300
10,000 North Carolina Muni Pwr Agy Ser A
(MBIA Insd).................................... 5.250 01/01/18 10,656,300
2,735 North Carolina Muni Pwr Agy Ser A (MBIA
Insd).......................................... 5.250 01/01/19 2,914,498
--------------
18,964,098
--------------
NORTH DAKOTA 1.1%
5,000 Mercer Cnty, ND Pollutn Ctl Rev Antelope Vly
Station Rfdg (AMBAC Insd)...................... 7.200 06/30/13 5,761,300
2,125 North Dakota St Brd Higher Ed Rev Hsg & Aux Fac
Univ ND (FGIC Insd)............................ 5.000 04/01/32 2,190,684
5,000 Oliver Cnty, ND Pollutn Ctl Rev Square Butte
Elec Coop Ser A Rfdg (AMBAC Insd).............. 5.300 01/01/27 5,241,400
--------------
13,193,384
--------------
OHIO 0.6%
1,000 Chillicothe, OH City Sch Dist Sch Impt (FGIC
Insd).......................................... 5.250 12/01/26 1,072,260
5,000 Columbus, OH City Sch Dist Sch Fac Constr &
Impt (FSA Insd)................................ 5.250 12/01/27 5,353,400
--------------
6,425,660
--------------
OKLAHOMA 3.1%
650 Claremore, OK Pub Wk Auth Elec Sys Rev (FSA
Insd).......................................... 5.000 06/01/23 679,081
2,340 Claremore, OK Pub Wk Auth Util Sys Rev Rfdg
(FSA Insd) (a)................................. 5.000 07/01/25 2,446,961
2,890 Jenks, OK Aquarium Auth Rev Rfdg (MBIA Insd)... 5.250 07/01/19 3,123,194
1,480 Jenks, OK Aquarium Auth Rev Rfdg (MBIA Insd)... 5.250 07/01/33 1,583,378
4,320 McAlester, OK Pub Wks Auth Util Cap Apprec Ser
A (FSA Insd)................................... * 02/01/30 1,182,168
5,660 Mustang, OK Impt Auth Util Rev (FSA Insd)...... 5.800 10/01/30 6,122,082
2,020 Oklahoma City, OK Arpt Tr Jr Lien 27th Ser A
(FSA Insd)..................................... 5.000 07/01/17 2,098,517
2,400 Oklahoma City, OK Pub Ppty Auth Hotel Tax Rev
(FGIC Insd).................................... 5.250 10/01/29 2,571,456
2,000 Oklahoma Colleges Brd Regt Stad Univ Cent OK
Ser B (AMBAC Insd)............................. 5.500 06/01/24 2,183,260
2,995 Sallisaw, OK Muni Auth Util Sys Rev (XLCA
Insd).......................................... 5.000 01/01/25 3,118,634
2,000 Tulsa, OK Cmnty College Rev (AMBAC Insd)....... 5.500 07/01/22 2,175,300
8,260 Tulsa, OK Tulsa Indl Auth Rev Univ Tulsa Ser A
(MBIA Insd).................................... 5.375 10/01/31 8,718,265
--------------
36,002,296
--------------
OREGON 0.5%
4,835 Oregon St Dept Admin Ser B Rfdg (MBIA Insd).... 5.250 05/01/17 5,151,596
--------------
</Table>
See Notes to Financial Statements 21
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
PENNSYLVANIA 3.2%
$ 5,000 Allegheny Cnty, PA Hosp Dev Auth Rev Insd Hlth
Sys Ser A (MBIA Insd).......................... 6.500% 11/15/30 $ 5,609,150
4,875 Allegheny Cnty, PA Hosp Dev Auth Rev Pittsburgh
Mercy Hlth Sys Inc (Escrowed to Maturity)
(AMBAC Insd)................................... 5.625 08/15/26 5,187,049
3,000 Harrisburg, PA Auth Res Gtd Sub Ser D-2
(Variable Rate Coupon) (FSA Insd).............. 5.000 12/01/33 3,190,140
3,000 Lycoming Cnty, PA Auth College Rev PA College
of Technology (AMBAC Insd)..................... 5.350 07/01/26 3,162,810
1,375 Pennsylvania St Higher Ed Fac Auth Rev St Sys
Higher Ed Ser P (AMBAC Insd)................... 5.000 12/15/16 1,410,888
2,990 Philadelphia, PA Gas Wks Rev 1998 Gen Ordinance
4th Ser (FSA Insd)............................. 5.250 08/01/18 3,167,815
4,555 Philadelphia, PA Gas Wks Rev 1998 Gen Ordinance
4th Ser (FSA Insd)............................. 5.250 08/01/21 4,814,180
1,485 Philadelphia, PA Gas Wks Rev Eighteenth Ser
(AGL Insd)..................................... 5.250 08/01/20 1,578,035
3,665 Philadelphia, PA Gas Wks Rev Fifth Ser A-1 (AGL
Insd) (a)...................................... 5.250 09/01/17 3,916,566
5,000 State Pub Sch Bldg Auth PA Sch Lease
Philadelphia Sch Dist Proj (FSA Insd).......... 5.250 06/01/26 5,293,800
--------------
37,330,433
--------------
SOUTH CAROLINA 1.9%
2,050 Columbia, SC Ctf Partn Tourism Dev Fee Pledge
(AMBAC Insd)................................... 5.250 06/01/19 2,170,848
3,325 Columbia, SC Pkg Fac Rev Ser A (CIFG Insd)..... 5.000 02/01/37 3,411,949
5,170 Easley, SC Util Rev Impt & Rfdg (FSA Insd)..... 5.000 12/01/34 5,372,561
6,500 South Carolina Jobs Econ Dev Auth Indl Rev Elec
& Gas Co Proj Ser A (AMBAC Insd)............... 5.200 11/01/27 6,872,125
4,000 South Carolina Jobs Econ Tuomey (CIFG Insd).... 5.000 11/01/30 4,121,280
--------------
21,948,763
--------------
SOUTH DAKOTA 1.1%
715 Minnehaha Cnty, SD Ctf Ltd Tax (FSA Insd)...... 5.000 12/01/14 760,217
1,455 Rapid City, SD Sales Tax Rev Rfdg (AMBAC
Insd).......................................... 5.500 06/01/12 1,568,766
5,205 South Dakota St Lease Rev Tr Ctf Ser A (FSA
Insd).......................................... 6.625 09/01/12 5,857,239
4,000 South Dakota St Lease Rev Tr Ctf Ser A (FSA
Insd).......................................... 6.700 09/01/17 4,859,560
--------------
13,045,782
--------------
TEXAS 8.9%
1,165 Alamo, TX Cmnty College Dist Combined Fee Rfdg
(FSA Insd)..................................... 5.000 11/01/22 1,210,155
5,000 Brazos Riv Auth TX Rev Houston Ind Inc Proj Ser
C (Variable Rate Coupon) (AMBAC Insd).......... 5.125 05/01/19 5,199,600
</Table>
22 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
TEXAS (CONTINUED)
$ 2,000 Colorado Riv, TX Muni Wtr Dist Sys Rfdg (AMBAC
Insd).......................................... 5.375% 01/01/19 $ 2,149,520
3,055 Dallas Fort Worth, TX Intl Arpt Rols RR II
291-1 (Inverse Fltg) (Acquired 07/19/04, Cost
$3,448,667) (AMT) (FSA Insd) (a) (b)........... 7.673 11/01/19 3,506,071
2,000 Dallas Fort Worth, TX Intl Arpt Rols RR II
291-2 (Inverse Fltg) (Acquired 07/19/04, Cost
$2,164,480) (AMT) (FSA Insd) (a) (b)........... 7.419 11/01/21 2,241,800
4,500 Harris Cnty, TX Toll Rd Sr Lien Rfdg (MBIA
Insd).......................................... 5.125 08/15/17 4,626,720
4,605 Houston, TX Arpt Sys Rev Sub Lien (FSA Insd)... 5.500 07/01/17 4,959,585
2,000 Houston, TX Arpt Sys Rev Sub Lien (FSA Insd)... 5.500 07/01/18 2,154,000
2,000 Houston, TX Pub Impt Ser A Rfdg (MBIA Insd).... 5.375 03/01/18 2,161,000
7,500 Houston, TX Util Sys Rev First Lien Rfdg (FSA
Insd).......................................... 5.000 11/15/27 7,804,725
22,500 Houston, TX Util Sys Rev First Lien Ser A Rfdg
(FGIC Insd).................................... 5.250 05/15/23 23,975,100
7,930 Lancaster, TX Indpt Sch Dist Rfdg (FSA Insd)... 5.750 02/15/30 8,878,745
1,790 Laredo, TX Cmnty College Dist Combined Fee Rev
Bldg Rfdg (AMBAC Insd)......................... 5.300 08/01/26 1,880,037
4,665 North Harris Cnty, TX Regl Wtr Sr Lien (MBIA
Insd) (a)...................................... 5.000 12/15/29 4,843,110
3,000 Nueces Riv Auth TX Wtr Supply Rev Fac Corpus
Christi Proj Rfdg (FSA Insd)................... 5.000 07/15/25 3,120,750
2,000 Nueces Riv Auth TX Wtr Supply Rev Fac Corpus
Christi Proj Rfdg (FSA Insd)................... 5.000 03/01/27 2,075,880
2,220 Raven Hills, TX Higher Ed Corp Cardinal Vlg Llc
Lamar Univ A (MBIA Insd)....................... 5.500 08/01/28 2,401,552
2,000 San Antonio, TX Hotel Occupancy Rev Sub Lien
Ser A Rfdg (AMBAC Insd)........................ 5.000 08/15/29 2,055,320
1,750 Tarrant Cnty, TX Hlth Fac Dev Corp Hlth Sys Rev
Ser B (Escrowed to Maturity) (FGIC Insd)....... 5.000 09/01/15 1,862,945
1,060 Tarrant Regl Wtr Dist TX Impt Rfdg (FSA
Insd).......................................... 5.250 03/01/18 1,131,084
2,000 Tarrant Regl Wtr Dist TX Impt Rfdg (FSA
Insd).......................................... 5.250 03/01/20 2,133,380
10,000 Texas St Tpk Auth Cent TX Tpk First Tier Ser A
(AMBAC Insd)................................... 5.500 08/15/39 10,749,200
1,800 Tyler, TX Indpt Sch Dist (FSA Insd) (a)........ 5.000 02/15/27 1,865,808
--------------
102,986,087
--------------
UTAH 0.3%
2,140 Murray City, UT Swr & Wtr Rev (AMBAC Insd)..... 5.250 10/01/23 2,288,965
595 Provo, UT Elec Rev 1984 Ser A Rfdg (Escrowed to
Maturity) (AMBAC Insd)......................... 10.375 09/15/15 776,856
--------------
3,065,821
--------------
</Table>
See Notes to Financial Statements 23
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
WASHINGTON 7.3%
$ 4,115 Chelan Cnty, WA Sch Dist No 246 (FSA Insd)..... 5.000% 12/01/21 $ 4,280,629
2,990 Clark Cnty, WA Pub Util Dist No 001 Wtr Rev
(FSA Insd)..................................... 5.125 01/01/20 3,128,108
11,340 Energy Northwest WA Elec Rev Columbia
Generating Ser A Rfdg (FSA Insd)............... 5.500 07/01/17 12,266,024
4,500 Energy Northwest WA Elec Rev Proj No 3 Ser A
Rfdg (FSA Insd)................................ 5.500 07/01/17 4,867,470
14,500 Energy Northwest WA Elec Rev Proj No 3 Ser A
Rfdg (FSA Insd)................................ 5.500 07/01/18 15,684,070
5,000 Energy Northwest WA Elec Rev Proj No 3 Ser B
Rfdg (FSA Insd)................................ 6.000 07/01/16 5,577,050
1,365 Energy Northwest WA Wind Proj (AMBAC Insd)..... 5.000 07/01/23 1,406,605
5,540 Everett, WA Wtr & Swr Rev (MBIA Insd).......... 5.000 12/01/29 5,770,298
1,215 Fife, WA Wtr & Swr Rev (MBIA Insd) (a)......... 5.000 04/01/24 1,262,470
1,895 Fife, WA Wtr & Swr Rev (MBIA Insd)............. 5.125 04/01/24 1,906,939
1,160 Fife, WA Wtr & Swr Rev (MBIA Insd) (a)......... 5.000 04/01/29 1,199,788
2,500 Goat Hill Ppty WA Lease Rev Govt Office Bldg
Proj (MBIA Insd)............................... 5.000 12/01/33 2,567,950
1,025 Grant Cnty, WA Pub Util Dist No 2 Rev Second
Ser C Rfdg (AMBAC Insd) (a).................... 6.000 01/01/17 1,052,911
2,000 Port Seattle, WA Rev Inter Lien Ser A Rfdg
(MBIA Insd).................................... 5.000 03/01/28 2,076,440
3,000 Port Seattle, WA Rev Inter Lien Ser A Rfdg
(MBIA Insd).................................... 5.000 03/01/35 3,092,370
2,000 Seattle, WA Muni Lt & Pwr Rev Impt & Rfdg (FSA
Insd).......................................... 5.500 03/01/18 2,133,080
2,565 Snohomish Cnty, WA Pub Util 1 (FSA Insd)....... 5.500 12/01/23 2,769,661
145 Snohomish Cnty, WA Pub Util 1 (FSA Insd)....... 5.000 12/01/24 149,759
2,000 Spokane, WA Pub Fac Dist Hotel (MBIA Insd)..... 5.750 12/01/25 2,214,120
2,420 Spokane, WA Pub Fac Dist Hotel (MBIA Insd)..... 5.750 12/01/26 2,673,906
3,000 Spokane, WA Pub Fac Dist Hotel (MBIA Insd)..... 5.250 09/01/33 3,157,260
1,465 Tacoma, WA Solid Waste Util Rev Rfdg (AMBAC
Insd).......................................... 5.375 12/01/18 1,565,001
2,075 Tacoma, WA Solid Waste Util Rev Rfdg (AMBAC
Insd) (a)...................................... 5.375 12/01/19 2,216,640
1,600 Washington St Ser R 99A Rfdg (FGIC Insd)....... 5.000 01/01/17 1,643,488
--------------
84,662,037
--------------
WEST VIRGINIA 0.1%
1,530 West Virginia Econ Dev Auth Lease Rev
Correctional Juvenile & Pub-A (MBIA Insd)...... 5.500 06/01/19 1,664,915
--------------
WISCONSIN 0.5%
1,350 Plover, WI Wtr Sys Rev (AMBAC Insd) (a)........ 5.400 12/01/16 1,425,006
1,500 Plover, WI Wtr Sys Rev (AMBAC Insd) (a)........ 5.500 12/01/18 1,585,740
</Table>
24 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
WISCONSIN (CONTINUED)
$ 1,405 Racine, WI Wtrwks Rev Sys Mtg (MBIA Insd)
(a)............................................ 5.250% 09/01/16 $ 1,496,901
750 Wilmot, WI Un High Sch Dist Ser B Rfdg (FSA
Insd).......................................... 5.000 03/01/23 792,315
--------------
5,299,962
--------------
PUERTO RICO 0.3%
3,000 Puerto Rico Indl Tourist Ed Med & Environmental
Ctl Fac Hosp Aux (MBIA Insd)................... 6.250 07/01/16 3,036,600
--------------
TOTAL LONG-TERM INVESTMENTS 95.9%
(Cost $1,070,087,256)....................................................... 1,110,708,136
SHORT-TERM INVESTMENTS 4.0%
(Cost $46,440,000).......................................................... 46,440,000
--------------
TOTAL INVESTMENTS 99.9%
(Cost $1,116,527,256)....................................................... 1,157,148,136
OTHER ASSETS IN EXCESS OF LIABILITIES 0.1%................................... 608,433
--------------
NET ASSETS 100.0%............................................................ $1,157,756,569
==============
</Table>
Percentages are calculated as a percentage of net assets.
* Zero coupon bond
(a) The Fund owns 100% of the outstanding bond issuance.
(b) These securities are restricted and may be resold only in transactions
exempt from registration which are normally those transactions with
qualified institutional buyers. Restricted securities comprise 4.5% of net
assets.
(c) Security purchased on a when-issued or delayed delivery basis.
(d) Security converts to a fixed coupon rate at a predetermined date.
(e) All or a portion of these securities have been physically segregated in
connection with open futures contracts.
(f) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
AGL--Assured Guaranty Ltd.
AMBAC--AMBAC Indemnity Corp.
CIFG--CDC IXIS Financial Guaranty
Connie Lee--Connie Lee Insurance Co.
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
MBIA--Municipal Bond Investors Assurance Corp.
XLCA--XL Capital Assurance Inc.
See Notes to Financial Statements 25
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
FUTURES CONTRACTS OUTSTANDING AS OF MARCH 31, 2006:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
SHORT CONTRACTS: CONTRACTS DEPRECIATION
U.S. Treasury Notes 5-Year Futures June 2006
(Current Notional Value of $104,438 per contract)......... 1,928 $813,046
----- --------
</Table>
SWAP AGREEMENT OUTSTANDING AS OF MARCH 31, 2006:
<Table>
<Caption>
PAY/
INTEREST RATE SWAP RECEIVE NOTIONAL UNREALIZED
FLOATING FIXED EXPIRATION AMOUNT APPRECIATION/
COUNTERPARTY FLOATING RATE INDEX RATE RATE DATE (000) DEPRECIATION
JP Morgan Chase Bank USD-BMA Municipal
N.A. Swap Index Receive 4.137% 06/28/26 32,540 $474,497
------ --------
</Table>
26 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
March 31, 2006 (Unaudited)
<Table>
ASSETS:
Total Investments (Cost $1,116,527,256)..................... $1,157,148,136
Cash........................................................ 450,733
Receivables:
Interest.................................................. 14,705,064
Investments Sold.......................................... 4,424,993
Fund Shares Sold.......................................... 209,146
Swap Contracts.............................................. 474,497
Other....................................................... 280,600
--------------
Total Assets............................................ 1,177,693,169
--------------
LIABILITIES:
Payables:
Investments Purchased..................................... 16,265,667
Fund Shares Repurchased................................... 1,258,406
Income Distributions...................................... 841,035
Investment Advisory Fee................................... 502,233
Distributor and Affiliates................................ 401,585
Variation Margin on Futures............................... 90,375
Trustees' Deferred Compensation and Retirement Plans........ 353,377
Accrued Expenses............................................ 223,922
--------------
Total Liabilities....................................... 19,936,600
--------------
NET ASSETS.................................................. $1,157,756,569
==============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $1,107,589,281
Net Unrealized Appreciation................................. 41,908,423
Accumulated Net Realized Gain............................... 7,256,179
Accumulated Undistributed Net Investment Income............. 1,002,686
--------------
NET ASSETS.................................................. $1,157,756,569
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $1,083,956,893 and 58,910,494 shares of
beneficial interest issued and outstanding)............. $ 18.40
Maximum sales charge (4.75%* of offering price)......... .92
--------------
Maximum offering price to public........................ $ 19.32
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $50,200,564 and 2,731,523 shares of
beneficial interest issued and outstanding)............. $ 18.38
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $21,862,552 and 1,190,645 shares of
beneficial interest issued and outstanding)............. $ 18.36
==============
Class I Shares:
Net asset value and offering price per share (Based on
net assets of $1,736,560 and 94,381 shares of beneficial
interest issued and outstanding)........................ $ 18.40
==============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
See Notes to Financial Statements 27
VAN KAMPEN INSURED TAX FREE INCOME FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended March 31, 2006 (Unaudited)
<Table>
INVESTMENT INCOME:
Interest.................................................... $ 27,728,659
------------
EXPENSES:
Investment Advisory Fee..................................... 2,970,017
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $1,329,112, $264,954 and $110,034,
respectively)............................................. 1,704,100
Shareholder Services........................................ 346,959
Custody..................................................... 60,057
Legal....................................................... 52,594
Trustees' Fees and Related Expenses......................... 23,651
Other....................................................... 268,851
------------
Total Expenses.......................................... 5,426,229
Less Credits Earned on Cash Balances.................... 32,537
------------
Net Expenses............................................ 5,393,692
------------
NET INVESTMENT INCOME....................................... $ 22,334,967
============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 6,071,101
Futures................................................... 6,223,021
------------
Net Realized Gain........................................... 12,294,122
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 60,107,152
------------
End of the Period:
Investments............................................. 40,620,880
Futures................................................. 813,046
Swap Contracts.......................................... 474,497
------------
41,908,423
------------
Net Unrealized Depreciation During the Period............... (18,198,729)
------------
NET REALIZED AND UNREALIZED LOSS............................ $ (5,904,607)
============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 16,430,360
============
</Table>
28 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets (Unaudited)
<Table>
<Caption>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2006 SEPTEMBER 30, 2005
--------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................ $ 22,334,967 $ 45,435,392
Net Realized Gain.................................... 12,294,122 18,143,294
Net Unrealized Depreciation During the Period........ (18,198,729) (18,879,056)
-------------- --------------
Change in Net Assets from Operations................. 16,430,360 44,699,630
-------------- --------------
Distributions from Net Investment Income:
Class A Shares..................................... (20,871,862) (43,893,696)
Class B Shares..................................... (809,247) (1,921,231)
Class C Shares..................................... (336,305) (636,583)
Class I Shares..................................... (36,935) (9,817)
-------------- --------------
(22,054,349) (46,461,327)
-------------- --------------
Distributions from Net Realized Gain:
Class A Shares..................................... (22,486,062) (10,259,399)
Class B Shares..................................... (1,089,279) (577,204)
Class C Shares..................................... (456,473) (180,088)
Class I Shares..................................... (37,990) -0-
-------------- --------------
(24,069,804) (11,016,691)
-------------- --------------
Total Distributions.................................. (46,124,153) (57,478,018)
-------------- --------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES......................................... (29,693,793) (12,778,388)
-------------- --------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold............................ 37,460,475 76,930,648
Net Asset Value of Shares Issued Through Dividend
Reinvestment....................................... 37,455,488 44,697,062
Cost of Shares Repurchased........................... (81,510,094) (138,280,579)
-------------- --------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS... (6,594,131) (16,652,869)
-------------- --------------
TOTAL DECREASE IN NET ASSETS......................... (36,287,924) (29,431,257)
NET ASSETS:
Beginning of the Period.............................. 1,194,044,493 1,223,475,750
-------------- --------------
End of the Period (Including accumulated
undistributed net investment income of $1,002,686
and $722,068, respectively)........................ $1,157,756,569 $1,194,044,493
============== ==============
</Table>
See Notes to Financial Statements 29
VAN KAMPEN INSURED TAX FREE INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS A MARCH 31, --------------------------------------------------------
2006 2005 2004 2003 2002 (b) 2001
----------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF THE PERIOD............ $ 18.87 $ 19.07 $ 19.27 $ 19.65 $ 19.22 $ 18.27
-------- -------- -------- -------- -------- --------
Net Investment Income.... .36(a) .72 .76 .77 .81 .86
Net Realized and
Unrealized Gain/Loss... (.10) (.01) .02 (.23) .87 .98
-------- -------- -------- -------- -------- --------
Total from Investment
Operations............... .26 .71 .78 .54 1.68 1.84
-------- -------- -------- -------- -------- --------
Less:
Distributions from Net
Investment Income...... .35 .74 .75 .74 .81 .89
Distributions from Net
Realized Gain.......... .38 .17 .23 .18 .44 -0-
-------- -------- -------- -------- -------- --------
Total Distributions........ .73 .91 .98 .92 1.25 .89
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF THE
PERIOD................... $ 18.40 $ 18.87 $ 19.07 $ 19.27 $ 19.65 $ 19.22
======== ======== ======== ======== ======== ========
Total Return (c)........... 1.45%* 3.77% 4.22% 2.90% 9.28% 10.28%
Net Assets at End of the
Period (In millions)..... $1,084.0 $1,114.2 $1,137.2 $1,209.9 $1,244.3 $1,129.6
Ratio of Expenses to
Average Net Assets....... .87% .88% .87% .86% .87% .90%
Ratio of Net Investment
Income to Average Net
Assets................... 3.86% 3.81% 3.99% 4.02% 4.30% 4.55%
Portfolio Turnover......... 24%* 66% 40% 61% 54% 80%
</Table>
* Non-Annualized
(a) Based on average shares outstanding.
(b) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended September 30, 2002 was to increase net investment
income per share by less than $.01, decrease net realized and unrealized
gains and losses per share by less than $.01, and increase the ratio of net
investment income to average net assets from 4.27% to 4.30%. Per share,
ratios and supplemental data for the periods prior to September 30, 2002
have not been restated to reflect this change in presentation.
(c) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 4.75% or contingent deferred
sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be
imposed on certain redemptions made within eighteen months of purchase. If
the sales charges were included, total returns would be lower. These returns
include combined Rule 12b-1 fees and service fees of up to .25% and do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
30 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS B MARCH 31, ------------------------------------------------
2006 2005 2004 2003 2002 (b) 2001
--------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD........................... $18.85 $19.05 $19.24 $19.63 $19.20 $18.26
------ ------ ------ ------ ------ ------
Net Investment Income............ .29(a) .59 .62 .63 .66 .70
Net Realized and Unrealized Gain/
Loss........................... (.10) (.02) .02 (.24) .88 .99
------ ------ ------ ------ ------ ------
Total from Investment Operations... .19 .57 .64 .39 1.54 1.69
------ ------ ------ ------ ------ ------
Less:
Distributions from Net Investment
Income......................... .28 .60 .60 .60 .67 .75
Distributions from Net Realized
Gain........................... .38 .17 .23 .18 .44 -0-
------ ------ ------ ------ ------ ------
Total Distributions................ .66 .77 .83 .78 1.11 .75
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD........................... $18.38 $18.85 $19.05 $19.24 $19.63 $19.20
====== ====== ====== ====== ====== ======
Total Return (c)................... 1.07%* 3.04% 3.43% 2.08% 8.47% 9.42%
Net Assets at End of the Period (In
millions)........................ $ 50.2 $ 56.2 $ 66.4 $ 82.6 $ 87.2 $ 49.2
Ratio of Expenses to Average Net
Assets........................... 1.63% 1.64% 1.63% 1.62% 1.63% 1.69%
Ratio of Net Investment Income to
Average Net Assets............... 3.10% 3.05% 3.23% 3.26% 3.53% 3.76%
Portfolio Turnover................. 24%* 66% 40% 61% 54% 80%
</Table>
* Non-Annualized
(a) Based on average shares outstanding.
(b) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended September 30, 2002 was to increase net investment
income per share by less than $.01, decrease net realized and unrealized
gains and losses per share by less than $.01, and increase the ratio of net
investment income to average net assets from 3.50% to 3.53%. Per share,
ratios and supplemental data for the periods prior to September 30, 2002
have not been restated to reflect this change in presentation.
(c) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 4%, charged on certain redemptions
made within one year of purchase and declining to 0% after the sixth year.
If the sales charge was included, total returns would be lower. These
returns include combined Rule 12b-1 fees and service fees of up to 1% and do
not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
See Notes to Financial Statements 31
VAN KAMPEN INSURED TAX FREE INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS C MARCH 31, ------------------------------------------------
2006 2005 2004 2003 2002 (b) 2001
--------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD........................... $18.84 $19.04 $19.23 $19.62 $19.19 $18.25
------ ------ ------ ------ ------ ------
Net Investment Income............ .29(a) .58 .62 .63 .67 .69
Net Realized and Unrealized
Gain/Loss...................... (.11) (.01) .02 (.24) .87 1.00
------ ------ ------ ------ ------ ------
Total from Investment Operations... .18 .57 .64 .39 1.54 1.69
------ ------ ------ ------ ------ ------
Less:
Distributions from Net Investment
Income......................... .28 .60 .60 .60 .67 .75
Distributions from Net Realized
Gain........................... .38 .17 .23 .18 .44 -0-
------ ------ ------ ------ ------ ------
Total Distributions................ .66 .77 .83 .78 1.11 .75
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD........................... $18.36 $18.84 $19.04 $19.23 $19.62 $19.19
====== ====== ====== ====== ====== ======
Total Return (c)................... 1.02%* 3.04% 3.43% 2.08% 8.48% 9.42%
Net Assets at End of the Period (In
millions)........................ $ 21.9 $ 21.7 $ 19.9 $ 24.1 $ 22.1 $ 11.2
Ratio of Expenses to Average Net
Assets........................... 1.63% 1.64% 1.63% 1.62% 1.63% 1.65%
Ratio of Net Investment Income to
Average Net Assets............... 3.10% 3.05% 3.23% 3.25% 3.53% 3.80%
Portfolio Turnover................. 24%* 66% 40% 61% 54% 80%
</Table>
* Non-Annualized
(a) Based on average shares outstanding.
(b) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended September 30, 2002 was to increase net investment
income per share by less than $.01, decrease net realized and unrealized
gains and losses per share by less than $.01, and increase the ratio of net
investment income to average net assets from 3.50% to 3.53%. Per share,
ratios and supplemental data for the periods prior to September 30, 2002
have not been restated to reflect this change in presentation.
(c) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 1%, charged on certain redemptions
made within one year of purchase. If the sales charge was included, total
returns would be lower. These returns include combined Rule 12b-1 fees and
service fees of up to 1% and do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
32 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS AUGUST 12, 2005
ENDED (COMMENCEMENT OF
CLASS I MARCH 31, OPERATIONS) TO
2006 SEPTEMBER 30, 2005
--------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD.................... $18.87 $18.93
------ ------
Net Investment Income..................................... .38(a) .10
Net Realized and Unrealized Loss.......................... (.09) (.06)
------ ------
Total from Investment Operations............................ .29 .04
------ ------
Less:
Distributions from Net Investment Income.................. .38 .10
Distributions from Net Realized Gain...................... .38 -0-
------ ------
Total Distributions......................................... .76 .10
------ ------
NET ASSET VALUE, END OF THE PERIOD.......................... $18.40 $18.87
====== ======
Total Return (b)............................................ 1.58%* 0.20%*
Net Assets at End of the Period (In millions)............... $ 1.7 $ 1.9
Ratio of Expenses to Average Net Assets..................... .63% .64%
Ratio of Net Investment Income to Average Net Assets........ 4.10% 4.06%
Portfolio Turnover.......................................... 24%* 66%
</Table>
* Non-Annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period. This return does
not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
See Notes to Financial Statements 33
VAN KAMPEN INSURED TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Insured Tax Free Income Fund (the "Fund") is organized as a series of
the Van Kampen Tax Free Trust, a Delaware statutory trust, and is registered as
a diversified open-end management investment company under the Investment
Company Act of 1940 (the "1940 Act"), as amended. The Fund's investment
objective is to provide investors a high level of current income exempt from
federal income taxes, with liquidity and safety of principal, primarily through
investment in a diversified portfolio of insured municipal securities. The Fund
commenced investment operations on December 14, 1984. The Fund offers Class A
Shares, Class B Shares, Class C Shares and Class I Shares. Each class of shares
differs by its initial sales load, contingent deferred sales charges, the
allocation of class-specific expenses and voting rights on matters affecting a
single class.
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 U.S. 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 Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services or dealers are valued at
fair value using procedures established in good faith by the Board of Trustees.
Futures contracts are valued at the settlement price established each day on the
exchange on which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Fund may purchase and sell securities on a "when-issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Fund will
segregate assets with the custodian having an aggregate value at least equal to
the amount of the when-issued or delayed delivery purchase commitments until
payment is made. At March 31, 2006, the Fund had $12,153,897 when-issued and
delayed delivery purchase commitments.
C. INCOME AND EXPENSES Interest income is recorded on an accrual basis. Bond
premium is amortized and discount is accreted over the expected life of each
applicable security. Income and expenses of the Fund are allocated on a pro rata
basis to each class of shares, except for distribution and service fees and
incremental transfer agency costs which are unique to each class of shares.
D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of Subchapter M of the Internal Revenue Code applicable to regulated investment
companies
34
VAN KAMPEN INSURED TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
and to distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
At March 31, 2006, the cost and related gross unrealized appreciation and
depreciation were as follows:
<Table>
Cost of investments for tax purposes........................ $1,115,802,593
==============
Gross tax unrealized appreciation........................... $ 43,926,309
Gross tax unrealized depreciation........................... (2,580,766)
--------------
Net tax unrealized appreciation on investments.............. $ 41,345,543
==============
</Table>
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains and a portion of futures gains, which are
included as ordinary income for tax purposes.
The tax character of distributions paid during the year ended September 30,
2005 was as follows:
<Table>
Distributions paid from:
Ordinary Income........................................... $ 1,834,335
Long-term capital gain.................................... 9,269,523
-----------
$11,103,858
===========
</Table>
As of September 30, 2005, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed ordinary income............................... $ 5,035,342
Undistributed long-term capital gain........................ 15,304,816
</Table>
Net realized gains or losses may differ for financial and tax reporting
purposes primarily as a result of the deferral of losses relating to wash sale
transactions.
F. INSURANCE EXPENSES The Fund typically invests in insured bonds. Any portfolio
securities not specifically covered by a primary insurance policy are insured
secondarily through the Fund's portfolio insurance policy. Insurance premiums
are based on the daily balances of uninsured bonds in the portfolio of
investments and are charged to expense on an accrual basis. The insurance policy
guarantees the timely payment of principal and interest on the securities in the
Fund's portfolio.
G. EXPENSE REDUCTIONS During the six-months ended March 31, 2006, the Fund's
custody fee was reduced by $32,537 as a result of credits earned on cash
balances.
35
VAN KAMPEN INSURED TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, Van Kampen Asset
Management (the "Adviser") will provide investment advice and facilities to the
Fund for an annual fee payable monthly as follows:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS % PER ANNUM
First $500 million.......................................... .525%
Next $500 million........................................... .500%
Next $500 million........................................... .475%
Over $1.5 billion........................................... .450%
</Table>
For the six-months ended March 31, 2006, the Fund recognized expenses of
approximately $16,000 representing legal expenses provided by Skadden, Arps,
Slate, Meagher & Flom LLP, of which a trustee of the Fund is a partner of such
firm and he and his law firm provide legal services as legal counsel to the
Fund.
Under separate Legal Services, Accounting Services and Chief Compliance
Officer ("CCO") Employment agreements, the Adviser provides accounting and legal
services and the CCO provides compliance services to the Fund. The costs of
these services are allocated to each fund. For the six-months ended March 31,
2006, the Fund recognized expenses of approximately $67,800, representing Van
Kampen Investment Inc.'s or its affiliates' (collectively "Van Kampen") cost of
providing accounting and legal services to the Fund, as well as, the salary,
benefits and related costs of the CCO and related support staff paid by Van
Kampen. Services provided pursuant to the Legal Services agreement are reported
as part of "Legal" expenses on the Statement of Operations. Services provided
pursuant to the Accounting Services and CCO Employment agreement are reported as
part of "Other" expenses on the Statement of Operations.
Van Kampen Investor Services Inc. (VKIS), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the six-months ended
March 31, 2006, the Fund recognized expenses of approximately $280,400,
representing transfer agency fees paid to VKIS. Transfer agency fees are
determined through negotiations with the Fund's Board of Trustees.
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 also
officers of Van Kampen.
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.
Amounts deferred are retained by the Fund and to the extent permitted by the
1940 Act, as amended, may be invested in the common shares of those funds
selected by the trustees. Investments in such funds of $247,903 are included in
"Other" assets on the Statement of Assets and Liabilities at March 31, 2006.
Appreciation/depreciation and distributions received from these investments are
recorded with an offsetting increase/decrease in the deferred compensation
obligations and do not affect the net asset value of the Fund. Benefits under
the retirement plan are payable upon retirement 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.
For the six-months ended March 31, 2006, Van Kampen, as Distributor for the
Fund, received commissions on sales of the Fund's Class A Shares of
approximately $90,600 and
36
VAN KAMPEN INSURED TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
CDSC on redeemed shares of approximately $29,800. Sales charges do not represent
expenses of the Fund.
3. CAPITAL TRANSACTIONS
For the six-months ended March 31, 2006 and year ended September 30, 2005,
transactions were as follows:
<Table>
<Caption>
FOR THE FOR THE
SIX MONTH ENDED YEAR ENDED
MARCH 31, 2006 SEPTEMBER 30, 2005
-------------------------- ---------------------------
SHARES VALUE SHARES VALUE
Sales:
Class A.......................... 1,795,795 $ 33,458,989 3,391,018 $ 64,402,543
Class B.......................... 82,220 1,530,745 254,051 4,816,384
Class C.......................... 128,101 2,386,270 298,578 5,659,465
Class I.......................... 4,499 84,471 108,413 2,052,256
---------- ------------ ---------- -------------
Total Sales........................ 2,010,615 $ 37,460,475 4,052,060 $ 76,930,648
========== ============ ========== =============
Dividend Reinvestment:
Class A.......................... 1,913,973 $ 35,422,323 2,239,715 $ 42,453,709
Class B.......................... 73,427 1,356,915 87,830 1,662,581
Class C.......................... 32,573 601,334 30,180 570,946
Class I.......................... 4,046 74,916 519 9,826
---------- ------------ ---------- -------------
Total Dividend Reinvestment........ 2,024,019 $ 37,455,488 2,358,244 $ 44,697,062
========== ============ ========== =============
Repurchases:
Class A.......................... (3,834,577) $(71,376,897) (6,212,732) $(117,927,260)
Class B.......................... (405,805) (7,552,569) (844,830) (16,033,908)
Class C.......................... (124,525) (2,313,297) (219,186) (4,154,336)
Class I.......................... (14,379) (267,331) (8,717) (165,075)
---------- ------------ ---------- -------------
Total Repurchases.................. (4,379,286) $(81,510,094) (7,285,465) $(138,280,579)
========== ============ ========== =============
</Table>
4. REDEMPTION FEES
The Fund assesses a 2% redemption fee on the proceeds of Fund shares that are
redeemed (either by sale or exchange) within seven days of purchase. The
redemption fee is paid directly to the Fund. For the six-months ended March 31,
2006, the Fund received redemption fees of approximately $800, which are
reported as part of "Cost of Shares Repurchased" in the Statement of Changes in
Net Assets.
5. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $269,124,160 and $293,663,148,
respectively.
6. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
37
VAN KAMPEN INSURED TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio and to manage the portfolio's effective yield, maturity and duration.
All of the Fund's portfolio holdings, including derivative instruments, are
marked to market each day with the change in value reflected in unrealized
appreciation/depreciation. Upon disposition, a realized gain or loss is
recognized accordingly, except when taking delivery of a security underlying a
futures contract. In this instance, the recognition of gain or loss is postponed
until the disposal of the security underlying the futures contract.
Summarized below are the specific types of derivative financial instruments
used by the Fund.
A. FUTURES CONTRACTS A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Fund generally invests in exchange traded futures contracts on U.S. Treasury
Notes and typically closes the contract prior to the delivery date. Upon
entering into futures contracts, the Fund maintains an amount of cash or liquid
securities with a value equal to a percentage of the contract amount with either
a futures commission merchant pursuant to rules and regulations promulgated
under the 1940 Act, as amended, or with its custodian in an account in the
broker's name. This amount is known as initial margin. During the period the
futures contract is open, payments are received from or made to the broker based
upon changes in the value of the contract (the variation margin). The risk of
loss associated with a futures contract is in excess of the variation margin
reflected on the Statement of Assets and Liabilities.
Transactions in futures contracts, for the six-months ended March 31, 2006,
were as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at September 30, 2005........................... 2,992
Futures Opened.............................................. 8,580
Futures Closed.............................................. (9,644)
------
Outstanding at March 31, 2006............................... 1,928
======
</Table>
B. INVERSE FLOATING RATE SECURITIES An Inverse Floating Rate security is one
where the coupon is inversely indexed to a short-term floating interest rate
multiplied by a specified factor. As the floating rate rises, the coupon is
reduced. Conversely as the floating rate declines, the coupon is increased. The
price of these securities may be more volatile than the price of a comparable
fixed rate security. These instruments are typically used by the Fund to enhance
the yield of the portfolio.
C. INTEREST RATE SWAPS The Fund may enter into interest rate swaps primarily to
preserve a return or spread on a particular investment or portion of its
portfolio, as a duration management technique or to protect against any increase
in the price of securities the Fund anticipates purchasing at a later date.
Interest rate swaps are contractual agreements to exchange periodic interest
payment streams calculated on a predetermined notional principal amount.
Interest rate swaps generally involve one party paying a fixed interest rate and
the other party paying a variable rate. The Fund will usually enter into swaps
on a net basis, i.e, the two payment streams are netted out in a cash settlement
on the payment date or dates
38
VAN KAMPEN INSURED TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
specified in the instrument, with the Fund receiving or paying, as the case may
be, only the net amount of the two payments. The Fund accrues the net amount
with respect to each swap on a daily basis. This net amount is recorded within
unrealized appreciation/depreciation on swap contracts. Upon cash settlement of
the periodic payments, the net amount is recorded as realized gain/loss on swap
contracts on the Statement of Operations. Risks may arise as a result of the
potential inability of the counterparties to meet the terms of their contracts.
If there is a default by the counterparty, the Fund will have contractual
remedies pursuant to the agreements related to the transaction.
7. DISTRIBUTION AND SERVICE PLANS
Shares of the Fund are distributed by Van Kampen Funds Inc. (the "Distributor"),
an affiliate of the Adviser. The Fund has adopted a distribution plan pursuant
to Rule 12b-1 under the 1940 Act, as amended, and a service plan (collectively,
the "Plans") for Class A Shares, Class B Shares and Class C Shares to compensate
the Distributor for the distribution, shareholder servicing and maintenance of
shareholder accounts for these shares. Under the Plans, the Fund will incur
annual fees of up to .25% of Class A average daily net assets and up to 1.00%
each of Class B and Class C average daily net assets. These fees are accrued
daily and paid to the Distributor monthly.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed receivable") was approximately $1,232,900 and $67,400
for Class B and Class C Shares, respectively. These amounts may be recovered
from future payments under the distribution plan or CDSC. To the extent the
unreimbursed receivable has been fully recovered, the distribution fee is
reduced.
8. INDEMNIFICATIONS
The Fund enters into contracts that contain a variety of indemnifications. The
Fund's maximum exposure under these arrangements is unknown. However, the Fund
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
9. LEGAL MATTERS
The Adviser, certain affiliates of the Adviser, and certain investment companies
advised by the Adviser or its affiliates, including the Fund, are named as
defendants in a number of similar class action complaints which were
consolidated. The consolidated action also names as defendants certain
individual Trustees and Directors of certain investment companies advised by
affiliates of the Adviser; the complaint does not, however, name the individual
Trustees of any Van Kampen funds. The consolidated amended complaint generally
alleges that defendants violated their statutory disclosure obligations and
fiduciary duties by failing properly to disclose (i) that the Adviser and
certain affiliates of the Adviser allegedly offered economic incentives to
brokers and others to steer investors to the funds advised by the Adviser or its
affiliates rather than funds managed by other companies, and (ii) that the funds
advised by the Adviser or its affiliates, including the Fund, allegedly paid
excessive commissions to brokers in return for their alleged efforts to steer
investors to these funds. The complaint seeks, among other things, unspecified
compensatory damages, rescissionary damages, fees and costs. Plaintiffs filed a
Motion for Leave to file a Supplemental Pleading that would, among other things,
expand the allegations and alleged class. The defendants moved to dismiss this
action, which motion was granted in its entirety. Additionally,
39
VAN KAMPEN INSURED TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
plaintiffs' Motion for Leave to file a Supplemental Pleading was denied. This
matter is now concluded.
The Adviser and certain affiliates of the Adviser are also named as
defendants in a derivative suit which additionally names as defendants certain
individual Trustees of certain Van Kampen funds; the named investment companies,
including the Fund, are listed as nominal defendants. The complaint alleges that
defendants caused the Van Kampen funds to pay economic incentives to a
proprietary sales force to promote the sale of proprietary mutual funds. The
complaint also alleges that the Van Kampen funds paid excessive commissions to
Morgan Stanley and its affiliates in connection with the sales of the funds. The
complaint seeks, among other things, the removal of the current Trustees of the
funds, rescission of the management contracts for the funds, disgorgement of
profits by Morgan Stanley and its affiliates and monetary damages. This
complaint has been coordinated with the consolidated complaint described in the
preceding paragraph. Plaintiff sought leave to file a second amended derivative
compliant that alleges that the Adviser permitted or recklessly disregarded
market timing and late trading in its proprietary mutual funds in order to
increase assets under management and fees. However, pursuant to an agreement
between the parties, the plaintiff's proposed second amended derivative
complaint was withdrawn and the allegations regarding market timing and late
trading asserted therein were filed in a separate complaint and coordinated with
other cases related to market timing that have been centralized in a federal
court. Additionally, plaintiff's initial complaint regarding allegations of
economic incentives was stayed pending certain procedural developments.
The defendants have moved to dismiss each of these actions and otherwise
intend to defend them vigorously. Defendants' motion to dismiss in the market
timing litigation was granted in part and denied in part, and defendants filed a
motion for reconsideration of the Court's decision to uphold certain of
plaintiff's claims. Additionally, plaintiff and the named Trustees entered into
a tolling agreement. The tolling agreement dismisses the Trustees from the
action without prejudice in exchange for tolling all claims against the
Trustees.
While the defendants believe that they have meritorious defenses, the
ultimate outcome of these matters is not presently determinable, and no
provision has been made in the Fund's financial statements for the effect, if
any, of these matters.
40
VAN KAMPEN INSURED TAX FREE INCOME FUND
BOARD OF TRUSTEES, OFFICERS AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
JACK E. NELSON
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
OFFICERS
RONALD E. ROBISON
President and Principal Executive Officer
J. DAVID GERMANY
Vice President
DENNIS SHEA
Vice President
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
PHILLIP G. GOFF
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1221 Avenue of the Americas
New York, New York 10020
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 947
Jersey City, New Jersey 07303-0947
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
One Lincoln Street
Boston, Massachusetts 02111
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, Illinois 60606
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
41
Van Kampen Insured Tax Free Income Fund
An Important Notice Concerning Our U.S. Privacy Policy
We are required by federal law to provide you with a copy of our Privacy
Policy annually.
The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors
Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van
Kampen Exchange Corp., as well as current and former individual investors in
Van Kampen mutual funds, unit investment trusts, and related companies.
This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised
by us. This Policy is, however, applicable to individuals who select us to
be a custodian of securities or assets in individual retirement accounts,
401(k) accounts, 529 Educational Savings Accounts, accounts subject to the
Uniform Gifts to Minors Act, or similar accounts.
Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
WE RESPECT YOUR PRIVACY
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we
help you achieve your financial objectives. This Policy describes what
non-public personal information we collect about you, why we collect it, and
when we may share it with others.
We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies
you or your accounts as "personal information."
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
To serve you better and manage our business, it is important that we collect
and maintain accurate information about you. We may obtain this information
from applications and other forms you submit to us, from your dealings with
us, from consumer reporting agencies, from our Web sites and from third
parties and other sources.
(continued on next page)
Van Kampen Insured Tax Free Income Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
For example:
-- We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.
-- We may obtain information about account balances, your use of
account(s) and the types of products and services you prefer to receive
from us through your dealings and transactions with us and other
sources.
-- We may obtain information about your creditworthiness and credit
history from consumer reporting agencies.
-- We may collect background information from and through third-party
vendors to verify representations you have made and to comply with
various regulatory requirements.
-- If you interact with us through our public and private Web sites, we
may collect information that you provide directly through online
communications (such as an e-mail address). We may also collect
information about your Internet service provider, your domain name,
your computer's operating system and Web browser, your use of our Web
sites and your product and service preferences, through the use of
"cookies." "Cookies" recognize your computer each time you return to
one of our sites, and help to improve our sites' content and
personalize your experience on our sites by, for example, suggesting
offerings that may interest you. Please consult the Terms of Use of
these sites for more details on our use of cookies.
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
To provide you with the products and services you request, to serve you
better and to manage our business, we may disclose personal information we
collect about you to our affiliated companies and to non-affiliated third
parties as required or permitted by law.
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise
required or permitted by law.
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except
to enable them to provide services on our behalf, to perform joint marketing
agreements with
(continued on back)
Van Kampen Insured Tax Free Income Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
other financial institutions, or as otherwise required or permitted by law.
For example, some instances where we may disclose information about you to
non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against
fraud, for institutional risk control, to respond to judicial process or to
perform services on our behalf. When we share personal information with
these companies, they are required to limit their use of personal
information to the particular purpose for which it was shared and they are
not allowed to share personal information with others except to fulfill that
limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL
INFORMATION WE COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties
that provide support or marketing services on our behalf may also receive
personal information, and we require them to adhere to confidentiality
standards with respect to such information.
Van Kampen Funds Inc.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2006 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC.
32, 332, 532
TFIN SAR 5/06
(VAN KAMPEN INVESTMENTS SHINE LOGO) RA06-00369P-Y03/06
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
Strategic Municipal Income Fund performed during the semiannual period.
The portfolio management team will provide an overview of the market
conditions and discuss some of the factors that affected investment
performance during the reporting period. In addition, this report
includes the fund's financial statements and a list of fund investments
as of March 31, 2006.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS FOR THE
FUND BEING OFFERED. THE PROSPECTUS CONTAINS INFORMATION ABOUT THE FUND,
INCLUDING THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES. PLEASE
READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT A MUTUAL FUND WILL ACHIEVE ITS
INVESTMENT OBJECTIVE. FUNDS ARE SUBJECT TO MARKET RISK, WHICH IS THE
POSSIBILITY THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL
DECLINE AND THAT THE VALUE OF FUND SHARES MAY THEREFORE BE LESS THAN WHAT
YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS
FUND.
INCOME MAY SUBJECT CERTAIN INDIVIDUALS TO THE FEDERAL ALTERNATIVE MINIMUM
TAX (AMT).
<Table>
<Caption>
---------------------------------------------------------------------------------------
NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
---------------------------------------------------------------------------------------
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
---------------------------------------------------------------------------------------
</Table>
Performance Summary as of 3/31/06
<Table>
<Caption>
A SHARES B SHARES C SHARES
6/28/85 4/30/93 8/13/93
- ---------------------------------------------------------------------------------------------
W/MAX W/MAX W/MAX
4.75% 4.00% 1.00%
AVERAGE ANNUAL W/O SALES SALES W/O SALES SALES W/O SALES SALES
TOTAL RETURNS CHARGES CHARGES CHARGES CHARGES CHARGES CHARGES
Since Inception 6.60% 6.35% 4.95% 4.95% 4.56% 4.56%
10-year 5.07 4.56 4.50 4.50 4.34 4.34
5-year 5.87 4.84 5.08 4.83 5.22 5.22
1-year 7.14 2.09 6.36 2.36 6.38 5.38
6-month 3.40 -1.52 2.94 -1.06 2.99 1.99
- ---------------------------------------------------------------------------------------------
SEC Yield 4.70% 4.17% 4.13%
</Table>
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS AND
PRINCIPAL VALUE WILL FLUCTUATE AND FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
Average annual total return with sales charges includes payment of the maximum
sales charge of 4.75 percent for Class A shares, a contingent deferred sales
charge of 4.00 percent for Class B shares (in year one and declining to zero
after year six), a contingent deferred sales charge of 1.00 percent for Class C
shares in year one and combined Rule 12b-1 fees and service fees of up to 0.25
percent for Class A shares and up to 1.00 percent for Class B and C shares. The
since inception and 10-year returns for Class B shares reflect the conversion of
Class B shares into Class A shares seven years after purchase. The since
inception returns for Class C shares reflect the conversion of Class C shares
into Class A shares ten years after purchase. Figures shown above assume
reinvestment of all dividends and capital gains. SEC yield is a calculation for
determining the amount of portfolio income, excluding non-income items as
prescribed by the SEC. Yields are subject to change.
The Lehman Brothers Municipal Bond Index is generally representative of
investment-grade, tax-exempt bonds. The index does not include any expenses,
fees or sales charges, which would lower performance. The index is unmanaged and
should not be considered an investment. It is not possible to invest directly in
an index. Index data source: Lipper Inc.
1
Fund Report
FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 2006
MARKET CONDITIONS
Despite the shadow of rising oil prices, the devastation of the Gulf Coast
hurricanes, and emerging weakness in the housing market, the economy continued
to grow during the six-month period ended March 31, 2006. This expansion was
more modest in the fourth quarter of 2005, but gained momentum in the first
quarter of 2006.
Against the backdrop of growth and good employment data, the Federal Open Market
Committee (the "Fed") continued raising the federal funds target rate during the
period, implementing four additional increases of 25 basis points each. The
final hike of the period represented the fifteenth consecutive increase--the
longest stretch of increases in 25 years. As the period came to a close, market
observers speculated about the Fed's near-term intentions. The Fed noted that
although longer-term inflation appeared contained, commodity prices could
amplify inflationary pressures.
Returns across the municipal bond market varied significantly. As investors
sought income opportunities, lower rated bonds outpaced investment-grade bonds
by a wide margin. Long-term bonds earned the best returns, broadly speaking,
while bonds in the three-to-seven year range posted the most muted gains.
Municipal bond issuance was robust during the final months of 2005. (In fact,
2005 marked a record high for municipal bond volume.) The tide changed in the
first quarter of 2006, however. As rising rates discouraged issuers from
refinancing debt, national municipal issuance dropped by approximately 30
percent versus the same period a year ago. While supply ebbed, the market's
appetite for municipal bonds remained strong, with particularly heavy demand
from high yield municipal bond funds.
2
PERFORMANCE ANALYSIS
The fund returned 3.40 percent for the six months ended March 31, 2006 (Class A
shares, unadjusted for sales charges). In comparison, the fund's benchmark, the
Lehman Brothers Municipal Bond Index, returned 0.98 percent for the period.
TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 2006
<Table>
<Caption>
- -------------------------------------------------------------------
LEHMAN BROTHERS
CLASS A CLASS B CLASS C MUNICIPAL BOND INDEX
3.40% 2.94% 2.99% 0.98%
- -------------------------------------------------------------------
</Table>
The performance for the three share classes varies because each has different
expenses. The fund's total return figures assume the reinvestment of all
distributions, but do not reflect the deduction of any applicable sales charges.
Such costs would lower performance. Past performance is no guarantee of future
results. See Performance Summary for standardized performance information and
index definition.
Throughout the period, our rigorous security-specific fundamental research drove
the fund's portfolio construction process. We also evaluated broader market
conditions, including issuance and supply/demand trends in order to manage the
fund's risk/reward characteristics.
The fund's allocation to high yield bonds was an especially significant driver
of outperformance during the period relative to the Lehman benchmark. As credit
spreads narrowed and investors sought yield in an environment of low rates, the
fund's high yield holdings were well positioned to appreciate. (Credit spreads
measure the added compensation investors require to assume risk. When credit
spreads tighten, bonds with lower credit ratings generally outperform higher
quality bonds.) Decreasing high yield bond issuance in the first quarter of
2006, coupled with steep demand, served as an additional catalyst to drive up
the fund's high-yield holdings.
Exposure to special facility airline bonds proved especially advantageous.
(These bonds are typically secured by lease payments from airlines, while
airport authorities have ownership rights to the facilities.) Increased air
travel has not been met by a corresponding increase in capacity, creating a
favorable supply-demand scenario for the airline facilities. Moreover, spreads
tightened significantly in this sector, particularly during the first quarter of
2006.
Although spreads did not narrow as significantly in the health care and special
tax district sectors, the fund's holdings in those areas also contributed to
performance. Tobacco master settlement revenue bonds also buoyed the fund's
income as well. The litigation environment for tobacco companies currently
appears to be generally favorable, and the tobacco industry has continued to
prosper.
3
The fund also held inverse floating rate securities. The yields of inverse
floaters move in the opposite direction as interest rates, and served the fund
well when long-term bonds rallied over the course of the period.
While the fund outperformed the benchmark, not all areas proved equally
advantageous. The fund's holdings in higher education and affordable senior
housing tempered the fund's overall pace; and a handful of issues declined due
to security-specific reasons.
The fund has the flexibility to invest in bonds across the credit quality
spectrum, including in non-rated securities. We seek to generate a compelling
total return and yield, with close attention to risk management. As of the close
of the reporting period, 18 percent of the fund's bonds were rated A- or higher.
82 percent of the fund's bonds were rated between BBB+ and B- or were non-rated
bonds that we believed to be of comparable credit quality. The fund was well
diversified across the municipal bond market. Hospitals, life care facilities
and special tax districts represented the largest sector weightings as of March
31, 2006.
We closely manage the growth of the fund's asset base as an important part of
our commitment to the fund's existing shareholders. Based on our analysis of the
supply and demand trends in the market, we believed the prudent course was to
keep the fund closed to new investors during the period.
There is no guarantee that any sectors mentioned will continue to perform as
discussed herein or that securities in such sectors will be held by the fund in
the future.
4
<Table>
<Caption>
RATINGS ALLOCATIONS AS OF 3/31/06
AAA/Aaa 7.6%
AA/Aa 4.3
A/A 6.2
BBB/Baa 11.9
BB/Ba 2.7
B/B 8.1
Non-Rated 59.2
<Caption>
TOP FIVE SECTORS AS OF 3/31/06
Hospital 18.6%
Life Care 16.3
Special Tax Districts 13.1
Air Carriers 10.2
Tax Allocation/Increment 4.6
<Caption>
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 3/31/06
Florida 10.0%
California 9.3
Texas 9.3
New York 8.1
Illinois 7.1
New Jersey 5.7
Pennsylvania 4.5
Missouri 4.0
Ohio 3.4
Oklahoma 3.4
Minnesota 3.1
Arizona 2.9
Colorado 2.7
Massachusetts 2.6
Michigan 2.5
Virginia 1.8
Tennessee 1.6
Georgia 1.4
Maryland 1.4
South Carolina 1.3
Puerto Rico 1.3
Wisconsin 1.1
Iowa 0.9
Indiana 0.9
Louisiana 0.8
Oregon 0.8
Alabama 0.8
New Hampshire 0.7
Washington 0.7
Nevada 0.5
South Dakota 0.5
New Mexico 0.5
Hawaii 0.5
Connecticut 0.5
Kansas 0.4
</Table>
<Table>
(continued on next page)
</Table>
5
<Table>
<Caption>
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 3/31/06
(continued from previous page)
Rhode Island 0.4
Wyoming 0.4
Alaska 0.3
North Carolina 0.3
U.S. Virgin Islands 0.2
Utah 0.2
Vermont 0.2
Idaho 0.2
Delaware 0.2
North Dakota 0.2
District of Columbia 0.1
Mississippi 0.0*
-----
Total Investments 99.7%
Other Assets in Excess of Liabilities 0.3
-----
Total Net Assets 100.0%
</Table>
* Amount is less than 0.1%
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the sectors shown above. Ratings allocations are as a percentage
of long-term investments. Sectors are as a percentage of total investments.
Summary of investments by state classification is as a percentage of total net
assets. Securities are classified by sectors that represent broad groupings of
related industries. Van Kampen is a wholly owned subsidiary of a global
securities firm which is engaged in a wide range of financial services
including, for example, securities trading and brokerage activities, investment
banking, research and analysis, financing and financial advisory services.
Rating allocations based upon ratings as issued by Standard and Poor's and
Moody's, respectively.
6
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
Each Van Kampen fund provides a complete schedule of portfolio holdings
in its semiannual and annual reports within 60 days of the end of the
fund's second and fourth fiscal quarters by filing the schedule
electronically with the Securities and Exchange Commission (SEC). The
semiannual reports are filed on Form N-CSRS and the annual reports are
filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
reports to fund shareholders, and makes these reports available on its
public Web site, www.vankampen.com. In addition to the semiannual and
annual reports that Van Kampen delivers to shareholders and makes
available through the Van Kampen public Web site, each fund files a
complete schedule of portfolio holdings with the SEC for the fund's first
and third fiscal quarters on Form N-Q. Van Kampen does not deliver the
reports for the first and third fiscal quarters to shareholders, nor are
the reports posted to the Van Kampen public Web site. You may, however,
obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS
filings) by accessing the SEC's Web site, http://www.sec.gov. You may
also review and copy them at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the SEC's Public
Reference Room may be obtained by calling the SEC at (800) SEC-0330. You
can also request copies of these materials, upon payment of a duplicating
fee, by electronic request at the SEC's e-mail address
(publicinfo@sec.gov) or by writing the Public Reference section of the
SEC, Washington, DC 20549-0102.
You may obtain copies of a fund's fiscal quarter filings by contacting
Van Kampen Client Relations at (800) 847-2424.
7
HOUSEHOLDING NOTICE
To reduce fund expenses, the fund attempts to eliminate duplicate
mailings to the same address. The fund delivers a single copy of certain
shareholder documents to investors who share an address, even if the
accounts are registered under different names. The fund's prospectuses
and shareholder reports (including annual privacy notices) will be
delivered to you in this manner indefinitely unless you instruct us
otherwise. You can request multiple copies of these documents by either
calling (800) 341-2911 or writing to Van Kampen Investor Services at 1
Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, IL 60181. Once Investor
Services has received your instructions, we will begin sending individual
copies for each account within 30 days.
PROXY VOTING POLICY AND PROCEDURES AND PROXY VOTING RECORD
You may obtain a copy of the fund's Proxy Voting Policy and Procedures
without charge, upon request, by calling toll free (800) 847-2424 or by
visiting our Web site at www.vankampen.com. It is also available on the
Securities and Exchange Commission's Web site at http://www.sec.gov.
You may obtain information regarding how the fund voted proxies relating
to portfolio securities during the most recent twelve-month period ended
June 30 without charge by visiting our Web site at www.vankampen.com.
This information is also available on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
8
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments of Class A Shares
and contingent deferred sales charge on redemptions of Class B and Class C
Shares; and (2) ongoing costs, including management fees; distribution and
service (12b-1) fees; and other Fund expenses. This example is intended to help
you understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period 10/01/05 - 03/31/06.
ACTUAL EXPENSE
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing cost of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or contingent deferred sales charges. Therefore, the second line
of the table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your cost would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
---------------------------------------------------
10/01/05 03/31/06 10/01/05-03/31/06
Class A
Actual................................... $1,000.00 $1,033.95 $4.21
Hypothetical............................. 1,000.00 1,020.83 4.18
(5% annual return before expenses)
Class B
Actual................................... 1,000.00 1,029.36 7.99
Hypothetical............................. 1,000.00 1,017.03 7.95
(5% annual return before expenses)
Class C
Actual................................... 1,000.00 1,029.86 8.00
Hypothetical............................. 1,000.00 1,017.03 7.95
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 0.83%, 1.58%,
and 1.58% for Class A, B, and C Shares, respectively, multiplied by the
average account value over the period, multiplied by 182/365 (to reflect the
one-half year period).
Assumes all dividends and distributions were reinvested.
9
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED)
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
MUNICIPAL BONDS 99.7%
ALABAMA 0.8%
$ 1,000 Alabama Drinking Wtr Fin Auth Revolving Fd
Ln Ser C (AMBAC Insd)...................... 5.750% 08/15/18 $ 1,082,930
2,000 Alabama Drinking Wtr Fin Auth Revolving Fd
Ln Ser C (AMBAC Insd)...................... 5.375 08/15/23 2,122,820
2,000 Alabama Wtr Pollutn Ctl Auth
(AMBAC Insd)............................... 5.750 08/15/18 2,156,660
1,000 Butler, AL Indl Dev Brd Solid GA Pacific
Corp Proj Rfdg (AMT)....................... 5.750 09/01/28 1,000,930
1,500 Colbert Cnty Northwest Auth Hlthcare Fac... 5.750 06/01/27 1,532,685
250 Huntsville Redstone Vlg, AL Spl Care Fac
Fin Auth Ser A............................. 8.250 12/01/32 237,737
2,500 Huntsville/Carlton Cove, AL Carlton Cove
Inc Proj Ser A............................. 7.000 11/15/17 1,261,400
3 Mobile, AL Indl Dev Brd Solid Waste Disp
Rev Mobile Energy Svc Co Proj Rfdg......... 6.950 01/01/20 294
1,395 Valley, AL Spl Care Fac Fin Auth Rev Lanier
Mem Hosp Ser A............................. 5.600 11/01/16 1,424,197
1,750 Valley, AL Spl Care Fac Fin Auth Rev Lanier
Mem Hosp Ser A............................. 5.650 11/01/22 1,781,815
--------------
12,601,468
--------------
ALASKA 0.3%
1,405 Alaska Indl Dev & Expt Auth Williams Lynxs
AK Cargoport (AMT) (Acquired 05/17/01, Cost
$1,405,000) (a)............................ 7.800 05/01/14 1,368,315
3,890 Juneau, AK City & Borough Rev Saint Anns
Care Ctr Proj.............................. 6.875 12/01/25 3,825,776
--------------
5,194,091
--------------
ARIZONA 2.9%
2,000 Arizona Hlth Fac Auth Hosp Sys Rev John C
Lincoln Hlth Network
(Prerefunded @ 12/01/12)................... 6.375 12/01/37 2,296,860
1,000 Arizona Hlth Fac Auth Rev Terraces Proj
Ser A...................................... 7.500 11/15/23 1,123,970
1,250 Arizona Hlth Fac Auth Rev Terraces Proj
Ser A...................................... 7.750 11/15/33 1,408,225
5,770 Cochise Cnty, AZ Indl Dev Sierra Vista
Cmnty Hosp Ser A Rfdg...................... 6.750 12/01/26 5,920,078
990 Flagstaff, AZ Indl Dev Auth Rev Sr Living
Cmnty Northn AZ Proj....................... 7.500 03/01/35 1,076,447
500 Flagstaff, AZ Indl Dev Auth Rev Sr Living
Cmnty Northn AZ Proj....................... 6.300 09/01/38 501,950
7,000 Glendale, AZ Indl Dev Auth Rfdg............ 5.000 12/01/35 7,039,550
4,000 Maricopa Cnty, AZ Hlth Fac Rev Catholic
Hlthcare West Ser A........................ 5.500 07/01/26 4,184,400
</Table>
10 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
ARIZONA (CONTINUED)
$ 4,000 Maricopa Cnty, AZ Indl Dev Auth
Multi-Family Hsg Rev Natl Hlth Fac II Proj
Ser B (Acquired 01/15/98, Cost $4,000,000)
(a) (b).................................... 6.625% 07/01/33 $ 3,102,560
2,290 Maricopa Cnty, AZ Indl Dev Christian Care
Mesa Inc Proj Ser A
(Prerefunded @ 04/01/07)................... 7.750 04/01/15 2,418,904
2,000 Maricopa Cnty, AZ Indl Dev Christian Care
Mesa Inc Proj Ser A
(Prerefunded @ 04/01/07)................... 7.875 04/01/27 2,114,600
1,500 Peoria, AZ Indl Dev Auth Rev Sierra Winds
Life Ser A Rfdg............................ 6.375 08/15/29 1,553,340
1,865 Pima Cnty, AZ Indl Dev Auth Ed Rev Fac
Milestones Charter Sch Proj................ 6.750 11/01/33 1,888,051
1,590 Pima Cnty, AZ Indl Dev Auth Ed Rev Fac
P.L.C Charter Sch Proj (c)................. 6.500 04/01/26 1,590,000
2,805 Pima Cnty, AZ Indl Dev Auth Ed Rev Fac
P.L.C Charter Sch Proj (c)................. 6.750 04/01/36 2,805,000
4,225 Pima Cnty, AZ Indl Dev Auth Ed Rev Fac
Premier & Air Co........................... 7.000 09/01/35 4,228,971
800 Pima Cnty, AZ Indl Dev Auth Fac Skyline
Tech High Sch Proj......................... 7.500 02/01/34 807,344
1,000 Pima Cnty, AZ Indl Dev Auth Rev La Posada
at Park Ctr Ser A.......................... 7.000 05/15/27 1,034,350
815 Red Hawk Canyon Cmnty Fac Dist No 2 AZ Dist
Assmt Rev.................................. 6.500 12/01/12 825,440
2,095 Tucson, AZ Multi-Family Rev Hsg Catalina
Asstd Living Ser A (AMT)................... 6.500 07/01/31 1,798,118
--------------
47,718,158
--------------
CALIFORNIA 9.3%
1,000 ABAG Fin Auth Nonprofit Corp CA Amern
Baptist Homes Ser A Rfdg................... 5.850 10/01/27 1,002,600
1,000 Beaumont, CA Fin Auth Loc Agy Ser A........ 5.600 09/01/25 1,057,290
2,000 Beaumont, CA Fin Auth Loc Agy Ser A........ 5.650 09/01/30 2,109,640
2,000 Beaumont, CA Fin Auth Loc Agy Ser A........ 5.700 09/01/35 2,087,120
1,000 Beaumont, CA Fin Auth Loc Agy Ser D........ 5.800 09/01/35 1,057,220
1,000 Blythe, CA Redev Agy Proj.................. 5.750 05/01/34 1,047,850
1,000 Brentwood, CA Infrastructure Auth Rev...... 5.875 09/02/34 1,030,430
15,000 California Hlth Fac Fin Auth Rev Cedars
Sinai Med Ctr Rfdg......................... 5.000 11/15/34 15,222,450
3,000 California Pollutn Ctl Fin Auth Solid Waste
Disp Rev Solid Waste Mgmt Inc Proj
Ser A 2 (AMT).............................. 5.400 04/01/25 3,126,630
6,150 California St Drivers Ser 1267 (Inverse
Fltg) (Acquired 03/14/06, Cost $7,554,537)
(a) (d).................................... 10.577 02/01/12 7,470,651
5,000 California St Rites Pa 1366 (Inverse Fltg)
(Acquired 03/23/06, Cost $6,244,600) (a)
(d)........................................ 8.952 11/01/26 6,171,300
</Table>
See Notes to Financial Statements 11
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$ 1,000 California Statewide Cmnty Dev Auth Elder
Care Alliance Ser A........................ 8.250% 11/15/32 $ 1,063,150
940 California Statewide Cmnty Dev Auth
Multi-Family Rev Hsg Heritage Pointe Sr Apt
Ser QQ (AMT) (Acquired 02/19/02,
Cost $937,650), (a)........................ 7.500 10/01/26 976,904
1,675 California Statewide Cmnty Dev Auth Rev
Daughters of Charity Hlth Ser A............ 5.250 07/01/35 1,717,428
1,250 California Statewide Cmnty Dev Auth Rev
Daughters of Charity Hlth Ser A............ 5.000 07/01/39 1,244,675
1,000 California Statewide Cmnty Dev Auth San
Francisco Art Institute (Acquired 07/05/02,
Cost $1,000,000) (a)....................... 7.375 04/01/32 1,007,190
1,000 Chino, CA Cmnty Fac Dist No 03 Impt Area
1.......................................... 5.700 09/01/29 1,045,540
5,000 Contra Costa, CA Home Mtg Fin Auth Home Mtg
Rev (Escrowed to Maturity) (MBIA Insd)..... * 09/01/17 2,417,400
1,500 Corona-Norco, CA Univ Sch Dist Pub Fin Auth
Spl Tax Rev Ser A.......................... 5.800 09/01/35 1,548,285
2,300 Foothill/Eastern Tran Corridor Agy CA Toll
Rd Rev (MBIA Insd)......................... * 01/15/18 1,275,074
15,000 Golden St Tob Securitization Corp CA Tob
Settlement Rev Rols RR II R 448CE (Inverse
Fltg) (Acquired 11/10/05, Cost $14,652,000)
(a) (d).................................... 6.598 06/01/45 15,516,750
800 Golden St Tob Securitization Corp CA Tob
Settlement Ser 2003 A-1.................... 6.750 06/01/39 896,936
1,750 Huntington Beach, CA Cmnty No 2003
1 Huntington Ctr........................... 5.800 09/01/23 1,807,522
885 Indio, CA Pub Fin Auth Rev Tax Increment
(Prerefunded @ 08/15/06)................... 6.500 08/15/27 908,364
2,000 Indio, CA Redev Agy Tax Alloc Sub Merged
Proj Area Ser B............................ 6.375 08/15/33 2,165,480
500 Indio, CA Redev Agy Tax Alloc Sub Merged
Proj Area Ser B............................ 6.500 08/15/34 545,935
1,000 Jurupa, CA Cmnty Svc Dist Spl Cmnty Fac
Dist No 4 Ser A............................ 5.700 09/01/34 1,031,980
1,825 Lake Elsinore, CA Pub Fin Auth Loc Agy Rev
Ser F...................................... 7.100 09/01/20 1,931,708
2,500 Lake Elsinore, CA Spl Tax Cmnty Fac Dist 2
Area AA.................................... 5.450 09/01/36 2,549,725
1,000 Lee Lake Wtr Dist CA Cmnty Fac Dist No 1
Spl Tax Sycamore Creek..................... 6.000 09/01/33 1,067,750
1,000 Lincoln, CA Spl Tax Cmnty Fac Dist No 2003
Ser 1...................................... 6.000 09/01/34 1,067,750
1,750 Los Angeles, CA Regl Arpt Impt Corp Lease
Rev Fac Sublease LA Intl Ser A-1 Rfdg...... 7.125 12/01/24 1,840,317
</Table>
12 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$17,440 Los Angeles, CA Regl Arpt Impt Corp Lease
Rev Ser C (AMT)............................ 7.500% 12/01/24 $ 18,615,282
1,410 Millbrae, CA Residential Fac Rev Magnolia
of Millbrae Proj Ser A (AMT)............... 7.375 09/01/27 1,470,263
1,000 Murrieta, CA Cmnty Fac Dist No 2 the Oaks
Impt Area A................................ 5.900 09/01/27 1,060,810
1,000 Murrieta, CA Cmnty Fac Dist No 2 the Oaks
Impt Area A................................ 6.000 09/01/34 1,061,970
1,000 Murrieta, CA Cmnty Fac Dist No 2 the Oaks
Impt Area B................................ 6.000 09/01/27 1,067,610
3,000 Northstar Cmnty Svc Dist CA Spl Tax Cmnty
Fac Dist No 1.............................. 5.450 09/01/28 3,056,040
1,000 Palmdale, CA Spl Tax Cmnty Fac 03-1
Anaverde A................................. 5.350 09/01/30 1,017,940
1,100 Palmdale, CA Spl Tax Cmnty Fac 03-1
Anaverde A................................. 5.400 09/01/35 1,121,461
1,000 Perris, CA Cmnty Fac Dist Spl Tax No 01-2
Ser A...................................... 6.375 09/01/32 1,087,190
2,000 Rancho Cordova Cmnty Fac Dist CA Spl Tax No
2003 1 Sunridge Anatolia................... 5.500 09/01/37 2,034,440
2,000 Riverside, CA Univ Sch Dist Tax Cmnty Fac
Dist 15 Impt Area 1........................ 5.550 09/01/30 2,062,480
6,000 San Jose, CA Multi-Family Hsg Rev Helzer
Courts Apt Proj Ser A (AMT)................ 6.400 12/01/41 5,823,420
7,100 San Jose, CA Redev Agy Tax Alloc Drivers
Ser 1085 (Inverse Fltg) (Acquired 09/12/05,
Cost $7,967,620) (MBIA Insd) (a) (d)....... 6.514 08/01/13 7,646,416
2,000 San Marcos, CA Pub Fac Auth Spl Tax Rev Ser
A.......................................... 5.650 09/01/36 2,065,760
5,000 Tob Securitization Auth Northrn CA Tob
Settlement Rev Asset Bkd Bds Ser A1........ 5.500 06/01/45 5,051,600
1,000 Upland, CA Cmnty Fac Dist 2003 San Antonio
Impt 1 A................................... 5.900 09/01/24 1,058,010
1,500 Upland, CA Cmnty Fac Dist 2003 San Antonio
Impt 1 A................................... 6.000 09/01/34 1,583,850
1,965 Vallejo, CA Ctf Partn Touro Univ........... 7.250 06/01/16 2,110,548
950 Vallejo, CA Pub Fin Auth Loc Hiddenbrooke
Impt Dist Ser A............................ 5.800 09/01/31 972,173
1,000 Woodland, CA Spl Tax Cmnty Fac Dist 1
Spring Lake................................ 6.250 09/01/34 1,090,580
1,800 Yuba City, CA Redev Agy Tax Proj Ser A..... 6.000 09/01/31 1,914,084
3,000 Yuba City, CA Redev Agy Tax Proj Ser A..... 6.000 09/01/39 3,150,300
--------------
151,131,271
--------------
COLORADO 2.7%
1,060 Beacon Pt Metro Dist Co Ser A.............. 6.125 12/01/25 1,108,665
1,005 Beacon Pt Metro Dist Co Ser A.............. 6.250 12/01/35 1,050,486
</Table>
See Notes to Financial Statements 13
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
COLORADO (CONTINUED)
$ 1,000 Bromley Pk Metro Dist CO No 2 Ser B........ 8.050% 12/01/32 $ 1,078,170
1,000 Castle Oaks Metro Dist CO Ltd Tax.......... 6.000 12/01/25 1,049,630
1,500 Castle Oaks Metro Dist CO Ltd Tax.......... 6.125 12/01/35 1,579,200
795 Colorado Ed & Cultural Fac Charter Sch
Frontier Academy........................... 7.250 06/01/20 822,117
2,000 Colorado Hlth Fac Auth Rev Baptist Home
Assn Ser A................................. 6.375 08/15/24 1,909,380
2,000 Colorado Hlth Fac Auth Rev Baptist Home
Assn Ser B (Variable Rate Coupon).......... 7.250 08/15/27 1,991,560
1,060 Colorado Hlth Fac Auth Rev Christian Living
Campus Proj................................ 7.050 01/01/19 1,085,567
3,000 Colorado Hlth Fac Auth Rev Covenant
Retirement Cmnty Inc....................... 5.000 12/01/35 2,947,410
2,000 Colorado Intl Ctr Metro Dist No 3.......... 6.500 12/01/35 2,042,820
3,425 Denver, CO Hlth & Hosp Auth Ser A Rfdg..... 6.250 12/01/33 3,754,382
2,500 Elk Vly, CO Pub Impt Fee Ser A............. 7.300 09/01/22 2,681,350
1,150 High Plains Metro Dist CO Ser A............ 6.125 12/01/25 1,210,720
2,250 High Plains Metro Dist CO Ser A............ 6.250 12/01/35 2,377,440
615 Lafayette, CO Indl Dev Rev Rocky Mtn Instr
Proj Ser A (d)............................. 6.750 10/01/14 510,924
1,920 Lafayette, CO Indl Dev Rev Rocky Mtn Instr
Proj Ser A (AMT)........................... 7.000 10/01/18 1,556,275
4,700 Lake Creek Affordable Hsg Corp Hsg Proj Ser
A Rfdg..................................... 6.250 12/01/23 4,843,632
500 Neu Towne, CO Metro Dist................... 7.250 12/01/34 548,605
3,500 Northwest CO Metro Dist No 3 Ltd Tax....... 6.125 12/01/25 3,610,355
1,000 Serenity Ridge, CO Metro Dist No 2......... 7.500 12/01/34 1,114,050
1,672 Skyland Metro Dist CO Gunnison Cnty Rfdg... 6.750 12/01/22 1,725,504
1,000 Southlands Metro Dist No 1 CO.............. 7.000 12/01/24 1,104,020
1,000 Wheatlands Metro Dist No 2 CO Ltd Tax...... 6.000 12/01/25 1,041,960
1,500 Wheatlands Metro Dist No 2 CO Ltd Tax...... 6.125 12/01/35 1,565,430
--------------
44,309,652
--------------
CONNECTICUT 0.5%
1,500 Connecticut St Dev Auth Indl Afco Cargo
Bdlg LLC Proj (AMT)........................ 8.000 04/01/30 1,626,825
2,000 Mohegan Tribe Indians CT Pub Impt Priority
Dist (Acquired 09/27/01,
Cost $1,955,120) (a)....................... 6.250 01/01/31 2,140,300
3,500 Mohegan Tribe Indians CT Pub Impt Priority
Dist (Acquired 11/03/04 to 11/04/04,
Cost $3,418,565) (a)....................... 5.250 01/01/33 3,529,645
--------------
7,296,770
--------------
</Table>
14 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
DELAWARE 0.2%
$ 850 Sussex Cnty, DE Rev Adj First Mtg Cadbury
Lewes Ser A................................ 5.900% 01/01/26 $ 863,132
1,000 Sussex Cnty, DE Rev Adj First Mtg Cadbury
Lewes Ser A................................ 6.000 01/01/35 1,013,890
1,080 Wilmington, DE Multi-Family Rent Rev Hsg
Electra Arms Sr Assoc Proj (AMT)........... 6.250 06/01/28 1,088,640
--------------
2,965,662
--------------
DISTRICT OF COLUMBIA 0.1%
1,000 District of Columbia Rev Methodist Home
Issue...................................... 6.000 01/01/29 1,013,470
85 District of Columbia Ser A-1 (Escrowed to
Maturity) (MBIA Insd)...................... 6.500 06/01/10 94,124
--------------
1,107,594
--------------
FLORIDA 10.0%
1,000 Anthem Pk Cmnty Dev Dist FL Cap Impt Rev... 5.800 05/01/36 1,029,960
1,000 Bellalago Ed Fac Benefits Ser A............ 6.000 05/01/33 1,046,490
1,000 Bellalago Ed Fac Benefits Ser B............ 5.800 05/01/34 1,033,210
4,315 Bloomingdale, FL Cmnty Dev Dist Spl Assmt
Rev........................................ 5.875 05/01/36 4,504,946
1,000 Bluewaters Cmnty Dev Dist of FL............ 6.000 05/01/35 1,050,260
2,350 Boca Raton, FL Hsg Auth Mtg Hsg Rev First
Lien Banyan Pl Sr Apt Rfdg (Acquired
03/23/06, Cost $2,317,265) (a)............. 5.900 10/01/36 2,309,862
1,855 Boca Raton, Fl Hsg Auth Mtg Hsg Rev First
Lien Banyan Pl Sr Apt Rfdg (Acquired
03/23/06, Cost $1,811,556) (a)............. 5.800 10/01/26 1,815,841
2,500 Bonnet Creek Resort Cmnty Dev.............. 7.500 05/01/34 2,756,350
5,000 Brevard Cnty, FL Hlth Fac Auth Hlthcare Fac
Rev Rites Pa 1342 (Inverse Fltg) (Acquired
12/08/05, Cost $4,707,600) (a) (d)......... 7.486 04/01/34 5,353,000
795 Caribe Palm Cmnty Dev Dist FL Spl Assmt Ser
A.......................................... 5.850 05/01/35 824,057
1,000 City Ctr Cmnty Dev Dist FL Spl Assmt Rev
Ser A...................................... 6.125 05/01/36 1,006,290
2,935 Escambia Cnty, FL Rev ICF/MR Pensacola Care
Dev Ctr.................................... 10.250 07/01/11 2,961,708
1,245 Escambia Cnty, FL Rev ICF/MR Pensacola Care
Dev Ctr Ser A.............................. 10.250 07/01/11 1,256,329
1,285 Fishhawk Cmnty Dev Dist of FL Spl Assmt Rev
(Prerefunded @ 05/01/06)................... 7.625 05/01/18 1,314,516
3,645 Florida Hsg Fin Corp Rev Hsg Beacon Hill
Apt Ser C (AMT)............................ 6.610 07/01/38 3,771,700
7,090 Florida Hsg Fin Corp Rev Hsg Cypress Trace
Apt Ser G (AMT)............................ 6.600 07/01/38 7,293,412
4,795 Florida Hsg Fin Corp Rev Hsg Westchase Apt
Ser B (AMT)................................ 6.610 07/01/38 4,925,280
</Table>
See Notes to Financial Statements 15
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
$ 2,750 Greater Orlando Aviation Auth Orlando, FL
Arpt Fac Rev Spl Purp Jetblue Awy Corp
(AMT)...................................... 6.375% 11/15/26 $ 2,775,327
2,800 Greater Orlando Aviation Auth Orlando, FL
Arpt Fac Rev Spl Purp Jetblue Awy Corp
(AMT)...................................... 6.500 11/15/36 2,821,448
3,505 Hammock Bay Cmnty Dev Dist FL Spl Assmt Rev
Ser A...................................... 6.125 05/01/35 3,660,201
1,480 Harbour Isles Cmnty Dev Dist of FL......... 6.125 05/01/35 1,562,140
300 Heritage Harbor Cmnty Dev Dist FL Rev
Rec........................................ 7.750 05/01/23 297,867
775 Heritage Harbor Cmnty Dev Dist FL Rev Spl
Assmt Ser A................................ 6.700 05/01/19 791,081
1,435 Highlands Cnty, FL Hlth Fac Hosp Adventist
Hlth Sys................................... 5.250 11/15/28 1,461,705
2,000 Highlands, FL Cmnty Dev Dist Spl Assmt..... 5.550 05/01/36 2,027,660
3,500 Hillsborough Cnty, FL Hsg Fin Hsg Clipper
Cove Apt Proj Ser A (AMT).................. 7.375 07/01/40 3,760,155
2,500 Hillsborough Cnty, FL Indl Dev Auth Hosp
Rev Tampa Gen Hosp Proj Ser B.............. 5.250 10/01/34 2,586,225
990 Islands at Doral III Cmnty 2004 Ser A...... 5.900 05/01/35 1,023,175
1,000 Islands at Doral NE Cmnty Dev.............. 6.250 05/01/34 1,065,880
6,410 Jea, FL Wtr & Swr Sys Rev Drivers Ser 805
(Inverse Fltg) (Acquired 03/22/05, Cost
$6,268,702) (MBIA Insd) (a)................ 6.004 10/01/12 6,440,255
1,530 Kendall Breeze West Cmnty Dev Dist FL Spl
Assmt...................................... 5.875 05/01/34 1,598,559
1,975 Keys Cove Cmnty Dev Dist FL Assmt Rev...... 5.875 05/01/35 2,065,080
2,940 Keys Cove Cmnty Dev Dist II FL............. 5.500 05/01/36 2,984,982
2,000 Lee Cnty, FL Indl Dev Auth Hlthcare Fac Rev
Cypress Cove Hlthpk Ser A.................. 6.750 10/01/32 2,120,460
3,500 Leon Cnty, FL Ed Fac Auth Rev Southgate
Residence Hall Ser A Rfdg.................. 6.750 09/01/28 3,612,945
1,270 Lexington Cmnty Dev Dist FL................ 6.125 05/01/34 1,331,163
75 Marshall Creek Cmnty Dev FL Spl Assmt Ser
B.......................................... 6.750 05/01/07 75,979
2,470 Meadow Woods Cmnty Dev Dist FL Ser A....... 6.050 05/01/35 2,552,597
1,000 Miami Beach, FL Hlth Fac Hosp Mt Sinai Med
Ctr FL Proj................................ 5.375 11/15/28 1,002,570
2,500 Miami Beach, FL Hlth Fac Hosp Mt Sinai Med
Ctr Rfdg (Acquired 04/26/04, Cost
$2,411,600) (a)............................ 6.750 11/15/29 2,806,025
3,000 Midtown Miami, FL Cmnty Dev Dist Ser A..... 6.000 05/01/24 3,256,500
1,120 Miromar Lakes Cmnty Dev Dist Ser B Rfdg.... 7.250 05/01/12 1,210,619
2,500 New Port Tampa Bay Cmnty Dev Dist FL Spl
Assmt Ser A................................ 5.875 05/01/38 2,529,800
910 Northern Palm Beach Cnty Dist FL Impt Wtr
Ctl & Impt Unit Dev No 16 Rfdg............. 7.500 08/01/24 981,717
1,750 Oak Creek Cmnty Dev Dist FL Spl Assmt...... 5.800 05/01/35 1,818,267
</Table>
16 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
$ 2,050 Orange Cnty, FL Hlth Fac Auth Rev First Mtg
Orlando Lutheran Twr Rfdg (Prerefunded @
07/01/06).................................. 8.625% 07/01/20 $ 2,136,489
2,250 Orange Cnty, FL Hlth Fac Auth Rev First Mtg
Orlando Lutheran Twr Rfdg
(Prerefunded @ 07/01/06)................... 8.750 07/01/26 2,345,602
1,560 Orange Cnty, FL Hlth Fac Auth Rev Hosp
Adventist Hlth Sys
(Prerefunded @ 11/15/10) (d)............... 5.875 11/15/11 1,713,598
1,000 Orange Cnty, FL Hlth Fac Auth Rev Hosp
Adventist Hlth Sys (Prerefunded @
11/15/10).................................. 6.375 11/15/20 1,119,050
2,000 Orange Cnty, FL Hlth Fac Auth Rev
Westminster Cmnty Care..................... 6.600 04/01/24 2,065,000
990 Overoaks, FL Cmnty Dev Dist CA Ser A....... 6.125 05/01/35 1,044,945
985 Parklands Lee Cmnty Dev Dist FL Spl Assmt
Ser A...................................... 5.800 05/01/35 1,014,008
1,000 Pine Is Cmnty Dev Dist FL Spl Assmt........ 5.750 05/01/35 1,027,720
3,000 Pinellas Cnty, FL Hlth Fac Auth Oaks of
Clearwtr Proj.............................. 6.250 06/01/34 3,154,830
1,000 Reunion East Cmnty Dev Dist................ 5.800 05/01/36 1,034,070
2,000 Reunion West Cmnty Dev Dist................ 6.250 05/01/36 2,113,900
5,000 River Hall Cmnty Dev Dist FL Cap Impt
Rev........................................ 5.450 05/01/36 5,043,650
980 Saddlebrook, FL Cmnty Ser A................ 6.900 05/01/33 1,056,303
500 Saint John's Cnty, FL Indl Dev Auth
Hlthcare Glenmoor Saint John's Proj Ser
A.......................................... 8.000 01/01/17 536,540
4,500 Saint John's Cnty, FL Indl Dev Auth
Hlthcare Glenmoor Saint John's Proj Ser
A.......................................... 8.000 01/01/30 4,828,860
2,000 Saint John's Cnty, FL Indl Dev Auth
Hlthcare Rev Bayview Proj Ser A............ 7.100 10/01/26 2,018,600
1,995 Silver Palms Cmnty Dev Dist (d)............ 5.900 05/01/34 2,081,044
1,300 South Dade Venture Cmnty Dev............... 6.125 05/01/34 1,379,833
1,480 South Vlg Cmnty Dev Dist FL Cap Impt Rev
Ser A...................................... 5.700 05/01/35 1,515,831
115 Stoneybrook West Cmnty Dev Dist FL Spl
Assmt Rev Ser B............................ 6.450 05/01/10 115,728
4,000 Tisons Landing Cmnty Dev Dist FL Spl Assmt
Ser A...................................... 5.625 05/01/37 4,045,120
4,000 Tolomato Cmnty Dev Dist FL Spl Assmt....... 5.400 05/01/37 4,035,520
1,500 Town Ctr at Palm Coast Cmnty Dev Dist FL
Cap Impt Rev............................... 6.000 05/01/36 1,551,795
1,480 Turnbull Creek Cmnty Dev Dist FL Spl
Assmt...................................... 5.800 05/01/35 1,520,730
1,652 University Square Cmnty Dev Dist FL Cap
Impt Rev (Acquired 10/07/99 to 09/07/00,
Cost $1,650,391) (a)....................... 6.750 05/01/20 1,783,384
2,660 Verano Ctr Cmnty Dev Dist FL Cmnty
Infrastructure Proj Ser A (c).............. 5.375 05/01/37 2,664,602
</Table>
See Notes to Financial Statements 17
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
$ 2,000 Volusia Cnty, FL Indl Dev Auth Bishops Glen
Proj Rfdg (Prerefunded @ 11/01/06)......... 7.625% 11/01/26 $ 2,085,600
1,000 World Comm Cmnty Dev Dist Ser A1........... 6.250 05/01/22 1,046,090
1,695 World Comm Cmnty Dev Dist Ser A2........... 6.125 05/01/35 1,769,105
--------------
162,321,140
--------------
GEORGIA 1.4%
2,000 Atlanta, GA Tax Alloc Atlantic Sta Proj.... 7.750 12/01/14 2,224,840
1,235 Atlanta, GA Tax Alloc Princeton Lakes Proj
(Acquired 03/10/06, Cost $1,235,000) (a)... 5.500 01/01/31 1,248,350
2,325 Atlanta, GA Urban Residential Fin Auth
Multi-Family Rev John Eagan Proj Ser A
(AMT)...................................... 6.750 07/01/30 2,134,768
2,750 De Kalb Cnty, GA Residential Care Fac Kings
Brdg Ser A................................. 8.250 07/01/26 2,821,142
1,000 Effingham Cnty, GA Dev Auth Solfort James
Proj (AMT)................................. 5.625 07/01/18 998,060
1,800 Fulton Cnty, GA Residential Care Canterbury
Court Proj Ser A........................... 6.000 02/15/22 1,829,682
650 Fulton Cnty, GA Residential Care Canterbury
Court Proj Ser A........................... 6.125 02/15/34 667,816
3,500 Fulton Cnty, GA Residential Care Sr Lien
RHA Asstd Living Ser A..................... 7.000 07/01/29 3,624,180
4,000 Milledgeville Baldwin Cnty, GA College & St
Univ Fndtn................................. 5.625 09/01/30 4,197,640
1,000 Private Colleges & Univ Auth GA Mercer Hsg
Corp Proj Ser A............................ 6.000 06/01/21 1,044,610
2,930 Renaissance on Peachtree Unit Invt Tr Ctf
GA Custody Ctf (Variable Rate Coupon)...... 12.178 10/01/25 2,395,744
--------------
23,186,832
--------------
HAWAII 0.5%
2,500 Hawaii St Dept Budget & Fin Spl Purp Rev
Kahala Nui Proj Ser A...................... 8.000 11/15/33 2,895,625
1,820 Hawaii St Dept Trans Spl Fac Rev
Continental Airl Inc (AMT)................. 5.625 11/15/27 1,564,745
2,825 Kuakini, HI Hlth Sys Spl Ser A............. 6.375 07/01/32 3,044,389
--------------
7,504,759
--------------
IDAHO 0.2%
1,000 Idaho Hlth Fac Auth Rev Vly Vista Care Ser
A Rfdg..................................... 7.875 11/15/29 1,003,940
1,000 Madison Cnty, ID Hosp Rev Ctf (c).......... 5.250 09/01/30 1,017,220
1,300 Madison Cnty, ID Hosp Rev Ctf (c).......... 5.250 09/01/37 1,317,121
--------------
3,338,281
--------------
ILLINOIS 7.1%
2,500 Bolingbrook, IL Cap Apprec Ser B
(MBIA Insd)................................ * 01/01/29 744,550
4,000 Bolingbrook, IL Sales Tax Rev Bolingbrook
(e)........................................ 0.000/6.250 01/01/24 3,587,360
</Table>
18 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
ILLINOIS (CONTINUED)
$ 1,990 Bolingbrook, IL Spl Svc Area No 01-1....... 7.375% 07/01/31 $ 2,165,478
1,665 Bolingbrook, IL Spl Svc Area No 1 Spl Tax
Augusta Vlg Proj Ser 2004.................. 6.250 03/01/32 1,713,302
1,500 Bolingbrook, IL Spl Svc Area No 1 Spl Tax
Augusta Vlg Proj (Acquired 11/13/02, Cost
$1,500,000) (a)............................ 6.750 03/01/32 1,595,700
2,000 Bolingbrook, IL Spl Svc Area No 1 Spl Tax
Forest City Tax Proj (e)................... 0.000/5.900 03/01/27 1,838,480
1,894 Bolingbrook, IL Spl Svc Area No 3 Lakewood
Ridge Proj................................. 7.050 03/01/31 2,027,963
947 Cary, IL Spl Tax Svc Area No 1 Cambridge
Ser A...................................... 7.625 03/01/30 1,055,905
7,750 Chicago, IL O'Hare Intl Arpt Rev RR II R
239-1 (AMT) (Inverse Fltg) (Acquired
08/18/03, Cost $8,490,358) (FSA Insd) (a)
(d)........................................ 8.180 01/01/19 9,179,565
4,950 Chicago, IL Proj Ser A Rfdg (MBIA Insd).... 5.500 01/01/38 5,279,769
50 Chicago, IL Proj Ser A Rfdg (Prerefunded @
01/01/11) (MBIA Insd)...................... 5.500 01/01/38 54,293
4,000 Chicago, IL Spl Assmt Lakeshore East
Proj....................................... 6.625 12/01/22 4,330,520
760 Chicago, IL Tax Increment Alloc Read
Dunning Ser B (ACA Insd)................... 7.250 01/01/14 791,631
3,000 Chicago, IL Tax Increment Alloc Sub Cent
Loop Redev Ser A (ACA Insd)................ 6.500 12/01/06 3,054,990
1,925 Chicago, IL Tax Increment Alloc Sub Cent
Loop Redev Ser A (ACA Insd)................ 6.500 12/01/08 2,050,568
1,000 Clay Cnty, IL Hosp Rev (Prerefunded @
12/01/08).................................. 5.900 12/01/28 1,074,650
1,127 Gilberts, IL Spl Svc Area No 9 Spl Tax Big
Timber Proj (Escrowed to Maturity) (d)..... 7.375 03/01/11 1,238,787
1,245 Gilberts, IL Spl Svc Area No 9 Spl Tax Big
Timber Proj (Prerefunded @ 03/01/11)....... 7.750 03/01/27 1,475,512
1,500 Godfrey, IL Rev Utd Methodist Vlg Ser A.... 5.875 11/15/29 1,227,405
2,700 Hoopeston, IL Hosp Cap Impt Rev Hoopeston
Cmnty Mem Hosp Rfdg........................ 6.550 11/15/29 2,542,536
1,660 Huntley, IL Increment Alloc Rev Huntley
Redev Proj Ser A........................... 8.500 12/01/15 1,706,380
187 Huntley, IL Spl Svc Area No 10 Spl Tax Ser
A (d)...................................... 6.250 03/01/09 194,573
2,621 Huntley, IL Spl Svc Area No 10 Spl Tax Ser
A.......................................... 6.500 03/01/29 2,791,994
9,000 Illinois Fin Auth Rev Clare at Wtr Tower
Proj Ser A................................. 6.125 05/15/38 9,105,480
1,405 Illinois Fin Auth Rev Cmnty Fac Clinic
Altgeld Proj............................... 8.000 11/15/16 1,283,144
500 Illinois Fin Auth Rev Fairview Oblig Grp
Ser A Rfdg................................. 6.000 08/15/20 508,420
</Table>
See Notes to Financial Statements 19
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
ILLINOIS (CONTINUED)
$ 500 Illinois Fin Auth Rev Fairview Oblig Grp
Ser A Rfdg................................. 6.125% 08/15/27 $ 506,550
1,000 Illinois Fin Auth Rev Friendship Vlg
Schaumburg Ser A........................... 5.375 02/15/25 1,007,300
2,000 Illinois Fin Auth Rev Friendship Vlg
Schaumburg Ser A........................... 5.625 02/15/37 2,029,140
3,000 Illinois Fin Auth Rev Landing at Plymouth
Pl Proj A.................................. 6.000 05/15/37 3,017,370
3,000 Illinois Fin Auth Rev Northwestn Mem Hosp
Ser A...................................... 5.500 08/15/43 3,183,330
1,000 Illinois Hlth Fac Auth Rev Ctr Baptist Home
Proj....................................... 7.125 11/15/29 1,056,970
2,500 Illinois Hlth Fac Auth Rev Decatur Mem
Hosp....................................... 5.750 10/01/24 2,619,150
3,000 Illinois Hlth Fac Auth Rev Fairview Oblig
Grp Ser A Rfdg (Prerefunded @ 08/15/06).... 7.400 08/15/23 3,097,590
650 Illinois Hlth Fac Auth Rev Loyola Univ Hlth
Sys Ser A.................................. 6.000 07/01/21 687,459
1,200 Illinois Hlth Fac Auth Rev Lutheran Sr
Ministries Oblig Ser A..................... 7.375 08/15/31 1,305,348
1,500 Illinois Hlth Fac Auth Rev Peace Mem
Ministries Proj (Prerefunded @ 08/15/06)... 7.500 08/15/26 1,549,350
1,175 Illinois Hlth Fac Auth Rev Proctor Cmnty
Hosp Proj.................................. 7.500 01/01/11 1,176,128
250 Illinois Hlth Fac Auth Rev Ser A Rfdg...... 6.200 08/15/23 253,805
1,125 Illinois Hlth Fac Auth Rev Ser A Rfdg...... 6.400 08/15/33 1,142,077
300 Illinois Hlth Fac Auth Rev Silver Cross
Rfdg (Prerefunded @ 08/15/09).............. 5.500 08/15/19 318,972
400 Illinois Hlth Fac Auth Rev Silver Cross.... 5.500 08/15/19 414,216
2,375 Lake Cnty, IL Fst Presv Dist Ld Acquisition
& Dev...................................... 5.750 12/15/16 2,579,820
675 Lake Cnty, IL Fst Presv Dist Ld Acquisition
& Dev...................................... 5.750 12/15/17 731,065
80 Lake, Cook, Kane & McHenry Cntys, IL Cmnty
Unit Sch Dist No 22 (FGIC Insd)............ 5.750 12/01/19 86,386
2,200 Manhattan, IL No 04 -1 Brookstone Springs
Proj....................................... 6.100 03/01/35 2,253,922
1,000 Minooka, IL Spl Assmt Impt Lakewood Trls
Unit 2 Proj................................ 6.375 03/01/34 1,049,380
1,195 Montgomery, IL Spl Assmt Impt Lakewood
Creek Proj................................. 7.750 03/01/30 1,315,994
1,800 Peoria, IL Spl Tax Weaverridge Spl Svc
Area....................................... 8.050 02/01/17 1,893,762
3,000 Pingree Grove, IL Spl Svc Area No 2 Spl Tax
Ser 05-2 Cambridge Lakes Proj.............. 6.000 03/01/35 3,056,370
2,000 Plano, IL Spl Svc Area No 1 Lakewood
Springs Proj Ser A......................... 6.200 03/01/34 2,067,960
2,095 Regional Tran Auth IL Ser B (AMBAC Insd)... 8.000 06/01/17 2,760,477
</Table>
20 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
ILLINOIS (CONTINUED)
$ 940 Sterling, IL Rev Hoosier Care Proj Ser A... 7.125% 06/01/34 $ 904,083
3,135 Wheeling, IL Tax Increment Rev N
Milwaukee/Lake Cook Tif Proj............... 6.000 01/01/25 3,060,606
5,650 Yorkville, IL Utd City Spl Svc Area Spl Tax
No 2004 107 Raintree Vlg II Proj........... 6.250 03/01/35 5,798,030
2,000 Yorkville, IL Utd City Spl Svc Area Spl Tax
No 4 104 Mpi Grade Resv Proj............... 6.375 03/01/34 2,083,380
--------------
115,624,945
--------------
INDIANA 0.9%
825 Crawfordsville, IN Redev Cmnty Redev Dist
Tax Increment Rev (Acquired 10/15/97, Cost
$825,000) (a) (d).......................... 7.000 02/01/12 834,883
1,885 Indiana Hlth Fac Fin Auth Rev Hoosier Care
Proj Ser A................................. 7.125 06/01/34 1,812,974
6,500 Indiana Hlth Fac Hosp Rev Cmnty Fndtn
Northwest IN Ser A......................... 6.000 03/01/34 6,860,880
2,000 Petersburg, IN Pollutn Ctl Rev IN Pwr & Lt
(AMT)...................................... 6.375 11/01/29 2,126,240
1,810 Portage, IN Spl Impt Dist Rev Marina Shores
Proj....................................... 6.375 03/01/35 1,819,050
230 Saint Joseph Cnty IN Econ Dev Rev Holy
Cross Vlg Notre Dame Proj A................ 6.000 05/15/26 240,819
265 Saint Joseph Cnty IN Econ Dev Rev Holy
Cross Vlg Notre Dame Proj A................ 5.700 05/15/28 267,661
470 Saint Joseph Cnty IN Econ Dev Rev Holy
Cross Vlg Notre Dame Proj A................ 6.000 05/15/38 487,653
--------------
14,450,160
--------------
IOWA 0.9%
1,000 Bremer Cnty, IA Retirement Fac Rev Bartels
Lutheran Ser A............................. 5.375 11/15/27 1,004,780
2,000 Estherville, IA Hosp Rev Avera Holy Family
Proj....................................... 6.250 07/01/26 2,124,480
375 Evansdale, IA Hlthcare Westn Home Proj..... 6.000 11/01/26 382,987
3,400 Evansdale, IA Hlthcare Westn Home Proj Ser
A (d)...................................... 6.000 11/01/26 3,455,488
1,950 Iowa Fin Auth Hlthcare Fac Care Initiatives
Proj Rfdg.................................. 9.250 07/01/25 2,333,175
500 Iowa Fin Auth Retirement Cmnty Friendship
Haven Proj Ser A........................... 5.750 11/15/19 503,610
500 Iowa Fin Auth Retirement Cmnty Friendship
Haven Proj Ser A........................... 6.000 11/15/24 506,680
800 Iowa Fin Auth Retirement Cmnty Friendship
Haven Proj Ser A........................... 6.125 11/15/32 809,880
</Table>
See Notes to Financial Statements 21
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
IOWA (CONTINUED)
$ 1,000 Polk Cnty, IA Hlthcare Fac Rev Luther Pk
Hth Ctr Inc Proj........................... 6.150% 10/01/36 $ 1,015,710
3,000 Tobacco Settlement Auth IA Tob Settlement
Rev Asset Bkd Ser C........................ 5.375 06/01/38 3,014,850
--------------
15,151,640
--------------
KANSAS 0.4%
910 Lawrence, KS Coml Dev Rev Holiday Inn Sr
Ser A Rfdg (b)............................. 8.000 07/01/16 486,331
1,000 Lenexa, KS Hlthcare Fac Rev Lakeview Vlg
Inc Ser B.................................. 6.250 05/15/26 1,018,450
915 Manhattan, KS Coml Dev Rev Holiday Inn Sr
Ser A Rfdg (b)............................. 8.000 07/01/16 497,623
1,500 Olathe, KS Sr Living Fac Rev Aberdeen Vlg
Inc Ser A Rfdg............................. 5.600 05/15/28 1,507,500
1,000 Olathe, KS Sr Living Fac Rev Catholic Care
Campus Inc. Ser A.......................... 6.000 11/15/26 1,040,560
1,000 Olathe, KS Sr Living Fac Rev Catholic Care
Campus Inc. Ser A.......................... 6.000 11/15/38 1,030,010
1,500 Overland Pk, KS Dev Corp Rev First Tier
Overland Park Ser A........................ 7.375 01/01/32 1,647,015
--------------
7,227,489
--------------
LOUISIANA 0.8%
1,975 Louisiana Hsg Fin Agy Rev Azalea Estates
Ser A Rfdg (AMT) (GNMA Collateralized)..... 5.375 10/20/39 2,038,121
4,100 Louisiana Loc Govt Environment Fac Cmnty
Dev Auth Rev Hlthcare Saint James Place Ser
A Rfdg..................................... 7.000 11/01/25 4,180,975
1,800 Louisiana Loc Govt Environment Fac Cmnty
Dev Auth Rev Hlthcare Saint James Place Ser
A Rfdg..................................... 7.000 11/01/29 1,831,356
1,500 Louisiana Pub Fac Auth Rev Progressive
Hlthcare................................... 6.375 10/01/20 1,481,175
1,000 Louisiana Pub Fac Auth Rev Progressive
Hlthcare................................... 6.375 10/01/28 950,280
3,054 Louisiana St Univ & Agric & Mechanical
College Univ Rev Master Agreement (Acquired
11/30/98, Cost $3,058,911) (a)............. 5.750 10/30/18 2,892,756
--------------
13,374,663
--------------
MARYLAND 1.4%
2,000 Annapolis, MD Spl Oblig Pk Pl Proj Ser A... 5.350 07/01/34 2,026,060
1,000 Baltimore Cnty, MD Mtg Rev Shelter Elder
Care Ser A................................. 7.250 11/01/29 1,036,460
4,000 Frederick Cnty, MD Spl Oblig Urbana Cmnty
Dev Auth Ser A (d)......................... 5.950 07/01/30 4,144,320
</Table>
22 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
MARYLAND (CONTINUED)
$ 1,000 Frederick Cnty, MD Spl Oblig Urbana Cmnty
Dev Auth Ser B............................. 6.250% 07/01/30 $ 1,038,440
425 Maryland St Econ Dev Corp Air Cargo Rev
Afco Cargo BWI II LLC Proj (AMT) (d)....... 6.250 07/01/07 426,645
1,200 Maryland St Econ Dev Corp MD Golf Course
Sys (Prerefunded @ 06/01/11)............... 8.250 06/01/28 1,425,108
1,540 Maryland St Hlth & Higher Ed Calvert
Hlth Sys................................... 5.500 07/01/36 1,622,790
1,000 Maryland St Hlth & Higher Ed Medstar Hlth
Rfdg....................................... 5.500 08/15/33 1,043,880
3,000 Montgomery Cnty, MD Econ Dev Editorial Proj
In Ed Ser A (Acquired 09/28/98, Cost
$3,000,000) (a)............................ 6.400 09/01/28 2,776,620
1,652 Prince Georges Cnty, MD Rev................ 8.000 04/01/16 1,652,033
3,000 Prince Georges Cnty, MD Spl Oblig Spl Assmt
Woodview Ser A............................. 8.000 07/01/26 3,138,060
1,000 Westminster, MD Econ Dev Carroll Lutheran
Vlg Ser A.................................. 6.000 05/01/24 1,043,150
1,500 Westminster, MD Econ Dev Carroll Lutheran
Vlg Ser A.................................. 6.250 05/01/34 1,574,835
--------------
22,948,401
--------------
MASSACHUSETTS 2.6%
1,000 Massachusetts St Dev Fin Agy Briarwood Ser
B (Prerefunded @ 12/01/10)................. 8.000 12/01/22 1,181,430
250 Massachusetts St Dev Fin Agy Rev Evergreen
Ctr Inc.................................... 5.000 01/01/24 241,002
500 Massachusetts St Dev Fin Agy Rev Evergreen
Ctr Inc.................................... 5.500 01/01/35 501,675
770 Massachusetts St Dev Fin Agy Rev Gtr Lynn
Mental Hlth (Acquired 07/27/00, Cost
$768,600) (Prerefunded @ 06/01/08) (a)..... 7.750 06/01/18 843,512
1,890 Massachusetts St Dev Fin Agy Rev Hillcrest
Ed Ctr Inc................................. 6.375 07/01/29 1,906,915
2,935 Massachusetts St Dev Fin Agy Rev Hlthcare
Fac Alliance Ser A......................... 7.100 07/01/32 3,005,968
1,000 Massachusetts St Dev Fin Agy Rev MCHSP
Human Svc Providers Ser A (Prerefunded @
07/01/10).................................. 8.000 07/01/20 1,163,480
3,650 Massachusetts St Dev Fin Agy Rev New
England Ctr For Children................... 6.000 11/01/19 3,744,426
10,315 Massachusetts St Dev Fin Agy Rev Rites PA
1316 (Inverse Fltg) (Acquired 07/20/05,
Cost $11,406,224) (AMBAC Insd) (a) (d)..... 6.088 10/01/39 11,000,535
3,100 Massachusetts St Hlth & Ed Civic Invt Ser
B.......................................... 9.150 12/15/23 3,738,538
933 Massachusetts St Hlth & Ed Nichols College
Issue Ser C................................ 6.000 10/01/17 986,806
</Table>
See Notes to Financial Statements 23
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
$ 1,000 Massachusetts St Hlth & Ed Northrn
Berkshire Hlth Ser B....................... 6.250% 07/01/24 $ 1,055,550
1,865 Massachusetts St Indl Fin Agy Assisted
Living Fac Rev Marina Bay LLC Proj (AMT)
(Prerefunded @ 12/01/07)................... 7.500 12/01/27 1,984,211
980 Massachusetts St Indl Fin Agy Assisted
Living Fac Rev Newton Grp Pptys LLC Proj
(AMT) (Prerefunded @ 09/01/07)............. 8.000 09/01/27 1,054,676
560 Massachusetts St Indl Fin Agy Rev First Mtg
GF/Pilgrim Inc Proj........................ 6.500 10/01/15 542,690
2,000 Massachusetts St Indl Fin Agy Rev First Mtg
GF/Pilgrim Inc Proj........................ 6.750 10/01/28 1,879,340
1,975 Massachusetts St Indl Fin Agy Rev First Mtg
Reeds Landing Proj (e)..................... 7.350/7.450 10/01/28 1,908,443
2,130 Massachusetts St Indl Fin Agy Rev Gtr Lynn
Mental Hlth (Acquired 06/24/98, Cost
$2,130,000) (Prerefunded
@ 06/01/08) (a)............................ 6.375 06/01/18 2,273,626
370 Massachusetts St Indl Fin Agy Rev Gtr Lynn
Mental Hlth (Acquired 06/24/98, Cost
$370,000) (Escrowed to Maturity) (a)....... 6.200 06/01/08 386,842
3,400 Massachusetts St Indl Fin Agy Rev Swr Fac
Res Ctl Composting (AMT) (Acquired
08/10/89, Cost $3,400,00) (a).............. 9.250 06/01/10 3,410,744
--------------
42,810,409
--------------
MICHIGAN 2.5%
2,500 Chelsea, MI Econ Dev Corp Rev Utd Methodist
Retirement Rfdg............................ 5.400 11/15/27 2,469,375
850 Detroit, MI Loc Dev Fin Auth Tax Increment
Sub Ser C (Acquired 09/08/97, Cost
$850,000) (a).............................. 6.850 05/01/21 871,080
1,000 Gaylord, MI Hosp Fin Auth Ltd Oblig Rev
Otsego Mem Hosp Rfdg....................... 6.500 01/01/31 1,033,530
1,700 Hillsdale, MI Hosp Fin Hillsdale
Cmnty Hlth Ctr............................. 5.000 05/15/13 1,682,660
4,000 Kent Hosp Fin Auth MI Rev Metro Hosp Proj
Ser A...................................... 6.250 07/01/40 4,348,080
2,390 Meridian, MI Econ Dev Corp Ltd Oblig Rev
First Mtg Burcham Hills Ser A Rfdg......... 7.500 07/01/13 2,444,827
3,430 Meridian, MI Econ Dev Corp Ltd Oblig Rev
First Mtg Burcham Hills Ser A Rfdg......... 7.750 07/01/19 3,509,679
3,045 Michigan St Hosp Fin Auth Rev Hosp Pontiac
Osteopathic Ser A Rfdg..................... 6.000 02/01/14 3,045,365
1,500 Michigan St Hosp Fin Auth Rev Hosp Pontiac
Osteopathic Ser A Rfdg..................... 6.000 02/01/24 1,500,345
</Table>
24 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
MICHIGAN (CONTINUED)
$ 2,000 Michigan St Hosp Fin Auth Rev Presbyterian
Vlg Rfdg................................... 5.500% 11/15/35 $ 2,070,340
11,084 Michigan St Strategic Fd Ltd Oblig Rev
Great Lakes Pulp & Fiber Proj (AMT) (b)
(f)........................................ 8.000 12/01/27 1,552,361
10,325 Wayne Cnty, MI Arpt Auth Rev Rols RR II R
352 (AMT) (Inverse Fltg) (Acquired
04/05/05, Cost $11,112,797) (MBIA Insd) (a)
(d)........................................ 7.173 12/01/24 11,419,347
3,900 Wenonah Pk Ppty Inc Bay City Hotel Rev
Bd......................................... 7.500 04/01/33 3,716,076
--------------
39,663,065
--------------
MINNESOTA 3.1%
2,000 Aitkin, MN Hlth Fac Rev Riverwood Hlthcare
Ctr Proj................................... 7.750 02/01/31 2,183,620
1,000 Cambridge, MN Hsg & Hlthcare Fac Rev
Grandview West Proj Ser B.................. 6.000 10/01/33 1,000,820
2,000 Carlton, MN Hlth & Hsg Fac Inter Faith
Social Svc Inc Proj........................ 7.500 04/01/19 2,142,620
2,000 Carlton, MN Hlth & Hsg Fac Inter Faith
Social Svc Inc Proj........................ 7.750 04/01/29 2,150,720
2,250 Cuyuna Range Hosp Dist MN Hlth Fac Gross
Rev........................................ 5.500 06/01/35 2,275,650
900 Duluth, MN Econ Dev Auth Hlthcare Fac Rev
Saint Lukes Hosp........................... 6.000 06/15/12 918,657
1,500 Duluth, MN Econ Dev Auth Hlthcare Fac Rev
Saint Lukes Hosp........................... 7.250 06/15/32 1,610,025
2,000 Glencoe, MN Hlthcare Fac Rev
(Prerefunded @ 04/01/11)................... 7.500 04/01/31 2,317,500
1,400 Minneapolis, MN Student Hsg Rev Riverton
Cmnty Hsg Proj Ser A....................... 5.600 08/01/26 1,386,980
3,100 Minneapolis, MN Student Hsg Rev Riverton
Cmnty Hsg Proj Ser A....................... 5.700 08/01/40 3,048,788
1,000 Minneapolis, MN Tax Increment Rev Ivy Tower
Proj....................................... 5.700 02/01/29 1,006,120
900 Minnesota Agric & Econ Dev Brd Rev Hlthcare
Benedictine Proj Ser A..................... 5.500 08/01/23 905,265
875 Minnesota Agric & Econ Dev Brd Rev Hlthcare
Benedictine Proj Ser A..................... 5.750 02/01/30 876,636
2,500 Northwest MN Multi-Cnty Pooled Hsg Pgm A
Rfdg....................................... 6.250 07/01/40 2,502,300
1,500 Oakdale, MN Rev Sr Hsg Oak Meadows Proj
Rfdg....................................... 6.250 04/01/34 1,565,760
1,425 Ramsey, MN Lease Rev Pact Charter Sch Proj
Ser A...................................... 6.750 12/01/33 1,449,439
1,500 Saint Cloud, MN Hsg & Redev Auth Sterling
Heights Apt Proj (AMT)..................... 7.550 04/01/39 1,586,055
1,000 Saint Paul, MN Hsg & Redev Auth Higher
Ground Academy Ser A Rfdg.................. 6.625 12/01/23 1,021,760
</Table>
See Notes to Financial Statements 25
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
MINNESOTA (CONTINUED)
$ 5,000 Saint Paul, MN Hsg & Redev Auth Hosp Rev
Hltheast Proj.............................. 6.000% 11/15/35 $ 5,368,400
2,185 Saint Paul, MN Hsg & Redev Auth Lease Rev
Hope Cmnty Academy Proj A.................. 6.250 12/01/33 2,195,379
2,295 Saint Paul, MN Hsg & Redev Auth LSE Rev
Rfdg....................................... 6.750 01/01/35 2,116,747
1,000 Saint Paul, MN Hsg & Redev Cmnty of Peace
Academy Proj Ser A......................... 7.875 12/01/30 1,034,830
2,250 Saint Paul, MN Port Auth Hotel Fac Rev
Radisson Kellogg Proj Ser 2 Rfdg
(Prerefunded @ 08/01/08)................... 7.375 08/01/29 2,489,378
1,250 Saint Paul, MN Port Auth Lease Rev Hltheast
Midway Campus 03 Ser A..................... 5.875 05/01/30 1,273,250
700 Saint Paul, MN Port Auth Lease Rev Hltheast
Midway Campus 03 Ser B..................... 6.000 05/01/30 714,189
1,000 Shakopee, MN Hlthcare Saint Francis Regl
Med Ctr.................................... 5.250 09/01/34 1,026,770
1,000 Vadnais Heights, MN Lease Rev Agric & Food
Sciences Ser A............................. 6.375 12/01/24 1,000,650
1,000 Vadnais Heights, MN Lease Rev Agric & Food
Sciences Ser A............................. 6.600 12/01/34 997,960
1,450 Winona, MN Hlthcare Winona Hlth Ser A...... 6.000 07/01/34 1,537,160
--------------
49,703,428
--------------
MISSISSIPPI 0.0%
615 Mississippi Bus Fin Corp (AMT)............. 7.250 07/01/34 633,739
--------------
MISSOURI 4.0%
1,500 Carthage, MO Hosp Rev...................... 5.875 04/01/30 1,507,320
8,500 Carthage, MO Hosp Rev...................... 6.000 04/01/38 8,522,185
1,250 Cole Cnty, MO Indl Dev Auth Sr Living Fac
Rev Lutheran Svc Heisinger Proj............ 5.500 02/01/35 1,294,100
910 Fenton, MO Tax Increment Rev & Impt Gravois
Bluffs Proj Rfdg........................... 6.125 10/01/21 930,521
960 Fenton, MO Tax Increment Rev & Impt Gravois
Bluffs Proj Rfdg........................... 7.000 10/01/21 1,025,501
1,440 Ferguson, MO Tax Increment Rev Crossings at
Halls Ferry Proj Rfdg...................... 5.000 04/01/17 1,408,435
120 Ferguson, MO Tax Increment Rev Crossings at
Halls Ferry Proj (Escrowed to Maturity).... 7.250 04/01/07 123,864
3,095 Ferguson, MO Tax Increment Rev Crossings at
Halls Ferry Proj (Prerefunded @
04/01/07).................................. 7.625 04/01/17 3,265,442
209 Ferguson, MO Tax Increment Rev Crossings at
Halls Ferry Proj (Prerefunded @
04/01/07).................................. 7.625 04/01/18 220,510
1,500 Folk Ave South Transn Dist MO Transn Sales
Tax Rev Dev MO............................. 5.625 11/01/31 1,502,955
</Table>
26 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
MISSOURI (CONTINUED)
$ 3,000 Joplin, MO Indl Dev Auth Hlth Fac Rev
Freeman Hlth Sys Proj...................... 5.500% 02/15/29 $ 3,087,660
2,000 Kansas City, MO Indl Dev Auth First Mtg
Bishop Spencer Ser A....................... 6.250 01/01/24 2,084,540
1,500 Kansas City, MO Indl Dev Auth First Mtg
Bishop Spencer Ser A....................... 6.500 01/01/35 1,573,185
976 Kansas City, MO Indl Dev Auth Multi-Family
Hsg Rev Brentwood Manor Apt Proj
Ser B (AMT)................................ 7.250 10/15/38 1,029,895
3,000 Kansas City, MO Indl Dev Plaza Lib Proj.... 5.900 03/01/24 2,998,500
1,793 Kansas City, MO Multi-Family Hsg Rev
Northwoods Apts Proj Ser A (AMT)........... 6.450 05/01/40 1,867,840
10,820 Missouri St Hlth & Ed Fac Rev Drivers Ser
362 (Inverse Fltg) (Acquired 07/21/03, Cost
$12,211,777) (a) (d)....................... 7.003 05/15/11 12,004,465
6,390 Missouri St Hlth & Ed Fac Rev Drivers Ser
847 (Inverse Fltg) (Acquired 04/05/05, Cost
$6,971,107) (a) (d)........................ 6.505 11/15/12 6,908,868
2,220 Nevada, MO Hosp Rev Nevada Regional Med
Ctr........................................ 6.750 10/01/22 2,367,741
2,750 Saint Joseph, MO Indl Dev Auth Hlthcare Rev
Living Cmnty Saint Joseph Proj............. 7.000 08/15/32 2,939,860
500 Saint Joseph, MO Indl Dev Auth Tax
Increment Rev Shoppes at North Vlg Proj Ser
A.......................................... 5.100 11/01/19 490,145
1,000 Saint Joseph, MO Indl Dev Auth Tax
Increment Rev Shoppes at North Vlg Proj Ser
A.......................................... 5.500 11/01/27 999,320
4,820 Saline Cnty, MO Indl Dev Auth Hlth Fac Rev
(Acquired 01/12/99, Cost $4,727,371) (a)... 6.500 12/01/28 4,979,301
1,000 Sikeston, MO Elec Rev Rfdg (MBIA Insd)..... 6.000 06/01/15 1,149,510
--------------
64,281,663
--------------
NEVADA 0.5%
3,500 Clark Cnty, NV Indl Dev Southwest Gas Corp
Proj Ser D1 (AMT) (FGIC Insd).............. 5.250 03/01/38 3,608,675
3,000 Henderson, NV Hlthcare Fac Rev Catholic
Hlthcare West Ser A........................ 5.625 07/01/24 3,188,790
1,000 Las Vegas, NV Loc Impt Bds Spl Impt Dist No
607........................................ 6.000 06/01/19 1,032,660
--------------
7,830,125
--------------
NEW HAMPSHIRE 0.7%
1,500 New Hampshire Higher Ed & Hlth Brewster
Academy (Prerefunded @ 06/01/06)........... 6.750 06/01/25 1,536,810
2,000 New Hampshire Higher Ed & Hlth Fac Auth Rev
Havenwood-Heritage Heights................. 7.350 01/01/18 2,043,140
2,000 New Hampshire Higher Ed & Hlth Fac Auth Rev
Havenwood-Heritage Heights................. 7.450 01/01/25 2,043,120
</Table>
See Notes to Financial Statements 27
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
NEW HAMPSHIRE (CONTINUED)
$ 1,690 New Hampshire Hlth & Ed Fac Auth Rev
Huntington At Nashua Ser A................. 6.875% 05/01/33 $ 1,770,241
1,500 New Hampshire Hlth & Ed Fac Hlthcare Sys
Covenant Hlth.............................. 5.500 07/01/34 1,561,695
1,500 New Hampshire Hlth & Ed Fac Speare Mem
Hosp....................................... 5.875 07/01/34 1,546,020
1,000 New Hampshire St Business Fin Auth Rev
Alice Peck Day Hlth Sys Ser A.............. 6.875 10/01/19 1,057,710
--------------
11,558,736
--------------
NEW JERSEY 5.7%
2,240 Camden Cnty, NJ Impt Auth Lease Rev
Dockside Refrig (Acquired 01/29/97 to
05/20/97, Cost $2,340,765) (a) (g)......... 8.400 04/01/24 2,163,840
1,000 Middlesex Cnty, NJ Pollutn Ctl Pollutn Ctl
Amerada Rfdg............................... 6.050 09/15/34 1,072,720
2,000 New Jersey Econ Dev Auth Cedar Crest Vlg
Inc Fac Ser A.............................. 7.000 11/15/16 2,080,820
2,500 New Jersey Econ Dev Auth Econ Dev Rev Utd
Methodist Homes Ser A-1.................... 6.000 07/01/18 2,675,600
2,000 New Jersey Econ Dev Auth First Mtg
Franciscan Oaks Proj....................... 5.700 10/01/17 2,032,520
1,000 New Jersey Econ Dev Auth Retirement Cmnty
Rev Ser A.................................. 8.000 11/15/15 1,131,780
1,000 New Jersey Econ Dev Auth Retirement Cmnty
Rev Ser A.................................. 8.125 11/15/18 1,073,970
1,440 New Jersey Econ Dev Auth Retirement Cmnty
Rev Ser A.................................. 8.125 11/15/23 1,625,918
710 New Jersey Econ Dev Auth Rev First Mtg
Lions Gate Proj A.......................... 5.750 01/01/25 725,095
1,230 New Jersey Econ Dev Auth Rev First Mtg
Lions Gate Proj A.......................... 5.875 01/01/37 1,260,541
1,000 New Jersey Econ Dev Auth Rev First Mtg
Winchester Gardens Ser A
(Prerefunded @ 11/01/06)................... 8.500 11/01/16 1,048,010
1,500 New Jersey Econ Dev Auth Rev First Mtg
Winchester Gardens Ser A
(Prerefunded @ 11/01/06)................... 8.625 11/01/25 1,573,050
1,440 New Jersey Econ Dev Auth Rev Kullman Assoc
Proj Ser A (AMT)........................... 6.125 06/01/18 1,299,658
2,000 New Jersey Econ Dev Auth Rev Sr Living Fac
Esplanade Bear (AMT)....................... 7.000 06/01/39 1,548,360
3,000 New Jersey Econ Dev Auth Rev Sr Mtg Arbor
Glen Proj Ser A (Prerefunded @ 05/15/06)... 8.750 05/15/26 3,078,450
5,035 New Jersey Econ Dev Auth Spl Fac Rev Contl
Airl Inc Proj (AMT)........................ 6.250 09/15/19 5,030,267
</Table>
28 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
NEW JERSEY (CONTINUED)
$ 9,525 New Jersey Econ Dev Auth Spl Fac Rev Contl
Airl Inc Proj (AMT)........................ 6.400% 09/15/23 $ 9,537,573
5,000 New Jersey Econ Dev Auth Spl Fac Rev Contl
Airl Inc Proj (AMT)........................ 6.250 09/15/29 4,981,500
16,010 New Jersey Econ Dev Auth Spl Fac Rev Contl
Airl Inc Proj (AMT)........................ 7.000 11/15/30 16,320,114
1,500 New Jersey Econ Dev Auth Sr Mtg Arbor
Ser A...................................... 6.000 05/15/28 1,538,355
3,500 New Jersey Econ Dev Auth Utd Methodist
Homes NJ Oblig............................. 5.750 07/01/29 3,566,220
900 New Jersey Hlthcare Fac Fin Auth Rev Avalon
at Hillsborough A (AMT).................... 6.375 07/01/25 907,056
575 New Jersey Hlthcare Fac Fin Auth Rev Avalon
at Hillsborough A (AMT).................... 6.625 07/01/35 580,744
3,225 New Jersey Hlthcare Fac Fin Auth Rev Cap
Hlth Sys Oblig Grp Ser A................... 5.375 07/01/33 3,312,333
810 New Jersey Hlthcare Fac Fin Auth Rev
Raritan Bay Med Ctr Issue Rfdg............. 7.250 07/01/14 835,596
3,000 New Jersey Hlthcare Fac Fin Inst Inc Cherry
Hill Proj.................................. 8.000 07/01/27 3,115,080
1,000 New Jersey St Ed Fac Auth Rev Felician
College of Lodi Ser D (Acquired 11/07/97,
Cost $1,000,000) (a)....................... 7.375 11/01/22 1,047,810
3,535 Tobacco Settlement Fin Corp NJ............. 6.750 06/01/39 3,958,776
5,000 Tobacco Settlement Fin Corp NJ............. 6.250 06/01/43 5,408,100
5,000 Tobacco Settlement Fin Corp NJ Asset Bkd... 6.000 06/01/37 5,247,250
2,000 Tobacco Settlement Fin Corp NJ Asset Bkd... 6.125 06/01/42 2,106,600
--------------
91,883,706
--------------
NEW MEXICO 0.5%
4,065 Albuquerque, NM Retirement Fac Rev La Vida
Llena Proj Ser B Rfdg...................... 6.600 12/15/28 4,198,251
1,505 Cabezon Pub Impt Dist NM Spl Levg Rev...... 6.000 09/01/24 1,541,782
1,005 New Mexico Hsg Auth Region III Sr Brentwood
Gardens Apt Ser A (AMT).................... 6.850 12/01/31 1,035,411
750 Ventana West Pub Impt Dist NM.............. 6.875 08/01/33 794,228
--------------
7,569,672
--------------
NEW YORK 8.1%
965 Bethlehem, NY Indl Dev Agy Sr Hsg Rev Van
Allen Proj Ser A........................... 6.875 06/01/39 964,875
1,000 Brookhaven, NY Indl Dev Agy Mem Hosp Med
Ctr Inc Ser A.............................. 8.125 11/15/20 1,091,630
1,400 Brookhaven, NY Indl Dev Agy Sr Residential
Hsg Rev Woodcrest Estates Fac Ser A
(AMT)...................................... 6.375 12/01/37 1,430,072
3,415 Dutchess Cnty, NY Indl Dev Agy Saint
Francis Hosp Ser A Rfdg.................... 7.500 03/01/29 3,728,839
</Table>
See Notes to Financial Statements 29
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$ 8,250 Metropolitan Trans Auth NY Drivers Ser 898
(Inverse Fltg) (Acquired 05/09/05, Cost
$8,893,723) (FSA Insd) (a) (d)............. 6.504% 05/15/11 $ 8,863,388
5,000 Metropolitan Trans Auth NY Rev Trans Ser
F.......................................... 5.000 11/15/35 5,144,050
1,975 Monroe Cnty, NY Indl Dev Agy Woodland Vlg
Proj....................................... 8.000 11/15/15 2,220,453
3,000 New York City Indl Dev Agy JFK Intl Arpt
Proj Ser B (AMT)........................... 8.500 08/01/28 3,358,500
15,400 New York City Indl Dev Agy Rev Liberty 7
World Trade Ctr Ser A...................... 6.500 03/01/35 16,276,260
4,445 New York City Indl Dev Agy Rev Rols RR II R
523CE (Inverse Fltg) (Acquired 03/03/06,
Cost $5,310,353) (a) (d)................... 14.469 03/01/15 5,390,007
10,000 New York City Indl Dev Agy Spl Fac Rev
Amern Airl JFK Intl Arpt (AMT)............. 7.500 08/01/16 11,003,900
11,750 New York City Indl Dev Agy Spl Fac Rev
Amern Airl JFK Intl Arpt (AMT)............. 7.625 08/01/25 12,913,838
5,000 New York City Indl Dev Agy Spl Fac Rev
Amern Airl JFK Intl Arpt (AMT)............. 7.750 08/01/31 5,542,050
10,000 New York City Muni Wtr Fin Drivers Ser 786
(Inverse Fltg) (Acquired 03/15/05 to
07/21/05, Cost $10,866,500) (a)............ 7.411 12/15/12 10,661,400
4,800 New York City Ser A........................ 7.000 08/01/07 4,922,448
200 New York City Ser A (Prerefunded @
08/01/06).................................. 7.000 08/01/07 205,294
5,000 New York City Transitional Drivers Ser 386
(Inverse Fltg) (Acquired 02/02/04, Cost
$5,458,300) (a) (d)........................ 6.504 02/01/12 5,464,150
1,360 New York St Dorm Auth Rev NY Methodist
Hosp....................................... 5.250 07/01/24 1,430,026
2,000 New York St Dorm Auth Rev NY Methodist
Hosp....................................... 5.250 07/01/33 2,088,260
2,500 New York St Energy Resh & Dev Auth Gas Fac
Rev (Inverse Fltg)......................... 9.025 04/01/20 2,845,925
1,955 Saratoga Cnty, NY Indl Dev Agy Sr Hsg Rev
Highpointe at Malta Proj Ser A............. 6.875 06/01/39 1,964,482
1,000 Suffolk Cnty, NY Gurwin Jewish Phase II.... 6.700 05/01/39 1,071,950
1,000 Suffolk Cnty, NY Indl Dev Agy Continuing
Care Retirement Cmnty Rev.................. 7.250 11/01/28 1,079,330
2,975 Suffolk Cnty, NY Indl Dev Agy Eastn Long Is
Hosp Assoc Ser A........................... 7.750 01/01/22 3,174,444
1,340 Suffolk Cnty, NY Indl Dev Agy Indl Dev Rev
Spellman High Voltage Fac Ser A (AMT)...... 6.375 12/01/17 1,321,669
4,000 Suffolk Cnty, NY Indl Dev Agy Medford
Hamlet Asstd Living Proj (AMT)............. 6.375 01/01/39 4,013,600
</Table>
30 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$ 1,445 Suffolk Cnty, NY Indl Dev Agy Peconic
Landing Ser A.............................. 8.000% 10/01/20 $ 1,618,530
1,000 Syracuse, NY Indl Dev Agy Rev First Mtg
Jewish Home Ser A.......................... 7.375 03/01/31 1,070,080
5,000 Tsasc Inc. NY Rols RR II R 513CE 2 (Inverse
Fltg) (Acquired 03/01/06, Cost $4,936,300)
(a)........................................ 6.537 06/01/26 4,880,450
2,700 Ulster Cnty, NY Indl Dev Agy Civic Fac Rev
Benedictine Hosp Proj Ser A................ 6.450 06/01/24 2,597,859
2,315 Utica, NY Indl Dev Agy Civic Utica College
Civic Fac.................................. 6.750 12/01/21 2,425,263
1,000 Westchester Cnty, NY Indl Dev Hebrew Hosp
Sr Hsg Inc Ser A........................... 7.375 07/01/30 1,078,100
--------------
131,841,122
--------------
NORTH CAROLINA 0.3%
2,000 North Carolina Med Care Commn First Mtg Utd
Methodist Homes
(Prerefunded @ 10/01/09)................... 7.000 10/01/17 2,208,460
2,600 North Carolina Med Care Commn Retirement
Fac Rev First Mtg Ser A 05................. 5.500 10/01/35 2,613,312
--------------
4,821,772
--------------
NORTH DAKOTA 0.2%
2,000 Grand Forks, ND Sr Hsg Rev Spl Term 4000
Vly Square Proj............................ 6.250 12/01/34 2,006,040
940 Grand Forks, ND Sr Hsg Rev Spl Term 4000
Vly Square Proj............................ 6.375 12/01/34 945,048
--------------
2,951,088
--------------
OHIO 3.4%
10,200 Adams Cnty Hosp Fac Impt Rev Adams Cnty
Hosp Proj.................................. 6.500 09/01/36 10,305,774
5,000 Athens Cnty, OH Hosp Fac Rev Impt O'Bleness
Mem Ser A Rfdg............................. 7.125 11/15/33 5,436,400
3,000 Cleveland-Cuyahoga Cnty, OH Spl Assmt/ Tax
Increment.................................. 7.000 12/01/18 3,167,730
1,000 Cuyahoga Cnty, OH Hlthcare Fac Franciscan
Cnty OH Inc Proj Ser C..................... 6.250 05/15/32 1,019,740
5,000 Cuyahoga Cnty, OH Rev Ser A Rfdg........... 6.000 01/01/32 5,530,800
1,760 Dayton, OH Spl Fac Rev Air Freight Cargo
Day LLC Proj (AMT)......................... 6.300 04/01/22 1,697,379
7,510 Erie Cnty, OH Hosp Fac Rev Firelands Regl
Med Ctr Ser A.............................. 5.625 08/15/32 7,807,696
5,955 Franklin Cnty, OH Hlthcare Fac Rev Impt
Lutheran Sr City Proj Rfdg................. 6.125 12/15/28 5,787,367
2,600 Franklin Cnty, OH Hlthcare Fac Rev Impt OH
Presbyterian Svc Ser A..................... 5.125 07/01/35 2,623,244
</Table>
See Notes to Financial Statements 31
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
OHIO (CONTINUED)
$ 1,500 Lucas Cnty, OH Hlthcare & Impt Sunset
Retirement Rfdg............................ 6.500% 08/15/20 $ 1,610,655
750 Lucas Cnty, OH Port Auth Rev Saint Mary
Woods Proj Ser A........................... 6.000 05/15/24 762,780
2,250 Lucas Cnty, OH Port Auth Rev Saint Mary
Woods Proj Ser A........................... 6.000 05/15/34 2,269,215
2,840 Madison Cnty, OH Hosp Impt Rev Madison Cnty
Hosp Proj Rfdg (Prerefunded @ 08/01/08).... 6.400 08/01/28 2,985,323
4,340 Norwood, OH Tax Increment Rev Fin
Cornerstone at Norwood..................... 6.200 12/01/31 4,343,472
--------------
55,347,575
--------------
OKLAHOMA 3.4%
1,000 Citizen Potawatomi Nation, OK Ser A........ 6.500 09/01/16 1,054,780
520 Langston, OK Econ Dev Langston Cmnty Dev
Corp Proj Ser A............................ 7.000 08/01/10 528,544
750 Langston, OK Econ Dev Langston Cmnty Dev
Corp Proj Ser A............................ 7.400 08/01/17 769,073
1,000 Langston, OK Econ Dev Langston Cmnty Dev
Corp Proj Ser A............................ 7.625 08/01/20 1,031,650
1,000 Norman, OK Regl Hosp Auth Hosp Rev......... 5.375 09/01/29 1,010,680
3,000 Norman, OK Regl Hosp Auth Hosp Rev......... 5.375 09/01/36 3,028,440
2,000 Oklahoma Cnty, OK Fin Auth Rev Epworth
Villa Proj Rfdg............................ 6.000 04/01/18 2,034,180
750 Oklahoma Cnty, OK Fin Auth Rev Epworth
Villa Proj Ser A Rfdg...................... 5.700 04/01/25 757,403
1,000 Oklahoma Cnty, OK Fin Auth Rev Epworth
Villa Proj Ser A Rfdg...................... 7.000 04/01/25 1,032,460
1,250 Oklahoma Cnty, OK Fin Auth Rev Epworth
Villa Proj Ser A Rfdg...................... 5.875 04/01/30 1,273,175
1,500 Oklahoma Cnty, OK Fin Auth Rev Retirement
Fac Concordia Ser A........................ 6.125 11/15/25 1,512,345
5,500 Oklahoma Cnty, OK Fin Auth Rev Retirement
Fac Concordia Ser A........................ 6.000 11/15/38 5,497,195
1,065 Oklahoma Dev Fin Auth Rev Hillcrest
Hlthcare Sys Ser A Rfdg (Prerefunded @
08/15/09).................................. 5.750 08/15/12 1,140,700
1,000 Oklahoma Dev Fin Auth Rev Hillcrest
Hlthcare Sys Ser A Rfdg (Prerefunded @
08/15/09).................................. 5.750 08/15/15 1,071,080
4,000 Oklahoma Dev Fin Auth Rev Hillcrest
Hlthcare Sys Ser A Rfdg (Prerefunded @
08/15/09).................................. 5.625 08/15/19 4,268,640
3,250 Tulsa Cnty, OK Pub Fac Auth (Prerefunded @
11/01/09) (AMBAC Insd)..................... 6.250 11/01/22 3,585,498
6,365 Tulsa, OK Muni Arpt Tr Rev Amern Airl Proj
Rfdg....................................... 6.250 06/01/20 6,343,041
16,855 Tulsa, OK Muni Arpt Tr Rev Ser A Rfdg
(AMT)...................................... 7.750 06/01/35 18,266,943
--------------
54,205,827
--------------
</Table>
32 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
OREGON 0.8%
$ 2,000 Clackamas Cnty, OR Hosp Fac Willamette View
Inc Proj Ser A (Prerefunded @ 11/01/09).... 7.500% 11/01/29 $ 2,262,200
2,145 Clatsop Care Ctr Hlth Dist OR Rev Sr Hsg... 6.875 08/01/28 2,164,241
2,500 Multnomah Cnty, OR Hosp Fac Auth Rev
Terwilliger Plaza Proj Rfdg (Acquired
05/21/04, Cost $2,442,200) (a)............. 6.500 12/01/29 2,565,075
5,093 Oregon St Hlth Hsg Ed & Cultural Fac Auth
(AMT)...................................... 7.250 06/01/28 5,164,559
970 Oregon St Hlth Hsg Ed Auth OR Baptist
Retirement Homes Ser A..................... 8.000 11/15/26 998,101
--------------
13,154,176
--------------
PENNSYLVANIA 4.5%
2,000 Allegheny Cnty, PA Hosp Dev Auth Rev OH Vly
Gen Hosp Proj Ser A........................ 5.125 04/01/35 1,995,200
2,000 Allegheny Cnty, PA Hosp Dev Hlth Sys Ser
B.......................................... 9.250 11/15/15 2,398,820
2,000 Allegheny Cnty, PA Hosp Dev Hlth Sys Ser
B.......................................... 9.250 11/15/22 2,391,420
2,000 Allegheny Cnty, PA Hosp Dev Hlth Sys Ser
B.......................................... 9.250 11/15/30 2,389,580
2,000 Allegheny Cnty, PA Indl Dev Auth Lease Rev
(AMT)...................................... 6.625 09/01/24 2,007,600
1,500 Allegheny Cnty, PA Redev Auth Pittsburgh
Mills Proj................................. 5.600 07/01/23 1,579,365
1,000 Berks Cnty, PA Muni Auth Rev Phoebe Berks
Vlg Inc Proj Rfdg (Prerefunded @
05/15/06).................................. 7.700 05/15/22 1,024,650
1,500 Bucks Cnty, PA Indl Dev Auth Retirement
Cmty Rev Ann's Choice Inc Fac Ser A........ 6.125 01/01/25 1,555,485
1,250 Bucks Cnty, PA Indl Dev Auth Retirement
Cmty Rev Ann's Choice Inc Fac Ser A........ 6.250 01/01/35 1,292,450
1,000 Bucks Cnty, PA Indl Dev Auth Rev First Mtg
Hlthcare Fac Chandler...................... 6.200 05/01/19 1,002,930
1,800 Bucks Cnty, PA Indl Dev Auth Rev First Mtg
Hlthcare Fac Chandler...................... 6.300 05/01/29 1,795,536
1,500 Chester Cnty, PA Hlth & Ed Fac Chester Cnty
Hosp Ser A................................. 6.750 07/01/31 1,634,580
2,000 Cumberland Cnty, PA Indl Dev Auth Rev First
Mtg Woods Cedar Run Ser A Rfdg (b)......... 6.500 11/01/28 741,640
3,000 Dauphin Cnty, PA Gen Auth Rev Office & Pkg
Riverfront Office.......................... 6.000 01/01/25 2,790,900
2,200 Indiana Cnty, PA Indl Dev Auth PSEG Pwr LLC
Proj Rfdg (AMT)............................ 5.850 06/01/27 2,317,832
1,000 Lancaster Cnty, PA Hosp Auth Rev Hlth Ctr
Saint Anne's Home.......................... 6.625 04/01/28 1,035,540
1,200 Lehigh Cnty, PA Gen Purp Auth First Mtg
Bible Fellowship Church.................... 7.625 11/01/21 1,325,328
3,000 Lehigh Cnty, PA Gen Purp Auth Rev Good
Shepherd Group Ser A....................... 5.500 11/01/24 3,140,820
</Table>
See Notes to Financial Statements 33
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
PENNSYLVANIA (CONTINUED)
$ 3,585 Lehigh Cnty, PA Gen Purp Auth Rev Kidspeace
Oblig Grp (d).............................. 6.200% 11/01/14 $ 3,537,965
5,500 Lehigh Cnty, PA Gen Purp Auth Rev Kidspeace
Oblig Grp Rfdg............................. 6.000 11/01/23 5,286,215
1,000 Lehigh Cnty, PA Indl Dev Auth Hlth Fac Rev
Lifepath Inc Proj.......................... 6.100 06/01/18 956,900
1,085 Montgomery Cnty, PA Indl Dev Auth Rev Mtg
Whitemarsh Cont Care Proj.................. 6.000 02/01/21 1,144,187
4,500 Montgomery Cnty, PA Indl Dev Auth Rev Mtg
Whitemarsh Cont Care Proj.................. 6.250 02/01/35 4,781,745
1,390 Northeastern PA Hosp & Ed Auth
Hlthcare Rev............................... 7.125 10/01/29 1,430,546
1,690 Northeastern PA Hosp & Ed Auth Hlthcare Rev
Oakwood Ter Proj (Acquired 12/27/05, Cost
$1,690,000) (a) (d)........................ 6.500 10/01/32 1,690,000
1,500 Pennsylvania Econ Dev Fin Auth Reliant
Energy Ser A (AMT)......................... 6.750 12/01/36 1,601,910
3,000 Pennsylvania Econ Dev Fin Auth Reliant
Energy Seward Ser A (AMT).................. 6.750 12/01/36 3,203,820
980 Pennsylvania St Higher Ed Student Assn Inc
Proj Ser A................................. 6.750 09/01/32 1,044,337
6,400 Philadelphia, PA Arpt Rev Ser A (AMT) (MBIA
Insd)...................................... 4.750 06/15/35 6,305,088
2,150 Philadelphia, PA Auth Indl Dev Rev Coml Dev
Rfdg....................................... 7.750 12/01/17 2,175,757
1,925 Philadelphia, PA Hosp & Higher Ed Fac Auth
Rev Centralized Comp Human Svc Ser A....... 6.125 01/01/13 1,906,482
1,500 Scranton Lackawanna, PA Hlth & Welfare Auth
Rev Rfdg (Prerefunded @ 01/15/07).......... 7.250 01/15/17 1,567,425
2,000 Scranton Lackawanna, PA Hlth & Welfare Auth
Rev Rfdg (Prerefunded @ 01/15/07).......... 7.350 01/15/22 2,091,440
1,500 Westmoreland Cnty, PA Indl Dev Hlthcare Fac
Redstone Ser B (Prerefunded @ 11/15/10).... 8.000 11/15/23 1,756,725
--------------
72,900,218
--------------
RHODE ISLAND 0.4%
1,825 Rhode Island St Econ Dev Corp Rev Oblig
Providence Pl.............................. 7.250 07/01/20 1,868,764
1,000 Rhode Island St Hlth & Ed Hosp Fin Ser A
(Prerefunded @ 09/15/08)................... 6.000 09/15/33 1,051,930
3,000 Tobacco Settlement Fin Corp RI Asset Bkd
Ser A...................................... 6.000 06/01/23 3,148,350
--------------
6,069,044
--------------
</Table>
34 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
SOUTH CAROLINA 1.3%
$ 1,700 Lancaster Cnty, SC Assmt Rev Sun City
Carolina Lakes Impt........................ 5.450% 12/01/37 $ 1,715,368
3,000 South Carolina Jobs Econ Dev Auth Econ Dev
Rev Westminster Impt & Rfdg................ 5.375 11/15/30 2,977,530
1,570 South Carolina Jobs Econ Dev Auth Hosp Fac
Rev Palmetto Hlth Alliance Ser A Impt &
Rfdg....................................... 6.250 08/01/31 1,733,186
2,965 South Carolina Jobs Econ Dev Auth Student
Hdg Rev Drivers Ser 650 (Inverse Fltg)
(Acquired 12/17/04, Cost $3,437,858) (MBIA
Insd) (a) (d).............................. 7.253 08/01/12 3,426,532
1,000 South Carolina Jobs Econ Dev Episcopal Home
Still Proj A............................... 6.000 05/15/17 1,019,930
2,000 South Carolina Jobs Econ Dev First Mtg
Westley Com Proj........................... 7.750 10/01/24 2,180,140
4,500 South Carolina Jobs Econ Dev First Mtg
Westley Com Proj........................... 8.000 10/01/31 4,930,560
3,000 Tobacco Settlement Rev Mgmt Auth SC Tob
Settlement Rev Ser B....................... 6.375 05/15/28 3,216,600
--------------
21,199,846
--------------
SOUTH DAKOTA 0.5%
1,010 Keystone, SD Econ Dev Rev Wtr Quality Mgmt
Corp Ser A (AMT)........................... 6.000 12/15/18 1,010,152
5,440 Sioux Falls, SD Multi-Family Hsg Inn
Westport Proj Ser A (Acquired 01/26/04 to
04/27/05, Cost $5,613,880) (a)............. 7.500 12/01/34 5,592,810
1,050 South Dakota St Hlth & Ed Fac Auth Rev
Sioux Vly Hosp & Hlth Sys Ser A............ 5.250 11/01/34 1,087,139
--------------
7,690,101
--------------
TENNESSEE 1.6%
3,000 Elizabethton, TN Hlth & Ed Fac Brd Rev Rfdg
(MBIA Insd)................................ 7.750 07/01/29 3,657,630
1,000 Johnson City, TN Hlth & Ed Fac Brd Hosp Rev
First Mtg Mtn States Hlth Ser A Rfdg....... 7.500 07/01/33 1,164,430
4,950 Johnson City Tn Hlth & Ed Fac Brd Hosp Rev
Riles PA 1351 (Inverse Fltg) (Acquired
02/02/06, Cost $5,313,231) (a) (d)......... 6.875 07/01/36 5,390,897
1,000 Johnson City, TN Hlth & Ed Fac Brd
Retirement Fac Rev Appalachian Christian
Vlg Proj Ser A............................. 6.250 02/15/32 1,034,420
1,000 Shelby Cnty, TN Hlth & Ed Germantown Vlg
Ser A...................................... 7.000 12/01/23 1,048,740
1,000 Shelby Cnty, TN Hlth & Ed Germantown Vlg
Ser A...................................... 7.250 12/01/34 1,059,930
1,000 Shelby Cnty TN Hlth Ed & Hsg Fac Brd Rev
Trezevant Manor Proj Ser A................. 5.625 09/01/26 997,300
</Table>
See Notes to Financial Statements 35
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
TENNESSEE (CONTINUED)
$ 2,500 Shelby Cnty TN Hlth Ed & Hsg Fac Brd Rev
Trezevant Manor Proj Ser A................. 5.750% 09/01/37 $ 2,506,850
5,130 Sullivan Cnty, TN Hlth Ed & Hsg Fac Brd Rev
(d)........................................ 8.410 11/01/19 5,373,367
2,725 Trenton, TN Hlth & Ed Fac Brd Rev Inc Proj
Ser A (Acquired 06/08/89,
Cost $2,725,000) (a) (d)................... 10.000 11/01/19 2,900,735
1,160 Trenton, TN Hlth & Ed Fac Brd Rev Inc Proj
Ser B (Acquired 06/08/89,
Cost $1,160,000) (a) (b) (d)............... 10.000 11/01/20 123,911
--------------
25,258,210
--------------
TEXAS 9.3%
435 Abia Dev Corp TX Arpt Fac Rev Austin Belly
Port Dev LLC Proj Ser A (AMT).............. 6.250 10/01/08 436,492
3,000 Abia Dev Corp TX Arpt Fac Rev Austin Belly
Port Dev LLC Proj Ser A (AMT).............. 6.500 10/01/23 2,984,520
1,000 Atlanta, TX Hosp Auth Fac Rev.............. 6.700 08/01/19 1,040,260
2,035 Atlanta, TX Hosp Auth Fac Rev.............. 6.750 08/01/29 2,086,791
990 Austin-Bergstorm Landhost Enterprises Inc
TX Arpt Hotel Sr Ser A (g)................. 6.750 04/01/27 592,961
990 Bexar Cnty, TX Hsg Fin Corp Multi-Family
Hsg Rev Woodland Ridge Apt Proj Ser A
(AMT)...................................... 7.000 01/01/39 1,003,712
2,000 Brazos Cnty, TX Hlth Fac Dev Oblig Grp..... 5.375 01/01/32 2,052,700
735 Comal Cnty, TX Hlth Fac Dev Hlthcare Sys
McKenna Mem Proj Ser A..................... 6.250 02/01/32 782,106
1,825 Dallas Cnty, TX Flood Ctl Dist No 1 Cap
Apprec Rfdg (Acquired 08/28/89, Cost
$660,829) (a).............................. * 08/01/11 1,369,626
3,445 Dallas Cnty, TX Flood Ctl Dist No 1 Rfdg... 7.250 04/01/32 3,602,815
4,305 Dallas Cnty, TX Flood Ctl Dist Rfdg (d).... 6.750 04/01/16 4,540,096
2,500 Decatur, TX Hosp Auth Hosp Wise Regl Hlth
Sys Ser A.................................. 7.000 09/01/25 2,712,975
3,500 Decatur, TX Hosp Auth Hosp Wise Regl Hlth
Sys Ser A.................................. 7.125 09/01/34 3,798,865
1,500 Grand Prairie, TX Hsg Fin Corp Indpt Sr
Living Ctr Rev............................. 7.500 07/01/17 1,562,670
3,000 Grand Prairie, TX Hsg Fin Corp Indpt Sr
Living Ctr Rev............................. 7.750 01/01/34 3,124,170
6,400 Houston, TX Arpt Sys Rev Spl Fac Contl Airl
Ser B (AMT)................................ 6.125 07/15/17 6,276,864
500 Houston, TX Arpt Sys Rev Spl Fac Contl Airl
Ser C (AMT)................................ 5.700 07/15/29 437,155
22,130 Houston, TX Arpt Sys Rev Spl Fac Contl Airl
Ser E (AMT)................................ 6.750 07/01/21 22,447,123
8,115 Houston, TX Arpt Sys Rev Spl Fac Contl Airl
Ser E (AMT)................................ 6.750 07/01/29 8,231,288
</Table>
36 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
TEXAS (CONTINUED)
$ 1,750 Houston, TX Arpt Sys Rev Sub Lien Ser A
(AMT) (FSA Insd)........................... 5.125% 07/01/32 $ 1,781,588
3,000 Houston, TX Hlth Fac Dev Corp Buckingham Sr
Living Cmnty Ser A......................... 7.125 02/15/34 3,291,930
17,750 Houston TX Util Sys Rev Comb First Lien Ser
A Rfdg (MBIA Insd) (c)..................... 5.125 05/15/28 18,618,685
3,750 Kerrville, TX Hlth Fac Dev Corp Hosp Rev
Sid Peterson Mem Hosp Proj................. 5.375 08/15/35 3,787,538
3,750 Lower CO River Auth TX Rev Ser A Rfdg
(Inverse Fltg) (Acquired 10/20/99, Cost
$3,784,875) (FSA Insd) (a)................. 7.769 05/15/15 4,278,450
8,880 Lower CO River Auth TX Rev Ser A Rfdg
(Inverse Fltg) (Acquired 10/20/99, Cost
$9,073,939) (FSA Insd) (a)................. 7.769 05/15/14 10,104,286
10,000 Lubbock, TX Hlth Fac Dev Corp Rev Ref First
Mtg Carillon Proj A Rfdg................... 6.625 07/01/36 9,868,800
1,330 Lubbock, TX Hlth Fac Dev Corp Rev First Mtg
Carillon Proj Ser A (Prerefunded @
07/01/09).................................. 6.500 07/01/19 1,432,836
2,255 Meadow Parc Dev Inc TX Multi-Family Rev Hsg
Meadow Parc Apt Proj....................... 6.500 12/01/30 2,275,272
2,500 Metropolitan Hlth Fac Dev Corp TX Wilson N
Jones Mem Hosp Proj........................ 7.250 01/01/31 2,582,225
2,755 Midlothian, TX Dev Auth Tax Increment
Contract Rev............................... 6.700 11/15/23 2,826,134
2,000 Midlothian, TX Dev Auth Tax Increment
Contract Rev............................... 7.875 11/15/26 2,187,520
1,500 Midlothian, TX Dev Auth Tax Increment
Contract Rev (Acquired 12/02/04, Cost
$1,500,000) (a)............................ 6.200 11/15/29 1,503,030
1,000 Richardson, TX Hosp Auth Rev Baylor &
Richardson Impt & Rfdg..................... 5.625 12/01/28 1,026,000
250 San Antonio, TX Hlth Fac Dev Corp Rev
Encore Nursing Ctr Part.................... 8.250 12/01/19 250,140
1,350 Texas St Dept Hsg & Cmnty Affairs Home Mtg
Rev (AMT) (GNMA Collateralized)............ 6.900 07/02/24 1,360,706
1,675 Texas St Pub Fin Auth Sch Excellence Ed
Proj Ser A (Acquired 12/02/04,
Cost $1,654,197) (a)....................... 7.000 12/01/34 1,732,419
1,500 Texas St Student Hsg Corp MSU Proj Midwestn
St Univ.................................... 6.500 09/01/34 1,624,590
2,950 Tomball, TX Hosp Auth Rev Hosp Tomball Regl
Hosp....................................... 6.000 07/01/29 3,045,757
1,000 Travis Cnty, TX Hlth Fac Dev Corp
Retirement Fac Rev Querencia Barton Creek
Proj....................................... 5.500 11/15/25 986,940
</Table>
See Notes to Financial Statements 37
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
TEXAS (CONTINUED)
$ 2,950 Travis Cnty, TX Hlth Fac Dev Corp
Retirement Fac Rev Querencia Barton Creek
Proj....................................... 5.650% 11/15/35 $ 2,898,995
945 Wichita Cnty, TX Hlth Fac Rolling Meadows
Fac Ser A Rfdg............................. 6.250 01/01/28 960,763
2,500 Woodhill Pub Fac Corp TX Hsg-Woodhill Apt
Proj....................................... 7.500 12/01/29 2,415,250
--------------
149,923,043
--------------
UTAH 0.2%
1,000 Hildale, UT Elec Rev Gas Turbine Elec Fac
Proj (b)................................... 7.800 09/01/15 360,000
1,165 Hildale, UT Elec Rev Gas Turbine Elec Fac
Proj (b)................................... 8.000 09/01/20 419,400
1,000 Hildale, UT Elec Rev Gas Turbine Elec Fac
Proj (b)................................... 7.800 09/01/25 360,000
2,395 Utah St Hsg Fin Agy Rev RHA Cmnty Svc Proj
Ser A...................................... 6.875 07/01/27 2,419,788
35 Utah St Hsg Fin Agy Single Family Mtg Mezz
A1 (AMBAC Insd)............................ 6.100 07/01/13 35,744
--------------
3,594,932
--------------
VERMONT 0.2%
1,000 Vermont Ed & Hlth Bldg Fin Agy Rev
Bennington College Proj.................... 6.625 10/01/29 1,032,970
1,910 Vermont Ed & Hlth Bldg Fin Agy Rev Hlthcare
Fac Copley Manor Proj...................... 6.500 04/01/33 1,298,953
1,000 Vermont Ed & Hlth Bldg Fin Agy Rev VT
Council Dev Mental Hlth Ser A.............. 6.000 12/15/09 1,047,010
--------------
3,378,933
--------------
VIRGINIA 1.8%
4,000 Albemarle Cnty, VA Indl Dev Auth Ed Fac Rev
Covenant Sch Inc Ser A..................... 7.750 07/15/32 4,417,800
2,500 Henrico Cnty, VA Econ Dev Auth Residential
Care Fac Rev Utd Methodist Ser A Rfdg...... 6.500 06/01/22 2,673,450
6,000 Peninsula Port Auth VA Residential Care Fac
Rev VA Baptist Homes Ser A................. 7.375 12/01/32 6,672,000
4,000 Roanoke Cnty, VA Indl Dev Auth Glebe Inc
Ser A...................................... 6.300 07/01/35 4,118,640
8,810 Tobacco Settlement Fin Corp VA Rites PA
1341 (Inverse Fltg) (Acquired 12/07/05,
Cost $8,844,888) (a)....................... 6.653 06/01/37 9,303,889
1,700 Virginia Small Business Fin Auth Rev Indl
Dev SIL Clean Wtr Proj (AMT)............... 7.250 11/01/24 1,763,835
--------------
28,949,614
--------------
</Table>
38 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
WASHINGTON 0.7%
$ 1,000 King Cnty, WA Pub Hosp Dist No 004
Snoqualmie Vly Hosp........................ 7.250% 12/01/15 $ 1,061,780
8,830 Tobacco Settlement Auth WA Asset Bkd....... 6.625 06/01/32 9,720,859
--------------
10,782,639
--------------
WISCONSIN 1.1%
800 Baldwin, WI Hosp Rev Mtg Ser A............. 6.125 12/01/18 803,744
1,000 Baldwin, WI Hosp Rev Mtg Ser A............. 6.375 12/01/28 1,005,450
1,745 Milwaukee, WI Rev Sr Air Cargo (AMT)....... 6.500 01/01/25 1,880,133
750 Wisconsin Hlth & Ed Fac Eastcastle Pl
Inc Proj................................... 6.000 12/01/24 768,713
2,000 Wisconsin St Hlth & Ed Fac Auth Rev Aurora
Hlthcare Inc Ser A......................... 5.600 02/15/29 2,048,920
3,000 Wisconsin St Hlth & Ed Fac Auth Rev
Milwaukee Catholic Home Inc Proj........... 7.500 07/01/26 3,068,430
1,000 Wisconsin St Hlth & Ed Fac Auth Rev Oakwood
Vlg Proj Ser A............................. 7.625 08/15/30 1,093,010
1,500 Wisconsin St Hlth & Ed Fac Beaver Dam Cmnty
Hosp Inc Ser A............................. 6.750 08/15/34 1,625,370
1,000 Wisconsin St Hlth & Ed Fac Divine Savior
Hlthcare Ser C (Prerefunded @ 05/01/12).... 7.500 05/01/32 1,173,610
2,000 Wisconsin St Hlth & Ed Fac Fort Hlthcare
Inc Proj................................... 6.100 05/01/34 2,183,180
1,500 Wisconsin St Hlth & Ed Fac Southwest Hlth
Ctr Ser A.................................. 6.125 04/01/24 1,533,735
--------------
17,184,295
--------------
WYOMING 0.4%
4,000 Sweetwater Cnty, WY Solid Waste Disp Rev
Corp Proj Rfdg (AMT)....................... 5.600 12/01/35 4,157,040
1,500 Teton Cnty, WY Hosp Dist Hosp Saint Johns
Med Ctr.................................... 6.750 12/01/27 1,590,555
--------------
5,747,595
--------------
PUERTO RICO 1.3%
15,000 Puerto Rico Comwlth Hwy & Trans Auth Trans
Rev Ser K.................................. 5.000 07/01/40 15,131,550
465 Puerto Rico Port Auth Rev Spl Fac Amern
Airl Ser A (AMT)........................... 6.250 06/01/26 425,224
5,000 Puerto Rico Pub Bldg Auth Rev Govt Fac
Ser I...................................... 5.250 07/01/33 5,217,150
--------------
20,773,924
--------------
</Table>
See Notes to Financial Statements 39
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
U. S. VIRGIN ISLANDS 0.2%
$ 2,500 Northern Mariana Islands Ser A............. 7.375% 06/01/30 $ 2,743,725
1,000 Virgin Islands Pub Fin Auth Resr Secd-
Hovensa Refinery (AMT)..................... 5.875 07/01/22 1,090,210
--------------
3,833,935
--------------
TOTAL MUNICIPAL BONDS 99.7%................................................. 1,612,995,408
--------------
<Caption>
NUMBER OF
DESCRIPTION SHARES VALUE
- -----------------------------------------------------------------------------------------------
EQUITY 0.0%
GMT Holdings, LLC (h)............................................. 2,240 $ 0
--------------
TOTAL LONG-TERM INVESTMENTS 99.7%
(Cost $1,564,737,102)....................................................... 1,612,995,408
SHORT-TERM INVESTMENT 0.0%
(Cost $900,000)............................................................. 900,000
--------------
TOTAL INVESTMENTS 99.7%
(Cost $1,565,637,102)....................................................... 1,613,895,408
OTHER ASSETS IN EXCESS OF LIABILITIES 0.3%................................... 4,459,298
--------------
NET ASSETS 100.0%............................................................ $1,618,354,706
==============
</Table>
Percentages are calculated as a percentage of net assets.
* Zero coupon bond
(a) These securities are restricted and may be resold only in transactions
exempt from registration which are normally those transactions with
qualified institutional buyers. Restricted securities comprise 14.2% of net
assets.
(b) Non-income producing security.
(c) Securities purchased on a when-issued or delayed delivery basis.
(d) The Fund owns 100% of the outstanding bond issuance.
(e) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(f) Payment-in-kind security.
(g) Interest is accruing at less than the stated coupon.
(h) Market value is determined in accordance with procedures established in good
faith by the Board of Trustees.
40 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
ACA--American Capital Access
AMBAC--AMBAC Indemnity Corp.
AMT--Alternative Minimum Tax
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
GNMA--Government National Mortgage Association
MBIA--Municipal Bond Investors Assurance Corp.
See Notes to Financial Statements 41
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
March 31, 2006 (Unaudited)
<Table>
ASSETS:
Total Investments (Cost $1,565,637,102)..................... $1,613,895,408
Cash........................................................ 282,549
Receivables:
Investments Sold.......................................... 31,221,224
Interest.................................................. 29,035,215
Fund Shares Sold.......................................... 1,961,513
Other....................................................... 191,854
--------------
Total Assets............................................ 1,676,587,763
--------------
LIABILITIES:
Payables:
Investments Purchased..................................... 50,540,373
Fund Shares Repurchased................................... 3,789,197
Income Distributions...................................... 2,263,484
Investment Advisory Fee................................... 639,825
Distributor and Affiliates................................ 628,516
Trustees' Deferred Compensation and Retirement Plans........ 249,946
Accrued Expenses............................................ 121,716
--------------
Total Liabilities....................................... 58,233,057
--------------
NET ASSETS.................................................. $1,618,354,706
==============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $1,693,999,709
Net Unrealized Appreciation................................. 48,258,306
Accumulated Undistributed Net Investment Income............. (3,825,995)
Accumulated Net Realized Loss............................... (120,077,314)
--------------
NET ASSETS.................................................. $1,618,354,706
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $1,288,482,312 and 96,784,281 shares of
beneficial interest issued and outstanding)............. $ 13.31
Maximum sales charge (4.75%* of offering price)......... .66
--------------
Maximum offering price to public........................ $ 13.97
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $131,146,166 and 9,857,097 shares of
beneficial interest issued and outstanding)............. $ 13.30
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $198,726,228 and 14,820,613 shares of
beneficial interest issued and outstanding)............. $ 13.41
==============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
42 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended March 31, 2006 (Unaudited)
<Table>
INVESTMENT INCOME:
Interest.................................................... $48,993,408
-----------
EXPENSES:
Investment Advisory Fee..................................... 3,725,746
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $1,598,988, $693,208 and $991,913,
respectively)............................................. 3,284,109
Shareholder Services........................................ 378,636
Legal....................................................... 86,852
Custody..................................................... 80,791
Trustees' Fees and Related Expenses......................... 21,433
Other....................................................... 339,786
-----------
Total Expenses.......................................... 7,917,353
Less Credits Earned on Cash Balances.................... 28,941
-----------
Net Expenses............................................ 7,888,412
-----------
NET INVESTMENT INCOME....................................... $41,104,996
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $(4,452,616)
Futures................................................... 77,287
-----------
Net Realized Loss........................................... (4,375,329)
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 32,455,361
End of the Period......................................... 48,258,306
-----------
Net Unrealized Appreciation During the Period............... 15,802,945
-----------
NET REALIZED AND UNREALIZED GAIN............................ $11,427,616
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $52,532,612
===========
</Table>
See Notes to Financial Statements 43
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets (Unaudited)
<Table>
<Caption>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2006 SEPTEMBER 30, 2005
--------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................ $ 41,104,996 $ 64,808,196
Net Realized Loss.................................... (4,375,329) (24,372,853)
Net Unrealized Appreciation During the Period........ 15,802,945 43,414,445
-------------- --------------
Change in Net Assets from Operations................. 52,532,612 83,849,788
-------------- --------------
Distributions from Net Investment Income:
Class A Shares..................................... (34,767,318) (55,305,117)
Class B Shares..................................... (3,300,416) (6,722,269)
Class C Shares..................................... (4,676,007) (6,404,362)
-------------- --------------
Total Distributions.................................. (42,743,741) (68,431,748)
-------------- --------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES......................................... 9,788,871 15,418,040
-------------- --------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold............................ 108,469,388 800,745,467
Net Asset Value of Shares Issued Through Dividend
Reinvestment....................................... 28,747,797 45,579,353
Cost of Shares Repurchased........................... (140,890,747) (223,389,642)
-------------- --------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS... (3,673,562) 622,935,178
-------------- --------------
TOTAL INCREASE IN NET ASSETS......................... 6,115,309 638,353,218
NET ASSETS:
Beginning of the Period.............................. 1,612,239,397 973,886,179
-------------- --------------
End of the Period (Including accumulated
undistributed net investment income of $(3,825,995)
and ($2,187,250), respectively).................... $1,618,354,706 $1,612,239,397
============== ==============
</Table>
44 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS A SHARES MARCH 31, --------------------------------------------------
2006 2005 2004 2003 2002 (a) 2001
----------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD......................... $ 13.23 $ 13.00 $13.03 $13.21 $13.25 $13.27
-------- -------- ------ ------ ------ ------
Net Investment Income.......... .35(c) .72(c) .74(c) .79 .78 .77
Net Realized and Unrealized
Gain/Loss.................... .09 .27 -0- (.25) (.11) (.05)
-------- -------- ------ ------ ------ ------
Total from Investment
Operations..................... .44 .99 .74 .54 .67 .72
Less Distributions from Net
Investment Income............ .36 .76 .77 .72 .71 .74
-------- -------- ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD......................... $ 13.31 $ 13.23 $13.00 $13.03 $13.21 $13.25
======== ======== ====== ====== ====== ======
Total Return (b)................. 3.40%* 7.75% 5.87% 4.21% 5.28% 5.46%
Net Assets at End of the Period
(In millions).................. $1,288.5 $1,267.3 $766.1 $560.9 $579.1 $607.1
Ratio of Expenses to Average Net
Assets......................... .83% .86% .91% .89% .86% .87%
Ratio of Net Investment Income to
Average Net Assets............. 5.29% 5.41% 5.74% 6.07% 5.99% 5.88%
Portfolio Turnover............... 35%* 48% 16% 14% 14% 22%
</Table>
* Non-Annualized
(a) As required, effective October 31, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended September 30, 2002 was to increase net investment
income per share by less than $.01, decrease net realized and unrealized
gains and losses per share by less than $.01 and increase the ratio of net
investment income to average net assets from 5.95% to 5.99%. Per share,
ratios and supplemental data for periods prior to September 30, 2002 have
not been restated to reflect this change in presentation.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 4.75% or contingent deferred
sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be
imposed on certain redemptions made within eighteen months of purchase. If
the sales charges were included, total returns would be lower. These returns
include combined Rule 12b-1 fees and service fees of up to .25% and do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) Based on average shares outstanding.
See Notes to Financial Statements 45
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS B SHARES MARCH 31, ------------------------------------------------
2006 2005 2004 2003 2002 (a) 2001
--------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD.......................... $13.22 $12.99 $13.02 $13.20 $13.24 $13.27
------ ------ ------ ------ ------ ------
Net Investment Income........... .30(c) .62(c) .65(c) .69(c) .70 .68
Net Realized and Unrealized
Gain/Loss..................... .09 .27 (.01) (.25) (.12) (.06)
------ ------ ------ ------ ------ ------
Total from Investment
Operations...................... .39 .89 .64 .44 .58 .62
Less Distributions from Net
Investment Income............... .31 .66 .67 .62 .62 .65
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD.......................... $13.30 $13.22 $12.99 $13.02 $13.20 $13.24
====== ====== ====== ====== ====== ======
Total Return (b).................. 2.94%* 7.04% 5.07% 3.42% 4.49% 4.71%
Net Assets at End of the Period
(In millions)................... $131.1 $144.9 $123.8 $115.6 $149.5 $176.5
Ratio of Expenses to Average Net
Assets.......................... 1.58% 1.61% 1.67% 1.64% 1.62% 1.63%
Ratio of Net Investment Income to
Average Net Assets.............. 4.54% 4.67% 5.00% 5.32% 5.23% 5.12%
Portfolio Turnover................ 35%* 48% 16% 14% 14% 22%
</Table>
* Non-Annualized
(a) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended September 30, 2002 was to increase net investment
income per share by less than $.01, decrease net realized and unrealized
gains and losses per share by less than $.01, and increase the ratio of net
investment income to average net assets from 5.19% to 5.23%. Per share,
ratios and supplemental data for periods prior to September 30, 2002 have
not been restated to reflect this change in presentation.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 4% charged on certain redemptions
made within one year of purchase and declining to 0% after the sixth year.
If the sales charge was included, total returns would be lower. These
returns include combined Rule 12b-1 fees and service fees of up to 1% and do
not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) Based on average shares outstanding.
46 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS C SHARES MARCH 31, ------------------------------------------------
2006 2005 2004 2003 2002 (a) 2001
--------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD.......................... $13.32 $13.09 $13.11 $13.20 $13.24 $13.27
------ ------ ------ ------ ------ ------
Net Investment Income........... .30(d) .62(d) .64(d) .79(d) .70 .68
Net Realized and Unrealized
Gain/Loss..................... .10 .27 .01 (.26) (.12) (.06)
------ ------ ------ ------ ------ ------
Total from Investment
Operations...................... .40 .89 .65 .53 .58 .62
Less Distributions from Net
Investment Income............... .31 .66 .67 .62 .62 .65
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD.......................... $13.41 $13.32 $13.09 $13.11 $13.20 $13.24
====== ====== ====== ====== ====== ======
Total Return (b).................. 2.99%* 6.98% 5.10%(e) 4.10%(c) 4.49% 4.71%
Net Assets at End of the Period
(In millions)................... $198.7 $200.0 $ 84.0 $ 34.3 $ 38.5 $ 44.4
Ratio of Expenses to Average Net
Assets.......................... 1.58% 1.62% 1.65%(e) 1.64% 1.62% 1.62%
Ratio of Net Investment Income to
Average Net Assets.............. 4.54% 4.62% 4.94%(e) 6.00%(c) 5.23% 5.13%
Portfolio Turnover................ 35%* 48% 16% 14% 14% 22%
</Table>
* Non-Annualized
(a) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended September 30, 2002 was to increase net investment
income per share by less than $.01, decrease net realized and unrealized
gains and losses per share by less than $.01, and increase the ratio of net
investment income to average net assets from 5.19% to 5.23%. Per share,
ratios and supplemental data for periods prior to September 30, 2002 have
not been restated to reflect this change in presentation.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 1%, charged on certain redemptions
made within one year of purchase. If the sales charge was included, total
returns would be lower. These returns include combined Rule 12b-1 fees and
service fees of up to 1% and do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
(c) Certain non-recurring payments were made to Class C Shares, resulting in an
increase to the Total Return and Ratio of Net Investment Income to Average
Net Assets of .68% and .69%, respectively.
(d) Based on average shares outstanding.
(e) The Total Return, Ratio of Expenses to Average Net Assets and Ratio of Net
Investment Income to Average Net Assets reflect actual 12b-1 fees of less
that 1% (See footnote 7).
See Notes to Financial Statements 47
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Strategic Municipal Income Fund (the "Fund") is organized as a series
of the Van Kampen Tax Free Trust, a Delaware statutory trust, and is registered
as a diversified, open-end management investment company under the Investment
Company Act of 1940 (the "1940 Act"), as amended. The Fund's investment
objective is to seek to provide investors a high level of current income exempt
from federal income tax primarily through investment in a diversified portfolio
of medium- and lower-grade municipal securities. The Fund commenced investment
operations on June 28, 1985. The Fund offers Class A Shares, Class B Shares,
Class C Shares and Class I Shares. Each class of shares differs by its initial
sales load, contingent deferred sales charges, the allocation of class-specific
expenses and voting rights on matters affecting a single class. As of March 31,
2006, there have been no sales of Class I Shares.
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 U.S. 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 Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services or dealers are valued at
fair value using procedures established in good faith by the Board of Trustees.
Futures contracts are valued at the settlement price established each day on the
exchange on which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
Legal expenditures that are expected to result in the restructuring of or a plan
of reorganization for an investment are recorded as realized losses. The Fund
may purchase and sell securities on a "when-issued" or "delayed delivery" basis,
with settlement to occur at a later date. The value of the security so purchased
is subject to market fluctuations during this period. The Fund will segregate
assets with the custodian having an aggregate value at least equal to the amount
of the when-issued or delayed delivery purchase commitments until payment is
made. At March 31, 2006, the Fund had $28,417,614 of when-issued or delayed
delivery purchase commitments.
C. INCOME AND EXPENSES Interest income is recorded on an accrual basis. Bond
premium is amortized and discount is accreted over the expected life of each
applicable security. Income and expenses of the Fund are allocated on a pro rata
basis to each class of shares, except for distribution and service fees and
incremental transfer agency costs which are unique to each class of shares.
48
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of Subchapter M of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset these losses against any future realized capital
gains. At September 30, 2005, the Fund had an accumulated capital loss
carryforward for tax purposes of $92,093,340 which will expire according to the
following schedule.
<Table>
<Caption>
AMOUNT EXPIRATION
$ 1,076,939................................................. September 30, 2006
9,610,374................................................. September 30, 2008
10,147,307................................................. September 30, 2009
16,221,240................................................. September 30, 2010
22,472,916................................................. September 30, 2011
3,607,121................................................. September 30, 2012
28,957,443................................................. September 30, 2013
</Table>
At March 31, 2006, the cost and related gross unrealized appreciation and
depreciation are as follows:
<Table>
Cost of investments for tax purposes........................ $1,564,966,234
==============
Gross tax unrealized appreciation........................... $ 70,903,013
Gross tax unrealized depreciation........................... (21,973,839)
--------------
Net tax unrealized appreciation on investments.............. $ 48,929,174
==============
</Table>
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains, which are included as ordinary income for
tax purposes.
The tax character of distributions paid during the year ended September 30,
2005 was as follows:
<Table>
Distributions paid from:
Ordinary income........................................... $ 1,843
Tax-exempt income......................................... 67,834,052
Long-term capital gain.................................... -0-
-----------
$67,835,895
===========
</Table>
As of September 30, 2005, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed Ordinary income............................... $ 48,591
Undistributed Tax-exempt income............................. 6,277,544
</Table>
49
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of the deferral of losses relating to wash sale
transactions and the capitalization of reorganization and restructuring costs.
F. EXPENSE REDUCTIONS During the six months ended March 31, 2006, the Fund's
custody fee was reduced by $28,941 as a result of credits earned on cash
balances.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, Van Kampen Asset
Management ("the Adviser") will provide investment advice and facilities to the
Fund for an annual fee payable monthly as follows:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS % PER ANNUM
First $500 million.......................................... .50%
Over $500 million........................................... .45%
</Table>
For the six months ended March 31, 2006, the Fund recognized expenses of
approximately $16,700 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, of which a trustee of the Fund is a partner of such
firm and he and his law firm provide legal services as legal counsel to the
Fund.
Under separate Legal Services, Accounting Services and Chief Compliance
Officer ("CCO") Employment agreements, the Adviser provides accounting and legal
services and the CCO provides compliance services to the Fund. The costs of
these services are allocated to each fund. For the six months ended March 31,
2006, the Fund recognized expenses of approximately $89,600 representing Van
Kampen Investments Inc.'s or its affiliates' (collectively "Van Kampen") cost of
providing accounting and legal services to the Fund, as well as, the salary,
benefits and related costs of the CCO and related support staff paid by Van
Kampen. Services provided pursuant to the Legal Services agreement are reported
as part of "Legal" expenses on the Statement of Operations. Services provided
pursuant to the Accounting Services and CCO Employment agreement are reported as
part of "Other" expenses on the Statement of Operations.
Van Kampen Investor Services Inc. ("VKIS"), an affiliate of the Adviser,
serves as the shareholder servicing agent of the Fund. For the six months ended
March 31, 2006, the Fund recognized expenses of approximately $334,800
representing transfer agency fees paid to VKIS. Transfer agency fees are
determined through negotiations with the Fund's Board of Trustees.
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 also
officers of Van Kampen.
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.
Amounts deferred are retained by the Fund and to the extent permitted by the
1940 Act, as amended, may be invested in the common shares of those funds
selected by the trustees. Investments in such funds of $153,558 are included in
"Other" assets on the Statement of Assets and Liabilities at March 31, 2006.
Appreciation/depreciation and distributions received from these investments are
recorded with an offsetting increase/decrease in the deferred compensation
obligation and do not affect the net
50
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
asset value of the Fund. Benefits under the retirement plan are payable upon
retirement 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.
For the six months ended March 31, 2006, Van Kampen, as distributor for the
Fund, received commissions on sales of the Fund's Class A shares of
approximately $200,600 and CDSC on redeemed shares of approximately $135,900.
Sales charges do not represent expenses of the Fund.
3. CAPITAL TRANSACTIONS
For the six months ended March 31, 2006 and the year ended September 30, 2005,
transactions were as follows:
<Table>
<Caption>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2006 SEPTEMBER 30, 2005
---------------------------- ----------------------------
SHARES VALUE SHARES VALUE
Sales:
Class A....................... 6,893,800 $ 91,224,095 46,042,142 $ 610,280,678
Class B....................... 191,696 2,533,497 3,997,568 52,841,157
Class C....................... 1,104,505 14,711,796 10,302,312 137,623,632
----------- ------------- ----------- -------------
Total Sales..................... 8,190,001 $ 108,469,388 60,342,022 $ 800,745,467
=========== ============= =========== =============
Dividend Reinvestment:
Class A....................... 1,812,392 $ 23,991,664 2,846,859 $ 37,712,082
Class B....................... 165,155 2,184,422 322,306 4,263,931
Class C....................... 192,933 2,571,711 269,962 3,603,340
----------- ------------- ----------- -------------
Total Dividend Reinvestment..... 2,170,480 $ 28,747,797 3,439,127 $ 45,579,353
=========== ============= =========== =============
Repurchases:
Class A....................... (7,696,263) $(101,773,958) (12,050,561) $(158,836,281)
Class B....................... (1,455,304) (19,274,782) (2,891,622) (38,202,420)
Class C....................... (1,490,028) (19,842,007) (1,980,028) (26,350,941)
----------- ------------- ----------- -------------
Total Repurchases............... (10,641,595) $(140,890,747) (16,922,211) $(223,389,642)
=========== ============= =========== =============
</Table>
4. REDEMPTION FEE
The Fund assesses a 2% redemption fee on the proceeds of Fund shares that are
redeemed (either by sale or exchange) within 30 days of purchase. The redemption
fee is paid directly to the Fund. For the six months ended March 31, 2006, the
Fund received redemption fees of approximately $7,100, which are reported as
part of "Cost of Shares Repurchased" on the Statement of Changes in Net Assets.
5. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $553,192,991 and $554,435,823,
respectively.
51
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
6. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio, to manage the portfolio's effective yield, maturity and duration, or
generate potential gain. All of the Fund's portfolio holdings, including
derivative instruments, are marked to market each day with the change in value
reflected in unrealized appreciation/depreciation. Upon disposition, a realized
gain or loss is recognized accordingly, except when taking delivery of a
security underlying a futures contract. In this instance, the recognition of
gain or loss is postponed until the disposal of the security underlying the
futures contract. Risks may arise as a result of the potential inability of the
counter parties to meet the terms of their contracts.
Summarized below are the specific types of derivative financial instruments
used by the Fund.
A. FUTURES CONTRACTS A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Fund generally invests in exchange traded futures contracts on U.S. Treasury
Securities and typically closes the contract prior to the delivery date. These
contracts are generally used to manage the Fund's effective maturity and
duration. Upon entering into futures contracts, the Fund maintains an amount of
cash or liquid securities with a value equal to a percentage of the contract
amount with either a futures commission merchant pursuant to rules and
regulations promulgated under the 1940 Act, as amended, or with its custodian in
an account in the broker's name. This amount is known as initial margin. During
the period the futures contract is open, payments are received from or made to
the broker based upon changes in the value of the contract (the variation
margin).
Transactions in futures contracts for the six months ended March 31, 2006
were as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at September 30, 2005........................... -0-
Futures Opened.............................................. 300
Futures Closed.............................................. (300)
----
Outstanding at March 31, 2006............................... -0-
====
</Table>
B. INDEXED SECURITIES An inverse floating rate security is one where the coupon
is inversely indexed to a short-term floating interest rate multiplied by a
specific factor. As the floating rate rises, the coupon is reduced. Conversely,
as the floating rate declines, the coupon is increased. The price of these
securities may be more volatile than the price of a comparable fixed rate
security. These instruments are typically used by the Fund to enhance the yield
of the portfolio. These instruments are identified in the Portfolio of
Investments.
7. DISTRIBUTION AND SERVICE PLANS
Shares of the Fund are distributed by Van Kampen Funds Inc. (the "Distributor"),
an affiliate of the Adviser. The Fund has adopted a distribution plan pursuant
to Rule 12b-1 under the 1940 Act, as amended, and a service plan (collectively,
the "Plans") for Class A Shares,
52
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
Class B Shares and Class C Shares to compensate the Distributor for the
distribution, shareholder servicing and maintenance of shareholder accounts for
these shares. Under the Plans, the Fund will incur annual fees of up to .25% of
Class A average daily net assets and up to 1.00% each of Class B and Class C
average daily net assets. These fees are accrued daily and paid to the
Distributor monthly.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed receivable") was approximately $3,054,200 and $401,600
for Class B and Class C Shares, respectively. These amounts may be recovered
from future payments under the distribution plan or CDSC. To the extent the
unreimbursed receivable has been fully recovered, the distribution fee is
reduced.
8. LEGAL MATTERS
The Adviser, certain affiliates of the Adviser, and certain investment companies
advised by the Adviser or its affiliates, including the Fund, are named as
defendants in a number of similar class action complaints which were
consolidated. The consolidated action also names as defendants certain
individual Trustees and Directors of certain investment companies advised by
affiliates of the Adviser; the complaint does not, however, name the individual
Trustees of any Van Kampen funds. The consolidated amended complaint generally
alleges that defendants violated their statutory disclosure obligations and
fiduciary duties by failing properly to disclose (i) that the Adviser and
certain affiliates of the Adviser allegedly offered economic incentives to
brokers and others to steer investors to the funds advised by the Adviser or its
affiliates rather than funds managed by other companies, and (ii) that the funds
advised by the Adviser or its affiliates, including the Fund, allegedly paid
excessive commissions to brokers in return for their alleged efforts to steer
investors to these funds. The complaint seeks, among other things, unspecified
compensatory damages, rescissionary damages, fees and costs. Plaintiffs filed a
Motion for Leave to file a Supplemental Pleading that would, among other things,
expand the allegations and alleged class. The defendants moved to dismiss this
action, which motion was granted in its entirety. Additionally, plaintiffs'
Motion for Leave to file a Supplemental Pleading was denied. This matter is now
concluded.
The Adviser and certain affiliates of the Adviser are also named as
defendants in a derivative suit which additionally names as defendants certain
individual Trustees of certain Van Kampen funds; the named investment companies,
including the Fund, are listed as nominal defendants. The complaint alleges that
defendants caused the Van Kampen funds to pay economic incentives to a
proprietary sales force to promote the sale of proprietary mutual funds. The
complaint also alleges that the Van Kampen funds paid excessive commissions to
Morgan Stanley and its affiliates in connection with the sales of the funds. The
complaint seeks, among other things, the removal of the current Trustees of the
funds, rescission of the management contracts for the funds, disgorgement of
profits by Morgan Stanley and its affiliates and monetary damages. This
complaint has been coordinated with the consolidated complaint described in the
preceding paragraph. Plaintiff sought leave to file a second amended derivative
compliant that alleges that the Adviser permitted or recklessly disregarded
market timing and late trading in its proprietary mutual funds in order to
increase assets under management and fees. However, pursuant to an agreement
between the parties, the plaintiff's proposed second amended derivative
complaint was withdrawn and the allegations regarding market timing and late
trading asserted therein were filed in a separate
53
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
complaint and coordinated with other cases related to market timing that have
been centralized in a federal court. Additionally, plaintiff's initial complaint
regarding allegations of economic incentives was stayed pending certain
procedural developments.
The defendants have moved to dismiss each of these actions and otherwise
intend to defend them vigorously. Defendants' motion to dismiss in the market
timing litigation was granted in part and denied in part, and defendants filed a
motion for reconsideration of the Court's decision to uphold certain of
plaintiff's claims. Additionally, plaintiff and the named Trustees entered into
a tolling agreement. The tolling agreement dismisses the Trustees from the
action without prejudice in exchange for tolling all claims against the
Trustees.
While the defendants believe that they have meritorious defenses, the
ultimate outcome of these matters is not presently determinable, and no
provision has been made in the Fund's financial statements for the effect, if
any, of these matters.
9. INDEMNIFICATIONS
The Fund enters into contracts that contain a variety of indemnifications. The
Fund's maximum exposure under these arrangements is unknown. However, the Fund
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
54
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
BOARD OF TRUSTEES, OFFICERS AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
JACK E. NELSON
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
OFFICERS
RONALD E. ROBISON
President and Principal Executive Officer
J. DAVID GERMANY
Vice President
DENNIS SHEA
Vice President
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
PHILLIP G. GOFF
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1221 Avenue of the Americas
New York, New York 10020
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 947
Jersey City, New Jersey 07303-0947
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
One Lincoln Street
Boston, Massachusetts 02111
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, Illinois 60606
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
55
Van Kampen Strategic Municipal Income Fund
An Important Notice Concerning Our U.S. Privacy Policy
We are required by federal law to provide you with a copy of our Privacy
Policy annually.
The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors
Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van
Kampen Exchange Corp., as well as current and former individual investors in
Van Kampen mutual funds, unit investment trusts, and related companies.
This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised
by us. This Policy is, however, applicable to individuals who select us to
be a custodian of securities or assets in individual retirement accounts,
401(k) accounts, 529 Educational Savings Accounts, accounts subject to the
Uniform Gifts to Minors Act, or similar accounts.
Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
WE RESPECT YOUR PRIVACY
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we
help you achieve your financial objectives. This Policy describes what
non-public personal information we collect about you, why we collect it, and
when we may share it with others.
We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies
you or your accounts as "personal information."
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
To serve you better and manage our business, it is important that we collect
and maintain accurate information about you. We may obtain this information
from applications and other forms you submit to us, from your dealings with
us, from consumer reporting agencies, from our Web sites and from third
parties and other sources.
(continued on next page)
Van Kampen Strategic Municipal Income Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
For example:
-- We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.
-- We may obtain information about account balances, your use of
account(s) and the types of products and services you prefer to receive
from us through your dealings and transactions with us and other
sources.
-- We may obtain information about your creditworthiness and credit
history from consumer reporting agencies.
-- We may collect background information from and through third-party
vendors to verify representations you have made and to comply with
various regulatory requirements.
-- If you interact with us through our public and private Web sites, we
may collect information that you provide directly through online
communications (such as an e-mail address). We may also collect
information about your Internet service provider, your domain name,
your computer's operating system and Web browser, your use of our Web
sites and your product and service preferences, through the use of
"cookies." "Cookies" recognize your computer each time you return to
one of our sites, and help to improve our sites' content and
personalize your experience on our sites by, for example, suggesting
offerings that may interest you. Please consult the Terms of Use of
these sites for more details on our use of cookies.
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
To provide you with the products and services you request, to serve you
better and to manage our business, we may disclose personal information we
collect about you to our affiliated companies and to non-affiliated third
parties as required or permitted by law.
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise
required or permitted by law.
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except
to enable them to provide services on our behalf, to perform joint marketing
agreements with
(continued on back)
Van Kampen Strategic Municipal Income Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
other financial institutions, or as otherwise required or permitted by law.
For example, some instances where we may disclose information about you to
non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against
fraud, for institutional risk control, to respond to judicial process or to
perform services on our behalf. When we share personal information with
these companies, they are required to limit their use of personal
information to the particular purpose for which it was shared and they are
not allowed to share personal information with others except to fulfill that
limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL
INFORMATION WE COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties
that provide support or marketing services on our behalf may also receive
personal information, and we require them to adhere to confidentiality
standards with respect to such information.
Van Kampen Funds Inc.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2006 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC.
39,399,539
STMI SAR 5/06
(VAN KAMPEN INVESTMENTS SHINE LOGO) RN06-01267P-Y03/06
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
California Insured Tax Free Fund performed during the semiannual period.
The portfolio management team will provide an overview of the market
conditions and discuss some of the factors that affected investment
performance during the reporting period. In addition, this report
includes the fund's financial statements and a list of fund investments
as of March 31, 2006.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A CLASS A, B, AND C
SHARE PROSPECTUS FOR THE FUND BEING OFFERED. THE PROSPECTUS CONTAINS
INFORMATION ABOUT THE FUND, INCLUDING THE INVESTMENT OBJECTIVES, RISKS,
CHARGES AND EXPENSES. TO OBTAIN A CLASS I SHARE PROSPECTUS, CONTACT YOUR
FINANCIAL ADVISOR OR DOWNLOAD ONE AT VANKAMPEN.COM. PLEASE READ THE
PROSPECTUS CAREFULLY BEFORE INVESTING.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT A MUTUAL FUND WILL ACHIEVE ITS
INVESTMENT OBJECTIVE. FUNDS ARE SUBJECT TO MARKET RISK, WHICH IS THE
POSSIBILITY THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL
DECLINE AND THAT THE VALUE OF FUND SHARES MAY THEREFORE BE LESS THAN WHAT
YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS
FUND.
INCOME MAY SUBJECT CERTAIN INDIVIDUALS TO THE FEDERAL ALTERNATIVE MINIMUM
TAX (AMT).
<Table>
<Caption>
---------------------------------------------------------------------------------------
NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
---------------------------------------------------------------------------------------
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
---------------------------------------------------------------------------------------
</Table>
Performance Summary as of 3/31/06
<Table>
<Caption>
A SHARES B SHARES C SHARES I SHARES
since 12/13/85 since 4/30/93 since 8/13/93 since 8/12/05
- -----------------------------------------------------------------------------------------------------
W/MAX W/MAX W/MAX
4.75% 4.00% 1.00%
AVERAGE ANNUAL W/O SALES SALES W/O SALES SALES W/O SALES SALES W/O SALES
TOTAL RETURNS CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE CHARGES
Since Inception 6.85% 6.59% 4.91 4.91% 4.46 4.46% 1.22%
10-year 5.49 4.97 5.02 5.02 4.72 4.72 --
5-year 4.69 3.68 4.29 4.04 3.93 3.93 --
1-year 3.86 -1.08 3.97 0.01 3.09 2.10 --
6-month 0.98 -3.83 0.95 -2.96 0.54 -0.43 1.05
- -----------------------------------------------------------------------------------------------------
SEC Yield 3.10% 3.51% 2.75% 3.75%
</Table>
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS AND
PRINCIPAL VALUE WILL FLUCTUATE AND FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
BECAUSE CLASS B SHARES INCURRED LOWER EXPENSES UNDER THE 12B-1 PLAN THAN DID
CLASS A SHARES FOR THE FISCAL PERIOD ENDED MARCH 31, 2006, THE TOTAL OPERATING
EXPENSE RATIO FOR CLASS B SHARES WAS LOWER AND, AS A RESULT, THE PERFORMANCE OF
CLASS B SHARES WAS HIGHER THAN THAT OF CLASS A SHARES. THERE CAN BE NO ASSURANCE
THAT THIS WILL CONTINUE TO OCCUR IN THE FUTURE AS THE MAXIMUM FEES PAYABLE BY
CLASS B SHARES UNDER THE 12B-1 PLAN ARE HIGHER THAN THOSE PAYABLE BY CLASS A
SHARES.
The returns shown in this report do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
Performance of share classes will vary due to differences in sales charges and
expenses. Average annual total return with sales charges includes payment of the
maximum sales charge of 4.75 percent for Class A shares, a contingent deferred
sales charge of 4.00 percent for Class B shares (in years one and two and
declining to zero after year five), a contingent deferred sales charge of 1.00
percent for Class C shares in year one and combined Rule 12b-1 fees and service
fees of up to 0.25 percent for Class A shares and up to 1.00 percent for Class B
and C shares. The since inception and 10-year returns for Class B shares reflect
the conversion of Class B shares into Class A shares six years after purchase.
The since inception returns for Class C shares reflect the conversion of Class C
shares into Class A shares ten years after purchase. Class I shares are
available for purchase exclusively by investors through (i) tax-exempt
retirement plans with assets of at least $1 million (including 401(k) plans, 457
plans, employer-sponsored 403(b) plans, profit sharing and money purchase plans,
defined benefit plans and non-qualified deferred compensation plans), (ii)
fee-based investment programs with assets of at least $1 million and (iii)
institutional clients with assets of at least $1 million. Class I shares are
offered without any sales charges on purchases or sales and do not include
combined Rule 12b-1 fees and service fees. Figures shown above assume
reinvestment of all dividends and capital gains. SEC yield is a calculation for
determining the amount of portfolio income, excluding non-income items as
prescribed by the SEC. Yields are subject to change.
The Lehman Brothers Municipal Bond Index is generally representative of
investment-grade, tax-exempt bonds. The index does not include any expenses,
fees or sales charges, which would lower performance. The index is unmanaged and
should not be considered an investment. It is not possible to invest directly in
an index. Source for index performance: Lipper Inc.
1
Fund Report
FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 2006
MARKET CONDITIONS
Despite the shadow of rising oil prices, the devastation of the Gulf Coast
hurricanes, and emerging weakness in the housing market, the economy continued
to grow during the six-month period ended March 31, 2006. This expansion was
more modest in the fourth quarter of 2005, but gained considerable momentum in
the first quarter.
Against the backdrop of growth and good employment data, the Federal Open Market
Committee (the "Fed") continued raising the federal funds target rate during the
period, implementing four additional increases of 25 basis points each. The
final hike of the period represented the fifteenth consecutive increase -- the
longest stretch of increases in 25 years. As the period came to a close, market
observers speculated about the Fed's near-term intentions, given the central
bank's view that although longer-term inflation appeared contained, commodity
prices could amplify inflationary pressures.
Returns across the municipal bond market varied significantly. As investors
sought income opportunities, lower rated bonds outpaced investment-grade bonds
by a wide margin. Long-term bonds earned the best returns, broadly speaking,
while bonds in the three-to-seven year range posted the most muted gains.
Municipal bond issuance was robust during the final months of 2005. (In fact,
2005 marked a record high for municipal bond volume.) The tide changed in the
first quarter of 2006, however. As rising rates discouraged issuers from
refinancing debt, national municipal issuance dropped versus the same period a
year ago. While supply ebbed, the market's appetite for municipal bonds remained
strong, with particularly heavy demand for high yield municipal bond funds.
The State of California continued to lead the nation in municipal issuance.
Moreover, although new volume dipped during the first quarter of 2006, it did
not decline so rapidly as the national average. The state's municipal market has
benefited from the continued strengthening of its credit fundamentals. Also,
despite his flagging popularity, Governor Schwarzenegger has made progress
advancing a number of his municipal funding proposals. The state still faces
challenges, however, with budget deficits, pension funding litigation and
immigration issues among the most significant.
2
PERFORMANCE ANALYSIS
The fund returned 0.98 percent for the six months ended March 31, 2006 (Class A
shares, unadjusted for sales charges). In comparison, the fund's benchmark, the
Lehman Brothers Municipal Bond Index, returned 0.98 percent for the period.
TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 2006
<Table>
<Caption>
- -------------------------------------------------------------------
LEHMAN BROTHERS
MUNICIPAL
CLASS A CLASS B CLASS C CLASS I BOND INDEX
0.98% 0.95% 0.54% 1.05% 0.98%
- -------------------------------------------------------------------
</Table>
The performance for the four share classes varies because each has different
expenses. The fund's total return figures assume the reinvestment of all
distributions, but do not reflect the deduction of any applicable sales charges.
Such costs would lower performance. Past performance is no guarantee of future
results. See Performance Summary for standardized performance information and
index definition.
Because Class B shares incurred lower expenses under the 12b-1 Plan than did
Class A shares for the fiscal period ended March 31, 2006, the total operating
expense ratio for Class B shares was lower and, as a result, the performance of
Class B shares was higher than that of Class A shares. There can be no assurance
that this will continue to occur in the future as the maximum fees payable by
Class B shares under the 12b-1 Plan are higher than those payable by Class A
shares.
We managed the fund according to our long-standing "relative value" discipline.
Our strategy involved buying bonds when our research indicates they are
attractively valued, and then selling them if they reach our return targets. We
then invested the proceeds into bonds which we believe offer greater future
total return prospects. We used rigorous research to seek fundamentally strong
issues with high liquidity. (Liquid securities are those for which there is a
robust market of purchasers and sellers.)
The fund invests in insured securities, with all bonds holding a credit rating
of AAA. Throughout the period, we followed a variety of strategies to pursue
yield within the parameters of our quality-driven approach.
We positioned the portfolio to reflect our view that yields would continue to
rise, with the yields of short-term bonds rising more rapidly than those of
long-term bonds. Reflecting this analysis, we kept the fund's duration shorter
than that of its benchmark; and this strategy served the fund well. (Duration is
a measure of interest rate sensitivity.)
The fund also benefited from our view that the long-term segment of the yield
curve was most compelling. We sold shorter-maturity bonds that had been pre-
refunded, capturing appreciation gains. We purchased longer-term bonds
(generally those with maturities of 25 to 30 years), favoring issues with
premium coupons and defensive characteristics. In contrast, we avoided non-
3
callable bonds and zero-coupon bonds, as these tend to underperform during
periods of rising interest rates.
The fund's preference for well-known issues enhanced performance, as these bonds
enjoyed demand on the national level. Within its portfolio, the fund maintained
a bias to the essential services sector of the market; and this emphasis turned
out to be advantageous. As of the close of the period, the fund's largest sector
weightings were in the Public Education, Tax Allocation and Public Building
sectors. (In contrast, we avoided housing bonds.)
We also found attractive yield opportunities by broadening the portfolio to
include securities insured by less well-known, but financially sound companies
with AAA ratings. These bonds often offered higher yields than comparable issues
insured by the most recognized companies.
While these factors served the fund in good stead during the period, the fund's
relative gains were tempered by its avoidance of a health care issue that
performed briskly during the period, due to pre-refunding activity.
There is no guarantee that any sectors mentioned will continue to perform as
discussed herein or that securities in such sectors will be held by the fund in
the future.
<Table>
TOP FIVE SECTORS AS OF 3/31/06 RATINGS ALLOCATIONS AS OF 3/31/06
Public Education 23.0% AAA/Aaa 100%
Tax Allocation 18.7
Public Building 15.9
Higher Education 8.6
General Purpose 7.3
</Table>
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the industries shown above. Ratings allocations are a percentage
of total investments. Top 5 sectors percentages are as a percentage of long-term
investments. Van Kampen is a wholly owned subsidiary of a global securities firm
which is engaged in a wide range of financial services including, for example,
securities trading and brokerage activities, investment banking, research and
analysis, financing and financial advisory services. Ratings allocations based
upon ratings as issued by Standard & Poor's and Moody's, respectively.
4
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
Each Van Kampen fund provides a complete schedule of portfolio holdings
in its semiannual and annual reports within 60 days of the end of the
fund's second and fourth fiscal quarters by filing the schedule
electronically with the Securities and Exchange Commission (SEC). The
semiannual reports are filed on Form N-CSRS and the annual reports are
filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
reports to fund shareholders, and makes these reports available on its
public Web site, www.vankampen.com. In addition to the semiannual and
annual reports that Van Kampen delivers to shareholders and makes
available through the Van Kampen public Web site, each fund files a
complete schedule of portfolio holdings with the SEC for the fund's first
and third fiscal quarters on Form N-Q. Van Kampen does not deliver the
reports for the first and third fiscal quarters to shareholders, nor are
the reports posted to the Van Kampen public Web site. You may, however,
obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS
filings) by accessing the SEC's Web site, http://www.sec.gov. You may
also review and copy them at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the SEC's Public
Reference Room may be obtained by calling the SEC at (800) SEC-0330. You
can also request copies of these materials, upon payment of a duplicating
fee, by electronic request at the SEC's e-mail address
(publicinfo@sec.gov) or by writing the Public Reference section of the
SEC, Washington, DC 20549-0102.
You may obtain copies of a fund's fiscal quarter filings by contacting
Van Kampen Client Relations at (800) 847-2424.
5
HOUSEHOLDING NOTICE
To reduce fund expenses, the fund attempts to eliminate duplicate
mailings to the same address. The fund delivers a single copy of certain
shareholder documents to investors who share an address, even if the
accounts are registered under different names. The fund's prospectuses
and shareholder reports (including annual privacy notices) will be
delivered to you in this manner indefinitely unless you instruct us
otherwise. You can request multiple copies of these documents by either
calling (800) 341-2911 or writing to Van Kampen Investor Services at 1
Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, IL 60181. Once Investor
Services has received your instructions, we will begin sending individual
copies for each account within 30 days.
PROXY VOTING POLICY AND PROCEDURES AND PROXY VOTING RECORD
You may obtain a copy of the fund's Proxy Voting Policy and Procedures
without charge, upon request, by calling toll free (800) 847-2424 or by
visiting our Web site at www.vankampen.com. It is also available on the
Securities and Exchange Commission's Web site at http://www.sec.gov.
You may obtain information regarding how the fund voted proxies relating
to portfolio securities during the most recent twelve-month period ended
June 30 without charge by visiting our Web site at www.vankampen.com.
This information is also available on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
6
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments of Class A Shares
and contingent deferred sales charge on redemptions of Class B and C Shares; and
(2) ongoing costs, including management fees; distribution and service (12b-1)
fees; and other Fund expenses. This example is intended to help you understand
your ongoing cost (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period 10/1/05 - 3/31/06.
ACTUAL EXPENSE
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing cost of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or contingent deferred sales charges. Therefore, the second line
of the table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD *
-------------------------------------------------
10/1/05 3/31/06 10/1/05-3/31/06
Class A
Actual..................................... $1,000.00 $1,009.77 $4.61
Hypothetical............................... 1,000.00 1,020.33 4.63
(5% annual return before expenses)
Class B
Actual..................................... 1,000.00 1,009.53 4.36
Hypothetical............................... 1,000.00 1,020.63 4.38
(5% annual return before expenses)
Class C
Actual..................................... 1,000.00 1,005.45 8.35
Hypothetical............................... 1,000.00 1,016.63 8.40
(5% annual return before expenses)
Class I
Actual..................................... 1,000.00 1,010.49 3.36
Hypothetical............................... 1,000.00 1,021.63 3.38
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 0.92%, 0.87%
and 1.67% and 0.67% for Class A, B, C and I Shares, respectively, multiplied
by the average account value over the period, multiplied by 182/365 (to
reflect the one-half year period).
Assumes all dividends and distributions were reinvested.
7
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED)
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS 98.9%
$1,925 Alhambra, CA City Elem Sch Dist Cap Apprec Ser A
(FSA Insd) (a).................................. * 09/01/20 $ 991,144
2,000 Anaheim, CA Pub Fin Auth Tax Alloc Rev (Inverse
Fltg) (MBIA Insd)............................... 9.420% 12/28/18 2,267,740
3,000 Baldy Mesa, CA Wtr Dist Ctf Partn Parity Wtr Sys
Impt Proj (AMBAC Insd).......................... 5.000 08/01/36 3,121,440
1,430 Bay Area Govt Assn CA Lease Rev Cap Proj Ser A
(AMBAC Insd) (a)................................ 5.250 07/01/17 1,520,133
2,735 Bay Area Govt Assn CA Lease West Sacramento Ser
A (XLCA Insd) (a)............................... 5.000 09/01/29 2,832,749
1,070 Bonita, CA Uni Sch Dist Election 2004 Ser A
(MBIA Insd)..................................... 5.250 08/01/24 1,147,778
1,000 Bonita, CA Uni Sch Dist Election 2004 Ser A
(MBIA Insd)..................................... 5.000 08/01/28 1,041,780
1,730 Brea & Olinda, CA Uni Sch Dist Ser A Rfdg (FSA
Insd) (a)....................................... 5.500 08/01/17 1,880,026
1,850 Brea & Olinda, CA Uni Sch Dist Ser A Rfdg (FSA
Insd) (a)....................................... 5.500 08/01/18 2,010,432
455 Calexico, CA Cmnty Redev Agy Tax Alloc Merged
Cent Bus & Residential Ser C (AMBAC Insd)....... 5.000 08/01/28 474,447
7,000 California Edl Fac Auth Rev Univ Of The Pacific
(MBIA Insd)..................................... 5.875 11/01/20 7,641,760
2,000 California Infrastructure & Econ Dev Bk Rev Bay
Area Toll Brdg First Lien Ser A (FGIC Insd)..... 5.000 07/01/29 2,074,300
1,050 California Spl Dist Assn Fin Corp Ctf Partn Pgm
Ser DD (FSA Insd) (a)........................... 5.625 01/01/27 1,084,230
1,150 California St (FGIC Insd)....................... 6.250 09/01/12 1,309,194
1,200 California St Dept Transn Ctf Ser A Rfdg (MBIA
Insd)........................................... 5.250 03/01/16 1,240,056
2,500 California St Dept Wtr Res Pwr Supply Rev Rite
Ser B (Inverse Fltg) (MBIA Insd) (Acquired
9/8/03, Cost $2,709,650) (a) (b)................ 6.769 05/01/11 2,988,900
2,500 California St Pub Wks Brd Lease Dept Corrections
Ten Admin Ser A (AMBAC Insd).................... 5.250 03/01/17 2,665,825
7,750 California St Rfdg (FGIC Insd).................. 5.000 02/01/23 7,985,135
1,000 California St Univ Rev & Colleges Systemwide Ser
A (AMBAC Insd).................................. 5.375 11/01/18 1,084,880
1,900 California Statewide Cmntys Dev Auth Wtr Rev Ser
A (FSA Insd).................................... 5.000 10/01/26 1,987,514
1,000 Carson, CA Redev Agy Redev Proj Area No 1 Tax
Alloc (MBIA Insd)............................... 5.500 10/01/15 1,114,660
2,000 Castaic Lake Wtr Agy CA Ctf Partn Wtr Sys Impt
Proj Ser A Rfdg (MBIA Insd)..................... 7.000 08/01/12 2,352,560
3,000 Castaic Lake Wtr Agy CA Rev Ctf Partn Ser A
(MBIA Insd)..................................... 5.250 08/01/23 3,182,760
</Table>
8 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$ 100 Cerritos, CA Cmnty College Election 2004 Ser A
(MBIA Insd)..................................... 5.000% 08/01/26 $ 104,248
125 Cerritos, CA Cmnty College Election 2004 Ser A
(MBIA Insd)..................................... 5.000 08/01/28 130,222
2,000 Chula Vista, CA Pub Fin Auth Rev Ser A Rfdg
(MBIA Insd)..................................... 5.000 09/01/29 2,075,220
1,160 Coachella, CA Fin Auth Tax Proj 1 & 2 Ser A Rfdg
(XLCA Insd) (a)................................. 5.250 12/01/30 1,229,913
3,140 Colton, CA Jt Uni Sch Dist Election 2001 Ser C
(FGIC Insd)..................................... 5.250 02/01/25 3,372,643
2,500 Colton, CA Jt Uni Sch Dist Election 2001 Ser C
(FGIC Insd)..................................... 5.250 02/01/27 2,677,625
3,400 Contra Costa, CA Cmnty College Election 2002
(MBIA Insd)..................................... 5.000 08/01/29 3,542,052
2,500 Culver City, CA Redev Agy Tax Alloc Redev Proj
Ser A Rfdg (AMBAC Insd)......................... 5.000 11/01/23 2,610,725
2,400 Dinuba, CA Redev Agy Tax Alloc Merged City Redev
Proj No 2 Rfdg (AMBAC Insd)..................... 5.000 09/01/34 2,482,800
1,000 East Bay, CA Muni Util Dist Wtr Sys Rev (MBIA
Insd)........................................... 5.000 06/01/21 1,044,210
2,195 Elk Grove, CA Uni Sch Dist Spl Tax Cmnty Fac
Dist No 1 (MBIA Insd)........................... 5.000 12/01/35 2,282,756
1,280 Fillmore, CA Uni Sch Dist Election 2004 Ser A
(FSA Insd)...................................... 5.000 08/01/27 1,338,688
1,300 Folsom Cordova, CA Uni Sch Dist Sch Fac Impt
Dist No 2 Ser A (MBIA Insd)..................... 5.375 10/01/17 1,408,979
1,360 Folsom, CA Pub Fin Auth City Hall & Cmnty Ctr
Rfdg (FSA Insd) (a)............................. 5.000 10/01/16 1,438,350
1,480 Fontana, CA Redev Agy Tax Alloc Dwntwn Redev
Proj Rfdg (MBIA Insd)........................... 5.000 09/01/21 1,532,777
650 Fresno, CA Jt Pwrs Fin Auth Ser A (FSA Insd).... 5.000 06/01/17 682,974
590 Fresno, CA Uni Sch Dist Ser C Rfdg (MBIA Insd)
(a)............................................. 5.900 08/01/17 682,152
630 Fresno, CA Uni Sch Dist Ser C Rfdg (MBIA Insd)
(a)............................................. 5.900 08/01/18 734,548
675 Fresno, CA Uni Sch Dist Ser C Rfdg (MBIA Insd)
(a)............................................. 5.900 08/01/19 791,579
720 Fresno, CA Uni Sch Dist Ser C Rfdg (MBIA Insd)
(a)............................................. 5.900 08/01/20 849,478
1,000 Fullerton, CA Sch Dist 2002 Election Ser B (FSA
Insd)........................................... 5.125 08/01/26 1,059,270
2,000 Glendale, CA Redev Agy Tax Ctr Glendale Redev
Proj (MBIA Insd)................................ 5.250 12/01/20 2,137,860
2,425 Glendora, CA Pub Fin Auth Tax Alloc Proj No 1
Ser A (MBIA Insd)............................... 5.000 09/01/24 2,515,355
5,000 Golden St Tobacco Securitization Corp CA Tobacco
Settlement Rev Enhanced Asset Bkd Ser A (FGIC
Insd)........................................... 5.000 06/01/38 5,138,500
2,230 Hanford, CA High Sch Dist Election 1998 Ser C
(MBIA Insd) (a)................................. 5.700 08/01/28 2,513,968
</Table>
See Notes to Financial Statements 9
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$2,500 Huntington Beach, CA High Election 2004
(FSA Insd)...................................... 5.000% 08/01/26 $ 2,607,975
2,000 Imperial Irr Dist CA Ctf Partn Elec Sys Proj
(FSA Insd)...................................... 5.250 11/01/23 2,127,760
1,950 Imperial Irr Dist CA Ctf Partn Wtr Sys Proj
(AMBAC Insd) (a)................................ 5.000 07/01/19 2,044,614
2,000 Inglewood, CA Redev Agy Tax Alloc Merged Redev
Proj Ser A Rfdg (AMBAC Insd).................... 5.250 05/01/23 2,205,380
1,715 Irvine, CA Pub Fac & Infrastructure Ser B (AMBAC
Insd) (a)....................................... 5.000 09/02/23 1,774,991
2,000 La Canada, CA Uni Sch Dist Election 2004 Ser A
(MBIA Insd)..................................... 5.500 08/01/28 2,186,240
2,000 La Quinta, CA Fin Auth Loc Ser A (AMBAC Insd)... 5.250 09/01/24 2,142,400
2,000 La Quinta, CA Fin Auth Loc Ser A (AMBAC Insd)... 5.000 09/01/29 2,080,000
2,000 La Quinta, CA Redev Agy Tax Alloc Redev Proj
Area No 1 (AMBAC Insd).......................... 5.000 09/01/22 2,088,580
1,000 Livermore-Amador Vly Wtr Mgmt Agy CA Swr Rev Ser
A (AMBAC Insd).................................. 5.250 08/01/16 1,069,150
1,000 Long Beach, CA Bd Fin Auth Lease Rev Rainbow
Harbor Refin Proj Ser A (AMBAC Insd)............ 5.250 05/01/24 1,050,390
1,260 Long Beach, CA Bd Fin Auth Pub Lease Safety Fac
Proj (AMBAC Insd) (a)........................... 5.250 11/01/16 1,361,682
1,545 Long Beach, CA Bd Fin Auth Pub Lease Safety Fac
Proj (AMBAC Insd) (a)........................... 5.250 11/01/20 1,658,156
2,000 Long Beach, CA Cmnty College Dist 2002 Election
Ser B (FGIC Insd)............................... 5.000 05/01/25 2,088,220
2,740 Los Angeles Cnty, CA Ctf Partn Antelope Vly
Courthouse Ser A (AMBAC Insd)................... 5.750 11/01/16 2,968,954
1,000 Los Angeles Cnty, CA Ctf Partn Disney Pkg Proj
Rfdg (AMBAC Insd)............................... 4.750 03/01/23 1,009,680
1,000 Los Angeles Cnty, CA Met Tran Auth Sales Tax Rev
Prop A First Tier Sr Ser C Rfdg (AMBAC Insd).... 5.000 07/01/23 1,039,500
1,235 Los Angeles Cnty, CA Met Tran Auth Sales Tax Rev
Prop C Second Tier Sr Ser A Rfdg (FGIC Insd).... 5.000 07/01/15 1,301,616
1,000 Los Angeles Cnty, CA Met Tran Auth Sales Tax Rev
Prop C Second Tier Sr Ser A Rfdg (FGIC Insd).... 5.000 07/01/16 1,051,490
1,265 Los Angeles Cnty, CA Schs Regionalized Business
Svcs Ctf Partn Cap Apprec Pooled Fin Ser A
(AMBAC Insd).................................... * 08/01/24 528,859
1,975 Los Angeles, CA Ctf Partn Real Ppty Pgm Ser T
(MBIA Insd) (a)................................. 5.000 02/01/19 2,048,114
2,000 Los Angeles, CA Dept Wtr & Pwr Sys Ser C (MBIA
Insd)........................................... 5.000 07/01/26 2,078,620
2,380 Los Angeles, CA Mtg Rev FHA Security 8 Asstd
Proj Ser A Rfdg (MBIA Insd)..................... 6.100 07/01/25 2,382,404
</Table>
10 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$1,375 Los Angeles, CA Spl Assmt Landscaping & Ltg Dist
No 96 Ser 1 (AMBAC Insd) (a).................... 5.000% 03/01/21 $ 1,422,217
1,000 Lynwood, CA Uni Sch Dist 2002 Election Ser A
(FSA Insd)...................................... 5.000 08/01/27 1,037,520
1,000 Menifee, CA Uni Sch Dist 2002 Election Ser B
(FGIC Insd)..................................... 5.000 08/01/28 1,043,520
1,500 Modesto, CA Irr Dist Ctfs Partn Cap Impts Ser A
(FSA Insd)...................................... 5.250 07/01/18 1,602,120
1,105 Monrovia, CA Fin Auth Lease Rev Hillside
Wilderness Preserve (AMBAC Insd)................ 5.000 12/01/20 1,159,996
2,000 Montclair, CA Redev Agy Tax Redev Proj No V Rfdg
(MBIA Insd)..................................... 5.000 10/01/20 2,080,380
1,000 Mount Pleasant, CA Elem Sch Dist 1998 Election
Ser C (FSA Insd)................................ 5.500 03/01/26 1,071,720
1,570 Mountain View, CA Shoreline Tax Alloc Ser A
(MBIA Insd) (a)................................. 5.250 08/01/16 1,679,398
1,105 National City, CA Cmnty Dev Com Redev Proj Ser B
Rfdg (AMBAC Insd)............................... 5.250 08/01/32 1,177,477
2,000 Natomas, CA Uni Sch Dist Rfdg (FGIC Insd)....... 5.250 09/01/16 2,112,120
2,060 Norco, CA Redev Agy Tax Alloc Norco Redev Proj
Area No 1 Rfdg (AMBAC Insd)..................... 5.000 03/01/26 2,135,664
1,250 North City West, CA Sch Fac Fin Auth Spl Tax Ser
B Rfdg (FSA Insd)............................... 5.750 09/01/15 1,285,750
1,000 Novato, CA Uni Sch Dist (FSA Insd).............. 5.000 08/01/28 1,041,780
3,915 Oak Grove, CA Sch Dist 1995 Election (FGIC
Insd)........................................... 5.250 08/01/25 4,147,355
1,000 Oakland, CA Uni Sch Dist Alameda Cnty (FSA
Insd)........................................... 5.000 08/01/17 1,034,530
1,300 Oceanside, CA Ctf Partn Ser A Rfdg (AMBAC
Insd)........................................... 5.200 04/01/23 1,370,798
3,025 Orange Cnty, CA Pub Fin Auth Lease Rev Juvenile
Justice Ctr Fac Rfdg (AMBAC Insd)............... 5.375 06/01/17 3,286,118
1,145 Pacifica, CA Wastewtr Rev Rfdg (AMBAC Insd)..... 5.000 10/01/25 1,189,575
1,340 Palm Springs, CA Fin Lease Rev Convention Ctr
Proj Ser A Rfdg (MBIA Insd)..................... 5.250 11/01/19 1,441,786
2,535 Placentia Yorba Linda, CA Uni Sch Dist Ctf Partn
(FGIC Insd)..................................... 5.000 10/01/22 2,659,088
3,065 Placentia Yorba Linda, CA Uni Sch Dist Ctf Partn
(FGIC Insd)..................................... 5.000 10/01/30 3,181,225
2,020 Pomona, CA Pub Fin Auth Rev Merged Redev Proj
Ser AD (MBIA Insd) (a).......................... 5.000 02/01/15 2,123,363
1,110 Pomona, CA Pub Fin Auth Rev Merged Redev Proj
Ser AD (MBIA Insd) (a).......................... 5.000 02/01/16 1,166,799
1,360 Port Hueneme, CA Ctf Partn Cap Impt Pgm Rfdg
(MBIA Insd)..................................... 6.000 04/01/19 1,595,103
1,055 Poway, CA Redev Agy Tax Alloc Paguay Redev Proj
(AMBAC Insd) (a)................................ 5.375 06/15/20 1,137,480
</Table>
See Notes to Financial Statements 11
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$3,000 Rancho Cucamonga, CA Redev Agy Rancho Redev Proj
(MBIA Insd)..................................... 5.375% 09/01/25 $ 3,198,540
1,000 Redding, CA Elec Sys Rev Ctf Partn (Inverse
Fltg) (Escrowed to Maturity) (MBIA Insd)........ 9.359 07/01/22 1,364,680
1,400 Redding, CA Redev Agy Tax Alloc Canby Hilltop
Cypress Redev Ser A (MBIA Insd)................. 5.000 09/01/23 1,461,614
3,775 Riverside Cnty, CA Ctf Partn Historic Courthouse
Proj (FGIC Insd) (a)............................ 5.000 11/01/27 3,918,979
2,160 Roseville, CA Jt Un High Sch Election 2004 Ser A
(FGIC Insd) (a)................................. 5.000 08/01/26 2,251,757
1,000 Sacramento, CA City Fin Auth Rev Cap Impt (AMBAC
Insd)........................................... 5.000 12/01/33 1,031,730
1,500 San Diego Cnty, CA Ctf Partn Edgemoor Proj &
Regl Sys Rfdg (AMBAC Insd)...................... 5.000 02/01/23 1,562,415
2,000 San Francisco, CA City & Cnty Second Ser Issue
26B (FGIC Insd)................................. 5.000 05/01/22 2,077,800
2,675 San Jose, CA Fin Auth Lease Rev Convention Ctr
Proj Ser F Rfdg (MBIA Insd)..................... 5.000 09/01/17 2,814,020
1,000 San Leandro, CA Ctf Partn Lib & Fire Stations
Fin (AMBAC Insd)................................ 5.750 11/01/29 1,081,600
1,000 San Leandro, CA Jt Proj Area Fin (MBIA Insd).... 5.100 12/01/26 1,045,710
1,340 Sanger, CA Uni Sch Dist Ctfs Cap Impt Prog (FSA
Insd) (a)....................................... 5.000 03/01/25 1,421,311
2,000 Santa Fe Springs, CA Cmnty Dev Comm Tax Alloc
Ser A Rfdg (MBIA Insd) (a)...................... 5.375 09/01/20 2,137,280
2,065 Santa Fe Springs, CA Cmnty Dev Comm Tax Alloc
Ser A Rfdg (MBIA Insd).......................... 5.375 09/01/21 2,202,839
2,450 Santa Monica, CA Cmnty College Ser A Rfdg (AMBAC
Insd) (a)....................................... 5.250 02/01/23 2,610,794
1,000 Shasta, CA Jt Pwrs Fin Auth Cnty Admin Bldg Proj
Ser A (MBIA Insd)............................... 5.250 04/01/22 1,060,930
1,000 South Gate, CA Pub Fin Auth South Gate Redev
Proj No 1 (XLCA Insd)........................... 5.750 09/01/22 1,111,670
2,150 Temecula, CA Redev Agy Tax Alloc Rev Temecula
Redev Proj No 1 (MBIA Insd)..................... 5.125 08/01/27 2,238,924
1,000 University of CA Rev Multi Purp Proj Ser M (FGIC
Insd)........................................... 5.125 09/01/17 1,052,880
1,000 University of CA Rev Resh Fac Ser E (AMBAC
Insd)........................................... 5.000 09/01/19 1,046,940
1,540 Vallejo City, CA Uni Sch Dist Ser A Rfdg
(MBIA Insd)..................................... 5.900 02/01/20 1,809,808
</Table>
12 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
$2,000 Ventura Cnty, CA Ctf Partn Pub Fin Auth Ser I
(FSA Insd)...................................... 5.250% 08/15/16 $ 2,101,240
3,655 Woodland, CA Fin Auth Wastewater Rev Second Sr
Lien (MBIA Insd) (a)............................ 5.000 03/01/30 3,791,953
------------
TOTAL INVESTMENTS 98.9%
(Cost $216,211,798)....................................................... 226,849,406
OTHER ASSETS IN EXCESS OF LIABILITIES 1.1%................................. 2,546,747
------------
NET ASSETS 100.0%.......................................................... $229,396,153
============
</Table>
Percentages are calculated as a percentage of net assets.
* Zero coupon bond
(a) The Fund owns 100% of the outstanding bond issuance.
(b) These securities are restricted and may be resold only in transactions
exempt from registration which are normally those transactions with
qualified institutional buyers. Restricted securities comprise 1.3% of net
assets.
AMBAC--AMBAC Indemnity Corp.
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
MBIA--Municipal Bond Investors Assurance Corp.
XLCA--XL Capital Assurance Inc.
See Notes to Financial Statements 13
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
March 31, 2006 (Unaudited)
<Table>
ASSETS:
Total Investments (Cost $216,211,798)....................... $226,849,406
Cash........................................................ 1,387,878
Receivables:
Interest.................................................. 2,474,898
Fund Shares Sold.......................................... 121,121
Other....................................................... 147,975
------------
Total Assets............................................ 230,981,278
------------
LIABILITIES:
Payables:
Fund Shares Repurchased................................... 880,683
Income Distributions...................................... 220,526
Investment Advisory Fee................................... 92,324
Distributor and Affiliates................................ 73,874
Trustees' Deferred Compensation and Retirement Plans........ 212,831
Accrued Expenses............................................ 104,887
------------
Total Liabilities....................................... 1,585,125
------------
NET ASSETS.................................................. $229,396,153
============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $217,955,564
Net Unrealized Appreciation................................. 10,637,608
Accumulated Undistributed Net Investment Income............. 565,117
Accumulated Net Realized Gain............................... 237,864
------------
NET ASSETS.................................................. $229,396,153
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $186,322,622 and 10,144,139 shares of
beneficial interest issued and outstanding)............. $ 18.37
Maximum sales charge (4.75%* of offering price)......... .92
------------
Maximum offering price to public........................ $ 19.29
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $29,493,222 and 1,581,140 shares of
beneficial interest issued and outstanding)............. $ 18.65
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $11,420,309 and 621,542 shares of
beneficial interest issued and outstanding)............. $ 18.37
============
Class I Shares:
Net asset value and offering price per share (Based on
net assets of $2,160,000 and 117,623 shares of
beneficial interest issued and outstanding)............. $ 18.36
============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
14 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended March 31, 2006 (Unaudited)
<Table>
INVESTMENT INCOME:
Interest.................................................... $ 5,534,050
-----------
EXPENSES:
Investment Advisory Fee..................................... 548,226
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B, and C of $233,512, $31,548 and $58,961
respectively)............................................. 324,021
Shareholder Services........................................ 66,621
Legal....................................................... 26,156
Trustees' Fees and Related Expenses......................... 15,738
Custody..................................................... 12,107
Other....................................................... 111,414
-----------
Total Expenses.......................................... 1,104,283
Less Credits Earned on Cash Balances.................... 3,584
-----------
Net Expenses............................................ 1,100,699
-----------
NET INVESTMENT INCOME....................................... $ 4,433,351
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 294,696
Futures................................................... 2,991
-----------
Net Realized Gain........................................... 297,687
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 13,202,185
End of the Period......................................... 10,637,608
-----------
Net Unrealized Depreciation During the Period............... (2,564,577)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(2,266,890)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 2,166,461
===========
</Table>
See Notes to Financial Statements 15
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets (Unaudited)
<Table>
<Caption>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2006 SEPTEMBER 30, 2005
--------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................ $ 4,433,351 $ 9,071,213
Net Realized Gain.................................... 297,687 2,956,456
Net Unrealized Depreciation During the Period........ (2,564,577) (2,833,739)
------------ ------------
Change in Net Assets from Operations................. 2,166,461 9,193,930
------------ ------------
Distributions from Net Investment Income:
Class A Shares..................................... (3,747,886) (7,367,133)
Class B Shares..................................... (604,450) (1,193,998)
Class C Shares..................................... (192,493) (381,330)
Class I Shares..................................... (51,060) (14,214)
------------ ------------
(4,595,889) (8,956,675)
------------ ------------
Distributions from Net Realized Gain:
Class A Shares..................................... (2,396,767) (1,194,255)
Class B Shares..................................... (396,499) (256,541)
Class C Shares..................................... (152,451) (76,525)
Class I Shares..................................... (31,914) -0-
------------ ------------
(2,977,631) (1,527,321)
------------ ------------
Total Distributions.................................. (7,573,520) (10,483,996)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES......................................... (5,407,059) (1,290,066)
------------ ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold............................ 18,106,453 34,454,209
Net Asset Value of Shares Issued Through Dividend
Reinvestment....................................... 5,468,461 7,391,256
Cost of Shares Repurchased........................... (25,140,936) (40,845,600)
------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS... (1,566,022) 999,865
------------ ------------
TOTAL DECREASE IN NET ASSETS......................... (6,973,081) (290,201)
NET ASSETS:
Beginning of the Period.............................. 236,369,234 236,659,435
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of $565,117 and
$727,655, respectively)............................ $229,396,153 $236,369,234
============ ============
</Table>
16 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS A SHARES MARCH 31, -----------------------------------------------
2006 2005 2004 2003 2002 (b) 2001
-------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD.......................... $18.80 $18.93 $18.84 $19.45 $18.64 $17.67
------ ------ ------ ------ ------ ------
Net Investment Income........... .36(c) .72 .75 .74 .77 .81
Net Realized and Unrealized
Gain/Loss..................... (.18) .01 .06 (.44) .85 .94
------ ------ ------ ------ ------ ------
Total from Investment
Operations...................... .18 .73 .81 .30 1.62 1.75
------ ------ ------ ------ ------ ------
Less:
Distributions from Net
Investment Income............. .37 .74 .72 .75 .78 .78
Distributions from Net Realized
Gain.......................... .24 .12 -0- .16 .03 -0-
------ ------ ------ ------ ------ ------
Total Distributions............... .61 .86 .72 .91 .81 .78
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD.......................... $18.37 $18.80 $18.93 $18.84 $19.45 $18.64
====== ====== ====== ====== ====== ======
Total Return (a).................. 0.98%* 3.96% 4.42% 1.67% 9.01% 10.09%
Net Assets at End of the Period
(In millions)................... $186.3 $188.0 $183.0 $195.4 $200.4 $174.9
Ratio of Expenses to Average Net
Assets.......................... .92% .92% .89% .87% .87% .89%
Ratio of Net Investment Income to
Average Net Assets.............. 3.84% 3.83% 4.00% 3.93% 4.18% 4.43%
Portfolio Turnover................ 17%* 25% 16% 25% 32% 39%
</Table>
* Non-Annualized
(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 4.75% or contingent deferred
sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be
imposed on certain redemptions made within eighteen months of purchase. If
the sales charges were included, total returns would be lower. These returns
include combined Rule 12b-1 fees and service fees of up to .25% and do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(b) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended September 30, 2002 was to increase net investment
income per share by less than $.01, decrease net realized and unrealized
gains and losses per share by less than $.01 and increase the ratio of net
investment income to average net assets from 4.16% to 4.18%. Per share,
ratios and supplemental data for periods prior to September 30, 2002 have
not been restated to reflect this change in presentation.
(c) Based on average shares outstanding.
See Notes to Financial Statements 17
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS B SHARES MARCH 31, -----------------------------------------------
2006 2005 2004 2003 2002 (b) 2001
-------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD.......................... $19.07 $19.03 $18.82 $19.44 $18.65 $17.69
------ ------ ------ ------ ------ ------
Net Investment Income........... .37(d) .79 .72 .60 .63 .67
Net Realized and Unrealized
Gain/Loss..................... (.22) (.03) .07 (.45) .84 .94
------ ------ ------ ------ ------ ------
Total from Investment
Operations...................... .18 .76 .79 .15 1.47 1.61
------ ------ ------ ------ ------ ------
Less:
Distributions from Net
Investment Income............. .36 .60 .58 .61 .65 .65
Distributions from Net Realized
Gain.......................... .24 .12 -0- .16 .03 -0-
------ ------ ------ ------ ------ ------
Total Distributions............... .60 .72 .58 .77 .68 .65
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD.......................... $18.65 $19.07 $19.03 $18.82 $19.44 $18.65
====== ====== ====== ====== ====== ======
Total Return (a).................. 0.95%*(c) 4.10%(c) 4.29%(c) 0.87% 8.16% 9.27%
Net Assets at End of the Period
(In millions)................... $ 29.5 $ 33.7 $ 41.1 $ 49.8 $ 53.0 $ 47.7
Ratio of Expenses to Average Net
Assets.......................... .87%(c) .81%(c) 1.09%(c) 1.62% 1.63% 1.65%
Ratio of Net Investment Income to
Average Net Assets.............. 3.89%(c) 3.96%(c) 3.80%(c) 3.18% 3.42% 3.67%
Portfolio Turnover................ 17%* 25% 16% 25% 32% 39%
</Table>
* Non-Annualized
(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 4%, charged on certain redemptions
made within the first and second years of purchase and declining to 0% after
the fifth year. If the sales charge was included, total returns would be
lower. These returns include combined Rule 12b-1 fees and service fees of up
to 1% and do not reflect the deduction of taxes that a shareholder would pay
on the Fund distributions or the redemption of Fund shares.
(b) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended September 30, 2002 was to increase net investment
income per share by less than $.01, decrease net realized and unrealized
gains and losses per share by less than $.01 and increase the ratio of net
investment income to average net assets from 3.40% to 3.42%. Per share,
ratios and supplemental data for periods prior to September 30, 2002 have
not been restated to reflect this change in presentation.
(c) The Total Return, Ratio of Expenses to Average Net Assets and Ratio of Net
Investment Income to Average Net Assets reflect actual 12b-1 fees of less
than 1% (See footnote 7).
(d) Based on average shares outstanding.
18 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS C SHARES MARCH 31, -----------------------------------------------
2006 2005 2004 2003 2002 (b) 2001
-------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD.......................... $18.81 $18.93 $18.82 $19.43 $18.64 $17.68
------ ------ ------ ------ ------ ------
Net Investment Income........... .29(e) .59 .61 .61 .64 .68
Net Realized and Unrealized
Gain/Loss..................... (.18) .01 .08 (.45) .83 .93
------ ------ ------ ------ ------ ------
Total from Investment
Operations...................... .10 .60 .69 .16 1.47 1.61
------ ------ ------ ------ ------ ------
Less:
Distributions from Net
Investment Income............. .30 .60 .58 .61 .65 .65
Distributions from Net Realized
Gain.......................... .24 .12 -0- .16 .03 -0-
------ ------ ------ ------ ------ ------
Total Distributions............... .54 .72 .58 .77 .68 .65
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD.......................... $18.37 $18.81 $18.93 $18.82 $19.43 $18.64
====== ====== ====== ====== ====== ======
Total Return (a).................. 0.54%* 3.26%(d) 3.75%(d) 0.92%(c) 8.16% 9.27%
Net Assets at End of the Period
(In millions)................... $ 11.4 $ 12.0 $ 12.6 $ 18.1 $ 15.0 $ 11.0
Ratio of Expenses to Average Net
Assets.......................... 1.67% 1.61%(d) 1.59%(d) 1.62% 1.63% 1.65%
Ratio of Net Investment Income to
Average Net Assets.............. 3.09% 3.15%(d) 3.30%(d) 3.20%(c) 3.41% 3.67%
Portfolio Turnover................ 17%* 25% 16% 25% 32% 39%
</Table>
* Non-Annualized
(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 1% charged on certain redemptions
made within one year of purchase. If the sales charge was included, total
returns would be lower. These returns include combined Rule 12b-1 fees and
service fees of up to 1% and do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
(b) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended September 30, 2002 was to increase net investment
income per share by less than $.01, decrease net realized and unrealized
gains and losses per share by less than $.01 and increase the ratio of net
investment income to average net assets from 3.39% to 3.41%. Per share,
ratios and supplemental data for periods prior to September 30, 2002 have
not been restated to reflect this change in presentation.
(c) Certain non-recurring payments were made to Class C Shares, resulting in an
increase to the Total Return and Ratio of Net Investment Income to Average
Net Assets of .03%.
(d) The Total Return, Ratio of Expenses to Average Net Assets and Ratio of Net
Investment Income to Average Net Assets reflect actual 12b-1 fees of less
than 1% (See footnote 7).
(e) Based on average shares outstanding.
See Notes to Financial Statements 19
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
AUGUST 12, 2005
SIX MONTHS (COMMENCEMENT
CLASS I SHARES ENDED OF OPERATIONS) TO
MARCH 31, 2006 SEPTEMBER 30, 2005
------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD................ $18.80 $18.87
------ ------
Net Investment Income................................. .38(b) .09
Net Realized and Unrealized Loss...................... (.18) (.06)
------ ------
Total from Investment Operations........................ .20 .03
------ ------
Less:
Distributions from Net Investment Income.............. .40 .10
Distributions from Net Realized Gain.................. .24 -0-
------ ------
Total Distributions..................................... .64 .10
------ ------
NET ASSET VALUE, END OF THE PERIOD...................... $18.36 $18.80
====== ======
Total Return (a)........................................ 1.05%* 0.17%*
Net Assets at End of the Period (In millions)........... $ 2.2 $ 2.6
Ratio of Expenses to Average Net Assets................. .67% .73%
Ratio of Net Investment Income to Average Net Assets.... 4.08% 4.03%
Portfolio Turnover...................................... 17%* 25%
</Table>
* Non-Annualized
(a) Assumes reinvestment of all distributions for the period. These returns do
not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund Shares.
(b) Based on average shares outstanding.
20 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA INSURED TAX FEE FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen California Insured Tax Free Fund (the "Fund") is organized as a
series of the Van Kampen Tax Free Trust, a Delaware statutory trust, and is
registered as a diversified, open-end management investment company under the
Investment Company Act of 1940 (the "1940 Act"), as amended. The Fund's
investment objective is to provide only California investors with a high level
of current income exempt from federal and California income taxes, with
liquidity and safety of principal, primarily through investment in a diversified
portfolio of insured California municipal securities. The Fund commenced
investment operations on December 13, 1985. The Fund offers Class A Shares,
Class B Shares, Class C Shares and Class I Shares. Each class of shares differs
by its initial sales load, contingent deferred sales charges, the allocation of
class specific expenses and voting rights on matters affecting a single class.
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 U.S. 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 Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services or dealers are valued at
fair value using procedures established in good faith by the Board of Trustees.
Futures contracts are valued at the settlement price established each day on the
exchange on which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Fund may purchase and sell securities on a "when-issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Fund will
segregate assets with the custodian having an aggregate value at least equal to
the amount of the when-issued or delayed delivery purchase commitments until
payment is made. At March 31, 2006, the Fund had no when-issued and delayed
delivery purchase commitments.
C. INCOME AND EXPENSES Interest income is recorded on an accrual basis. Bond
premium is amortized and discount is accreted over the expected life of each
applicable security. Income and expenses of the Fund are allocated on a pro rata
basis to each class of shares, except for distribution and service fees and
incremental transfer agency costs which are unique to each class of shares.
D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of Subchapter M of the Internal Revenue Code applicable to regulated investment
companies
21
VAN KAMPEN CALIFORNIA INSURED TAX FEE FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
and to distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
At March 31, 2006, the cost and related gross unrealized appreciation and
depreciation are as follows:
<Table>
Cost of investments for tax purposes........................ $216,032,197
============
Gross tax unrealized appreciation........................... $ 10,998,819
Gross tax unrealized depreciation........................... (181,610)
------------
Net tax unrealized appreciation on investments.............. $ 10,817,209
============
</Table>
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains and a portion of futures gains, which are
included in ordinary income for tax purposes.
The tax character of distributions paid during the year ended September 30,
2005 was as follows:
<Table>
Distributions paid from:
Ordinary income........................................... $ 755
Long-term capital gain.................................... 1,527,321
----------
$1,528,076
==========
</Table>
As of September 30, 2005, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed ordinary income............................... $ 94,762
Undistributed long-term capital gain........................ 2,815,951
</Table>
F. INSURANCE EXPENSE The Fund typically invests in insured bonds. Any portfolio
securities not specifically covered by a primary insurance policy are insured
secondarily through the Fund's portfolio insurance policy. Insurance premiums
are based on the daily balances of uninsured bonds in the portfolio of
investments and are charged to expense on an accrual basis. The insurance policy
guarantees the timely payment of principal and interest on the securities in the
Fund's portfolio.
G. EXPENSE REDUCTIONS During the six months ended March 31, 2006, the Fund's
custody fee was reduced by $3,584 as a result of credits earned on cash
balances.
22
VAN KAMPEN CALIFORNIA INSURED TAX FEE FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly as follows:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS % PER ANNUM
First $100 million.......................................... 0.500%
Next $150 million........................................... 0.450%
Next $250 million........................................... 0.425%
Over $500 million........................................... 0.400%
</Table>
For the six months ended March 31, 2006, the Fund recognized expenses of
approximately $4,300 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, of which a Trustee of the Fund is a partner of such
firm and he and his law firm provide legal services as legal counsel to the
Fund.
Under separate Legal Services, Accounting Services and Chief Compliance
Officer ("CCO") Employment agreements, the Adviser provides accounting and legal
services and the CCO provides compliance services to the Fund. The costs of
these services are allocated to each fund. For the six months ended March 31,
2006, the Fund recognized expenses of approximately $35,900 representing Van
Kampen Investment Inc.'s or its affiliates' (collectively "Van Kampen") cost of
providing accounting and legal services to the Fund, as well as, the salary,
benefits and related costs of the CCO and related support staff paid by Van
Kampen. Services provided pursuant to the Legal Services agreement are reported
as part of "Legal" expenses on the Statement of Operations. Services provided
pursuant to the Accounting Services and CCO Employment agreement are reported as
part of "Other" expenses on the Statement of Operations.
Van Kampen Investor Services Inc. (VKIS), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the six months ended
March 31, 2006, the Fund recognized expenses of approximately $52,300
representing transfer agency fees paid to VKIS. Transfer agency fees are
determined through negotiations with the Fund's Board of Trustees.
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.
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.
Amounts deferred are retained by the Fund and to the extent permitted by the
1940 Act, as amended, may be invested in the common shares of those funds
selected by the trustees. Investments in such funds of $123,676 are included in
"Other" assets on the Statement of Assets and Liabilities at March 31, 2006.
Appreciation/depreciation and distributions received from these investments are
recorded with an offsetting increase/decrease in the deferred compensation
obligation and do not affect the net asset value of the Fund. Benefits under the
retirement plan are payable upon retirement 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.
For the six months ended March 31, 2006, Van Kampen as Distributor for the
Fund, received commissions on sales of the Fund's Class A Shares of
approximately $45,300 and
23
VAN KAMPEN CALIFORNIA INSURED TAX FEE FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
CDSC on redeemed shares of approximately $9,600. Sales charges do not represent
expenses of the Fund.
3. CAPITAL TRANSACTIONS
For the six months ended March 31, 2006 and the year ended September 30, 2005,
transactions were as follows:
<Table>
<Caption>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2006 SEPTEMBER 30, 2005
-------------------------- --------------------------
SHARES VALUE SHARES VALUE
Sales:
Class A........................... 891,888 $ 16,562,414 1,471,767 $ 27,872,464
Class B........................... 23,574 444,818 83,294 1,597,761
Class C........................... 55,667 1,037,500 118,736 2,246,315
Class I........................... 3,326 61,721 145,079 2,737,669
---------- ------------ ---------- ------------
Total Sales......................... 974,455 $ 18,106,453 1,818,876 $ 34,454,209
========== ============ ========== ============
Dividend Reinvestment:
Class A........................... 239,769 $ 4,445,119 320,900 $ 6,072,157
Class B........................... 38,635 727,065 53,489 1,021,670
Class C........................... 11,501 213,306 14,962 283,212
Class I........................... 4,475 82,971 753 14,217
---------- ------------ ---------- ------------
Total Dividend Reinvestment......... 294,380 $ 5,468,461 390,104 $ 7,391,256
========== ============ ========== ============
Repurchases:
Class A........................... (986,567) $(18,335,584) (1,459,363) $(27,608,932)
Class B........................... (246,696) (4,657,194) (528,905) (10,111,922)
Class C........................... (85,423) (1,588,325) (158,990) (3,012,985)
Class I........................... (30,105) (559,833) (5,905) (111,761)
---------- ------------ ---------- ------------
Total Repurchases................... (1,348,791) $(25,140,936) (2,153,163) $(40,845,600)
========== ============ ========== ============
</Table>
4. REDEMPTION FEE
The Fund assesses a 2% redemption fee on the proceeds of Fund shares that are
redeemed (either by sale or exchange) within seven days of purchase. The
redemption fee is paid directly to the Fund. For the six months ended March 31,
2006, the Fund did not receive any redemption fees.
5. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $38,189,287 and $41,747,794,
respectively.
6. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio and to manage
24
VAN KAMPEN CALIFORNIA INSURED TAX FEE FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
the portfolio's effective yield, maturity and duration. All of the Fund's
portfolio holdings, including derivative instruments, are marked to market each
day with the change in value reflected in unrealized appreciation/depreciation.
Upon disposition, a realized gain or loss is recognized accordingly, except when
taking delivery of a security underlying a futures contract. In this instance,
the recognition of gain or loss is postponed until the disposal of the security
underlying the futures contract.
Summarized below are the specific types of derivative financial instruments
used by the fund.
A. FUTURES CONTRACTS During the period, the Fund invested in futures contracts,
a type of derivative. A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Fund generally invests in futures on U.S. Treasury Notes and typically closes
the contract prior to the delivery date. The contracts are generally used to
manage the portfolio's effective maturity and duration. Upon entering into
futures contracts, the Fund maintains an amount of cash or liquid securities
with a value equal to a percentage of the contract amount with either a futures
commission merchant pursuant to rules and regulations promulgated under the 1940
Act, as amended, or with its custodian in an account in the broker's name. This
amount is known as initial margin. During the period the futures contract is
open, payments are received from or made to the broker based upon changes in the
value of the contract (the variation margin).
Transactions in futures contracts for the six months ended March 31, 2006,
were as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at September 30, 2005........................... -0-
Futures Opened.............................................. 107
Futures Closed.............................................. (107)
----
Outstanding at March 31, 2006............................... -0-
====
</Table>
B. INDEXED SECURITIES The Fund invests in indexed securities. These instruments
are identified in the Portfolio of Investments. The price of these securities
may be more volatile than the price of a comparable fixed rate security.
An inverse floating rate security is one where the coupon is inversely
indexed to a short-term floating interest rate multiplied by a specific factor.
As the floating rate rises, the coupon is reduced. Conversely, as the floating
rate declines, the coupon is increased. These instruments are typically used by
the Fund to enhance the yield of the portfolio.
7. DISTRIBUTION AND SERVICE PLANS
Shares of the Fund are distributed by Van Kampen Funds Inc. (the "Distributor"),
an affiliate of the Adviser. The Fund has adopted a distribution plan pursuant
to Rule 12b-1 under the 1940 Act, as amended, and a service plan (collectively,
the "Plans") for Class A Shares, Class B Shares and Class C Shares to compensate
the Distributor for the distribution, shareholder servicing and maintenance of
shareholder accounts for these shares. Under the Plans, the Fund will incur
annual fees of up to .25% of Class A average daily net assets and up to 1.00%
each of Class B and Class C average daily net assets. These fees are accrued
daily and paid to the Distributor monthly.
25
VAN KAMPEN CALIFORNIA INSURED TAX FEE FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed receivable") was approximately $0 and $3,500 for Class
B and Class C Shares, respectively. These amounts may be recovered from future
payments under the distribution plan or CDSC. To the extent the unreimbursed
receivable has been fully recovered, the distribution fee is reduced.
8. LEGAL MATTERS
The Adviser, certain affiliates of the Adviser, and certain investment companies
advised by the Adviser or its affiliates, including the Fund, are named as
defendants in a number of similar class action complaints which were
consolidated. The consolidated action also names as defendants certain
individual Trustees and Directors of certain investment companies advised by
affiliates of the Adviser; the complaint does not, however, name the individual
Trustees of any Van Kampen funds. The consolidated amended complaint generally
alleges that defendants violated their statutory disclosure obligations and
fiduciary duties by failing properly to disclose (i) that the Adviser and
certain affiliates of the Adviser allegedly offered economic incentives to
brokers and others to steer investors to the funds advised by the Adviser or its
affiliates rather than funds managed by other companies, and (ii) that the funds
advised by the Adviser or its affiliates, including the Fund, allegedly paid
excessive commissions to brokers in return for their alleged efforts to steer
investors to these funds. The complaint seeks, among other things, unspecified
compensatory damages, rescissionary damages, fees and costs. Plaintiffs filed a
Motion for Leave to file a Supplemental Pleading that would, among other things,
expand the allegations and alleged class. The defendants moved to dismiss this
action, which motion was granted in its entirety. Additionally, plaintiffs'
Motion for Leave to file a Supplemental Pleading was denied. The matter is now
concluded.
The Adviser and certain affiliates of the Adviser are also named as
defendants in a derivative suit which additionally names as defendants certain
individual Trustees of certain Van Kampen funds; the named investment companies,
including the Fund, are listed as nominal defendants. The complaint alleges that
defendants caused the Van Kampen funds to pay economic incentives to a
proprietary sales force to promote the sale of proprietary mutual funds. The
complaint also alleges that the Van Kampen funds paid excessive commissions to
Morgan Stanley and its affiliates in connection with the sales of the funds. The
complaint seeks, among other things, the removal of the current Trustees of the
funds, rescission of the management contracts for the funds, disgorgement of
profits by Morgan Stanley and its affiliates and monetary damages. This
complaint has been coordinated with the consolidated complaint described in the
preceding paragraph. Plaintiff sought leave to file a second amended derivative
complaint that alleges that the Adviser permitted or recklessly disregarded
market timing and late trading in its proprietary mutual funds in order to
increase assets under management and fees. However, pursuant to an agreement
between the parties, the plaintiff's proposed second amended derivative
complaint was withdrawn and the allegations regarding market timing and late
trading asserted therein were filed in a separate complaint and coordinated with
other cases related to market timing that have been centralized in a federal
court. Additionally, plaintiff's initial complaint regarding allegations of
economic incentives was stayed pending certain procedural developments.
26
VAN KAMPEN CALIFORNIA INSURED TAX FEE FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
The defendants have moved to dismiss each of these actions and otherwise
intend to defend them vigorously. Defendants' motion to dismiss in the market
timing litigation was granted in part and denied in part, and defendants filed a
motion for reconsideration of the Court's decision to uphold certain of
plaintiff's claims. Additionally, plaintiff and the named Trustees entered into
a tolling agreement. The tolling agreement dismisses the Trustees from the
action without prejudice in exchange for tolling all claims against the
Trustees.
While the defendants believe that they have meritorious defenses, the
ultimate outcome of these matters is not presently determinable, and no
provision has been made in the Fund's financial statements for the effect, if
any, of these matters.
9. INDEMNIFICATIONS
The Fund enters into contracts that contain a variety of indemnifications. The
Fund's maximum exposure under these arrangements is unknown. However, the Fund
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
27
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
BOARD OF TRUSTEES, OFFICERS AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
JACK E. NELSON
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
OFFICERS
RONALD E. ROBISON
President and Principal Executive Officer
J. DAVID GERMANY
Vice President
DENNIS SHEA
Vice President
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
PHILLIP G. GOFF
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1221 Avenue of the Americas
New York, New York 10020
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 947
Jersey City, New Jersey 07303-0947
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
One Lincoln Street
Boston, Massachusetts 02111
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, Illinois 60606
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
28
Van Kampen California Insured Tax Free Fund
An Important Notice Concerning Our U.S. Privacy Policy
We are required by federal law to provide you with a copy of our Privacy
Policy annually.
The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors
Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van
Kampen Exchange Corp., as well as current and former individual investors in
Van Kampen mutual funds, unit investment trusts, and related companies.
This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised
by us. This Policy is, however, applicable to individuals who select us to
be a custodian of securities or assets in individual retirement accounts,
401(k) accounts, 529 Educational Savings Accounts, accounts subject to the
Uniform Gifts to Minors Act, or similar accounts.
Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
WE RESPECT YOUR PRIVACY
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we
help you achieve your financial objectives. This Policy describes what
non-public personal information we collect about you, why we collect it, and
when we may share it with others.
We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies
you or your accounts as "personal information."
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
To serve you better and manage our business, it is important that we collect
and maintain accurate information about you. We may obtain this information
from applications and other forms you submit to us, from your dealings with
us, from consumer reporting agencies, from our Web sites and from third
parties and other sources.
(continued on next page)
Van Kampen California Insured Tax Free Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
For example:
-- We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.
-- We may obtain information about account balances, your use of
account(s) and the types of products and services you prefer to receive
from us through your dealings and transactions with us and other
sources.
-- We may obtain information about your creditworthiness and credit
history from consumer reporting agencies.
-- We may collect background information from and through third-party
vendors to verify representations you have made and to comply with
various regulatory requirements.
-- If you interact with us through our public and private Web sites, we
may collect information that you provide directly through online
communications (such as an e-mail address). We may also collect
information about your Internet service provider, your domain name,
your computer's operating system and Web browser, your use of our Web
sites and your product and service preferences, through the use of
"cookies." "Cookies" recognize your computer each time you return to
one of our sites, and help to improve our sites' content and
personalize your experience on our sites by, for example, suggesting
offerings that may interest you. Please consult the Terms of Use of
these sites for more details on our use of cookies.
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
To provide you with the products and services you request, to serve you
better and to manage our business, we may disclose personal information we
collect about you to our affiliated companies and to non-affiliated third
parties as required or permitted by law.
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise
required or permitted by law.
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except
to enable them to provide services on our behalf, to perform joint marketing
agreements with
(continued on back)
Van Kampen California Insured Tax Free Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
other financial institutions, or as otherwise required or permitted by law.
For example, some instances where we may disclose information about you to
non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against
fraud, for institutional risk control, to respond to judicial process or to
perform services on our behalf. When we share personal information with
these companies, they are required to limit their use of personal
information to the particular purpose for which it was shared and they are
not allowed to share personal information with others except to fulfill that
limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL
INFORMATION WE COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties
that provide support or marketing services on our behalf may also receive
personal information, and we require them to adhere to confidentiality
standards with respect to such information.
Van Kampen Funds Inc.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2006 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC.
41, 341, 541
CAI SAR 5/06
(VAN KAMPEN INVESTMENTS SHINE LOGO) RN06-0125P-Y03/06
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
Municipal Income Fund performed during the semiannual period. The
portfolio management team will provide an overview of the market
conditions and discuss some of the factors that affected investment
performance during the reporting period. In addition, this report
includes the fund's financial statements and a list of fund investments
as of March 31, 2006.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A CLASS A, B AND C SHARE
PROSPECTUS FOR THE FUND BEING OFFERED. THE PROSPECTUS CONTAINS
INFORMATION ABOUT THE FUND, INCLUDING THE INVESTMENT OBJECTIVES, RISKS,
CHARGES AND EXPENSES. TO OBTAIN A CLASS I SHARE PROSPECTUS, CONTACT YOUR
FINANCIAL ADVISOR OR DOWNLOAD ONE AT VANKAMPEN.COM. PLEASE READ THE
PROSPECTUS CAREFULLY BEFORE INVESTING.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT A MUTUAL FUND WILL ACHIEVE ITS
INVESTMENT OBJECTIVE. FUNDS ARE SUBJECT TO MARKET RISK, WHICH IS THE
POSSIBILITY THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL
DECLINE AND THAT THE VALUE OF FUND SHARES MAY THEREFORE BE LESS THAN WHAT
YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS
FUND.
INCOME MAY SUBJECT CERTAIN INDIVIDUALS TO THE FEDERAL ALTERNATIVE MINIMUM
TAX (AMT).
<Table>
<Caption>
---------------------------------------------------------------------------------------
NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
---------------------------------------------------------------------------------------
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
---------------------------------------------------------------------------------------
</Table>
Performance Summary as of 3/31/06
<Table>
<Caption>
A SHARES B SHARES C SHARES I SHARES
since 8/1/90 since 8/24/92 since 8/13/93 since 8/12/05
- ----------------------------------------------------------------------------------------------------
W/MAX W/MAX W/MAX
4.75% 4.00% 1.00%
AVERAGE ANNUAL W/O SALES SALES W/O SALES SALES W/O SALES SALES W/O SALES
TOTAL RETURNS CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE CHARGES
Since Inception 5.91% 5.58% 4.72% 4.72% 3.97% 3.97% 2.14%
10-year 4.83 4.33 4.35 4.35 4.03 4.03 --
5-year 4.86 3.85 4.06 3.80 4.07 4.07 --
1-year 4.65 -0.34 3.75 -0.25 3.82 2.82 --
6-month 1.48 -3.32 0.97 -3.00 1.04 0.04 1.53
- ----------------------------------------------------------------------------------------------------
30-Day SEC Yield 3.48% 2.91% 2.91% 3.91%
</Table>
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS AND
PRINCIPAL VALUE WILL FLUCTUATE AND FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
The returns shown in this report do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
Performance of share classes will vary due to differences in sales charges and
expenses. Average annual total return with sales charges includes payment of the
maximum sales charge of 4.75 percent for Class A shares, a contingent deferred
sales charge of 4.00 percent for Class B shares (in year one and declining to
zero after year six), a contingent deferred sales charge of 1.00 percent for
Class C shares in year one and combined Rule 12b-1 fees and service fees of up
to 0.25 percent for Class A shares and up to 1.00 percent for Class B and C
shares. The since inception and 10-year returns for Class B shares reflect the
conversion of Class B shares into Class A shares six years after purchase. The
since inception returns for Class C shares reflect the conversion of Class C
shares into Class A shares ten years after purchase. Class I shares are
available for purchase exclusively by investors through (i) tax-exempt
retirement plans with assets of at least $1 million (including 401(k) plans, 457
plans, employer-sponsored 403(b) plans, profit sharing and money purchase plans,
defined benefit plans and non-qualified deferred compensation plans), (ii)
fee-based investment programs with assets of at least $1 million and (iii)
institutional clients with assets of at least $1 million. Class I shares are
offered without any sales charges on purchases or sales and do not include
combined Rule 12b-1 fees and service fees. Figures shown above assume
reinvestment of all dividends and capital gains. SEC yield is a calculation for
determining the amount of portfolio income, excluding non-income items as
prescribed by the SEC. Yields are subject to change.
The Lehman Brothers Municipal Bond Index is generally representative of
investment-grade, tax-exempt bonds. The index does not include any expenses,
fees or sales charges, which would lower performance. The index is unmanaged and
should not be considered an investment. It is not possible to invest directly in
an index. Index data source: Lipper Inc.
1
Fund Report
FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 2006
MARKET CONDITIONS
Despite the shadow of rising oil prices, the devastation of the Gulf Coast
hurricanes, and emerging weakness in the housing market, the economy continued
to grow during the six-month period ended March 31, 2006. This expansion was
more modest in the fourth quarter of 2005, but gained momentum in the first
quarter of 2006.
Against the backdrop of growth and good employment data, the Federal Open Market
Committee (the "Fed") continued raising the federal funds target rate during the
period, implementing four additional increases of 25 basis points each. The
final hike of the period represented the fifteenth consecutive increase--the
longest stretch of increases in 25 years. As the period came to a close, market
observers speculated about the Fed's near-term intentions, given the central
bank's view that although longer-term inflation appeared contained, commodity
prices could amplify inflationary pressures.
Returns across the municipal bond market varied significantly. As investors
sought income opportunities, lower rated bonds outpaced investment-grade bonds
by a wide margin. Long-term bonds earned the best returns, broadly speaking,
while bonds in the three-to-seven year range posted the most muted gains.
Municipal bond issuance was robust during the final months of 2005. (In fact,
2005 marked a record high for municipal bond volume.) The tide changed in the
first quarter of 2006, however. As rising rates discouraged issuers from
refinancing debt, national municipal issuance dropped by 30 percent versus the
same period a year ago. While supply ebbed, the market's appetite for municipal
bonds remained strong, with particularly heavy demand from high yield municipal
bond funds.
2
PERFORMANCE ANALYSIS
The fund returned 1.48 percent for the six months ended March 31, 2006 (Class A
shares, unadjusted for sales charges). In comparison, the fund's benchmark, the
Lehman Brothers Municipal Bond Index, returned 0.98 percent for the period.
TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 2006
<Table>
<Caption>
- -----------------------------------------------------------------------------
LEHMAN BROTHERS MUNICIPAL
CLASS A CLASS B CLASS C CLASS I BOND INDEX
1.48% 0.97% 1.04% 1.53% 0.98%
- -----------------------------------------------------------------------------
</Table>
The performance for the four share classes varies because each has different
expenses. The fund's total return figures assume the reinvestment of all
distributions, but do not reflect the deduction of any applicable sales charges.
Such costs would lower performance. Past performance is no guarantee of future
results. See Performance Summary for standardized performance information and
index definition.
We sought to increase the yield and return potential of the portfolio within the
framework of our investment strategy. Following our long-standing "relative
value" discipline, we favored high quality bonds with good liquidity. (Liquid
securities are those for which there is a robust market of purchasers and
sellers.) Based on our in-depth proprietary research, we purchased bonds we
believed to be attractively valued, and then sold them when they reached our
return targets. We then invested the proceeds into bonds which we believed
offered greater future total return prospects.
Several factors drove the fund's performance during the period. While the
majority of the portfolio was invested in bonds rated AA and higher, the fund
was overweighted in BBB rated bonds and non-rated bonds relative to its
benchmark. In an environment of relatively low interest rates, demand for
higher-yielding credits remained strong.
Our analysis had suggested that interest rates would continue to rise, with the
yields of short-term bonds advancing more rapidly than those of long-term
issues. Accordingly, we kept the fund's duration (a measure of interest rate
sensitivity) shorter than that of the Lehman benchmark, and this strategy
contributed to the fund's relative performance. An overweighted position in
long-term bonds -- the strongest segment of the market--also served the fund
well.
Our sales included shorter maturity, pre-refunded bonds. We also sold zero-
coupon bonds, which tend to underperform during periods of rising rates. We
added slightly to the fund's stake in BBB rated bonds during the period,
bringing the fund's allocation of BBB and non-rated bonds to approximately 20
percent at the close of the reporting period.
3
The fund remained well diversified across the major sectors of the municipal
market, with a focus on essential services. As of the close of the period,
general purpose, hospitals and wholesale electric represented the fund's largest
sector weightings. Meanwhile, approximately 72 percent of the fund's bonds were
rated AA or higher as of March 31, 2006.
There is no guarantee that any sectors mentioned will continue to perform as
discussed herein or that securities in such sectors will be held by the fund in
the future.
4
<Table>
<Caption>
RATINGS ALLOCATION AS OF 3/31/06
AAA/Aaa 59.4%
AA/Aa 13.0
A/A 6.0
BBB/Baa 9.3
BB/Ba 0.3
B/B 1.0
NR 11.0
<Caption>
TOP FIVE SECTORS AS A 3/31/06
General Purpose 14.8%
Hospital 10.2
Wholesale Electric 10.1
Public Education 9.1
Bridge Tunnel 8.2
<Caption>
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 3/31/06
California 15.6%
New York 15.0
Texas 12.1
Illinois 6.9
Colorado 6.2
New Jersey 6.1
Florida 5.5
Michigan 4.0
Massachusetts 2.1
Utah 2.1
Arizona 2.0
Connecticut 1.9
North Carolina 1.8
Missouri 1.5
Indiana 1.4
Georgia 1.4
Washington 1.4
District of Columbia 1.3
Kansas 1.1
Pennsylvania 1.1
Oregon 1.0
Iowa 1.0
Tennessee 0.9
West Virginia 0.9
New Hampshire 0.8
Louisiana 0.7
Ohio 0.5
Rhode Island 0.5
Alabama 0.5
Oklahoma 0.4
South Dakota 0.4
Minnesota 0.3
Maryland 0.2
Vermont 0.2
</Table>
<Table>
(continued on next page)
</Table>
5
<Table>
<Caption>
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 3/31/06
(continued from previous page)
South Carolina 0.1
Taxable Note 0.3
-----
Total Investments 99.2%
Other Assets in Excess of Liabilities 0.8
-----
Total Net Assets 100.0%
</Table>
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the sectors shown above. Ratings allocations and sectors are as a
percentage of long-term investments. Summary of investments by state
classification is as a percentage of net assets. Securities are classified by
sectors that represent broad groupings of related industries. Van Kampen is a
wholly owned subsidiary of a global securities firm which is engaged in a wide
range of financial services including, for example, securities trading and
brokerage activities, investment banking, research and analysis, financing and
financial advisory services. Rating allocations based upon ratings as issued by
Standard and Poor's and Moody's, respectively.
6
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
Each Van Kampen fund provides a complete schedule of portfolio holdings
in its semiannual and annual reports within 60 days of the end of the
fund's second and fourth fiscal quarters by filing the schedule
electronically with the Securities and Exchange Commission (SEC). The
semiannual reports are filed on Form N-CSRS and the annual reports are
filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
reports to fund shareholders, and makes these reports available on its
public Web site, www.vankampen.com. In addition to the semiannual and
annual reports that Van Kampen delivers to shareholders and makes
available through the Van Kampen public Web site, each fund files a
complete schedule of portfolio holdings with the SEC for the fund's first
and third fiscal quarters on Form N-Q. Van Kampen does not deliver the
reports for the first and third fiscal quarters to shareholders, nor are
the reports posted to the Van Kampen public Web site. You may, however,
obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS
filings) by accessing the SEC's Web site, http://www.sec.gov. You may
also review and copy them at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the SEC's Public
Reference Room may be obtained by calling the SEC at (800) SEC-0330. You
can also request copies of these materials, upon payment of a duplicating
fee, by electronic request at the SEC's e-mail address
(publicinfo@sec.gov) or by writing the Public Reference section of the
SEC, Washington, DC 20549-0102.
You may obtain copies of a fund's fiscal quarter filings by contacting
Van Kampen Client Relations at (800) 847-2424.
7
HOUSEHOLDING NOTICE
To reduce fund expenses, the fund attempts to eliminate duplicate
mailings to the same address. The fund delivers a single copy of certain
shareholder documents to investors who share an address, even if the
accounts are registered under different names. The fund's prospectuses
and shareholder reports (including annual privacy notices) will be
delivered to you in this manner indefinitely unless you instruct us
otherwise. You can request multiple copies of these documents by either
calling (800) 341-2911 or writing to Van Kampen Investor Services at 1
Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, IL 60181. Once Investor
Services has received your instructions, we will begin sending individual
copies for each account within 30 days.
PROXY VOTING POLICY AND PROCEDURES AND PROXY VOTING RECORD
You may obtain a copy of the fund's Proxy Voting Policy and Procedures
without charge, upon request, by calling toll free (800) 847-2424 or by
visiting our Web site at www.vankampen.com. It is also available on the
Securities and Exchange Commission's Web site at http://www.sec.gov.
You may obtain information regarding how the fund voted proxies relating
to portfolio securities during the most recent twelve-month period ended
June 30 without charge by visiting our Web site at www.vankampen.com.
This information is also available on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
8
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments of Class A Shares
and contingent deferred sales charge on redemptions of Class B and C Shares; and
(2) ongoing costs, including management fees; distribution and service (12b-1)
fees; and other Fund expenses. This example is intended to help you understand
your ongoing cost (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period 10/1/05 - 3/31/06.
ACTUAL EXPENSE
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing cost of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or contingent deferred sales charges. Therefore, the second line
of the table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
-------------------------------------------------
10/1/05 3/31/06 10/1/05-3/31/06
Class A
Actual..................................... $1,000.00 $1,014.79 $4.47
Hypothetical............................... 1,000.00 1,020.43 4.48
(5% annual return before expenses)
Class B
Actual..................................... 1,000.00 1,009.67 8.22
Hypothetical............................... 1,000.00 1,016.73 8.25
(5% annual return before expenses)
Class C
Actual..................................... 1,000.00 1,010.36 8.22
Hypothetical............................... 1,000.00 1,016.73 8.25
(5% annual return before expenses)
Class I
Actual..................................... 1,000.00 1,015.35 3.22
Hypothetical............................... 1,000.00 1,021.73 3.23
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 0.89%, 1.64%,
1.64% and 0.64% for Class A, B, C and I Shares, respectively, multiplied by
the average account value over the period, multiplied by 182/365 (to reflect
the one-half year period).
Assumes all dividends and distributions were reinvested.
9
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED)
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
MUNICIPAL BONDS 98.7%
ALABAMA 0.5%
$ 2,000 Birmingham Baptist Med Ctr AL Spl Care Fac
Fin Auth Rev Baptist Hlth Sys Inc Ser A..... 5.000% 11/15/30 $ 1,976,160
1,000 Jefferson Cnty, AL Ltd Oblig Sch Wt Ser A... 5.000 01/01/24 1,028,390
3 Mobile, AL Indl Dev Brd Solid Waste Disp Rev
Mobile Energy Svc Co Proj Rfdg.............. 6.950 01/01/20 294
------------
3,004,844
------------
ARIZONA 2.0%
1,000 Cottonwood, AZ Wtr Rev Sys Sr Lien (XLCA
Insd)....................................... 5.000 07/01/30 1,041,040
5,000 Phoenix, AZ Civic Impt Corp Sr Lien Ser B
(AMT) (FGIC Insd)........................... 5.250 07/01/32 5,164,850
1,875 Scottsdale, AZ Indl Dev Hosp Scottsdale Mem
Hosp Ser A Rfdg (AMBAC Insd)................ 6.000 09/01/12 1,969,200
1,750 Scottsdale, AZ Indl Dev Hosp Scottsdale Mem
Hosp Ser A Rfdg (AMBAC Insd)................ 6.125 09/01/17 1,839,582
2,750 University Med Ctr Corp AZ Hosp Rev......... 5.000 07/01/35 2,753,410
------------
12,768,082
------------
CALIFORNIA 15.6%
4,870 Anaheim, CA Pub Fin Auth Lease Rev Cap
Apprec Sub Pub Impt Proj C (FSA Insd)....... * 09/01/20 2,507,466
2,000 California Cnty, CA Tob Securitization Agy
Tob LA Cnty Securitization Ser A (a)........ 0/5.250 06/01/21 1,570,360
1,670 California Cnty, CA Tob Securitization Agy
Tob Sonoma Cnty Corp Rfdg................... 5.000 06/01/26 1,629,486
1,875 California Cnty, CA Tob Securitization Agy
Tob Sonoma Cnty Corp Rfdg................... 5.250 06/01/45 1,845,750
1,000 California Hlth Fac Fin Auth Rev Cedars
Sinai Med Ctr Rfdg.......................... 5.000 11/15/27 1,017,920
3,000 California Hlth Fac Fin Auth Rev Cedars
Sinai Med Ctr Rfdg.......................... 5.000 11/15/34 3,044,490
305 California Infrastructure & Econ Dev Bk Rev
Bay Area Toll Brdgs First Lien A (FSA
Insd)....................................... 5.250 07/01/20 328,351
5,000 California Infrastructure & Econ Dev Bk Rev
Rites-PA-1202R (Inverse Fltg) (Acquired
09/10/03, Cost $5,484,100) (FSA Insd) (b)
(c)......................................... 6.519 07/01/11 5,765,550
5,725 California St (FSA Insd).................... 5.000 02/01/29 5,928,924
10,000 California St Dept Wtr Res Pwr Ser A
(Prerefunded @ 05/01/12) (AMBAC Insd)....... 5.500 05/01/16 11,045,300
5,000 California St Dept Wtr Res Pwr Ser A
(Prerefunded @ 05/01/12) (XLCA Insd)........ 5.375 05/01/17 5,488,900
6,575 California St Dept Wtr Res Pwr Supply Rev
Rites-PA-1201R (Inverse Fltg) (Acquired
09/08/03, Cost $7,143,277) (MBIA Insd)
(c)......................................... 6.519 05/01/20 7,771,979
</Table>
10 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$ 7,500 California St Drivers Ser 482 (Inverse Fltg)
(Acquired 07/19/04, Cost $8,325,750) (XLCA
Insd) (b) (c)............................... 7.010% 10/01/10 $ 8,595,000
3,500 California St Pub Wks Brd Lease Rev Dept
Corrections Ser C........................... 5.250 06/01/28 3,660,300
1,350 California Statewide Cmnty Dev Auth Rev
Daughters of Charity Hlth Ser A............. 5.000 07/01/39 1,344,249
3,000 California Statewide Cmnty Dev Auth Rev Hlth
Fac Adventist Hlth Ser A.................... 5.000 03/01/35 3,033,210
2,640 Escondido, CA Jt Pwrs Fin Auth Lease Rev
(AMBAC Insd)................................ * 09/01/13 1,671,674
5,430 Escondido, CA Jt Pwrs Fin Auth Lease Rev
(AMBAC Insd)................................ * 09/01/14 3,211,302
3,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev
Cap Apprec Rfdg (MBIA Insd)................. * 01/15/17 1,760,160
21,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev
Cap Apprec Rfdg............................. * 01/15/24 7,644,210
15,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev
Cap Apprec Rfdg............................. * 01/15/30 3,793,050
2,400 Golden St Tob Securitization Corp CA Tob
Settlement Rev Enhanced Ser A............... 5.000 06/01/45 2,441,328
6,695 San Francisco, CA City & Cnty Second Ser
Issue 29 B Rfdg (FGIC Insd)................. 5.125 05/01/20 7,039,391
1,600 Turlock, CA Hlth Fac Rev Ctf Partn Emanuel
Med Ctr Inc................................. 5.375 10/15/34 1,642,928
5,000 West Contra Costa CA Uni Election of 2002
Ser B (FSA Insd)............................ 5.000 08/01/26 5,167,050
------------
98,948,328
------------
COLORADO 6.2%
2,840 Adams Cnty, CO Single Family Mtg Rev Ser A
(Escrowed to Maturity) (b).................. 8.875 08/01/10 3,399,452
5,000 Arapahoe Cnty, CO Wtr & Waste Proj Ser A
(MBIA Insd)................................. 5.125 12/01/32 5,225,400
5,000 Colorado Ed & Cultural Fac Auth Rev Impt
Charter Sch Peak to Peak Rfdg (XLCA Insd)... 5.250 08/15/34 5,282,150
3,000 Colorado Hlth Fac Auth Rev Covenant
Retirement Cmntys Inc....................... 5.000 12/01/35 2,947,410
1,000 Colorado Hlth Fac Auth Rev Evangelical
Lutheran Ser A.............................. 5.250 06/01/34 1,019,410
5,000 Colorado Springs, CO Util Rev Sys Sub Lien
Impt Ser A Rfdg............................. 5.000 11/15/21 5,214,500
5,000 Colorado Springs, CO Util Rev Sys Sub Lien
Impt Ser A Rfdg............................. 5.000 11/15/29 5,128,950
1,630 Dove Vly Metro Dist CO Arapahoe Cnty Rfdg
(FSA Insd).................................. 5.000 11/01/25 1,703,790
</Table>
See Notes to Financial Statements 11
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
COLORADO (CONTINUED)
$15,000 E 470 Pub Hwy Auth CO Rev Cap Apprec Sr Ser
B (MBIA Insd)............................... * 09/01/20 $ 7,735,200
1,500 Park Creek Metro Dist CO Rev Sr Ltd Tax Ppty
Tax Rfdg.................................... 5.500% 12/01/37 1,543,110
------------
39,199,372
------------
CONNECTICUT 1.9%
2,785 Bridgeport, CT Rol Ser II R 182 (Inverse
Fltg) (Acquired 07/09/02, Cost $3,177,971)
(FGIC Insd) (b) (c)......................... 7.469 08/15/15 3,226,757
2,950 Bridgeport, CT Rol Ser II R 182 (Inverse
Fltg) (Acquired 07/09/02, Cost $3,323,232)
(FGIC Insd) (b) (c)......................... 7.469 08/15/16 3,407,574
2,530 Mashantucket Western Pequot Tribe CT Spl Rev
Ser A, 144A--Private Placement (d).......... 6.400 09/01/11 2,603,117
2,470 Mashantucket Western Pequot Tribe CT Spl Rev
Ser A, 144A--Private Placement (Prerefunded
@ 09/01/07) (d)............................. 6.400 09/01/11 2,590,017
------------
11,827,465
------------
DISTRICT OF COLUMBIA 1.3%
5,150 District Columbia Tax Incrmnt Gallary Place
Proj (FSA Insd)............................. 5.250 07/01/27 5,436,958
3,000 Metropolitan Washington DC Arpt Auth Sys Ser
A (AMT) (FGIC Insd)......................... 5.250 10/01/32 3,100,830
------------
8,537,788
------------
FLORIDA 5.3%
5,000 Broward Cnty, FL Arpt Sys Rev Ser J-I (AMT)
(AMBAC Insd)................................ 5.250 10/01/26 5,182,250
1,100 Capital Tr Agy FL Rev Ft Lauderdale Proj
(AMT)....................................... 5.750 01/01/32 1,143,571
9,000 Dade Cnty, FL Gtd Entitlement Rev Cap Apprec
Ser A Rfdg (MBIA Insd)...................... * 02/01/18 4,525,200
570 Escambia Cnty, FL Hlth Fac Auth Rev (AMBAC
Insd)....................................... 5.950 07/01/20 600,193
6,385 Lake Cnty, FL Sch Brd Ctf Partn (Prerefunded
@ 07/01/12) (AMBAC Insd).................... 5.375 07/01/16 6,930,151
500 Orange Cnty, FL Hlth Fac Auth Rev First Mtg
Orlando Lutheran Twr Rfdg (Prerefunded @
07/01/06)................................... 8.625 07/01/20 521,095
595 Orange Cnty, FL Tourist Dev Tax Rev
(Escrowed to Maturity) (AMBAC Insd)......... 6.000 10/01/16 598,665
12,860 Orlando, FL Util Commn Wtr Rfdg............. 5.250 10/01/19 13,771,131
------------
33,272,256
------------
</Table>
12 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
GEORGIA 1.4%
$ 2,000 Atlanta, GA Tax Alloc Eastside Proj Ser B... 5.600% 01/01/30 $ 2,053,100
6,310 Municipal Elec Auth GA Combustion Turbine
Ser A (MBIA Insd)........................... 5.250 11/01/17 6,762,364
5 Municipal Elec Auth GA Combustion Turbine
Ser A (Prerefunded @ 11/01/12) (MBIA
Insd)....................................... 5.250 11/01/17 5,407
------------
8,820,871
------------
ILLINOIS 6.9%
1,500 Bolingbrook, IL Sales Tax Rev (a)........... 0/6.250 01/01/24 1,345,260
3,000 Chicago, IL Lakefront Millennium Pkg Fac
(MBIA Insd) (a)............................. 0/5.650 01/01/19 3,244,920
1,000 Chicago, IL Metro Wtr Reclamation Dist Gtr
Chicago (Escrowed to Maturity).............. 7.000 01/01/11 1,105,310
8,050 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt
Third Lien C-2 Rfdg (AMT) (XLCA Insd)....... 5.250 01/01/34 8,299,952
1,200 Chicago, IL Proj & Rfdg Ser C (FGIC Insd)
(b)......................................... 5.750 01/01/16 1,298,976
2,010 Chicago, IL Proj & Rfdg Ser C (Prerefunded @
07/01/10) (FGIC Insd) (b)................... 5.750 01/01/16 2,188,990
40 Chicago, IL Single Family Mtg Rev Ser A
(AMT) (GNMA Collateralized)................. 7.000 09/01/27 40,133
945 Chicago, IL Tax Increment Alloc Santn Drain
& Ship Canal Ser A.......................... 7.750 01/01/14 985,975
1,000 Cook Cnty, IL Cmnty College Dist No 508
Chicago Ctf Partn (FGIC Insd)............... 8.750 01/01/07 1,036,960
5,000 Cook Cnty, IL Ser A (Prerefunded @ 05/15/11)
(FGIC Insd)................................. 5.500 11/15/31 5,410,150
1,250 Huntley, IL Increment Alloc Rev Huntley
Redev Proj Ser A............................ 8.500 12/01/15 1,284,925
90 Illinois Dev Fin Auth Rev Cmnty Fac Clinic
Altgeld Proj................................ 8.000 11/15/06 89,000
5,000 Illinois St First Ser (FSA Insd)............ 5.250 12/01/21 5,332,750
9,250 Metropolitan Pier & Expo Auth IL Dedicated
St Tax Rev Cap Apprec McCormick Rfdg (MBIA
Insd) (a)................................... 0/5.400 06/15/19 7,270,222
3,607 Pingree Grove Vlg, IL Spl Svc Area No 1 Spl
Tax Ser 05-1 Cambridge Lakes Proj........... 5.250 03/01/15 3,654,252
1,000 Yorkville, IL Utd City Spl Svc Area Spl Tax
No 2004-107 Raintree Vlg II Proj............ 6.250 03/01/35 1,026,200
------------
43,613,975
------------
INDIANA 1.4%
2,500 Indiana Bd Bk Spl Pgm Hendricks Redev
(Prerefunded @ 02/01/07) (LOC--Canadian
Imperial Bank).............................. 6.200 02/01/23 2,602,125
1,890 Indiana Hlth Fac Fin Auth Rev Hoosier Care
Proj Ser A.................................. 7.125 06/01/34 1,817,783
550 Indianapolis, IN Loc Pub Impt Bd Bk Ser D... 6.750 02/01/14 629,761
</Table>
See Notes to Financial Statements 13
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
INDIANA (CONTINUED)
$ 140 Saint Joseph Cnty, IN Redev Dist Tax
Increment Rev Ser B (b)..................... * 06/30/11 $ 94,198
140 Saint Joseph Cnty, IN Redev Dist Tax
Increment Rev Ser B (b)..................... * 06/30/12 87,259
135 Saint Joseph Cnty, IN Redev Dist Tax
Increment Rev Ser B (b)..................... * 06/30/13 77,958
130 Saint Joseph Cnty, IN Redev Dist Tax
Increment Rev Ser B (b)..................... * 06/30/14 69,553
130 Saint Joseph Cnty, IN Redev Dist Tax
Increment Rev Ser B (b)..................... * 06/30/15 64,428
135 Saint Joseph Cnty, IN Redev Dist Tax
Increment Rev Ser B (b)..................... * 06/30/16 61,988
225 Saint Joseph Cnty, IN Redev Dist Tax
Increment Rev Ser B (b)..................... * 06/30/17 95,704
3,295 Vigo Cnty, IN Elem Sch Bldg First Mtg Impt &
Rfdg (FSA Insd)............................. 5.250% 01/10/22 3,476,060
------------
9,076,817
------------
IOWA 1.0%
175 Iowa Fin Auth Hosp Fac Rev Trinity Regl Hosp
Proj (FSA Insd)............................. 6.000 07/01/07 178,160
2,400 Iowa Fin Auth Hosp Fac Rev Trinity Regl Hosp
Proj (FSA Insd)............................. 5.750 07/01/17 2,499,384
1,000 Tobacco Settlement Auth IA Tob Settlement
Rev Ser C................................... 5.375 06/01/38 1,004,950
2,500 Tobacco Settlement Auth IA Tob Settlement
Rev Ser C................................... 5.625 06/01/46 2,555,450
------------
6,237,944
------------
KANSAS 1.1%
6,600 Sedgwick Cnty, KS Uni Sch Dist No 259
Wichita (MBIA Insd) (b)..................... 5.625 09/01/13 7,079,160
------------
LOUISIANA 0.7%
4,350 Ernest N Morial New Orleans, LA Exhib Hall
Auth Spl Tax Sub Ser A (AMBAC Insd)......... 5.000 07/15/33 4,420,035
------------
MARYLAND 0.2%
1,250 Prince Georges Cnty, MD Spl Oblig Natl
Harbor Proj................................. 5.200 07/01/34 1,260,400
------------
MASSACHUSETTS 2.1%
3,500 Massachusetts St Hlth & Ed Fac Auth Rev Ser
G (MBIA Insd)............................... 5.000 07/01/13 3,510,220
2,000 Massachusetts St Hlth & Ed Fac Auth Rev Univ
MA Mem Issue Ser D.......................... 5.000 07/01/33 1,986,600
</Table>
14 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
$ 2,740 Massachusetts St Indl Fin Agy Rev First Mtg
Reeds Landing Proj (a)...................... 7.350/7.450% 10/01/28 $ 2,647,662
5,000 Massachusetts St Rites PA 1290--Private
Placement (Inverse Fltg) (Acquired 03/23/05,
Cost $5,458,000) (FSA Insd) (b) (c)......... 6.076 03/01/24 5,457,000
------------
13,601,482
------------
MICHIGAN 4.0%
825 Detroit, MI Loc Dev Fin Auth Tax Increment
Sub Ser C (Acquired 09/08/97, Cost $825,000)
(c)......................................... 6.850 05/01/21 845,460
5,000 Detroit, MI Sew Disp Rev Sr Lien Ser A Rfdg
(FGIC Insd)................................. 5.125 07/01/31 5,203,350
5,000 Michigan St Bldg Auth Rev Fac Pgm Ser II
(Prerefunded @ 10/15/11).................... 5.500 10/15/16 5,432,050
5,000 Michigan St Strategic Fd Detroit Edison Co
Proj C Rfdg (AMT) (XLCA Insd)............... 5.450 12/15/32 5,258,950
9,739 Michigan St Strategic Fd Ltd Oblig Rev Great
Lakes Pulp & Fiber Proj (AMT) (e) (f)....... 8.000 12/01/27 1,364,114
1,905 Michigan St Strategic Fd Solid Genesee Pwr
Sta Proj Rfdg (AMT)......................... 7.500 01/01/21 1,880,978
5,000 Western Townships, MI Util Sew Rfdg (MBIA
Insd)....................................... 5.250 01/01/16 5,255,350
------------
25,240,252
------------
MINNESOTA 0.3%
2,000 Saint Paul, MN Hsg & Redev Auth Hosp Rev
Hltheast Proj............................... 6.000 11/15/35 2,147,360
------------
MISSOURI 1.5%
1,000 Carthage, MO Hosp Rev....................... 5.750 04/01/22 1,002,260
1,000 Carthage, MO Hosp Rev....................... 5.875 04/01/30 1,004,880
3,000 Kansas City, MO Indl Dev Auth Plaza Lib
Proj........................................ 6.000 03/01/16 3,115,530
2,835 Kansas City, MO Port Auth Fac Riverfront
Park Proj Ser A (b)......................... 5.750 10/01/06 2,839,621
1,200 Missouri St Hlth & Ed Fac Auth Rev Sr Living
Fac Lutheran Ser B Rfdg..................... 5.125 02/01/27 1,211,916
460 Saint Louis, MO Tax Increment Rev Scullin
Redev Area Ser A............................ 10.000 08/01/10 508,700
------------
9,682,907
------------
NEW HAMPSHIRE 0.8%
1,295 New Hampshire Higher Ed & Hlth Fac Auth Rev
(b)......................................... 8.800 06/01/09 1,427,608
625 New Hampshire Higher Ed & Hlth Fac Auth Rev
Daniel Webster College Issue Rfdg (b)....... 6.100 07/01/09 630,981
700 New Hampshire St Business Fin Auth Elec Fac
Rev Plymouth Cogeneration (AMT) (Acquired
06/29/93, Cost $685,140) (c)................ 7.750 06/01/14 715,631
</Table>
See Notes to Financial Statements 15
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
NEW HAMPSHIRE (CONTINUED)
$ 1,000 New Hampshire St Business Fin Auth Rev Alice
Peck Day Hlth Sys Ser A..................... 6.875% 10/01/19 $ 1,057,710
1,000 New Hampshire St Tpk Sys Rev Ser A Rfdg
(FGIC Insd)................................. 6.750 11/01/11 1,037,340
------------
4,869,270
------------
NEW JERSEY 6.1%
2,000 Camden Cnty, NJ Impt Auth Lease Rev Dockside
Refrig (Acquired 01/29/97, Cost $2,074,739)
(c) (g)..................................... 8.400 04/01/24 1,932,000
3,250 Landis, NJ Swr Auth Swr Rev (Inverse Fltg)
(FGIC Insd)................................. 7.900 09/19/19 3,855,442
5,600 Middlesex Cnty, NJ Util Auth Swr Rev Ser A
Rfdg (MBIA Insd)............................ 6.250 08/15/10 5,936,392
2,000 New Jersey Econ Dev Auth Holt Hauling &
Warehsg Rev Ser G Rfdg (e).................. 8.400 12/15/15 1,750,000
2,000 New Jersey Econ Dev Auth Rev Cig Tax........ 5.750 06/15/34 2,099,100
1,900 New Jersey Econ Dev Auth Rev First Mtg
Winchester Gardens Ser A (Prerefunded @
11/01/06)................................... 8.500 11/01/16 1,991,219
565 New Jersey St Tpk Auth Tpk Rev (MBIA
Insd)....................................... 6.500 01/01/16 653,293
190 New Jersey St Tpk Auth Tpk Rev Ser C
(Escrowed to Maturity) (MBIA Insd).......... 6.500 01/01/16 221,145
2,725 New Jersey St Tpk Auth Tpk Rev Ser C
(Escrowed to Maturity) (MBIA Insd).......... 6.500 01/01/16 3,165,578
5,710 New Jersey St Trans Corp Ctf Fed Trans Admin
Gnt Ser A (AMBAC Insd)...................... 5.750 09/15/10 6,066,704
10,000 New Jersey St Trans Corp Ctf Fed Trans Admin
Gnt Ser B (Prerefunded @ 09/15/10) (AMBAC
Insd) (h)................................... 6.000 09/15/15 10,947,300
------------
38,618,173
------------
NEW YORK 15.0%
5,000 Metropolitan Trans Auth NY Rev Ser B (FGIC
Insd)....................................... 5.250 11/15/18 5,398,400
1,000 Nassau Cnty, NY Tob Settlement Corp Ser
A-3......................................... 5.000 06/01/35 968,620
1,000 Nassau Cnty, NY Tob Settlement Corp Ser
A-3......................................... 5.125 06/01/46 969,330
5,000 New York City Hsg Dev Corp Multi-Family Rev
Hsg Ser K (AMT)............................. 5.000 11/01/37 5,039,550
2,300 New York City Indl Dev Agy Amern Airl JFK
Intl Arpt (AMT)............................. 7.625 08/01/25 2,527,815
1,000 New York City Indl Dev Agy Amern Airl JFK
Intl Arpt (AMT)............................. 7.750 08/01/31 1,108,410
3,000 New York City Indl Dev Agy Rev Liberty 7
World Trade Ctr Ser A....................... 6.250 03/01/15 3,159,450
</Table>
16 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$ 5,000 New York City Muni Wtr Fin Auth Wtr & Swr
Sys Rev Rites PA 1289 (Inverse Fltg)
(Acquired 03/09/05, Cost $5,451,150) (MBIA
Insd) (c)................................... 6.065% 06/15/27 $ 5,453,350
4,800 New York City Ser A......................... 7.000 08/01/07 4,922,448
2,930 New York City Ser B (MBIA Insd)............. 5.875 08/01/15 3,195,751
14,430 New York City Ser B (Prerefunded @ 08/01/10)
(MBIA Insd)................................. 5.875 08/01/15 15,837,791
5,000 New York City Transitional Drivers Ser 307
(Inverse Fltg) (Acquired 11/06/02, Cost
$5,439,826) (AMBAC Insd) (b) (c)............ 7.000 08/01/19 5,737,300
5,000 New York City Transitional Fin Auth Future
Tax Secd Ser E.............................. 5.000 02/01/33 5,155,750
3,000 New York Cnty Tob Tr IV Settlement Pass Thru
Ser A....................................... 5.000 06/01/42 2,857,890
695 New York St Dorm Auth Rev Mental Hlth Ser
A........................................... 5.750 02/15/11 720,513
1,590 New York St Dorm Auth Rev Mental Hlth Ser A
(Prerefunded @ 02/15/07).................... 5.750 02/15/11 1,651,183
680 New York St Dorm Auth Rev Mental Hlth Ser
A........................................... 5.750 02/15/12 704,963
1,595 New York St Dorm Auth Rev Mental Hlth Ser A
(Prerefunded @ 02/15/07).................... 5.750 02/15/12 1,656,376
2,500 New York St Energy Resh & Dev Auth Gas Fac
Rev (Inverse Fltg).......................... 9.025 04/01/20 2,845,925
3,000 New York St Energy Resh & Dev Auth Gas Fac
Rev Brooklyn Union Gas Ser B (Inverse Fltg)
(AMT)....................................... 10.264 07/01/26 3,161,850
10,725 New York St Environmental Fac Rev Fds Second
Resolution (b).............................. 5.000 06/15/20 11,345,978
10,000 Triborough Brdg & Tunl Auth NY Gen Ser B
Rfdg........................................ 5.000 11/15/22 10,381,700
------------
94,800,343
------------
NORTH CAROLINA 1.8%
2,000 Charlotte Mecklenberg Hosp Auth NC Hlthcare
Sys Rev Carolina Hlthcare Sys Ser A......... 5.000 01/15/45 2,033,580
8,500 North Carolina Muni Pwr Agy Ser A (MBIA
Insd)....................................... 5.250 01/01/19 9,057,855
------------
11,091,435
------------
OHIO 0.5%
3,340 Adams Cnty Hosp Fac Impt Rev Adams Cnty Hosp
Proj........................................ 6.250 09/01/20 3,370,528
------------
</Table>
See Notes to Financial Statements 17
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
OKLAHOMA 0.4%
$ 2,250 Oklahoma City, OK Pub Ppty Auth Hotel Tax
Rev (FGIC Insd)............................. 5.250% 10/01/29 $ 2,410,740
315 Oklahoma Hsg Fin Agy Single Family Rev Mtg
Class B (AMT) (GNMA Collateralized)......... 7.997 08/01/18 333,270
------------
2,744,010
------------
OREGON 1.0%
5,000 Oregon Hlth Sciences Univ Insd Ser A (MBIA
Insd)....................................... 5.250 07/01/22 5,326,650
1,000 Port Morrow, OR Pollutn Ctl Portland Gen A
Rfdg (Variable Rate Coupon)................. 5.200 05/01/33 1,024,910
------------
6,351,560
------------
PENNSYLVANIA 1.1%
1,000 Montgomery Cnty, PA Indl Dev Auth Rev Mtg
Whitemarsh Cont Care Proj................... 6.250 02/01/35 1,062,610
5,250 Philadelphia, PA Auth Indl Ser B (FSA
Insd)....................................... 5.500 10/01/16 5,690,580
------------
6,753,190
------------
RHODE ISLAND 0.5%
1,110 Rhode Island St Econ Dev Corp Rev (b)....... 7.250 07/01/10 1,141,568
2,000 Rhode Island St Hlth & Ed Bldg Higher Ed
Johnson & Wales Rfdg (XLCA Insd)............ 5.375 04/01/19 2,135,620
------------
3,277,188
------------
SOUTH CAROLINA 0.1%
700 Piedmont Muni Pwr Agy SC Elec Rev Rfdg...... 5.000 01/01/25 699,958
------------
SOUTH DAKOTA 0.4%
1,000 South Dakota St Hlth & Ed Fac Auth Rev Huron
Regl Med Ctr................................ 7.250 04/01/20 1,000,000
1,250 South Dakota St Hlth & Ed Fac Auth Rev Sioux
Vly Hosp & Hlth Sys Ser A................... 5.250 11/01/34 1,294,213
------------
2,294,213
------------
TENNESSEE 0.9%
1,000 Chattanooga, TN Hlth Ed & Hsg Fac Brd Rev
CDFI Phase I LLC Proj Ser A Rfdg............ 5.000 10/01/25 983,490
4,000 Elizabethton, TN Hlth & Ed Fac Brd Rev Hosp
Ser B Impt & Rfdg (MBIA Insd)............... 7.750 07/01/29 4,876,840
------------
5,860,330
------------
TEXAS 12.1%
500 Bexar Cnty, TX Hlth Fac Dev Corp Hosp Rev
Saint Luke's Lutheran Hosp (Escrowed to
Maturity)................................... 7.000 05/01/21 643,795
3,170 Brazos Riv Auth TX Pollutn Ctl Rev Adj Elec
Co Proj Ser C Rfdg (Variable Rate Coupon)
(AMT)....................................... 5.750 05/01/36 3,356,364
90 Coastal Wtr Auth TX Conveyance Sys Rev
(Escrowed to Maturity) (AMBAC Insd)......... 6.250 12/15/17 90,154
</Table>
18 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
TEXAS (CONTINUED)
$ 5,000 Dallas-Fort Worth, TX Intl Arpt Rev Jt Ser A
Impt & Rfdg (AMT) (FGIC Insd)............... 5.500% 11/01/31 $ 5,240,450
6,065 Harris Cnty, TX Toll Rd Sub Lien Rfdg....... 5.000 08/01/33 6,171,138
5,000 Harris Cnty-Houston, TX Sports Auth Spl Rev
Jr Lien Ser B Rfdg (MBIA Insd).............. 5.250 11/15/40 5,192,750
10,000 Houston, TX Hotel Occupancy Tax Convtn &
Entertnmnt Ser B (AMBAC Insd)............... 5.750 09/01/14 10,896,100
7,500 Lower CO Riv Auth TX Rev Ser A Rfdg (Inverse
Fltg) (Acquired 10/20/99, Cost $7,623,805)
(FSA Insd) (c).............................. 7.769 05/15/14 8,534,025
6,250 Lower CO Riv Auth TX Rev Ser A Rfdg (Inverse
Fltg) (Acquired 10/20/99, Cost $6,312,134)
(FSA Insd) (c).............................. 7.769 05/15/15 7,130,750
3,250 Lower CO Riv Auth TX Rev Ser A Rfdg (Inverse
Fltg) (Acquired 10/20/99, Cost $3,254,875)
(FSA Insd) (b) (c).......................... 7.769 05/15/16 3,711,988
5,000 Mabank, TX Indpt Sch Dist (PSF Gtd)......... 5.125 08/15/35 5,151,650
5,210 Mabank, TX Indpt Sch Dist (PSF Gtd) (b)..... 5.000 08/15/30 5,348,326
2,000 Metropolitan Hlth Fac Dev Corp TX Wilson N
Jones Mem Hosp Proj......................... 7.200 01/01/21 2,072,640
9,175 Midlothian, TX Indpt Sch Dist Rfdg (PSF
Gtd)........................................ 5.000 02/15/34 9,368,593
1,375 Texas St Dept Hsg & Cmnty Affairs Home Mtg
Rev Coll Ser C-2 Rfdg (Inverse Fltg) (AMT)
(GNMA Collateralized)....................... 10.271 07/02/24 1,396,780
2,220 Wylie, TX Indpt Sch Dist Rfdg (PSF Gtd)..... 5.000 08/15/30 2,270,749
------------
76,576,252
------------
UTAH 2.1%
1,340 Hildale, UT Elec Rev Gas Turbine Elec Fac
Proj (e).................................... 7.800 09/01/15 482,400
1,000 Hildale, UT Elec Rev Gas Turbine Elec Fac
Proj (e).................................... 8.000 09/01/20 360,000
1,000 Hildale, UT Elec Rev Gas Turbine Elec Fac
Proj (e).................................... 7.800 09/01/25 360,000
11,000 Salt Lake City, UT Hosp Rev IHC Hosp Inc
Rfdg........................................ 6.150 02/15/12 12,096,260
------------
13,298,660
------------
VERMONT 0.2%
1,000 Vermont Ed & Hlth Bldg Fin Agy Rev
Bennington College Proj..................... 6.625 10/01/29 1,032,970
------------
WASHINGTON 1.4%
8,000 King Cnty, WA Sch Dist No 411 (FGIC Insd)
(b)......................................... 5.250 12/01/20 8,553,040
------------
</Table>
See Notes to Financial Statements 19
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
yWest Virginia 0.9%
$ 1,500 West Virginia St Hosp Fin Auth Hosp Rev
Bears & Bulls WV Univ Med Corp Rfdg (MBIA
Insd)....................................... 6.100% 01/01/18 $ 1,541,715
4,000 West Virginia St Hosp Fin Auth Hosp Rev
Bears & Bulls WV Univ Med Corp Rfdg (MBIA
Insd)....................................... 6.100 01/01/18 4,110,920
------------
5,652,635
------------
TOTAL MUNICIPAL BONDS 98.7%................................................... 624,583,093
------------
TAXABLE NOTE 0.3%
1,614 UAL Corp.................................... 5.000 01/25/21 1,747,539
------------
</Table>
<Table>
<Caption>
NUMBER
DESCRIPTION OF SHARES VALUE
- ---------------------------------------------------------------------------------------------
EQUITY 0.0%
GMT Holdings, LLC, Class B (i)..................................... 4,000 $ 0
------------
TOTAL LONG-TERM INVESTMENTS 99.0%
(Cost $609,773,170)......................................................... 626,330,632
SHORT-TERM INVESTMENT 0.2%
(Cost $1,400,000)........................................................... 1,400,000
------------
TOTAL INVESTMENTS 99.2%
(Cost $611,173,170)......................................................... 627,730,632
OTHER ASSETS IN EXCESS OF LIABILITIES 0.8%................................... 5,073,375
------------
NET ASSETS 100.0%............................................................ $632,804,007
============
</Table>
Percentages are calculated as a percentage of net assets.
* Zero coupon bond
(a) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(b) The Fund owns 100% of the outstanding bond issuance.
(c) These securities are restricted and may be resold only in transactions
exempt from registration which are normally those transactions with
qualified institutional buyers. Restricted securities comprise 10.8% of net
assets.
20 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
(d) 144A securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933, as amended. These securities may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(e) Non-income producing security.
(f) Payment-in-kind security.
(g) Interest is accruing at less than the stated coupon.
(h) All or a portion of this security has been physically segregated in
connection with open futures contracts.
(i) Market value is determined in accordance with procedures established in good
faith by the Board of Trustees.
AMBAC--AMBAC Indemnity Corp.
AMT--Alternative Minimum Tax
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
GNMA--Government National Mortgage Association
LOC--Letter of Credit
MBIA--Municipal Bond Investors Assurance Corp.
PSF--Public School Fund
XLCA--XL Capital Assurance Inc.
FUTURES CONTRACTS OUTSTANDING AS OF MARCH 31, 2006
<Table>
<Caption>
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
SHORT CONTRACTS:
U.S. Treasury Notes 5-Year Futures June 2006 (Current
Notional Value of $104,438 per contract).................. 61 $35,616
== =======
</Table>
See Notes to Financial Statements 21
VAN KAMPEN MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
March 31, 2006 (Unaudited)
<Table>
ASSETS:
Total Investments (Cost $611,173,170)....................... $627,730,632
Cash........................................................ 263,197
Receivables:
Interest.................................................. 8,501,886
Fund Shares Sold.......................................... 306,028
Investments Sold.......................................... 227,251
Other....................................................... 207,173
------------
Total Assets............................................ 637,236,167
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 1,937,950
Fund Shares Repurchased................................... 876,551
Income Distributions...................................... 678,378
Investment Advisory Fee................................... 263,971
Distributor and Affiliates................................ 230,659
Variation Margin on Futures............................... 2,859
Trustees' Deferred Compensation and Retirement Plans........ 270,778
Accrued Expenses............................................ 171,014
------------
Total Liabilities....................................... 4,432,160
------------
NET ASSETS.................................................. $632,804,007
============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $640,188,557
Net Unrealized Appreciation................................. 16,593,078
Accumulated Undistributed Net Investment Income............. 89,763
Accumulated Net Realized Loss............................... (24,067,391)
------------
NET ASSETS.................................................. $632,804,007
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $585,023,553 and 40,083,677 shares of
beneficial interest issued and outstanding)............. $ 14.60
Maximum sales charge (4.75%* of offering price)......... .73
------------
Maximum offering price to public........................ $ 15.33
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $33,160,052 and 2,275,082 shares of
beneficial interest issued and outstanding)............. $ 14.58
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $13,451,529 and 924,316 shares of
beneficial interest issued and outstanding)............. $ 14.55
============
Class I Shares:
Net asset value and offering price per share (Based on
net assets of $1,168,873 and 80,110 shares of beneficial
interest issued
and outstanding)........................................ $ 14.59
============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
22 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended March 31, 2006 (Unaudited)
<Table>
INVESTMENT INCOME:
Interest.................................................... $16,234,238
-----------
EXPENSES:
Investment Advisory Fee..................................... 1,547,135
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B, and C of $731,538, $181,333 and $65,636,
respectively)............................................. 978,507
Shareholder Services........................................ 191,633
Legal....................................................... 39,058
Custody..................................................... 35,342
Trustees' Fees and Related Expenses......................... 18,014
Other....................................................... 211,595
-----------
Total Expenses.......................................... 3,021,284
Less Credits Earned on Cash Balances.................... 13,642
-----------
Net Expenses............................................ 3,007,642
-----------
NET INVESTMENT INCOME....................................... $13,226,596
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $(2,569,324)
Futures................................................... 529,255
-----------
Net Realized Loss........................................... (2,040,069)
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 19,006,762
-----------
End of the Period:
Investments............................................. 16,557,462
Futures................................................. 35,616
-----------
16,593,078
-----------
NET UNREALIZED DEPRECIATION DURING THE PERIOD............... (2,413,684)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(4,453,753)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 8,772,843
===========
</Table>
See Notes to Financial Statements 23
VAN KAMPEN MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets (Unaudited)
<Table>
<Caption>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2006 SEPTEMBER 30, 2005
--------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................ $ 13,226,596 $ 28,142,888
Net Realized Gain/Loss............................... (2,040,069) 7,645,862
Net Unrealized Depreciation During the Period........ (2,413,684) (11,721,452)
------------ ------------
Change in Net Assets from Operations................. 8,772,843 24,067,298
------------ ------------
Distributions from Net Investment Income:
Class A Shares..................................... (12,960,342) (26,358,317)
Class B Shares..................................... (674,657) (1,598,728)
Class C Shares..................................... (244,208) (476,845)
Class I Shares..................................... (28,322) (7,693)
------------ ------------
Total Distributions.................................. (13,907,529) (28,441,583)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES......................................... (5,134,686) (4,374,285)
------------ ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold............................ 35,671,611 41,515,355
Net Asset Value of Shares Issued Through Dividend
Reinvestment....................................... 9,773,677 19,629,302
Cost of Shares Repurchased........................... (47,045,211) (89,121,245)
------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS... (1,599,923) (27,976,588)
------------ ------------
TOTAL DECREASE IN NET ASSETS......................... (6,734,609) (32,350,873)
NET ASSETS:..........................................
Beginning of the Period.............................. 639,538,616 671,889,489
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of $89,763 and
$770,696, respectively)............................ $632,804,007 $639,538,616
============ ============
</Table>
24 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS A SHARES MARCH 31, -----------------------------------------------
2006 2005 2004 2003 2002 (c) 2001
-------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD........................... $14.71 $14.81 $14.84 $15.03 $14.56 $14.06
------ ------ ------ ------ ------ ------
Net Investment Income............ .31(a) .64(a) .66(a) .67(a) .71 .74
Net Realized and Unrealized
Gain/Loss...................... (.09) (.09) (.05) (.19) .46 .49
------ ------ ------ ------ ------ ------
Total from Investment Operations... .22 .55 .61 .48 1.17 1.23
Less Distributions from Net
Investment Income................ .33 .65 .64 .67 .70 .73
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD........................... $14.60 $14.71 $14.81 $14.84 $15.03 $14.56
====== ====== ====== ====== ====== ======
Total Return (b)................... 1.48%* 3.78% 4.20% 3.31% 8.35% 8.93%
Net Assets at End of the Period (In
millions)........................ $585.0 $587.6 $609.4 $658.5 $696.4 $701.5
Ratio of Expenses to Average Net
Assets........................... .89% .88% .89% .88% .87% .83%
Ratio of Net Investment Income to
Average Net Assets............... 4.24% 4.35% 4.46% 4.53% 4.89% 5.16%
Portfolio Turnover................. 6%* 39% 15% 46% 49% 31%
</Table>
* Non-Annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 4.75% or contingent deferred
sales charge (CDSC). On purchases of $1 million of more, a CDSC of 1% may be
imposed on certain redemptions made within eighteen months of purchase. If
the sales charges were included, total returns would be lower. These returns
include combined Rule 12b-1 fees and service fees of up to .25% and do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended September 30, 2002 was to increase net investment
income per share by $.01, decrease net realized and unrealized gains and
losses by $.01 and increase the ratio of net investment income to average
net assets from 4.85% to 4.89%. Per share, ratios and supplemental data for
periods prior to September 30, 2002 have not been restated to reflect this
change in presentation.
See Notes to Financial Statements 25
VAN KAMPEN MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS B SHARES MARCH 31, -----------------------------------------------
2006 2005 2004 2003 2002 (c) 2001
-------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD........................... $14.69 $14.79 $14.82 $15.02 $14.54 $14.05
------ ------ ------ ------ ------ ------
Net Investment Income............ .26(a) .53(a) .55(a) .56(a) .60 .63
Net Realized and Unrealized
Gain/Loss...................... (.10) (.09) (.05) (.20) .48 .48
------ ------ ------ ------ ------ ------
Total from Investment Operations... .16 .44 .50 .36 1.08 1.11
Less Distributions from Net
Investment Income................ .27 .54 .53 .56 .60 .62
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD........................... $14.58 $14.69 $14.79 $14.82 $15.02 $14.54
====== ====== ====== ====== ====== ======
Total Return (b)................... .97%* 3.03% 3.41% 2.48% 7.64% 8.06%
Net Assets at End of the Period (In
millions)........................ $ 33.2 $ 38.1 $ 48.8 $ 58.4 $ 65.0 $ 66.6
Ratio of Expenses to Average Net
Assets........................... 1.64% 1.63% 1.64% 1.63% 1.62% 1.59%
Ratio of Net Investment Income to
Average Net Assets............... 3.49% 3.60% 3.71% 3.78% 4.13% 4.40%
Portfolio Turnover................. 6%* 39% 15% 46% 49% 31%
</Table>
* Non-Annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 4%, charged on certain redemptions
made within one year of purchase and declining to 0% after the sixth year.
If the sales charge was included, total returns would be lower. These
returns include combined Rule 12b-1 fees and service fees of up to 1% and do
not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended September 30, 2002 was to increase net investment
income per share by $.01, decrease net realized and unrealized gains and
losses by $.01 and increase the ratio of net investment income to average
net assets from 4.09% to 4.13%. Per share, ratios and supplemental data for
periods prior to September 30, 2002 have not been restated to reflect this
change in presentation.
26 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS C SHARES MARCH 31, -----------------------------------------------
2006 2005 2004 2003 2002 (c) 2001
-------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD........................... $14.67 $14.77 $14.80 $15.00 $14.52 $14.04
------ ------ ------ ------ ------ ------
Net Investment Income............ .26(a) .53(a) .55(a) .56(a) .60 .63
Net Realized and Unrealized
Gain/Loss...................... (.11) (.09) (.05) (.20) .48 .47
------ ------ ------ ------ ------ ------
Total from Investment Operations... .15 .44 .50 .36 1.08 1.10
Less Distributions from Net
Investment Income................ .27 .54 .53 .56 .60 .62
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD........................... $14.55 $14.67 $14.77 $14.80 $15.00 $14.52
====== ====== ====== ====== ====== ======
Total Return (b)................... 1.04%* 3.03% 3.43% 2.48% 7.65% 8.00%
Net Assets at End of the Period (In
millions)........................ $ 13.5 $ 12.5 $ 13.7 $ 17.0 $ 18.8 $ 17.4
Ratio of Expenses to Average Net
Assets........................... 1.64% 1.63% 1.64% 1.63% 1.62% 1.62%
Ratio of Net Investment Income to
Average Net Assets............... 3.49% 3.60% 3.71% 3.78% 4.13% 4.37%
Portfolio Turnover................. 6%* 39% 15% 46% 49% 31%
</Table>
* Non-Annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 1%, charged on certain redemptions
made within one year of purchase. If the sales charge was included, total
returns would be lower. These returns include combined Rule 12b-1 fees and
service fees of up to 1% and do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
(c) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended September 30, 2002 was to increase net investment
income per share by $.01, decrease net realized and unrealized gains and
losses by $.01 and increase the ratio of net investment income to average
net assets from 4.09% to 4.13%. Per share, ratios and supplemental data for
periods prior to September 30, 2002 have not been restated to reflect this
change in presentation.
See Notes to Financial Statements 27
VAN KAMPEN MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
AUGUST 12, 2005
SIX MONTHS (COMMENCEMENT
CLASS I SHARES ENDED OF OPERATIONS) TO
MARCH 31, 2006 SEPTEMBER 30, 2005
------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD................. $14.71 $14.71
------ ------
Net Investment Income (a).............................. .33 .09
Net Realized and Unrealized Loss....................... (.11) -0-**
------ ------
Total from Investment Operations......................... .22 .09
Less Distributions from Net Investment Income............ .34 .09
------ ------
NET ASSET VALUE, END OF THE PERIOD....................... $14.59 $14.71
====== ======
Total Return (b)......................................... 1.53%* .60%*
Net Assets at End of the Period (In millions)............ $ 1.2 $ 1.3
Ratio of Expenses to Average Net Assets.................. .64% .66%
Ratio of Net Investment Income to Average Net Assets..... 4.49% 4.56%
Portfolio Turnover....................................... 6%* 39%
</Table>
* Non-Annualized
** Amount is less than $.01.
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period. This return does
not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
28 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Municipal Income Fund (the "Fund") is organized as a series of the
Van Kampen Tax Free Trust, a Delaware statutory trust, and is registered as a
diversified open-end management investment company under the Investment Company
Act of 1940 (the "1940 Act"), as amended. The Fund's investment objective is to
provide a high level of current income exempt from federal income tax,
consistent with preservation of capital. The Fund commenced investment
operations on August 1, 1990. The Fund offers Class A Shares, Class B Shares,
Class C Shares and Class I Shares. Each class of shares differs by its initial
sales load, contingent deferred sales charges, the allocation of class-specific
expenses and voting rights on the matters affecting a single class.
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 U.S. 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 Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services or dealers are valued at
fair value using procedures established in good faith by the Board of Trustees.
Future contracts are valued at the settlement price established each day on the
exchange on which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
Legal expenditures that are expected to result in the restructuring of or a plan
of reorganization for an investment are recorded as realized losses. The Fund
may purchase and sell securities on a "when-issued" or "delayed delivery" basis,
with settlement to occur at a later date. The value of the security so purchased
is subject to market fluctuations during this period. The Fund will segregate
assets with the custodian having an aggregate value at least equal to the amount
of the when-issued or delayed delivery purchase commitments until payment is
made. At March 31, 2006, the Fund had no when-issued and delayed delivery
purchase commitments.
C. INCOME AND EXPENSES Interest income is recorded on an accrual basis. Bond
premium is amortized and discount is accreted over the expected life of each
applicable security. Income and expenses of the Fund are allocated on a pro rata
basis to each class of shares, except for distribution and service fees and
incremental transfer agency costs which are unique to each class of shares.
D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of Subchapter M of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset
29
VAN KAMPEN MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
these losses against any future realized capital gains. At September 30, 2005,
the Fund had an accumulated capital loss carryforward for tax purposes of
$22,055,994, which will expire according to the following schedule.
<Table>
<Caption>
AMOUNT EXPIRATION
$5,079,306.................................................. September 30, 2008
9,728,055.................................................. September 30, 2009
7,248,633.................................................. September 30, 2010
</Table>
At March 31, 2006, the cost and related gross unrealized appreciation and
depreciation are as follows:
<Table>
Cost of investments for tax purposes........................ $611,031,910
============
Gross tax unrealized appreciation........................... $ 25,632,921
Gross tax unrealized depreciation........................... (8,934,199)
------------
Net tax unrealized appreciation investments................. $ 16,698,722
============
</Table>
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains and gains on futures transactions. All
short-term capital gains and a portion of futures gains are included in ordinary
income for tax purposes.
The tax character of distributions paid during the year ended September 30,
2005 was as follows:
<Table>
Distribution paid from:
Ordinary income........................................... $117,584
Long-term capital gain.................................... -0-
--------
$117,584
========
</Table>
As of September 30, 2005, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed ordinary income............................... $106,600
</Table>
Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of gains or losses recognized for tax purposes,
but not for book purposes.
F. EXPENSE REDUCTIONS During the six months ended March 31, 2006, the Fund's
custody fee was reduced by $13,642 as a result of credits earned on cash
balances.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, Van Kampen Asset
Management (the "Adviser") will provide investment advice and facilities to the
Fund for an annual fee payable monthly as follows:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS % PER ANNUM
First $500 million.......................................... .50%
Over $500 million........................................... .45%
</Table>
30
VAN KAMPEN MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
For the six months ended March 31, 2006, the Fund recognized expenses of
approximately $8,800 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, of which a trustee of the Fund is a partner of such
firm and he and his law firm provide legal services as legal counsel to the
Fund.
Under separate Legal Services, Accounting Services and Chief Compliance
Officer ("CCO") Employment Agreements, the Adviser provides accounting and legal
services and the CCO provides compliance services to the Fund. The costs of
these services are allocated to each fund. For the six months ended March 31,
2006, the Fund recognized expenses of approximately $51,500, representing Van
Kampen Investments Inc.'s or its affiliates' (collectively "Van Kampen") cost of
providing accounting and legal services to the Fund, as well as, the salary,
benefits and related costs of the CCO and related support staff paid by Van
Kampen. Services provided pursuant to the Legal Services agreement are reported
as part of "Legal" expenses on the Statement of Operations. Services provided
pursuant to the Accounting Services and CCO Employment agreement are reported as
part of "Other" expenses on the Statement of Operations.
Van Kampen Investor Services Inc. (VKIS), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the six months ended
March 31, 2006, the Fund recognized expenses of approximately $155,100
representing transfer agency fees paid to VKIS. Transfer agency fees are
determined through negotiations with the Fund's Board of Trustees.
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 also
officers of Van Kampen.
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.
Amounts deferred are retained by the Fund and, to the extent permitted by the
1940 Act, as amended, may be invested in the common shares of those funds
selected by the trustees. Investments in such funds of $175,816 are included in
"Other" assets on the Statements of Assets and Liabilities at March 31, 2006.
Appreciation/ depreciation and distributions received from these investments are
recorded with an offsetting increase/decrease in the deferred compensation
obligation and do not affect the net asset value of the Fund. Benefits under the
retirement plan are payable upon retirement 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.
For the six months ended March 31, 2006, Van Kampen as Distributor for the
Fund, received commissions on sales of the Fund's Class A Shares of
approximately $66,000 and CDSC on redeemed shares of approximately $36,700.
Sales charges do not represent expenses of the Fund.
31
VAN KAMPEN MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
3. CAPITAL TRANSACTIONS
For the six months ended March 31, 2006 and the year ended September 30, 2005,
transactions were as follows:
<Table>
<Caption>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2006 SEPTEMBER 30, 2005
-------------------------- --------------------------
SHARES VALUE SHARES VALUE
Sales:
Class A............................ 2,086,931 $ 30,567,884 2,412,267 $ 35,680,084
Class B............................ 161,460 2,358,707 177,415 2,622,903
Class C............................ 185,628 2,705,289 130,335 1,918,515
Class I............................ 2,717 39,731 87,953 1,293,853
---------- ------------ ---------- ------------
Total Sales.......................... 2,436,736 $ 35,671,611 2,807,970 $ 41,515,355
========== ============ ========== ============
Dividend Reinvestment:
Class A............................ 623,497 $ 9,121,688 1,233,680 $ 18,241,199
Class B............................ 30,492 444,945 69,165 1,021,344
Class C............................ 12,254 178,722 24,348 359,067
Class I............................ 1,937 28,322 521 7,692
---------- ------------ ---------- ------------
Total Dividend Reinvestment.......... 668,180 $ 9,773,677 1,327,714 $ 19,629,302
========== ============ ========== ============
Repurchases:
Class A............................ (2,565,748) $(37,552,563) (4,851,772) $(71,717,331)
Class B............................ (511,257) (7,464,315) (952,114) (14,055,751)
Class C............................ (127,919) (1,868,164) (225,130) (3,317,881)
Class I............................ (10,969) (160,169) (2,049) (30,282)
---------- ------------ ---------- ------------
Total Repurchases.................... (3,215,893) $(47,045,211) (6,031,065) $(89,121,245)
========== ============ ========== ============
</Table>
4. REDEMPTION FEE
The Fund will assess a 2% redemption fee on the proceeds of Fund shares that are
redeemed (either by sale or exchange) within seven days of purchase. The
redemption fee is paid directly to the Fund. For the six months ended March 31,
2006, the Fund received redemption fees of approximately $200, which are
reported as part of "Cost of Shares Repurchased" on the Statement of Changes in
Net Assets.
5. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $40,717,486 and $43,579,102,
respectively.
6. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund may use derivative instruments for a variety of reasons, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio, to manage the portfolio's effective yield, maturity and duration, or
generate potential gain. All of the Fund's portfolio holdings, including
derivative instruments, are marked to market each day with the change in value
reflected in unrealized appreciation/depreciation. Upon disposition, a realized
gain or loss is recognized accordingly, except when taking delivery of a
security underlying a futures contract. In this instance, the recognition of
gain or loss is postponed until the
32
VAN KAMPEN MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
disposal of the security underlying the futures contract. Risks may arise as a
result of the potential inability of the counter parties to meet the terms of
their contracts.
Summarized below are the different types of derivative financial instruments
used by the Fund.
A. FUTURES CONTRACTS A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Fund generally invests in exchange traded futures on U.S. Treasury Notes and
typically closes the contract prior to delivery date. Upon entering into futures
contracts, the Fund maintains an amount of cash or liquid securities with a
value equal to a percentage of the contract amount with either a futures
commission merchant pursuant to rules and regulations promulgated under the 1940
Act, as amended, or with its custodian in an account in the broker's name. This
amount is known as initial margin. During the period the futures contract is
open, payments are received from or made to the broker based upon changes in the
value of the contract (the variation margin). The risk of loss associated with a
futures contract is in excess of the variation margin reflected on the Statement
of Assets and Liabilities.
Transactions in futures contracts for the six months ended March 31, 2006,
were as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at September 30, 2005........................... 438
Futures Opened.............................................. 1,095
Futures Closed.............................................. (1,472)
------
Outstanding at March 31, 2006............................... 61
======
</Table>
B. INDEXED SECURITY An inverse floating rate security is one where the coupon is
inversely indexed to a short-term floating interest rate multiplied by a
specific factor. As the floating rate rises, the coupon is reduced. Conversely,
as the floating rate declines, the coupon is increased. The price of these
securities may be more volatile than the price of a comparable fixed rate
security. These instruments are typically used by the Fund to enhance the yield
of the portfolio. These instruments are identified in the portfolio of
investments.
7. DISTRIBUTION AND SERVICE PLANS
Shares of the Fund are distributed by Van Kampen Funds Inc. (the "Distributor"),
an affiliate of the Adviser. The Fund has adopted a distribution plan pursuant
to Rule 12b-1 under the 1940 Act, as amended, and a service plan (collectively,
the "Plans") for Class A Shares, Class B Shares and Class C Shares to compensate
the Distributor for the sale, distribution, shareholder servicing and
maintenance of shareholder accounts for these shares. Under the Plans, the Fund
will incur annual fees of up to .25% of Class A average daily net assets and up
to 1.00% each of Class B and Class C average daily net assets. These fees are
accrued daily and paid to the Distributor monthly.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed receivable") was approximately $2,473,200 and $195,200
for Class B and Class C Shares, respectively. These amounts may be recovered
from future payments under the distribution plan or CDSC. To the extent the
unreimbursed receivable has been fully recovered, the distribution fee is
reduced.
8. LEGAL MATTERS
The Adviser, certain affiliates of the Adviser, and certain investment companies
advised by the Adviser or its affiliates, including the Fund, are named as
defendants in a number of similar
33
VAN KAMPEN MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
class action complaints which were consolidated. The consolidated action also
names as defendants certain individual Trustees and Directors of certain
investment companies advised by affiliates of the Adviser; the complaint does
not, however, name the individual Trustees of any Van Kampen funds. The
consolidated amended complaint generally alleges that defendants violated their
statutory disclosure obligations and fiduciary duties by failing properly to
disclose (i) that the Adviser and certain affiliates of the Adviser allegedly
offered economic incentives to brokers and others to steer investors to the
funds advised by the Adviser or its affiliates rather than funds managed by
other companies, and (ii) that the funds advised by the Adviser or its
affiliates, including the Fund, allegedly paid excessive commissions to brokers
in return for their alleged efforts to steer investors to these funds. The
complaint seeks, among other things, unspecified compensatory damages,
rescissionary damages, fees and costs. Plaintiffs filed a Motion for Leave to
file a Supplemental Pleading that would, among other things, expand the
allegations and alleged class. The defendants moved to dismiss this action,
which motion was granted in its entirety. Additionally, plaintiffs' Motion for
Leave to file a Supplemental Pleading was denied. This matter is now concluded.
The Adviser and certain affiliates of the Adviser are also named as
defendants in a derivative suit which additionally names as defendants certain
individual Trustees of certain Van Kampen funds; the named investment companies,
including the Fund, are listed as nominal defendants. The complaint alleges that
defendants caused the Van Kampen funds to pay economic incentives to a
proprietary sales force to promote the sale of proprietary mutual funds. The
complaint also alleges that the Van Kampen funds paid excessive commissions to
Morgan Stanley and its affiliates in connection with the sales of the funds. The
complaint seeks, among other things, the removal of the current Trustees of the
funds, rescission of the management contracts for the funds, disgorgement of
profits by Morgan Stanley and its affiliates and monetary damages. This
complaint has been coordinated with the consolidated complaint described in the
preceding paragraph. Plaintiff sought leave to file a second amended derivative
complaint that alleges that the Adviser permitted or recklessly disregarded
market timing and late trading in its proprietary mutual funds in order to
increase assets under management and fees. However, pursuant to an agreement
between the parties, the plaintiff's proposed second amended derivative
complaint was withdrawn and the allegations regarding market timing and late
trading asserted therein were filed in a separate complaint and coordinated with
other cases related to market timing that have been centralized in a federal
court. Additionally, plaintiff's initial complaint regarding allegations of
economic incentives was stayed pending certain procedural developments.
The defendants have moved to dismiss each of these actions and otherwise
intend to defend them vigorously. Defendants' motion to dismiss in the market
timing litigation was granted in part and denied in part, and defendants filed a
motion for reconsideration of the Court's decision to uphold certain of the
plaintiff's claims. Additionally, plaintiff and the named Trustees entered into
a tolling agreement. The tolling agreement dismisses the Trustees from the
action without prejudice in exchange for tolling all claims against the
Trustees.
While the defendants believe that they have meritorious defenses, the
ultimate outcome of these matters is not presently determinable, and no
provision has been made in the Fund's financial statements for the effect, if
any, of these matters.
9. INDEMNIFICATIONS
The Fund enters into contracts that contain a variety of indemnifications. The
Fund's maximum exposure under these arrangements is unknown. However, the Fund
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
34
VAN KAMPEN MUNICIPAL INCOME FUND
BOARD OF TRUSTEES, OFFICERS AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
JACK E. NELSON
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
OFFICERS
RONALD E. ROBISON
President and Principal Executive Officer
J. DAVID GERMANY
Vice President
DENNIS SHEA
Vice President
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
PHILLIP G. GOFF
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1221 Avenue of the Americas
New York, New York 10020
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 947
Jersey City, New Jersey 07303-0947
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
One Lincoln Street
Boston, Massachusetts 02111
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, Illinois 60606
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
35
Van Kampen Municipal Income Fund
An Important Notice Concerning Our U.S. Privacy Policy
We are required by federal law to provide you with a copy of our Privacy
Policy annually.
The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors
Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van
Kampen Exchange Corp., as well as current and former individual investors in
Van Kampen mutual funds, unit investment trusts, and related companies.
This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised
by us. This Policy is, however, applicable to individuals who select us to
be a custodian of securities or assets in individual retirement accounts,
401(k) accounts, 529 Educational Savings Accounts, accounts subject to the
Uniform Gifts to Minors Act, or similar accounts.
Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
WE RESPECT YOUR PRIVACY
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we
help you achieve your financial objectives. This Policy describes what
non-public personal information we collect about you, why we collect it, and
when we may share it with others.
We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies
you or your accounts as "personal information."
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
To serve you better and manage our business, it is important that we collect
and maintain accurate information about you. We may obtain this information
from applications and other forms you submit to us, from your dealings with
us, from consumer reporting agencies, from our Web sites and from third
parties and other sources.
(continued on next page)
Van Kampen Municipal Income Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
For example:
-- We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.
-- We may obtain information about account balances, your use of
account(s) and the types of products and services you prefer to receive
from us through your dealings and transactions with us and other
sources.
-- We may obtain information about your creditworthiness and credit
history from consumer reporting agencies.
-- We may collect background information from and through third-party
vendors to verify representations you have made and to comply with
various regulatory requirements.
-- If you interact with us through our public and private Web sites, we
may collect information that you provide directly through online
communications (such as an e-mail address). We may also collect
information about your Internet service provider, your domain name,
your computer's operating system and Web browser, your use of our Web
sites and your product and service preferences, through the use of
"cookies." "Cookies" recognize your computer each time you return to
one of our sites, and help to improve our sites' content and
personalize your experience on our sites by, for example, suggesting
offerings that may interest you. Please consult the Terms of Use of
these sites for more details on our use of cookies.
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
To provide you with the products and services you request, to serve you
better and to manage our business, we may disclose personal information we
collect about you to our affiliated companies and to non-affiliated third
parties as required or permitted by law.
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise
required or permitted by law.
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except
to enable them to provide services on our behalf, to perform joint marketing
agreements with
(continued on back)
Van Kampen Municipal Income Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
other financial institutions, or as otherwise required or permitted by law.
For example, some instances where we may disclose information about you to
non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against
fraud, for institutional risk control, to respond to judicial process or to
perform services on our behalf. When we share personal information with
these companies, they are required to limit their use of personal
information to the particular purpose for which it was shared and they are
not allowed to share personal information with others except to fulfill that
limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL
INFORMATION WE COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties
that provide support or marketing services on our behalf may also receive
personal information, and we require them to adhere to confidentiality
standards with respect to such information.
Van Kampen Funds Inc.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2006 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC.
49, 349, 549
MIF SAR 5/06
(VAN KAMPEN INVESTMENTS SHINE LOGO) RA06-00371P-Y03/06
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
Intermediate Term Municipal Income Fund performed during the semiannual
period. The portfolio management team will provide an overview of the
market conditions and discuss some of the factors that affected
investment performance during the reporting period. In addition, this
report includes the fund's financial statements and a list of fund
investments as of March 31, 2006.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A CLASS A, B, AND C
SHARE PROSPECTUS FOR THE FUND BEING OFFERED. THE PROSPECTUS CONTAINS
INFORMATION ABOUT THE FUND, INCLUDING THE INVESTMENT OBJECTIVES, RISKS,
CHARGES AND EXPENSES. TO OBTAIN A CLASS I SHARE PROSPECTUS, CONTACT YOUR
FINANCIAL ADVISOR OR DOWNLOAD ONE AT VANKAMPEN.COM. PLEASE READ THE
PROSPECTUS CAREFULLY BEFORE INVESTING.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT A MUTUAL FUND WILL ACHIEVE ITS
INVESTMENT OBJECTIVE. FUNDS ARE SUBJECT TO MARKET RISK, WHICH IS THE
POSSIBILITY THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL
DECLINE AND THAT THE VALUE OF FUND SHARES MAY THEREFORE BE LESS THAN WHAT
YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS
FUND.
INCOME MAY SUBJECT CERTAIN INDIVIDUALS TO THE FEDERAL ALTERNATIVE MINIMUM
TAX (AMT).
<Table>
<Caption>
---------------------------------------------------------------------------------------
NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
---------------------------------------------------------------------------------------
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
---------------------------------------------------------------------------------------
</Table>
Performance Summary as of 3/31/06
<Table>
<Caption>
A SHARES B SHARES C SHARES I SHARES
5/28/93 5/28/93 10/19/93 8/12/05
- ------------------------------------------------------------------------------------------------
W/MAX W/MAX W/MAX
4.75% 4.00% 1.00%
AVERAGE ANNUAL W/O SALES SALES W/O SALES SALES W/O SALES SALES W/O SALES
TOTAL RETURNS CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE CHARGES
Since Inception 5.25% 4.86% 4.90% 4.90% 4.19% 4.19% 1.40%
10-year 4.94 4.43 4.47 4.47 4.18 4.18 --
5-year 4.59 3.58 4.19 3.93 3.87 3.87 --
1-year 3.39 -1.53 3.39 -0.61 2.62 1.63 --
6-month 0.89 -3.88 0.91 -3.04 0.51 -0.48 1.01
- ------------------------------------------------------------------------------------------------
30-Day SEC Yield 3.06% 3.21% 2.46% 3.46%
- ------------------------------------------------------------------------------------------------
30-Day SEC
Unsubsidized Yield 2.96% 3.11% 2.36% 3.36%
</Table>
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS AND
PRINCIPAL VALUE WILL FLUCTUATE AND FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
BECAUSE CLASS B SHARES INCURRED LOWER EXPENSES UNDER THE 12B-1 PLAN THAN DID
CLASS A SHARES FOR THE FISCAL PERIOD ENDED MARCH 31, 2006, THE TOTAL OPERATING
EXPENSE RATIO FOR CLASS B SHARES WAS LOWER AND, AS A RESULT, THE PERFORMANCE OF
CLASS B SHARES WAS HIGHER THAN THAT OF CLASS A SHARES. THERE CAN BE NO ASSURANCE
THAT THIS WILL CONTINUE TO OCCUR IN THE FUTURE AS THE MAXIMUM FEES PAYABLE BY
CLASS B SHARES UNDER THE 12B-1 PLAN ARE HIGHER THAN THOSE PAYABLE BY CLASS A
SHARES.
The returns shown in this report do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
Performance of share classes will vary due to differences in sales charges and
expenses. Average annual total return with sales charges includes payment of the
maximum sales charge of 4.75 percent for Class A shares, a contingent deferred
sales charge of 4.00 percent for Class B shares (in years one and two and
declining to zero after year five), a contingent deferred sales charge of 1.00
percent for Class C shares in year one and combined Rule 12b-1 fees and service
fees of up to 0.25 percent for Class A shares and up to 1.00 percent for Class B
and C shares. The since inception and 10-year returns for Class B shares reflect
the conversion of Class B shares into Class A shares six years after purchase.
The since inception returns for Class C shares reflect the conversion of Class C
shares into Class A shares ten years after purchase. Class I shares are
available for purchase exclusively by investors through (i) tax-exempt
retirement plans with assets of at least $1 million (including 401(k) plans, 457
plans, employer-sponsored 403(b) plans, profit sharing and money purchase plans,
defined benefit plans and non-qualified deferred compensation plans), (ii)
fee-based investment programs with assets of at least $1 million and (iii)
institutional clients with assets of at least $1 million. Class I shares are
offered without any sales charges on purchases or sales and do not include
combined Rule 12b-1 fees and service fees. Figures shown above assume
reinvestment of all dividends and capital gains. The fund's adviser has waived
or reimbursed fees and expenses from time to time; absent such
waivers/reimbursements the fund's returns would have been lower. SEC yield is a
calculation for determining the amount of portfolio income, excluding nonincome
items as prescribed by the SEC. The unsubsidized SEC yields reflect some or all
of the expenses that the adviser had voluntarily waived. Yields are subject to
change.
The Lehman Brothers Municipal Bond Index is generally representative of
investment-grade, tax-exempt bonds. The index does not include any expenses,
fees or sales charges, which would lower performance. The index is unmanaged and
should not be considered an investment. It is not possible to invest directly in
an index. Index data source: Lipper Inc.
1
Fund Report
FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 2006
MARKET CONDITIONS
Despite the shadow of rising oil prices, the devastation of the Gulf Coast
hurricanes, and emerging weakness in the housing market, the economy continued
to grow during the six-month period ended March 31, 2006. This expansion was
more modest in the fourth quarter of 2005, but gained considerable momentum in
the first quarter of 2006.
Against the backdrop of growth and good employment data, the Federal Open Market
Committee (the "Fed") continued raising the federal funds target rate during the
period, implementing four additional increases of 25 basis points each. The
final hike of the period represented the fifteenth consecutive increase--the
longest stretch of increases in 25 years. As the period came to a close, market
observers speculated about the Fed's near-term intentions, given the central
bank's view that although longer-term inflation appeared contained, commodity
prices could amplify inflationary pressures.
Returns across the municipal bond market varied significantly. As investors
sought income opportunities, lower rated bonds outpaced investment-grade bonds
by a wide margin. Long-term bonds earned the best returns, broadly speaking,
while bonds in the three-to-seven year range posted the most muted gains.
Municipal bond issuance was robust during the final months of 2005. (In fact,
2005 marked a record high for municipal bond volume.) The tide changed in the
first quarter of 2006, however. As rising rates discouraged issuers from
refinancing debt, national municipal issuance dropped versus the same period a
year ago. While supply ebbed, the market's appetite for municipal bonds remained
strong, with particularly heavy demand from high yield municipal bond funds.
PERFORMANCE ANALYSIS
The fund returned 0.89 percent for the six months ended March 31, 2006 (Class A
shares, unadjusted for sales charges). In comparison, the fund's benchmark, the
Lehman Brothers Municipal Bond Index, returned 0.98 percent for the period.
2
TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 2006
<Table>
<Caption>
- ------------------------------------------------------------------------
LEHMAN BROTHERS
CLASS A CLASS B CLASS C CLASS I MUNICIPAL BOND INDEX
0.89% 0.91% 0.51% 1.01% 0.98%
- ------------------------------------------------------------------------
</Table>
The performance for the four share classes varies because each has different
expenses. The fund's total return figures assume the reinvestment of all
distributions, but do not reflect the deduction of any applicable sales charges.
Such costs would lower performance. Past performance is no guarantee of future
results. See Performance Summary for standardized performance information and
index definition.
Because Class B shares incurred lower expenses under the 12b-1 Plan than did
Class A shares for the fiscal period ended March 31, 2006, the total operating
expense ratio for Class B shares was lower and, as a result, the performance of
Class B shares was higher than that of Class A shares. There can be no assurance
that this will continue to occur in the future as the maximum fees payable by
Class B shares under the 12b-1 Plan are higher than those payable by Class A
shares.
We sought to increase the yield potential of the portfolio within the framework
of our investment strategy. Following our long-standing "relative value"
discipline, we favored high quality bonds with good liquidity. (Liquid
securities are those for which there is a robust market of purchasers and
sellers.) Based on our in-depth proprietary research, we purchased bonds we
believed to be attractively valued, and then sold them when they reached our
return targets. We then invested the proceeds into bonds which we believed
offered greater future total return prospects.
Several factors drove the fund's performance during the period. While the
majority of the portfolio was invested in bonds rated AA and higher, the
portfolio's overweight relative to its benchmark in BBB rated and non-rated
bonds proved beneficial. In an environment of relatively low interest rates,
demand for higher-yielding credits remained strong.
Our analysis had suggested that interest rates would continue to rise, with the
yields of short-term bonds advancing more rapidly than those of long-term
issues. Accordingly, we kept the fund's duration (a measure of interest rate
sensitivity) shorter than that of the Lehman benchmark, and this strategy
contributed to the fund's relative performance. The fund also benefited from its
"barbell" structure. Specifically, we emphasized bonds with very short
maturities and long maturities. This resulted in an overweighted position in
long-term bonds--the strongest performers--relative to the Lehman benchmark, and
a significantly underweighted position in the segment of the curve that
performed most tepidly.
We found lucrative opportunities to sell high-quality bonds at tight spreads
capturing good appreciation. We invested the proceeds of the fund's sales into a
variety of higher yielding investment-grade and non-rated issues.
3
The fund remained well diversified across the major sectors of the municipal
market, with a focus on essential services. At the close of the period, public
education, general purpose and hospital represented the fund's largest sector
weightings. Reflecting our focus on high quality securities, 67 percent of the
portfolio was rated AA or above at the close of the period.
There is no guarantee that any sectors mentioned will continue to perform as
discussed herein or that securities in such sectors will be held by the fund in
the future.
4
<Table>
<Caption>
RATINGS ALLOCATIONS AS OF 3/31/06
AAA/Aaa 57.8%
AA/Aa 9.2
A/A 7.0
BBB/Baa 10.5
BB/Ba 0.5
Non-Rated 15.0
<Caption>
TOP FIVE SECTORS AS OF 3/31/06
Public Education 18.4%
General Purpose 10.1
Hospital 10.1
Retail Electric 10.0
Higher Education 6.4
<Caption>
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 3/31/06
Pennsylvania 10.0%
New Jersey 8.6
Missouri 7.8
Alabama 5.3
Florida 5.2
Illinois 5.2
Ohio 4.9
California 4.8
New York 4.1
Oregon 4.1
Colorado 3.5
Maryland 2.9
Michigan 2.9
Texas 2.7
Indiana 2.6
Tennessee 2.3
Arkansas 2.2
Arizona 2.1
Kansas 2.0
South Carolina 1.9
New Mexico 1.6
North Carolina 1.5
South Dakota 1.4
West Virginia 1.4
Connecticut 1.1
Kentucky 1.0
Nebraska 0.9
Virginia 0.9
Washington 0.5
Wisconsin 0.4
Georgia 0.2
Montana 0.2
Massachusetts 0.2
</Table>
<Table>
(continued on next page)
</Table>
5
<Table>
<Caption>
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 3/31/06
(continued from previous page)
Rhode Island 0.1
Minnesota 0.0*
-----
Total Long-Term Investments 96.5%
Short-Term Investments 3.7
-----
Total Investments 100.2
Liabilities in Excess of Other Assets (0.2)
-----
Total Net Assets 100.0%
</Table>
* Amount is less than 0.1%
Provided for informational purposes only and should not be deemed as a
recommendation to buy or sell the securities mentioned or securities in the
sectors shown above. Subject to change daily. Ratings allocations and sector
percentages are as a percentage of long-term investments. Securities are
classified by sectors that represent broad groupings of related industries.
Summary of investments by state classification are as a percentage of total net
assets. Van Kampen is a wholly owned subsidiary of a global securities firm
which is engaged in a wide range of financial services including, for example,
securities trading and brokerage activities, investment banking, research and
analysis, financing and financial advisory services. Rating allocations based
upon ratings as issued by Standard and Poor's and Moody's, respectively.
6
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
Each Van Kampen fund provides a complete schedule of portfolio holdings
in its semiannual and annual reports within 60 days of the end of the
fund's second and fourth fiscal quarters by filing the schedule
electronically with the Securities and Exchange Commission (SEC). The
semiannual reports are filed on Form N-CSRS and the annual reports are
filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
reports to fund shareholders, and makes these reports available on its
public Web site, www.vankampen.com. In addition to the semiannual and
annual reports that Van Kampen delivers to shareholders and makes
available through the Van Kampen public Web site, each fund files a
complete schedule of portfolio holdings with the SEC for the fund's first
and third fiscal quarters on Form N-Q. Van Kampen does not deliver the
reports for the first and third fiscal quarters to shareholders, nor are
the reports posted to the Van Kampen public Web site. You may, however,
obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS
filings) by accessing the SEC's Web site, http://www.sec.gov. You may
also review and copy them at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the SEC's Public
Reference Room may be obtained by calling the SEC at (800) SEC-0330. You
can also request copies of these materials, upon payment of a duplicating
fee, by electronic request at the SEC's e-mail address
(publicinfo@sec.gov) or by writing the Public Reference section of the
SEC, Washington, DC 20549-0102.
You may obtain copies of a fund's fiscal quarter filings by contacting
Van Kampen Client Relations at (800) 847-2424.
7
HOUSEHOLDING NOTICE
To reduce fund expenses, the fund attempts to eliminate duplicate
mailings to the same address. The fund delivers a single copy of certain
shareholder documents to investors who share an address, even if the
accounts are registered under different names. The fund's prospectuses
and shareholder reports (including annual privacy notices) will be
delivered to you in this manner indefinitely unless you instruct us
otherwise. You can request multiple copies of these documents by either
calling (800) 341-2911 or writing to Van Kampen Investor Services at 1
Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, IL 60181. Once Investor
Services has received your instructions, we will begin sending individual
copies for each account within 30 days.
PROXY VOTING POLICY AND PROCEDURES AND PROXY VOTING RECORD
You may obtain a copy of the fund's Proxy Voting Policy and Procedures
without charge, upon request, by calling toll free (800) 847-2424 or by
visiting our Web site at www.vankampen.com. It is also available on the
Securities and Exchange Commission's Web site at http://www.sec.gov.
You may obtain information regarding how the fund voted proxies relating
to portfolio securities during the most recent twelve-month period ended
June 30 without charge by visiting our Web site at www.vankampen.com.
This information is also available on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
8
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments of Class A Shares
and contingent deferred sales charge on redemptions of Class B and C Shares; and
(2) ongoing costs, including management fees; distribution and service (12b-1)
fees; and other Fund expenses. This example is intended to help you understand
your ongoing costs (in dollars) of investing in the Fund and to compare these
costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period 10/1/05 - 3/31/06.
ACTUAL EXPENSE
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing cost of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or contingent deferred sales charges. Therefore, the second line
of the table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
-------------------------------------------------
10/1/05 3/31/06 10/1/05-3/31/06
Class A
Actual..................................... $1,000.00 $1,008.88 $5.16
Hypothetical............................... 1,000.00 1,019.83 5.19
(5% annual return before expenses)
Class B
Actual..................................... 1,000.00 1,009.08 5.01
Hypothetical............................... 1,000.00 1,019.93 5.04
(5% annual return before expenses)
Class C
Actual..................................... 1,000.00 1,005.09 8.90
Hypothetical............................... 1,000.00 1,016.03 8.95
(5% annual return before expenses)
Class I
Actual..................................... 1,000.00 1,010.15 3.91
Hypothetical............................... 1,000.00 1,021.03 3.93
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 1.03%, 1.00%,
1.78% and 0.78% for Class A, B, C and I Shares, respectively, multiplied by
the average account value over the period, multiplied by 182/365 (to reflect
the one-half year period). These ratios reflect an expense waiver.
Assumes all dividends and distributions were reinvested.
9
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED)
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS 96.5%
ALABAMA 5.3%
$1,260 Dothan Houston Cnty, AL Arpt Auth (AMT) (MBIA
Insd) (a)...................................... 5.400% 12/01/15 $ 1,339,556
1,890 Elmore Cnty, AL Ltd Oblig Sch Wts (FSA Insd)
(a)............................................ 5.000 02/01/20 1,981,306
1,405 Greenville, AL Wts Rfdg (XLCA Insd)............ 5.000 01/01/18 1,475,475
1,000 Jefferson Cnty, AL Ltd Oblig Ser A............. 5.000 01/01/07 1,009,770
200 West Jefferson Cnty, AL Amusement & Pub Park
Auth (Prerefunded @ 12/01/06).................. 7.500 12/01/08 207,684
------------
6,013,791
------------
ARIZONA 2.1%
1,000 Arizona St Univ Rev Sys Rfdg (AMBAC Insd)...... 5.000 07/01/20 1,054,070
800 Maricopa Cnty, AZ Uni Sch Impt Proj of 2002 Ser
B (FSA Insd)................................... 5.250 07/01/16 863,504
480 Pima Cnty, AZ Indl Dev Auth Indl Rev Lease
Oblig Irvington Proj Tucson Ser A Rfdg (FSA
Insd).......................................... 7.250 07/15/10 484,138
------------
2,401,712
------------
ARKANSAS 2.2%
1,000 Arkansas St Fed Hwy Grant Antic Ser A.......... 5.500 08/01/06 1,006,710
500 University of AR Rev Pine Bluff Campus Ser A
Rfdg (AMBAC Insd) (a).......................... 5.000 12/01/17 530,910
950 University of AR Rev UALR Cap Impt Ser B (FSA
Insd).......................................... 4.500 12/01/19 968,050
------------
2,505,670
------------
CALIFORNIA 4.8%
1,090 California Edl Fac Auth Rev Occidental College
Ser A (MBIA Insd) (a).......................... 5.000 10/01/20 1,154,670
1,000 California St (AMBAC Insd) (b)................. 6.400 09/01/08 1,065,940
1,500 California St Dept Wtr Res Pwr Ser A
(Prerefunded @ 05/01/12) (AMBAC Insd).......... 5.375 05/01/18 1,646,670
385 Fairfield Suisun, CA Uni Sch Election 2002
(MBIA Insd).................................... 5.250 08/01/18 414,387
1,100 Santa Clara, CA Elec Rev Sub Ser A (MBIA
Insd).......................................... 5.250 07/01/20 1,181,785
------------
5,463,452
------------
COLORADO 3.5%
150 Colorado Hlth Fac Auth Rev Sr Living Fac Eaton
Ter Ser A...................................... 6.800 07/01/09 155,611
1,560 Colorado Springs, CO Utils Rev Sys Sub Lien
Impt Ser A..................................... 5.000 11/15/19 1,644,568
1,000 Denver, CO City & Cnty Arpt Rev Ser D Rfdg
(AMT) (FSA Insd)............................... 5.500 11/15/12 1,066,150
1,000 Weld & Adams Cntys, CO Sch Dist (FSA Insd)..... 5.000 12/15/21 1,052,920
------------
3,919,249
------------
</Table>
10 See Notes to Financial Statements
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ------------------------------------------------------------------------------------------
CONNECTICUT 1.1%
$1,000 Connecticut St Hlth & Edl Fac Auth Rev Griffin
Hosp Ser B (Radian Insd)....................... 5.000% 07/01/11 $ 1,047,840
215 New Haven, CT Indl Fac Rev Adj Govt Ctr Thermal
Energies (AMT)................................. 7.250 07/01/09 215,505
------------
1,263,345
------------
FLORIDA 5.2%
500 Baywinds Cmnty Dev Dist FL Spl Assmt Ser B
(c)............................................ 4.900 05/01/12 500,000
1,000 Brevard Cnty, FL Sch Brd Ctfs Ser B Rfdg (FGIC
Insd).......................................... 5.000 07/01/20 1,047,190
2,000 Broward Cnty, FL Arpt Sys Rev Ser E Rfdg (AMT)
(MBIA Insd) (b)................................ 5.375 10/01/13 2,084,620
140 Lee Cnty, FL Indl Dev Auth Econ Rev Encore
Nursing Ctr Part Rfdg.......................... 8.125 12/01/07 140,132
40 Orange Cnty, FL Hlth Fac Auth Rev First Mtg
Orlando Lutheran Twr Rfdg (Escrowed
to Maturity)................................... 8.125 07/01/06 40,450
250 Orange Cnty, FL Hlth Fac Auth Rev First Mtg
Orlando Lutheran Twr Rfdg (Prerefunded @
07/01/06)...................................... 8.625 07/01/20 260,547
1,500 Orange Cnty, FL Sch Brd Ctf Ser A (AMBAC
Insd).......................................... 5.250 08/01/14 1,609,650
210 Volusia Cnty, FL Indl Dev Auth Bishops Glen
Proj Rfdg (Escrowed to Maturity)............... 7.125 11/01/06 212,159
------------
5,894,748
------------
GEORGIA 0.2%
230 Forsyth Cnty, GA Hosp Auth Rev Antic Ctfs GA
Baptist Hlthcare Sys Proj (Escrowed to
Maturity)...................................... 6.000 10/01/08 237,167
------------
ILLINOIS 5.2%
545 Clay Cnty, IL Hosp Rev (Prerefunded @ 12/1/08)
(a)............................................ 5.500 12/01/10 575,613
500 Hodgkins, IL Tax Increment Rev Sr Lien Rfdg.... 5.000 01/01/14 518,490
80 Huntley, IL Spl Svc Area No 7 Spl Tax.......... 6.000 03/01/09 81,101
500 Illinois Fin Auth Rev Landing at Plymouth Pl
Proj Ser A..................................... 5.250 05/15/14 496,025
1,010 Illinois Fin Auth Student Hsg Rev MJH Ed
Assistance IV Sr Ser A (a)..................... 5.000 06/01/09 1,031,412
1,000 Illinois Fin Auth Student Hsg Rev MJH Ed
Assistance IV Sr Ser A......................... 5.500 06/01/19 1,047,800
500 Lincolnshire, IL Spl Svc Area Sedgebrook
Proj........................................... 5.000 03/01/11 510,790
130 Peoria, IL Spl Tax Weaverridge Spl Svc Area.... 7.625 02/01/08 136,324
439 Pingree Grove Village, IL Spl Svc Area No 1 Spl
Tax Ser 05-1 Cambridge Lakes Proj.............. 5.250 03/01/15 444,751
1,000 Round Lake Beach, IL Tax....................... 4.650 12/15/13 1,005,890
------------
5,848,196
------------
</Table>
See Notes to Financial Statements 11
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ------------------------------------------------------------------------------------------
INDIANA 2.6%
$1,000 Allen Cnty, IN Juvenile Justice Ctr First Mtg
(AMBAC Insd)................................... 5.500% 01/01/18 $ 1,078,810
1,400 Indiana Bd Bk Spl Prog Hendricks Redev Ser B
(Prerefunded @ 02/01/07)....................... 6.000 02/01/12 1,455,006
400 Saint Joseph Cnty, IN Econ Dev Rev Holy Cross
Vlg Notre Dame Proj Ser A...................... 5.750 05/15/13 413,336
------------
2,947,152
------------
KANSAS 2.0%
500 Burlington, KS Envrn Impt Rev.................. 4.750 09/01/15 504,615
500 Kansas St Dev Fin Auth Hlth Fac Rev Hays Med
Ctr Inc Ser L.................................. 5.250 11/15/16 529,320
1,000 Shawnee Cnty, KS Sch Dist 501 Topeka........... 5.000 02/01/20 1,048,120
220 Wyandotte Cnty, KS City KS Univ Brd of Public
Utility Office Bldg Complex Proj (MBIA Insd)... 5.000 05/01/11 231,937
------------
2,313,992
------------
KENTUCKY 1.0%
1,000 Louisville & Jefferson Cnty, KY Ser C (AMT)
(FSA Insd)..................................... 5.500 07/01/17 1,074,320
------------
MARYLAND 2.9%
1,000 Baltimore, MD Convention Ctr Hotel Rev Ser A
(XLCA Insd).................................... 5.250 09/01/22 1,080,360
1,000 Maryland St Econ Dev Corp Student Hsg Rev Univ
MD College Park Proj Rfdg (CIFG Insd) (c)...... 5.000 06/01/13 1,060,440
625 Maryland St Econ Dev Corp Univ MD College Park
Proj (Escrowed to Maturity).................... 5.750 06/01/13 692,737
500 Prince Georges Cnty, MD Spl Oblig Natl
Harbor Proj.................................... 4.700 07/01/15 507,275
------------
3,340,812
------------
MASSACHUSETTS 0.2%
35 Massachusetts St Indl Fin Agy East Boston
Neighborhood Proj.............................. 7.250 07/01/06 34,987
140 Massachusetts St Indl Fin Agy Rev Gtr Lynn
Mental Hlth (Escrowed to Maturity) (Acquired
06/24/1998, Cost $140,000) (d)................. 6.200 06/01/08 146,373
------------
181,360
------------
MICHIGAN 2.9%
1,000 Brighton, MI Area Sch Dist Rfdg (a)............ 5.250 05/01/18 1,069,730
1,000 Brighton, MI Area Sch Dist Rfdg................ 5.250 05/01/20 1,069,730
335 John Tolfree Hlth Sys Corp MI Mtg Rev Rfdg..... 5.450 09/15/06 336,296
500 Kent Hosp Fin Auth MI Rev Met Hosp Proj Ser
A.............................................. 5.000 07/01/09 509,945
250 Michigan St Strategic Fd Ltd Oblig United Waste
Sys Proj (AMT)................................. 5.200 04/01/10 258,372
------------
3,244,073
------------
</Table>
12 See Notes to Financial Statements
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ------------------------------------------------------------------------------------------
MINNESOTA 0.0%
$ 50 Minneapolis, MN Multi-Family Rev Hsg Belmont
Apts Proj (AMT) (a)............................ 7.000% 11/01/06 $ 50,093
------------
MISSOURI 7.8%
500 Carthage, MO Hosp Rev.......................... 4.000 04/01/07 500,040
610 Ferguson, MO Tax Increment Rev Crossing at
Halls Ferry Rfdg (a)........................... 5.500 04/01/14 623,652
1,350 Kansas City, MO Indl Dev Auth Plaza Lib Proj... 6.000 03/01/16 1,401,988
1,000 Macon, MO Ctfs Partn (MBIA Insd)............... 5.250 08/01/17 1,041,860
830 Missouri St Dev Fin Brd Fac Rev Pub Safety Proj
Ser A (a)...................................... 5.000 03/01/11 855,730
2,125 O' Fallon, MO Ctfs Partn (MBIA Insd) (a)....... 5.375 02/01/18 2,273,516
2,000 Saint Charles, MO Ctf Partn Ser B.............. 5.500 05/01/18 2,095,620
------------
8,792,406
------------
MONTANA 0.2%
210 Crow Fin Auth, MT Tribal Purp Rev (Acquired
12/11/1997, Cost $210,000) (d)................. 5.400 10/01/07 213,753
------------
NEBRASKA 0.9%
1,000 Dodge Cnty, NE Sch Dist 001 Rfdg (FSA Insd).... 5.000 12/15/18 1,053,670
------------
NEW JERSEY 8.6%
1,000 Casino Reinvestment Dev Auth NJ Hotel Room Fee
Rev (AMBAC Insd)............................... 5.250 01/01/20 1,083,260
1,400 Essex Cnty, NJ Impt Auth Lease Gtd Cnty
Correctional Fac Proj (Prerefunded @ 10/01/10)
(FGIC Insd).................................... 5.750 10/01/30 1,519,476
460 Middlesex Cnty, NJ Impt Auth Street Student Hsg
Proj Ser A..................................... 2.500 08/15/06 457,732
1,000 Morris Union Jointure Cmnty NJ Ctfs Part
(Radian Insd).................................. 5.250 05/01/20 1,062,270
400 New Jersey Econ Dev Auth First Mtg Winchester
Ser A Rfdg..................................... 3.000 11/01/06 397,044
1,500 New Jersey Econ Dev Auth Rev Cigarette Tax..... 5.500 06/15/16 1,617,105
415 New Jersey Hlthcare Fac Fin Auth Rev Christ
Hosp Group Issue (Escrowed to Maturity) (Connie
Lee Insd)...................................... 7.000 07/01/06 418,544
1,000 New Jersey Hlthcare Fac Fin Auth Rev St.
Clare's Hosp Inc Ser A Rfdg (Radian Insd)...... 5.250 07/01/20 1,060,340
1,000 New Jersey Hlthcare Fac Fin Auth Rev Virtua
Hlth Issue (FSA Insd).......................... 5.250 07/01/10 1,048,750
455 Rahway, NJ Ctfs Partn (MBIA Insd).............. 5.500 02/15/16 488,734
565 Rahway, NJ Ctfs Partn (MBIA Insd).............. 5.600 02/15/17 609,313
------------
9,762,568
------------
</Table>
See Notes to Financial Statements 13
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ------------------------------------------------------------------------------------------
NEW MEXICO 1.6%
$1,000 Jicarilla, NM Apache Nation Rev Ser A (Acquired
10/23/2003, Cost $1,020,380) (d)............... 5.500% 09/01/23 $ 1,055,400
700 Jicarilla, NM Apache Nation Rev Ser A (Acquired
10/23/2003, Cost $728,707) (d)................. 4.000 09/01/08 702,898
------------
1,758,298
------------
NEW YORK 4.1%
205 Brookhaven, NY Indl Dev Agy Sr Residential Hsg
Rev Woodcrest Estates Fac Ser A (AMT).......... 5.875 12/01/09 208,967
1,000 Long Island Pwr Auth NY Elec Gen Ser C......... 5.500 09/01/17 1,081,740
500 New York City Indl Dev Agy Rev Liberty 7 World
Trade Ctr Ser A................................ 6.250 03/01/15 526,575
780 New York City Indl Dev Agy Spl Fac Rev Terminal
One Group Assn Proj (AMT)...................... 5.000 01/01/10 803,439
480 New York City Ser A............................ 7.000 08/01/07 492,245
20 New York City Ser A (Prerefunded @ 08/01/06)... 7.000 08/01/07 20,529
500 New York St Dorm Auth Rev Mt Sinai NYU Hlth Ser
C.............................................. 5.000 07/01/11 505,630
5 Niagara Falls, NY Pub Impt (MBIA Insd)......... 6.900 03/01/20 5,014
1,000 Tobacco Settlement Fin Corp NY Ser C-1......... 5.250 06/01/13 1,031,200
------------
4,675,339
------------
NORTH CAROLINA 1.5%
630 North Carolina Eastn Mun Pwr Agy Pwr Sys Rev
Ser D.......................................... 6.450 01/01/14 686,221
1,000 North Carolina Muni Pwr Agy Ser A (MBIA
Insd).......................................... 5.250 01/01/19 1,065,630
------------
1,751,851
------------
OHIO 4.9%
500 Adams Cnty Hosp Fac Impt Rev Adams Cnty Hosp
Proj........................................... 6.250 09/01/20 504,570
500 Athens Cnty, OH Hosp Fac Rev & Impt O' Bleness
Mem Ser A Rfdg................................. 6.250 11/15/13 523,720
1,370 Cleveland, OH Non Tax Rev Cleveland Stadium
Proj Rfdg (AMBAC Insd)......................... 5.125 12/01/20 1,451,679
500 Dayton, OH Spl Fac Rev Afco Cargo Day LLC Proj
(AMT).......................................... 6.000 04/01/09 498,175
1,000 Ohio Mun Elec Generation Agy Jt Venture 5 Ctfs
Ben Int Rfdg (AMBAC Insd)...................... 5.000 02/15/21 1,043,230
1,160 Sugarcreek, OH Loc Sch Dist Sch Impt Rfdg (MBIA
Insd) (a)...................................... 5.250 12/01/18 1,248,114
325 Toledo, OH Swr Sys Rev (AMBAC Insd)............ 5.000 11/15/18 343,291
------------
5,612,779
------------
</Table>
14 See Notes to Financial Statements
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ------------------------------------------------------------------------------------------
OREGON 4.1%
$2,575 Emerald Peoples Util Dist OR Ser A Rfdg (FSA
Insd) (a)...................................... 5.250% 11/01/16 $ 2,782,442
785 Oregon St Dept Admin Svcs Lottery Rev Ser B
(FSA Insd)..................................... 5.000 04/01/18 829,211
1,000 Port Morrow, OR Pollutn Ctl Portland Gen Ser A
Rfdg (Mandatory Put @ 05/01/09)................ 5.200 05/01/33 1,024,910
------------
4,636,563
------------
PENNSYLVANIA 10.0%
250 Allegheny Cnty, PA Redev Auth Rev Pittsburgh
Mills Proj..................................... 5.100 07/01/14 258,918
1,220 Canon McMillan Sch Dist PA Ser A Rfdg
(MBIA Insd).................................... 5.000 12/15/15 1,295,652
500 Montgomery Cnty, PA Indl Dev Auth Rev Mtg
Whitemarsh Cont Care Proj...................... 6.000 02/01/21 527,275
1,150 Philadelphia, PA Gas Wks Rev Eighteenth Ser.... 5.250 08/01/18 1,224,520
900 Philadelphia, PA Gas Wks Rev Third Ser
(FSA Insd)..................................... 5.000 08/01/10 942,471
2,000 Philadelphia, PA Redev Auth Rev Neighborhood
Trans Ser A (FGIC Insd)........................ 5.500 04/15/16 2,163,520
1,500 Springfield, PA Sch Dist DE Ser A (FGIC
Insd).......................................... 5.000 03/15/20 1,573,695
1,090 Wilson, PA Area Sch Dist (FGIC Insd)........... 5.125 03/15/17 1,158,125
2,070 York Cnty, PA Sch Technology (FGIC Insd)....... 5.375 02/15/16 2,241,893
------------
11,386,069
------------
RHODE ISLAND 0.1%
150 Rhode Island St Econ Dev Grant Antic RI Dept
Trans Ser A (FSA Insd)......................... 5.000 06/15/15 158,936
------------
SOUTH CAROLINA 1.9%
1,020 Berkeley Cnty, SC Impt & Rfdg (FSA Insd)....... 5.000 09/01/17 1,077,161
1,065 Lexington, SC Wtr & Swr Rev & Impt Comb Ser A
Rfdg (MBIA Insd) (a)........................... 5.000 04/01/14 1,116,195
------------
2,193,356
------------
SOUTH DAKOTA 1.4%
1,515 Minnehaha Cnty, SD Ctfs Ltd Tax (FSA Insd)..... 5.000 12/01/18 1,600,476
------------
TENNESSEE 2.3%
495 Chattanooga, TN Hlth Edl Hsg Fac CDFI Phase I
LLC Proj Ser A Rfdg............................ 5.000 10/01/15 502,673
700 Franklin, TN Spl Sch Dist Cap Apprec
(FSA Insd)..................................... * 06/01/15 475,391
1,000 Gatlinburg, TN Pub Bldg Auth Rfdg (AMBAC
Insd).......................................... 5.750 12/01/11 1,097,340
500 Shelby Cnty, TN Hlth Edl & Hsg Fac Brd Rev
Trezevant Manor Proj Ser A..................... 5.250 09/01/16 495,355
------------
2,570,759
------------
</Table>
See Notes to Financial Statements 15
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ------------------------------------------------------------------------------------------
TEXAS 2.7%
$ 395 Brazos Riv Auth TX Pollutn Ctl Rev Adj TXU Elec
Co Proj Ser C Rfdg (AMT) (Mandatory Put
@ 11/01/11).................................... 5.750% 05/01/36 $ 418,222
500 Hidalgo Cnty, TX Hlth Svcs Mission Hosp
Inc Proj....................................... 5.000 08/15/13 509,010
350 Hidalgo Cnty, TX Hlth Svcs Mission Hosp
Inc Proj....................................... 5.000 08/15/19 351,904
1,000 Lower Colorado Riv Auth TX LCRA Svcs Corp Proj
Rfdg (FGIC Insd)............................... 5.000 05/15/17 1,042,330
500 Mesquite, TX Hlth Fac Dev Retirement Christian
Care........................................... 5.000 02/15/15 506,445
250 San Antonio, TX Hsg Fin Corp Multi-Family Hsg
Rev Beverly Oaks Apt Proj Ser A (a)............ 7.500 02/01/10 245,700
------------
3,073,611
------------
VIRGINIA 0.9%
1,000 Tobacco Settlement Fin Corp VA Asset Bkd....... 5.250 06/01/19 1,021,450
------------
WASHINGTON 0.5%
510 Skagit Cnty, WA Pub Hosp Dist No 001 Skagit Vy
Hosp........................................... 5.250 12/01/10 526,708
------------
WEST VIRGINIA 1.4%
1,500 West Virginia St Hosp Fin Auth (MBIA Insd)..... 6.100 01/01/18 1,541,715
------------
WISCONSIN 0.4%
500 Wisconsin St Hlth & Edl Fac Beaver Dam Cmnty
Hosp Inc....................................... 5.500 08/15/14 504,875
------------
TOTAL LONG-TERM INVESTMENTS 96.5%
(Cost $108,110,529)...................................................... 109,534,314
SHORT-TERM INVESTMENTS 3.7%
(Cost $4,200,000)........................................................ 4,200,000
------------
TOTAL INVESTMENTS 100.2%
(Cost $112,310,529)...................................................... 113,734,314
LIABILITIES IN EXCESS OF OTHER ASSETS (0.2%).............................. (228,671)
------------
NET ASSETS 100.0%......................................................... $113,505,643
============
</Table>
Percentages are calculated as a percentage of net assets.
* Zero coupon bond
(a) The Fund owns 100% of the outstanding bond issuance.
16 See Notes to Financial Statements
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
(b) All or a portion of these securities have been physically segregated in
connection with open futures contracts.
(c) Securities purchased on a when-issued or delayed delivery basis.
(d) These securities are restricted and may be resold only in transactions
exempt from registration which are normally those transactions with
qualified institutional buyers. Restricted securities comprise 1.9% of net
assets.
AMBAC--AMBAC Indemnity Corp.
AMT--Alternative Minimum Tax
CIFG--CDC IXIS Financial Guaranty
Connie Lee--Connie Lee Insurance Co.
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
MBIA--Municipal Bond Investors Assurance Corp.
Radian--Radian Asset Assurance
XLCA--XL Capital Assurance Inc.
FUTURES CONTRACTS OUTSTANDING AS OF MARCH 31, 2006:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
SHORT CONTRACTS:
U.S. Treasury Notes 5-Year Futures June 2006 (Current
Notional Value of $104,437 per contract).................. 65 $37,951
== =======
</Table>
See Notes to Financial Statements 17
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
March 31, 2006 (Unaudited)
<Table>
ASSETS:
Total Investments (Cost $112,310,529)....................... $113,734,314
Cash........................................................ 122,667
Receivables:
Interest.................................................. 1,489,983
Fund Shares Sold.......................................... 116,129
Other....................................................... 135,880
------------
Total Assets............................................ 115,598,973
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 1,569,990
Income Distributions...................................... 76,424
Fund Shares Repurchased................................... 72,286
Distributor and Affiliates................................ 43,966
Investment Advisory Fee................................... 38,988
Variation Margin on Futures............................... 3,047
Trustees' Deferred Compensation and Retirement Plans........ 195,277
Accrued Expenses............................................ 93,352
------------
Total Liabilities....................................... 2,093,330
------------
NET ASSETS.................................................. $113,505,643
============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $111,745,194
Net Unrealized Appreciation................................. 1,461,736
Accumulated Undistributed Net Investment Income............. 165,121
Accumulated Net Realized Gain............................... 133,592
------------
NET ASSETS.................................................. $113,505,643
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $81,660,331 and 7,739,224 shares of
beneficial interest issued and outstanding)............. $ 10.55
Maximum sales charge (4.75%* of offering price)......... .53
------------
Maximum offering price to public........................ $ 11.08
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $15,282,098 and 1,429,735 shares of
beneficial interest issued and outstanding)............. $ 10.69
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $16,029,881 and 1,521,085 shares of
beneficial interest issued and outstanding)............. $ 10.54
============
Class I Shares:
Net asset value and offering price per share (Based on
net assets of $533,333 and 50,570 shares of beneficial
interest issued and outstanding)........................ $ 10.55
============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
18 See Notes to Financial Statements
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended March 31, 2006 (Unaudited)
<Table>
INVESTMENT INCOME:
Interest.................................................... $ 2,590,779
-----------
EXPENSES:
Investment Advisory Fee..................................... 294,104
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B, and C of $106,034, $17,480 and $82,564,
respectively)............................................. 206,078
Registration and Filing Fees................................ 47,122
Shareholder Services........................................ 34,414
Accounting.................................................. 33,420
Legal....................................................... 22,814
Trustees' Fees and Related Expenses......................... 15,654
Custody..................................................... 10,117
Other....................................................... 59,262
-----------
Total Expenses.......................................... 722,985
Investment Advisory Fee Reduction....................... 58,821
Less Credits Earned on Cash Balances.................... 2,587
-----------
Net Expenses............................................ 661,577
-----------
NET INVESTMENT INCOME....................................... $ 1,929,202
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 112,103
Futures................................................... 254,933
-----------
Net Realized Gain........................................... 367,036
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 2,795,009
-----------
End of the Period:
Investments............................................. 1,423,785
Futures................................................. 37,951
-----------
1,461,736
-----------
Net Unrealized Depreciation During the Period............... (1,333,273)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $ (966,237)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 962,965
===========
</Table>
See Notes to Financial Statements 19
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets (Unaudited)
<Table>
<Caption>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2006 SEPTEMBER 30, 2005
--------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................ $ 1,929,202 $ 3,992,236
Net Realized Gain.................................... 367,036 411,603
Net Unrealized Depreciation During the Period........ (1,333,273) (541,868)
------------ ------------
Change in Net Assets from Operations................. 962,965 3,861,971
------------ ------------
Distributions from Net Investment Income:
Class A Shares..................................... (1,460,057) (2,950,100)
Class B Shares..................................... (263,705) (500,423)
Class C Shares..................................... (222,826) (447,551)
Class I Shares..................................... (10,243) (2,786)
------------ ------------
(1,956,831) (3,900,860)
------------ ------------
Distributions from Net Realized Gain:
Class A Shares..................................... (391,473) (111,173)
Class B Shares..................................... (76,687) (25,082)
Class C Shares..................................... (80,238) (21,027)
Class I Shares..................................... (2,627) -0-
------------ ------------
(551,025) (157,282)
------------ ------------
Total Distributions.................................. (2,507,856) (4,058,142)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES......................................... (1,544,891) (196,171)
------------ ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold............................ 14,577,980 35,234,147
Net Asset Value of Shares Issued Through Dividend
Reinvestment....................................... 1,853,306 2,853,082
Cost of Shares Repurchased........................... (23,594,423) (30,577,511)
------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS... (7,163,137) 7,509,718
------------ ------------
TOTAL INCREASE/DECREASE IN NET ASSETS................ (8,708,028) 7,313,547
NET ASSETS:
Beginning of the Period.............................. 122,213,671 114,900,124
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of $165,121 and
$192,750, respectively)............................ $113,505,643 $122,213,671
============ ============
</Table>
20 See Notes to Financial Statements
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS A SHARES MARCH 31, ------------------------------------------------
2006 2005 2004 2003 2002 (B) 2001
--------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD........................... $10.69 $10.72 $10.76 $10.86 $10.42 $10.14
------ ------ ------ ------ ------ ------
Net Investment Income............ .18(c) .36 .37 .38 .42 .49
Net Realized and Unrealized
Gain/Loss...................... (.09) (.01) .04 (.03) .44 .23
------ ------ ------ ------ ------ ------
Total from Investment Operations... .09 .35 .41 .35 .86 .72
------ ------ ------ ------ ------ ------
Less:
Distributions from Net Investment
Income......................... .18 .37 .37 .40 .42 .43
Distributions from Net Realized
Gain........................... .05 .01 .08 .05 -0- .01
------ ------ ------ ------ ------ ------
Total Distributions................ .23 .38 .45 .45 .42 .44
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD........................... $10.55 $10.69 $10.72 $10.76 $10.86 $10.42
====== ====== ====== ====== ====== ======
Total Return* (a).................. 0.89%** 3.31% 3.84% 3.33% 8.48% 7.19%
Net Assets at End of the Period (In
millions)........................ $ 81.7 $ 88.2 $ 76.5 $ 70.1 $ 53.5 $ 29.1
Ratio of Expenses to Average Net
Assets*.......................... 1.03% .99% .93% .84% .85% .77%
Ratio of Net Investment Income to
Average Net Assets*.............. 3.38% 3.32% 3.50% 3.55% 4.08% 4.78%
Portfolio Turnover................. 6%** 34% 60% 35% 75% 106%
* If certain expenses had not been voluntarily 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........................ 1.13% 1.09% 1.03% 1.04% 1.14% 1.23%
Ratio of Net Investment Income
to Average Net Assets......... 3.28% 3.22% 3.40% 3.35% 3.79% 4.32%
</Table>
** Non-Annualized
(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 4.75% or contingent deferred
sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be
imposed on certain redemptions made within eighteen months of purchase. If
the sales charge was included, total returns would be lower. These returns
include combined Rule 12b-1 fees and service fees of up to .25% and do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(b) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended September 30, 2002 was to increase net investment
income per share by less than $.01, decrease net realized and unrealized
gains and losses per share by less than $.01 and increase the ratio of net
investment income to average net assets by .01%. Per share, ratios and
supplemental data for periods prior to September 30, 2002 have not been
restated to reflect this change in presentation.
(c) Based on average shares outstanding.
See Notes to Financial Statements 21
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS B SHARES MARCH 31, -----------------------------------------------------
2006 2005 2004 2003 2002 (B) 2001
---------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF
THE PERIOD.................... $10.82 $10.75 $10.78 $10.84 $10.41 $10.13
------ ------ ------ ------ ------ ------
Net Investment Income......... .18(e) .40 .30 .32 .35 .42
Net Realized and Unrealized
Gain/Loss................... (.08) (.03) .04 (.01) .42 .22
------ ------ ------ ------ ------ ------
Total from Investment
Operations.................... .10 .37 .34 .31 .77 .64
------ ------ ------ ------ ------ ------
Less:
Distributions from Net
Investment Income........... .18 .29 .29 .32 .34 .35
Distributions from Net
Realized Gain............... .05 .01 .08 .05 -0- .01
------ ------ ------ ------ ------ ------
Total Distributions............. .23 .30 .37 .37 .34 .36
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD........................ $10.69 $10.82 $10.75 $10.78 $10.84 $10.41
====== ====== ====== ====== ====== ======
Total Return* (a)............... 0.91%**(d) 3.47%(d) 3.15%(d) 2.96%(c) 7.61% 6.42%
Net Assets at End of the Period
(In millions)................. $ 15.3 $ 16.9 $ 20.3 $ 23.9 $ 17.1 $ 11.1
Ratio of Expenses to Average Net
Assets*....................... 1.00%(d) .82%(d) 1.67%(d) 1.59% 1.60% 1.52%
Ratio of Net Investment Income
to Average Net Assets*........ 3.41%(d) 3.51%(d) 2.76%(d) 3.08%(c) 3.34% 4.02%
Portfolio Turnover.............. 6%** 34% 60% 35% 75% 106%
* If certain expenses had not been voluntarily 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................. 1.10%(d) .92%(d) 1.77%(d) 1.79% 1.89% $1.98%
Ratio of Net Investment
Income to Average Net
Assets..................... 3.31%(d) 3.41%(d) 2.66%(d) 2.88%(c) 3.05% 3.56%
</Table>
** Non-Annualized
(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 4%, charged on certain redemptions
made within the first and second year of purchase and declining to 0% after
the fifth year. If the sales charge was included, total returns would be
lower. These returns include combined Rule 12b-1 fees and service fees of up
to 1% and do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
(b) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended September 30, 2002 was to increase net investment
income per share by less than $.01, decrease net realized and unrealized
gains and losses per share by less than $.01 and increase the ratio of net
investment income to average net assets by .01%. Per share, ratios and
supplemental data for periods prior to September 30, 2002 have not been
restated to reflect this change in presentation.
(c) Certain non-recurring payments were made to Class B Shares, resulting in an
increase to the Ratio of Net Investment Income to Average Net Assets and
Total Return of .28%.
(d) The Total Return, Ratio of Expenses to Average Net Assets and Ratio of Net
Investment Income to Average Net Assets reflect actual 12b-1 fees of less
than 1% (See footnote 7).
(e) Based on average shares outstanding.
22 See Notes to Financial Statements
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS C SHARES MARCH 31, -----------------------------------------------
2006 2005 2004 2003 2002 (B) 2001
-------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................ $10.68 $10.70 $10.73 $10.82 $10.40 $10.12
------ ------ ------ ------ ------ ------
Net Investment Income............. .14(e) .29 .30 .30 .34 .42
Net Realized and Unrealized
Gain/Loss....................... (.09) (.01) .04 (.02) .42 .22
------ ------ ------ ------ ------ ------
Total from Investment Operations.... .05 .28 .34 .28 .76 .64
------ ------ ------ ------ ------ ------
Less:
Distributions from Net Investment
Income.......................... .14 .29 .29 .32 .34 .35
Distributions from Net Realized
Gain............................ .05 .01 .08 .05 -0- .01
------ ------ ------ ------ ------ ------
Total Distributions................. .19 .30 .37 .37 .34 .36
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD............................ $10.54 $10.68 $10.70 $10.73 $10.82 $10.40
====== ====== ====== ====== ====== ======
Total Return* (a)................... 0.51%** 2.64%(d) 3.17%(d) 2.69%(c) 7.52% 6.42%
Net Assets at End of the Period (In
millions)......................... $ 16.0 $ 16.5 $ 18.1 $ 21.4 $ 13.2 $ 8.6
Ratio of Expenses to Average Net
Assets*........................... 1.78% 1.64%(d) 1.66%(d) 1.59% 1.60% 1.52%
Ratio of Net Investment Income to
Average Net Assets*............... 2.63% 2.69%(d) 2.77%(d) 2.84%(c) 3.33% 4.02%
Portfolio Turnover.................. 6%** 34% 60% 35% 75% 106%
* If certain expenses had not been voluntarily 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......................... 1.88% 1.74%(d) 1.76%(d) 1.79% 1.89% 1.98%
Ratio of Net Investment Income to
Average Net Assets............. 2.53% 2.59%(d) 2.67%(d) 2.64%(c) 3.04% 3.56%
</Table>
** Non-Annualized
(a) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 1%, charged on certain redemptions
made within one year of purchase. If the sales charge was included, total
returns would be lower. These returns include combined Rule 12b-1 fees and
service fees of up to 1% and do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
(b) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting market discount on fixed income securities. The effect of this
change for the year ended September 30, 2002 was to increase net investment
income per share by less than $.01, decrease net realized and unrealized
gains and losses per share by less than $.01 and increase the ratio of net
investment income to average net assets by .01%. Per share, ratios and
supplemental data for periods prior to September 30, 2002 have not been
restated to reflect this change in presentation.
(c) Certain non-recurring payments were made to Class C Shares, resulting in an
increase to the Ratio of Net Investment Income to Average Net Assets and
Total Return of .06%.
(d) The Total Return, Ratio of Expenses to Average Net Assets and Ratio of Net
Investment Income to Average Net Assets reflect actual 12b-1 fees of less
than 1% (See footnote 7).
(e) Based on average shares outstanding.
See Notes to Financial Statements 23
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS AUGUST 12, 2005
ENDED (COMMENCEMENT
CLASS I SHARES MARCH 31, OF OPERATIONS)
2006 TO SEPTEMBER 30, 2005
-----------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD.................. $10.69 $10.70
------ ------
Net Investment Income................................... .19(b) .05
Net Realized and Unrealized Loss........................ (.08) (.01)
------ ------
Total from Investment Operations.......................... .11 .04
------ ------
Less:
Distributions from Net Investment Income................ .20 .05
Distributions from Net Realized Gain.................... .05 -0-
------ ------
Total Distributions....................................... .25 .05
------ ------
NET ASSET VALUE, END OF THE PERIOD........................ $10.55 $10.69
====== ======
Total Return* (a)......................................... 1.01%** 0.38%**
Net Assets at End of the Period (In millions)............. $ .5 $ .6
Ratio of Expenses to Average Net Assets*.................. .78% .77%
Ratio of Net Investment Income to Average Net Assets*..... 3.63% 3.59%
Portfolio Turnover........................................ 6%** 34%
* If certain expenses had not been voluntarily 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................ .88% .87%
Ratio of Net Investment Income to Average Net Assets... 3.53% 3.49%
</Table>
** Non-Annualized
(a) Assumes reinvestment of all distributions for the period. These returns do
not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund Shares.
(b) Based on average shares outstanding.
24 See Notes to Financial Statements
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Intermediate Term Municipal Income Fund (the "Fund") is organized as
a series of the Van Kampen Tax Free Trust, a Delaware statutory trust, and is
registered as a diversified, open-end management investment company under the
Investment Company Act of 1940 (the "1940 Act"), as amended. The Fund's
investment objective is to provide investors with a high level of current income
exempt from federal income tax, consistent with preservation of capital. The
Fund commenced investment operations on May 28, 1993. The Fund offers Class A
Shares, Class B Shares, Class C Shares and Class I Shares. Each class of shares
differs by its initial sales load, contingent deferred sales charges, the
allocation of class specific expenses and voting rights on matters affecting a
single class.
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 U.S. 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 Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services are valued at fair value
using procedures established in good faith by the Board of Trustees. Futures
contracts are valued at the settlement price established each day on the
exchange on which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
Legal expenditures that are expected to result in the restructuring of or a plan
of reorganization for an investment are recorded as realized losses. The Fund
may purchase and sell securities on a "when-issued" or "delayed delivery" basis,
with settlement to occur at a later date. The value of the security so purchased
is subject to market fluctuations during this period. Purchasing securities on
this basis involves a risk that the market value at the time of delivery may be
lower than the agreed upon purchase price resulting in an unrealized loss. The
Fund will segregate assets with the custodian having an aggregate value at least
equal to the amount of the when-issued or delayed delivery purchase commitments
until payment is made. At March 31, 2006, the Fund had $1,569,990 of when-issued
and delayed delivery purchase commitments.
C. INCOME AND EXPENSES Interest income is recorded on an accrual basis. Bond
premium is amortized and discount is accreted over the expected life of each
applicable security. Income and expenses of the Fund are allocated on a pro rata
basis to each class of shares, except for distribution and service fees and
incremental transfer agency costs which are unique to each class of shares.
D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of Subchapter M of the Internal Revenue Code applicable to regulated investment
companies
25
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
and to distribute substantially all of its taxable income, if any, to its
shareholders. Therefore, no provision for federal income taxes is required.
At March 31, 2006, the cost and related gross unrealized appreciation and
depreciation are as follows:
<Table>
Cost of investments for tax purposes........................ $112,294,798
============
Gross tax unrealized appreciation........................... $ 1,769,225
Gross tax unrealized depreciation........................... (329,709)
------------
Net tax unrealized appreciation on investments.............. $ 1,439,516
============
</Table>
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed at least annually. Distributions from net realized gains for book
purposes may include short term capital gains, which are included in ordinary
income for tax purposes.
The tax character of distributions paid during the year ended September 30,
2005 was as follows:
<Table>
Distributions paid from:
Ordinary Income........................................... $157,902
Long Term Capital Gains................................... -0-
--------
$157,902
========
</Table>
As of September 30, 2005, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed ordinary income............................... $413,786
</Table>
F. EXPENSE REDUCTIONS During the six months ended March 31, 2006, the Fund's
custody fee was reduced by $2,587 as a result of credits earned on cash
balances.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly as follows:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS % PER ANNUM
First $500 million.......................................... .50%
Over $500 million........................................... .45%
</Table>
For the six months ended March 31, 2006, the Adviser waived $58,821 of its
investment advisory fee. This represents .10% of the Fund's average net assets
for the period. This waiver is voluntary in nature and can be discontinued at
the Adviser's discretion.
For the six months ended March 31, 2006, the Fund recognized expenses of
approximately $2,300 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, of which a trustee of the Fund is a partner of such
firm and he and his law firm provide services as legal counsel to the Fund.
Under separate Legal Services, Accounting Services and Chief Compliance
Officer ("CCO") Employment agreements, the Adviser provides accounting and legal
services and the
26
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
CCO provides compliance services to the Fund. The costs of these services are
allocated to each fund. For the six months ended March 31, 2006, the Fund
recognized expenses of approximately $32,300, representing Van Kampen
Investments Inc.'s or its affiliates' (collectively "Van Kampen") cost of
providing accounting and legal services to the Fund, as well as, the salary,
benefits and related costs of the CCO and related support staff paid by Van
Kampen. Services provided pursuant to the Legal Services agreement are reported
as part of "Legal" expenses on the Statement of Operations. Services provided
pursuant to the Accounting Services and CCO Employment agreement are reported as
part of "Other" expenses on the Statement of Operations.
Van Kampen Investor Services Inc. (VKIS), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the six months ended
March 31, 2006, the Fund recognized expenses of approximately $26,300,
representing transfer agency fees paid to VKIS. Transfer agency fees are
determined through negotiations with the Fund's Board of Trustees.
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 also
officers of Van Kampen.
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.
Amounts deferred are retained by the Fund, and to the extent permitted by the
1940 Act, as amended, may be invested in the common shares of those funds
selected by the trustees. Investments in such funds of approximately $117,100
are included in "Other" assets on the Statement of Assets and Liabilities at
March 31, 2006. Appreciation/depreciation and distributions received from these
investments are recorded with an offsetting increase/decrease in the deferred
compensation obligation and do not affect the net asset value of the Fund.
Benefits under the retirement plan are payable upon retirement 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.
For the six months ended March 31, 2006, Van Kampen, as Distributor for the
Fund, received commissions on sales of the Fund's Class A Shares of
approximately $21,400 and CDSC on redeemed shares of approximately $14,300.
Sales charges do not represent expenses of the Fund.
27
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
3. CAPITAL TRANSACTIONS
For the six months ended March 31, 2006, and the year ended September 30, 2005,
transactions were as follows:
<Table>
<Caption>
FOR THE FOR THE
SIX MONTH ENDED YEAR ENDED
MARCH 31, 2006 SEPTEMBER 30, 2005
-------------------------- --------------------------
SHARES VALUE SHARES VALUE
Sales:
Class A........................... 1,174,166 $ 12,476,463 2,799,376 $ 30,055,073
Class B........................... 35,974 386,816 164,518 1,783,449
Class C........................... 159,989 1,697,958 261,414 2,801,679
Class I........................... 1,578 16,743 55,508 593,946
---------- ------------ ---------- ------------
Total Sales......................... 1,371,707 $ 14,577,980 3,280,816 $ 35,234,147
========== ============ ========== ============
Dividend Reinvestment:
Class A........................... 136,714 $ 1,450,508 209,871 $ 2,252,182
Class B........................... 19,170 206,004 29,127 315,068
Class C........................... 17,355 183,924 26,416 283,046
Class I........................... 1,214 12,870 260 2,786
---------- ------------ ---------- ------------
Total Dividend Reinvestment......... 174,453 $ 1,853,306 265,674 $ 2,853,082
========== ============ ========== ============
Repurchases:
Class A........................... (1,824,724) $(19,372,486) (1,888,033) $(20,267,308)
Class B........................... (187,352) (2,015,432) (524,704) (5,674,515)
Class C........................... (200,521) (2,127,583) (432,719) (4,629,779)
Class I........................... (7,439) (78,922) (551) (5,909)
---------- ------------ ---------- ------------
Total Repurchases................... (2,220,036) $(23,594,423) (2,846,007) $(30,577,511)
========== ============ ========== ============
</Table>
4. REDEMPTION FEE
The Fund will assess a 2% redemption fee on the proceeds of Fund shares that are
redeemed (either by sale or exchange) within seven days of purchase. The
redemption fee is paid directly to the Fund. For the six months ended March 31,
2006, the fund received redemption fees of $14, which are reported as part of
"Cost of Shares Repurchased" on the Statement of Changes in Net Assets.
5. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $6,910,775 and $15,598,671 respectively.
6. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund may use derivative instruments for a variety of reasons, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio or generate potential gain. All of the Fund's portfolio holdings,
including derivative instruments, are marked to market each day with the change
in value reflected in the unrealized appreciation/depreciation. Upon
disposition, a realized gain or loss is recognized accordingly, except when
taking delivery of a security underlying a futures contract. In this instance,
the
28
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
recognition of gain or loss is postponed until the disposal of the security
underlying the futures contract. Risk may arise as a result of the potential
inability of the counterparties to meet the terms of their contracts.
During the period, the Fund invested in futures contracts, a type of
derivative. A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The Fund
generally invests in exchange traded futures contracts on U.S. Treasury
Securities and typically closes the contract prior to delivery date. These
contracts are generally used to manage the Fund's effective maturity and
duration. Upon entering into futures contracts, the Fund maintains, an amount of
cash or liquid securities with a value equal to a percentage of the contract
amount with either a futures commission merchant pursuant to rules and
regulations promulgated in the 1940 Act, as amended, or with its custodian in an
account in the broker's name. This amount is known as initial margin. During the
period the futures contract is open, payments are received from or made to the
broker based upon changes in the value of the contract (the variation margin).
The risk of loss associated with a futures contract is in excess of the
variation margin reflected on the Statement of Assets and Liabilities.
Transactions in futures contracts for the six months ended March 31, 2006,
were as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at September 30, 2005........................... 161
Futures Opened.............................................. 243
Futures Closed.............................................. (339)
----
Outstanding at March 31, 2006............................... 65
====
</Table>
7. DISTRIBUTION AND SERVICE PLANS
Shares of the Fund are distributed by Van Kampen Funds Inc. (the "Distributor"),
an affiliate of the Adviser. The Fund has adopted a distribution plan pursuant
to Rule 12b-1 under the 1940 Act, as amended, and a service plan (collectively,
the "Plans") for Class A Shares, Class B Shares and Class C Shares to compensate
the Distributor for the sale, distribution, shareholder servicing and
maintenance of shareholder accounts for these shares. Under the Plans, the Fund
will incur annual fees of up to .25% of Class A average daily net assets and up
to 1.00% each of Class B and Class C average daily net assets. These fees are
accrued daily and paid to the Distributor monthly.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed receivable") was approximately $0 and $5,000 for Class
B and Class C Shares, respectively. These amounts may be recovered from future
payments under the distribution plan or CDSC. To the extent the unreimbursed
receivable has been fully recovered, the distribution fee is reduced.
8. LEGAL MATTERS
The Adviser, certain affiliates of the Adviser, and certain investment companies
advised by the Adviser or its affiliates, including the Fund, are named as
defendants in a number of similar class action complaints which were
consolidated. The consolidated action also names as defendants certain
individual Trustees and Directors of certain investment companies advised by
affiliates of the Adviser; the complaint does not, however, name the individual
Trustees of any Van Kampen funds. The consolidated amended complaint generally
alleges that
29
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
defendants violated their statutory disclosure obligations and fiduciary duties
by failing properly to disclose (i) that the Adviser and certain affiliates of
the Adviser allegedly offered economic incentives to brokers and others to steer
investors to the funds advised by the Adviser or its affiliates rather than
funds managed by other companies, and (ii) that the funds advised by the Adviser
or its affiliates, including the Fund, allegedly paid excessive commissions to
brokers in return for their alleged efforts to steer investors to these funds.
The complaint seeks, among other things, unspecified compensatory damages,
rescissionary damages, fees and costs. Plaintiffs filed a Motion for Leave to
file a Supplemental Pleading that would, among other things, expand the
allegations and alleged class. The defendants moved to dismiss this action,
which motion was granted in its entirety. Additionally, plaintiffs' Motion for
Leave to file a Supplemental Pleading was denied. This matter is now concluded.
The Adviser and certain affiliates of the Adviser are also named as
defendants in a derivative suit which additionally names as defendants certain
individual Trustees of certain Van Kampen funds; the named investment companies,
including the Fund, are listed as nominal defendants. The complaint alleges that
defendants caused the Van Kampen funds to pay economic incentives to a
proprietary sales force to promote the sale of proprietary mutual funds. The
complaint also alleges that the Van Kampen funds paid excessive commissions to
Morgan Stanley and its affiliates in connection with the sales of the funds. The
complaint seeks, among other things, the removal of the current Trustees of the
funds, rescission of the management contracts for the funds, disgorgement of
profits by Morgan Stanley and its affiliates and monetary damages. This
complaint has been coordinated with the consolidated complaint described in the
preceding paragraph. Plaintiff sought leave to file a second amended derivative
complaint that alleges that the Adviser permitted or recklessly disregarded
market timing and late trading in its proprietary mutual funds in order to
increase assets under management and fees. However, pursuant to an agreement
between the parties, the plaintiff's proposed second amended derivative
complaint was withdrawn and the allegations regarding market timing and late
trading asserted therein were filed in a separate complaint and coordinated with
other cases related to market timing that have been centralized in a federal
court. Additionally, plaintiff's initial complaint regarding allegations of
economic incentives was stayed pending certain procedural developments.
The defendants have moved to dismiss each of these actions and otherwise
intend to defend them vigorously. Defendants' motion to dismiss in the market
timing litigation was granted in part and denied in part, and defendants filed a
motion for reconsideration of the Court's decision to uphold certain of the
plaintiff's claims. Additionally, plaintiff and the named Trustees entered into
a tolling agreement. The tolling agreement dismisses the Trustees from the
action without prejudice in exchange for tolling all claims against the
Trustees.
While the defendants believe that they have meritorious defenses, the
ultimate outcome of these matters is not presently determinable, and no
provision has been made in the Fund's financial statements for the effect, if
any, of these matters.
9. INDEMNIFICATIONS
The Fund enters into contracts that contain a variety of indemnifications. The
Fund's maximum exposure under these arrangements is unknown. However, the Fund
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
30
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
BOARD OF TRUSTEES, OFFICERS AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
JACK E. NELSON
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
OFFICERS
RONALD E. ROBISON
President and Principal Executive Officer
J. DAVID GERMANY
Vice President
DENNIS SHEA
Vice President
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
PHILLIP G. GOFF
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1221 Avenue of the Americas
New York, New York 10020
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 947
Jersey City, New Jersey 07303-0947
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
One Lincoln Street
Boston, Massachusetts 02111
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, Illinois 60606
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
31
Van Kampen Intermediate Term Municipal Income Fund
An Important Notice Concerning Our U.S. Privacy Policy
We are required by federal law to provide you with a copy of our Privacy
Policy annually.
The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors
Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van
Kampen Exchange Corp., as well as current and former individual investors in
Van Kampen mutual funds, unit investment trusts, and related companies.
This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised
by us. This Policy is, however, applicable to individuals who select us to
be a custodian of securities or assets in individual retirement accounts,
401(k) accounts, 529 Educational Savings Accounts, accounts subject to the
Uniform Gifts to Minors Act, or similar accounts.
Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
WE RESPECT YOUR PRIVACY
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we
help you achieve your financial objectives. This Policy describes what
non-public personal information we collect about you, why we collect it, and
when we may share it with others.
We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies
you or your accounts as "personal information."
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
To serve you better and manage our business, it is important that we collect
and maintain accurate information about you. We may obtain this information
from applications and other forms you submit to us, from your dealings with
us, from consumer reporting agencies, from our Web sites and from third
parties and other sources.
(continued on next page)
Van Kampen Intermediate Term Municipal Income Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
For example:
-- We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.
-- We may obtain information about account balances, your use of
account(s) and the types of products and services you prefer to receive
from us through your dealings and transactions with us and other
sources.
-- We may obtain information about your creditworthiness and credit
history from consumer reporting agencies.
-- We may collect background information from and through third-party
vendors to verify representations you have made and to comply with
various regulatory requirements.
-- If you interact with us through our public and private Web sites, we
may collect information that you provide directly through online
communications (such as an e-mail address). We may also collect
information about your Internet service provider, your domain name,
your computer's operating system and Web browser, your use of our Web
sites and your product and service preferences, through the use of
"cookies." "Cookies" recognize your computer each time you return to
one of our sites, and help to improve our sites' content and
personalize your experience on our sites by, for example, suggesting
offerings that may interest you. Please consult the Terms of Use of
these sites for more details on our use of cookies.
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
To provide you with the products and services you request, to serve you
better and to manage our business, we may disclose personal information we
collect about you to our affiliated companies and to non-affiliated third
parties as required or permitted by law.
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise
required or permitted by law.
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except
to enable them to provide services on our behalf, to perform joint marketing
agreements with
(continued on back)
Van Kampen Intermediate Term Municipal Income Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
other financial institutions, or as otherwise required or permitted by law.
For example, some instances where we may disclose information about you to
non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against
fraud, for institutional risk control, to respond to judicial process or to
perform services on our behalf. When we share personal information with
these companies, they are required to limit their use of personal
information to the particular purpose for which it was shared and they are
not allowed to share personal information with others except to fulfill that
limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL
INFORMATION WE COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties
that provide support or marketing services on our behalf may also receive
personal information, and we require them to adhere to confidentiality
standards with respect to such information.
Van Kampen Funds Inc.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2006 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC.
138, 338, 538
INF SAR 5/06
(VAN KAMPEN INVESTMENTS SHINE LOGO) RN06-01255P-Y03/06
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen New
York Tax Free Income Fund performed during the semiannual period. The
portfolio management team will provide an overview of the market
conditions and discuss some of the factors that affected investment
performance during the reporting period. In addition, this report
includes the fund's financial statements and a list of fund investments
as of March 31, 2006.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS FOR THE
FUND BEING OFFERED. THE PROSPECTUS CONTAINS INFORMATION ABOUT THE FUND,
INCLUDING THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES. PLEASE
READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT A MUTUAL FUND WILL ACHIEVE ITS
INVESTMENT OBJECTIVE. FUNDS ARE SUBJECT TO MARKET RISK, WHICH IS THE
POSSIBILITY THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL
DECLINE AND THAT THE VALUE OF FUND SHARES MAY THEREFORE BE LESS THAN WHAT
YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS
FUND.
INCOME MAY SUBJECT CERTAIN INDIVIDUALS TO THE FEDERAL ALTERNATIVE MINIMUM
TAX (AMT).
<Table>
<Caption>
---------------------------------------------------------------------------------------
NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
---------------------------------------------------------------------------------------
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
---------------------------------------------------------------------------------------
</Table>
Performance Summary as of 3/31/2006
<Table>
<Caption>
A SHARES B SHARES C SHARES
7/29/94 7/29/94 7/29/94
- --------------------------------------------------------------------------------------------
W/MAX W/MAX W/MAX
4.75% 4.00% 1.00%
AVERAGE ANNUAL W/O SALES SALES W/O SALES SALES W/O SALES SALES
TOTAL RETURNS CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE
Since Inception 6.29% 5.85% 5.82% 5.82% 5.63% 5.63%
10-year 6.21 5.70 5.66 5.66 5.42 5.42
5-year 5.52 4.49 4.72 4.47 4.72 4.72
1-year 5.01 0.01 4.10 0.15 4.04 3.05
6-month 1.36 -3.45 0.98 -2.92 0.92 -0.06
- --------------------------------------------------------------------------------------------
30-Day SEC Yield 3.17% 3.64% 3.64%
- --------------------------------------------------------------------------------------------
30-Day SEC Unsubsidized
Yield 3.08% 3.16% 3.16%
</Table>
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS AND
PRINCIPAL VALUE WILL FLUCTUATE AND FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
The returns shown in this report do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
Performance of share classes will vary due to differences in sales charges and
expenses. Average annual total return with sales charges includes payment of the
maximum sales charge of 4.75 percent for Class A shares, a contingent deferred
sales charge of 4.00 percent for Class B shares (in year one and declining to
zero after year six), a contingent deferred sales charge of 1.00 percent for
Class C shares in year one and combined Rule 12b-1 fees and service fees of up
to 0.25 percent for Class A shares and up to 1.00 percent for Class B and C
shares. The since inception and 10-year returns for Class B shares reflect its
conversion into Class A shares seven years after purchase. The since inception
returns for Class C shares reflects the conversion of Class C shares into Class
A shares ten years after purchase. Figures shown above assume reinvestment of
all dividends and capital gains. The fund's adviser has waived or reimbursed
fees and expenses from time to time; absent such waivers/reimbursements the
fund's returns would have been lower. SEC yield is a calculation for determining
the amount of portfolio income, excluding non-income items as prescribed by the
SEC. The unsubsidized SEC yields reflect some or all of the expenses that the
adviser had voluntarily waived. Yields are subject to change.
The Lehman Brothers Municipal Bond Index is generally representative of
investment-grade, tax-exempt bonds. The Lehman Brothers NY Municipal Bond Index
tracks the performance of NY issued municipal bonds rated at least Baa or BBB by
Moody's Investors Service, Inc. or Standard & Poor's Corporation, respectively
and with maturities of 2 years or greater. Indexes do not include any expenses,
fees or sales charges, which would lower performance. Indexes are unmanaged and
should not be considered an investment. It is not possible to invest directly in
an index. Source for index performance: Lipper, Inc.
1
Fund Report
FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 2006
MARKET CONDITIONS
Despite the shadow of rising oil prices, the devastation of the Gulf Coast
hurricanes, and emerging weakness in the housing market, the economy continued
to grow during the six-month period ended March 31, 2006. This expansion was
more modest in the fourth quarter of 2005, but gained considerable momentum in
the first quarter of 2006.
Against the backdrop of growth and good employment data, the Federal Open Market
Committee (the "Fed") continued raising the federal funds target rate during the
period, implementing four additional increases of 25 basis points each. The
final hike of the period represented the fifteenth consecutive increase -- the
longest stretch of increases in 25 years. As the period came to a close, market
observers speculated about the Fed's near-term intentions, given the central
bank's view that although longer-term inflation appeared contained, commodity
prices could amplify inflationary pressures.
Returns across the municipal bond market varied significantly. As investors
sought income opportunities, lower rated bonds outpaced investment-grade bonds
by a wide margin. Long-term bonds earned the best returns, broadly speaking,
while bonds in the three-to-seven year range posted the most muted gains.
Municipal bond issuance was robust during the final months of 2005. (In fact,
2005 marked a record high for municipal bond volume.) The tide changed in the
first quarter of 2006, however. As rising rates discouraged issuers from
refinancing debt, national municipal issuance dropped versus the same period a
year ago. While supply ebbed, the market's appetite for municipal bonds remained
strong, with particularly heavy demand from high yield municipal bond funds.
Although slowing refunding activity in 2006 contributed to a drop in issuance
that was in line with national trends, New York remained a leading issuer of
municipal bonds during the period. The state enjoys a good, stable credit
outlook, thanks to ongoing economic and fiscal improvements. The securities and
tourism industries count among the state's bright spots, as does the real estate
market. Manufacturing activity, especially in upstate New York, remains a
notable pocket of economic weakness.
2
PERFORMANCE ANALYSIS
The fund returned 1.36 percent for the six months ended March 31, 2006 (Class A
shares, unadjusted for sales charges). In comparison, the fund's benchmarks, the
Lehman Brothers Municipal Bond Index, returned 0.98 percent and the Lehman
Brothers NY Municipal Bond Index returned 1.03 percent for the period.
TOTAL RETURN FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 2006
<Table>
<Caption>
- ----------------------------------------------------------------------------------------
LEHMAN BROTHERS LEHMAN BROTHERS
CLASS A CLASS B CLASS C MUNICIPAL BOND INDEX NY MUNICIPAL BOND INDEX
1.36% 0.98% 0.92% 0.98% 1.03%
- ----------------------------------------------------------------------------------------
</Table>
The performance for the three share classes varies because each has different
expenses. The fund's total return figures assume the reinvestment of all
distributions, but do not reflect the deduction of any applicable sales charges.
Such costs would lower performance. Past performance is no guarantee of future
results. See Performance Summary for standardized performance information and
index definitions.
Throughout the period, we managed the fund according to a long-term "buy and
hold" discipline anchored by rigorous research. We sought high quality bonds
with attractive return potential and good liquidity. (Liquid securities are
those for which there is a robust market of purchasers and sellers.)
We sought opportunities to enhance the fund's yield, adding AA rated housing
bonds and BBB rated tobacco revenue bonds. Our decision to increase tobacco bond
exposure reflected our analytical findings of strong tobacco industry
fundamentals and an improving litigation environment.
The fund also benefited from its emphasis on bonds with long maturities, as this
segment of the market performed most strongly. Our purchases favored bonds with
maturities of 25 to 40 years. In contrast, we sold intermediate- and short-term
bonds with maturities of 15 years and less. Based on the view that interest
rates would continue to rise, with longer-term rates advancing less rapidly, we
kept the fund's duration shorter than its benchmark. (Duration is a measure of
interest rate sensitivity.) This posture proved advantageous during the period.
The fund's portfolio was well-diversified across the major sectors of the
municipal bond market. As of the close of the period, the fund's largest
allocations were to the general purpose, hospital, student housing, tobacco and
higher education sectors.
Consistent with our quality-driven approach, 94 percent of bonds in the
portfolio carried investment-grade ratings of BBB or higher at the close of the
period, while 63 percent were rated AA or higher.
There is no guarantee that any sectors mentioned will continue to perform as
discussed herein or that securities in such sectors will be held by the fund in
the future.
3
<Table>
<Caption>
RATINGS ALLOCATIONS AS OF 3/31/06
AAA/Aaa 41.9%
AA/Aa 20.9
A/A 17.1
BBB/Baa 14.2
BB/Ba 2.6
B/B 0.5
NR 2.8
<Caption>
TOP 5 SECTORS AS OF 3/31/06
General Purpose 17.6%
Hospital 14.3
Student Housing 8.6
Tobacco-Master Settlement 7.9
Higher Education 7.1
</Table>
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the sectors shown above. Sectors are as a percentage of long-term
investments. Ratings are as a percentage of total investments. Securities are
classified by sectors that represent broad groupings of related industries. Van
Kampen is a wholly owned subsidiary of a global securities firm which is engaged
in a wide range of financial services including, for example, securities trading
and brokerage activities, investment banking, research and analysis, financing
and financial advisory services. Rating allocations based upon ratings as issued
by Standard and Poor's and Moody's, respectively.
4
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
Each Van Kampen fund provides a complete schedule of portfolio holdings
in its semiannual and annual reports within 60 days of the end of the
fund's second and fourth fiscal quarters by filing the schedule
electronically with the Securities and Exchange Commission (SEC). The
semiannual reports are filed on Form N-CSRS and the annual reports are
filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
reports to fund shareholders, and makes these reports available on its
public Web site, www.vankampen.com. In addition to the semiannual and
annual reports that Van Kampen delivers to shareholders and makes
available through the Van Kampen public Web site, each fund files a
complete schedule of portfolio holdings with the SEC for the fund's first
and third fiscal quarters on Form N-Q. Van Kampen does not deliver the
reports for the first and third fiscal quarters to shareholders, nor are
the reports posted to the Van Kampen public Web site. You may, however,
obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS
filings) by accessing the SEC's Web site, http://www.sec.gov. You may
also review and copy them at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the SEC's Public
Reference Room may be obtained by calling the SEC at (800) SEC-0330. You
can also request copies of these materials, upon payment of a duplicating
fee, by electronic request at the SEC's e-mail address
(publicinfo@sec.gov) or by writing the Public Reference section of the
SEC, Washington, DC 20549-0102.
You may obtain copies of a fund's fiscal quarter filings by contacting
Van Kampen Client Relations at (800) 847-2424.
5
HOUSEHOLDING NOTICE
To reduce fund expenses, the fund attempts to eliminate duplicate
mailings to the same address. The fund delivers a single copy of certain
shareholder documents to investors who share an address, even if the
accounts are registered under different names. The fund's prospectuses
and shareholder reports (including annual privacy notices) will be
delivered to you in this manner indefinitely unless you instruct us
otherwise. You can request multiple copies of these documents by either
calling (800) 341-2911 or writing to Van Kampen Investor Services at 1
Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, IL 60181. Once Investor
Services has received your instructions, we will begin sending individual
copies for each account within 30 days.
PROXY VOTING POLICY AND PROCEDURES AND PROXY VOTING RECORD
You may obtain a copy of the fund's Proxy Voting Policy and Procedures
without charge, upon request, by calling toll free (800) 847-2424 or by
visiting our Web site at www.vankampen.com. It is also available on the
Securities and Exchange Commission's Web site at http://www.sec.gov.
You may obtain information regarding how the fund voted proxies relating
to portfolio securities during the most recent twelve-month period ended
June 30 without charge by visiting our Web site at www.vankampen.com.
This information is also available on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
6
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments of Class A Shares
and contingent deferred sales charge on redemptions of Class B and Class C
Shares; and (2) ongoing costs, including management fees; distribution and
service (12b-1) fees; and other Fund expenses. This example is intended to help
you understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period 10/1/05 - 3/31/06.
ACTUAL EXPENSE
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing cost of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or contingent deferred sales charges. Therefore, the second line
of the table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
--------------------------------------------------
10/1/05 3/31/06 10/1/05-3/31/06
Class A
Actual.................................... $1,000.00 $1,013.61 $3.66
Hypothetical.............................. 1,000.00 1,021.33 3.68
(5% annual return before expenses)
Class B
Actual.................................... 1,000.00 1,009.79 7.37
Hypothetical.............................. 1,000.00 1,017.63 7.39
(5% annual return before expenses)
Class C
Actual.................................... 1,000.00 1,009.16 7.36
Hypothetical.............................. 1,000.00 1,017.63 7.39
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 0.73%, 1.47%,
and 1.47% for Class A, B and C Shares, respectively, multiplied by the
average account value over the period, multiplied by 182/365 (to reflect the
one-half year period). These ratios reflect an expense waiver.
Assumes all dividends and distributions were reinvested.
7
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED)
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
MUNICIPAL BONDS 98.7%
NEW YORK 97.8%
$1,290 Albany Cnty, NY Indl Dev Agy Indl Dev Rev
Albany College of Pharmacy Ser A.......... 5.625% 12/01/34 $ 1,350,669
330 Bethlehem, NY Indl Dev Agy Sr Hsg Rev Van
Allen Proj Ser A.......................... 6.875 06/01/39 329,957
1,250 Erie Cnty, NY Indl Dev Agy Sch Fac Rev
City of Buffalo Proj (FSA Insd)........... 5.750 05/01/21 1,368,662
1,250 Erie Cnty, NY Indl Dev Agy Sch Fac Rev
City of Buffalo Proj (FSA Insd)........... 5.750 05/01/22 1,368,662
1,000 Erie Cnty, NY Tob Asset Sec Corp Ser A.... 5.000 06/01/45 951,410
1,250 Hempstead Town, NY Indl Dev Adelphi Univ
Civic Fac................................. 5.750 06/01/22 1,360,950
1,530 Hempstead Town, NY Indl Dev Adelphi Univ
Civic Fac................................. 5.000 10/01/35 1,565,435
1,290 Islip, NY Res Recovery Agy Res 1985 Fac
Ser E (AMT) (FSA Insd).................... 5.750 07/01/22 1,415,027
1,000 Livingston Cnty, NY Indl Dev Agy Civic Fac
Rev Nicholas H Noyes Mem Hosp............. 6.000 07/01/30 1,043,210
1,500 Long Island Pwr Auth NY Elec Sys Rev Gen
Ser B..................................... 5.000 12/01/35 1,550,040
2,000 Long Island Pwr Auth NY Elec Sys Rev Gen
Ser C..................................... 5.500 09/01/19 2,163,480
1,000 Metropolitan Trans Auth NY Rev Ser A Rfdg
(AMBAC Insd).............................. 5.500 11/15/19 1,091,320
1,000 Metropolitan Trans Auth NY Svc Contract
Ser A Rfdg................................ 5.125 01/01/29 1,047,180
1,000 Monroe Cnty, NY Indl Dev Agy Nazareth
College Rochester Proj (MBIA Insd)........ 5.250 10/01/21 1,068,140
1,320 Montgomery Cnty, NY Indl Dev Agy Lease HFM
Boces Ser A (XLCA Insd)................... 5.000 07/01/34 1,361,303
2,425 New York City Fiscal 2003 Ser I........... 5.750 03/01/15 2,658,721
1,500 New York City Hlth & Hosp Corp Rev Hlth
Sys Ser A (FSA Insd)...................... 5.500 02/15/18 1,620,795
1,000 New York City Hlth & Hosp Corp Rev Hlth
Sys Ser A (FSA Insd)...................... 5.500 02/15/19 1,080,530
1,000 New York City Hsg Dev Corp Multi-Family
Rev Hsg Ser J1............................ 4.850 05/01/36 1,007,970
2,500 New York City Hsg Dev Corp Multi-Family
Rev Hsg Ser L (AMT)....................... 5.050 11/01/39 2,522,025
1,000 New York City Hsg Dev Corp Ser A (AMT).... 5.500 11/01/34 1,028,810
465 New York City Indl Dev Agy Civic Fac Rev
Cmnty Res Developmentally Disabled........ 7.500 08/01/26 475,746
500 New York City Indl Dev Agy Civic Fac Rev
College of New Rochelle Proj.............. 5.750 09/01/17 519,290
500 New York City Indl Dev Agy Civic Fac Rev
YMCA Greater NY Proj...................... 6.000 08/01/07 514,680
</Table>
8 See Notes to Financial Statements
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$1,405 New York City Indl Dev Agy Fac Rev Royal
Charter-NY Presbyterian (FSA Insd)........ 5.375% 12/15/16 $ 1,533,080
1,000 New York City Indl Dev Agy Fac Spl Fac Rev
Rols RR II (Inverse Floating Rate) (AMT)
(Acquired 12/09/05, Cost $1,114,880)
(a)....................................... 7.521 01/01/19 1,132,720
500 New York City Indl Dev Agy Rev Liberty 7
World Trade Ctr Ser A..................... 6.250 03/01/15 526,575
500 New York City Indl Dev Agy Rev Liberty 7
World Trade Ctr Ser A..................... 6.500 03/01/35 528,450
1,125 New York City Indl Dev Agy Rev Liberty
Iac/ Interactivecorp...................... 5.000 09/01/35 1,133,359
500 New York City Indl Dev Agy Spl Fac Rev
Amern Airl JFK Intl Arpt (AMT)............ 7.750 08/01/31 554,205
500 New York City Muni Wtr Fin Ser B (b)...... 6.000 06/15/33 546,350
2,500 New York City Ser A....................... 5.500 08/01/20 2,702,325
2,500 New York City Ser G....................... 5.000 08/01/24 2,603,350
2,390 New York City Ser G....................... 5.000 12/01/28 2,461,867
1,000 New York City Ser K....................... 5.000 08/01/24 1,039,640
1,000 New York City Transitional Cultural Res
Rev Amern Museum Nat History Ser A (MBIA
Insd)..................................... 5.000 07/01/44 1,029,350
1,000 New York City Transitional Fin Auth Rev
Future Tax Secd Ser A Rfdg (c)............ 5.500/14.000 11/01/26 1,078,820
1,500 New York City Transitional Fin Auth Rev
Future Tax Secd Ser C (AMBAC Insd)........ 5.250 08/01/21 1,603,725
1,000 New York City Transitional Fin Auth Rev
Future Tax Secd Ser D (MBIA Insd)......... 5.250 02/01/19 1,072,180
1,540 New York City Transitional Future Tax Secd
Ser B..................................... 5.500 02/01/15 1,658,226
2,475 New York Cnty Tob Tr IV Settlement Pass
Thru Ser A................................ 5.000 06/01/45 2,354,740
1,060 New York St Dorm Auth Lease Rev Master
Boces Pgm (FSA Insd) (d).................. 5.250 08/15/22 1,134,391
1,500 New York St Dorm Auth Lease Rev Muni Hlth
Fac Impt Pgm Ser 1 (FSA Insd)............. 5.500 01/15/14 1,608,270
2,000 New York St Dorm Auth Rev Catholic Hlth
L.I. Oblig Grp............................ 5.000 07/01/27 2,011,260
1,000 New York St Dorm Auth Rev City Univ Cons
Third Ser 1 (FGIC Insd)................... 5.250 07/01/25 1,049,590
1,230 New York St Dorm Auth Rev City Univ Ser D
Rfdg (FSA Insd)........................... 5.750 07/01/12 1,330,393
650 New York St Dorm Auth Rev City Univ Sys
Cons Ser A................................ 5.625 07/01/16 719,888
1,000 New York St Dorm Auth Rev City Univ Sys
Cons Ser B................................ 6.000 07/01/14 1,101,260
1,890 New York St Dorm Auth Rev Dept Ed (d)..... 5.250 07/01/21 2,008,749
</Table>
See Notes to Financial Statements 9
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$2,000 New York St Dorm Auth Rev FHA Montefiore
Hosp (FGIC Insd).......................... 5.000% 08/01/33 $ 2,068,420
1,000 New York St Dorm Auth Rev Insd Brooklyn
Law Sch Ser B (XLCA Insd)................. 5.375 07/01/23 1,077,250
1,055 New York St Dorm Auth Rev Insd NY St Rehab
Assn Ser A (AMBAC Insd) (d)............... 5.500 07/01/13 1,153,178
1,040 New York St Dorm Auth Rev Insd NY St Rehab
Assn Ser A (AMBAC Insd) (d)............... 5.500 07/01/15 1,131,593
1,000 New York St Dorm Auth Rev Insd NY Univ Ser
2 (AMBAC Insd)............................ 5.000 07/01/41 1,020,030
415 New York St Dorm Auth Rev Mental Hlth Svc
Ser B (MBIA Insd)......................... 5.250 08/15/31 433,874
1,200 New York St Dorm Auth Rev Miriam Osborn
Mem Home Ser B (ACA Insd)................. 6.375 07/01/29 1,303,968
2,000 New York St Dorm Auth Rev Non St Supported
Debt Mt Sinai NYU Hlth Ser C.............. 5.500 07/01/26 2,024,900
1,250 New York St Dorm Auth Rev Non St Supported
Debt Mtg Hosp Spl Surgery (FHA Gtd)....... 5.000 08/15/29 1,303,137
2,000 New York St Dorm Auth Rev Non St Supported
Debt Providence Rest (ACA Insd)........... 5.250 07/01/25 2,094,600
750 New York St Dorm Auth Rev Nursing Home
Menorah Campus (FHA Gtd).................. 5.950 02/01/17 779,145
1,000 New York St Dorm Auth Rev Sch Dist Fin Pgm
Ser D (MBIA Insd)......................... 5.500 10/01/17 1,090,190
1,000 New York St Dorm Auth Rev Secd Hosp North
Gen Hosp Rfdg (MBIA Insd)................. 5.750 02/15/17 1,104,510
1,000 New York St Dorm Auth Rev Secd Hosp North
Gen Hosp Rfdg............................. 5.750 02/15/18 1,090,710
1,000 New York St Dorm Auth Rev St Univ Ed Fac
1989 Res (MBIA Insd)...................... 6.000 05/15/15 1,094,130
500 New York St Energy Resh & Dev Auth Gas Fac
Rev Brooklyn Union Gas Ser B (Inverse
Floating Rate) (AMT)...................... 10.264 07/01/26 526,975
1,000 New York St Environ Fac Corp St Clean Wtr
& Drinking Revolving Fd Pooled Fin Pgm
I......................................... 5.250 09/15/19 1,074,420
2,500 New York St Environ Fac Corp St Clean Wtr
& Drinking Revolving Fds.................. 5.000 06/15/21 2,621,500
1,250 New York St Hsg Fin Agy St Econ Dev Hsg
Ser A (FGIC Insd)......................... 5.000 09/15/34 1,296,375
1,425 New York St Hsg Fin Agy St Personal Income
Tax Rev Econ Dev & Hsg Ser A.............. 5.000 09/15/23 1,496,720
2,280 New York St Loc Govt Assist Corp Ser E
Rfdg...................................... 6.000 04/01/14 2,587,070
</Table>
10 See Notes to Financial Statements
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$2,000 New York St Mtg Agy Rev Homeowner Mtg Ser
130 (AMT)................................. 4.800% 10/01/37 $ 2,000,720
700 New York St Mtg Agy Rev Ser 82 (AMT)...... 5.650 04/01/30 705,313
995 New York St Mtg Agy Rev Ser 101 (AMT)..... 5.400 04/01/32 1,020,611
460 New York St Twy Auth Svc Contract Rev Loc
Hwy & Brdg................................ 5.500 04/01/16 498,474
500 New York St Urban Dev Corp Rev
Correctional Fac Ser A Rfdg............... 5.500 01/01/14 538,235
220 Oneida Cnty, NY Indl Dev Agy Civic Fac
Saint Elizabeth Med Ser A................. 5.875 12/01/29 225,749
100 Port Auth NY & NJ Spl Oblig (AMT)......... 7.000 10/01/07 102,077
1,000 Rensselaer Cnty, NY Indl Dev Agy Indl Dev
Rev Franciscan Heights LP Proj Ser A (AMT)
(LOC: JP Morgan Chase).................... 5.375 12/01/36 1,043,550
1,000 Rockland Cnty, NY Solid Waste Ser B (AMT)
(AMBAC Insd).............................. 5.000 12/15/23 1,031,860
825 Suffolk Cnty, NY Indl Dev Agy Civic Fac
Rev Family Svc League Suffolk Cnty (LOC:
Fleet National)........................... 5.000 11/01/34 845,625
80 Syracuse, NY Hsg Auth Rev Sub Proj Loretto
Rest Ser B................................ 7.500 08/01/10 80,754
250 Syracuse, NY Indl Dev Agy Rev First Mtg
Jewish Home Ser A......................... 7.375 03/01/21 268,625
2,000 Tobacco Settlement Fin Corp NY Ser C-1.... 5.500 06/01/22 2,157,420
2,000 Triborough Brdg & Tunl Auth NY Rev Gen
Purp Ser A................................ 5.250 01/01/18 2,137,220
325 Triborough Brdg & Tunl Auth NY Rev Gen
Purp Ser A................................ 5.000 01/01/32 332,716
1,590 Tsasc Inc. NY Ser 1....................... 5.000 06/01/34 1,546,577
2,500 Tsasc Inc. NY Ser 1....................... 5.125 06/01/42 2,431,675
1,000 Ulster Cnty, NY Res Recovery Agy Solid
Waste Sys Rev Rfdg (AMBAC Insd)........... 5.250 03/01/18 1,060,890
1,000 Upper Mohawk Vly Regl Wtr Fin Auth NY Wtr
Sys Rev (AMBAC Insd)...................... 5.750 04/01/20 1,084,210
310 Utica, NY Indl Dev Agy Civic Fac Rev Utica
College Proj Ser A........................ 5.750 08/01/28 313,103
1,000 Warren & Washington Cnty NY Indl Dev Agy
Civic Fac Rev Glens Falls Hosp Proj Ser A
(FSA Insd)................................ 5.000 12/01/35 1,030,420
500 Westchester Cnty, NY Indl Dev Agy Mtg
Kendal on Hudson Proj Ser A............... 6.375 01/01/24 532,010
2,000 Westchester Tob Asset Sec Corp NY......... 5.125 06/01/45 1,940,720
1,000 Western Nassau Cnty, NY Wtr Auth Wtr Sys
Rev (AMBAC Insd).......................... 5.000 05/01/26 1,045,630
</Table>
See Notes to Financial Statements 11
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$1,000 Yonkers, NY Indl Dev Agy Civic Fac Rev
Cmnty Dev Ppty Yonkers Inc Ser A
(Prerefunded @ 02/01/11).................. 6.625% 02/01/26 $ 1,129,820
------------
118,463,474
------------
U. S. VIRGIN ISLANDS 0.9%
1,000 Virgin Islands Pub Fin Auth Rev Gross Rcpt
Taxes Ln Nt Ser A......................... 6.375 10/01/19 1,102,250
------------
TOTAL LONG-TERM INVESTMENTS 98.7%
(Cost $116,193,804)........................................................ 119,565,724
SHORT-TERM INVESTMENT 0.4%
(Cost $400,000)............................................................ 400,000
------------
TOTAL INVESTMENTS 99.1%
(Cost $116,593,804)........................................................ 119,965,724
OTHER ASSETS IN EXCESS OF LIABILITIES 0.9%.................................. 1,145,831
------------
NET ASSETS 100.0%........................................................... $121,111,555
============
</Table>
Percentages are calculated as a percentage of net assets.
(a) These securities are restricted and may be resold only in transactions
exempt from registration which are normally those transactions with
qualified institutional buyers. Restricted securities comprise 0.94% of net
assets.
(b) All or a portion of this security has been physically segregated in
connection with open futures contracts.
(c) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(d) The Fund owns 100% of the outstanding bond issuance.
ACA -- American Capital Access
AMBAC -- AMBAC Indemnity Corp.
AMT -- Alternative Minimum Tax
FGIC -- Financial Guaranty Insurance Co.
FHA -- Federal Housing Administration
FSA -- Financial Security Assurance Inc.
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corp.
XLCA -- XL Capital Assurance Inc.
12 See Notes to Financial Statements
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2006 (UNAUDITED) continued
FUTURES CONTRACTS OUTSTANDING AS OF MARCH 31, 2006:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
--------- -------------
SHORT CONTRACTS:
U.S. Treasury Notes 5-Year Futures June 2006 (Current
Notional Value of $104,438 per contract).................. 139 $66,401
=== =======
</Table>
See Notes to Financial Statements 13
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
March 31, 2006 (Unaudited)
<Table>
ASSETS:
Total Investments (Cost $116,593,804)....................... $119,965,724
Cash........................................................ 50,960
Receivables:
Interest.................................................. 1,586,980
Investments Sold.......................................... 70,000
Fund Shares Sold.......................................... 68,842
Other....................................................... 88,339
------------
Total Assets............................................ 121,830,845
------------
LIABILITIES:
Payables:
Fund Shares Repurchased................................... 287,860
Income Distributions...................................... 108,520
Distributor and Affiliates................................ 79,668
Investment Advisory Fee................................... 22,630
Variation Margin on Futures............................... 6,516
Trustees' Deferred Compensation and Retirement Plans........ 138,432
Accrued Expenses............................................ 75,664
------------
Total Liabilities....................................... 719,290
------------
NET ASSETS.................................................. $121,111,555
============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $117,062,288
Net Unrealized Appreciation................................. 3,438,321
Accumulated Undistributed Net Investment Income............. 378,069
Accumulated Net Realized Gain............................... 232,877
------------
NET ASSETS.................................................. $121,111,555
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $72,375,361 and 4,455,087 shares of
beneficial interest issued and outstanding)............. $ 16.25
Maximum sales charge (4.75%* of offering price)......... .81
------------
Maximum offering price to public........................ $ 17.06
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $31,012,246 and 1,913,528 shares of
beneficial interest issued and outstanding)............. $ 16.21
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $17,723,948 and 1,092,472 shares of
beneficial interest issued and outstanding)............. $ 16.22
============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
14 See Notes to Financial Statements
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended March 31, 2006 (Unaudited)
<Table>
INVESTMENT INCOME:
Interest.................................................... $ 2,820,313
-----------
EXPENSES:
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $87,180, $163,063 and $88,807,
respectively)............................................. 339,050
Investment Advisory Fee..................................... 279,663
Shareholder Services........................................ 31,690
Legal....................................................... 21,260
Trustees' Fees and Related Expenses......................... 13,877
Custody..................................................... 9,814
Other....................................................... 73,647
-----------
Total Expenses.......................................... 769,001
Investment Advisory Fee Reduction....................... 148,757
Less Credits Earned on Cash Balances.................... 1,812
-----------
Net Expenses............................................ 618,432
-----------
NET INVESTMENT INCOME....................................... $ 2,201,881
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 96,993
Futures................................................... 488,659
-----------
Net Realized Gain........................................... 585,652
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 4,846,831
-----------
End of the Period:
Investments............................................. 3,371,920
Futures................................................. 66,401
-----------
3,438,321
-----------
Net Unrealized Depreciation During the Period............... (1,408,510)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $ (822,858)
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 1,379,023
===========
</Table>
See Notes to Financial Statements 15
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets (Unaudited)
<Table>
<Caption>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2006 SEPTEMBER 30, 2005
--------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................ $ 2,201,881 $ 4,216,652
Net Realized Gain.................................... 585,652 2,081,074
Net Unrealized Depreciation During the Period........ (1,408,510) (1,745,917)
------------ ------------
Change in Net Assets from Operations................. 1,379,023 4,551,809
------------ ------------
Distributions from Net Investment Income:
Class A Shares..................................... (1,344,646) (2,448,929)
Class B Shares..................................... (517,357) (1,124,558)
Class C Shares..................................... (281,478) (547,665)
------------ ------------
(2,143,481) (4,121,152)
------------ ------------
Distributions from Net Realized Gain:
Class A Shares..................................... (1,332,049) -0-
Class B Shares..................................... (632,017) -0-
Class C Shares..................................... (347,951) -0-
------------ ------------
(2,312,017) -0-
------------ ------------
Total Distributions.................................. (4,455,498) (4,121,152)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES......................................... (3,076,475) 430,657
------------ ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold............................ 12,037,744 20,984,248
Net Asset Value of Shares Issued Through Dividend
Reinvestment....................................... 3,269,351 2,899,167
Cost of Shares Repurchased........................... (10,921,400) (22,740,048)
------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS... 4,385,695 1,143,367
------------ ------------
TOTAL INCREASE IN NET ASSETS......................... 1,309,220 1,574,024
NET ASSETS:
Beginning of the Period.............................. 119,802,335 118,228,311
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of $378,069 and
$319,669, respectively)............................ $121,111,555 $119,802,335
============ ============
</Table>
16 See Notes to Financial Statements
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS A SHARES MARCH 31, -----------------------------------------------
2006 2005 2004 2003 2002 (a) 2001
--------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD......................... $16.67 $16.60 $16.40 $16.49 $15.76 $14.91
------ ------ ------ ------ ------ ------
Net Investment Income.......... .33 .64 .65 .69 .74 .73
Net Realized and Unrealized
Gain/Loss.................... (.11) .06 .17 (.10) .73 .88
------ ------ ------ ------ ------ ------
Total from Investment
Operations..................... .22 .70 .82 .59 1.47 1.61
------ ------ ------ ------ ------ ------
Less:
Distributions from Net
Investment Income............ .32 .63 .62 .68 .74 .76
Distributions from Net Realized
Gain......................... .32 -0- -0- -0- -0- -0-
------ ------ ------ ------ ------ ------
Total Distributions.............. .64 .63 .62 .68 .74 .76
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD......................... $16.25 $16.67 $16.60 $16.40 $16.49 $15.76
====== ====== ====== ====== ====== ======
Total Return* (b)................ 1.36%** 4.29% 5.13% 3.69% 9.63% 10.97%
Net Assets at End of the Period
(In millions).................. $ 72.4 $ 67.8 $ 62.2 $ 63.6 $ 47.5 $ 43.5
Ratio of Expenses to Average Net
Assets*........................ .73% .76% .76% .55% .38% .53%
Ratio of Net Investment Income to
Average Net Assets*............ 4.02% 3.87% 3.94% 4.19% 4.68% 4.74%
Portfolio Turnover............... 18%** 41% 15% 27% 43% 30%
* If certain expenses had not been voluntarily 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.................. .98% 1.01% 1.09% 1.06% 1.07% 1.13%
Ratio of Net Investment Income
to Average Net Assets....... 3.77% 3.62% 3.60% 3.68% 3.99% 4.14%
</Table>
** Non-Annualized
(a) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting discount on fixed income securities. The effect of this change for
the year ended September 30, 2002 was to increase net investment income per
share by less than $.01, decrease net realized and unrealized gains and
losses per share by less than $.01 and increase the ratio of net investment
income to average net assets by .01%. Per share, ratios and supplemental
data for periods prior to September 30, 2002 have not been restated to
reflect this change in presentation.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 4.75% or contingent deferred
sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be
imposed on certain redemptions made within eighteen months of purchase. If
the sales charges were included, total returns would be lower. These returns
include combined Rule 12b-1 fees and service fees of up to .25% and do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemptions of Fund shares.
See Notes to Financial Statements 17
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS B SHARES MARCH 31, -----------------------------------------------
2006 2005 2004 2003 2002 (a) 2001
--------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD......................... $16.63 $16.58 $16.38 $16.47 $15.74 $14.90
------ ------ ------ ------ ------ ------
Net Investment Income.......... .27 .52 .52 .56 .62 .62
Net Realized and Unrealized
Gain/Loss.................... (.11) .04 .18 (.09) .73 .86
------ ------ ------ ------ ------ ------
Total from Investment
Operations..................... .16 .56 .70 .47 1.35 1.48
------ ------ ------ ------ ------ ------
Less:
Distributions from Net
Investment Income............ .26 .51 .50 .56 .62 .64
Distributions from Net Realized
Gain......................... .32 -0- -0- -0- -0- -0-
------ ------ ------ ------ ------ ------
Total Distributions.............. .58 .51 .50 .56 .62 .64
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD......................... $16.21 $16.63 $16.58 $16.38 $16.47 $15.74
====== ====== ====== ====== ====== ======
Total Return* (b)................ .98%** 3.40% 4.36% 2.93% 8.83% 10.09%
Net Assets at End of the Period
(In millions).................. $ 31.0 $ 33.9 $ 38.6 $ 40.5 $ 40.5 $ 35.0
Ratio of Expenses to Average Net
Assets*........................ 1.47% 1.51% 1.51% 1.29% 1.13% 1.28%
Ratio of Net Investment Income to
Average Net Assets*............ 3.27% 3.12% 3.19% 3.45% 3.92% 3.99%
Portfolio Turnover............... 18%** 41% 15% 27% 43% 30%
* If certain expenses had not been voluntarily 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.................. 1.72% 1.76% 1.84% 1.80% 1.82% 1.88%
Ratio of Net Investment Income
to Average Net Assets....... 3.02% 2.87% 2.85% 2.94% 3.24% 3.39%
</Table>
** Non-Annualized
(a) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting discount on fixed income securities. The effect of this change for
the year ended September 30, 2002 was to increase net investment income per
share by less than $.01, decrease net realized and unrealized gains and
losses per share by less than $.01 and increase the ratio of net investment
income to average net assets by .01%. Per share, ratios and supplemental
data for periods prior to September 30, 2002 have not been restated to
reflect this change in presentation.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 4%, charged on certain redemptions
made within one year of purchase and declining to 0% after the sixth year.
If the sales charge was included, total returns would be lower. These
returns include combined Rule 12b-1 fees and service fees of up to 1% and do
not reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
18 See Notes to Financial Statements
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
CLASS C SHARES MARCH 31, --------------------------------------------
2006 2005 2004 2003 2002 (a) 2001
---------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD........................... $16.65 $16.59 $16.39 $16.48 $15.75 $14.91
------ ------ ------ ------ ------ ------
Net Investment Income............ .26 .52 .52 .56 .62 .60
Net Realized and Unrealized
Gain/Loss...................... (.11) .05 .18 (.09) .73 .88
------ ------ ------ ------ ------ ------
Total from Investment Operations... .15 .57 .70 .47 1.35 1.48
------ ------ ------ ------ ------ ------
Less:
Distributions from Net Investment
Income......................... .26 .51 .50 .56 .62 .64
Distributions from Net Realized
Gain........................... .32 -0- -0- -0- -0- -0-
------ ------ ------ ------ ------ ------
Total Distributions................ .58 .51 .50 .56 .62 .64
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD........................... $16.22 $16.65 $16.59 $16.39 $16.48 $15.75
====== ====== ====== ====== ====== ======
Total Return* (b).................. .92%**(d) 3.46%(d) 4.36% 2.92%(c) 8.83% 10.09%
Net Assets at End of the Period (In
millions)........................ $ 17.7 $ 18.1 $ 17.5 $ 17.7 $ 12.0 $ 7.3
Ratio of Expenses to Average Net
Assets*.......................... 1.47%(d) 1.47%(d) 1.51% 1.30% 1.13% 1.30%
Ratio of Net Investment Income to
Average Net Assets*.............. 3.27%(d) 3.14%(d) 3.19% 3.45%(c) 3.92% 3.97%
Portfolio Turnover................. 18%** 41% 15% 27% 43% 30%
* If certain expenses had not been voluntarily 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........................ 1.72%(d) 1.72%(d) 1.84% 1.81% 1.82% 1.90%
Ratio of Net Investment Income
to Average Net Assets......... 3.02%(d) 2.89%(d) 2.85% 2.94%(c) 3.23% 3.37%
</Table>
** Non-Annualized
(a) As required, effective October 1, 2001, the Fund has adopted the provisions
of the AICPA Audit and Accounting Guide for Investment Companies and began
accreting discount on fixed income securities. The effect of this change for
the year ended September 30, 2002 was to increase net investment income per
share by less than $.01, decrease net realized and unrealized gains and
losses per share by less than $.01 and increase the ratio of net investment
income to average net assets by .01%. Per share, ratios and supplemental
data for periods prior to September 30, 2002 have not been restated to
reflect this change in presentation.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 1% charged on certain redemptions
made within one year of purchase. If the sales charge was included, total
returns would be lower. These returns include combined Rule 12b-1 fees and
service fees of up to 1% and do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
(c) Certain non-recurring payments were made to Class C Shares, resulting in an
increase to the Total Return and Ratio of Net Investment Income to Average
Net Assets of .03%.
(d) The Total Return, Ratio of Expenses to Average Net Assets and Ratio of Net
Investment Income to Average Net Assets reflect actual 12b-1 fees of less
than 1% (See Footnote 7).
See Notes to Financial Statements 19
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen New York Tax Free Income Fund (the "Fund") is organized as a series
of the Van Kampen Tax Free Trust, a Delaware statutory trust, and is registered
as a non-diversified, open-end management investment company under the
Investment Company Act of 1940 (the "1940 Act"), as amended. The Fund's
investment objective is to seek to provide investors with a high level of
current income exempt from federal, New York State and New York City income
taxes, consistent with preservation of capital. The Fund seeks to achieve its
investment objective by investing at least 80% of its total assets in a
portfolio of New York municipal securities that are rated investment grade at
the time of purchase. The Fund commenced investment operations on July 29, 1994.
The Fund offers Class A Shares, Class B Shares, Class C Shares and Class I
Shares. Each class of shares differs by its initial sales load, contingent
deferred sales charges, the allocation of class-specific expenses and voting
rights on matters affecting a single class. As of March 31, 2006, there have
been no sales of Class I Shares.
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 U.S. 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 Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services or dealers are valued at
fair value using procedures established in good faith by the Board of Trustees.
Future contracts are valued at the settlement price established each day on the
exchange on which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Fund may purchase and sell securities on a "when-issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Fund will
segregate assets with the custodian having an aggregate value at least equal to
the amount of the when-issued or delayed delivery purchase commitments until
payment is made. At March 31, 2006, there were no when-issued or delayed
delivery purchase commitments.
C. INCOME AND EXPENSES Interest income is recorded on an accrual basis. Bond
premium is amortized and discount is accreted over the expected life of each
applicable security. Income and expenses of the Fund are allocated on a pro rata
basis to each class of shares, except for distribution and service fees and
incremental transfer agency costs which are unique to each class of shares.
20
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of Subchapter M 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. During the prior fiscal year, the Fund utilized capital losses carried
forward of $78,198.
At March 31, 2006, the cost and related gross unrealized appreciation and
depreciation are as follows:
<Table>
Cost of investments for tax purposes........................ $116,579,104
============
Gross tax unrealized appreciation........................... $ 3,515,253
Gross tax unrealized depreciation........................... (128,633)
------------
Net tax unrealized appreciation on investments.............. $ 3,386,620
============
</Table>
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains and gains on futures transactions. All
short-term capital gains and a portion of futures gains are included as ordinary
income for tax purposes.
The tax character of distributions paid during the year ended September 30,
2005 was as follows:
<Table>
Distributions paid from:
Ordinary income........................................... $384
Long-term capital gain.................................... -0-
----
$384
----
</Table>
As of September 30, 2005, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed ordinary income............................... $ 73,859
Undistributed long-term capital gain........................ $2,033,570
</Table>
F. EXPENSE REDUCTION During the six months ended March 31, 2006, the Fund's
custody fee was reduced by $1,812 as a result of credit earned on cash balances.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, Van Kampen Asset
Management (the "Adviser") will provide investment advice and facilities to the
Fund for an annual fee payable monthly as follows:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS % PER ANNUM
First $500 million.......................................... .470%
Over $500 million........................................... .445%
</Table>
21
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
For the six months ended March 31, 2006, the Adviser voluntarily waived
$148,757 of its investment advisory fees. This represents .25% of its average
net assets for the period. This waiver is voluntary and can be discontinued at
any time.
For the six months ended March 31, 2006, the Fund recognized expenses of
approximately $2,300, representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, counsel to the Fund, of which a trustee of the Fund
is a partner of such firm and he and his law firm provide legal services as
legal counsel to the Fund.
Under separate Legal Services, Accounting Services and Chief Compliance
Officer ("CCO") Employment agreements, the Adviser provides accounting and legal
services and the CCO provides compliance services to the Fund. The costs of
these services are allocated to each fund. For the six months ended March 31,
2006, the Fund recognized expenses of approximately $29,400, representing Van
Kampen Investments Inc.'s or its affiliates' (collectively "Van Kampen") cost of
providing accounting and legal services to the Fund, as well as, the salary,
benefits and related costs of the CCO and related support staff paid by Van
Kampen. Services provided pursuant to the Legal Services agreement are reported
as part of "Legal" expenses on the Statement of Operations. Services provided
pursuant to the Accounting Services and CCO Employment agreement are reported as
part of "Other" expenses on the Statement of Operations.
Van Kampen Investor Services Inc. (VKIS), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the six months ended
March 31, 2006, the Fund recognized expenses of approximately $24,800
representing transfer agency fees paid to VKIS. Transfer agency fees are
determined through negotiations with the Fund's Board of Trustees.
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 also
officers of Van Kampen.
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.
Amounts deferred are retained by the Fund and to the extent permitted by the
1940 Act, as amended, may be invested in the common shares of those funds
selected by the trustees. Investments in such funds of $68,492 are included in
"Other" assets on the Statement of Assets and Liabilities at March 31, 2006.
Appreciation/depreciation and distributions received from these investments are
recorded with an offsetting increase/decrease in the deferred compensation
obligation and do not affect the net asset value of the Fund. Benefits under the
retirement plan are payable upon retirement 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.
For the six months ended March 31, 2006, Van Kampen, as Distributor for the
Fund, received commissions on sales of the Fund's Class A Shares of
approximately $20,100 and CDSC on redeemed shares of approximately $22,900.
Sales charges do not represent expenses of the Fund.
22
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
3. CAPITAL TRANSACTIONS
For the six months ended March 31, 2006 and the year ended September 30, 2005,
transactions were as follows:
<Table>
<Caption>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 2006 SEPTEMBER 30, 2005
------------------------ --------------------------
SHARES VALUE SHARES VALUE
Sales:
Class A............................. 629,770 $ 10,342,645 948,370 $ 15,809,067
Class B............................. 48,336 792,642 104,295 1,729,569
Class C............................. 55,107 902,457 207,093 3,445,612
-------- ------------ ---------- ------------
Total Sales........................... 733,213 $ 12,037,744 1,259,758 $ 20,984,248
======== ============ ========== ============
Dividend Reinvestment:
Class A............................. 118,756 $ 1,938,812 103,277 $ 1,720,306
Class B............................. 53,484 870,821 46,953 780,802
Class C............................. 28,202 459,718 23,912 398,059
-------- ------------ ---------- ------------
Total Dividend Reinvestment........... 200,442 $ 3,269,351 174,142 $ 2,899,167
======== ============ ========== ============
Repurchases:
Class A............................. (360,824) $ (5,927,605) (731,919) $(12,170,713)
Class B............................. (227,695) (3,728,436) (437,927) (7,282,119)
Class C............................. (77,401) (1,265,359) (197,540) (3,287,216)
-------- ------------ ---------- ------------
Total Repurchases..................... (665,920) $(10,921,400) (1,367,386) $(22,740,048)
======== ============ ========== ============
</Table>
4. REDEMPTION FEE
The Fund assesses a 2% redemption fee on the proceeds of Fund shares that are
redeemed (either by sale or exchange) within seven days of purchase. The
redemption fee is paid directly to the Fund. For the six months ended March 31,
2006, the Fund did not receive any redemption fees.
5. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $25,289,631 and $21,280,500,
respectively.
6. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund may use derivative instruments for a variety of reasons such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio and to manage the portfolio's effective maturity and duration. All of
the Fund's portfolio holdings, including derivative instruments, are marked to
market each day with the change in value reflected in the unrealized
appreciation/depreciation. Upon disposition, a realized gain or loss is
recognized accordingly, except when taking delivery of a security underlying a
futures
23
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
contract. In this instance, the recognition of gain or loss is postponed until
the disposal of the security underlying the futures contract.
Summarized below are the different types of derivative financial instruments
used by the Fund.
A. FUTURES CONTRACTS During the period, the Fund invested in futures contracts,
a type of derivative. A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Fund generally invests in exchange traded futures contracts on U.S. Treasury
Bonds and typically closes the contract prior to the delivery date. These
contracts are generally used to manage the Fund's effective maturity and
duration. Upon entering into futures contracts, the Fund maintains an amount of
cash or liquid securities with a value equal to percentage of the contract
amount with either a future commission merchant pursuant to rules and
regulations promulgated in the 1940 Act, as amended, or with its custodian in an
account in the broker's name. This amount is known as initial margin. During the
period the futures contract is open, payments are received from or made to the
broker based upon changes in the values of the contract (variation margin). The
risk of loss associated with a futures contract is in excess of the variation
margin reflected on the Statement of Assets and Liabilities.
Transactions in futures contracts for the six months ended March 31, 2006
are as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at September 30, 2005........................... 237
Futures Opened.............................................. 510
Futures Closed.............................................. (608)
----
Outstanding at March 31, 2006............................... 139
====
</Table>
B. INDEXED SECURITY An inverse floating rate security is one where the coupon is
inversely indexed to a short-term floating interest rate multiplied by a
specific factor. As the floating rate rises, the coupon is reduced. Conversely,
as the floating rate declines, the coupon is increased. The price of these
securities may be more volatile than the price of a comparable fixed rate
security. These instruments are typically used by the Fund to enhance the yield
of the portfolio. These securities are identified on the Portfolio of
Investments.
7. DISTRIBUTION AND SERVICE PLANS
Shares of the Fund are distributed by Van Kampen Funds Inc. (the "Distributor"),
an affiliate of the Adviser. The Fund has adopted a distribution plan pursuant
to Rule 12b-1 under the 1940 Act, as amended, and a service plan (collectively,
the "Plans") for Class A Shares, Class B Shares and Class C Shares to compensate
the Distributor for the sale, distribution, shareholder servicing and
maintenance of shareholder accounts for these shares. Under the Plans, the Fund
will incur annual fees of up to .25% of Class A average daily net assets and up
to 1.00% each of Class B and Class C average daily net assets. These fees are
accrued daily and paid to the Distributor monthly.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed receivable") was approximately $181,100 and $0 for
Class B and Class C Shares, respectively. These amounts may be recovered from
future payments under the
24
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
distribution plan or CDSC. To the extent the unreimbursed receivable has been
fully recovered, the distribution fee is reduced.
8. LEGAL MATTERS
The Adviser, certain affiliates of the Adviser, and certain investment companies
advised by the Adviser or its affiliates, including the Fund, are named as
defendants in a number of similar class action complaints which were
consolidated. The consolidated action also names as defendants certain
individual Trustees and Directors of certain investment companies advised by
affiliates of the Adviser; the complaint does not, however, name the individual
Trustees of any Van Kampen funds. The consolidated amended complaint generally
alleges that defendants violated their statutory disclosure obligations and
fiduciary duties by failing properly to disclose (i) that the Adviser and
certain affiliates of the Adviser allegedly offered economic incentives to
brokers and others to steer investors to the funds advised by the Adviser or its
affiliates rather than funds managed by other companies, and (ii) that the funds
advised by the Adviser or its affiliates, including the Fund, allegedly paid
excessive commissions to brokers in return for their alleged efforts to steer
investors to these funds. The complaint seeks, among other things, unspecified
compensatory damages, rescissionary damages, fees and costs. Plaintiffs filed a
Motion for Leave to file a Supplemental Pleading that would, among other things,
expand the allegations and alleged class. The defendants moved to dismiss this
action, which motion was granted in its entirety. Additionally, plaintiffs'
motion for Leave to file a Supplemental Pleading was denied. This matter is now
concluded.
The Adviser and certain affiliates of the Adviser are also named as
defendants in a derivative suit which additionally names as defendants certain
individual Trustees of certain Van Kampen funds; the named investment companies,
including the Fund, are listed as nominal defendants. The complaint alleges that
defendants caused the Van Kampen funds to pay economic incentives to a
proprietary sales force to promote the sale of proprietary mutual funds. The
complaint also alleges that the Van Kampen funds paid excessive commissions to
Morgan Stanley and its affiliates in connection with the sales of the funds. The
complaint seeks, among other things, the removal of the current Trustees of the
funds, rescission of the management contracts for the funds, disgorgement of
profits by Morgan Stanley and its affiliates and monetary damages. This
complaint has been coordinated with the consolidated complaint described in the
preceding paragraph. Plaintiff sought leave to file a second amended derivative
complaint that alleges that the Adviser permitted or recklessly disregarded
market timing and late trading in its proprietary mutual funds in order to
increase assets under management and fees. However, pursuant to an agreement
between the parties, the plaintiff's proposed second amended derivative
complaint was withdrawn and the allegations regarding market timing and late
trading asserted therein were filed in a separate complaint and coordinated with
other cases related to market timing that have been centralized in a federal
court. Additionally, plaintiff's initial complaint regarding allegations of
economic incentives was stayed pending certain procedural developments.
The defendants have moved to dismiss each of these actions and otherwise
intend to defend them vigorously. Defendants' motion to dismiss in the market
timing litigation was granted in part and denied in part, and defendants filed a
motion for reconsideration of the Court's decision to uphold certain of the
plaintiff's claims. Additionally, plaintiff and the
25
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2006 (UNAUDITED) continued
named Trustees entered into a tolling agreement. The tolling agreement dismisses
the Trustees from the action without prejudice in exchange for tolling all
claims against the Trustees.
While the defendants believe that they have meritorious defenses, the
ultimate outcome of these matters is not presently determinable, and no
provision has been made in the Fund's financial statements for the effect, if
any, of these matters.
9. INDEMNIFICATIONS
The Fund enters into contracts that contain a variety of indemnifications. The
Fund's maximum exposure under these arrangements is unknown. However, the Fund
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
26
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
BOARD OF TRUSTEES, OFFICERS AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
JACK E. NELSON
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
OFFICERS
RONALD E. ROBISON
President and Principal Executive Officer
J. DAVID GERMANY
Vice President
DENNIS SHEA
Vice President
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
PHILLIP G. GOFF
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
DISTRIBUTOR
VAN KAMPEN FUNDS, INC.
1221 Avenue of the Americas
New York, New York 10020
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 947
Jersey City, New Jersey 07303-0947
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
One Lincoln Street
Boston, Massachusetts 02111
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, Illinois 60606
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
27
Van Kampen New York Tax Free Income Fund
An Important Notice Concerning Our U.S. Privacy Policy
We are required by federal law to provide you with a copy of our Privacy
Policy annually.
The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors
Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van
Kampen Exchange Corp., as well as current and former individual investors in
Van Kampen mutual funds, unit investment trusts, and related companies.
This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised
by us. This Policy is, however, applicable to individuals who select us to
be a custodian of securities or assets in individual retirement accounts,
401(k) accounts, 529 Educational Savings Accounts, accounts subject to the
Uniform Gifts to Minors Act, or similar accounts.
Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
WE RESPECT YOUR PRIVACY
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we
help you achieve your financial objectives. This Policy describes what
non-public personal information we collect about you, why we collect it, and
when we may share it with others.
We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies
you or your accounts as "personal information."
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
To serve you better and manage our business, it is important that we collect
and maintain accurate information about you. We may obtain this information
from applications and other forms you submit to us, from your dealings with
us, from consumer reporting agencies, from our Web sites and from third
parties and other sources.
(continued on next page)
Van Kampen New York Tax Free Income Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
For example:
-- We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.
-- We may obtain information about account balances, your use of
account(s) and the types of products and services you prefer to receive
from us through your dealings and transactions with us and other
sources.
-- We may obtain information about your creditworthiness and credit
history from consumer reporting agencies.
-- We may collect background information from and through third-party
vendors to verify representations you have made and to comply with
various regulatory requirements.
-- If you interact with us through our public and private Web sites, we
may collect information that you provide directly through online
communications (such as an e-mail address). We may also collect
information about your Internet service provider, your domain name,
your computer's operating system and Web browser, your use of our Web
sites and your product and service preferences, through the use of
"cookies." "Cookies" recognize your computer each time you return to
one of our sites, and help to improve our sites' content and
personalize your experience on our sites by, for example, suggesting
offerings that may interest you. Please consult the Terms of Use of
these sites for more details on our use of cookies.
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
To provide you with the products and services you request, to serve you
better and to manage our business, we may disclose personal information we
collect about you to our affiliated companies and to non-affiliated third
parties as required or permitted by law.
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise
required or permitted by law.
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except
to enable them to provide services on our behalf, to perform joint marketing
agreements with
(continued on back)
Van Kampen New York Tax Free Income Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
other financial institutions, or as otherwise required or permitted by law.
For example, some instances where we may disclose information about you to
non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against
fraud, for institutional risk control, to respond to judicial process or to
perform services on our behalf. When we share personal information with
these companies, they are required to limit their use of personal
information to the particular purpose for which it was shared and they are
not allowed to share personal information with others except to fulfill that
limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL
INFORMATION WE COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties
that provide support or marketing services on our behalf may also receive
personal information, and we require them to adhere to confidentiality
standards with respect to such information.
Van Kampen Funds Inc.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2006 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC.
235,325,425
NYTF SAR 5/06
(VAN KAMPEN INVESTMENTS SHINE LOGO) RN06-01256P-Y03/06
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. Schedule of Investments.
Please refer to Item #1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures
(a) The Trust's principal executive officer and principal financial officer have
concluded that the Trust's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Trust in this Form
N-CSRS was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the second fiscal quarter of the period covered
by this report that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.
Item 12. Exhibits.
(1) Code of Ethics -- Not applicable for semi-annual reports.
(2)(a) A certification for the Principal Executive Officer of the registrant is
attached hereto as part of EX-99.CERT.
(2)(b) A certification for the Principal Financial Officer of the registrant is
attached hereto as part of EX-99.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Van Kampen Tax Free Trust
By: /s/ Ronald E. Robison
----------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: May 18, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Ronald E. Robison
----------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: May 18, 2006
By: /s/ Phillip G. Goff
--------------------
Name: Phillip G. Goff
Title: Principal Financial Officer
Date: May 18, 2006