UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
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)
522 Fifth Avenue, New York, New York 10036
(Address of principal executive offices) (Zip code)
Ronald Robison
522 Fifth Avenue, New York, New York 10036
(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: 9/30/07
Item 1. Reports to Shareholders.
The Fund's 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 annual 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 September 30, 2007.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A CLASS A, B, AND C
SHARE OR CLASS I SHARE PROSPECTUS FOR THE FUND BEING OFFERED. THE
PROSPECTUSES CONTAIN INFORMATION ABOUT THE FUND, INCLUDING THE INVESTMENT
OBJECTIVES, RISKS, CHARGES AND EXPENSES. TO OBTAIN AN ADDITIONAL
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 THE FUND WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. THE FUND IS SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY
THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL DECLINE AND,
THEREFORE, THE VALUE OF THE FUND SHARES MAY 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 9/30/07
PERFORMANCE OF A $10,000 INVESTMENT
This chart compares your fund's performance to that of the Lehman Brothers
Municipal Bond Index from 9/30/97 through 9/30/07. Class A shares, adjusted for
sales charges.
(LINE GRAPH)
<Table>
<Caption>
VAN KAMPEN INSURED TAX FREE LEHMAN BROTHERS MUNICIPAL BOND
INCOME FUND INDEX
--------------------------- ------------------------------
9/97 9525 10000
9784 10271
9866 10390
10009 10548
9/98 10333 10871
10337 10937
10388 11034
10106 10839
9/99 9940 10796
9817 10712
10177 11025
10319 11192
9/00 10550 11462
11111 11964
11297 12229
11318 12309
9/01 11634 12654
11540 12577
11604 12695
12042 13160
9/02 12714 13785
12669 13785
12781 13950
13085 14310
9/03 13083 14321
13274 14517
13419 14768
13103 14419
9/04 13635 14980
13788 15168
13750 15162
14181 15606
9/05 14149 15587
14272 15701
14354 15739
14305 15744
9/06 14784 16281
14945 16461
15000 16594
14858 16484
9/07 14692 16784
</Table>
<Table>
<Caption>
I SHARES
A SHARES B SHARES C SHARES SINCE
since 12/14/84 since 05/03/93 since 08/13/93 08/12/05
- -------------------------------------------------------------------------------------------------
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 CHARGES CHARGE
Since Inception 7.17% 6.94% 4.37% 4.37% 4.10% 4.10% 2.11%
10-year 4.43 3.92 3.78 3.78 3.62 3.62 n/a
5-year 2.93 1.94 2.16 1.91 2.15 2.15 n/a
1-year -0.63 -5.36 -1.38 -5.19 -1.38 -2.33 -0.38
- -------------------------------------------------------------------------------------------------
SEC 30-day Yield 3.84% 3.29% 3.29% 4.27%
</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 eight 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.
1
Fund Report
FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2007
MARKET CONDITIONS
Strong fundamental and technical factors supported the municipal bond market
throughout much of the reporting period, helping it to perform well through the
second quarter of 2007. In July, however, contagion from the troubled subprime
mortgage sector led to an increasingly illiquid and volatile market, and a
flight to quality that led Treasury bonds to outperform all other sectors of the
fixed income market, including both investment grade and below investment grade
municipal bonds.
Up until that time, demand for municipal bonds had been quite strong as
institutional investors and non-traditional buyers such as hedge funds and
arbitrage investors continued to flock to the market, which helped to keep
credit spreads tight. As market liquidity began to dry up, however,
institutional demand fell off and refunding activity, which had been robust,
virtually halted. Although the supply of municipal bonds was declining as well,
the decrease in demand put significant pressure on prices at the same time that
the Treasury market was rallying. As a result, credit spreads widened, with the
most significant widening occurring in the lower-rated segments of the market,
where spreads on municipal bonds rated BBB and below (including non-rated bonds)
widened by 40 to 50 basis points.
In mid-September, following the 50 basis point reduction in the target federal
funds rate by the Federal Open Market Committee (the "Fed"), the market began to
stabilize, liquidity improved, and municipal credit spreads began to tighten
again. Despite these improvements, however, municipal bonds underperformed
Treasuries for the overall reporting period.
Overall, municipal bond yields ended the period higher, but most of the yield
increases occurred in the intermediate to long maturity portion of the yield
curve while yields on the front end of the curve declined slightly. As a result,
the municipal yield curve steepened over the course of the period, with the
differential between two-year and 30-year maturities widening to about 100 basis
points. The supply of municipal bonds appeared to be heading toward a record for
a calendar year, with total new issuance year-to-date reaching $323 billion as
of September 30, 2007. Insured bonds represented roughly half of all new issue
supply.
2
PERFORMANCE ANALYSIS
All share classes of Van Kampen Insured Tax Free Income Fund underperformed the
Lehman Brothers Municipal Bond Index for the 12 months ended September 30, 2007,
assuming no deduction of applicable sales charges.
TOTAL RETURNS FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2007
<Table>
<Caption>
- -------------------------------------------------------------------
LEHMAN BROTHERS
MUNICIPAL
CLASS A CLASS B CLASS C CLASS I BOND INDEX
-0.63% -1.38% -1.38% -0.38% 3.09%
- -------------------------------------------------------------------
</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.
Various factors contributed to the Fund's relative underperformance for the
reporting period, one of which was the allocation to tobacco bonds. We added to
holdings here in March because these bonds offered very attractive yields, and
the overall position performed well through June. In July and August, however,
the tobacco sector was one of the hardest hit sectors of the municipal market.
Although the fundamental credit quality of tobacco bonds remained solid, the
combination of an abundant supply, the liquidity squeeze in the market, and the
flight to quality (tobacco bonds are lower-rated) caused spreads in the sector
to widen dramatically. As a result, the performance of the Fund's holdings
declined.
Another detractor from relative performance was the fact that the Fund is
primarily comprised of insured municipal bonds, whereas the benchmark Lehman
Brothers Municipal Bond Index contains no insured bonds. Insured bonds, by
nature, are more sensitive to interest rate changes than uninsured bonds.
Therefore, given the rise in municipal rates over the course of the period, the
performance of the Fund's insured bonds lagged.
Recent Fund enhancements allow for up to 20 percent of assets to be invested in
uninsured--but still investment grade--securities. Over the course of the
period, we increased the Fund's allocation to these securities to roughly 15
percent as of the end of the reporting period, by adding inverse floating-
rating securities* in the health care and housing sectors. Although these
positions enhanced the Fund's income and diversification, and performed well
until the summer months, spread widening in the sector later in the period
dampened their performance.
*An inverse floating-rate security, or "inverse floater", is a variable rate
security whose coupon rate changes in the opposite direction from the change in
the reference rate used to calculate the coupon rate.
3
We maintained the Fund's shorter duration (a measure of interest-rate
sensitivity) throughout the period, which was additive to performance when
interest rates were rising. However, to maintain that duration we used a U.S.
Treasury futures hedge, which detracted from returns during the
flight-to-quality Treasury market rally.
The Fund's holdings in various sectors were positive contributors to
performance, including health care, utility, and industrial development revenue
bonds, all of which turned in strong performance for the fiscal year.
We continued to focus on the long end of the yield curve, favoring bonds in the
25-year portion of the curve. We also favored premium-coupon bonds with call
features of 10 years or less. Conversely, we generally avoided zero coupon bonds
in the latter half of the period, maintaining a relative underweight to the
sector as tighter spreads have made them unattractive.
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 9/30/07
California 22.9%
Illinois 16.5
Florida 8.6
New Jersey 7.6
Texas 7.5
Washington 7.2
Colorado 6.4
Georgia 5.9
Pennsylvania 3.5
Alabama 3.1
Virginia 3.0
Louisiana 2.7
South Carolina 2.6
New York 2.2
Alaska 2.1
Nevada 2.1
Arizona 2.0
Missouri 1.4
Montana 1.4
Indiana 1.3
Massachusetts 1.2
Arkansas 1.2
North Dakota 1.2
South Dakota 1.0
Oklahoma 0.9
Mississippi 0.6
Nebraska 0.5
Wisconsin 0.4
Maryland 0.4
District of Columbia 0.4
Idaho 0.4
Michigan 0.3
Puerto Rico 0.3
Iowa 0.2
Kansas 0.2
North Carolina 0.2
West Virginia 0.2
Rhode Island 0.1
Connecticut 0.1
Utah 0.1
-----
Total Long-Term Investments 119.9
Short-Term Investments 4.7
-----
Total Investments 124.6
Liability for Floating Rate Note Obligations (23.7)
-----
Total Net Investments 100.9
Liabilities in Excess of Other Assets (0.9)
-----
Net Assets 100.0%
</Table>
<Table>
(continued on next page)
</Table>
5
<Table>
RATINGS ALLOCATIONS AS OF 9/30/07
AAA/Aaa 81.7%
AA/Aa 10.2
A/A 1.1
BBB/Baa 0.8
NR 6.1
TOP FIVE SECTORS AS OF 9/30/07
Airports 11.4%
Single Family Housing 10.4
Wholesale Electric 9.1
Master Tobacco Settlement 8.2
Public Education 8.2
</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 total long-term investments. Summary of investments by state
classification are 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. The semiannual reports and the
annual reports are filed electronically with the Securities and Exchange
Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. 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 email 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 charges on redemptions of Class B and C Shares;
and redemption fees; 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 4/1/07 - 9/30/07.
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 or redemption fees.
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*
------------------------------------------------
4/1/07 9/30/07 4/1/07-9/30/07
Class A
Actual...................................... $1,000.00 $ 979.47 $ 8.78
Hypothetical................................ 1,000.00 1,016.19 8.95
(5% annual return before expenses)
Class B
Actual...................................... 1,000.00 975.72 12.68
Hypothetical................................ 1,000.00 1,012.23 12.91
(5% annual return before expenses)
Class C
Actual...................................... 1,000.00 975.69 12.53
Hypothetical................................ 1,000.00 1,012.38 12.76
(5% annual return before expenses)
Class I
Actual...................................... 1,000.00 980.69 7.75
Hypothetical................................ 1,000.00 1,017.25 7.89
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 1.77%, 2.56%,
2.53%, and 1.56% for Class A, B, C and I Shares, respectively, multiplied by
the average account value over the period, multiplied by 183/365 (to reflect
the one-half year period).
Assumes all dividends and distributions were reinvested.
9
The following table shows what expenses a shareholder would have paid, excluding
interest and residual trust expenses.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
------------------------------------------------
4/1/07 9/30/07 4/1/07-9/30/07
Class A
Actual...................................... $1,000.00 $ 979.47 $4.32
Hypothetical................................ 1,000.00 1,020.71 4.41
(5% annual return before expenses)
Class B
Actual...................................... 1,000.00 975.72 8.07
Hypothetical................................ 1,000.00 1,016.90 8.24
(5% annual return before expenses)
Class C
Actual...................................... 1,000.00 975.69 8.07
Hypothetical................................ 1,000.00 1,016.90 8.24
(5% annual return before expenses)
Class I
Actual...................................... 1,000.00 980.69 3.08
Hypothetical................................ 1,000.00 1,021.96 3.14
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 0.87%, 1.63%,
1.63%, and 0.62% for Class A, B, C and I Shares, respectively, multiplied by
the average account value over the period, multiplied by 183/365 (to reflect
the one-half year period).
Assumes all dividends and distributions were reinvested.
10
Investment Advisory Agreement Approval
Both the Investment Company Act of 1940 and the terms of the Fund's investment
advisory agreement require that the investment advisory agreement between the
Fund and its investment adviser be approved annually both by a majority of the
Board of Trustees and by a majority of the independent trustees voting
separately.
At meetings held on April 17, 2007 and May 30, 2007, the Board of Trustees, and
the independent trustees voting separately, considered and ultimately determined
that the terms of the investment advisory agreement are fair and reasonable and
approved the continuance of the investment advisory agreement as being in the
best interests of the Fund and its shareholders. In making its determination,
the Board of Trustees considered materials that were specifically prepared by
the investment adviser at the request of the Board and Fund counsel, and by an
independent provider of investment company data contracted to assist the Board,
relating to the investment advisory agreement review process. The Board also
considered information received periodically about the portfolio, performance,
the investment strategy, portfolio management team and fees and expenses of the
Fund. The Board of Trustees considered the investment advisory agreement over a
period of several months and the trustees held sessions both with the investment
adviser and separate from the investment adviser in reviewing and considering
the investment advisory agreement.
In approving the investment advisory agreement, the Board of Trustees
considered, among other things, the nature, extent and quality of the services
provided by the investment adviser, the performance, fees and expenses of the
Fund compared to other similar funds and other products, the investment
adviser's expenses in providing the services and the profitability of the
investment adviser and its affiliated companies. The Board of Trustees
considered the extent to which any economies of scale experienced by the
investment adviser are shared with the Fund's shareholders, and the propriety of
existing and alternative breakpoints in the Fund's investment advisory fee
schedule. The Board of Trustees considered comparative advisory fees of the Fund
and other investment companies and/or other products at different asset levels,
and considered the trends in the industry versus historical and projected assets
of the Fund. The Board of Trustees evaluated other benefits the investment
adviser and its affiliates derive from their relationship with the Fund. The
Board of Trustees reviewed information about the foregoing factors and
considered changes, if any, in such information since its previous approval. The
Board of Trustees discussed the financial strength of the investment adviser and
its affiliated companies and the capability of the personnel of the investment
adviser, and specifically the strength and background of its portfolio
management personnel. The Board of Trustees reviewed the statutory and
regulatory requirements for approval and disclosure of investment advisory
agreements. The Board of Trustees, including the independent trustees,
11
evaluated all of the foregoing and does not believe any single factor or group
of factors control or dominate the review process, and, after considering all
factors together, has determined, in the exercise of its business judgment, that
approval of the investment advisory agreement is in the best interests of the
Fund and its shareholders. The following summary provides more detail on certain
matters considered but does not detail all matters considered.
Nature, Extent and Quality of the Services Provided. On a regular basis, the
Board of Trustees considers the roles and responsibilities of the investment
adviser as a whole and for those specific portfolio management, support and
trading functions servicing the Fund. The trustees discuss with the investment
adviser the resources available and used in managing the Fund and changes made
in the Fund's portfolio management team over time. The Fund discloses
information about its portfolio management team members and their experience in
its prospectus. The trustees also discuss certain other services which are
provided on a cost-reimbursement basis by the investment adviser or its
affiliates to the Van Kampen funds including certain accounting, administrative
and legal services. The Board has determined that the nature, extent and quality
of the services provided by the investment adviser support its decision to
approve the investment advisory agreement.
Performance, Fees and Expenses of the Fund. On a regular basis, the Board of
Trustees reviews the performance, fees and expenses of the Fund compared to its
peers and to appropriate benchmarks. In addition, the Board spends more focused
time on the performance of the Fund and other funds in the Van Kampen complex,
paying specific attention to underperforming funds. The trustees discuss with
the investment adviser the performance goals and the actual results achieved in
managing the Fund. When considering a fund's performance, the trustees and the
investment adviser place emphasis on trends and longer-term returns (focusing on
one-year, three-year and five-year performance with special attention to
three-year performance) and, when a fund's weighted performance is under the
fund's benchmark, they discuss the causes and where necessary seek to make
specific changes to investment strategy or investment personnel. The Fund
discloses more information about its performance elsewhere in this report and in
the Fund's prospectus. The trustees discuss with the investment adviser the
level of advisory fees for this Fund relative to comparable funds and other
products advised by the adviser and others in the marketplace. The trustees
review not only the advisory fees but other fees and expenses (whether paid to
the adviser, its affiliates or others) and the Fund's overall expense ratio. The
Fund discloses more information about its fees and expenses in its prospectus.
The Board has determined that the performance, fees and expenses of the Fund
support its decision to approve the investment advisory agreement.
Investment Adviser's Expenses in Providing the Service and Profitability. At
least annually, the trustees review the investment adviser's expenses in
providing services to the Fund and other funds advised by the investment adviser
and the
12
profitability of the investment adviser. These profitability reports are put
together by the investment adviser with the oversight of the Board. The trustees
discuss with the investment adviser its revenues and expenses, including among
other things, revenues for advisory services, portfolio management-related
expenses, revenue sharing arrangement costs and allocated expenses both on an
aggregate basis and per fund. The Board has determined that the analysis of the
investment adviser's expenses and profitability support its decision to approve
the investment advisory agreement.
Economies of Scale. On a regular basis, the Board of Trustees considers the size
and growth prospects of the Fund and how that relates to the Fund's expense
ratio and particularly the Fund's advisory fee rate. In conjunction with its
review of the investment adviser's profitability, the trustees discuss with the
investment adviser how more (or less) assets can affect the efficiency or
effectiveness of managing the Fund's portfolio and whether the advisory fee
level is appropriate relative to current and projected asset levels and/or
whether the advisory fee structure reflects economies of scale as asset levels
change. The Board has determined that its review of the actual and potential
economies of scale of the Fund support its decision to approve the investment
advisory agreement.
Other Benefits of the Relationship. On a regular basis, the Board of Trustees
considers other benefits to the investment adviser and its affiliates derived
from its relationship with the Fund and other funds advised by the investment
adviser. These benefits include, among other things, fees for transfer agency
services provided to the funds, in certain cases research received by the
adviser generated from commission dollars spent on funds' portfolio trading, and
in certain cases distribution or service related fees related to funds' sales.
The trustees review with the investment adviser each of these arrangements and
the reasonableness of its costs relative to the services performed. The Board
has determined that the other benefits received by the investment adviser or its
affiliates support its decision to approve the investment advisory agreement.
13
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
MUNICIPAL BONDS 124.6%
ALABAMA 3.1%
$4,485 Alabama St Brd Ed Rev Athens St Univ (MBIA
Insd) (a)...................................... 5.000% 09/01/27 $ 4,687,945
1,095 Birmingham, AL Wtrwks & Swr Brd Ser A (FGIC
Insd).......................................... 5.000 01/01/21 1,150,385
3,670 Houston Cnty, AL Hlthcare Auth Ser A (AMBAC
Insd).......................................... 5.250 10/01/30 3,849,537
3,120 Huntsville, AL Hlthcare Auth Ser A (MBIA Insd)
(Prerefunded @ 5/14/12)........................ 5.400 06/01/22 3,408,101
8,000 Trussville, AL Wt Ser A (FGIC Insd)............ 5.000 10/01/31 8,290,960
10,000 Trussville, AL Wt Ser A (FGIC Insd)............ 5.000 10/01/36 10,322,900
--------------
31,709,828
--------------
ALASKA 2.1%
1,000 Alaska Hsg Fin Corp Home Mtg Amt Ser C (AMT)... 4.800 06/01/38 951,720
2,000 Alaska St Hsg Fin Corp Gen Hsg Ser A (FGIC
Insd).......................................... 5.000 12/01/30 2,061,240
1,000 Alaska St Hsg Fin Corp Gen Hsg Ser A (FGIC
Insd).......................................... 5.250 12/01/41 1,037,730
6,525 Alaska St Intl Arpt Rev Rfdg Ser B (MBIA Insd)
(b)............................................ 5.000 10/01/24 6,811,210
9,570 Alaska St Intl Arpt Rev Rfdg Ser D (MBIA Insd)
(b)............................................ 5.000 10/01/24 9,989,775
210 Anchorage, AK Wtr Rev Rfdg (AMBAC Insd)
(Prerefunded @ 9/01/09)........................ 6.000 09/01/19 221,790
1,215 Anchorage, AK Wtr Rev Rfdg (AMBAC Insd)........ 6.000 09/01/19 1,279,018
--------------
22,352,483
--------------
ARIZONA 2.0%
1,225 Arizona St Univ Ctf Partn Resh Infrastructure
Proj (AMBAC Insd).............................. 5.250 09/01/24 1,291,395
5,000 Maricopa Cnty, AZ Pollutn Ctl Corp Pollutn Ctl
Rev El Paso Elec Co Rfdg Ser A (FGIC Insd)..... 4.800 08/01/40 4,971,050
10,000 Mesa, AZ Util Sys Rev Rfdg Second Ser (FGIC
Insd) (b)...................................... 4.500 07/01/28 9,860,000
2,000 Pima Cnty, AZ Indl Dev Auth AZ Charter Sch Proj
Ser O.......................................... 5.000 07/01/26 1,864,880
1,750 Pima Cnty, AZ Indl Dev Auth AZ Charter Sch Proj
Ser O.......................................... 5.250 07/01/31 1,653,453
515 Pima Cnty, AZ Indl Dev Auth Indl Rev Lease
Oblig Irvington Proj Tucson Elec Pwr Co Rfdg
Ser A (FSA Insd)............................... 7.250 07/15/10 529,399
--------------
20,170,177
--------------
</Table>
14 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
ARKANSAS 1.2%
$2,500 Arkansas St Dev Fin Auth Rev St Agy Fac
Donaghey Plaza Proj (FSA Insd)................. 5.000% 06/01/29 $ 2,571,950
6,265 Little Rock, AR Sch Dist Rfdg Ser B (FSA
Insd).......................................... 5.500 02/01/25 6,482,646
3,000 Little Rock, AR Swr Rev Constr Ser C (FSA Insd)
(c)............................................ 5.000 10/01/37 3,118,560
--------------
12,173,156
--------------
CALIFORNIA 22.9%
4,000 Bay Area Govt Assn CA Rev Tax Alloc CA Redev
Pool Ser A (XLCA Insd)......................... 5.250 09/01/35 4,168,200
3,205 Bell, CA Cmnty Hsg Auth Lease Rev Rfdg (AMBAC
Insd).......................................... 5.000 10/01/30 3,323,745
3,310 Bell, CA Cmnty Hsg Auth Lease Rev Rfdg (AMBAC
Insd).......................................... 5.000 10/01/36 3,390,036
3,500 California Ed Fac Auth Rev Occidental College
Ser A (MBIA Insd).............................. 5.000 10/01/36 3,617,775
10,000 California Hsg Fin Agy Rev Home Mtg Ser E (AMT)
(b)............................................ 4.800 08/01/37 9,820,450
10,935 California Hsg Fin Agy Rev Home Mtg Ser G (AMT)
(b)............................................ 5.050 02/01/29 10,997,517
5,000 California Hsg Fin Agy Rev Ser J (AMT) (c)..... 5.050 08/01/27 4,996,550
12,085 California St Dept Vet Affairs Home Pur Rev Ser
A (AMT) (b).................................... 4.950 12/01/37 12,014,876
3,000 California St Pub Wks Brd UCLA Replacement Hosp
Ser A (FSA Insd)............................... 5.000 10/01/22 3,105,330
5,000 California St Var Purp (b)..................... 5.000 06/01/37 5,089,925
2,980 California Stwide Cmnty Dev Auth Wtr & Wastewtr
Rev Pooled Fin Pgm Ser C (FSA Insd) (a)........ 5.000 10/01/29 3,080,456
4,000 California Stwide Cmnty Dev Auth Wtr & Wastewtr
Rev Pooled Fin Pgm Ser C (FSA Insd)............ 5.250 10/01/34 4,167,080
1,095 California Stwide Cmnty Dev Auth Wtr & Wastewtr
Rev Pooled Fin Ser 2004A (FSA Insd)............ 5.000 10/01/29 1,135,920
3,920 California Stwide Cmnty Dev Auth Wtr & Wastewtr
Rev Pooled Fin Ser 2004A (FSA Insd)............ 5.250 10/01/24 4,209,414
4,615 California Stwide Cmnty Dev Auth Wtr & Wastewtr
Rev Ser D (FSA Insd) (a)....................... 5.000 10/01/26 4,823,967
7,430 Capistrano, CA Uni Sch Dist (FGIC Insd) (a).... 5.000 09/01/25 7,737,899
7,995 Capistrano, CA Uni Sch Dist (FGIC Insd) (a).... 5.000 09/01/26 8,320,876
8,600 Capistrano, CA Uni Sch Dist (FGIC Insd) (a).... 5.000 09/01/27 8,938,926
3,500 Capistrano, CA Uni Sch Dist (FGIC Insd)........ 5.000 09/01/29 3,630,795
5,000 Chino Vly Uni Sch Dist CA Election 2002 Ser C
(MBIA Insd).................................... 5.250 08/01/30 5,304,500
3,225 Coronado, CA Cmnty Dev Agy Tax Alloc Coronado
Cmnty Dev Proj (AMBAC Insd).................... 5.000 09/01/30 3,325,942
425 Earlimart, CA Elem Sch Dist Ser 1 (AMBAC
Insd).......................................... 6.700 08/01/21 543,779
1,750 Golden St Tob Sec Asset Bkd Ser A-1............ 5.750 06/01/47 1,669,955
</Table>
See Notes to Financial Statements 15
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$17,500 Golden St Tob Sec Corp CA Tob Settlement Rev
Ser A-1 (b).................................... 5.750% 06/01/47 $ 16,699,550
265 Golden West Sch Fin Auth CA Rev Rfdg Ser A
(MBIA Insd) (a)................................ 5.750 08/01/19 306,732
10,000 Hawthorne, CA Cmnty Redev Agy Tax Alloc Proj
Area No 2 (XLCA Insd).......................... 5.250 09/01/36 10,489,700
690 Jurupa, CA Univ Sch Dist Election 2001 (FGIC
Insd).......................................... 5.000 08/01/26 719,891
2,500 Lehman Muni Tr Rcpts Var Sts Ri Trs Ser 07
(MBIA Insd) (g) (h)............................ 6.164 05/15/47 1,842,650
3,360 Loma Linda, CA Redev Agy Tax Alloc Ser A (XLCA
Insd).......................................... 5.250 07/01/30 3,524,371
10,450 Los Angeles, CA Muni Impt Corp Lease Rev Police
Headquarters Fac Ser A (FGIC Insd)............. 4.250 01/01/37 9,479,195
10,000 Merced, CA Irr Dist Rev Ctf Partn Elec Sys Proj
(XLCA Insd).................................... 5.250 09/01/36 10,444,100
4,000 Murrieta Vy, CA Uni Sch Dist Pub Fin Auth Spl
Tax Rev Ser A (AGL Insd)....................... 4.750 09/01/36 3,965,680
3,000 Oxnard, CA Fin Auth Headworks Proj (AMBAC
Insd).......................................... 5.000 06/01/36 3,083,760
5,000 Palm Springs, CA Fin Lease Rev Convention Ctr
Proj Ser A (MBIA Insd)......................... 5.500 11/01/29 5,422,750
10,000 Poway, CA Uni Sch Dist Spl Tax Cmnty Fac Dist
No 6-4S Ranch (AMBAC Insd)..................... 5.000 09/01/35 10,295,400
1,140 Rohnert Park, CA Swr Sys Rev Ctf Partn Spl Term
(AMBAC Insd)................................... 5.000 06/01/30 1,172,479
5,140 San Marcos, CA Pub Fac Auth Rev Tax Increment
Pass-Thru Ser A Rfdg (AMBAC Insd) (b).......... 5.000 10/01/31 5,338,250
2,785 Santa Monica, CA Cmnty College Rfdg Ser A
(AMBAC Insd)................................... 5.000 02/01/27 2,861,699
3,935 Sierra Kings, CA Hlthcare Dist Election 2006
(Radian Insd).................................. 5.000 08/01/37 3,857,008
5,380 South Orange Cnty, CA Pub Fin Auth Spl Tax Rev
Ladera Ranch Ser A (AMBAC Insd)................ 5.000 08/15/27 5,601,817
2,000 South Tahoe, CA Jt Pwr Fin Redev Proj Area No 1
Rfdg Ser A (AMBAC Insd)........................ 5.000 10/01/35 2,049,720
6,500 Stockton, CA Port Dist Port Rev Ser A (MBIA
Insd).......................................... 4.500 07/01/32 6,292,975
3,335 Tobacco Sec Auth Southn CA Tob Settlement Rols
II R Ser 741 (g)............................... 7.243 06/01/46 1,963,615
3,715 Vallecitos Wtr Dist Wtr Ser A (FSA Insd)....... 5.000 07/01/27 3,888,565
4,100 Vallecitos Wtr Dist Wtr & Ser A (FSA Insd)..... 5.000 07/01/35 4,255,267
</Table>
16 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$ 700 Vallejo City, CA Uni Sch Rfdg Ser A (MBIA
Insd).......................................... 5.900% 08/01/25 $ 824,887
4,440 Washington, CA Uni Sch Dist Yolo Cnty Ctf Partn
New High Sch Proj (AMBAC Insd)................. 5.000 08/01/30 4,595,045
--------------
236,389,019
--------------
COLORADO 6.4%
10,000 Arkansas River Pwr Auth CO Pwr Rev Impt (XLCA
Insd).......................................... 5.000 10/01/43 10,225,300
5,000 Aurora, CO Wtr Impt Rev First Lien Ser A (AMBAC
Insd).......................................... 5.000 08/01/39 5,174,600
1,500 Bromley Pk Met Dist CO Rfdg & Impt (Radian
Insd).......................................... 4.750 12/01/37 1,408,515
3,745 Colorado Ed & Cultural Fac Auth Rev Charter Sch
Aurora Academy Sch Proj Rfdg Ser A (XLCA Insd)
(a)............................................ 5.250 02/15/34 3,898,021
2,500 Colorado Ed & Cultural Fac Auth Rev Charter Sch
Bromley Sch Proj Rfdg (XLCA Insd).............. 5.250 09/15/32 2,621,725
2,770 Colorado Ed & Cultural Fac Auth Rev Rfdg
Charter Sch Challenge Proj Rfdg (CIFG Insd).... 5.000 06/01/37 2,811,217
1,000 Colorado Ed & Cultural Fac Auth Rev Charter Sch
Woodrow Wilson Sch Proj Rfdg Ser A (XLCA
Insd).......................................... 5.250 12/01/34 1,048,320
2,000 Compark Business Campus Met Dist CO Rfdg & Impt
Ser A (Radian Insd)............................ 5.600 12/01/34 2,061,800
2,095 Conservatory Met Dist CO Arapahoe Cnty Rfdg &
Impt Ltd Tax Conv Unltd (Radian Insd).......... 5.125 12/01/37 2,095,670
17,580 Denver, CO Convention Ctr Hotel Auth Rev Rfdg
(XLCA Insd) (b)................................ 5.000 12/01/35 17,972,298
1,800 Regional Transn Dist CO Sales Tax Rev Fastracks
Proj Ser A (AMBAC Insd)........................ 4.375 11/01/36 1,699,776
12,670 Southlands Met Dist No 1 CO Rfdg & Impt (Radian
Insd).......................................... 5.250 12/01/34 12,798,474
2,000 Walker Field, CO Pub Arpt Auth Arpt Rev Gen.... 4.750 12/01/27 1,828,640
--------------
65,644,356
--------------
CONNECTICUT 0.1%
1,000 Connecticut St Hlth & Ed Fac Auth Rev Hosp For
Spl Care Ser C (Radian Insd)................... 5.250 07/01/32 1,005,230
--------------
DISTRICT OF COLUMBIA 0.4%
4,000 Metropolitan Washington DC Arpt Ser A (FSA
Insd) (AMT).................................... 5.000 10/01/32 4,055,000
--------------
FLORIDA 8.6%
5,000 Auburndale, FL Wtr & Swr Rev (AMBAC Insd)...... 4.250 12/01/32 4,550,700
5,110 Auburndale, FL Wtr & Swr Rev (AMBAC Insd)...... 4.375 12/01/37 4,730,889
500 Dade Cnty, FL Aviation Rev Ser B (MBIA Insd)... 5.600 10/01/26 505,630
750 Dade Cnty, FL Wtr & Swr Sys Rev (FGIC Insd).... 5.375 10/01/16 766,020
</Table>
See Notes to Financial Statements 17
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
$ 140 Escambia Cnty, FL Hlth Fac Auth Rev (AMBAC
Insd).......................................... 5.950% 07/01/20 $ 145,499
1,800 Florida Hsg Fin Corp Rev Ser 6 (AMT) (b)....... 4.550 07/01/26 1,692,910
3,500 Florida Hsg Fin Corp Rev Ser 6 (AMT) (b)....... 4.625 07/01/31 3,291,769
2,500 Florida Hsg Fin Corp Rev Ser 6 (AMT) (b)....... 4.700 07/01/37 2,351,263
1,000 Florida Intergovnmtl Fin Ser C1 (AMBAC Insd)... 5.125 02/01/31 1,032,600
575 Florida Muni Ln Council Rev Ser B (MBIA
Insd).......................................... 5.750 11/01/14 615,124
1,185 Florida St Brd Ed Cap Outlay Pub Ed Ser C (FGIC
Insd).......................................... 5.000 06/01/23 1,232,957
2,750 Florida St Brd Ed Lottery Rev Ser B (FGIC
Insd).......................................... 5.250 07/01/13 2,810,472
750 Florida St Brd of Regt Hsg Rev (MBIA Insd)..... 5.750 07/01/14 797,715
1,365 Florida St Correctional Privatization Commn Ctf
Partn (MBIA Insd).............................. 5.375 08/01/14 1,459,990
1,900 Fort Myers, FL Impt Rev Rfdg (MBIA Insd)....... 4.450 12/01/35 1,781,022
1,340 Gulf Breeze, FL Rev Loc Govt (FGIC Insd)....... 5.150 12/01/20 1,398,263
500 Gulf Breeze, FL Rev Loc Govt (FGIC Insd)....... 5.650 12/01/20 523,335
1,000 Indian River Cnty, FL Hosp Rev Rfdg (FSA
Insd).......................................... 6.100 10/01/18 1,011,890
1,000 Key West, FL Util Brd Elec Rev Cap Apprec Ser D
(AMBAC Insd) (e)............................... * 10/01/13 778,230
10,000 Miami-Dade Cnty, FL Aviation Rev Miami Intl
Arpt Ser A (CIFG Insd) (AMT) (c)............... 5.000 10/01/38 9,968,700
5,000 Miami-Dade Cnty, FL Pub Fac Rev Jackson Hlth
Sys Ser A (MBIA Insd).......................... 5.000 06/01/31 5,103,450
5,000 Miami-Dade Cnty, FL Wtr & Swr Rev Rfdg (XLCA
Insd).......................................... 5.000 10/01/26 5,242,800
1,000 Orlando, FL Cmnty Redev Agy Tax Rep Drive Unvl
Blvd Rfdg (AMBAC Insd)......................... 5.125 04/01/20 1,051,250
750 Polk Cnty, FL Sch Brd Ctf Partn Master Lease
Ser A (FSA Insd)............................... 5.500 01/01/16 798,885
1,000 Port Saint Lucie, FL Spl Assmt Rev Util Svc
Area No 3 & 4A (MBIA Insd)..................... 5.000 10/01/18 1,021,460
535 Saint Johns Cnty, FL Indl Dev Auth Professional
Golf Proj Rfdg (MBIA Insd)..................... 5.250 09/01/12 571,680
1,000 Saint Lucie Cnty, FL Sch Brd Ctf Ser A (FSA
Insd).......................................... 5.000 07/01/21 1,039,360
3,145 Santa Rosa Bay Brdg Auth FL Rev Cap Apprec
(MBIA Insd).................................... * 07/01/18 1,939,301
500 Seminole Tribe FL Spl Oblig Rev 144a Ser A
(h)............................................ 5.750 10/01/22 525,825
500 Seminole Tribe FL Spl Oblig Rev 144a Ser A
(h)............................................ 5.250 10/01/27 500,190
4,000 Sunrise, FL Util Sys Rev Rfdg (AMBAC Insd)..... 5.200 10/01/22 4,325,840
10,000 Tallahassee, FL Hlth Fac Rev Tallahassee Mem
Regl Med Rfdg Ser A (MBIA Insd) (f)............ 6.625 12/01/13 10,022,800
9,300 Tampa Bay Wtr FL Regl Wtr Supply Auth Util Sys
Rev Impt & Rfdg Ser A (FGIC Insd).............. 4.500 10/01/36 8,914,701
1,000 Village Ctr Cmnty Dev Dist FL Ser A (MBIA
Insd).......................................... 5.200 11/01/25 1,049,520
</Table>
18 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
$3,735 Volusia Cnty, FL Ed Fac Auth Rev Ed Fac Embry
Riddle Rfdg Ser B (AMBAC Insd)................. 5.250% 10/15/19 $ 3,883,093
1,000 Volusia Cnty, FL Ed Fac Auth Rev Ed Fac Embry
Riddle Rfdg Ser B (AMBAC Insd)................. 5.250 10/15/22 1,037,540
--------------
88,472,673
--------------
GEORGIA 5.9%
1,370 Atlanta, GA Tax Allocation Rfdg Atlantic Sta
Proj (AGL Insd)................................ 5.250 12/01/21 1,476,846
1,000 Atlanta, GA Tax Allocation Rfdg Atlantic Sta
Proj (AGL Insd)................................ 5.250 12/01/22 1,073,720
4,390 Bleckley-Cochran, GA Dev Auth Student Hsg Fac
Rev MGC Real Estate Fndtn Ser A (CIFG Insd).... 5.000 07/01/25 4,559,805
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 11,636,604
10,795 Clayton Cnty, GA Dev Auth CSU Fndtn Real Estate
I Llc Pj (XLCA Insd) (a)....................... 5.000 07/01/38 11,143,571
2,500 Fulton Cnty, GA Dev Auth Rev GA Tech North Ave
Apts Proj Ser A (XLCA Insd).................... 5.000 06/01/32 2,588,100
14,530 Georgia Muni Elec Auth Pwr Rev 2005 Ser Y
(AMBAC Insd)................................... 6.400 01/01/13 15,982,709
160 Georgia Muni Elec Auth Pwr Rev 2005 Ser Y
(AMBAC Insd) (Prerefunded @ 1/01/11)........... 6.400 01/01/13 173,981
9,445 Georgia Muni Elec Auth Pwr Rev 2005 Ser Y (MBIA
Insd).......................................... 6.500 01/01/17 10,938,443
145 Georgia Muni Elec Auth Pwr Rev 2005 Ser Y (MBIA
Insd) (Prerefunded @ 1/01/14).................. 6.500 01/01/17 167,970
860 Georgia Muni Elec Auth Pwr Rev Ser Y (AMBAC
Insd) (e)...................................... 6.400 01/01/13 950,420
410 Georgia Muni Elec Auth Pwr Rev Ser Y (MBIA
Insd).......................................... 6.500 01/01/17 475,916
--------------
61,168,085
--------------
IDAHO 0.4%
3,750 Idaho Hsg & Fin Assn Single Family Mtg Rev
Class III Ser G-1 (AMT)........................ 5.125 01/01/29 3,843,562
--------------
ILLINOIS 16.5%
1,000 Bartlett, IL Tax Increment Rev Rfdg Sr Lien
Quarry Redev Proj.............................. 5.600 01/01/23 1,012,750
5,010 Bourbonnais, IL Indl Proj Rev Olivet Nazarene
Univ Proj (Radian Insd)........................ 5.125 11/01/37 4,908,147
1,500 Chicago, IL Brd Ed Cap Apprec Sch Reform Ser A
(FGIC Insd).................................... * 12/01/19 887,220
1,020 Chicago, IL Brd Ed Cap Apprec Sch Reform Ser A
(FGIC Insd).................................... * 12/01/25 442,343
</Table>
See Notes to Financial Statements 19
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
ILLINOIS (CONTINUED)
$2,845 Chicago, IL Brd Ed Cap Apprec Sch Reform Ser
B-1 (FGIC Insd)................................ * 12/01/19 $ 1,682,761
2,000 Chicago, IL Lakefront Millenium Pkg Fac (MBIA
Insd) (Prerefunded @ 1/01/12).................. 5.700% 01/01/25 2,201,620
2,000 Chicago, IL Lakefront Millenium Pkg Fac (MBIA
Insd) (Prerefunded @ 1/01/12).................. 5.750 01/01/29 2,205,520
5,925 Chicago, IL Midway Arpt Rev Second Lien Rfdg
Ser B (AMBAC Insd) (a)......................... 5.000 01/01/21 6,186,470
6,220 Chicago, IL Midway Arpt Rev Second Lien Rfdg
Ser B (AMBAC Insd) (a)......................... 5.000 01/01/22 6,474,833
1,000 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Rfdg Ser A (MBIA Insd).................... 5.000 01/01/29 1,030,290
5,000 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Rfdg Ser E (CIFG Insd).................... 5.000 01/01/34 5,108,700
2,840 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Rfdg Ser E (CIFG Insd) (a)................ 5.250 01/01/21 2,996,825
2,975 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Rfdg Ser E (CIFG Insd) (a)................ 5.250 01/01/22 3,130,920
3,120 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Rfdg Ser E (CIFG Insd).................... 5.250 01/01/23 3,278,278
1,430 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Rfdg Ser E (CIFG Insd).................... 5.250 01/01/24 1,499,355
17,500 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Ser A-2 Rfdg (FSA Insd) (AMT) (b)......... 5.750 01/01/20 18,778,900
20,000 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Ser A-2 Rfdg (FSA Insd) (AMT) (b)......... 5.750 01/01/21 21,472,900
12,000 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien Ser A (MBIA Insd) (b)..................... 5.250 01/01/24 12,720,720
5,000 Chicago, IL Pk Dist Ser A (FGIC Insd).......... 5.000 01/01/31 5,168,750
615 Chicago, IL Pk Dist Ser C (FGIC Insd).......... 5.500 01/01/19 652,029
3,230 Chicago, IL Proj Rfdg Ser A (FGIC Insd)........ 5.375 01/01/34 3,316,919
1,305 Chicago, IL Proj Rfdg Ser A (MBIA Insd)........ 5.500 01/01/38 1,372,769
50 Chicago, IL Proj Rfdg Ser A (MBIA Insd)
(Prerefunded @ 1/01/11)........................ 5.500 01/01/38 53,426
145 Chicago, IL Proj Rfdg Ser A (AMBAC Insd)....... 5.625 01/01/39 154,525
5,000 Chicago, IL Single Family Mtg Rev Coll Ser I
(GNMA Collateralized) (AMT).................... 5.300 06/01/43 5,282,400
345 Cook Cnty, IL Sch Dist No 100 Berwyn South Cap
Apprec (FSA Insd) (a).......................... 8.100 12/01/16 456,997
290 Cook Cnty, IL Sch Dist No 100 Berwyn South Cap
Apprec (FSA Insd) (a).......................... 8.200 12/01/14 370,649
2,605 Cook Cnty, IL Sch Dist No 122 Oak Lawn Cap
Apprec (FGIC Insd) (a)......................... * 12/01/17 1,705,077
2,995 Cook Cnty, IL Sch Dist No 122 Oak Lawn Cap
Apprec (FGIC Insd) (a)......................... * 12/01/18 1,863,968
</Table>
20 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
ILLINOIS (CONTINUED)
$4,210 Cook Cnty, IL Sch Dist No 122 Oak Lawn Cap
Apprec (FGIC Insd) (a)......................... * 12/01/19 $ 2,487,184
4,050 Cook Cnty, IL Sch Dist No 122 Oak Lawn Cap
Apprec (FGIC Insd)............................. * 12/01/20 2,262,654
3,000 Du Page Cnty, IL Cmnty High Sch (FSA Insd)..... 5.600% 01/01/22 3,226,860
540 Grundy, Kendall & Will Cntys, IL (AMBAC
Insd).......................................... 5.500 05/01/20 570,067
340 Grundy, Kendall & Will Cntys, IL (AMBAC
Insd).......................................... 5.500 05/01/21 356,544
3,000 Huntley, IL Spl Svc Area No 10 Spl Tax Rfdg
(AGL Insd)..................................... 5.100 03/01/29 3,126,390
2,000 Illinois Dev Fin Auth Rev Sch Dist Pgm Rockford
Sch 205 (FSA Insd)............................. 6.650 02/01/11 2,190,000
5,000 Illinois Fin Auth Rev Osf Hlthcare Sys Ser A... 5.750 11/15/37 5,244,200
1,465 Illinois Hsg Dev Auth Multi Fam Rev Ser K...... 4.600 07/01/23 1,451,141
2,000 Illinois Med Dist (MBIA Insd).................. 5.250 06/01/32 2,086,540
3,500 Illinois Muni Elec Agy Pwr Supply Sys Rev Rfdg
(FSA Insd) (Prerefunded @ 2/01/08)............. 5.000 02/01/21 3,552,430
10,000 Illinois St Toll Hwy Auth Toll Highway Rev Sr
Priority Ser A-1 (FSA Insd).................... 5.000 01/01/26 10,464,800
1,200 Lake Cnty, IL Cmnty Cons Sch Dist No 50
Woodland Cap Apprec Ser B (FGIC Insd).......... * 12/01/14 907,632
6,790 Lake Cnty, IL Cmnty Unit Sch Dist No 60
Waukegan Cap Apprec Ser A (FSA Insd)........... * 12/01/17 4,444,327
1,330 McHenry Cnty, IL Cmnty High Sch Dist No 154 Cap
Apprec (FGIC Insd)............................. * 01/01/16 947,399
3,000 McHenry & Kane Cnty, IL Cmnty Cons Sch Dist No
158 Cap Apprec (FGIC Insd)..................... * 01/01/17 2,041,710
4,000 McHenry & Kane Cnty, IL Cmnty Cons Sch Dist No
158 Cap Apprec (FGIC Insd)..................... * 01/01/18 2,590,560
6,000 Metropolitan Pier & Expo Auth IL Dedicated St
Tax Rev McCormick Pl Expn Ser A (MBIA Insd).... 5.250 06/15/42 6,233,280
--------------
170,599,779
--------------
INDIANA 1.3%
610 Indiana Bd Bk Spl Pgm Ser A (AMBAC Insd) (e)... 9.750 08/01/09 647,899
2,350 Indiana Hlth & Ed Fac Fin Cmnty Fndtn Northwest
IN............................................. 5.500 03/01/37 2,348,191
1,245 Indiana Hlth Fac Fin Auth Hosp Rev Cmnty Proj
Ser A (AMBAC Insd)............................. 5.000 05/01/35 1,266,576
5,000 Indiana Muni Pwr Agy Pwr Supply Ser A (MBIA
Insd).......................................... 5.000 01/01/37 5,154,750
3,840 Indiana Muni Pwr Agy Pwr Supply Ser A (MBIA
Insd).......................................... 5.000 01/01/42 3,935,539
500 Plainfield, IN Cmnty High Sch Bldg Corp First
Mtg (FGIC Insd)................................ 5.000 01/15/30 517,995
--------------
13,870,950
--------------
</Table>
See Notes to Financial Statements 21
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
IOWA 0.2%
$2,375 Iowa Fin Auth Hosp Fac Rev Trinity Regl Hosp
Proj (FSA Insd)................................ 5.750% 07/01/17 $ 2,426,466
--------------
KANSAS 0.2%
2,250 Lenexa, KS Hlthcare Fac Rev Rfdg & Impt........ 5.500 05/15/39 2,241,473
--------------
LOUISIANA 2.7%
3,585 Calcasieu Parish, LA Mem Hosp Svc Dist Hosp Rev
Lake Charles Mem Hosp Proj Ser A (Connie Lee
Insd).......................................... 6.375 12/01/12 3,804,653
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 6,602,820
7,500 Lafayette, LA Util Rev (MBIA Insd)............. 5.250 11/01/24 8,017,275
7,000 Louisiana St Gas & Fuels Tax Rev Ser A (XLCA
Insd) (b)...................................... 5.000 05/01/27 7,284,830
2,500 Louisiana St Gas & Fuels Tax Rev Ser A (XLCA
Insd) (b)...................................... 5.000 05/01/28 2,598,088
225 New Orleans, LA Home Mtg Auth Single Family Mtg
Rev Ser 1985 (MBIA Insd)....................... * 09/15/16 88,562
--------------
28,396,228
--------------
MARYLAND 0.4%
1,255 Maryland St Cmnty Dev Admin Dept Hsg & Cmnty
Dev Ser P (AMT) (b)............................ 4.450 09/01/21 1,197,087
1,000 Maryland St Cmnty Dev Admin Dept Hsg & Cmnty
Dev Ser P (AMT) (b)............................ 4.550 09/01/26 953,854
1,350 Maryland St Cmnty Dev Admin Dept Hsg & Cmnty
Dev Ser P (AMT) (b)............................ 4.625 09/01/31 1,287,703
675 Maryland St Cmnty Dev Admin Dept Hsg & Cmnty
Dev Ser P (AMT) (b)............................ 4.700 03/01/37 643,852
--------------
4,082,496
--------------
MASSACHUSETTS 1.2%
2,350 Massachusetts Muni Whsl Elec Co Nuclear Mix Ser
1-A (MBIA Insd)................................ 5.250 07/01/13 2,516,098
175 Massachusetts Muni Whsl Elec Co Proj No. 6-A
Ser A (MBIA Insd).............................. 5.250 07/01/16 187,369
3,000 Massachusetts St Hsg Fin Agy Hsg Ser A (AMT)... 5.200 12/01/37 3,016,770
2,065 Massachusetts St Hsg Fin Agy Hsg Rev Single
Family Hsg Ser 126 (AMT) (b)................... 4.625 06/01/32 1,941,981
5,000 Massachusetts St Wtr Pollutn Abatement Tr Pool
Pgm Ser 12 (b)................................. 4.375 08/01/31 4,761,325
--------------
12,423,543
--------------
</Table>
22 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
MICHIGAN 0.3%
$ 75 Chippewa Valley, MI Sch Bldg & Site (FSA
Insd).......................................... 5.000% 05/01/20 $ 79,162
3,000 Michigan Tob Settlement Fin Auth Tob Settlement
Asset Sr Ser A................................. 6.000 06/01/48 2,999,250
--------------
3,078,412
--------------
MISSISSIPPI 0.6%
1,000 Harrison Cnty, MS Wastewtr Mgmt & Solid
Wastewtr Treatment Fac Rfdg Ser A (FGIC Insd)
(e)............................................ 8.500 02/01/13 1,231,190
5,000 Mississippi Dev Bank Spl Oblg Muni Energy Agy
Pwr Supply Proj Ser A (XLCA Insd).............. 5.000 03/01/41 5,077,100
--------------
6,308,290
--------------
MISSOURI 1.4%
1,170 Mehlville, MO Sch Dist No R-9 Ctf Partn Ser A
(FSA Insd)..................................... 5.500 03/01/16 1,239,451
1,225 Mehlville, MO Sch Dist No R-9 Ctf Partn Ser A
(FSA Insd)..................................... 5.500 03/01/17 1,293,269
2,400 Missouri St Hsg Dev Commn Single Family Mtg Rev
Homeownership Ln Prog (GNMA Collateralized)
(AMT).......................................... 5.100 09/01/38 2,390,640
2,750 Springfield, MO Pub Bldg Corp Leasehold Rev
Springfield Branson Arpt Ser B (AMBAC Insd)
(AMT) (b)...................................... 4.550 07/01/29 2,567,338
3,350 Springfield, MO Pub Bldg Corp Leasehold Rev
Springfield Branson Aprt Ser B (AMBAC Insd)
(AMT) (b)...................................... 4.600 07/01/36 3,127,485
4,475 Springfield, MO Pub Util Rev (FGIC Insd)....... 4.500 08/01/36 4,353,504
--------------
14,971,687
--------------
MONTANA 1.4%
2,900 Forsyth, MT Pollutn Ctl Rev Northwestn Corp
Colstrip Rfdg (AMBAC Insd)..................... 4.650 08/01/23 2,908,381
3,000 Montana Fac Fin Auth Hlthcare Fac Rev St Luke
Cmnty Hlthcare Proj Ser C...................... 4.750 01/01/32 2,921,790
3,750 Montana Fac Fin Auth Rev Benefis Hlth Sys (AGL
Insd).......................................... 5.000 01/01/37 3,817,875
5,000 Montana St Brd Hsg Single Family Mtg Ser A-2
(AMT).......................................... 4.800 12/01/37 4,766,200
--------------
14,414,246
--------------
NEBRASKA 0.5%
3,620 Saunders Cnty, NE (FSA Insd) (a)............... 5.000 11/01/35 3,688,165
2,000 Washington Cnty, NE Wastewtr & Solid Waste Disp
Fac Rev Cargill Inc Proj (AMT)................. 4.850 04/01/35 1,895,380
--------------
5,583,545
--------------
</Table>
See Notes to Financial Statements 23
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
NEVADA 2.1%
$10,040 Clark Cnty, NV Arpt Rev Sub Lien Ser A-1 (AMT)
(FGIC Insd) (b)................................ 5.500% 07/01/22 $ 10,600,784
10,000 Director St, NV Dept Business & Ind Las Vegas
Monorail Proj First Tier (AMBAC Insd).......... 5.625 01/01/32 10,523,100
935 Reno, NV Cap Impt Rev (FGIC Insd).............. 5.125 06/01/26 974,532
--------------
22,098,416
--------------
NEW JERSEY 7.6%
4,000 Tobacco Settlement Fin Corp NJ Ser A-1......... 4.750 06/01/34 3,331,560
13,430 Tobacco Settlement Fin Corp NJ Ser A-1 (b)..... 4.750 06/01/34 11,349,564
70,000 Tobacco Settlement Fin Corp NJ Ser A-1 (b)..... 5.000 06/01/41 63,906,673
--------------
78,587,797
--------------
NEW YORK 2.2%
5,000 Liberty, NY Dev Corp Rev Goldman Sachs
Headquarters................................... 5.250 10/01/35 5,340,550
5,470 New York City Hlth & Hosp Hlth Sys Ser A (FSA
Insd).......................................... 5.000 02/15/21 5,678,680
5,000 New York City, NY Indl Dev Agy Civic Fac Rev
Polytechnic Univ Proj (ACA Insd) (b)........... 5.250 11/01/27 4,969,850
2,360 New York City, NY City Hsg Dev Corp Ser B-1
(AMT).......................................... 5.125 11/01/32 2,374,113
3,105 New York St Dorm Auth Rev Insd Brooklyn Law Sch
Ser B (XLCA Insd) (a).......................... 5.375 07/01/21 3,351,444
1,000 New York St Mtg Agy Homeowner Mtg Rev (AMT).... 5.125 10/01/37 996,950
--------------
22,711,587
--------------
NORTH CAROLINA 0.2%
1,650 North Carolina Hsg Fin Agy Homeownership Rev
Ser 30-A (AMT) (c)............................. 5.250 07/01/39 1,663,712
--------------
NORTH DAKOTA 1.2%
5,000 Mercer Cnty, ND Pollutn Ctl Rev Antelope Vly
Station Rfdg (AMBAC Insd)...................... 7.200 06/30/13 5,599,650
5,000 Oliver Cnty, ND Pollutn Ctl Rev Square Butte
Elec Coop Rfdg Ser A (AMBAC Insd).............. 5.300 01/01/27 5,175,700
1,125 Ward Cnty, ND Hlthcare Fac Rev Trinity
Obligated Group................................ 5.125 07/01/25 1,128,847
--------------
11,904,197
--------------
OKLAHOMA 0.9%
1,480 Jenks, OK Aquarium Auth Rev Rfdg (MBIA Insd)... 5.250 07/01/33 1,557,567
4,320 McAlester, OK Pub Wks Auth Util Cap Apprec Ser
A (FSA Insd)................................... * 02/01/30 1,266,321
2,400 Oklahoma City, OK Pub Ppty Auth Hotel Tax Rev
(FGIC Insd).................................... 5.250 10/01/29 2,528,976
</Table>
24 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
OKLAHOMA (CONTINUED)
$2,000 Oklahoma Colleges Brd Regt Stad Univ Cent OK
Ser B (AMBAC Insd)............................. 5.500% 06/01/24 $ 2,186,360
2,000 Tulsa, OK Cmnty College Rev (AMBAC Insd)....... 5.500 07/01/22 2,161,520
--------------
9,700,744
--------------
PENNSYLVANIA 3.5%
5,000 Allegheny Cnty, PA Hosp Dev Auth Rev Insd Hlth
Sys Ser A (MBIA Insd) (Prerefunded @
11/15/10)...................................... 6.500 11/15/30 5,523,500
4,875 Allegheny Cnty, PA Hosp Dev Auth Rev Pittsburgh
Mercy Hlth Sys Inc (AMBAC Insd) (e)............ 5.625 08/15/26 5,236,091
3,000 Allegheny Cnty, PA San Auth Swr (FGIC Insd).... 5.000 12/01/37 3,112,860
250 Harrisburg, PA Auth Res Gtd Sub Ser D-2 (FSA
Insd).......................................... 5.000 12/01/33 266,148
3,000 Lycoming Cnty, PA Auth College Rev PA College
of Technology (AMBAC Insd)..................... 5.350 07/01/26 3,117,540
1,800 Pennsylvania Hsg Fin Agy Single Family Mtg Rev
Ser 96-A (AMT) (b)............................. 4.600 10/01/27 1,691,408
2,500 Pennsylvania Hsg Fin Agy Single Family Mtg Rev
Ser 96-A (AMT) (b)............................. 4.650 10/01/31 2,349,180
4,700 Pennsylvania Hsg Fin Agy Single Family Mtg Rev
Ser 96-A (AMT) (b)............................. 4.700 10/01/37 4,416,458
4,555 Philadelphia, PA Gas Wks Rev 1998 Gen Ordinance
4th Ser (FSA Insd)............................. 5.250 08/01/21 4,794,183
1,485 Philadelphia, PA Gas Wks Rev Eighteenth Ser AGC
(AGL Insd)..................................... 5.250 08/01/20 1,578,169
3,665 Philadelphia, PA Gas Wks Rev Fifth Ser A-1 (AGL
Insd) (a)...................................... 5.250 09/01/17 3,953,875
--------------
36,039,412
--------------
RHODE ISLAND 0.1%
1,075 Rhode Island Hsg & Mtg Fin Corp Homeownership
Oppty Ser 57-B (AMT)........................... 5.350 10/01/37 1,092,458
--------------
SOUTH CAROLINA 2.6%
3,325 Columbia, SC Pkg Fac Rev Ser A (CIFG Insd)..... 5.000 02/01/37 3,395,457
5,170 Easley, SC Util Rev Impt & Rfdg (FSA Insd)..... 5.000 12/01/34 5,328,822
3,000 Kershaw Cnty, SC Pub Sch Fndtn Installment Pwr
Rev Dist Proj (CIFG Insd)...................... 5.000 12/01/30 3,096,750
3,800 Scago Ed & Fac Corp for Cherokee Cnty SC Proj
Ser B (FSA Insd)............................... 5.000 12/01/30 3,936,344
6,500 South Carolina Jobs Econ Dev Auth Indl Rev Elec
& Gas Co Proj Ser A (AMBAC Insd)............... 5.200 11/01/27 6,822,855
4,000 South Carolina Jobs Econ Tuomey (CIFG Insd).... 5.000 11/01/30 4,096,640
--------------
26,676,868
--------------
</Table>
See Notes to Financial Statements 25
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
SOUTH DAKOTA 1.0%
$5,205 South Dakota St Lease Rev Tr Ctf Ser A (FSA
Insd).......................................... 6.625% 09/01/12 $ 5,695,936
4,000 South Dakota St Lease Rev Tr Ctf Ser A (FSA
Insd).......................................... 6.700 09/01/17 4,857,280
--------------
10,553,216
--------------
TEXAS 7.5%
620 Alamo, TX Cmnty College Dist Combined Fee Rfdg
(FSA Insd)..................................... 5.000 11/01/22 641,744
5,000 Brazos Riv Auth TX Rev Houston Ind Inc Proj Ser
C (AMBAC Insd)................................. 5.125 05/01/19 5,132,800
4,000 Dallas Fort Worth, TX Intl Arpt Rev Impt Ser B
(FSA Insd) (AMT) (b)........................... 5.375 11/01/21 4,202,640
6,110 Dallas Fort Worth, TX Intl Arpt Rev Impt Ser B
(FSA Insd) (AMT) (b)........................... 5.500 11/01/19 6,511,549
5,000 Houston, TX Util Sys Rev First Lien Rfdg Ser A
(FSA Insd)..................................... 5.000 11/15/36 5,170,500
22,500 Houston, TX Util Sys Rev First Lien Rfdg Ser A
(FGIC Insd).................................... 5.250 05/15/23 23,910,075
750 Laredo, TX Cmnty College Dist Unrefunded
Balance Bldg & Rfdg (AMBAC Insd)............... 5.300 08/01/26 776,190
4,000 North TX Hlth Fac Dev Corp United Regl Hlthcare
Sys (FSA Insd)................................. 5.000 09/01/32 4,102,160
3,000 Nueces Riv Auth TX Wtr Supply Rev Fac Corpus
Christi Proj Rfdg (FSA Insd)................... 5.000 07/15/25 3,122,550
2,000 Nueces Riv Auth TX Wtr Supply Rev Fac Corpus
Christi Proj Rfdg (FSA Insd)................... 5.000 03/01/27 2,075,000
2,000 San Antonio, TX Hotel Occupancy Rev Sub Lien
Rfdg Ser A (AMBAC Insd)........................ 5.000 08/15/29 2,046,360
5,000 Tarrant Cnty, TX Cultural Ed Fac Fin Corp
Retirement Fac Buckner Retirement Svcs Inc
Proj........................................... 5.250 11/15/37 5,100,100
1,750 Tarrant Cnty, TX Hlth Fac Dev Corp Hlth Sys Rev
Ser B (FGIC Insd) (e).......................... 5.000 09/01/15 1,873,200
1,000 Texas St Dept Hsg & Cmnty Affairs Single Family
Rev Ser B (GNMA Collateralized) (AMT).......... 5.250 09/01/32 1,012,940
1,000 Texas St Dept Hsg & Cmnty Affairs Single Family
Rev Ser B (GNMA Collateralized) (AMT).......... 5.300 09/01/39 1,009,930
10,000 Texas St Tpk Auth Cent TX Tpk First Tier Ser A
(AMBAC Insd)................................... 5.500 08/15/39 10,608,500
--------------
77,296,238
--------------
UTAH 0.1%
520 Provo, UT Elec Rev 1984 Rfdg Ser A (AMBAC Insd)
(e)............................................ 10.375 09/15/15 664,711
--------------
</Table>
26 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
VIRGINIA 3.0%
$3,150 Virginia St Hsg Auth Dev Auth Rental Hsg Ser D
(AMT) (b)...................................... 4.500% 07/01/29 $ 2,955,676
3,650 Virginia St Hsg Auth Dev Auth Rental Hsg Ser D
(AMT) (b)...................................... 4.600 07/01/33 3,449,158
5,835 Virginia St Hsg Auth Dev Auth Rental Hsg Ser D
(AMT) (b)...................................... 4.650 01/01/39 5,430,405
10,000 Virginia St Hsg Dev Auth Comwlth Mtg Ser A-1
(AMT).......................................... 5.100 10/01/35 10,018,300
9,950 Virginia St Hsg Dev Auth Comwlth Mtg Ser B
(AMT) (b)...................................... 4.850 01/01/36 9,529,290
--------------
31,382,829
--------------
WASHINGTON 7.2%
4,115 Chelan Cnty, WA Sch Dist No 246 (FSA Insd)..... 5.000 12/01/21 4,310,997
11,340 Energy Northwest WA Elec Rev Columbia
Generating Rfdg Ser A (FSA Insd)............... 5.500 07/01/17 12,123,481
4,500 Energy Northwest WA Elec Rev Proj No 3 Rfdg Ser
A (FSA Insd)................................... 5.500 07/01/17 4,810,905
14,500 Energy Northwest WA Elec Rev Proj No 3 Rfdg Ser
A (FSA Insd)................................... 5.500 07/01/18 15,493,830
5,000 Energy Northwest WA Elec Rev Proj No 3 Rfdg Ser
B (FSA Insd)................................... 6.000 07/01/16 5,497,200
1,365 Energy Northwest WA Wind Proj (AMBAC Insd)..... 5.000 07/01/23 1,403,561
1,215 Fife, WA Wtr & Swr Rev (MBIA Insd) (a)......... 5.000 04/01/24 1,259,688
1,160 Fife, WA Wtr & Swr Rev (MBIA Insd) (a)......... 5.000 04/01/29 1,196,030
1,895 Fife, WA Wtr & Swr Rev (MBIA Insd)............. 5.125 04/01/24 1,907,299
2,500 Goat Hill Ppty WA Lease Rev Govt Office Bldg
Proj (MBIA Insd)............................... 5.000 12/01/33 2,558,225
5,115 Lynnwood, WA Pub Fac Dist Rev Convention Ctr
(AMBAC Insd)................................... 5.000 12/01/34 5,249,524
4,185 Port Seattle, WA Rev Inter Lien Rfdg (XLCA
Insd).......................................... 5.000 02/01/27 4,333,358
1,250 Skagit Cnty, WA Pub Hosp Dist No 001 Rev Skagit
Vy Hosp........................................ 5.750 12/01/28 1,301,175
145 Snohomish Cnty, WA Pub Util 1 (FSA Insd)....... 5.000 12/01/24 149,147
2,565 Snohomish Cnty, WA Pub Util 1 (FSA Insd)....... 5.500 12/01/23 2,746,807
3,000 Spokane, WA Pub Fac Dist Hotel (MBIA Insd)..... 5.250 09/01/33 3,119,610
2,000 Spokane, WA Pub Fac Dist Hotel (MBIA Insd)..... 5.750 12/01/25 2,186,280
2,420 Spokane, WA Pub Fac Dist Hotel (MBIA Insd)..... 5.750 12/01/26 2,630,225
2,000 Washington St Hsg Fin Commn Single Family Prog
Ser 2-A (GNMA Collateralized) (AMT)............ 4.700 12/01/38 1,874,160
--------------
74,151,502
--------------
WEST VIRGINIA 0.2%
1,530 West Virginia Econ Dev Auth Lease Rev
Correctional Juvenile & Pub Ser A (MBIA
Insd).......................................... 5.500 06/01/19 1,655,582
--------------
</Table>
See Notes to Financial Statements 27
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
WISCONSIN 0.4%
$4,000 Wisconsin Pub Pwr Inc Sys Pwr Supply Sys Rev
Ser A (AMBAC Insd)............................. 5.000% 07/01/37 $ 4,112,320
--------------
PUERTO RICO 0.3%
3,000 Puerto Rico Indl Tourist Ed Med & Environmental
Ctl Fac Hosp Aux (MBIA Insd)................... 6.250 07/01/16 3,006,570
--------------
TOTAL LONG-TERM INVESTMENTS 119.9%
(Cost $1,229,169,169).................................................... 1,238,678,843
--------------
TOTAL SHORT-TERM INVESTMENTS 4.7%
(Cost $48,725,000)....................................................... 48,725,000
--------------
TOTAL INVESTMENTS 124.6%
(Cost $1,277,894,169).................................................... 1,287,403,843
LIABILITY FOR FLOATING RATE NOTE OBLIGATIONS RELATED TO SECURITIES
HELD (23.7%)
(Cost ($244,725,000))
(244,725) Notes with interest rates ranging from 3.80% to 4.00% at
September 30, 2007 and contractual maturities of collateral
ranging from 2019 to 2047 (See Note 1) (d)..................... (244,725,000)
--------------
TOTAL NET INVESTMENTS 100.9%
(Cost $984,444,169)...................................................... 1,042,678,843
LIABILITIES IN EXCESS OF OTHER ASSETS (0.9%).............................. (9,339,361)
--------------
NET ASSETS 100.0%......................................................... $1,033,339,482
==============
</Table>
Percentages are calculated as a percentage of net assets.
* Zero coupon bond
(a) The Fund owns 100% of the outstanding bond issuance.
(b) Underlying security related to Inverse Floaters entered into by the Fund.
See Notes 1H and 6B.
(c) Security purchased on a when-issued or delayed delivery basis.
(d) Floating rate notes. The interest rates shown reflect the rates in effect at
September 30, 2007.
(e) Escrowed to Maturity
(f) All or a portion of this security has been physically segregated in
connection with open futures contracts.
(g) Inverse Floating Rate. The interest rates shown reflect the rates in effect
at September 30, 2007.
28 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
(h) 144A -- Private Placement security which is exempt from registration under
Rule 144A of the Securities Act of 1933, as amended. This security may only
be resold in transactions exempt from registration, which are normally those
transactions with qualified institutional buyers.
ACA--American Capital Access
AGL--Assured Guaranty Ltd.
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.
GNMA--Government National Mortgage Association
MBIA--Municipal Bond Investors Assurance Corp.
Radian--Radian Asset Assurance
XLCA--XL Capital Assurance Inc.
FUTURES CONTRACTS OUTSTANDING AS OF SEPTEMBER 30, 2007:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
SHORT CONTRACTS:
U.S. Treasury Bond Futures, December 2007
(Current Notional Value of $111,344 per contract)......... 1,926 $1,698,258
----- ----------
</Table>
See Notes to Financial Statements 29
VAN KAMPEN INSURED TAX FREE INCOME FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
September 30, 2007
<Table>
ASSETS:
Total Investments (Cost $1,277,894,169)..................... $1,287,403,843
Cash........................................................ 1,383,963
Receivables:
Interest.................................................. 13,501,084
Fund Shares Sold.......................................... 176,430
Other....................................................... 337,965
--------------
Total Assets............................................ 1,302,803,285
--------------
LIABILITIES:
Payables:
Floating Rate Note Obligations............................ 244,725,000
Investments Purchased..................................... 20,169,895
Fund Shares Repurchased................................... 2,554,346
Income Distributions...................................... 657,228
Investment Advisory Fee................................... 434,088
Distributor and Affiliates................................ 357,297
Trustees' Deferred Compensation and Retirement Plans........ 417,730
Accrued Expenses............................................ 148,219
--------------
Total Liabilities....................................... 269,463,803
--------------
NET ASSETS.................................................. $1,033,339,482
==============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $1,023,368,987
Net Unrealized Appreciation................................. 11,207,932
Accumulated Undistributed Net Investment Income............. 2,625,987
Accumulated Net Realized Loss............................... (3,863,424)
--------------
NET ASSETS.................................................. $1,033,339,482
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $983,277,247 and 55,483,208 shares of
beneficial interest issued and outstanding)............. $ 17.72
Maximum sales charge (4.75%* of offering price)......... 0.88
--------------
Maximum offering price to public........................ $ 18.60
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $30,010,524 and 1,695,492 shares of
beneficial interest issued and outstanding)............. $ 17.70
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $18,979,179 and 1,073,322 shares of
beneficial interest issued and outstanding)............. $ 17.68
==============
Class I Shares:
Net asset value and offering price per share (Based on
net assets of $1,072,532 and 60,519 shares of beneficial
interest issued and outstanding)........................ $ 17.72
==============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
30 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended September 30, 2007
<Table>
INVESTMENT INCOME:
Interest.................................................... $ 60,919,911
------------
EXPENSES:
Interest and Residual Trust Expenses........................ 7,254,839
Investment Advisory Fee..................................... 5,589,961
Distribution (12b-1) and Service Fees
Class A................................................... 2,558,961
Class B................................................... 374,252
Class C................................................... 195,990
Transfer Agent Fees......................................... 647,259
Accounting and Administrative Expenses...................... 218,508
Professional Fees........................................... 152,430
Reports to Shareholders..................................... 96,310
Custody..................................................... 68,435
Registration Fees........................................... 55,966
Trustees' Fees and Related Expenses......................... 51,231
Other....................................................... 62,287
------------
Total Expenses.......................................... 17,326,429
Less Credits Earned on Cash Balances.................... 51,630
------------
Net Expenses............................................ 17,274,799
------------
NET INVESTMENT INCOME....................................... $ 43,645,112
============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 7,009,971
Futures................................................... (9,711,280)
Swaps..................................................... (2,862,937)
------------
Net Realized Loss........................................... (5,564,246)
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 55,739,241
------------
End of the Period:
Investments............................................. 9,509,674
Futures................................................. 1,698,258
------------
11,207,932
------------
Net Unrealized Depreciation During the Period............... (44,531,309)
------------
NET REALIZED AND UNREALIZED LOSS............................ $(50,095,555)
============
NET DECREASE IN NET ASSETS FROM OPERATIONS.................. $ (6,450,443)
============
</Table>
See Notes to Financial Statements 31
VAN KAMPEN INSURED TAX FREE INCOME FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets
<Table>
<Caption>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2007 SEPTEMBER 30, 2006
---------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................ $ 43,645,112 $ 44,231,145
Net Realized Gain/Loss............................... (5,564,246) 9,909,928
Net Unrealized Depreciation During the Period........ (44,531,309) (4,367,911)
-------------- --------------
Change in Net Assets from Operations................. (6,450,443) 49,773,162
-------------- --------------
Distributions from Net Investment Income:
Class A Shares..................................... (40,174,291) (41,491,407)
Class B Shares..................................... (1,163,640) (1,533,329)
Class C Shares..................................... (610,672) (670,641)
Class I Shares..................................... (88,748) (78,466)
-------------- --------------
(42,037,351) (43,773,843)
-------------- --------------
Distributions from Net Realized Gain:
Class A Shares..................................... (3,149,919) (22,486,062)
Class B Shares..................................... (122,192) (1,089,279)
Class C Shares..................................... (59,328) (456,473)
Class I Shares..................................... (7,068) (37,990)
-------------- --------------
(3,338,507) (24,069,804)
-------------- --------------
Total Distributions.................................. (45,375,858) (67,843,647)
-------------- --------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES......................................... (51,826,301) (18,070,485)
-------------- --------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold............................ 61,750,099 74,704,286
Net Asset Value of Shares Issued Through Dividend
Reinvestment....................................... 36,270,893 54,158,045
Cost of Shares Repurchased........................... (155,459,171) (162,232,377)
-------------- --------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS... (57,438,179) (33,370,046)
-------------- --------------
TOTAL DECREASE IN NET ASSETS......................... (109,264,480) (51,440,531)
NET ASSETS:
Beginning of the Period.............................. 1,142,603,962 1,194,044,493
-------------- --------------
End of the Period (Including accumulated
undistributed net investment income of $2,625,987
and $1,060,848, respectively)...................... $1,033,339,482 $1,142,603,962
============== ==============
</Table>
32 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
FINANCIAL STATEMENTS continued
Statement of Cash Flows
For the Year Ended September 30, 2007
<Table>
CHANGE IN NET ASSETS FROM OPERATIONS........................ $ (6,450,443)
-------------
Adjustments to Reconcile the Change in Net Assets from
Operations to Net Cash Provided by Operating Activities:
Purchases of Investments.................................. (744,388,246)
Proceeds from Sales/Maturities of Investments............. 640,097,253
Net Sales of Short-Term Investments....................... 17,120,000
Amortization of Premium................................... 2,422,813
Accretion of Discount..................................... (1,505,311)
Net Realized Gain on Investments.......................... (7,009,971)
Net Change in Unrealized Depreciation on Investments...... 48,114,712
Decrease in Swap Contracts................................ (926,662)
Decrease in Variation Margin on Futures................... 83,437
Decrease in Interest Receivables and Other Assets......... 424,270
Decrease in Receivable for Investments Sold............... 1,297,148
Decrease in Accrued Expenses and Other Payables........... (94,378)
Decrease in Investments Purchased Payable................. (29,186,109)
-------------
Total Adjustments....................................... (73,551,044)
-------------
NET CASH PROVIDED BY OPERATING ACTIVITIES................... (80,001,487)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Shares Sold................................. 62,074,417
Repurchased Shares........................................ (154,708,406)
Dividends Paid (net of reinvested dividends of
$36,270,893)............................................ (9,260,805)
Proceeds from Floating Rate Note Obligations.............. 181,595,000
-------------
NET CASH PROVIDED BY FINANCING ACTIVITIES................... 79,700,206
-------------
Net Decrease in Cash........................................ (301,281)
Cash at the Beginning of the Period......................... 1,685,244
-------------
CASH AT THE END OF THE PERIOD............................... $ 1,383,963
=============
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Year for Interest.................... $ 7,254,839
=============
</Table>
See Notes to Financial Statements 33
VAN KAMPEN INSURED TAX FREE INCOME FUND
FINANCIAL HIGHLIGHTS
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS A SHARES ------------------------------------------------------
2007 2006 2005 2004 2003
------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................. $18.59 $ 18.87 $ 19.07 $ 19.27 $ 19.65
------ -------- -------- -------- --------
Net Investment Income.............. 0.74(a) 0.72(a) 0.72 0.76 0.77
Net Realized and Unrealized
Gain/Loss........................ (0.84) 0.09 (0.01) 0.02 (0.23)
------ -------- -------- -------- --------
Total from Investment Operations..... (0.10) 0.81 0.71 0.78 0.54
------ -------- -------- -------- --------
Less:
Distributions from Net Investment
Income........................... 0.71 0.71 0.74 0.75 0.74
Distributions from Net Realized
Gain............................. 0.06 0.38 0.17 0.23 0.18
------ -------- -------- -------- --------
Total Distributions.................. 0.77 1.09 0.91 0.98 0.92
------ -------- -------- -------- --------
NET ASSET VALUE, END OF THE PERIOD... $17.72 $ 18.59 $ 18.87 $ 19.07 $ 19.27
====== ======== ======== ======== ========
Total Return (b)..................... -0.63% 4.49% 3.77% 4.22% 2.90%
Net Assets at End of the Period (In
millions).......................... $983.3 $1,075.9 $1,114.2 $1,137.2 $1,209.9
Ratio of Expenses to Average Net
Assets............................. 1.54% 1.00% 0.94% 0.89% 0.86%
Ratio of Net Investment Income to
Average Net Assets................. 4.02% 3.87% 3.81% 3.99% 4.02%
Portfolio Turnover................... 51% 45% 65% 39% 58%
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net
Assets (Excluding Interest and
Residual Trust Expenses)........... 0.88% 0.88% 0.88% 0.87% 0.86%
</Table>
(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 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.
34 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS B SHARES ----------------------------------------------
2007 2006 2005 2004 2003
----------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD.... $18.57 $18.85 $19.05 $19.24 $19.63
------ ------ ------ ------ ------
Net Investment Income..................... 0.60(a) 0.58(a) 0.59 0.62 0.63
Net Realized and Unrealized Gain/Loss..... (0.84) 0.09 (0.02) 0.02 (0.24)
------ ------ ------ ------ ------
Total from Investment Operations............ (0.24) 0.67 0.57 0.64 0.39
------ ------ ------ ------ ------
Less:
Distributions from Net Investment
Income.................................. 0.57 0.57 0.60 0.60 0.60
Distributions from Net Realized Gain...... 0.06 0.38 0.17 0.23 0.18
------ ------ ------ ------ ------
Total Distributions......................... 0.63 0.95 0.77 0.83 0.78
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD.......... $17.70 $18.57 $18.85 $19.05 $19.24
====== ====== ====== ====== ======
Total Return (b)............................ -1.38% 3.71% 3.04% 3.43% 2.08%
Net Assets at End of the Period (In
millions)................................. $ 30.0 $ 43.0 $ 56.2 $ 66.4 $ 82.6
Ratio of Expenses to Average Net Assets..... 2.29% 1.75% 1.70% 1.65% 1.62%
Ratio of Net Investment Income to Average
Net Assets................................ 3.25% 3.11% 3.05% 3.23% 3.26%
Portfolio Turnover.......................... 51% 45% 65% 39% 58%
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses)................................. 1.63% 1.63% 1.64% 1.63% 1.62%
</Table>
(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.
See Notes to Financial Statements 35
VAN KAMPEN INSURED TAX FREE INCOME FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS C SHARES ----------------------------------------------
2007 2006 2005 2004 2003
----------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD.... $18.55 $18.84 $19.04 $19.23 $19.62
------ ------ ------ ------ ------
Net Investment Income..................... 0.60(a) 0.58(a) 0.58 0.62 0.63
Net Realized and Unrealized Gain/Loss..... (0.84) 0.08 (0.01) 0.02 (0.24)
------ ------ ------ ------ ------
Total from Investment Operations............ (0.24) 0.66 0.57 0.64 0.39
------ ------ ------ ------ ------
Less:
Distributions from Net Investment
Income.................................. 0.57 0.57 0.60 0.60 0.60
Distributions from Net Realized Gain...... 0.06 0.38 0.17 0.23 0.18
------ ------ ------ ------ ------
Total Distributions......................... 0.63 0.95 0.77 0.83 0.78
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD.......... $17.68 $18.55 $18.84 $19.04 $19.23
====== ====== ====== ====== ======
Total Return (b)............................ -1.38% 3.66% 3.04% 3.43% 2.08%
Net Assets at End of the Period (In
millions)................................. $ 19.0 $ 21.3 $ 21.7 $ 19.9 $ 24.1
Ratio of Expenses to Average Net Assets..... 2.29% 1.75% 1.70% 1.65% 1.62%
Ratio of Net Investment Income to Average
Net Assets................................ 3.26% 3.11% 3.05% 3.23% 3.25%
Portfolio Turnover.......................... 51% 45% 65% 39% 58%
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses)................................. 1.63% 1.63% 1.64% 1.63% 1.62%
</Table>
(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.
36 See Notes to Financial Statements
VAN KAMPEN INSURED TAX FREE INCOME FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED AUGUST 12, 2005
SEPTEMBER 30, (COMMENCEMENT OF
CLASS I SHARES ------------------- OPERATIONS) TO
2007 2006 SEPTEMBER 30, 2005
-----------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD......... $18.59 $18.87 $18.93
------ ------ ------
Net Investment Income.......................... 0.78(a) 0.75(a) 0.10
Net Realized and Unrealized Gain/Loss.......... (0.84) 0.10 (0.06)
------ ------ ------
Total from Investment Operations................. (0.06) 0.85 0.04
------ ------ ------
Less:
Distributions from Net Investment Income....... 0.75 0.75 0.10
Distributions from Net Realized Gain........... 0.06 0.38 -0-
------ ------ ------
Total Distributions.............................. 0.81 1.13 0.10
------ ------ ------
NET ASSET VALUE, END OF THE PERIOD............... $17.72 $18.59 $18.87
====== ====== ======
Total Return (b)................................. -0.38% 4.75% 0.20%*
Net Assets at End of the Period (In millions).... $ 1.1 $ 2.4 $ 1.9
Ratio of Expenses to Average Net Assets.......... 1.29% 0.75% 0.70%
Ratio of Net Investment Income to Average Net
Assets......................................... 4.23% 4.11% 4.06%
Portfolio Turnover............................... 51% 45% 65%
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses)...................................... 0.63% 0.63% 0.64%
</Table>
* Non-Annualized
(a) Based on average shares outstanding.
(b) 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.
See Notes to Financial Statements 37
VAN KAMPEN INSURED TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007
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 with 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 last reported 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. Interest rate swaps are valued
using market quotations obtained from brokers. 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 September 30, 2007, the Fund had $19,650,630 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
38
VAN KAMPEN INSURED TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
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, 2007, the Fund had an accumulated capital loss
carryforward for tax purposes of $210,390 which will expire on September 30,
2015.
At September 30, 2007, the cost and related gross unrealized appreciation
and depreciation were as follows:
<Table>
Cost of investments for tax purposes........................ $1,028,238,575
==============
Gross tax unrealized appreciation........................... $ 34,726,881
Gross tax unrealized depreciation........................... (20,286,613)
--------------
Net tax unrealized appreciation on investments.............. $ 14,440,268
==============
</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 and a portion of futures gains,
which are included in ordinary income for tax purposes.
The tax character of distributions paid during the years ended September 30,
2007 and 2006 was as follows:
<Table>
<Caption>
2007 2006
Distributions paid from:
Ordinary income........................................... $ 368,719 $ 5,594,196
Tax exempt income......................................... 41,829,550 43,813,499
Long-term capital gain.................................... 3,333,429 18,477,514
----------- -----------
$45,531,698 $67,885,209
=========== ===========
</Table>
Permanent differences, primarily due to the Fund's investment in other
regulated investment companies, resulted in the following reclassification among
the Fund's components of net assets at September 30, 2007:
<Table>
<Caption>
ACCUMULATED UNDISTRIBUTED ACCUMULATED NET
NET INVESTMENT INCOME REALIZED LOSS CAPITAL
$(42,622)........ $42,622 $-0-
</Table>
As of September 30, 2007, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed ordinary income............................... $ 11,165
Undistributed tax-exempt income............................. 3,457,102
</Table>
Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of gains or losses recognized on securities for
tax purposes but not for book,
39
VAN KAMPEN INSURED TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
post-October losses of $10,095,585 which are not recognized for tax purposes
until the first day of the following fiscal year, and gains or losses recognized
for tax purposes on open futures transactions on September 30, 2007.
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 year ended September 30, 2007, the Fund's
custody fee was reduced by $51,630 as a result of credits earned on cash
balances.
H. FLOATING RATE NOTE OBLIGATIONS RELATED TO SECURITIES HELD The Fund enters
into transactions in which it transfers to dealer trusts fixed rate bonds in
exchange for cash and residual interest in the dealer trusts' assets and cash
flows, which are in the form of inverse floating rate investments. The dealer
trusts fund the purchases of the fixed rate bonds by issuing floating rate notes
to third parties and allowing the Fund to retain residual interests in the
bonds. The Fund enters into shortfall agreements with the dealer trusts, which
commit the Fund to pay the dealer trusts, in certain circumstances, the
difference between the liquidation value of the fixed rate bonds held by the
dealer trusts and the liquidation value of the floating rate notes held by third
parties, as well as any shortfalls in interest cash flows. The residual
interests held by the Fund (inverse floating rate investments) include the right
of the Fund (1) to cause the holders of the floating rate notes to tender their
notes at par at the next interest rate reset date, and (2) to transfer the
municipal bond from the dealer trusts to the Fund, thereby collapsing the dealer
trusts. The Fund accounts for the transfer of bonds to the dealer trusts as
secured borrowings, with the securities transferred remaining in the Fund's
investments assets, and the related floating rate notes reflected as Fund
liabilities under the caption "Floating Rate Note Obligations" on the Statement
of Assets and Liabilities. The Fund records the interest income from the fixed
rate bonds under the caption "Interest" and records the expenses related to
floating rate note obligations and any administrative expenses of the dealer
trusts under the caption "Interest and Residual Trust Expenses" on the Fund's
Statement of Operations. The notes issued by the dealer trust have interest
rates that reset weekly and the floating rate note holders have the option to
tender their notes to the dealer trusts for redemption at par at each reset
date. At September 30, 2007, Fund investments with a value of $322,628,491 are
held by the dealer trusts and serve as collateral for the $244,725,000 in
floating rate notes outstanding at that date. Contractual maturities of the
floating rate notes and interest rates in effect at September 30, 2007 are
presented on the Portfolio of Investments. The average floating rate notes
outstanding and average annual interest and fee rate related to residual
interests during the fiscal year ended September 30, 2007 were $171,285,000 and
4.24%, respectively.
40
VAN KAMPEN INSURED TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 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.......................................... 0.525%
Next $500 million........................................... 0.500%
Next $500 million........................................... 0.475%
Over $1.5 billion........................................... 0.450%
</Table>
For the year ended September 30, 2007, the Fund recognized expenses of
approximately $37,000 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 year ended September 30,
2007, the Fund recognized expenses of approximately $121,600 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 "Professional Fees" on the Statement of Operations. Services provided
pursuant to the Accounting Services and CCO Employment agreement are reported as
part of "Accounting and Administrative 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 year ended
September 30, 2007, the Fund recognized expenses of approximately $515,400
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 $304,676 are included in
"Other" assets on the Statement of Assets and Liabilities at September 30, 2007.
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 year ended September 30, 2007, Van Kampen, as Distributor for the
Fund, received commissions on sales of the Fund's Class A Shares of
approximately $124,400 and
41
VAN KAMPEN INSURED TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
contingent deferred sales charge (CDSC) on redeemed shares of approximately
$63,300. Sales charges do not represent expenses of the Fund.
3. CAPITAL TRANSACTIONS
For the years ended September 30, 2007 and 2006, transactions were as follows:
<Table>
<Caption>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2007 SEPTEMBER 30, 2006
--------------------------- ---------------------------
SHARES VALUE SHARES VALUE
Sales:
Class A......................... 3,029,192 $ 55,440,204 3,647,193 $ 67,459,015
Class B......................... 119,180 2,169,642 145,733 2,695,598
Class C......................... 202,348 3,648,363 193,827 3,592,442
Class I......................... 26,658 491,890 52,223 957,231
---------- ------------- ---------- -------------
Total Sales....................... 3,377,378 $ 61,750,099 4,038,976 $ 74,704,286
========== ============= ========== =============
Dividend Reinvestment:
Class A......................... 1,901,728 $ 34,806,744 2,782,083 $ 51,372,658
Class B......................... 48,204 882,182 99,188 1,829,554
Class C......................... 26,612 486,151 45,556 839,386
Class I......................... 5,217 95,816 6,305 116,447
---------- ------------- ---------- -------------
Total Dividend Reinvestment....... 1,981,761 $ 36,270,893 2,933,132 $ 54,158,045
========== ============= ========== =============
Repurchases:
Class A......................... (7,320,562) $(133,746,892) (7,591,729) $(140,348,327)
Class B......................... (788,918) (14,359,946) (909,576) (16,794,436)
Class C......................... (301,386) (5,496,161) (248,131) (4,575,867)
Class I......................... (102,322) (1,856,172) (27,777) (513,747)
---------- ------------- ---------- -------------
Total Repurchases................. (8,513,188) $(155,459,171) (8,777,213) $(162,232,377)
========== ============= ========== =============
</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 and allocated on a pro rata basis to
each class of shares. For the year ended September 30, 2007, 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. The per share
impact from redemption fees paid to the Fund was less than $0.01.
5. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $746,274,821 and $642,549,022,
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.
42
VAN KAMPEN INSURED TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
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 yield, maturity and duration.
All of the Fund's 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 exercising an option contract or 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
Bonds or Notes for duration and risk management purposes 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 year ended September 30, 2007,
were as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at September 30, 2006........................... 890
Futures Opened.............................................. 13,756
Futures Closed.............................................. (12,720)
-------
Outstanding at September 30, 2007........................... 1,926
=======
</Table>
B. INVERSE FLOATING RATE INVESTMENTS The Fund may invest a portion of its assets
in inverse floating rate instruments, either through outright purchases of
inverse floating rate securities or through the transfer of bonds to a dealer
trust in exchange for cash and residual interests in the dealer trust. These
investments are typically used by the Fund in seeking to enhance the yield of
the portfolio. These instruments typically involve greater risks than a fixed
rate municipal bond. In particular, these instruments are acquired through
leverage or may have leverage embedded in them and therefore involve many of the
risks associated with leverage. Leverage is a speculative technique that may
expose the Fund to greater risk and increased costs. Leverage may cause the
Fund's net asset value to be more volatile than if it had not been leveraged
because leverage tends to magnify the effect of any increases or decreases in
the value of the Fund's portfolio securities. The use of leverage may also cause
the Fund to liquidate portfolio positions when it may not be advantageous to do
so in order to satisfy its obligations with respect to inverse floating rate
instruments.
43
VAN KAMPEN INSURED TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
C. INTEREST RATE SWAPS The Fund may enter into forward interest rate swap
transactions intended to help the Fund manage its overall interest rate
sensitivity, either shorter or longer, generally to more closely align the
Fund's interest rate sensitivity with that of the broader municipal market.
Forward interest rate swap transactions involve the Fund's agreement with a
counterparty to pay, in the future, a fixed or variable rate payment in exchange
for the counterparty paying the Fund a variable or fixed rate payment, the
accruals for which would begin at a specified date in the future (the "effective
date"). The amount of the payment obligation is based on the notional amount of
the forward swap contract and the termination date of the swap (which is akin to
a bond's maturity). The value of the Fund's swap commitment would increase or
decrease based primarily on the extent to which long-term interest rates for
bonds having a maturity of the swap's termination date increases or decreases.
The Fund may terminate a swap contract prior to the effective date, at which
point a realized gain or loss is recognized. When a forward swap is terminated,
it ordinarily does not involve the delivery of securities or other underlying
assets or principal, but rather is settled in cash on a net basis. The Fund
intends, but is not obligated, to terminate its forward swaps before the
effective date. Accordingly, the risk of loss with respect to the swap
counterparty on such transactions is limited to the credit risk associated with
a counterparty failing to honor its commitment to pay any realized gain to the
Fund upon termination. To reduce such credit risk, all counterparties are
required to pledge collateral daily (based on the daily valuation of each swap)
on behalf of the Fund with a value approximately equal to the amount of any
unrealized gain. Reciprocally, when the Fund has an unrealized loss on a swap
contract, the Fund has instructed the custodian to pledge cash or liquid
securities as collateral with a value approximately equal to the amount of the
unrealized loss. Collateral pledges are monitored and subsequently adjusted if
and when the swap valuations fluctuate. Restricted cash, if any, for segregating
purposes is shown on the Statement of Assets and Liabilities.
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 $823,300 and $61,400
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.
44
VAN KAMPEN INSURED TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
9. ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation 48, Accounting for Uncertainty in Income Taxes--an interpretation
of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for income taxes
by prescribing the minimum recognition threshold a tax position must meet before
being recognized in the financial statements. FIN 48 is effective for the fiscal
years beginning after December 15, 2006 and is to be applied to all open tax
years as of the effective date. Recent SEC guidance allows implementing FIN 48
in the fund NAV calculations as late as the fund's last NAV calculation in the
first required financial statement period. As a result, the Fund will
incorporate FIN 48 in its semi annual report on March 31, 2008. The impact to
the Fund's financial statements, if any, is currently being assessed.
In addition, in September 2006, Statement of Financial Accounting Standards
No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for
fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 will have on the Fund's financial statement disclosures.
45
VAN KAMPEN INSURED TAX FREE INCOME FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of
Van Kampen Insured Tax Free Income Fund
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Van Kampen Insured Tax Free Income
Fund (one of the Funds constituting the Van Kampen Tax Free Trust (the "Fund"))
as of September 30, 2007, and the related statements of operations and cash
flows for the year then ended, the statements of changes in net assets for each
of the two years in the period then ended, and the financial highlights for the
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
We were not engaged to perform an audit of the Fund's internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of September 30, 2007, by correspondence with the
custodian and brokers or by other appropriate auditing procedures where replies
from brokers were not received. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen Insured Tax Free Income Fund of the Van Kampen Tax Free Trust at
September 30, 2007, the results of its operations and its cash flows for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Chicago, Illinois
November 16, 2007
46
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
DENNIS SHEA
Vice President
J. DAVID GERMANY
Vice President
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
STUART N. SCHULDT
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
522 Fifth Avenue
New York, New York 10036
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
One Parkview Plaza - Suite 100
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
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
For federal income tax purposes, the following information is furnished with
respect to the distributions paid by the Fund during its taxable year ended
September 30, 2007. The Fund designated 99.1% of the income distributions as a
tax-exempt income distribution. The Fund designated and paid $3,333,429 as a
long-term capital gain distribution. In January, the Fund provides tax
information to shareholders for the preceding calender year.
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
47
VAN KAMPEN INSURED TAX FREE INCOME FUND
TRUSTEES AND OFFICERS
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees and the Fund's officers appointed by the Board of
Trustees. The tables below list the trustees and executive officers of the Fund
and their principal occupations during the last five years, other directorships
held by trustees and their affiliations, if any, with Van Kampen Investments,
the Adviser, the Distributor, Van Kampen Advisors Inc., Van Kampen Exchange
Corp. and Investor Services. The term "Fund Complex" includes each of the
investment companies advised by the Adviser as of the date of this Annual
Report. Trustees serve until reaching their retirement age or until their
successors are duly elected and qualified. Officers are annually elected by the
trustees.
INDEPENDENT TRUSTEES:
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (62) Trustee Trustee Chairman and Chief 73 Trustee/Director/Managing
Blistex Inc. since 2003 Executive Officer of General Partner of funds
1800 Swift Drive Blistex Inc., a consumer in the Fund Complex.
Oak Brook, IL 60523 health care products Director of the Heartland
manufacturer. Alliance, a nonprofit
organization serving
human needs based in
Chicago. Board member of
the Illinois
Manufacturers'
Association.
Jerry D. Choate (69) Trustee Trustee Prior to January 1999, 73 Trustee/Director/Managing
33971 Selva Road since 1999 Chairman and Chief General Partner of funds
Suite 130 Executive Officer of the in the Fund Complex.
Dana Point, CA 92629 Allstate Corporation Director of H&R Block,
("Allstate") and Allstate Amgen Inc., a
Insurance Company. Prior biotechnological company,
to January 1995, and Valero Energy
President and Chief Corporation, an
Executive Officer of independent refining
Allstate. Prior to August company.
1994, various management
positions at Allstate.
</Table>
48
<Table>
<Caption>
VAN KAMPEN INSURED TAX FREE INCOME FUND
TRUSTEES AND OFFICERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Rod Dammeyer (67) Trustee Trustee President of CAC, L.L.C., 73 Trustee/Director/Managing
CAC, L.L.C. since 2003 a private company General Partner of funds
4350 LaJolla Village Drive offering capital in the Fund Complex.
Suite 980 investment and management Director of Quidel
San Diego, CA 92122-6223 advisory services. Corporation, Stericycle,
Inc., Ventana Medical
Systems, Inc. and Trustee
of The Scripps Research
Institute. Prior to April
2007, Director of GATX
Corporation. Prior to
April 2004, Director of
TheraSense, Inc. Prior to
January 2004, Director of
TeleTech Holdings Inc.
and Arris Group, Inc.
Linda Hutton Heagy+ (59) Trustee Trustee Managing Partner of 73 Trustee/Director/Managing
Heidrick & Struggles since 1995 Heidrick & Struggles, an General Partner of funds
233 South Wacker Drive international executive in the Fund Complex.
Suite 7000 search firm. Prior to Trustee on the University
Chicago, IL 60606 1997, Partner of Ray & of Chicago Hospitals
Berndtson, Inc., an Board, Vice Chair of the
executive recruiting Board of the YMCA of
firm. Prior to 1995, Metropolitan Chicago and
Executive Vice President a member of the Women's
of ABN AMRO, N.A., a bank Board of the University
holding company. Prior to of Chicago.
1990, Executive Vice
President of The Exchange
National Bank.
</Table>
49
<Table>
<Caption>
VAN KAMPEN INSURED TAX FREE INCOME FUND
TRUSTEES AND OFFICERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
R. Craig Kennedy (55) Trustee Trustee Director and President of 73 Trustee/Director/Managing
1744 R Street, NW since 1993 the German Marshall Fund General Partner of funds
Washington, DC 20009 of the United States, an in the Fund Complex.
independent U.S. Director of First Solar,
foundation created to Inc.
deepen understanding,
promote collaboration and
stimulate exchanges of
practical experience
between Americans and
Europeans. Formerly,
advisor to the Dennis
Trading Group Inc., a
managed futures and
option company that
invests money for
individuals and
institutions. Prior to
1992, President and Chief
Executive Officer,
Director and member of
the Investment Committee
of the Joyce Foundation,
a private foundation.
Howard J Kerr (72) Trustee Trustee Prior to 1998, President 73 Trustee/Director/Managing
14 Huron Trace since 2003 and Chief Executive General Partner of funds
Galena, IL 61036 Officer of Pocklington in the Fund Complex.
Corporation, Inc., an Director of the Lake
investment holding Forest Bank & Trust.
company. Director of the Marrow
Foundation.
Jack E. Nelson (71) Trustee Trustee President of Nelson 73 Trustee/Director/Managing
423 Country Club Drive since 1984 Investment Planning General Partner of funds
Winter Park, FL 32789 Services, Inc., a in the Fund Complex.
financial planning
company and registered
investment adviser in the
State of Florida.
President of Nelson Ivest
Brokerage Services Inc.,
a member of FINRA,
Securities Investors
Protection Corp. and the
Municipal Securities
Rulemaking Board.
President of Nelson Sales
and Services Corporation,
a marketing and services
company to support
affiliated companies.
</Table>
50
<Table>
<Caption>
VAN KAMPEN INSURED TAX FREE INCOME FUND
TRUSTEES AND OFFICERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Hugo F. Sonnenschein (67) Trustee Trustee President Emeritus and 73 Trustee/Director/Managing
1126 E. 59th Street since 2003 Honorary Trustee of the General Partner of funds
Chicago, IL 60637 University of Chicago and in the Fund Complex.
the Adam Smith Trustee of the University
Distinguished Service of Rochester and a member
Professor in the of its investment
Department of Economics committee. Member of the
at the University of National Academy of
Chicago. Prior to July Sciences, the American
2000, President of the Philosophical Society and
University of Chicago. a fellow of the American
Academy of Arts and
Sciences.
</Table>
51
<Table>
<Caption>
VAN KAMPEN INSURED TAX FREE INCOME FUND
TRUSTEES AND OFFICERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Suzanne H. Woolsey, Ph.D. Trustee Trustee Chief Communications 73 Trustee/Director/Managing
(65) since 1999 Officer of the National General Partner of funds
815 Cumberstone Road Academy of in the Fund Complex.
Harwood, MD 20776 Sciences/National Director of Fluor Corp.,
Research Council, an an engineering,
independent, federally procurement and
chartered policy construction
institution, from 2001 to organization, since
November 2003 and Chief January 2004. Director of
Operating Officer from Intelligent Medical
1993 to 2001. Prior to Devices, Inc., a symptom
1993, Executive Director based diagnostic tool for
of the Commission on physicians and clinical
Behavioral and Social labs. Director of the
Sciences and Education at Institute for Defense
the National Academy of Analyses, a federally
Sciences/National funded research and
Research Council. From development center,
1980 through 1989, Director of the German
Partner of Coopers & Marshall Fund of the
Lybrand. United States, Director
of the Rocky Mountain
Institute of Technology
and the Colorado College.
</Table>
52
VAN KAMPEN INSURED TAX FREE INCOME FUND
TRUSTEES AND OFFICERS continued
INTERESTED TRUSTEE:*
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Wayne W. Whalen* (68) Trustee Trustee Partner in the law firm 73 Trustee/Director/Managing
333 West Wacker Drive since 1984 of Skadden, Arps, Slate, General Partner of funds
Chicago, IL 60606 Meagher & Flom LLP, legal in the Fund Complex.
counsel to funds in the Director of the Abraham
Fund Complex. Lincoln Presidential
Library Foundation.
</Table>
+ As indicated above, Ms. Heagy is an employee of Heidrick and Struggles, an
international executive search firm ("Heidrick"). Heidrick has been (and may
continue to be) engaged by Morgan Stanley from time to time to perform
executive searches. Such searches have been unrelated to Van Kampen's or
Morgan Stanley's asset management businesses and have been done by
professionals at Heidrick without any involvement by Ms. Heagy. Ethical wall
procedures exist to ensure that Ms. Heagy will not have any involvement with
any searches performed by Heidrick for Morgan Stanley. Ms. Heagy does not
receive any compensation, directly or indirectly, for searches performed by
Heidrick for Morgan Stanley. Ms. Heagy does own common shares of Heidrick
(representing less than 1% of Heidrick's outstanding common shares).
* Mr. Whalen is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act) of certain funds in the Fund Complex by reason of he and
his firm currently providing legal services as legal counsel to such funds
in the Fund Complex.
53
VAN KAMPEN INSURED TAX FREE INCOME FUND
TRUSTEES AND OFFICERS continued
OFFICERS:
<Table>
<Caption>
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Ronald E. Robison (68) President and Officer President of funds in the Fund Complex since September 2005
522 Fifth Avenue Principal Executive since 2003 and Principal Executive Officer of funds in the Fund Complex
New York, NY 10036 Officer since May 2003. Managing Director of Van Kampen Advisors
Inc. since June 2003. Director of Investor Services since
September 2002. Director of the Adviser, Van Kampen
Investments and Van Kampen Exchange Corp. since January
2005. Managing Director of Morgan Stanley and Morgan Stanley
& Co. Incorporated. Managing Director and Director of Morgan
Stanley Investment Management Inc. Chief Administrative
Officer, Managing Director and Director of Morgan Stanley
Investment Advisors Inc. and Morgan Stanley Services Company
Inc. Managing Director and Director of Morgan Stanley
Distributors Inc. and Morgan Stanley Distribution Inc. Chief
Executive Officer and Director of Morgan Stanley Trust.
Executive Vice President and Principal Executive Officer of
the Institutional and Retail Morgan Stanley Funds. Director
of Morgan Stanley SICAV. Previously, Chief Global Operations
Officer of Morgan Stanley Investment Management Inc. and
Executive Vice President of funds in the Fund Complex from
May 2003 to September 2005.
Dennis Shea (54) Vice President Officer Managing Director of Morgan Stanley Investment Advisors
522 Fifth Avenue since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser
New York, NY 10036 and Van Kampen Advisors Inc. Chief Investment Officer--
Global Equity of the same entities since February 2006. Vice
President of Morgan Stanley Institutional and Retail Funds
since February 2006. Vice President of funds in the Fund
Complex since March 2006. Previously, Managing Director and
Director of Global Equity Research at Morgan Stanley from
April 2000 to February 2006.
J. David Germany (53) Vice President Officer Managing Director of Morgan Stanley Investment Advisors
20 Bank Street, since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser
Canary Wharf and Van Kampen Advisors Inc. Chief Investment Officer--
London, GBR E14 4AD Global Fixed Income of the same entities since December
2005. Managing Director and Director of Morgan Stanley
Investment Management Ltd. Director of Morgan Stanley
Investment Management (ACD) Limited since December 2003.
Vice President of Morgan Stanley Institutional and Retail
Funds since February 2006. Vice President of funds in the
Fund Complex since March 2006.
</Table>
54
<Table>
<Caption>
VAN KAMPEN INSURED TAX FREE INCOME FUND
TRUSTEES AND OFFICERS continued
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Amy R. Doberman (45) Vice President Officer Managing Director and General Counsel--U.S. Investment
522 Fifth Avenue since 2004 Management; Managing Director of Morgan Stanley Investment
New York, NY 10036 Management Inc., Morgan Stanley Investment Advisors Inc. and
the Adviser. Vice President of the Morgan Stanley
Institutional and Retail Funds since July 2004 and Vice
President of funds in the Fund Complex since August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeltus Investment Management,
Inc. from January 1997 to July 2000.
Stefanie V. Chang (41) Vice President Officer Executive Director of Morgan Stanley Investment Management
522 Fifth Avenue and Secretary since 2003 Inc. Vice President and Secretary of funds in the Fund
New York, NY 10036 Complex.
John L. Sullivan (52) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza - Suite 100 Officer since 1996 August 2004. Prior to August 2004, Director and Managing
Oakbrook Terrace, IL 60181 Director of Van Kampen Investments, the Adviser, Van Kampen
Advisors Inc. and certain other subsidiaries of Van Kampen
Investments, Vice President, Chief Financial Officer and
Treasurer of funds in the Fund Complex and head of Fund
Accounting for Morgan Stanley Investment Management Inc.
Prior to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
Stuart N. Schuldt (45) Chief Financial Officer Officer Executive Director of Morgan Stanley Investment Management
1 Parkview Plaza - Suite 100 and Treasurer since 2007 Inc. since June 2007. Chief Financial Officer and Treasurer
Oakbrook Terrace, IL 60181 of funds in the Fund Complex since June 2007. Prior to June
2007, Senior Vice President of Northern Trust Company,
Treasurer and Principal Financial Officer for Northern Trust
U.S. mutual fund complex.
</Table>
55
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.
The Statement of Additional Information includes additional information
about Fund trustees and is available, without charge, upon request by
calling 1-800-847-2424.
Van Kampen Funds Inc.
1 Parkview Plaza - Suite 100
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2007 Van Kampen Funds Inc.
All rights reserved. Member FINRA/SIPC.
32, 332, 532, 632
TFINANN 11/07
(VAN KAMPEN INVESTMENTS LOGO) IU07-04741P-Y09/07
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
Strategic Municipal Income Fund performed during the annual 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 September 30, 2007.
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 AN ADDITIONAL 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 THE FUND WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. THE FUND IS SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY
THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL DECLINE AND,
THEREFORE, THE VALUE OF FUND SHARES MAY 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 9/30/07
This chart compares your fund's performance to that of the Lehman Brothers
Municipal Bond Index from 9/30/97 through 9/30/07. Class A shares adjusted for
sales charges.
(LINE GRAPH)
<Table>
<Caption>
VAN KAMPEN STRATEGIC MUNICIPAL LEHMAN BROTHERS MUNICIPAL BOND
INCOME FUND INDEX
------------------------------ ------------------------------
9/97 9528 10000
9748 10271
9890 10390
10029 10548
9/98 10333 10871
10331 10937
10387 11034
10238 10839
9/99 10074 10796
9907 10712
10017 11025
10038 11192
9/00 10201 11462
10245 11964
10469 12229
10546 12309
9/01 10759 12654
10695 12577
10775 12695
11066 13160
9/02 11327 13785
11351 13785
11401 13950
11734 14310
9/03 11803 14321
11992 14517
12229 14768
12051 14419
9/04 12496 14980
12820 15168
12993 15162
13447 15606
9/05 13464 15587
13685 15701
13921 15739
14088 15744
9/06 14597 16281
14886 16461
15013 16594
14958 16484
9/07 14635 16784
</Table>
<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 6.38% 6.15% 4.74% 4.74% 4.43% 4.43%
10-year 4.39 3.88 3.76 3.76 3.67 3.67
5-year 5.26 4.24 4.47 4.23 4.61 4.61
1-year 0.26 -4.52 -0.49 -4.30 -0.49 -1.44
- -----------------------------------------------------------------------------------------------
30 day SEC Yield 4.80% 4.29% 4.24%
</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.
1
Fund Report
FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2007
MARKET CONDITIONS
Strong fundamental and technical factors supported the municipal bond market
throughout much of the reporting period, helping it to perform well through the
second quarter of 2007. In July, however, contagion from the troubled subprime
mortgage sector led to an increasingly illiquid and volatile market, and a
flight to quality that led Treasury bonds to outperform all other sectors of the
fixed income market, including both investment grade and below investment grade
municipal bonds.
Up until that time, demand for municipal bonds had been quite strong as
institutional investors and non-traditional buyers such as hedge funds and
arbitrage investors continued to flock to the market. Given the low prevailing
interest rates, demand for higher-yielding municipal bonds was particularly
robust, which served to keep credit spreads tight. As market liquidity began to
dry up, however, institutional demand fell off and refunding activity, which had
been high, virtually halted. Although the supply of municipal bonds was
declining as well, the decrease in demand put significant pressure on prices at
the same time that the Treasury market was rallying. As a result, credit spreads
widened, with the most significant widening occurring in the lower-rated
segments of the market, where spreads on municipal bonds rated BBB and below
(including non-rated bonds) widened by 40 to 50 basis points.
In mid-September, following the 50 basis point reduction in the target federal
funds rate by the Federal Open Market Committee (the "Fed"), the market began to
stabilize, liquidity improved, and municipal credit spreads began to tighten
again. Despite these improvements, however, municipal bonds underperformed
Treasuries for the overall reporting period.
Overall, municipal bond yields ended the period higher, but most of the yield
increases occurred in the intermediate-to-long maturity portion of the yield
curve, while yields on the front end of the curve decreased slightly. As a
result, the municipal yield curve steepened over the course of the period, with
the differential between two-year and 30-year maturities widening to about 100
basis points.
2
PERFORMANCE ANALYSIS
All share classes of Van Kampen Strategic Municipal Income Fund underperformed
the Lehman Brothers Municipal Bond Index for the 12 months ended September 30,
2007, assuming no deduction of applicable sales charges.
TOTAL RETURNS FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2007
<Table>
<Caption>
- --------------------------------------------------------------
LEHMAN BROTHERS
CLASS A CLASS B CLASS C MUNICIPAL BOND INDEX
0.26% -0.49% -0.49% 3.09%
- --------------------------------------------------------------
</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.
Various factors contributed to the Fund's relative underperformance for the
reporting period, but the primary driver was the Fund's allocation to lower-and
non-rated securities. The Fund maintained its approximate 50 percent allocation
to these securities throughout the period, whereas the benchmark Lehman Brothers
Municipal Bond Index is composed of investment grade issues. Although the
performance of all municipal bonds suffered during the flight-to-quality
Treasury market rally, the lower-rated segment of the market experienced the
greatest spread widening. As a result, while the Fund's emphasis on lower-rated,
higher-yielding bonds was additive to performance through June, it detracted
from returns in the latter months of the period and hindered overall performance
for one-year period.
The Fund's holdings in master settlement tobacco bonds also detracted from
performance. Although the Fund was underweighted in these bonds relative to the
Lehman Brothers Municipal Bond Index during the period, the tobacco sector
experienced the most significant spread widening late in the period, after
particularly strong performance early in the reporting year. The hospital sector
was also hard hit in August, and the Fund's holdings there tempered returns.
Over the course of the period, we continued to reduce the Fund's allocation to
inverse floating-rate securities* in an effort to help reduce the portfolio's
volatility and to manage shareholder cash flows. Inverse floating-rate
securities are highly sensitive to interest rate changes. Given rising rates in
the second and third quarter of 2007, the reduction in the Fund's holdings in
these securities during that time hindered overall performance as they were sold
into a weaker market.
On a positive note, Fund performance was boosted by holdings in pre-refunded
bonds, which performed well throughout the reporting period. Because these
*An inverse floating-rate security, or "inverse floater", is a variable rate
security whose coupon rate changes in the opposite direction from the change in
the reference rate used to calculate the coupon rate.
3
are short-maturity securities, they did not experience the sell off that longer-
maturity bonds did when yields on the long end of the curve rose.
Overall, the Fund's sector exposure remained relatively unchanged, with
hospital, life care, and special tax district bonds representing the largest
sector weightings as of the end of the fiscal year.
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 9/30/07
AAA/Aaa 13.1%
AA/Aa 1.7
A/A 7.7
BBB/Baa 9.7
BB/Ba 3.5
B/B 0.6
Non-Rated 63.7
<Caption>
TOP FIVE SECTORS AS OF 9/30/07
Hospital 20.3%
Life Care 17.5
Special Tax Districts 17.0
Public Buildings 3.6
Airports 3.3
<Caption>
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 9/30/07
Florida 15.2%
Illinois 10.4
California 8.5
Minnesota 7.2
Texas 6.9
New York 5.8
Pennsylvania 5.6
Virginia 4.8
Tennessee 4.4
Michigan 4.3
Ohio 3.3
District of Columbia 3.1
Missouri 3.1
Colorado 2.6
Arizona 2.5
Maryland 2.5
New Jersey 2.5
Massachusetts 2.0
Georgia 1.9
Iowa 1.7
Oklahoma 1.4
Indiana 1.4
South Carolina 1.4
Louisiana 1.1
Wisconsin 1.1
Alabama 1.0
Oregon 0.9
Washington 0.8
Nevada 0.8
New Mexico 0.6
South Dakota 0.6
Idaho 0.5
Connecticut 0.5
Kansas 0.5
New Hampshire 0.4
</Table>
<Table>
(continued on next page)
</Table>
5
<Table>
<Caption>
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 9/30/07
(continued from previous page)
Hawaii 0.4
Wyoming 0.4
Puerto Rico 0.3
Alaska 0.3
Rhode Island 0.3
North Carolina 0.3
U.S. Virgin Islands 0.3
Utah 0.2
Montana 0.2
Delaware 0.2
Mississippi 0.2
Vermont 0.1
North Dakota 0.1
-----
Total Long-Term Investments 114.6%
Short-Term Investments 0.2
Liability for Floating Rate Note Obligation Related to
Securities Held -15.8
Assets in Excess of Other Liabilities 1.0
-----
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 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.
Ratings 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. The semiannual reports and the
annual reports are filed electronically with the Securities and Exchange
Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. 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 email 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 charges on redemptions of Class B and Class C
Shares; and redemption fees; 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 4/1/07 - 9/30/07.
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 or redemption fees.
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*
------------------------------------------------
4/1/07 9/30/07 4/1/07-9/30/07
Class A
Actual...................................... $1,000.00 $ 974.85 $ 8.07
Hypothetical................................ 1,000.00 1,016.90 8.24
(5% annual return before expenses)
Class B
Actual...................................... 1,000.00 971.14 11.76
Hypothetical................................ 1,000.00 1,013.14 12.01
(5% annual return before expenses)
Class C
Actual...................................... 1,000.00 971.33 11.76
Hypothetical................................ 1,000.00 1,013.14 12.01
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 1.63%, 2.38%
and 2.38% for Class A, B and C Shares, respectively, multiplied by the
average account value over the period, multiplied by 183/365 (to reflect the
one-half year period).
Assumes all dividends and distributions were reinvested.
9
The following table shows what expenses a shareholder would have paid, excluding
interest and residual trust expenses.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
------------------------------------------------
4/1/07 9/30/07 4/1/07-9/30/07
Class A
Actual...................................... $1,000.00 $ 974.85 $4.06
Hypothetical................................ 1,000.00 1,020.96 4.15
(5% annual return before expenses)
Class B
Actual...................................... 1,000.00 971.14 7.76
Hypothetical................................ 1,000.00 1,017.20 7.94
(5% annual return before expenses)
Class C
Actual...................................... 1,000.00 971.33 7.76
Hypothetical................................ 1,000.00 1,017.20 7.94
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 0.82%, 1.57%
and 1.57% for Class A, B and C Shares, respectively, multiplied by the
average account value over the period, multiplied by 183/365 (to reflect the
one-half year period).
Assumes all dividends and distributions were reinvested.
10
Investment Advisory Agreement Approval
Both the Investment Company Act of 1940 and the terms of the Fund's investment
advisory agreement require that the investment advisory agreement between the
Fund and its investment adviser be approved annually both by a majority of the
Board of Trustees and by a majority of the independent trustees voting
separately.
At meetings held on April 17, 2007 and May 30, 2007, the Board of Trustees, and
the independent trustees voting separately, considered and ultimately determined
that the terms of the investment advisory agreement are fair and reasonable and
approved the continuance of the investment advisory agreement as being in the
best interests of the Fund and its shareholders. In making its determination,
the Board of Trustees considered materials that were specifically prepared by
the investment adviser at the request of the Board and Fund counsel, and by an
independent provider of investment company data contracted to assist the Board,
relating to the investment advisory agreement review process. The Board also
considered information received periodically about the portfolio, performance,
the investment strategy, portfolio management team and fees and expenses of the
Fund. The Board of Trustees considered the investment advisory agreement over a
period of several months and the trustees held sessions both with the investment
adviser and separate from the investment adviser in reviewing and considering
the investment advisory agreement.
In approving the investment advisory agreement, the Board of Trustees
considered, among other things, the nature, extent and quality of the services
provided by the investment adviser, the performance, fees and expenses of the
Fund compared to other similar funds and other products, the investment
adviser's expenses in providing the services and the profitability of the
investment adviser and its affiliated companies. The Board of Trustees
considered the extent to which any economies of scale experienced by the
investment adviser are shared with the Fund's shareholders, and the propriety of
existing and alternative breakpoints in the Fund's investment advisory fee
schedule. The Board of Trustees considered comparative advisory fees of the Fund
and other investment companies and/or other products at different asset levels,
and considered the trends in the industry versus historical and projected assets
of the Fund. The Board of Trustees evaluated other benefits the investment
adviser and its affiliates derive from their relationship with the Fund. The
Board of Trustees reviewed information about the foregoing factors and
considered changes, if any, in such information since its previous approval. The
Board of Trustees discussed the financial strength of the investment adviser and
its affiliated companies and the capability of the personnel of the investment
adviser, and specifically the strength and background of its portfolio
management personnel. The Board of Trustees reviewed the statutory and
regulatory requirements for approval and disclosure of investment advisory
agreements. The Board of Trustees, including the independent trustees,
11
evaluated all of the foregoing and does not believe any single factor or group
of factors control or dominate the review process, and, a considering all
factors together, has determined, in the exercise of its business judgment, that
approval of the investment advisory agreement is in the best interests of the
Fund and its shareholders. The following summary provides more detail on certain
matters considered but does not detail all matters considered.
Nature, Extent and Quality of the Services Provided. On a regular basis, the
Board of Trustees considers the roles and responsibilities of the investment
adviser as a whole and for those specific portfolio management, support and
trading functions servicing the Fund. The trustees discuss with the investment
adviser the resources available and used in managing the Fund and changes made
in the Fund's portfolio management team over time. The Fund discloses
information about its portfolio management team members and their experience in
its prospectus. The trustees also discuss certain other services which are
provided on a cost-reimbursement basis by the investment adviser or its
affiliates to the Van Kampen funds including certain accounting, administrative
and legal services. The Board has determined that the nature, extent and quality
of the services provided by the investment adviser support its decision to
approve the investment advisory agreement.
Performance, Fees and Expenses of the Fund. On a regular basis, the Board of
Trustees reviews the performance, fees and expenses of the Fund compared to its
peers and to appropriate benchmarks. In addition, the Board spends more focused
time on the performance of the Fund and other funds in the Van Kampen complex,
paying specific attention to underperforming funds. The trustees discuss with
the investment adviser the performance goals and the actual results achieved in
managing the Fund. When considering a fund's performance, the trustees and the
investment adviser place emphasis on trends and longer-term returns (focusing on
one-year, three-year and five-year performance with special attention to
three-year performance) and, when a fund's weighted performance is under the
fund's benchmark, they discuss the causes and where necessary seek to make
specific changes to investment strategy or investment personnel. The Fund
discloses more information about its performance elsewhere in this report and in
the Fund's prospectus. The trustees discuss with the investment adviser the
level of advisory fees for this Fund relative to comparable funds and other
products advised by the adviser and others in the marketplace. The trustees
review not only the advisory fees but other fees and expenses (whether paid to
the adviser, its affiliates or others) and the Fund's overall expense ratio. The
Fund discloses more information about its fees and expenses in its prospectus.
The Board has determined that the performance, fees and expenses of the Fund
support its decision to approve the investment advisory agreement.
Investment Adviser's Expenses in Providing the Service and Profitability. At
least annually, the trustees review the investment adviser's expenses in
providing services to the Fund and other funds advised by the investment adviser
and the
12
profitability of the investment adviser. These profitability reports are put
together by the investment adviser with the oversight of the Board. The trustees
discuss with the investment adviser its revenues and expenses, including among
other things, revenues for advisory services, portfolio management-related
expenses, revenue sharing arrangement costs and allocated expenses both on an
aggregate basis and per fund. The Board has determined that the analysis of the
investment adviser's expenses and profitability support its decision to approve
the investment advisory agreement.
Economies of Scale. On a regular basis, the Board of Trustees considers the size
and growth prospects of the Fund and how that relates to the Fund's expense
ratio and particularly the Fund's advisory fee rate. In conjunction with its
review of the investment adviser's profitability, the trustees discuss with the
investment adviser how more (or less) assets can affect the efficiency or
effectiveness of managing the Fund's portfolio and whether the advisory fee
level is appropriate relative to current and projected asset levels and/or
whether the advisory fee structure reflects economies of scale as asset levels
change. The Board has determined that its review of the actual and potential
economies of scale of the Fund support its decision to approve the investment
advisory agreement.
Other Benefits of the Relationship. On a regular basis, the Board of Trustees
considers other benefits to the investment adviser and its affiliates derived
from its relationship with the Fund and other funds advised by the investment
adviser. These benefits include, among other things, fees for transfer agency
services provided to the funds, in certain cases research received by the
adviser generated from commission dollars spent on funds' portfolio trading, and
in certain cases distribution or service related fees related to funds' sales.
The trustees review with the investment adviser each of these arrangements and
the reasonableness of its costs relative to the services performed. The Board
has determined that the other benefits received by the investment adviser or its
affiliates support its decision to approve the investment advisory agreement.
13
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
MUNICIPAL BONDS 114.6%
ALABAMA 1.0%
$ 2,000 Alabama Drinking Wtr Fin Auth Revolving Fd
Ln Ser C (AMBAC Insd)..................... 5.375% 08/15/23 $ 2,090,560
1,500 Alexander City, AL Spl Care Fac Fin Auth
Med Fac Rev Russell Hosp Corp Ser A....... 5.750 12/01/36 1,527,150
1,000 Butler, AL Indl Dev Brd Solid GA Pacific
Corp Proj Rfdg (AMT)...................... 5.750 09/01/28 953,220
1,500 Colbert Cnty Northwest Auth Hlthcare
Fac....................................... 5.750 06/01/27 1,536,135
1,000 Huntsville Redstone Vlg, AL Spl Care Fac
Fin Auth Redstone Vlg Proj................ 5.500 01/01/28 947,330
250 Huntsville Redstone Vlg, AL Spl Care Fac
Fin Auth Ser A (Prerefunded @ 12/01/12)... 8.250 12/01/32 305,267
3,785 Huntsville Redstone Vlg, AL Spl Care Fac
Fin Auth Vlg Proj......................... 5.500 01/01/43 3,508,430
2,500 Huntsville/Carlton Cove, AL Carlton Cove
Inc Proj Ser A (a)........................ 7.000/4.375 11/15/17 1,276,550
3 Mobile, AL Indl Dev Brd Solid Waste Disp
Rev Mobile Energy Svc Co Proj Rfdg........ 6.950 01/01/20 291
1,395 Valley, AL Spl Care Fac Fin Auth Rev
Lanier Mem Hosp Ser A..................... 5.600 11/01/16 1,416,009
1,750 Valley, AL Spl Care Fac Fin Auth Rev
Lanier Mem Hosp Ser A..................... 5.650 11/01/22 1,766,660
--------------
15,327,602
--------------
ALASKA 0.3%
1,100 Alaska Indl Dev & Expt Auth Williams Lynxs
AK Cargoport (AMT) (Acquired 05/17/01,
Cost $1,100,000) (b)...................... 7.800 05/01/14 1,150,149
3,780 Juneau, AK City & Borough Rev Saint Ann's
Care Ctr Proj............................. 6.875 12/01/25 3,863,803
--------------
5,013,952
--------------
ARIZONA 2.5%
1,000 Arizona Hlth Fac Auth Rev Terraces Proj
Ser A..................................... 7.500 11/15/23 1,090,900
1,250 Arizona Hlth Fac Auth Rev Terraces Proj
Ser A..................................... 7.750 11/15/33 1,369,400
5,650 Cochise Cnty, AZ Indl Dev Sierra Vista
Cmnty Hosp Rfdg Ser A..................... 6.750 12/01/26 5,766,955
500 Flagstaff, AZ Indl Dev Auth Rev Living
Cmnty Northn Cmnty Proj (Prerefunded @
03/01/13)................................. 6.300 09/01/38 521,855
2,700 Flagstaff, AZ Indl Dev Auth Rev Rfdg Sr
Living Cmnty Northn AZ.................... 5.700 07/01/42 2,563,191
975 Flagstaff, AZ Indl Dev Auth Rev Sr Living
Cmnty Northn AZ Proj (Prerefunded @
03/01/13)................................. 7.500 03/01/35 1,167,543
</Table>
14 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
ARIZONA (CONTINUED)
$ 4,000 Maricopa Cnty, AZ Hlth Fac Rev Catholic
Hlthcare West Ser A....................... 5.500% 07/01/26 $ 4,164,360
1,500 Peoria, AZ Indl Dev Auth Rev Sierra Winds
Life Rfdg Ser A........................... 6.375 08/15/29 1,536,840
2,525 Pima Cnty, AZ Indl Dev Auth Ed Rev Fac
Choice Ed & Dev Corp Proj................. 6.250 06/01/26 2,579,792
1,590 Pima Cnty, AZ Indl Dev Auth Ed Rev Fac
P.L.C Charter Schs Proj................... 6.500 04/01/26 1,649,323
2,805 Pima Cnty, AZ Indl Dev Auth Ed Rev Fac
P.L.C Charter Schs Proj................... 6.750 04/01/36 2,921,772
4,225 Pima Cnty, AZ Indl Dev Auth Ed Rev Fac
Premier & Air Co.......................... 7.000 09/01/35 4,236,112
1,865 Pima Cnty, AZ Indl Dev Auth Ed Rev
Milestones Charter Sch Proj............... 6.750 11/01/33 1,875,519
800 Pima Cnty, AZ Indl Dev Auth Fac Skyline
Tech High Sch Proj........................ 7.500 02/01/34 802,576
1,000 Pima Cnty, AZ Indl Dev Auth Rev La Posada
at Pk Ctr Ser A........................... 7.000 05/15/27 1,020,960
2,000 Pima Cnty, AZ Indl Dev Auth Wtr & Waste
Rev Global Wtr Res LLC Proj (AMT)
(Acquired 12/15/06, Cost $2,000,000)
(b)....................................... 5.600 12/01/22 1,922,760
785 Red Hawk Canyon Cmnty Fac Dist No 2 AZ
Dist Assmt Rev Ser A...................... 6.500 12/01/12 832,720
2,010 Tucson, AZ Multi-Family Rev Hsg Catalina
Asstd Living Ser A (AMT).................. 6.500 07/01/31 1,690,330
--------------
37,712,908
--------------
CALIFORNIA 8.5%
1,000 ABAG Fin Auth Nonprofit Corp CA Amern
Baptist Homes Rfdg Ser A.................. 5.850 10/01/27 1,010,660
1,000 Beaumont, CA Fin Auth Loc Agy Ser A....... 5.600 09/01/25 1,014,630
2,000 Beaumont, CA Fin Auth Loc Agy Ser A....... 5.650 09/01/30 2,017,580
2,000 Beaumont, CA Fin Auth Loc Agy Ser A....... 5.700 09/01/35 2,016,640
1,000 Beaumont, CA Fin Auth Loc Agy Ser D....... 5.800 09/01/35 1,014,900
1,000 Blythe, CA Redev Agy Proj................. 5.750 05/01/34 1,010,650
15,000 California Hlth Fac Fin Auth Rev Rfdg
Cedars Sinai Med Ctr (e).................. 5.000 11/15/34 15,033,825
1,000 California Statewide Cmnty Dev Auth Elder
Care Alliance Ser A (Prerefunded @
11/15/12)................................. 8.250 11/15/32 1,216,160
915 California Statewide Cmnty Dev Auth Multi-
Family Rev Hsg Heritage Pointe Sr Apt Ser
QQ (AMT) (Acquired 02/19/02, Cost
$912,713) (b)............................. 7.500 10/01/26 950,163
1,000 California Statewide Cmnty Dev Auth San
Francisco Art Institute (Acquired
07/05/02, Cost $1,000,000) (b)............ 7.375 04/01/32 1,062,460
</Table>
See Notes to Financial Statements 15
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$ 2,500 California Statewide Cmntys CA Baptist
Univ Ser A................................ 5.500% 11/01/38 $ 2,472,300
1,720 California Statewide Cmntys Dev Auth Rev
Lancer Ed Student Hsg Proj................ 5.625 06/01/33 1,695,714
1,000 Chino, CA Cmnty Fac Dist No 03 Impt Area
1......................................... 5.700 09/01/29 997,590
5,000 Contra Costa, CA Home Mtg Fin Auth Home
Mtg Rev (MBIA Insd) (g)................... * 09/01/17 2,652,850
1,500 Corona-Norco, CA Univ Sch Dist Pub Fin
Auth Spl Tax Rev Ser A.................... 5.800 09/01/35 1,518,240
2,300 Foothill/Eastern Tran Corridor Agy CA Toll
Rd Rev (MBIA Insd)........................ * 01/15/18 1,369,627
30,000 Golden St Tob Securitization Corp CA Tob
Settlement Rev Enhanced Asset Bkd Ser A
(e)....................................... 5.000 06/01/45 30,064,200
1,750 Huntington Beach, CA Cmnty No 2003 1
Huntington Ctr............................ 5.800 09/01/23 1,806,735
2,000 Indio, CA Redev Agy Tax Alloc Sub Merged
Proj Area Ser B........................... 6.375 08/15/33 2,113,620
495 Indio, CA Redev Agy Tax Alloc Sub Merged
Proj Area Ser B........................... 6.500 08/15/34 528,106
1,000 Jurupa, CA Cmnty Svc Dist Spl Cmnty Fac
Dist No 4 Ser A........................... 5.700 09/01/34 1,009,680
1,725 Lake Elsinore, CA Pub Fin Auth Loc Agy Rev
Ser F..................................... 7.100 09/01/20 1,761,898
2,500 Lake Elsinore, CA Spl Tax Cmnty Fac Dist 2
Area AA................................... 5.450 09/01/36 2,441,225
1,000 Lee Lake Wtr Dist CA Cmnty Fac Dist No 1
Spl Tax Sycamore Creek.................... 6.000 09/01/33 1,027,520
1,370 Millbrae, CA Residential Fac Rev Magnolia
of Millbrae Proj Ser A (AMT).............. 7.375 09/01/27 1,412,525
1,000 Murrieta, CA Cmnty Fac Dist No 2 the Oaks
Impt Area A............................... 5.900 09/01/27 1,023,590
1,000 Murrieta, CA Cmnty Fac Dist No 2 the Oaks
Impt Area A............................... 6.000 09/01/34 1,024,090
1,000 Murrieta, CA Cmnty Fac Dist No 2 the Oaks
Impt Area B............................... 6.000 09/01/27 1,029,290
3,000 Northstar Cmnty Svc Dist CA Spl Tax Cmnty
Fac Dist No 1............................. 5.450 09/01/28 2,972,160
1,000 Palmdale, CA Spl Tax Cmnty Fac 03-1
Anaverde Ser A............................ 5.350 09/01/30 974,820
1,100 Palmdale, CA Spl Tax Cmnty Fac 03-1
Anaverde Ser A............................ 5.400 09/01/35 1,068,309
1,000 Perris, CA Cmnty Fac Dist Spl Tax No 01-2
Ser A..................................... 6.375 09/01/32 1,057,730
</Table>
16 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$ 2,000 Rancho Cordova Cmnty Fac Dist CA Spl Tax
No 2003 1 Sunridge Anatolia............... 5.500% 09/01/37 $ 1,966,760
2,000 Riverside, CA Univ Sch Dist Tax Cmnty Fac
Dist 15 Impt Area 1....................... 5.550 09/01/30 2,000,920
2,535 Sacramento Cnty, CA Spl Tax Cmnty Fac Dist
No 05-2 Ser A............................. 6.000 09/01/37 2,583,241
6,000 San Jose, CA Multi-Family Hsg Rev Helzer
Courts Apt Proj Ser A (AMT)............... 6.400 12/01/41 6,000,420
2,000 San Marcos, CA Pub Fac Auth Spl Tax Rev
Ser A..................................... 5.650 09/01/36 2,003,900
5,700 Silicon Vly Tob Securitization Auth CA Tob
Settlement Rev Cap Apprec Turbo Santa
Clara A................................... * 06/01/36 869,706
4,645 Silicon Vly Tob Securitization Auth CA Tob
Settlement Rev Cap Apprec Turbo Santa
Clara A................................... * 06/01/41 499,152
9,000 Silicon Vly Tob Securitization Auth CA Tob
Settlement Rev Cap Apprec Turbo Santa
Clara A................................... * 06/01/47 649,980
22,500 Silicon Vly Tob Securitization Auth CA Tob
Settlement Rev Cap Apprec Turbo Santa
Clara C................................... * 06/01/56 720,900
7,500 Silicon Vly Tob Securitization Auth CA Tob
Settlement Rev Cap Apprec Turbo Santa
Clara D................................... * 06/01/56 183,900
3,000 Temecula, CA Pub Fin Auth Spl Roripaugh
Cmnty Fac Dist 03-2....................... 5.500 09/01/36 2,644,380
35,000 Tobacco Securitization Auth Southn CA Tob
Settlement Cabs First Sub................. * 06/01/46 2,700,600
27,200 Tobacco Securitization Auth Southn CA Tob
Settlement Cabs Second Sub................ * 06/01/46 2,021,776
47,000 Tobacco Securitization Auth Southn CA Tob
Settlement Cabs Third Sub................. * 06/01/46 3,053,590
1,000 Upland, CA Cmnty Fac Dist 2003 San Antonio
Impt Ser 1 A.............................. 5.900 09/01/24 1,029,350
1,500 Upland, CA Cmnty Fac Dist 2003 San Antonio
Impt Ser 1 A.............................. 6.000 09/01/34 1,531,710
1,965 Vallejo, CA Ctf Partn Touro Univ.......... 7.250 06/01/16 2,067,435
915 Vallejo, CA Pub Fin Auth Loc Hiddenbrooke
Impt Dist Ser A........................... 5.800 09/01/31 928,999
1,000 Woodland, CA Spl Tax Cmnty Fac Dist 1
Spring Lake............................... 6.250 09/01/34 1,063,520
1,800 Yuba City, CA Redev Agy Tax Proj Ser A.... 6.000 09/01/31 1,846,476
3,000 Yuba City, CA Redev Agy Tax Proj Ser A.... 6.000 09/01/39 3,075,720
--------------
127,811,922
--------------
</Table>
See Notes to Financial Statements 17
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
COLORADO 2.6%
$ 1,060 Beacon Pt Metro Dist CO Ser A............. 6.125% 12/01/25 $ 1,036,055
1,005 Beacon Pt Metro Dist CO Ser A............. 6.250 12/01/35 980,840
1,000 Bromley Pk Metro Dist CO No 2 Ser B
(Prerefunded @ 12/01/12).................. 8.050 12/01/32 1,211,620
1,000 Castle Oaks Metro Dist CO Ltd Tax......... 6.000 12/01/25 974,550
1,500 Castle Oaks Metro Dist CO Ltd Tax......... 6.125 12/01/35 1,458,690
1,700 Colorado Ed & Cultural Fac Auth Rev
Charter Sch Brighton Sch Proj............. 6.000 11/01/36 1,713,498
795 Colorado Ed & Cultural Fac Auth Rev
Charter Sch Frontier Academy (Prerefunded
@ 06/01/11)............................... 7.250 06/01/20 875,549
3,000 Colorado Hlth Fac Auth Rev Amern Baptist
Home Ser A................................ 5.900 08/01/37 2,966,490
1,410 Confluence Metro Dist Colo Tax............ 5.400 12/01/27 1,360,199
1,000 Confluence Metro Dist Colo Tax............ 5.450 12/01/34 946,450
2,000 Copperleaf Metro Dist No 2 CO (Acquired
09/15/06, Cost $2,000,000) (b)............ 5.950 12/01/36 1,895,400
2,500 Elk Vly, CO Pub Impt Fee Ser A............ 7.300 09/01/22 2,618,550
1,150 High Plains Metro Dist CO Ser A........... 6.125 12/01/25 1,066,752
2,250 High Plains Metro Dist CO Ser A........... 6.250 12/01/35 2,036,992
565 Lafayette, CO Indl Dev Rev Rocky Mtn Instr
Proj Ser A (c)............................ 6.750 10/01/14 472,035
1,880 Lafayette, CO Indl Dev Rev Rocky Mtn Instr
Proj Ser A (AMT).......................... 7.000 10/01/18 1,538,930
4,560 Lake Creek Affordable Hsg Corp Hsg Proj
Rfdg Ser A................................ 6.250 12/01/23 4,739,527
2,000 Montezuma Cnty, CO Hosp Dist Hlth Fac
Enterprise Hosp Rfdg (f).................. 5.900 10/01/37 2,002,980
500 Neu Towne, CO Metro Dist.................. 7.250 12/01/34 514,965
3,500 Northwest CO Metro Dist No 3 Ltd Tax...... 6.125 12/01/25 3,458,105
1,000 Serenity Ridge, CO Metro Dist No 2........ 7.500 12/01/34 1,058,540
1,616 Skyland Metro Dist CO Gunnison Cnty
Rfdg...................................... 6.750 12/01/22 1,649,403
1,000 Southlands Metro Dist No 1 CO (Prerefunded
@ 12/01/14)............................... 7.000 12/01/24 1,203,770
1,000 Vista Ridge Met Dist CO Rfdg Ltd Tax Sub
Ser B..................................... 6.625 12/01/40 971,820
--------------
38,751,710
--------------
</Table>
18 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
CONNECTICUT 0.5%
$ 1,500 Connecticut St Dev Auth Indl Afco Cargo
Bdlg LLC Proj (AMT)....................... 8.000% 04/01/30 $ 1,597,725
2,000 Mohegan Tribe Indians CT Pub Impt Priority
Dist (Acquired 09/27/01, Cost $1,955,120)
(b)....................................... 6.250 01/01/31 2,094,220
3,500 Mohegan Tribe Indians CT Pub Impt Priority
Dist (Acquired 11/03/04, Cost $3,418,565)
(b) (h)................................... 5.250 01/01/33 3,346,525
--------------
7,038,470
--------------
DELAWARE 0.2%
850 Sussex Cnty, DE Rev Adj First Mtg Cadbury
Lewes Ser A............................... 5.900 01/01/26 853,213
1,000 Sussex Cnty, DE Rev Adj First Mtg Cadbury
Lewes Ser A............................... 6.000 01/01/35 1,008,300
1,040 Wilmington, DE Multi-Family Rent Rev Hsg
Electra Arms Sr Assoc Proj (AMT).......... 6.250 06/01/28 1,048,861
--------------
2,910,374
--------------
DISTRICT OF COLUMBIA 3.1%
12,120 District Columbia Ballpark Rev Ser B-1
(e)....................................... 5.000 02/01/24 12,521,728
13,035 District Columbia Ballpark Rev Ser B-1
(e)....................................... 5.000 02/01/25 13,467,057
13,950 District Columbia Ballpark Rev Ser B-1
(e)....................................... 5.000 02/01/26 14,412,385
1,000 District of Columbia Rev Methodist Home
Issue..................................... 6.000 01/01/29 1,006,050
85 District of Columbia Rfdg Ser A-1 (MBIA
Insd) (g)................................. 6.500 06/01/10 91,396
28,940 District of Columbia Tob Settlement Fin
Corp Ser A................................ * 06/15/46 2,145,322
17,500 District of Columbia Tob Settlement Fin
Corp Ser B................................ * 06/15/46 1,297,275
67,660 District of Columbia Tob Settlement Fin
Corp Ser C................................ * 06/15/55 2,320,738
--------------
47,261,951
--------------
FLORIDA 15.2%
3,000 Alachua Cnty, FL Indl Dev Rev North FL
Retirement Vlg............................ 5.875 11/15/42 3,021,390
985 Anthem Pk Cmnty Dev Dist FL Cap Impt Rev.. 5.800 05/01/36 929,338
2,000 Bainebridge Cmnty Dev Dist FL Spl Assmt... 5.500 05/01/38 1,802,660
2,500 Bartram Pk Cmnty Dev Dist FL Assmt........ 5.400 05/01/37 2,222,525
1,375 Bay Laurel Ctr Cmnty Dev Dist FL Spl Assmt
Candler................................... 5.450 05/01/37 1,231,629
1,500 Beacon Lakes, FL Cmnty Dev FL Spl Assmt
Ser A..................................... 6.000 05/01/38 1,453,995
1,500 Beacon Lakes, FL Cmnty Dev FL Spl Assmt
Sub Ser B................................. 6.200 05/01/38 1,474,860
</Table>
See Notes to Financial Statements 19
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
$ 1,000 Bellalago Ed Fac Benefits Ser A........... 6.000% 05/01/33 $ 1,005,600
970 Bellalago Ed Fac Benefits Ser B........... 5.800 05/01/34 934,973
4,260 Bloomingdale, FL Cmnty Dev Dist Spl Assmt
Rev....................................... 5.875 05/01/36 4,173,096
970 Bluewaters Cmnty Dev Dist of FL........... 6.000 05/01/35 1,046,436
1,780 Boca Raton, FL Hsg Auth Mtg Hsg Rev First
Lien Banyan Pl Sr Apts Rfdg (Acquired
03/23/06, Cost $1,811,556) (b)............ 5.800 10/01/26 1,735,998
2,350 Boca Raton, FL Hsg Auth Mtg Hsg Rev First
Lien Banyan Pl Sr Apts Rfdg (Acquired
03/23/06, Cost $2,317,265) (b)............ 5.900 10/01/36 2,298,911
2,500 Bonnet Creek Resort Cmnty Dev............. 7.500 05/01/34 2,671,050
20,000 Brevard Cnty, FL Hlth Fac Auth Hlthcare
Fac Rev Hlth First Inc Proj (e)........... 5.000 04/01/34 19,963,100
775 Caribe Palm Cmnty Dev Dist FL Spl Assmt
Ser A..................................... 5.850 05/01/35 736,862
3,000 City Ctr Cmnty Dev Dist FL Spl Assmt Rev
Ser A..................................... 6.000 05/01/38 2,850,360
990 City Ctr Cmnty Dev Dist FL Spl Assmt Rev
Ser A..................................... 6.125 05/01/36 998,019
910 Escambia Cnty, FL Rev ICF/MR Pensacola
Care Dev Ctr.............................. 10.250 07/01/11 918,217
2,135 Escambia Cnty, FL Rev ICF/MR Pensacola
Care Dev Ctr Ser A........................ 10.250 07/01/11 2,154,279
5,000 Fiddlers Creek Cmnty Dev Dist............. 6.000 05/01/38 4,975,350
2,495 Florida Hsg Fin Corp Multi-Family Hsg
Whistlers Cove Apt Proj (AMT)............. 6.500 01/01/39 2,518,104
3,600 Florida Hsg Fin Corp Rev Hsg Beacon Hill
Apt Ser C (AMT)........................... 6.610 07/01/38 3,675,240
6,985 Florida Hsg Fin Corp Rev Hsg Cypress Trace
Apt Ser G (AMT)........................... 6.600 07/01/38 7,076,015
4,725 Florida Hsg Fin Corp Rev Hsg Westchase Apt
Ser B (AMT)............................... 6.610 07/01/38 4,775,794
2,450 Gramercy Farms Cmnty Dev Dist FL Spl Assmt
Ser A1.................................... 5.250 05/01/39 2,121,455
2,100 Gramercy Farms Cmnty Dev Dist FL Spl Assmt
Ser B..................................... 5.100 05/01/14 1,990,023
4,000 Grand Bay at Doral Cmnty Dev Dist FL Ser
B......................................... 6.000 05/01/17 3,946,800
19,740 Halifax Hosp Med Ctr FL Hosp Rev Rfdg &
Impt Ser A (e)............................ 5.375 06/01/46 19,832,186
2,445 Hammock Bay Cmnty Dev Dist FL Spl Assmt
Rev Ser A................................. 6.125 05/01/35 2,469,205
1,460 Harbour Isles Cmnty Dev Dist of FL........ 6.125 05/01/35 1,431,340
1,450 Hawks Pt Cmnty Dev Dist FL Spl Assmt
Hawk's Point Cmnty Dev A.................. 5.300 05/01/39 1,265,517
</Table>
20 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
$ 280 Heritage Harbor Cmnty Dev Dist FL Rev
Rec....................................... 7.750% 05/01/23 $ 275,430
750 Heritage Harbor Cmnty Dev Dist FL Rev Spl
Assmt Ser A............................... 6.700 05/01/19 755,535
1,975 Highlands, FL Cmnty Dev Dist Spl Assmt.... 5.550 05/01/36 1,810,107
3,500 Hillsborough Cnty, FL Hsg Fin Hsg Clipper
Cove Apt Proj Ser A (AMT)................. 7.375 07/01/40 3,682,875
975 Islands at Doral III Cmnty 2004 Ser A..... 5.900 05/01/35 952,234
1,000 Islands at Doral NE Cmnty Dev Dist FL Spl
Assmt..................................... 6.250 05/01/34 1,107,780
2,200 Jacksonville, FL Econ Dev Commn Hlthcare
Fac Rev Rfdg FL Proton Therapy Inst Ser A
(Acquired 08/09/07, Cost $2,224,420)
(b)....................................... 6.250 09/01/27 2,282,192
12,825 Jea, FL Wtr & Swr Sys Rev Sub Second
Crossover (e)............................. 4.750 10/01/40 12,492,641
1,510 Kendall Breeze West Cmnty Dev Dist FL Spl
Assmt (c)................................. 5.875 05/01/34 1,497,860
1,950 Keys Cove Cmnty Dev Dist FL Assmt Rev..... 5.875 05/01/35 1,982,740
2,900 Keys Cove Cmnty Dev Dist II FL............ 5.500 05/01/36 2,674,931
1,000 Lakeside Landings Cmnty Dev Dist FL Spl
Assmt Ser A............................... 5.500 05/01/38 901,330
2,000 Lakeside Landings Cmnty Dev Dist FL Spl
Assmt Ser B............................... 5.250 05/01/13 1,927,220
4,000 Landmark at Doral Cmnty Dev Dist FL Spl
Assmt Ser A............................... 5.500 05/01/38 3,605,320
2,000 Lee Cnty, FL Indl Dev Auth Hlthcare Fac
Rev Cypress Cove Hlthpk Ser A............. 6.750 10/01/32 2,121,580
1,500 Lee Cnty, FL Indl Dev Auth Indl Dev Rev
Lee Charter Fndtn Ser A................... 5.250 06/15/27 1,421,400
1,500 Lee Cnty, FL Indl Dev Auth Indl Dev Rev
Lee Charter Fndtn Ser A................... 5.375 06/15/37 1,387,140
3,360 Leon Cnty, FL Ed Fac Auth Rev Southgate
Residence Hall Rfdg Ser A................. 6.750 09/01/28 3,439,800
1,240 Lexington Cmnty Dev Dist FL............... 6.125 05/01/34 1,269,351
2,435 Meadow Woods Cmnty Dev Dist FL Ser A...... 6.050 05/01/35 2,438,506
2,500 Miami Beach, FL Hlth Fac Hosp Mt Sinai Med
Ctr Rfdg (Acquired 04/26/04, Cost
$2,411,600) (b)........................... 6.750 11/15/29 2,725,875
1,000 Miami Beach, FL Hlth Fac Hosp Rev Mt Sinai
Med Ctr FL Proj........................... 5.375 11/15/28 978,310
3,000 Midtown Miami, FL Cmnty Dev Dist Ser A.... 6.000 05/01/24 2,961,060
1,000 Miromar Lakes Cmnty Dev Dist Rfdg Ser B... 7.250 05/01/12 1,077,010
860 Northern Palm Beach Cnty Impt Dist FL Impt
Wtr Ctl & Impt Unit Dev No 16 Rfdg........ 7.500 08/01/24 896,507
1,730 Oak Creek Cmnty Dev Dist FL Spl Assmt..... 5.800 05/01/35 1,677,840
</Table>
See Notes to Financial Statements 21
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
$ 1,000 Orange Cnty, FL Hlth Fac Auth Rev Hosp
Adventist Hlth Sys (Prerefunded @
11/15/10)................................. 6.375% 11/15/20 $ 1,090,510
2,000 Orange Cnty, FL Hlth Fac Auth Rev
Westminster Cmnty Care.................... 6.600 04/01/24 2,052,480
975 Overoaks, FL Cmnty Dev Dist CA Ser A...... 6.125 05/01/35 980,801
5,000 Palm Coast Pk Cmnty Dev Dist FL Spl Assmt
Rev....................................... 5.700 05/01/37 4,646,700
970 Parklands Lee Cmnty Dev Dist FL Spl Assmt
Ser A..................................... 5.800 05/01/35 940,755
965 Pine Island Cmnty Dev Dist FL Spl Assmt... 5.750 05/01/35 977,584
3,000 Pinellas Cnty, FL Hlth Fac Auth Oaks of
Clearwtr Proj............................. 6.250 06/01/34 3,132,930
1,000 Reunion East Cmnty Dev Dist............... 5.800 05/01/36 962,850
1,975 Reunion West Cmnty Dev Dist............... 6.250 05/01/36 2,013,493
940 Saddlebrook, FL Cmnty Ser A............... 6.900 05/01/33 1,022,823
500 Saint John's Cnty, FL Indl Dev Auth
Hlthcare Glenmoor St John's Proj Ser A
(Prerefunded @ 01/01/10).................. 8.000 01/01/17 549,300
4,500 Saint John's Cnty, FL Indl Dev Auth
Hlthcare Glenmoor St John's Proj Ser A
(Prerefunded @ 01/01/10).................. 8.000 01/01/30 5,001,660
1,600 Saint John's Cnty, FL Indl Dev Auth
Hlthcare Glenmoor Proj Ser A.............. 5.375 01/01/40 1,494,528
2,000 Sarasota Natl Cmnty Dev Dist FL Spl
Assmt..................................... 5.300 05/01/39 1,745,540
2,000 Seminole Tribe FL Spl Oblig Rev Ser A
(h)....................................... 5.500 10/01/24 2,044,000
1,925 Silver Palms Cmnty Dev Dist (c)........... 5.900 05/01/34 1,915,914
1,500 Six Mile Creek Cmnty Dev Dist FL Cap Impt
Rev....................................... 5.875 05/01/38 1,399,500
1,300 South Dade Venture Cmnty Dev.............. 6.125 05/01/34 1,318,798
1,460 South Vlg Cmnty Dev Dist FL Cap Impt Rev
Ser A..................................... 5.700 05/01/35 1,368,575
1,000 Split Pine Cmnty Dev Dist FL Spl Assmt Ser
A......................................... 5.250 05/01/39 859,790
100 Stoneybrook West Cmnty Dev Dist FL Spl
Assmt Rev Ser B........................... 6.450 05/01/10 101,374
2,000 Sweetwater Creek Cmnty Dev Dist FL Cap
Impt Rev Ser A............................ 5.500 05/01/38 1,765,620
4,000 Tisons Landing Cmnty Dev Dist FL Spl Assmt
Ser A..................................... 5.625 05/01/37 3,677,040
1,465 Town Ctr at Palm Coast Cmnty Dev Dist FL
Cap Impt Rev.............................. 6.000 05/01/36 1,440,329
2,475 Treeline Presv Cmnty Dev Dist FL Spl Assmt
Ser A..................................... 6.800 05/01/39 2,500,295
</Table>
22 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
$ 3,850 Turnbull Creek Cmnty Dev Dist FL Spl
Assmt..................................... 5.250% 05/01/37 $ 3,276,427
1,460 Turnbull Creek Cmnty Dev Dist FL Spl
Assmt..................................... 5.800 05/01/35 1,351,522
1,577 University Square Cmnty Dev Dist FL Cap
Impt Rev (Acquired 10/07/99, Cost
$1,577,000) (b)........................... 6.750 05/01/20 1,636,816
2,000 West Vlgs Impt Dist FL Rev Spl Assmt Unit
of Dev No 3............................... 5.500 05/01/37 1,804,900
3,000 West Vlgs Impt Dist FL Rev West Vlg Imp
Dist...................................... 5.500 05/01/38 2,703,990
2,000 Winter Garden Vlg at Fowler Groves Cmnty
Dev Dist FL Spl........................... 5.650 05/01/37 1,923,540
960 World Comm Cmnty Dev Dist Ser A1.......... 6.250 05/01/22 993,600
1,670 World Comm Cmnty Dev Dist Ser A2.......... 6.125 05/01/35 1,658,895
--------------
228,395,780
--------------
GEORGIA 1.9%
1,840 Atlanta, GA Tax Alloc Atlantic Sta Proj
(Prerefunded @ 12/01/11).................. 7.750 12/01/14 2,059,034
3,705 Atlanta, GA Tax Alloc Princeton Lakes Proj
(Acquired 04/11/07, Cost $2,512,509)
(b)....................................... 5.500 01/01/31 3,507,227
2,285 Atlanta, GA Urban Residential Fin Auth
Multi-Family Rev John Eagan Proj Ser A
(AMT)..................................... 6.750 07/01/30 2,332,619
1,000 Effingham Cnty, GA Dev Auth Solfort James
Proj (AMT)................................ 5.625 07/01/18 972,030
3,000 Fulton Cnty, GA Dev Auth Rev Tuff Caub LLC
Proj Ser A................................ 5.250 11/01/28 2,874,420
1,800 Fulton Cnty, GA Residential Care
Canterbury Court Proj Ser A............... 6.000 02/15/22 1,809,072
650 Fulton Cnty, GA Residential Care
Canterbury Crt Proj Ser A................. 6.125 02/15/34 656,942
3,500 Fulton Cnty, GA Residential Care Sr Lien
RHA Asstd Living Ser A.................... 7.000 07/01/29 3,632,720
1,500 Medical Ctr Hosp Auth GA Rev Rfdg Spring
Harbor Green Isl Proj..................... 5.250 07/01/27 1,400,235
1,000 Private Colleges & Univ Auth GA Mercer Hsg
Corp Proj Ser A........................... 6.000 06/01/21 1,053,010
2,930 Renaissance on Peachtree Unit Invt Tr Ctf
GA Custody Ctfs........................... 6.000 10/01/25 2,495,745
2,500 Rockdale Cnty, GA Dev Auth Proj Rev Visy
Paper Proj Ser A (AMT).................... 6.125 01/01/34 2,507,250
1,245 Savannah, GA Econ Dev Auth Rev First Mtg
Marshes of Skidaway Ser A................. 6.250 01/01/12 1,238,663
</Table>
See Notes to Financial Statements 23
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
GEORGIA (CONTINUED)
$ 2,245 Savannah, GA Econ Dev Auth Rev First Mtg
Marshes of Skidaway Ser A................. 6.850% 01/01/19 $ 2,309,454
--------------
28,848,421
--------------
HAWAII 0.4%
2,500 Hawaii St Dept Budget & Fin Spl Purp Rev
Kahala Nui Proj Ser A..................... 8.000 11/15/33 2,829,175
2,825 Kuakini, HI Hlth Sys Spl Ser A............ 6.375 07/01/32 2,966,081
--------------
5,795,256
--------------
IDAHO 0.5%
2,290 Gooding Cnty, ID Indl Dev Corp Solid Waste
Disp Rev Intrepid Technology & Res Proj
(AMT) (Acquired 11/03/06, Cost $2,290,000)
(b)....................................... 7.500 11/01/24 2,214,201
2,505 Idaho Hlth Fac Auth Rev Rfdg Vly Vista
Care Corp................................. 6.125 11/15/37 2,541,598
3,000 Idaho Hlth Fac Auth Rev Vly Vista Care
Rfdg Ser A................................ 7.875 11/15/29 3,298,230
--------------
8,054,029
--------------
ILLINOIS 10.4%
2,300 Annawan, IL Tax Increment Rev Patriot
Renewable Fuels LLC Proj.................. 5.625 01/01/18 2,237,992
2,500 Bolingbrook, IL Cap Apprec Ser B (MBIA
Insd)..................................... * 01/01/29 802,325
4,000 Bolingbrook, IL Sales Tax Rev Bolingbrook
(i)....................................... 0.000/6.250 01/01/24 4,053,520
1,976 Bolingbrook, IL Spl Svc Area No 01-1
(Prerefunded @ 07/01/11).................. 7.375 07/01/31 2,233,927
1,486 Bolingbrook, IL Spl Svc Area No 1 Spl Tax
Augusta Vlg Proj (Prerefunded @ 03/01/32)
(Acquired 11/13/02, Cost $1,486,000)
(b)....................................... 6.750 03/01/32 1,669,684
1,665 Bolingbrook, IL Spl Svc Area No 1 Spl Tax
Augusta Vlg Proj Ser 2004 (Prerefunded @
03/01/12)................................. 6.250 03/01/32 1,838,426
2,000 Bolingbrook, IL Spl Svc Area No 1 Spl Tax
Forest City Tax Proj (i).................. 0.000/5.900 03/01/27 2,077,620
1,874 Bolingbrook, IL Spl Svc Area No 3 Lakewood
Ridge Proj (Prerefunded @ 03/01/11)....... 7.050 03/01/31 2,079,353
735 Cary, IL Spl Tax Svc Area No 1 Cambridge
Ser A (Prerefunded @ 03/01/10)............ 7.625 03/01/30 810,668
1,305 Chicago, IL 2006 Proj Rfdg Ser A (MBIA
Insd)..................................... 5.500 01/01/38 1,372,769
1,750 Chicago, IL Increment Alloc Rev Diversey
Narragansett Proj Nt...................... 7.460 02/15/26 1,829,363
15,500 Chicago, IL O'Hare Intl Arpt Rev Rfdg Gen
Airport Third Lein Ser A-2 (e)............ 5.750 01/01/19 16,659,012
</Table>
24 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
ILLINOIS (CONTINUED)
$ 50 Chicago, IL Proj Rfdg Ser A (MBIA Insd)
(Prerefunded @ 01/01/11).................. 5.500% 01/01/38 $ 53,426
4,000 Chicago, IL Spl Assmt Lakeshore East
Proj...................................... 6.625 12/01/22 4,228,240
680 Chicago, IL Tax Increment Alloc Read
Dunning Ser B (ACA Insd).................. 7.250 01/01/14 695,014
1,925 Chicago, IL Tax Increment Alloc Sub Cent
Rev Loop Ser A (ACA Insd)................. 6.500 12/01/08 1,974,087
3,465 Cortland, IL Spl Tax Rev Sheaffer Sys Proj
(Acquired 05/02/06, Cost $3,465,000)
(b)....................................... 5.500 03/01/17 3,437,488
2,000 Deerfield, IL Ed Fac Chicagoland Jewish
High Sch Proj............................. 6.000 05/01/41 2,025,960
989 Gilberts, IL Spl Svc Area No 9 Spl Tax Big
Timber Proj (c) (g)....................... 7.375 03/01/11 1,055,609
1,245 Gilberts, IL Spl Svc Area No 9 Spl Tax Big
Timber Proj (Prerefunded @ 03/01/11)
(j)....................................... 7.750 03/01/27 1,426,633
1,500 Godfrey, IL Rev Utd Methodist Vlg Ser A... 5.875 11/15/29 1,207,740
1,270 Hampshire, IL Spl Svc Area No 16 Spl Tax
Crown Dev Proj Prairie Ridge A............ 6.000 03/01/46 1,257,681
2,085 Hampshire, IL Spl Svc Area No 17 Spl Tax
Crown Dev Proj Oakstead Ser A............. 6.000 03/01/45 2,049,784
2,730 Hampshire, IL Spl Svc Area No 19 Spl Tax
Crown Dev Prairie Ridge East A............ 6.000 03/01/46 2,683,563
2,700 Hoopeston, IL Hosp Cap Impt Rev Hoopeston
Cmnty Mem Hosp Impt & Rfdg................ 6.550 11/15/29 2,700,891
1,575 Huntley, IL Increment Alloc Rev Huntley
Redev Proj Ser A.......................... 8.500 12/01/15 1,584,450
2,621 Huntley, IL Spl Svc Area No 10 Spl Tax Ser
A (Prerefunded @ 03/01/09)................ 6.500 03/01/29 2,775,587
137 Huntley, IL Spl Svc Area No 10 Spl Tax Ser
A (c) (g)................................. 6.250 03/01/09 142,005
750 Illinois Fin Auth Rev Central Baptist
Vlg....................................... 5.375 11/15/27 710,670
2,000 Illinois Fin Auth Rev Central Baptist
Vlg....................................... 5.375 11/15/39 1,825,320
9,000 Illinois Fin Auth Rev Clare at Wtr Tower
Proj Ser A................................ 6.125 05/15/38 9,080,190
4,500 Illinois Fin Auth Rev Clare Oaks Proj Ser
A......................................... 6.000 11/15/39 4,520,025
1,405 Illinois Fin Auth Rev Cmnty Fac Clinic
Altgeld Proj.............................. 8.000 11/15/16 1,421,157
1,000 Illinois Fin Auth Rev Friendship Vlg
Schaumburg Ser A.......................... 5.375 02/15/25 949,060
2,000 Illinois Fin Auth Rev Friendship Vlg
Schaumburg Ser A.......................... 5.625 02/15/37 1,898,180
3,000 Illinois Fin Auth Rev Landing at Plymouth
Pl Proj Ser A............................. 6.000 05/15/37 3,015,780
3,300 Illinois Fin Auth Rev Luther Oaks Proj Ser
A......................................... 6.000 08/15/26 3,370,290
</Table>
See Notes to Financial Statements 25
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
ILLINOIS (CONTINUED)
$ 2,000 Illinois Fin Auth Rev Luther Oaks Proj Ser
A......................................... 6.000% 08/15/39 $ 2,008,720
1,000 Illinois Fin Auth Rev Montgomery Place
Proj...................................... 5.500 05/15/26 963,270
2,000 Illinois Fin Auth Rev Montgomery Place
Proj Ser A................................ 5.750 05/15/38 1,960,340
3,000 Illinois Fin Auth Rev Northwestern Mem
Hosp Ser A................................ 5.500 08/15/43 3,157,710
4,850 Illinois Fin Auth Rev Rfdg Christian Homes
Inc Ser A................................. 5.750 05/15/26 4,724,773
500 Illinois Fin Auth Rev Rfdg Fairview Oblig
Grp Ser A................................. 6.000 08/15/20 504,285
500 Illinois Fin Auth Rev Rfdg Fairview Oblig
Grp Ser A................................. 6.125 08/15/27 503,525
1,500 Illinois Fin Auth Rev Three Crowns Pk
Plaza Ser A............................... 5.875 02/15/38 1,496,715
1,000 Illinois Hlth Fac Auth Rev Ctr Baptist
Home Proj (Prerefunded @ 11/15/09)........ 7.125 11/15/29 1,075,530
2,500 Illinois Hlth Fac Auth Rev Decatur Mem
Hosp...................................... 5.750 10/01/24 2,594,425
650 Illinois Hlth Fac Auth Rev Loyola Univ
Hlth Sys Ser A (Prerefunded @ 07/01/11)... 6.000 07/01/21 702,559
1,200 Illinois Hlth Fac Auth Rev Lutheran Sr
Ministries Oblig Ser A (Prerefunded @
08/15/11)................................. 7.375 08/15/31 1,371,900
250 Illinois Hlth Fac Auth Rev Rfdg Ser A..... 6.200 08/15/23 251,145
1,125 Illinois Hlth Fac Auth Rev Rfdg Ser A..... 6.400 08/15/33 1,130,141
400 Illinois Hlth Fac Auth Rev Silver Cross... 5.500 08/15/19 409,812
80 Lake, Cook, Kane & McHenry Cntys, IL Cmnty
Unit Sch Dist No 22 (FGIC Insd)........... 5.750 12/01/19 84,902
2,186 Manhatan, IL No 04-1 Brookstone Springs
Proj...................................... 6.100 03/01/35 2,242,246
989 Minooka, IL Spl Assmt Impt Lakewood Trails
Unit 2 Proj............................... 6.375 03/01/34 1,033,456
1,187 Montgomery, IL Spl Assmt Impt Lakewood
Creek Proj (Prerefunded @ 03/01/11)....... 7.750 03/01/30 1,350,272
3,000 Pingree Grove, IL Spl Svc Area No 2 Spl
Tax Cambridge Lakes Proj Ser 05-2......... 6.000 03/01/35 2,997,840
2,248 Pingree Grove, IL Spl Svc Area No 7 Spl
Tax Cambridge Lakes Proj Ser 06-01........ 6.000 03/01/36 2,216,213
1,600 Pingree Grove Vlg, IL Rev Cambridge Lakes
Learning Ctr.............................. 6.000 06/01/36 1,535,488
1,992 Plano, IL Spl Svc Area No 1 Lakewood
Springs Proj Ser A........................ 6.200 03/01/34 2,058,473
1,815 Plano, IL Spl Svc Area No 6 Spl Tax
Lakewood Springs Club Proj................ 5.800 03/01/37 1,739,678
</Table>
26 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
ILLINOIS (CONTINUED)
$ 1,370 Quad Cities Reg Econ Dev Auth IL Multi-
Family Hsg Heritage Woods Moline Slf Proj
(AMT)..................................... 6.000% 12/01/41 $ 1,320,817
2,095 Regional Tran Auth IL Ser B (AMBAC
Insd)..................................... 8.000 06/01/17 2,748,053
925 Sterling, IL Rev Hoosier Care Proj Ser
A......................................... 7.125 06/01/34 939,745
4,000 Upper IL Riv Vly Dev Auth Multi-Family Hsg
Rev Living Springs Mchenry Slf Proj
(AMT)..................................... 6.100 12/01/41 4,015,840
1,921 Volo Vlg, IL Spl Svc Area No 3 Symphony
Meadows Proj Ser 1........................ 6.000 03/01/36 1,893,837
3,135 Wheeling, IL Tax Increment Rev N
Milwaukee/Lake Cook TIF Proj.............. 6.000 01/01/25 3,093,242
1,405 Yorkville, IL Utd City Business Dist Rev
Storm Wtr Impt Proj....................... 6.000 01/01/26 1,339,738
385 Yorkville, IL Utd City Business Dist Rev
Storm Wtr Impt Proj....................... 6.000 01/01/27 366,612
5,615 Yorkville, IL Utd City Spl Svc Area Spl
Tax No 2004-107 Raintree Vlg II Proj...... 6.250 03/01/35 5,712,589
1,550 Yorkville, IL Utd City Spl Svc Area Spl
Tax No 2006-113 Cannonball/Beecher........ 5.750 03/01/28 1,470,594
1,956 Yorkville, IL Utd City Spl Svc Area Spl
Tax No 4 104 MPI Grade Res Proj........... 6.375 03/01/34 1,999,306
--------------
156,767,280
--------------
INDIANA 1.4%
825 Crawfordsville, IN Redev Cmnty Redev Dist
Tax Increment Rev (Acquired 10/15/97, Cost
$825,000) (b) (c)......................... 7.000 02/01/12 842,639
1,855 Indiana Hlth Fac Fin Auth Rev Hoosier Care
Proj Ser A................................ 7.125 06/01/34 1,884,402
6,500 Indiana Hlth Fac Hosp Rev Cmnty Fndtn
Northwest IN Ser A........................ 6.000 03/01/34 6,749,795
2,000 Petersburg, IN Pollutn Ctl Rev IN Pwr & Lt
(AMT)..................................... 6.375 11/01/29 2,111,400
1,810 Portage, IN Spl Impt Dist Rev Marina
Shores Proj............................... 6.375 03/01/35 1,802,905
265 Saint Joseph Cnty, IN Econ Dev Rev Holy
Cross Vlg Notre Dame Proj Ser A........... 5.700 05/15/28 263,391
230 Saint Joseph Cnty, IN Econ Dev Rev Holy
Cross Vlg Notre Dame Proj Ser A........... 6.000 05/15/26 234,791
470 Saint Joseph Cnty, IN Econ Dev Rev Holy
Cross Vlg Notre Dame Proj Ser A........... 6.000 05/15/38 471,842
1,500 Vigo Cnty, IN Hosp Auth Rev Union Hosp Inc
(Acquired 06/27/07, Cost $1,495,230)
(b)....................................... 5.800 09/01/47 1,465,740
</Table>
See Notes to Financial Statements 27
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
INDIANA (CONTINUED)
$ 2,000 Vigo Cnty, IN Hosp Auth Rev Union Hosp Inc
(Acquired 06/27/07, Cost $1,993,840)
(b)....................................... 5.750% 09/01/42 $ 1,941,340
4,000 Vigo Cnty, IN Hosp Auth Rev Union Hosp Inc
(Acquired 06/27/07, Cost $4,000,000)
(b)....................................... 5.700 09/01/37 3,926,560
--------------
21,694,805
--------------
IOWA 1.7%
1,000 Bremer Cnty, IA Retirement Fac Rev Bartels
Lutheran Ser A............................ 5.375 11/15/27 958,990
3,635 Des Moines Iowa Multi-family Hsg Rev Rfdg
Luther Pk Apts Inc Ser A (Acquired
04/05/07, Cost $3,635,000) (b) (c)........ 5.300 12/01/36 3,397,344
2,000 Estherville, IA Hosp Rev Avera Holy Family
Proj...................................... 6.250 07/01/26 2,097,280
375 Evansdale, IA Hlthcare Westn Home Proj
(c)....................................... 6.000 11/01/26 380,205
3,400 Evansdale, IA Hlthcare Westn Home Proj Ser
A (c)..................................... 6.000 11/01/26 3,424,514
3,250 Iowa Fin Auth Hlth Fac Rev Rfdg Dev Care
Initiatives Proj A........................ 5.500 07/01/25 3,305,022
500 Iowa Fin Auth Retirement Cmnty Friendship
Haven Proj Ser A.......................... 5.750 11/15/19 501,550
500 Iowa Fin Auth Retirement Cmnty Friendship
Haven Proj Ser A.......................... 6.000 11/15/24 503,625
800 Iowa Fin Auth Retirement Cmnty Friendship
Haven Proj Ser A.......................... 6.125 11/15/32 808,192
350 Iowa Fin Auth Sr Hsg Rev Rfdg Bethany Life
Cmnty Proj A.............................. 5.450 11/01/26 340,273
1,000 Iowa Fin Auth Sr Hsg Rev Rfdg Bethany Life
Cmnty Proj A.............................. 5.550 11/01/41 941,820
2,250 Iowa Fin Auth Sr Living Fac Rev Deerfield
Ret Cmnty Inc Ser A....................... 5.250 11/15/37 2,098,328
1,500 Iowa Fin Auth Sr Living Fac Rev Deerfield
Ret Cmnty Inc Ser A....................... 5.500 11/15/27 1,437,405
2,300 Jefferson Cnty, IA Hosp Rev Jefferson Cnty
Hosp Proj Ser C........................... 5.950 08/01/37 2,290,225
1,000 Polk Cnty, IA Hlthcare Fac Rev Luther Pk
Hlth Ctr Inc Proj......................... 6.150 10/01/36 1,011,560
2,000 Pottawattamie Cnty IA Rev Rfdg Christian
Homes Inc Ser E........................... 5.750 05/15/31 1,923,700
--------------
25,420,033
--------------
KANSAS 0.5%
1,700 Lenexa, KS Hlthcare Fac Rev Rfdg & Impt... 5.375 05/15/27 1,709,401
1,000 Olathe, KS Sr Living Fac Rev Catholic Care
Campus Inc Ser A.......................... 6.000 11/15/26 1,012,170
1,000 Olathe, KS Sr Living Fac Rev Catholic Care
Campus Inc Ser A.......................... 6.000 11/15/38 1,007,600
</Table>
28 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
KANSAS (CONTINUED)
$ 1,500 Overland Pk, KS Dev Corp Rev First Tier
Overland Pk Ser A......................... 7.375% 01/01/32 $ 1,586,280
1,570 Overland Pk, KS Trans Dev Dist Spl Assmt
Grass Creek Proj.......................... 5.125 09/01/28 1,527,704
--------------
6,843,155
--------------
LOUISIANA 1.1%
2,978 Lakeshore Vlg Master Cmnty Dev Dist LA Spl
Assmt..................................... 5.250 07/01/17 2,929,816
1,945 Louisiana Hsg Fin Agy Rev Azalea Estates
Rfdg Ser A (GNMA Collateralized) (AMT).... 5.375 10/20/39 1,976,664
4,100 Louisiana Loc Govt Environment Fac Cmnty
Dev Auth Rev Hlthcare Saint James Place
Rfdg Ser A................................ 7.000 11/01/25 4,206,969
1,800 Louisiana Loc Govt Environment Fac Cmnty
Dev Auth Rev Hlthcare Saint James Place
Rfdg Ser A................................ 7.000 11/01/29 1,851,534
1,500 Louisiana Pub Fac Auth Rev Progressive
Hlthcare.................................. 6.375 10/01/20 1,509,420
1,000 Louisiana Pub Fac Auth Rev Progressive
Hlthcare.................................. 6.375 10/01/28 1,004,380
2,805 Louisiana St Univ & Agric & Mechanical
College Univ Rev Master Agreement
(Acquired 11/30/98, Cost $2,805,147)
(b)....................................... 5.750 10/30/18 2,805,371
--------------
16,284,154
--------------
MARYLAND 2.5%
1,000 Baltimore Cnty, MD Mtg Rev Shelter Elder
Care Ser A (Prerefunded @ 11/01/09)....... 7.250 11/01/29 1,086,650
1,500 Brunswick, MD Spl Oblg Brunswick Crossing
Spl Taxing................................ 5.500 07/01/36 1,444,350
4,000 Frederick Cnty, MD Spl Oblig Urbana Cmnty
Dev Auth Ser A............................ 5.950 07/01/30 4,017,080
985 Frederick Cnty, MD Spl Oblig Urbana Cmnty
Dev Auth Ser B............................ 6.250 07/01/30 994,407
1,500 Howard Cnty Md Retirement Rfdg Vantage
House Fac Ser A........................... 5.250 04/01/27 1,442,460
1,160 Maryland St Econ Dev Corp MD Golf Course
Sys (Prerefunded @ 06/01/11).............. 8.250 06/01/28 1,333,895
1,500 Maryland St Econ Dev Corp Sr Lien Proj
Chesapeake Bay Ser B...................... 5.250 12/01/31 1,429,845
1,540 Maryland St Hlth & Higher Ed Calvert Hlth
Sys....................................... 5.500 07/01/36 1,584,460
16,755 Maryland St Hlth & Higher Ed Fac Auth Rev
Medstar Hlth (e).......................... 5.250 05/15/46 16,722,216
1,000 Maryland St Hlth & Higher Ed Medstar Hlth
Rfdg...................................... 5.500 08/15/33 1,022,030
</Table>
See Notes to Financial Statements 29
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
MARYLAND (CONTINUED)
$ 1,500 Maryland St Hlth & Higher Edl Fac Auth Rev
Washington Christian Academy.............. 5.500% 07/01/38 $ 1,461,870
3,000 Montgomery Cnty, MD Econ Dev Editorial
Proj In Ed Ser A (Acquired 09/28/98, Cost
$3,000,000) (b)........................... 6.400 09/01/28 2,531,970
1,000 Westminster, MD Econ Dev Carroll Lutheran
Vlg Ser A................................. 6.000 05/01/24 1,028,390
1,500 Westminster, MD Econ Dev Carroll Lutheran
Vlg Ser A................................. 6.250 05/01/34 1,548,030
--------------
37,647,653
--------------
MASSACHUSETTS 2.0%
1,000 Massachusetts St Dev Fin Agy Briarwood Ser
B (Prerefunded @ 12/01/10)................ 8.000 12/01/22 1,137,000
250 Massachusetts St Dev Fin Agy Rev Evergreen
Ctr Inc................................... 5.000 01/01/24 240,687
500 Massachusetts St Dev Fin Agy Rev Evergreen
Ctr Inc................................... 5.500 01/01/35 494,040
1,835 Massachusetts St Dev Fin Agy Rev Hillcrest
Ed Ctr Inc................................ 6.375 07/01/29 1,849,368
2,845 Massachusetts St Dev Fin Agy Rev Hlthcare
Fac Alliance Ser A........................ 7.100 07/01/32 2,931,972
1,000 Massachusetts St Dev Fin Agy Rev MCHSP
Human Svc Providers Ser A (Prerefunded @
07/01/10)................................. 8.000 07/01/20 1,117,230
3,585 Massachusetts St Dev Fin Agy Rev New
England Ctr For Children.................. 6.000 11/01/19 3,650,964
4,960 Massachusetts St Dev Fin Agy Rev Rfdg
First Mtg Reeds Accd Invt................. 5.750 10/01/31 4,827,270
3,100 Massachusetts St Hlth & Ed Fac Auth Rev
Civic Invt Ser B (Prerefunded @
12/15/12)................................. 9.150 12/15/23 3,892,050
842 Massachusetts St Hlth & Ed Fac Auth Rev
Nichols College Issue Ser C............... 6.000 10/01/17 880,648
1,000 Massachusetts St Hlth & Ed Fac Auth Rev
Northn Berkshire Hlth Ser B............... 6.250 07/01/24 1,040,040
465 Massachusetts St Indl Fin Agy Rev First
Mtg GF/Pilgrim Inc Proj................... 6.500 10/01/15 422,411
2,000 Massachusetts St Indl Fin Agy Rev First
Mtg GF/Pilgrim Inc Proj................... 6.750 10/01/28 1,725,020
1,905 Massachusetts St Indl Fin Agy Rev First
Mtg Reeds Landing Proj (Prerefunded @
10/01/08) (i)............................. 7.450/7.550 10/01/28 2,027,282
</Table>
30 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
$ 2,130 Massachusetts St Indl Fin Agy Rev Gtr Lynn
Mental Hlth (Prerefunded @ 06/01/08)
(Acquired 06/24/98, Cost $2,130,000)
(b)....................................... 6.375% 06/01/18 $ 2,207,234
2,200 Massachusetts St Indl Fin Agy Rev Swr Fac
Res Ctl Composting (AMT) (Acquired
08/10/89, Cost $2,200,000) (b)............ 9.250 06/01/10 2,214,718
--------------
30,657,934
--------------
MICHIGAN 4.3%
2,500 Chelsea, MI Econ Dev Corp Rev Utd
Methodist Retirement Rfdg................. 5.400 11/15/27 2,503,450
795 Detroit, MI Loc Dev Fin Auth Tax Increment
Sub Ser C (Acquired 09/08/97, Cost
$795,000) (b)............................. 6.850 05/01/21 811,703
775 East Lansing MI Econ Dev Corp Ltd Oblig
Rev First Mtg Burcham Hills Ser B1........ 5.250 07/01/37 689,347
1,000 Gaylord, MI Hosp Fin Auth Ltd Oblig Rev
Otsego Mem Hosp Rfdg...................... 6.500 01/01/31 1,036,090
4,000 Kent Hosp Fin Auth MI Rev Metro Hosp Proj
Ser A..................................... 6.250 07/01/40 4,297,960
1,595 Meridian, MI Econ Dev Corp Ltd Oblig Rev
Rfdg First Mtg Burcham Hills Ser A1....... 5.250 07/01/26 1,484,147
2,735 Michigan St Hosp Fin Auth Rev Hosp Pontiac
Osteopathic Rfdg Ser A.................... 6.000 02/01/14 2,737,407
1,500 Michigan St Hosp Fin Auth Rev Hosp Pontiac
Osteopathic Rfdg Ser A.................... 6.000 02/01/24 1,500,690
2,000 Michigan St Hosp Fin Auth Rev Presbyterian
Vlg Rfdg.................................. 5.500 11/15/35 1,945,480
13,375 Michigan St Hosp Fin Auth Rev Rfdg Henry
Ford Hlth Sys A (e)....................... 5.250 11/15/46 13,605,319
8,500 Michigan Tob Settlement Fin Auth Tob
Settlement Asset Sr Ser A................. 6.000 06/01/48 8,497,875
20,650 Wayne Cnty, MI Arpt Auth Rev Detroit Metro
Wayne Cnty Arpt (e)....................... 5.250 12/01/24 21,450,968
5,120 Wenonah Pk Ppty Inc Bay City Hotel Rev
Bd........................................ 7.500 04/01/33 4,104,397
--------------
64,664,833
--------------
MINNESOTA 7.2%
700 Aitkin, MN Hlthcare Fac Rev Riverwood
Hlthcare Ctr Proj......................... 5.500 02/01/24 693,987
2,540 Aitkin, MN Hlthcare Fac Rfdg Riverwood
Hlthcare Ctr.............................. 5.600 02/01/32 2,493,467
2,000 Aitkin, MN Hlth Fac Rev Riverwood Hlthcare
Ctr Proj (Prerefunded @ 02/01/11)......... 7.750 02/01/31 2,252,120
1,000 Cambridge, MN Hsg & Hlthcare Fac Rev
Grandview West Proj Ser B................. 6.000 10/01/33 1,001,440
</Table>
See Notes to Financial Statements 31
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
MINNESOTA (CONTINUED)
$ 2,000 Carlton, MN Hlth & Hsg Fac Inter Faith
Social Svc Inc Proj (Prerefunded @
04/01/10)................................. 7.500% 04/01/19 $ 2,197,160
2,000 Carlton, MN Hlth & Hsg Fac Inter Faith
Social Svc Inc Proj (Prerefunded @
04/01/10)................................. 7.750 04/01/29 2,217,340
2,700 Carlton, MN Hlthcare & Hsg Fac Rev Rfdg
Inter Faith Care Ctr Proj................. 5.700 04/01/36 2,615,058
1,500 Columbia Heights, MN Multi-Family &
Hlthcare Fac Rev Rfdg Crest View Corp Proj
A......................................... 5.700 07/01/42 1,437,615
2,000 Crookston, MN Hlthcare Fac Rev Rfdg
Riverview Hlth Proj....................... 5.300 05/01/32 1,848,820
2,250 Cuyuna Range Hosp Dist MN Hlth Fac Gross
Rev....................................... 5.500 06/01/35 2,117,565
2,100 Dakota Cnty, MN Cmnty Dev Agy Multi-Family
Hsg Rev Commons on Marice Proj Rfdg Ser
A......................................... 5.000 05/01/42 1,799,217
675 Duluth, MN Econ Dev Auth Hlthcare Fac Rev
Saint Luke's Hosp......................... 6.000 06/15/12 698,395
1,500 Duluth, MN Econ Dev Auth Hlthcare Fac Rev
Saint Luke's Hosp......................... 7.250 06/15/32 1,606,575
2,000 Glencoe, MN Hlthcare Fac Rev (Prerefunded
@ 04/01/11)............................... 7.500 04/01/31 2,247,560
6,695 Minneapolis & St Paul MN Metro Arpts Commn
Arpt Rev Sub Ser B (AMT) (e).............. 5.000 01/01/21 6,863,363
7,385 Minneapolis & St Paul MN Metro Arpts Commn
Arpt Rev Sub Ser B (AMT) (e).............. 5.000 01/01/23 7,570,714
3,000 Minneapolis, MN Hsg & Hlthcare Fac Rev
Rfdg Providence Proj Ser A................ 5.750 10/01/37 2,939,100
1,400 Minneapolis, MN Student Hsg Rev Riverton
Cmnty Hsg Proj Ser A...................... 5.600 08/01/26 1,364,762
3,100 Minneapolis, MN Student Hsg Rev Riverton
Cmnty Hsg Proj Ser A...................... 5.700 08/01/40 2,988,028
1,000 Minneapolis, MN Tax Increment Rev Ivy
Tower Proj................................ 5.700 02/01/29 984,030
900 Minnesota Agric & Econ Dev Brd Rev
Hlthcare Benedictine Proj Ser A........... 5.500 08/01/23 895,221
875 Minnesota Agric & Econ Dev Brd Rev
Hlthcare Benedictine Proj Ser A........... 5.750 02/01/30 868,403
3,770 Moorhead, MN Sr Hsg Rev Sheyenne Crossing
Proj...................................... 5.650 04/01/41 3,632,998
2,150 New Ulm, MN Econ Dev Auth Rfdg Hadc
Ridgeway Proj Ser A (GTY AGMT)............ 6.000 06/01/41 2,155,633
875 New Ulm, MN Econ Dev Auth Rfdg Hadc
Ridgeway Proj Ser A (GTY AGMT)............ 5.750 06/01/28 874,921
</Table>
32 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
MINNESOTA (CONTINUED)
$ 3,000 North Oaks, MN Sr Hsg Rev Presbyterian
Homes North Oaks.......................... 6.500% 10/01/47 $ 3,079,860
850 Northwest, MN Multi-Cnty Hsg & Redev Auth
Govt Hsg Rev Pooled Hsg Pgm Rfdg.......... 5.250 07/01/26 803,862
2,340 Northwest, MN Multi-Cnty Hsg & Redev Auth
Govt Hsg Rev Pooled Hsg Pgm Rfdg.......... 5.450 07/01/41 2,194,452
2,500 Northwest, MN Multi-Cnty Hsg & Dev Auth
Govtl Hsg Rev Rfdg Pooled Hsg Pgm A....... 6.250 07/01/40 2,503,500
1,500 Oakdale, MN Rev Sr Hsg Oak Meadows Proj
Rfdg...................................... 6.250 04/01/34 1,523,175
2,450 Oronoco, MN Multi-Family Hsg Rev Wedum
Shorewood Campus Proj Rfdg................ 5.400 06/01/41 2,243,171
1,350 Park Rapids, MN Hsg Hlth Fac Cdl Homes LLC
Proj (k).................................. 6.030 08/01/36 1,250,721
1,100 Pine City, MN Lease Rev Lakes Intl
Language Academy Ser A.................... 6.250 05/01/35 1,097,767
2,000 Prior Lake, MN Sr Hsg Rev Shepards Path
Ser B..................................... 5.700 08/01/36 1,936,620
2,000 Prior Lake, MN Sr Hsg Rev Shepards Path
Ser B..................................... 5.750 08/01/41 1,956,080
1,425 Ramsey, MN Lease Rev Pact Charter Sch Proj
Ser A..................................... 6.750 12/01/33 1,511,626
1,500 Saint Cloud, MN Hsg & Redev Auth Sterling
Heights Apt Proj (AMT).................... 7.550 04/01/39 1,542,135
2,355 Saint Louis Pk, MN Rev Roitenberg Family
Asstd Proj Rfdg........................... 5.700 08/15/41 2,286,116
1,000 Saint Paul, MN Hsg & Redev Auth Higher
Ground Academy Rfdg Ser A................. 6.625 12/01/23 1,046,840
4,000 Saint Paul, MN Hsg & Redev Auth Hlthcare
Fac Rev Hlth Partners Oblig Grp Proj...... 5.250 05/15/36 3,961,720
400 Saint Paul, MN Hsg & Redev Auth Hmong
Academy Proj Ser A........................ 5.750 09/01/26 400,948
5,000 Saint Paul, MN Hsg & Redev Auth Hosp Rev
Hlth East Proj............................ 6.000 11/15/35 5,196,600
2,185 Saint Paul, MN Hsg & Redev Auth Lease Rev
Hope Cmnty Academy Proj A................. 6.250 12/01/33 2,207,331
1,000 Saint Paul, MN Hsg & Redev Cmnty of Peace
Academy Proj Ser A (Prerefunded @
12/01/10)................................. 7.875 12/01/30 1,141,870
2,250 Saint Paul, MN Port Auth Hotel Fac Rev
Radisson Kellogg Proj Ser 2 (Prerefunded @
08/01/08)................................. 7.375 08/01/29 2,386,418
1,250 Saint Paul, MN Port Auth Lease Rev
Hltheast Midway Campus 03 Ser A........... 5.875 05/01/30 1,266,325
700 Saint Paul, MN Port Auth Lease Rev
Hltheast Midway Campus 03 Ser B........... 6.000 05/01/30 705,894
</Table>
See Notes to Financial Statements 33
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
MINNESOTA (CONTINUED)
$ 2,000 Saint Paul, MN Hsg & Redev Auth Lse Rev
Hmong Academy Proj Ser A.................. 6.000% 09/01/36 $ 2,015,680
1,000 Saint Paul, MN Hsg & Redev Auth Rfdg
Marian Ctr Proj A......................... 5.300 11/01/30 935,550
2,225 Saint Paul, MN Hsg & Redev Auth Rfdg
Marian Ctr Proj A......................... 5.375 05/01/43 2,067,403
1,000 Shakopee, MN Hlthcare Saint Francis Regl
Med Ctr................................... 5.250 09/01/34 993,540
1,000 Vadnais Heights, MN Lease Rev Agric & Food
Sciences Ser A............................ 6.375 12/01/24 998,340
1,000 Vadnais Heights, MN Lease Rev Agric & Food
Sciences Ser A............................ 6.600 12/01/34 993,010
1,450 Winona, MN Hlthcare Winona Hlth Ser A..... 6.000 07/01/34 1,513,162
--------------
108,123,208
--------------
MISSISSIPPI 0.2%
615 Mississippi Bus Fin Corp (AMT)............ 7.250 07/01/34 658,179
1,800 Mississippi Home Corp Rev Grove Apts Proj
Ser 1 (AMT)............................... 6.250 04/01/37 1,784,412
--------------
2,442,591
--------------
MISSOURI 3.1%
1,000 Branson Hills Infrastructure Fac Cmnty
Impt Dist MO Spl Ser A.................... 5.500 04/01/22 978,980
1,000 Branson Hills Infrastructure Fac Cmnty
Impt Dist MO Spl Ser A.................... 5.500 04/01/27 960,150
3,000 Branson, MO Regl Arpt Transn Dev Dist Arpt
Rev Ser B (AMT)........................... 6.000 07/01/37 2,936,940
1,500 Carthage, MO Hosp Rev..................... 5.875 04/01/30 1,506,465
8,500 Carthage, MO Hosp Rev..................... 6.000 04/01/38 8,533,660
1,250 Cole Cnty, MO Indl Dev Auth Sr Living Fac
Rev Lutheran Sr Svcs Heisinger Proj....... 5.500 02/01/35 1,264,900
960 Fenton, MO Tax Increment Rev & Impt
Gravois Bluffs Proj Rfdg (Prerefunded @
10/01/11)................................. 7.000 10/01/21 1,090,099
910 Fenton, MO Tax Increment Rev & Impt
Gravois Bluffs Proj Rfdg (Prerefunded @
10/01/12)................................. 6.125 10/01/21 1,014,659
1,300 Ferguson, MO Tax Increment Rev Crossings
at Halls Ferry Proj....................... 5.000 04/01/17 1,264,068
3,000 Joplin, MO Indl Dev Auth Hlth Fac Rev
Freeman Hlth Sys Proj..................... 5.500 02/15/29 3,069,300
2,000 Kansas City, MO Indl Dev Auth First Mtg
Bishop Spencer Ser A...................... 6.250 01/01/24 2,055,460
1,500 Kansas City, MO Indl Dev Auth First Mtg
Bishop Spencer Ser A...................... 6.500 01/01/35 1,550,115
</Table>
34 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
MISSOURI (CONTINUED)
$ 964 Kansas City, MO Indl Dev Auth Multi-Family
Hsg Rev Brentwood Manor Apt Proj Ser B
(AMT)..................................... 7.250% 10/15/38 $ 1,009,935
3,000 Kansas City, MO Indl Dev Plaza Lib Proj... 5.900 03/01/24 2,967,540
1,753 Kansas City, MO Multi-Family Hsg Rev
Northwoods Apts Proj Ser A (AMT).......... 6.450 05/01/40 1,820,876
2,220 Nevada, MO Hosp Rev Nevada Regl Med Ctr
(Prerefunded @ 10/01/11).................. 6.750 10/01/22 2,497,655
2,750 Saint Joseph, MO Indl Dev Auth Hlthcare
Rev Living Cmnty Saint Joseph Proj........ 7.000 08/15/32 2,728,247
500 Saint Joseph, MO Indl Dev Auth Tax
Increment Rev Shoppes at North Vlg Proj
Ser A..................................... 5.100 11/01/19 494,600
1,000 Saint Joseph, MO Indl Dev Auth Tax
Increment Rev Shoppes at North Vlg Proj
Ser A..................................... 5.500 11/01/27 994,530
1,270 Saint Louis Cnty, MO Indl Dev Auth Sr
Living Fac Rev St Andrews Res For Srs Ser
A......................................... 6.375 12/01/30 1,285,964
1,630 Saint Louis Cnty, MO Indl Dev Auth Sr
Living Fac Rev St Andrews Res For Srs Ser
A......................................... 6.375 12/01/41 1,644,377
4,720 Saline Cnty, MO Indl Dev Auth Hlth Fac Rev
(Acquired 01/12/99, Cost $4,629,292)
(b)....................................... 6.500 12/01/28 4,819,498
--------------
46,488,018
--------------
MONTANA 0.2%
1,000 Montana Fac Fin Auth Rev Sr Living Saint
Johns Lutheran Ser A...................... 6.000 05/15/25 1,026,310
2,000 Montana Fac Fin Auth Rev Sr Living Saint
Johns Lutheran Ser A...................... 6.125 05/15/36 2,046,200
--------------
3,072,510
--------------
NEVADA 0.8%
2,400 Director St NV Dept Business & Industry
Las Vegas Monorail Proj Second Tier....... 7.375 01/01/40 2,371,656
3,000 Henderson, NV Hlthcare Fac Rev Catholic
Hlthcare West Ser A....................... 5.625 07/01/24 3,151,770
980 Las Vegas, NV Loc Impt Bds Spl Impt Dist
No 607.................................... 6.000 06/01/19 1,009,674
5,425 Reno, NV Redev Agy Tax Alloc Sub Lien Ser
C......................................... 5.400 06/01/27 5,267,838
--------------
11,800,938
--------------
NEW HAMPSHIRE 0.4%
1,500 New Hampshire Hlth & Ed Fac Auth Rev
Hlthcare Sys Covenant Hlth................ 5.500 07/01/34 1,545,480
1,690 New Hampshire Hlth & Ed Fac Auth Rev
Huntington at Nashua Ser A................ 6.875 05/01/33 1,807,151
</Table>
See Notes to Financial Statements 35
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
NEW HAMPSHIRE (CONTINUED)
$ 1,500 New Hampshire Hlth & Ed Fac Speare Mem
Hosp...................................... 5.875% 07/01/34 $ 1,524,570
1,000 New Hampshire St Business Fin Auth Rev
Alice Peck Day Hlth Sys Ser A (Prerefunded
@ 10/01/09)............................... 6.875 10/01/19 1,076,650
--------------
5,953,851
--------------
NEW JERSEY 2.5%
1,000 Middlesex Cnty, NJ Pollutn Ctl Amerada
Rfdg...................................... 6.050 09/15/34 1,040,230
2,000 New Jersey Econ Dev Auth Cedar Crest Vlg
Inc Fac Ser A (Prerefunded @ 11/15/08).... 7.000 11/15/16 2,073,080
2,500 New Jersey Econ Dev Auth Econ Dev Rev Utd
Methodist Homes Ser A1.................... 6.000 07/01/18 2,648,050
2,000 New Jersey Econ Dev Auth First Mtg
Franciscan Oaks Proj...................... 5.700 10/01/17 2,025,420
1,230 New Jersey Econ Dev Auth First Mtg Lions
Gate Proj A............................... 5.875 01/01/37 1,236,716
750 New Jersey Econ Dev Auth First Mtg
Seashore Gardens Proj..................... 5.300 11/01/26 707,835
900 New Jersey Econ Dev Auth First Mtg
Seashore Gardens Proj..................... 5.375 11/01/36 848,907
1,000 New Jersey Econ Dev Auth Retirement Cmnty
Rev Ser A (Prerefunded @ 11/15/08)........ 8.125 11/15/18 1,046,690
1,000 New Jersey Econ Dev Auth Retirement Cmnty
Rev Ser A (Prerefunded @ 11/15/10)........ 8.000 11/15/15 1,139,160
1,440 New Jersey Econ Dev Auth Retirement Cmnty
Rev Ser A (Prerefunded @ 11/15/10)........ 8.125 11/15/23 1,645,502
710 New Jersey Econ Dev Auth Rev First Mtg
Lions Gate Proj A......................... 5.750 01/01/25 720,011
1,285 New Jersey Econ Dev Auth Rev Kullman Assoc
Proj Ser A (AMT).......................... 6.125 06/01/18 1,173,950
2,000 New Jersey Econ Dev Auth Rev Sr Living Fac
Esplanade Bear (AMT)...................... 7.000 06/01/39 1,440,000
1,500 New Jersey Econ Dev Auth Rev Unrefunded
Bal Sr Mtg Arbor Ser A.................... 6.000 05/15/28 1,512,015
3,500 New Jersey Econ Dev Auth Utd Methodist
Homes NJ Oblig............................ 5.750 07/01/29 3,527,125
900 New Jersey Hlthcare Fac Fin Auth Rev
Avalon at Hillsborough Ser A (AMT)........ 6.375 07/01/25 904,500
575 New Jersey Hlthcare Fac Fin Auth Rev
Avalon at Hillsborough Ser A (AMT)........ 6.625 07/01/35 578,807
8,840 New Jersey Hlthcare Fac Fin Auth Rev Cap
Apprec Saint Barnabas Hlth Ser B.......... * 07/01/35 1,703,822
7,780 New Jersey Hlthcare Fac Fin Auth Rev Cap
Apprec Saint Barnabas Hlth Ser B.......... * 07/01/36 1,413,159
</Table>
36 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
NEW JERSEY (CONTINUED)
$ 7,155 New Jersey Hlthcare Fac Fin Auth Rev Cap
Apprec Saint Barnabas Hlth Ser B.......... * 07/01/37 $ 1,221,287
3,225 New Jersey Hlthcare Fac Fin Auth Rev Cap
Hlth Sys Oblig Grp Ser A.................. 5.375% 07/01/33 3,249,316
595 New Jersey Hlthcare Fac Fin Auth Rev
Raritan Bay Med Ctr Issue Rfdg............ 7.250 07/01/14 607,382
4,740 New Jersey Hlthcare Fac Fin Auth Rev Saint
Barnabas Hlthcare Sys Ser B............... * 07/01/34 971,937
3,000 New Jersey Hlthcare Fac Fin Inst Inc
Cherry Hill Proj.......................... 8.000 07/01/27 3,033,780
970 New Jersey St Ed Fac Auth Rev Felician
College of Lodi Ser D (Acquired 11/07/97,
Cost $970,000) (b)........................ 7.375 11/01/22 992,213
--------------
37,460,894
--------------
NEW MEXICO 0.6%
4,010 Albuquerque, NM Retirement Fac Rev La Vida
Llena Proj Rfdg Ser B..................... 6.600 12/15/28 4,145,458
1,505 Cabezon Pub Impt Dist NM Spl Leverage
Rev....................................... 6.000 09/01/24 1,539,013
991 New Mexico Hsg Auth Region lll Sr
Brentwood Gardens Apt Ser A (AMT)......... 6.850 12/01/31 1,053,354
2,000 New Mexico St Hosp Equip Ln Council Hosp
Rev Rehoboth Proj Rfdg Ser A.............. 5.250 08/15/26 1,865,960
750 Ventana West Pub Impt Dist NM............. 6.875 08/01/33 792,975
--------------
9,396,760
--------------
NEW YORK 5.8%
1,000 Amherst, NY Indl Dev Agy Civic Beechwood
Hlthcare Ctr Inc.......................... 5.200 01/01/40 894,830
950 Bethlehem, NY Indl Dev Agy Sr Hsg Rev Van
Allen Proj Ser A (Prerefunded @
06/01/09)................................. 6.875 06/01/39 1,022,095
1,000 Brookhaven, NY Indl Dev Agy Mem Hosp Med
Ctr Inc Ser A (Prerefunded @ 11/15/10).... 8.125 11/15/20 1,132,200
1,400 Brookhaven, NY Indl Dev Agy Sr Residential
Hsg Rev Woodcrest Estates Fac Ser A
(AMT)..................................... 6.375 12/01/37 1,427,356
3,330 Dutchess Cnty, NY Indl Dev Agy Saint
Francis Hosp Rfdg Ser A................... 7.500 03/01/29 3,626,403
2,000 Erie Cnty, NY Indl Dev Agy Rev Orchard Pk
CCRC Inc Proj Ser A....................... 6.000 11/15/36 1,964,720
1,080 Genesee Cnty, NY Indl Dev Agy Civic Fac
Rev United Mem Med Ctr Proj............... 5.000 12/01/32 986,904
1,840 Monroe Cnty, NY Indl Dev Agy Woodland Vlg
Proj (Prerefunded @ 11/15/10)............. 8.000 11/15/15 2,048,178
15,000 New York City Indl Dev Agy Rev Liberty 7
World Trade Ctr Ser A..................... 6.250 03/01/15 15,687,300
</Table>
See Notes to Financial Statements 37
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$ 15,400 New York City Indl Dev Agy Rev Liberty 7
World Trade Ctr Ser A..................... 6.500% 03/01/35 $ 16,103,472
17,780 New York, NY City Indl Dev Agy Rev Liberty
7 World Trade Ctr A (e)................... 6.250 03/01/15 18,594,769
2,500 New York St Energy Resh & Dev Auth Gas Fac
Rev (d) (m)............................... 8.822 04/01/20 2,657,875
1,935 Saratoga Cnty, NY Indl Dev Agy Sr Hsg Rev
Highpointe at Malta Proj Ser A
(Prerefunded @ 06/01/09).................. 6.875 06/01/39 2,090,748
1,000 Suffolk Cnty, NY Indl Dev Agy First Mtg
Jefferson Ferry Ser A (Prerefunded @
11/01/09)................................. 7.250 11/01/28 1,094,950
2,875 Suffolk Cnty, NY Indl Dev Agy Civic Fac
Rev Eastn Long Is Hosp Assoc Ser A
(Prerefunded @ 01/01/12).................. 7.750 01/01/22 3,279,484
1,000 Suffolk Cnty, NY Indl Dev Agy Gurwin
Jewish Phase II........................... 6.700 05/01/39 1,071,330
4,000 Suffolk Cnty, NY Indl Dev Agy Medford
Hamlet Asstd Living Proj (AMT)............ 6.375 01/01/39 4,009,960
1,445 Suffolk Cnty, NY Indl Dev Agy Peconic
Landing Ser A............................. 8.000 10/01/20 1,571,177
1,280 Suffolk Cnty, NY Indl Dev Agy Spellman
High Voltage Fac Ser A (AMT).............. 6.375 12/01/17 1,282,931
1,000 Syracuse, NY Indl Dev Agy Rev First Mtg
Jewish Home Ser A......................... 7.375 03/01/31 1,054,010
2,700 Ulster Cnty, NY Indl Dev Agy Civic Fac Rev
Benedictine Hosp Proj Ser A (Prerefunded @
06/01/09)................................. 6.450 06/01/24 2,843,748
2,315 Utica, NY Indl Dev Agy Civic Utica College
Civic Fac................................. 6.750 12/01/21 2,486,611
1,000 Westchester Cnty, NY Indl Dev Hebrew Hosp
Sr Hsg Inc Ser A.......................... 7.375 07/01/30 1,058,570
--------------
87,989,621
--------------
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 2,140,160
2,600 North Carolina Med Care Commn Retirement
Fac Rev First Mtg Ser A-05................ 5.500 10/01/35 2,506,556
--------------
4,646,716
--------------
NORTH DAKOTA 0.1%
1,820 Traill Cnty, ND Hlthcare Rev Hillsboro Med
Ctr....................................... 5.500 05/01/42 1,700,353
--------------
</Table>
38 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
OHIO 3.3%
$ 10,200 Adams Cnty Hosp Fac Impt Rev Adams Cnty
Hosp Proj................................. 6.500% 09/01/36 $ 9,189,384
5,000 Athens Cnty, OH Hosp Fac Rev Impt
O'Bleness Mem Rfdg Ser A.................. 7.125 11/15/33 5,363,850
3,000 Cleveland-Cuyahoga Cnty, OH Spl Assmt/Tax
Increment................................. 7.000 12/01/18 3,241,980
2,000 Cuyahoga Cnty, OH Hlthcare & Indpt Living
Fac Rev Eliza Jennings Sr Care Ser A...... 6.000 05/15/37 2,002,720
1,000 Cuyahoga Cnty, OH Hlthcare Fac Franciscan
Cnty OH Inc Proj Ser C.................... 6.250 05/15/32 1,010,840
1,760 Dayton, OH Spl Fac Rev Air Fght Cargo Day
LLC Proj (AMT)............................ 6.300 04/01/22 1,761,690
7,510 Erie Cnty, OH Hosp Fac Rev Firelands Regl
Med Ctr Ser A............................. 5.625 08/15/32 7,765,415
5,955 Franklin Cnty, OH Hlthcare Fac Rev Impt
Lutheran Sr City Proj Rfdg (c)............ 6.125 12/15/28 5,695,898
2,600 Franklin Cnty, OH Hlthcare Fac Rev Impt OH
Presbyterian Svc Ser A.................... 5.125 07/01/35 2,513,862
1,500 Lucas Cnty, OH Hlthcare & Impt Sunset
Retirement Rfdg........................... 6.500 08/15/20 1,562,535
750 Lucas Cnty, OH Port Auth Rev Saint Mary
Woods Proj Ser A.......................... 6.000 05/15/24 747,592
2,250 Lucas Cnty, OH Port Auth Rev Saint Mary
Woods Proj Ser A.......................... 6.000 05/15/34 2,202,975
2,770 Madison Cnty, OH Hosp Impt Rev Madison
Cnty Hosp Proj Rfdg (Prerefunded @
08/01/08)................................. 6.400 08/01/28 2,842,352
4,340 Norwood, OH Tax Increment Rev Fin
Cornerstone at Norwood.................... 6.200 12/01/31 4,254,893
--------------
50,155,986
--------------
OKLAHOMA 1.4%
1,000 Citizen Potawatomi Nation, OK Ser A....... 6.500 09/01/16 1,047,400
330 Langston, OK Econ Dev Langston Cmnty Dev
Corp Proj Ser A (g)....................... 7.000 08/01/10 347,074
750 Langston, OK Econ Dev Langston Cmnty Dev
Corp Proj Ser A (Prerefunded @
08/01/10)................................. 7.400 08/01/17 838,208
1,000 Langston, OK Econ Dev Langston Cmnty Dev
Corp Proj Ser A (Prerefunded @
08/01/10)................................. 7.625 08/01/20 1,123,620
2,000 Oklahoma Cnty, OK Fin Auth Rev Epworth
Villa Proj Rfdg........................... 6.000 04/01/18 2,023,540
750 Oklahoma Cnty, OK Fin Auth Rev Epworth
Villa Proj Rfdg Ser A..................... 5.700 04/01/25 749,175
1,250 Oklahoma Cnty, OK Fin Auth Rev Epworth
Villa Proj Rfdg Ser A..................... 5.875 04/01/30 1,251,237
1,000 Oklahoma Cnty, OK Fin Auth Rev Epworth
Villa Proj Rfdg Ser A..................... 7.000 04/01/25 1,019,470
</Table>
See Notes to Financial Statements 39
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
OKLAHOMA (CONTINUED)
$ 5,500 Oklahoma Cnty, OK Fin Auth Rev Retirement
Fac Concordia Ser A....................... 6.000% 11/15/38 $ 5,468,815
1,500 Oklahoma Cnty, OK Fin Auth Rev Retirement
Fac Concordia Ser A....................... 6.125 11/15/25 1,510,830
4,000 Oklahoma Dev Fin Auth Rev Hillcrest
Hlthcare Sys Rfdg Ser A (Prerefunded @
08/15/09)................................. 5.625 08/15/19 4,188,840
1,065 Oklahoma Dev Fin Auth Rev Hillcrest
Hlthcare Sys Rfdg Ser A (Prerefunded @
08/15/09)................................. 5.750 08/15/12 1,117,675
1,000 Oklahoma Dev Fin Auth Rev Hillcrest
Hlthcare Sys Rfdg Ser A (Prerefunded @
08/15/09)................................. 5.750 08/15/15 1,049,460
--------------
21,735,344
--------------
OREGON 0.9%
2,000 Clackamas Cnty, OR Hosp Fac Willamette
View Inc Proj Ser A (Prerefunded @
11/01/09)................................. 7.500 11/01/29 2,182,400
2,145 Clatsop Care Ctr Hlth Dist OR Rev Sr
Hsg....................................... 6.875 08/01/28 2,181,958
2,500 Multnomah Cnty, OR Hosp Fac Auth Rev
Terwilliger Plaza Proj Rfdg (Acquired
05/21/04, Cost $2,442,200) (b)............ 6.500 12/01/29 2,536,550
4,898 Oregon St Hlth Hsg Ed & Cultural Fac Auth
St Anthony Vlg Hsg Ser A (AMT)............ 7.250 06/01/28 5,039,283
910 Oregon St Hlth Hsg Ed Auth OR Baptist
Retirement Homes Ser A.................... 8.000 11/15/26 911,865
--------------
12,852,056
--------------
PENNSYLVANIA 5.6%
15,500 Allegheny Cnty, PA Hosp Dev Auth Rev Hlth
Sys West PA Ser A (e)..................... 5.375 11/15/40 14,997,188
1,925 Allegheny Cnty, PA Hosp Dev Hlth Sys Ser B
(Prerefunded @ 11/15/10).................. 9.250 11/15/15 2,224,376
2,000 Allegheny Cnty, PA Hosp Dev Hlth Sys Ser B
(Prerefunded @ 11/15/10).................. 9.250 11/15/22 2,365,380
2,000 Allegheny Cnty, PA Hosp Dev Hlth Sys Ser B
(Prerefunded @ 11/15/10).................. 9.250 11/15/30 2,365,380
1,500 Allegheny Cnty, PA Redev Auth Pittsburgh
Mills Proj................................ 5.600 07/01/23 1,524,240
1,500 Berks Cnty, PA Indl Dev Auth First Mtg Rev
Rfdg One Douglassville Proj Ser A (AMT)... 6.125 11/01/34 1,482,315
1,500 Bucks Cnty, PA Indl Dev Auth Retirement
Cmnty Rev Ann's Choice Inc Fac Ser A...... 6.125 01/01/25 1,532,220
1,250 Bucks Cnty, PA Indl Dev Auth Retirement
Cmnty Rev Ann's Choice Inc Fac Ser A...... 6.250 01/01/35 1,271,175
1,000 Bucks Cnty, PA Indl Dev Auth Rev First Mtg
Hlthcare Fac Chandler..................... 6.200 05/01/19 982,450
</Table>
40 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
PENNSYLVANIA (CONTINUED)
$ 1,800 Bucks Cnty, PA Indl Dev Auth Rev First Mtg
Hlthcare Fac Chandler..................... 6.300% 05/01/29 $ 1,741,392
1,500 Chester Cnty, PA Hlth & Ed Fac Chester
Cnty Hosp Ser A........................... 6.750 07/01/31 1,579,380
3,000 Dauphin Cnty, PA Gen Auth Rev Office & Pkg
Riverfront Office......................... 6.000 01/01/25 2,788,740
1,000 Fulton Cnty, PA Indl Dev Auth Hosp Rev
Fulton Cnty Med Ctr Proj.................. 5.875 07/01/31 1,002,950
1,900 Fulton Cnty, PA Indl Dev Auth Hosp Rev
Fulton Cnty Med Ctr Proj.................. 5.900 07/01/40 1,899,791
1,000 Harrisburg, PA Auth Univ Rev Harrisburg
Univ of Science Ser A..................... 5.400 09/01/16 1,013,020
3,050 Harrisburg, PA Auth Univ Rev Harrisburg
Univ of Science Ser B..................... 6.000 09/01/36 3,098,830
2,200 Indiana Cnty, PA Indl Dev Auth PSEG Pwr
LLC Proj Rfdg (AMT)....................... 5.850 06/01/27 2,268,310
1,000 Lancaster Cnty, PA Hosp Auth Rev Hlth Ctr
Saint Anne's Home......................... 6.625 04/01/28 1,019,210
1,200 Lehigh Cnty, PA Gen Purp Auth First Mtg
Bible Fellowship Church................... 7.625 11/01/21 1,301,952
3,000 Lehigh Cnty, PA Gen Purp Auth Rev Good
Shepherd Grp Ser A........................ 5.500 11/01/24 3,114,780
3,585 Lehigh Cnty, PA Gen Purp Auth Rev
Kidspeace Oblig Grp (c)................... 6.200 11/01/14 3,515,451
5,500 Lehigh Cnty, PA Gen Purp Auth Rev
Kidspeace Oblig Grp Rfdg.................. 6.000 11/01/23 5,499,615
1,000 Lehigh Cnty, PA Indl Dev Auth Hlth Fac Rev
Lifepath Inc Proj......................... 6.100 06/01/18 986,420
4,180 Montgomery Cnty, PA Higher Ed & Hlth Auth
Rev Rfdg & Impt AHR Montgomery............ 6.875 04/01/36 4,377,379
1,085 Montgomery Cnty, PA Indl Dev Auth Rev Mtg
Whitemarsh Cont Care Proj................. 6.000 02/01/21 1,113,362
4,500 Montgomery Cnty, PA Indl Dev Auth Rev Mtg
Whitemarsh Cont Care Proj................. 6.250 02/01/35 4,613,850
1,340 Northeastern, PA Hosp & Ed Auth Hlthcare
Rev....................................... 7.125 10/01/29 1,365,125
1,665 Northeastern, PA Hosp & Ed Auth Hlthcare
Rev Oakwood Ter Proj (Acquired 12/27/05,
Cost $1,665,000) (b) (c) (h).............. 6.500 10/01/32 1,666,199
1,500 Pennsylvania Econ Dev Fin Auth Reliant
Energy Ser A (AMT) (d).................... 6.750 12/01/36 1,631,160
3,000 Pennsylvania Econ Dev Fin Auth Reliant
Energy Seward Ser A (AMT) (d)............. 6.750 12/01/36 3,262,320
980 Pennsylvania St Higher Ed Student Assn Inc
Proj Ser A................................ 6.750 09/01/32 1,043,465
</Table>
See Notes to Financial Statements 41
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
PENNSYLVANIA (CONTINUED)
$ 2,150 Philadelphia, PA Auth Indl Dev Rev Coml
Dev Rfdg (AMT)............................ 7.750% 12/01/17 $ 2,153,612
1,695 Philadelphia, PA Hosp & Higher Ed Fac Auth
Rev Centralized Comp Human Svc Ser A...... 6.125 01/01/13 1,670,185
1,500 Westmoreland Cnty, PA Indl Dev Hlthcare
Fac Redstone Ser B (Prerefunded @
11/15/10)................................. 8.000 11/15/23 1,690,650
--------------
84,161,872
--------------
RHODE ISLAND 0.3%
1,825 Rhode Island St Econ Dev Corp Rev Oblig
Providence RI............................. 7.250 07/01/20 1,903,055
3,000 Tobacco Settlement Fin Corp RI Asset Bkd
Ser A..................................... 6.000 06/01/23 3,083,580
--------------
4,986,635
--------------
SOUTH CAROLINA 1.4%
2,500 Lancaster Cnty, SC Assmt Rev Edenmoor Impt
Dist Ser A (Acquired 05/19/06, Cost
$2,500,000) (b)........................... 5.750 12/01/37 2,435,175
1,700 Lancaster Cnty, SC Assmt Rev Sun City
Carolina Lakes Impt....................... 5.450 12/01/37 1,589,211
1,000 Myrtle Beach, SC Tax Increment Myrtle
Beach Air Force Base Ser A................ 5.250 11/01/26 929,000
1,250 Myrtle Beach, SC Tax Increment Myrtle
Beach Air Force Base Ser A................ 5.300 11/01/35 1,137,500
3,000 South Carolina Jobs Econ Dev Auth Econ Dev
Rev Westminster Impt & Rfdg............... 5.375 11/15/30 2,781,000
1,570 South Carolina Jobs Econ Dev Auth Hosp Fac
Rev Rfdg Palmetto Hlth Alliance Ser A..... 6.250 08/01/31 1,658,878
2,000 South Carolina Jobs Econ Dev Auth Rev
Woodlands at Furman Proj Ser A (f)........ 6.000 11/15/37 2,000,000
1,000 South Carolina Jobs Econ Dev Episcopal
Home Still Proj Ser A..................... 6.000 05/15/17 1,014,540
2,250 South Carolina Jobs Econ Dev First Mtg
Wesley Com Rfdg........................... 5.300 10/01/36 2,013,525
2,000 South Carolina Jobs Econ Dev First Mtg
Westley Com Proj (Prerefunded @
10/01/10)................................. 7.750 10/01/24 2,272,120
3,000 Tobacco Settlement Rev Mgmt Auth SC Tob
Settlement Rev Ser B...................... 6.375 05/15/28 3,086,670
--------------
20,917,619
--------------
SOUTH DAKOTA 0.6%
1,010 Keystone, SD Econ Dev Rev Wtr Quality Mgmt
Corp A (AMT).............................. 6.000 12/15/18 998,143
1,750 Sioux Falls, SD Hlth Fac Rev Rfdg Dow
Rummel Vlg Proj........................... 5.000 11/15/33 1,573,512
</Table>
42 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
SOUTH DAKOTA (CONTINUED)
$ 4,065 Sioux Falls, SD Multi-Family Rev Rfdg Hsg
Inn on Westport Proj A1 (Acquired
08/04/06, Cost $4,065,000) (b)............ 6.000% 03/01/40 $ 4,036,057
1,030 Sioux Falls, SD Multi-Family Rev Rfdg Hsg
Inn on Westport Sub B (Acquired 08/04/06,
Cost $1,030,000) (b) (c).................. 7.500 03/01/40 998,915
1,050 South Dakota St Hlth & Ed Fac Auth Rev
Sioux Vly Hosp & Hlth Sys A............... 5.250 11/01/34 1,076,481
--------------
8,683,108
--------------
TENNESSEE 4.4%
1,675 Blount Cnty, TN Hlth & Ed Fac Brd Rev Rfdg
Asbury Inc. Ser A......................... 5.125 04/01/23 1,602,439
3,000 Elizabethton, TN Hlth & Ed Fac Brd Rev
Rfdg Impt Hosp Ser B (MBIA Insd) (j)...... 7.750 07/01/29 3,521,430
9,900 Johnson City, TN Hlth & Ed Fac Brd Hosp
Rev First Mtg Mtn St Hlth Ser A (e)....... 5.500 07/01/36 10,032,957
1,000 Johnson City, TN Hlth & Ed Fac Brd Hosp
Rev First Mtg MTN St Hlth Rfdg Ser A...... 7.500 07/01/33 1,139,550
1,000 Johnson City, TN Hlth & Ed Fac Brd
Retirement Fac Rev Appalachian Christian
Vlg Proj Ser A............................ 6.250 02/15/32 1,021,500
1,750 Shelby Cnty, TN Hlth & Ed Germantown Vlg
Ser A..................................... 7.000 12/01/23 1,743,893
2,500 Shelby Cnty, TN Hlth & Ed Germantown Vlg
Ser A..................................... 7.250 12/01/34 2,521,100
1,000 Shelby Cnty, TN Hlth Ed & Hsg Fac Brd Rev
Trezevant Manor Proj Ser A................ 5.625 09/01/26 1,002,380
4,500 Shelby Cnty, TN Hlth Ed & Hsg Fac Brd Rev
Trezevant Manor Proj Ser A................ 5.750 09/01/37 4,505,985
800 Shelby Cnty, TN Hlth Ed Hsg Vlg at
Germantown................................ 6.250 12/01/34 695,752
4,920 Sullivan Cnty, TN Hlth Ed & Hsg Fac Brd
Rev (c)................................... 8.410 11/01/19 5,075,472
5,700 Sullivan Cnty, TN Hlth Ed & Hsg Fac Brd
Hosp Rev Wellmont Hlth Sys Proj Ser C
(e)....................................... 5.250 09/01/36 5,620,523
24,000 Tennessee Energy Acqusn Corp Gas Rev Ser A
(e)....................................... 5.250 09/01/22 24,868,080
2,625 Trenton, TN Hlth & Ed Fac Brd Rev Inc Proj
Ser A (Acquired 06/08/89, Cost $2,625,000)
(b) (c)................................... 10.000 11/01/19 2,708,291
1,160 Trenton, TN Hlth & Ed Fac Brd Rev Inc Proj
Ser B (Acquired 06/08/89, Cost $1,160,000)
(b) (c) (d)............................... 10.000 11/01/20 123,621
--------------
66,182,973
--------------
</Table>
See Notes to Financial Statements 43
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
TEXAS 6.9%
$ 155 Abia Dev Corp TX Arpt Fac Rev Austin Belly
Port Dev LLC Proj Ser A (AMT)............. 6.250% 10/01/08 $ 155,665
3,000 Abia Dev Corp TX Arpt Fac Rev Austin Belly
Port Dev LLC Proj Ser A (AMT)............. 6.500 10/01/23 3,023,580
2,000 Angelina & Neches Riv Auth TX Indl Dev
Corp Environmental Aspen Pwr LLC Proj Ser
A (AMT)................................... 6.500 11/01/29 1,970,140
1,000 Atlanta, TX Hosp Auth Fac Rev............. 6.700 08/01/19 1,034,320
2,035 Atlanta, TX Hosp Auth Fac Rev............. 6.750 08/01/29 2,097,698
990 Austin-Bergstorm Landhost Enterprises Inc
TX Arpt Hotel Sr Ser A (a)................ 6.750/4.450 04/01/27 770,319
965 Bexar Cnty, TX Hsg Fin Corp Multi-Family
Hsg Rev Woodland Ridge Apt Proj Ser A
(AMT)..................................... 7.000 01/01/39 1,019,966
2,000 Brazos Cnty, TX Hlth Fac Dev Oblig Grp.... 5.375 01/01/32 2,034,880
735 Comal Cnty, TX Hlth Fac Dev Hlthcare Sys
McKenna Mem Proj Ser A.................... 6.250 02/01/32 764,451
1,825 Dallas Cnty, TX Flood Ctl Dist No 1 Cap
Apprec Rfdg (Acquired 08/28/89, Cost
$660,829) (b) (c)......................... * 08/01/11 1,467,574
3,445 Dallas Cnty, TX Flood Ctl Dist No 1
Rfdg...................................... 7.250 04/01/32 3,546,180
4,205 Dallas Cnty, TX Flood Ctl Dist Rfdg (c)... 6.750 04/01/16 4,353,058
2,500 Decatur, TX Hosp Auth Hosp Wise Regl Hlth
Sys Ser A................................. 7.000 09/01/25 2,678,225
3,500 Decatur, TX Hosp Auth Hosp Wise Regl Hlth
Sys Ser A................................. 7.125 09/01/34 3,749,445
1,500 Grand Prairie, TX Hsg Fin Corp Indpt Sr
Living Ctr Rev (a)........................ 7.500/3.750 07/01/17 1,375,755
3,000 Grand Prairie, TX Hsg Fin Corp Indpt Sr
Living Ctr Rev (a)........................ 7.750/3.875 01/01/34 2,691,300
1,750 Houston, TX Arpt Sys Rev Sub Lien Ser A
(FSA Insd) (AMT).......................... 5.125 07/01/32 1,763,440
3,000 Houston, TX Hlth Fac Dev Corp Buckingham
Sr Living Cmnty Ser A (Prerefunded @
02/15/14)................................. 7.125 02/15/34 3,586,710
17,760 Lower CO Riv Auth TX Rev Rfdg Ser A (e)... 5.875 05/15/14 18,558,046
7,500 Lower CO Riv Auth TX Rev Rfdg Ser A (e)... 5.875 05/15/15 7,837,012
1,000 Lubbock, TX Hlth Fac Dev Corp Rev Dev Rfdg
First Mtg Carillon Proj A................. 6.500 07/01/26 1,029,710
10,000 Lubbock, TX Hlth Fac Dev Corp Rev Dev Rfdg
First Mtg Carillon Proj A................. 6.625 07/01/36 10,358,300
1,195 Lubbock, TX Hlth Fac Dev Corp Rev First
Mtg Carillon Proj A (Prerefunded @
07/01/09)................................. 6.500 07/01/19 1,264,370
2,225 Meadow Parc Dev Inc TX Multi-Family Rev
Hsg Meadow Parc Apt Proj.................. 6.500 12/01/30 2,242,845
</Table>
44 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
TEXAS (CONTINUED)
$ 2,500 Metropolitan Hlth Fac Dev Corp TX Wilson N
Jones Mem Hosp Proj....................... 7.250% 01/01/31 $ 2,564,425
1,500 Midlothian, TX Dev Auth Tax Increment
Contract Rev (Acquired 12/02/04, Cost
$1,500,000) (b)........................... 6.200 11/15/29 1,564,275
2,000 Midlothian, TX Dev Auth Tax Increment
Contract Rev (Prerefunded @ 05/15/11)..... 7.875 11/15/26 2,300,220
1,000 Richardson, TX Hosp Auth Rev Baylor &
Richardson Impt Rfdg...................... 5.625 12/01/28 1,011,480
2,500 Tarrant Cnty, TX Cultural Ed Fac Fin Corp
Retirement Fac Northwest Sr Hsg Edgemere
Proj Ser A................................ 6.000 11/15/36 2,551,175
1,000 Texas St Dept Hsg & Cmnty Affairs Home Mtg
Rev (GNMA Collateralized) (AMT)........... 6.900 07/02/24 1,029,080
1,675 Texas St Pub Fin Auth Sch Excellence Ed
Proj Ser A (Acquired 12/02/04, Cost
$1,654,197) (b)........................... 7.000 12/01/34 1,815,415
1,500 Texas St Student Hsg Corp MSU Proj
Midwestern St Univ........................ 6.500 09/01/34 1,584,015
2,950 Tomball, TX Hosp Auth Rev Hosp Tomball
Regl Hosp................................. 6.000 07/01/29 3,008,115
1,000 Travis Cnty, TX Hlth Fac Dev Corp
Retirement Fac Rev Querencia Barton Creek
Proj...................................... 5.500 11/15/25 970,910
2,950 Travis Cnty, TX Hlth Fac Dev Corp
Retirement Fac Rev Querencia Barton Creek
Proj...................................... 5.650 11/15/35 2,868,433
925 Wichita Cnty, TX Hlth Fac Rolling Meadows
Fac Rfdg Ser A............................ 6.250 01/01/28 939,837
2,500 Woodhill Pub Fac Corp TX Hsg Woodhill Apt
Proj...................................... 7.500 12/01/29 2,389,450
--------------
103,969,819
--------------
UTAH 0.2%
1,000 Hildale, UT Elec Rev Gas Turbine Elec Fac
Proj (l).................................. 7.800 09/01/15 307,500
585 Hildale, UT Elec Rev Gas Turbine Elec Fac
Proj (l).................................. 7.800 09/01/25 179,887
1,165 Hildale, UT Elec Rev Gas Turbine Elec Fac
Proj (l).................................. 8.000 09/01/20 358,238
2,315 Utah St Hsg Fin Agy Rev RHA Cmnty Svc Proj
Ser A..................................... 6.875 07/01/27 2,338,914
--------------
3,184,539
--------------
</Table>
See Notes to Financial Statements 45
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
VERMONT 0.1%
$ 1,000 Vermont Ed & Hlth Bldg Fin Agy Rev
Bennington College Proj................... 6.625% 10/01/29 $ 1,026,740
770 Vermont Ed & Hlth Bldg Fin Agy Rev VT
Council Dev Mental Hlth Ser A............. 6.000 12/15/09 796,234
--------------
1,822,974
--------------
VIRGINIA 4.8%
4,000 Albemarle Cnty, VA Indl Dev Auth Ed Fac
Rev Covenant Sch Inc Ser A................ 7.750 07/15/32 4,389,480
5,000 Celebrate, VA South Cmnty Dev Celebrate VA
South Proj................................ 6.250 03/01/37 5,093,000
1,500 Farms New Kent, VA Cmnty Dev Ser B........ 5.450 03/01/36 1,414,305
1,500 Farms New Kent, VA Cmnty Dev Ser C........ 5.800 03/01/36 1,452,285
2,500 Henrico Cnty, VA Econ Dev Auth Residential
Care Fac Rev Utd Methodist Rfdg Ser A..... 6.500 06/01/22 2,632,050
1,000 New Port Cmnty Dev Auth VA Spl Assmt...... 5.500 09/01/26 985,510
2,500 New Port Cmnty Dev Auth VA Spl Assmt...... 5.600 09/01/36 2,446,275
4,000 Peninsula Ports Auth VA Residential Care
Fac Rev Rfdg VA Baptist Homes Ser C....... 5.400 12/01/33 3,887,800
1,500 Peninsula Town Ctr Cmnty Dev Auth VA Spl
Oblig..................................... 6.350 09/01/28 1,554,060
1,250 Peninsula Town Ctr Cmnty Dev Auth VA Spl
Oblig..................................... 6.450 09/01/37 1,293,900
4,000 Roanoke Cnty, VA Indl Dev Auth Glebe Inc
Ser A..................................... 6.300 07/01/35 2,524,160
17,620 Tobacco Settlement Fin Corp VA Asset Bkd
(e)....................................... 5.625 06/01/37 19,738,629
1,700 Virginia Small Business Fin Auth Rev Indl
Dev SIL Clean Wtr Proj (AMT) (l).......... 7.250 11/01/24 535,840
25,225 Virginia St Hsg Auth Dev Auth Comnwlth Mtg
Sub Ser D1 (AMT) (e)...................... 4.900 01/01/33 24,734,641
--------------
72,681,935
--------------
WASHINGTON 0.8%
1,000 King Cnty, WA Pub Hosp Dist No 004
Snoqualmie Vly Hosp....................... 7.250 12/01/15 1,039,480
8,830 Tobacco Settlement Auth WA Tob Settlement
Rev....................................... 6.625 06/01/32 9,153,355
1,000 Washington St Hsg Fin Commn Nonprofit Rev
Skyline at First Hill Proj Ser A.......... 5.625 01/01/27 989,470
1,000 Washington St Hsg Fin Commn Nonprofit Rev
Skyline at First Hill Proj Ser A.......... 5.625 01/01/38 977,170
--------------
12,159,475
--------------
WISCONSIN 1.1%
800 Baldwin, WI Hosp Rev Mtg Ser A............ 6.125 12/01/18 800,360
1,000 Baldwin, WI Hosp Rev Mtg Ser A............ 6.375 12/01/28 1,000,610
1,740 Milwaukee, WI Rev Sr Air Cargo (AMT)...... 6.500 01/01/25 1,819,553
</Table>
46 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -----------------------------------------------------------------------------------------------
WISCONSIN (CONTINUED)
$ 1,000 Waukesha, WI Redev Auth Hsg Rfdg Sr
Kirkland Crossings Proj................... 5.500% 07/01/31 $ 957,750
1,500 Waukesha, WI Redev Auth Hsg Sr Kirkland
Crossings Proj Rfdg....................... 5.600 07/01/41 1,423,800
750 Wisconsin Hlth & Ed Fac Eastcastle Pl Inc
Proj...................................... 6.000 12/01/24 753,217
2,000 Wisconsin St Hlth & Ed Fac Auth Rev Aurora
Hlthcare Inc Ser A........................ 5.600 02/15/29 2,015,920
1,000 Wisconsin St Hlth & Ed Fac Auth Rev
Oakwood Vlg Proj Ser A.................... 7.625 08/15/30 1,066,120
1,500 Wisconsin St Hlth & Ed Fac Beaver Dam
Cmnty Hosp Inc Ser A...................... 6.750 08/15/34 1,605,195
1,000 Wisconsin St Hlth & Ed Fac Divine Savior
Hlthcare Ser C (Prerefunded @ 05/01/12)... 7.500 05/01/32 1,146,570
2,000 Wisconsin St Hlth & Ed Fac Fort Hlthcare
Inc Proj.................................. 6.100 05/01/34 2,100,960
1,500 Wisconsin St Hlth & Ed Fac Southwest Hlth
Ctr Ser A................................. 6.125 04/01/24 1,552,365
--------------
16,242,420
--------------
WYOMING 0.4%
4,000 Sweetwater Cnty, WY Solid Waste Disp Rev
FMC Corp Proj Rfdg (AMT).................. 5.600 12/01/35 4,000,960
1,500 Teton Cnty, WY Hosp Dist Hosp Saint Johns
Med Ctr................................... 6.750 12/01/27 1,573,815
--------------
5,574,775
--------------
PUERTO RICO 0.3%
5,000 Puerto Rico Pub Bldg Auth Rev Govt Fac Ser
I (Comwth Gtd)............................ 5.250 07/01/33 5,141,250
--------------
U.S. VIRGIN ISLANDS 0.3%
2,500 Northern Mariana Islands Ser A
(Prerefunded @ 06/01/10).................. 7.375 06/01/30 2,742,125
1,000 Virgin Islands Pub Fin Auth Refinery Fac
Rev Sr Secd-Hovensa Refinery (AMT)........ 5.875 07/01/22 1,037,670
--------------
3,779,795
--------------
TOTAL LONG-TERM INVESTMENTS 114.6%
(Cost $1,720,600,688)........................................................ 1,726,210,257
TOTAL SHORT TERM INVESTMENTS 0.2%
(Cost $3,600,000)............................................................ 3,600,000
--------------
TOTAL INVESTMENTS 114.8%
(Cost $1,724,200,688)........................................................ 1,729,810,257
</Table>
See Notes to Financial Statements 47
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
DESCRIPTION VALUE
- -------------------------------------------------------------------------------------------------
LIABILITY FOR FLOATING RATE NOTE OBLIGATIONS RELATED TO SECURITIES HELD (15.8%)
(Cost ($238,410,000))
$(238,410) Notes with interest rates ranging from 3.88% to 4.00% at September
30, 2007 and contractual maturities of collateral ranging from 2014
to 2046 (See note 1) (n)........................................... $ (238,410,000)
--------------
TOTAL NET INVESTMENTS 99.0%
(Cost $1,485,790,688).......................................................... 1,491,400,257
OTHER ASSETS IN EXCESS OF LIABILITIES 1.0%...................................... 15,661,941
--------------
NET ASSETS 100.0%............................................................... $1,507,062,198
==============
</Table>
Percentages are calculated as a percentage of net assets.
* Zero coupon bond
(a) Interest is accruing at less than the stated coupon. Coupon is shown as
stated coupon/actual coupon.
(b) 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 5.4% of net assets.
(c) The Fund owns 100% of the outstanding bond issuance.
(d) Variable Rate Coupon
(e) Underlying Security related to Inverse Floaters entered into by the Fund.
See Note 1.
(f) Security purchased on a when-issued or delayed delivery basis.
(g) Escrowed to Maturity
(h) 144A-Private Placement security which is exempt from registration under
Rule 144A of the Securities Act of 1933, as amended. This security may only
be resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(i) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(j) All or a portion of this security has been physically segregated in
connection with open futures contracts.
(k) Floating Rate Coupon
(l) Non-income producing security.
(m) Inverse Floating Rate
(n) Floating rate notes. The interest rates shown reflect the rates in the
effect at September 30, 2007.
48 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
ACA--American Capital Access
AMBAC--AMBAC Indemnity Corp.
AMT--Alternative Minimum Tax
Comwth--Commonwealth of Puerto Rico
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
GNMA--Government National Mortgage Association
GTY AGMT--Guarantee Agreement
MBIA--Municipal Bond Investors Assurance Corp.
FUTURES CONTRACTS OUTSTANDING AS OF SEPTEMBER 30, 2007:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
SHORT CONTRACTS:
U.S. Treasury Bond Futures, December 2007 (Current Notional
Value of $111,344 per contract)........................... 810 $1,218,980
=== ==========
</Table>
See Notes to Financial Statements 49
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
September 30, 2007
<Table>
ASSETS:
Total Investments (Cost $1,724,200,688)..................... $1,729,810,257
Receivables:
Interest.................................................. 26,112,278
Investments Sold.......................................... 6,869,040
Fund Shares Sold.......................................... 3,199,332
Other....................................................... 246,554
--------------
Total Assets............................................ 1,766,237,461
--------------
LIABILITIES:
Payables:
Floating Rate Note Obligation............................. 238,410,000
Investments Purchased..................................... 10,397,140
Fund Shares Repurchased................................... 3,482,486
Custodian Bank............................................ 3,322,352
Income Distribution....................................... 1,923,323
Distributor and Affiliates................................ 609,700
Investments Advisory Fee.................................. 575,320
Trustees' Deferred Compensation and Retirement Plans........ 315,272
Accrued Expenses............................................ 139,670
--------------
Total Liabilities....................................... 259,175,263
--------------
NET ASSETS.................................................. $1,507,062,198
==============
NET ASSETS CONSIST OF:
Capital (Par value of $0.01 per share with an unlimited
number of shares authorized).............................. $1,625,847,448
Net Unrealized Appreciation................................. 6,828,549
Accumulated Undistributed Net Investment income............. 726,302
Accumulated Net Realized Loss............................... (126,340,101)
--------------
NET ASSETS.................................................. $1,507,062,198
==============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $1,245,409,694 and 96,226,866 shares of
beneficial interest issued and outstanding)............. $ 12.94
Maximum sales charge (4.75%* of offering price)......... 0.65
--------------
Maximum offering price to public........................ $ 13.59
==============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $91,387,908 and 7,065,847 shares of
beneficial interest issued and outstanding)............. $ 12.93
==============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $170,264,596 and 13,053,656 shares of
beneficial interest issued and outstanding)............. $ 13.04
==============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
50 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended September 30, 2007
<Table>
INVESTMENT INCOME:
Interest.................................................... $ 112,049,376
-------------
EXPENSES:
Interest and Residual Trust Expenses........................ 14,933,878
Investment Advisory Fee..................................... 7,625,721
Distribution (12b-1) and Service Fees
Class A................................................... 3,341,097
Class B................................................... 1,074,965
Class C................................................... 1,899,672
Transfer Agent Fees......................................... 699,252
Accounting and Administrative Expenses...................... 301,969
Custody..................................................... 175,308
Professional Fees........................................... 167,875
Reports to Shareholders..................................... 128,801
Registration Fees........................................... 68,624
Trustees' Fees and Related Expenses......................... 58,981
Other....................................................... 83,069
-------------
Total Expenses.......................................... 30,559,212
Less Credits Earned on Cash Balances.................... 30,244
-------------
Net Expenses............................................ 30,528,968
-------------
NET INVESTMENT INCOME....................................... $ 81,520,408
=============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ (5,376,965)
Futures................................................... (4,873,008)
-------------
Net Realized Loss........................................... (10,249,973)
-------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 73,653,473
-------------
End of the Period:
Investments............................................. 5,609,569
Futures................................................. 1,218,980
-------------
6,828,549
-------------
Net Unrealized Depreciation During the Period............... (66,824,924)
-------------
NET REALIZED AND UNREALIZED LOSS............................ $ (77,074,897)
=============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 4,445,511
=============
</Table>
See Notes to Financial Statements 51
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS continued
Statement of Cash Flows
For the Year Ended September 30, 2007
<Table>
CHANGE IN NET ASSETS FROM OPERATIONS........................ 4,445,511
ADJUSTMENTS TO RECONCILE THE CHANGE IN NET ASSETS FROM
OPERATIONS TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Purchases of Investments.................................. (567,629,361)
Proceeds from Sales/Maturities of Investments............. 915,746,695
Net Sales of Short-Term Investments....................... 600,000
Amortization of Premium................................... 2,856,390
Accretion of Discount..................................... (2,508,850)
Net Realized Loss on Investments.......................... 5,376,965
Net Change in Unrealized Depreciation on Investments...... 72,192,709
Decrease in Interest Receivables and Other Assets......... 1,729,081
Decrease in Receivable for Investments Sold............... 1,119,255
Decrease in Accrued Expenses and Other Payables........... (210,531)
Decrease in Investments Purchased Payable................. (10,275,514)
-------------
Total Adjustments....................................... 418,996,839
-------------
NET CASH PROVIDED BY OPERATING ACTIVITIES................... 423,442,350
-------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Shares Sold................................. 209,278,729
Repurchased Shares........................................ (333,805,831)
Dividends Paid (net of reinvested dividends of
$56,452,751)............................................ (26,342,040)
Proceeds from Floating Rate Note Obligations.............. (278,830,000)
-------------
NET CASH PROVIDED BY FINANCING ACTIVITIES................... (429,699,142)
-------------
NET DECREASE IN CASH FOR THE PERIOD......................... (6,256,792)
Cash at beginning of period................................. 2,934,440
-------------
Cash at end of period....................................... $ (3,322,352)
=============
SUPPLEMENTAL DISCLOSURE
Cash Paid During the Year for Interest.................. $ 14,933,878
=============
</Table>
52 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets
<Table>
<Caption>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2007 SEPTEMBER 30, 2006
----------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.............................. $ 81,520,408 $ 83,566,311
Net Realized Gain/Loss............................. (10,249,973) 3,527,529
Net Unrealized Appreciation/Depreciation During the
Period........................................... (66,824,924) 41,198,112
-------------- --------------
Change in Net Assets from Operations............... 4,445,511 128,291,952
-------------- --------------
Distributions from Net Investment Income:
Class A Shares................................... (69,372,970) (69,389,893)
Class B Shares................................... (4,750,158) (6,164,057)
Class C Shares................................... (8,315,260) (9,173,440)
-------------- --------------
Total Distributions................................ (82,438,388) (84,727,390)
-------------- --------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES....................................... (77,992,877) 43,564,562
-------------- --------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold.......................... 204,818,983 204,752,493
Net Asset Value of Shares Issued Through Dividend
Reinvestment..................................... 56,452,751 56,971,212
Cost of Shares Repurchased......................... (332,787,775) (260,956,548)
-------------- --------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS..................................... (71,516,041) 767,157
-------------- --------------
TOTAL INCREASE/DECREASE IN NET ASSETS.............. (149,508,918) 44,331,719
NET ASSETS:
Beginning of the Period............................ 1,656,571,116 1,612,239,397
-------------- --------------
End of the Period (Including accumulated
undistributed net investment income of $726,302
and $1,677,725, respectively).................... $1,507,062,198 $1,656,571,116
============== ==============
</Table>
See Notes to Financial Statements 53
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS A SHARES ----------------------------------------------------
2007 2006 2005 2004 2003
----------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD............................... $ 13.59 13.23 $ 13.00 $13.03 $13.21
-------- -------- -------- ------ ------
Net Investment Income................ 0.69(a) 0.71(a) 0.72(a) 0.74(a) 0.79
Net Realized and Unrealized
Gain/Loss.......................... (0.64) 0.37 0.27 -0- (0.25)
-------- -------- -------- ------ ------
Total from Investment Operations....... 0.05 1.08 0.99 0.74 0.54
Less: Distributions from Net Investment
Income............................... 0.70 0.72 0.76 0.77 0.72
-------- -------- -------- ------ ------
NET ASSET VALUE, END OF THE PERIOD..... $ 12.94 $ 13.59 $ 13.23 $13.00 $13.03
======== ======== ======== ====== ======
Total Return (b)....................... 0.26% 8.41% 7.75% 5.87% 4.21%
Net Assets at End of the Period (In
millions)............................ $1,245.4 $1,338.7 $1,267.3 $766.1 $560.9
Ratio of Expenses to Average Net
Assets............................... 1.73% 1.39% 1.04% 0.99% 0.92%
Ratio of Net Investment Income to
Average Net Assets................... 5.11% 5.34% 5.41% 5.74% 6.07%
Portfolio Turnover..................... 28% 48% 34% 10% 14%
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net Assets
(Excluding Interest and Residual
Trust Expenses)...................... 0.82% 0.84% 0.86% 0.91% 0.89%
</Table>
(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 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.
54 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS B SHARES ---------------------------------------------
2007 2006 2005 2004 2003
---------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD...... $13.58 $13.22 $12.99 $13.02 $13.20
------ ------ ------ ------ ------
Net Investment Income (a)................... 0.59 0.61 0.62 0.65 0.69
Net Realized and Unrealized Gain/Loss....... (0.65) 0.37 0.27 (0.01) (0.25)
------ ------ ------ ------ ------
Total from Investment Operations.............. (0.06) 0.98 0.89 0.64 0.44
Less: Distributions from Net Investment
Income...................................... 0.59 0.62 0.66 0.67 0.62
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD............ $12.93 $13.58 $13.22 $12.99 $13.02
====== ====== ====== ====== ======
Total Return (b).............................. -0.49% 7.54% 7.04% 5.07% 3.42%
Net Assets at End of the Period (In
millions)................................... $ 91.4 $120.0 $144.9 $123.8 $115.6
Ratio of Expenses to Average Net Assets....... 2.48% 2.14% 1.79% 1.75% 1.67%
Ratio of Net Investment Income to Average Net
Assets...................................... 4.35% 4.58% 4.67% 5.00% 5.32%
Portfolio Turnover............................ 28% 48% 34% 10% 14%
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses)................................... 1.57% 1.59% 1.61% 1.67% 1.64%
</Table>
(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.
See Notes to Financial Statements 55
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS C SHARES ----------------------------------------------
2007 2006 2005 2004 2003
----------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD.... $13.69 $13.32 $13.09 $13.11 $13.20
------ ------ ------ ------ ------
Net Investment Income (a)................. 0.59 0.61 0.62 0.64 0.79
Net Realized and Unrealized Gain/Loss..... (0.65) 0.38 0.27 0.01 (0.26)
------ ------ ------ ------ ------
Total from Investment Operations............ (0.06) 0.99 0.89 0.65 0.53
Less: Distributions from Net
Investment Income......................... 0.59 0.62 0.66 0.67 0.62
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD.......... $13.04 $13.69 $13.32 $13.09 $13.11
====== ====== ====== ====== ======
Total Return (b)............................ -0.49% 7.55% 6.98% 5.10%(d) 4.10%(c)
Net Assets at End of the Period (In
millions)................................. $170.3 $198.0 $200.0 $ 84.0 $ 34.3
Ratio of Expenses to Average Net Assets..... 2.48% 2.14% 1.80% 1.73% 1.67%
Ratio of Net Investment Income to Average
Net Assets................................ 4.35% 4.59% 4.62% 4.94%(d) 6.00%(c)
Portfolio Turnover.......................... 28% 48% 34% 10% 14%
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses)................................. 1.57% 1.59% 1.62% 1.65% 1.64%
</Table>
(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 on 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) 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)
56 See Notes to Financial Statements
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007
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 September
30, 2007, 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 September 30, 2007, the Fund had $4,000,000 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.
57
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 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, 2007, the Fund had an accumulated capital loss
carryforward for tax purposes of $121,633,269 which will expire according to the
following schedule:
<Table>
<Caption>
AMOUNT EXPIRATION
$ 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
24,197,373................................................. September 30, 2014
6,419,495................................................. September 30, 2015
</Table>
At September 30, 2007, the cost and related gross unrealized appreciation
and depreciation are as follows:
<Table>
Cost of investments for tax purposes........................ $1,482,904,769
==============
Gross tax unrealized appreciation........................... $ 46,828,005
Gross tax unrealized depreciation........................... (38,332,517)
--------------
Net tax unrealized appreciation on investments.............. $ 8,495,488
==============
</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 years ended September 30,
2007 and 2006 were as follows:
<Table>
<Caption>
2007 2006
Distributions paid from:
Ordinary income........................................... $ 195,125 $ 57,989
Tax-exempt income......................................... 82,599,666 84,689,847
----------- -----------
$82,794,791 $84,747,836
=========== ===========
</Table>
58
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
Permanent differences, primarily due to a reclass of book to tax accretion
differences, resulted in the following reclassifications among the Fund's
components of net assets at September 30, 2007:
<Table>
<Caption>
ACCUMULATED UNDISTRIBUTED ACCUMULATED NET
NET INVESTMENT LOSS REALIZED LOSS CAPITAL
$(33,443) $33,443 $-0-
</Table>
As of September 30, 2007, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed ordinary income............................... $ 20,904
Undistributed tax-exempt income............................. 3,680,322
</Table>
Net realized gains or losses may differ for financial and tax reporting
purposes primarily as a result of the capitalization of reorganization and
restructuring costs, gains or losses recognized for tax purposes on open futures
transactions at September 30, 3007 and post October losses of $5,819,316 which
are not recognized for tax purposes until the first day of the following fiscal
year.
F. EXPENSE REDUCTIONS During the year ended September 30, 2007, the Fund's
custody fee was reduced by $30,244 as a result of credits earned on cash
balances.
G. FLOATING RATE NOTE OBLIGATIONS RELATED TO SECURITIES HELD The Fund enters
into transactions in which it transfers to dealer trusts fixed rate bonds in
exchange for cash and residual interest in the dealer trusts' assets and cash
flows, which are in the form of inverse floating rate investments. The dealer
trusts fund the purchases of the fixed rate bonds by issuing floating rate notes
to third parties and allowing the Fund to retain residual interests in the
bonds. The Fund enters into shortfall agreements with the dealer trusts, which
commit the Fund to pay the dealer trusts, in certain circumstances, the
difference between the liquidation value of the fixed rate bonds held by the
dealer trusts and the liquidation value of the floating rate notes held by third
parties, as well as any shortfalls in interest cash flows. The residual
interests held by the Fund (inverse floating rate investments) include the right
of the Fund (1) to cause the holders of the floating rate notes to tender their
notes at par at the next interest rate reset date, and (2) to transfer the
municipal bond from the dealer trusts to the Fund, thereby collapsing the dealer
trusts. The Fund accounts for the transfer of bonds to the dealer trusts as
secured borrowings, with the securities transferred remaining in the Fund's
investments assets, and the related floating rate notes reflected as Fund
liabilities under the caption "Floating Rate Note Obligations" on the Statement
of Assets and Liabilities. The Fund records the interest income from the fixed
rate bonds under the caption "Interest" and records the expenses related to
floating rate note obligations and any administrative expenses of the dealer
trusts under the caption "Interest and Residual Trust Expenses" on the Fund's
Statement of Operations. The notes issued by the dealer trust have interest
rates that reset weekly and the floating rate note holders have the option to
tender their notes to the dealer trusts for redemption at par at each reset
date. At September 30, 2007, Fund investments with a value of $365,640,559 are
held by the dealer
59
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
trusts and serve as collateral for the $238,410,000 in floating rate notes
outstanding at that date. Contractual maturities of the floating rate notes and
interest rates in effect at September 30, 2007 are presented on the Portfolio of
Investments. The average floating rate notes outstanding and average annual
interest and fee rate related to residual interests during the fiscal year ended
September 30, 2007 were $368,907,692 and 4.05%, respectively.
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 year ended September 30, 2007, the Fund recognized expenses of
approximately $39,100 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 year ended September 30,
2007, the Fund recognized expenses of approximately $156,100 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 "Professional Fees" on the Statement of Operations. Services provided
pursuant to the Accounting Services and CCO Employment agreement are reported as
part of "Accounting and Administrative 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 year ended
September 30, 2007, the Fund recognized expenses of approximately $602,300
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 $205,700
are included in "Other" assets on the Statement of Assets and Liabilities at
September 30, 2007. 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
60
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
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 year ended September 30, 2007, Van Kampen, as Distributor for the
Fund, received commissions on sales of the Fund's Class A Shares of
approximately $310,900 and contingent deferred sales charge (CDSC) on redeemed
shares of approximately $162,300. Sales charges do not represent expenses of the
Fund.
3. CAPITAL TRANSACTIONS
For the year ended September 30, 2007 and 2006, transactions were as follows:
<Table>
<Caption>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2007 SEPTEMBER 30, 2006
---------------------------- ----------------------------
SHARES VALUE SHARES VALUE
Sales:
Class A....................... 13,359,816 $ 179,556,041 13,055,319 $ 173,891,015
Class B....................... 254,573 3,420,137 334,366 4,446,493
Class C....................... 1,619,525 21,842,805 1,973,723 26,414,985
----------- ------------- ----------- -------------
Total Sales..................... 15,233,914 $ 204,818,983 15,363,408 $ 204,752,493
=========== ============= =========== =============
Dividend Reinvestment:
Class A....................... 3,620,350 $ 48,736,241 3,595,933 $ 47,892,378
Class B....................... 244,599 3,293,023 308,235 4,099,833
Class C....................... 325,970 4,423,487 371,317 4,979,001
----------- ------------- ----------- -------------
Total Dividend Reinvestment..... 4,190,919 $ 56,452,751 4,275,485 $ 56,971,212
=========== ============= =========== =============
Repurchases:
Class A....................... (19,239,544) $(257,128,757) (13,939,360) $(185,299,918)
Class B....................... (2,264,108) (30,483,079) (2,767,368) (36,807,094)
Class C....................... (3,350,119) (45,175,939) (2,899,964) (38,849,536)
----------- ------------- ----------- -------------
Total Repurchases............... (24,853,771 $(332,787,775) (19,606,692) $(260,956,548)
=========== ============= =========== =============
</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 30 days of purchase. The redemption
fee is paid directly to the Fund and allocated on pro rata basis to each class
of shares. For the year ended September 30, 2007, the Fund received redemption
fees of approximately $9,900, which are reported as part of "Cost of Shares
Repurchased" on the Statements of Changes in Net Assets. The per share impact
from redemption fees paid to the Fund was less than $0.01.
5. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $567,629,361 and 915,746,695,
respectively.
61
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 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 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 disposal of the security underlying the
futures contract. Risks may arise as a result of the potential inability of the
counterparties 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 future contracts for year ended September 30, 2007, are as
follows:
<Table>
<Caption>
CONTRACTS
Outstanding at September 30, 2006........................... 2,670
Futures Opened.............................................. 17,617
Futures Closed.............................................. (19,477)
-------
Outstanding at September 30, 2007........................... 810
=======
</Table>
B. INVERSE FLOATING RATE INVESTMENTS The Fund may invest a portion of its assets
in inverse floating rate instruments, either through outright purchases of
inverse floating rate securities or through the transfer of bonds to a dealer
trust in exchange for cash and residual interests in the dealer trust. These
investments are typically used by the Fund in seeking to enhance the yield of
the portfolio. These instruments typically involve greater risks than a fixed
rate municipal bond. In particular, these instruments are acquired through
leverage or may have leverage embedded in them and therefore involve many of the
risks associated with leverage. Leverage is a speculative technique that may
expose the Fund to greater risk and increased costs. Leverage may cause the
Fund's net asset value to be more volatile than if it had not been leveraged
because leverage tends to magnify the effect of any increases or decreases in
the value of the Fund's portfolio securities. The use of leverage may also cause
the Fund to liquidate portfolio positions when it may not be advantageous to do
so in order to satisfy its obligations with respect to inverse floating rate
instruments.
62
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
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 $1,904,100 and $37,800
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. ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation 48, Accounting for Uncertainty in Income Taxes -- an
interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting
for income taxes by prescribing the minimum recognition threshold a tax position
must meet before being recognized in the financial statements. FIN 48 is
effective for the fiscal years beginning after December 15, 2006 and is to be
applied to all open tax years as of the effective date. Recent SEC guidance
allows implementing FIN 48 in the fund NAV calculations as late as the fund's
last NAV calculation in the first required financial statement period. As a
result, the Fund will incorporate FIN 48 in its semi annual report on March 31,
2008. The impact to the Fund's financial statements, if any, is currently being
assessed.
In addition, in September 2006, Statement of Financial Accounting Standards
No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for
fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 will have on the Fund's financial statement disclosures.
63
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of
Van Kampen Strategic Municipal Income Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Van Kampen Strategic Municipal Income Fund (one
of the Funds constituting the Van Kampen Tax Free Trust (the "Fund")) as of
September 30, 2007, and the related statements of operations and cash flows for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for the each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
We were not engaged to perform an audit of the Fund's internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of September 30, 2007, by correspondence with the
custodian and brokers or by other appropriate auditing procedures where replies
from brokers were not received. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Van Kampen Strategic Municipal Income Fund of the Van Kampen Tax Free Trust at
September 30, 2007, the results of its operations and its cash flows for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and its financial highlights for each of the five years in
the period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Chicago, Illinois
November 16, 2007
64
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
DENNIS SHEA
Vice President
J. DAVID GERMANY
Vice President
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
STUART N. SCHULDT
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
522 Fifth Avenue
New York, New York 10036
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
One Parkview Plaza, Suite 100
P. O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
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
FOR FEDERAL INCOME TAX PURPOSES, THE FOLLOWING INFORMATION IS FURNISHED WITH
RESPECT TO DISTRIBUTIONS PAID BY THE FUND DURING ITS TAXABLE YEAR ENDED
SEPTEMBER 30, 2007. THE FUND DESIGNATED 99.8% OF THE INCOME DISTRIBUTIONS AS A
TAX-EXEMPT INCOME DISTRIBUTION.
IN JANUARY, THE FUND PROVIDES TAX INFORMATION TO SHAREHOLDERS FOR THE
PRECEDING CALENDAR YEAR.
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
65
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
TRUSTEES AND OFFICERS
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees and the Fund's officers appointed by the Board of
Trustees. The tables below list the trustees and executive officers of the Fund
and their principal occupations during the last five years, other directorships
held by trustees and their affiliations, if any, with Van Kampen Investments,
the Adviser, the Distributor, Van Kampen Advisors Inc., Van Kampen Exchange
Corp. and Investor Services. The term "Fund Complex" includes each of the
investment companies advised by the Adviser as of the date of this Annual
Report. Trustees serve until reaching their retirement age or until their
successors are duly elected and qualified. Officers are annually elected by the
trustees.
INDEPENDENT TRUSTEES:
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (62) Trustee Trustee Chairman and Chief 73 Trustee/Director/Managing
Blistex Inc. since 2003 Executive Officer of General Partner of funds
1800 Swift Drive Blistex Inc., a consumer in the Fund Complex.
Oak Brook, IL 60523 health care products Director of the Heartland
manufacturer. Alliance, a nonprofit
organization serving
human needs based in
Chicago. Board member of
the Illinois
Manufacturers'
Association.
Jerry D. Choate (69) Trustee Trustee Prior to January 1999, 73 Trustee/Director/Managing
33971 Selva Road since 1999 Chairman and Chief General Partner of funds
Suite 130 Executive Officer of the in the Fund Complex.
Dana Point, CA 92629 Allstate Corporation Director of H&R Block,
("Allstate") and Allstate Amgen Inc., a
Insurance Company. Prior biotechnological company,
to January 1995, and Valero Energy
President and Chief Corporation, an
Executive Officer of independent refining
Allstate. Prior to August company.
1994, various management
positions at Allstate.
</Table>
66
<Table>
<Caption>
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
TRUSTEES AND OFfiCERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Rod Dammeyer (67) Trustee Trustee President of CAC, L.L.C., 73 Trustee/Director/Managing
CAC, L.L.C. since 2003 a private company General Partner of funds
4350 LaJolla Village Drive offering capital in the Fund Complex.
Suite 980 investment and management Director of Quidel
San Diego, CA 92122-6223 advisory services. Corporation, Stericycle,
Inc., Ventana Medical
Systems, Inc. and Trustee
of The Scripps Research
Institute. Prior to April
2007, Director of GATX
Corporation. Prior to
April 2004, Director of
TheraSense, Inc. Prior to
January 2004, Director of
TeleTech Holdings Inc.
and Arris Group, Inc.
Linda Hutton Heagy+ (59) Trustee Trustee Managing Partner of 73 Trustee/Director/Managing
Heidrick & Struggles since 1995 Heidrick & Struggles, an General Partner of funds
233 South Wacker Drive international executive in the Fund Complex.
Suite 7000 search firm. Prior to Trustee on the University
Chicago, IL 60606 1997, Partner of Ray & of Chicago Hospitals
Berndtson, Inc., an Board, Vice Chair of the
executive recruiting Board of the YMCA of
firm. Prior to 1995, Metropolitan Chicago and
Executive Vice President a member of the Women's
of ABN AMRO, N.A., a bank Board of the University
holding company. Prior to of Chicago.
1990, Executive Vice
President of The Exchange
National Bank.
</Table>
67
<Table>
<Caption>
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
TRUSTEES AND OFfiCERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
R. Craig Kennedy (55) Trustee Trustee Director and President of 73 Trustee/Director/Managing
1744 R Street, NW since 1993 the German Marshall Fund General Partner of funds
Washington, DC 20009 of the United States, an in the Fund Complex.
independent U.S. Director of First Solar,
foundation created to Inc.
deepen understanding,
promote collaboration and
stimulate exchanges of
practical experience
between Americans and
Europeans. Formerly,
advisor to the Dennis
Trading Group Inc., a
managed futures and
option company that
invests money for
individuals and
institutions. Prior to
1992, President and Chief
Executive Officer,
Director and member of
the Investment Committee
of the Joyce Foundation,
a private foundation.
Howard J Kerr (72) Trustee Trustee Prior to 1998, President 73 Trustee/Director/Managing
14 Huron Trace since 2003 and Chief Executive General Partner of funds
Galena, IL 61036 Officer of Pocklington in the Fund Complex.
Corporation, Inc., an Director of the Lake
investment holding Forest Bank & Trust.
company. Director of the Marrow
Foundation.
Jack E. Nelson (71) Trustee Trustee President of Nelson 73 Trustee/Director/Managing
423 Country Club Drive since 1985 Investment Planning General Partner of funds
Winter Park, FL 32789 Services, Inc., a in the Fund Complex.
financial planning
company and registered
investment adviser in the
State of Florida.
President of Nelson Ivest
Brokerage Services Inc.,
a member of FINRA,
Securities Investors
Protection Corp. and the
Municipal Securities
Rulemaking Board.
President of Nelson Sales
and Services Corporation,
a marketing and services
company to support
affiliated companies.
</Table>
68
<Table>
<Caption>
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
TRUSTEES AND OFfiCERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Hugo F. Sonnenschein (67) Trustee Trustee President Emeritus and 73 Trustee/Director/Managing
1126 E. 59th Street since 2003 Honorary Trustee of the General Partner of funds
Chicago, IL 60637 University of Chicago and in the Fund Complex.
the Adam Smith Trustee of the University
Distinguished Service of Rochester and a member
Professor in the of its investment
Department of Economics committee. Member of the
at the University of National Academy of
Chicago. Prior to July Sciences, the American
2000, President of the Philosophical Society and
University of Chicago. a fellow of the American
Academy of Arts and
Sciences.
</Table>
69
<Table>
<Caption>
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
TRUSTEES AND OFfiCERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Suzanne H. Woolsey, Ph.D. Trustee Trustee Chief Communications 73 Trustee/Director/Managing
(65) since 1999 Officer of the National General Partner of funds
815 Cumberstone Road Academy of in the Fund Complex.
Harwood, MD 20776 Sciences/National Director of Fluor Corp.,
Research Council, an an engineering,
independent, federally procurement and
chartered policy construction
institution, from 2001 to organization, since
November 2003 and Chief January 2004. Director of
Operating Officer from Intelligent Medical
1993 to 2001. Prior to Devices, Inc., a symptom
1993, Executive Director based diagnostic tool for
of the Commission on physicians and clinical
Behavioral and Social labs. Director of the
Sciences and Education at Institute for Defense
the National Academy of Analyses, a federally
Sciences/National funded research and
Research Council. From development center,
1980 through 1989, Director of the German
Partner of Coopers & Marshall Fund of the
Lybrand. United States, Director
of the Rocky Mountain
Institute of Technology
and the Colorado College.
</Table>
70
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
TRUSTEES AND OFFICERS continued
INTERESTED TRUSTEE:*
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Wayne W. Whalen* (68) Trustee Trustee Partner in the law firm 73 Trustee/Director/Managing
333 West Wacker Drive since 1985 of Skadden, Arps, Slate, General Partner of funds
Chicago, IL 60606 Meagher & Flom LLP, legal in the Fund Complex.
counsel to funds in the Director of the Abraham
Fund Complex. Lincoln Presidential
Library Foundation.
</Table>
+ As indicated above, Ms. Heagy is an employee of Heidrick and Struggles, an
international executive search firm ("Heidrick"). Heidrick has been (and may
continue to be) engaged by Morgan Stanley from time to time to perform
executive searches. Such searches have been unrelated to Van Kampen's or
Morgan Stanley's asset management businesses and have been done by
professionals at Heidrick without any involvement by Ms. Heagy. Ethical wall
procedures exist to ensure that Ms. Heagy will not have any involvement with
any searches performed by Heidrick for Morgan Stanley. Ms. Heagy does not
receive any compensation, directly or indirectly, for searches performed by
Heidrick for Morgan Stanley. Ms. Heagy does own common shares of Heidrick
(representing less than 1% of Heidrick's outstanding common shares).
* Mr. Whalen is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act) of certain funds in the Fund Complex by reason of he and
his firm currently providing legal services as legal counsel to such funds
in the Fund Complex.
71
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
TRUSTEES AND OFFICERS continued
OFFICERS:
<Table>
<Caption>
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Ronald E. Robison (68) President and Officer President of funds in the Fund Complex since September 2005
522 Fifth Avenue Principal Executive since 2003 and Principal Executive Officer of funds in the Fund Complex
New York, NY 10036 Officer since May 2003. Managing Director of Van Kampen Advisors
Inc. since June 2003. Director of Investor Services since
September 2002. Director of the Adviser, Van Kampen
Investments and Van Kampen Exchange Corp. since January
2005. Managing Director of Morgan Stanley and Morgan Stanley
& Co. Incorporated. Managing Director and Director of Morgan
Stanley Investment Management Inc. Chief Administrative
Officer, Managing Director and Director of Morgan Stanley
Investment Advisors Inc. and Morgan Stanley Services Company
Inc. Managing Director and Director of Morgan Stanley
Distributors Inc. and Morgan Stanley Distribution Inc. Chief
Executive Officer and Director of Morgan Stanley Trust.
Executive Vice President and Principal Executive Officer of
the Institutional and Retail Morgan Stanley Funds. Director
of Morgan Stanley SICAV. Previously, Chief Global Operations
Officer of Morgan Stanley Investment Management Inc. and
Executive Vice President of funds in the Fund Complex from
May 2003 to September 2005.
Dennis Shea (54) Vice President Officer Managing Director of Morgan Stanley Investment Advisors
522 Fifth Avenue since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser
New York, NY 10036 and Van Kampen Advisors Inc. Chief Investment Officer--
Global Equity of the same entities since February 2006. Vice
President of Morgan Stanley Institutional and Retail Funds
since February 2006. Vice President of funds in the Fund
Complex since March 2006. Previously, Managing Director and
Director of Global Equity Research at Morgan Stanley from
April 2000 to February 2006.
J. David Germany (53) Vice President Officer Managing Director of Morgan Stanley Investment Advisors
20 Bank Street, since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser
Canary Wharf and Van Kampen Advisors Inc. Chief Investment Officer--
London, GBR E14 4AD Global Fixed Income of the same entities since December
2005. Managing Director and Director of Morgan Stanley
Investment Management Ltd. Director of Morgan Stanley
Investment Management (ACD) Limited since December 2003.
Vice President of Morgan Stanley Institutional and Retail
Funds since February 2006. Vice President of funds in the
Fund Complex since March 2006.
</Table>
72
<Table>
<Caption>
VAN KAMPEN STRATEGIC MUNICIPAL INCOME FUND
TRUSTEES AND OFfiCERS continued
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Amy R. Doberman (45) Vice President Officer Managing Director and General Counsel--U.S. Investment
522 Fifth Avenue since 2004 Management; Managing Director of Morgan Stanley Investment
New York, NY 10036 Management Inc., Morgan Stanley Investment Advisors Inc. and
the Adviser. Vice President of the Morgan Stanley
Institutional and Retail Funds since July 2004 and Vice
President of funds in the Fund Complex since August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeltus Investment Management,
Inc. from January 1997 to July 2000.
Stefanie V. Chang (41) Vice President Officer Executive Director of Morgan Stanley Investment Management
522 Fifth Avenue and Secretary since 2003 Inc. Vice President and Secretary of funds in the Fund
New York, NY 10036 Complex.
John L. Sullivan (52) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza - Suite 100 Officer since 1996 August 2004. Prior to August 2004, Director and Managing
Oakbrook Terrace, IL 60181 Director of Van Kampen Investments, the Adviser, Van Kampen
Advisors Inc. and certain other subsidiaries of Van Kampen
Investments, Vice President, Chief Financial Officer and
Treasurer of funds in the Fund Complex and head of Fund
Accounting for Morgan Stanley Investment Management Inc.
Prior to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
Stuart N. Schuldt (45) Chief Financial Officer Officer Executive Director of Morgan Stanley Investment Management
1 Parkview Plaza - Suite 100 and Treasurer since 2007 Inc. since June 2007. Chief Financial Officer and Treasurer
Oakbrook Terrace, IL 60181 of funds in the Fund Complex since June 2007. Prior to June
2007, Senior Vice President of Northern Trust Company,
Treasurer and Principal Financial Officer for Northern Trust
U.S. mutual fund complex.
</Table>
73
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.
The Statement of Additional Information includes additional information
about Fund trustees and is available, without charge, upon request by
calling 1-800-847-2424.
Van Kampen Funds Inc.
1 Parkview Plaza - Suite 100
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2007 Van Kampen Funds Inc.
All rights reserved. Member FINRA/SIPC.
39, 339, 539
STMIANN 11/07
(VAN KAMPEN INVESTMENTS LOGO) IU07-04688P-Y09/07
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
California Insured Tax Free Fund performed during the annual 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 September 30, 2007.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A CLASS A, B, AND C
SHARE OR CLASS I SHARE PROSPECTUS FOR THE FUND BEING OFFERED. THE
PROSPECTUSES CONTAIN INFORMATION ABOUT THE FUND, INCLUDING THE INVESTMENT
OBJECTIVES, RISKS, CHARGES AND EXPENSES. TO OBTAIN AN ADDITIONAL
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 THE FUND WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. THE FUND IS SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY
THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL DECLINE AND,
THEREFORE, THE VALUE OF THE FUND SHARES MAY BE LESS THAN WHAT YOU PAID
FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS FUND.
<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 9/30/07
PERFORMANCE OF A $10,000 INVESTMENT
This chart compares your fund's performance to that of the Lehman Brothers
Municipal Bond Index and the Lehman Brothers California Insured Municipal Bond
Index from 9/30/97 through 9/30/07. Class A shares, adjusted for sale charges.
(LINE GRAPH)
<Table>
<Caption>
LEHMAN BROTHERS CALIFORNIA
VAN KAMPEN CALIFORNIA INSURED MUNICIPAL BOND LEHMAN BROTHERS MUNICIPAL
INSURED TAX FREE FUND INDEX BOND INDEX
--------------------- -------------------------- -------------------------
9/97 9523 10000 10000
9808 10292 10271
9911 10419 10390
10064 10577 10548
9/98 10434 10979 10871
10429 11022 10937
10508 11146 11034
10233 10877 10839
9/99 10075 10781 10796
9898 10624 10712
10345 11078 11025
10473 11258 11192
9/00 10800 11625 11462
11344 12123 11964
11484 12357 12229
11438 12356 12309
9/01 11890 12818 12654
11752 12761 12577
11767 12789 12695
12182 13237 13160
9/02 12961 13971 13785
12850 13897 13785
12938 14066 13950
13189 14429 14310
9/03 13177 14366 14321
13401 14619 14517
13584 14872 14768
13207 14495 14419
9/04 13760 15079 14980
13971 15302 15168
13908 15291 15162
14376 15768 15606
9/05 14305 15754 15587
14433 15892 15701
14445 15946 15739
14381 15914 15744
9/06 14897 16507 16281
15035 16712 16461
15130 16848 16594
14946 16698 16484
9/07 14919 17045 16784
</Table>
<Table>
<Caption>
I SHARES
A SHARES B SHARES C SHARES SINCE
since 12/13/85 since 4/30/93 since 8/13/93 8/12/05
- -------------------------------------------------------------------------------------------------------
AVERAGE W/MAX W/MAX W/MAX
ANNUAL 4.75% 4.00% 1.00%
TOTAL W/O SALES SALES W/O SALES SALES W/O SALES SALES W/O SALES
RETURNS CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE CHARGES
Since
Inception 6.52% 6.28% 4.53% 4.53% 4.21% 4.21% 2.28%
10-year 4.59 4.08 4.13 4.13 3.84 3.84 n/a
5-year 2.85 1.86 2.74 2.48 2.13 2.13 n/a
1-year 0.15 -4.62 0.10 -3.74 -0.57 -1.53 0.35
- -------------------------------------------------------------------------------------------------------
30-Day SEC Yield 3.67% 3.87% 3.11% 4.11%
</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 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 eight 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
1
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 Lehman Brothers California Insured
Municipal Bond Index is comprised of insured CA municipal bond issues. The
indexes do not include any expenses, fees or sales charges, which would lower
performance. The indexes are unmanaged and should not be considered investments.
2
Fund Report
FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2007
MARKET CONDITIONS
Strong fundamental and technical factors supported the municipal bond market
throughout much of the reporting period, helping it to perform well through the
second quarter of 2007. In July, however, contagion from the troubled subprime
mortgage sector led to an increasingly illiquid and volatile market, and a
flight to quality that led Treasury bonds to outperform all other sectors of the
fixed income market, including both investment grade and below investment grade
municipal bonds.
Up until that time, demand for municipal bonds had been quite strong as
institutional investors and non-traditional buyers such as hedge funds and
arbitrage investors continued to flock to the market, which helped to keep
credit spreads tight. As market liquidity began to dry up, however,
institutional demand fell off and refunding activity, which had been robust,
virtually halted. Although the supply of municipal bonds was declining as well,
the decrease in demand put significant pressure on prices at the same time that
the Treasury market was rallying. As a result, credit spreads widened, with the
most significant widening occurring in the lower-rated segments of the market,
where spreads on municipal bonds rated BBB and below (including non-rated bonds)
widened by 40 to 50 basis points.
In mid-September, following the 50 basis point reduction in the target federal
funds rate by the Federal Open Market Committee (the "Fed"), the market began to
stabilize, liquidity improved, and municipal credit spreads began to tighten
again. Despite these improvements, however, municipal bonds underperformed
Treasuries for the overall reporting period.
Overall, municipal bond yields ended the period higher, but most of the yield
increases occurred in the intermediate to long maturity portion of the yield
curve while yields on the front end of the curve declined slightly. As a result,
the municipal yield curve steepened over the course of the period, with the
differential between two-year and 30-year maturities widening to about 100 basis
points.
The supply of municipal bonds appeared to be heading toward a record for a
calendar year, with total new issuance year-to-date reaching $323 billion as of
September 30, 2007. Insured bonds represented roughly half of all new issue
supply. The State of California continued to be the largest issuer of municipal
bonds in the country, with $52 billion in new issues coming to market so far
this year. Roughly 60 percent of that new issue supply was insured bonds.
Although the housing market is still a concern in California, where the
foreclosure rate is quite high, the state's overall economy continues to be
diverse and growth remains steady.
3
PERFORMANCE ANALYSIS
All share classes of Van Kampen California Insured Tax Free Fund underperformed
the Lehman Brothers California Insured Municipal Bond Index and the Lehman
Brothers Municipal Bond Index for the 12 months ended September 30, 2007,
assuming no deduction of applicable sales charges.
TOTAL RETURNS FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2007
<Table>
<Caption>
- ----------------------------------------------------------------------------------------
LEHMAN BROTHERS
CALIFORNIA INSURED LEHMAN BROTHERS
MUNICIPAL BOND MUNICIPAL BOND
CLASS A CLASS B CLASS C CLASS I INDEX INDEX
0.15% 0.10% -0.57% 0.35% 3.26% 3.09%
- ----------------------------------------------------------------------------------------
</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 definitions.
Various factors contributed to the Fund's relative underperformance for the
reporting period, one of which was the allocation to tobacco bonds. We added to
holdings here in March because these bonds offered very attractive yields, and
the overall position performed well through June. In July and August, however,
the tobacco sector was one of the hardest hit sectors of the municipal market.
Although the fundamental credit quality of tobacco bonds remained solid, the
combination of an abundant supply, the liquidity squeeze in the market, and the
flight to quality (tobacco bonds are lower-rated) caused spreads in the sector
to widen dramatically. As a result, the performance of the Fund's holdings
declined.
Recent Fund enhancements allow for up to 20 percent of assets to be invested in
uninsured--but still investment grade--securities. Over the course of the
period, we increased the Fund's allocation to these securities to roughly 11
percent by adding inverse floating-rating securities* in the health care and
housing sectors. Although these positions enhanced the Fund's income and
diversification, and performed well until the summer months, spread widening in
the sector later in the period dampened their performance. On a more positive
note, holdings in tax-supported debt, including state and local general
obligation bonds (GOs) and dedicated tax bonds, performed strongly during the
period, contributing positively to returns.
We maintained the Fund's shorter duration (a measure of interest-rate
sensitivity) throughout the period, which was additive to performance when
interest rates were rising. However, to maintain that duration we used a
*An inverse floating-rate security, or "inverse floater", is a variable rate
security whose coupon rate changes in the opposite direction from the change in
the reference rate used to calculate the coupon rate.
4
U.S. Treasury futures hedge, which detracted from returns during the flight-to-
quality Treasury market rally.
We continued to focus on the long end of the yield curve, favoring bonds in the
25-year portion of the curve. We also favored premium-coupon bonds with call
features of 10 years or less. Conversely, we generally avoided zero coupon bonds
in the latter half of the period, maintaining a relative underweight to the
sector as tighter spreads have made it unattractive.
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.
5
<Table>
TOP FIVE SECTORS AS OF 9/30/07 RATINGS ALLOCATIONS AS OF 9/30/07
Tax Allocation 27.8% AAA/Aaa 91.5%
Public Education 15.6 AA/Aa 5.4
Public Buildings 10.2 A/A 0.8
General Purpose 7.9 BBB/Baa 2.3
Higher Education 5.7
</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.
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. The semiannual reports and the
annual reports are filed electronically with the Securities and Exchange
Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. 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 email 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 charges on redemptions of Class B and C Shares;
and redemption fees; 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 4/1/07 - 9/30/07.
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 or redemption fees.
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*
------------------------------------------------
4/1/07 9/30/07 4/1/07-9/30/07
Class A
Actual...................................... $1,000.00 $ 986.06 $ 6.67
Hypothetical................................ 1,000.00 1,018.35 6.78
(5% annual return before expenses)
Class B
Actual...................................... 1,000.00 985.75 6.87
Hypothetical................................ 1,000.00 1,018.15 6.98
(5% annual return before expenses)
Class C
Actual...................................... 1,000.00 982.15 10.63
Hypothetical................................ 1,000.00 1,014.34 10.81
(5% annual return before expenses)
Class I
Actual...................................... 1,000.00 986.78 5.43
Hypothetical................................ 1,000.00 1,019.60 5.52
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 1.34%, 1.38%,
2.14%, and 1.09% for Class A, B, C and I Shares, respectively, multiplied by
the average account value over the period, multiplied by 183/365 (to reflect
the one-half year period).
Assumes all dividends and distributions were reinvested.
9
The following table shows what expenses a shareholder would have paid, excluding
interest and residual trust expenses.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
------------------------------------------------
4/1/07 9/30/07 4/1/07-9/30/07
Class A
Actual...................................... $1,000.00 $ 986.06 $4.58
Hypothetical................................ 1,000.00 1,020.46 4.66
(5% annual return before expenses)
Class B
Actual...................................... 1,000.00 985.75 4.58
Hypothetical................................ 1,000.00 1,020.46 4.66
(5% annual return before expenses)
Class C
Actual...................................... 1,000.00 982.15 8.60
Hypothetical................................ 1,000.00 1,016.39 8.74
(5% annual return before expenses)
Class I
Actual...................................... 1,000.00 986.78 3.34
Hypothetical................................ 1,000.00 1,021.71 3.40
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 0.92%, 0.92%,
1.73%, and 0.67% for Class A, B, C and I Shares, respectively, multiplied by
the average account value over the period, multiplied by 183/365 (to reflect
the one-half year period).
Assumes all dividends and distributions were reinvested.
10
Investment Advisory Agreement Approval
Both the Investment Company Act of 1940 and the terms of the Fund's investment
advisory agreement require that the investment advisory agreement between the
Fund and its investment adviser be approved annually both by a majority of the
Board of Trustees and by a majority of the independent trustees voting
separately.
At meetings held on April 17, 2007 and May 30, 2007, the Board of Trustees, and
the independent trustees voting separately, considered and ultimately determined
that the terms of the investment advisory agreement are fair and reasonable and
approved the continuance of the investment advisory agreement as being in the
best interests of the Fund and its shareholders. In making its determination,
the Board of Trustees considered materials that were specifically prepared by
the investment adviser at the request of the Board and Fund counsel, and by an
independent provider of investment company data contracted to assist the Board,
relating to the investment advisory agreement review process. The Board also
considered information received periodically about the portfolio, performance,
the investment strategy, portfolio management team and fees and expenses of the
Fund. The Board of Trustees considered the investment advisory agreement over a
period of several months and the trustees held sessions both with the investment
adviser and separate from the investment adviser in reviewing and considering
the investment advisory agreement.
In approving the investment advisory agreement, the Board of Trustees
considered, among other things, the nature, extent and quality of the services
provided by the investment adviser, the performance, fees and expenses of the
Fund compared to other similar funds and other products, the investment
adviser's expenses in providing the services and the profitability of the
investment adviser and its affiliated companies. The Board of Trustees
considered the extent to which any economies of scale experienced by the
investment adviser are shared with the Fund's shareholders, and the propriety of
existing and alternative breakpoints in the Fund's investment advisory fee
schedule. The Board of Trustees considered comparative advisory fees of the Fund
and other investment companies and/or other products at different asset levels,
and considered the trends in the industry versus historical and projected assets
of the Fund. The Board of Trustees evaluated other benefits the investment
adviser and its affiliates derive from their relationship with the Fund. The
Board of Trustees reviewed information about the foregoing factors and
considered changes, if any, in such information since its previous approval. The
Board of Trustees discussed the financial strength of the investment adviser and
its affiliated companies and the capability of the personnel of the investment
adviser, and specifically the strength and background of its portfolio
management personnel. The Board of Trustees reviewed the statutory and
regulatory requirements for approval and disclosure of investment advisory
agreements. The Board of Trustees, including the independent trustees,
11
evaluated all of the foregoing and does not believe any single factor or group
of factors control or dominate the review process, and, after considering all
factors together, has determined, in the exercise of its business judgment, that
approval of the investment advisory agreement is in the best interests of the
Fund and its shareholders. The following summary provides more detail on certain
matters considered but does not detail all matters considered.
Nature, Extent and Quality of the Services Provided. On a regular basis, the
Board of Trustees considers the roles and responsibilities of the investment
adviser as a whole and for those specific portfolio management, support and
trading functions servicing the Fund. The trustees discuss with the investment
adviser the resources available and used in managing the Fund. The Fund
discloses information about its portfolio management team members and their
experience in its prospectus. The trustees also discuss certain other services
which are provided on a cost-reimbursement basis by the investment adviser or
its affiliates to the Van Kampen funds including certain accounting,
administrative and legal services. The Board has determined that the nature,
extent and quality of the services provided by the investment adviser support
its decision to approve the investment advisory agreement.
Performance, Fees and Expenses of the Fund. On a regular basis, the Board of
Trustees reviews the performance, fees and expenses of the Fund compared to its
peers and to appropriate benchmarks. In addition, the Board spends more focused
time on the performance of the Fund and other funds in the Van Kampen complex,
paying specific attention to underperforming funds. The trustees discuss with
the investment adviser the performance goals and the actual results achieved in
managing the Fund. When considering a fund's performance, the trustees and the
investment adviser place emphasis on trends and longer-term returns (focusing on
one-year, three-year and five-year performance with special attention to
three-year performance) and, when a fund's weighted performance is under the
fund's benchmark, they discuss the causes and where necessary seek to make
specific changes to investment strategy or investment personnel. The Fund
discloses more information about its performance elsewhere in this report and in
the Fund's prospectus. The trustees discuss with the investment adviser the
level of advisory fees for this Fund relative to comparable funds and other
products advised by the adviser and others in the marketplace. The trustees
review not only the advisory fees but other fees and expenses (whether paid to
the adviser, its affiliates or others) and the Fund's overall expense ratio. The
Fund discloses more information about its fees and expenses in its prospectus.
The Board has determined that the performance, fees and expenses of the Fund
support its decision to approve the investment advisory agreement.
Investment Adviser's Expenses in Providing the Service and Profitability. At
least annually, the trustees review the investment adviser's expenses in
providing services to the Fund and other funds advised by the investment adviser
and the profitability of the investment adviser. These profitability reports are
put
12
together by the investment adviser with the oversight of the Board. The trustees
discuss with the investment adviser its revenues and expenses, including among
other things, revenues for advisory services, portfolio management-related
expenses, revenue sharing arrangement costs and allocated expenses both on an
aggregate basis and per fund. The Board has determined that the analysis of the
investment adviser's expenses and profitability support its decision to approve
the investment advisory agreement.
Economies of Scale. On a regular basis, the Board of Trustees considers the size
and growth prospects of the Fund and how that relates to the Fund's expense
ratio and particularly the Fund's advisory fee rate. In conjunction with its
review of the investment adviser's profitability, the trustees discuss with the
investment adviser how more (or less) assets can affect the efficiency or
effectiveness of managing the Fund's portfolio and whether the advisory fee
level is appropriate relative to current and projected asset levels and/or
whether the advisory fee structure reflects economies of scale as asset levels
change. The Board has determined that its review of the actual and potential
economies of scale of the Fund support its decision to approve the investment
advisory agreement.
Other Benefits of the Relationship. On a regular basis, the Board of Trustees
considers other benefits to the investment adviser and its affiliates derived
from its relationship with the Fund and other funds advised by the investment
adviser. These benefits include, among other things, fees for transfer agency
services provided to the funds, in certain cases research received by the
adviser generated from commission dollars spent on funds' portfolio trading, and
in certain cases distribution or service related fees related to funds' sales.
The trustees review with the investment adviser each of these arrangements and
the reasonableness of its costs relative to the services performed. The Board
has determined that the other benefits received by the investment adviser or its
affiliates support its decision to approve the investment advisory agreement.
13
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
MUNICIPAL BONDS 106.6%
CALIFORNIA 106.1%
$ 1,925 Alhambra, CA City Elem Sch Dist Cap Apprec Ser
A (FSA Insd) (a).............................. * 09/01/20 $ 1,096,788
2,000 Anaheim, CA Pub Fin Auth Tax Alloc Rev (MBIA
Insd) (b)..................................... 8.870% 12/28/18 2,099,780
2,365 Apple Valley, CA Pub Fin Town Hall Annex Proj
Ser A (AMBAC Insd)............................ 5.000 09/01/27 2,465,465
2,000 Banning, CA Fin Auth Rev Elec Sys Proj (XLCA
Insd)......................................... 5.000 06/01/38 2,054,700
1,430 Bay Area Govt Assn CA Lease Rev Cap Proj Ser A
(AMBAC Insd) (a).............................. 5.250 07/01/17 1,537,007
2,735 Bay Area Govt Assn CA Lease West Sacramento
Ser A (XLCA Insd) (a)......................... 5.000 09/01/29 2,814,671
1,000 Bonita, CA Uni Sch Dist Election 2004 Ser A
(MBIA Insd)................................... 5.000 08/01/28 1,037,750
1,070 Bonita, CA Uni Sch Dist Election 2004 Ser A
(MBIA Insd)................................... 5.250 08/01/24 1,152,155
1,850 Brea & Olinda, CA Uni Sch Dist Rfdg Ser A (FSA
Insd) (a)..................................... 5.500 08/01/18 1,983,866
2,165 California Ed Fac Auth Rev Univ Pacific (MBIA
Insd)......................................... 5.875 11/01/20 2,306,829
10,000 California Hlth Fac Fin Sutter Hlth Ser A
(d)........................................... 5.000 11/15/42 10,024,850
2,000 California Infrastructure & Econ Dev Bk Rev
Bay Area Toll Brdg First Lien Ser A (FGIC
Insd) (Prerefunded @ 01/01/28)................ 5.000 07/01/29 2,166,680
2,000 California Mobilehome Pk Fin Auth Rev Union
City Tropics Rfdg Ser A....................... 4.500 12/15/36 1,712,020
1,050 California Spl Dist Assn Fin Corp Ctf Partn
Pgm Ser DD (FSA Insd) (a)..................... 5.625 01/01/27 1,071,703
945 California St (FGIC Insd)..................... 6.250 09/01/12 1,031,968
5,000 California St Dept Wtr Res Pwr Supply Rev Ser
A (MBIA Insd) (d)............................. 5.375 05/01/21 5,444,725
7,750 California St Rfdg (FGIC Insd)................ 5.000 02/01/23 7,857,570
1,000 California St Univ Rev & Colleges Systemwide
Ser A (AMBAC Insd)............................ 5.375 11/01/18 1,074,410
5,000 California St Var Purp (d).................... 5.000 06/01/37 5,089,925
1,900 California Statewide Cmntys Dev Auth Wtr Rev
Ser A (FSA Insd).............................. 5.000 10/01/26 1,982,232
2,000 Castaic Lake Wtr Agy CA Ctf Partn Wtr Sys Impt
Proj Rfdg Ser A (MBIA Insd)................... 7.000 08/01/12 2,297,140
3,000 Castaic Lake Wtr Agy CA Rev Ctf Partn Ser A
(MBIA Insd)................................... 5.250 08/01/23 3,149,070
100 Cerritos, CA Cmnty College Election 2004 Ser A
(MBIA Insd)................................... 5.000 08/01/26 103,955
125 Cerritos, CA Cmnty College Election 2004 Ser A
(MBIA Insd)................................... 5.000 08/01/28 129,719
</Table>
14 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$ 2,725 Clearlake, CA Pub Fin Auth Rev Redev Agy
Highlands Pk Proj Ser A (MBIA Insd)........... 4.250% 10/01/31 $ 2,503,621
1,160 Coachella, CA Fin Auth Tax Proj 1 & 2 Rfdg Ser
A (XLCA Insd) (a)............................. 5.250 12/01/30 1,213,128
3,400 Contra Costa, CA Cmnty College Election 2002
(MBIA Insd)................................... 5.000 08/01/29 3,524,270
1,400 Corona, CA Redev Agy Tax Alloc Temescal Canyon
Proj Area Ser A (AGL Insd).................... 4.375 11/01/26 1,355,886
1,850 Del Mar, CA Uni Sch Dist Spl Cmnty Fac Dist No
95 1 (AMBAC Insd)............................. 5.000 09/01/36 1,903,169
2,400 Dinuba, CA Redev Agy Tax Alloc Merged City
Redev Proj No 2 Rfdg (AMBAC Insd)............. 5.000 09/01/34 2,464,992
2,870 Dinuba, CA Redev Agy Tax Alloc Merged City
Redev Proj No 2 Rfdg (AMBAC Insd)............. 5.000 09/01/36 2,949,987
2,195 Elk Grove, CA Uni Sch Dist Spl Tax Cmnty Fac
Dist No 1 (MBIA Insd)......................... 5.000 12/01/35 2,250,358
1,280 Fillmore, CA Uni Sch Dist Election 2004 Ser A
(FSA Insd).................................... 5.000 08/01/27 1,335,142
1,480 Fontana, CA Redev Agy Tax Alloc Dwntwn Redev
Proj Rfdg (MBIA Insd)......................... 5.000 09/01/21 1,522,076
650 Fresno, CA Jt Pwrs Fin Auth Ser A (FSA
Insd)......................................... 5.000 06/01/17 681,713
590 Fresno, CA Uni Sch Dist Rfdg Ser C (MBIA Insd)
(a)........................................... 5.900 08/01/17 684,022
630 Fresno, CA Uni Sch Dist Rfdg Ser C (MBIA Insd)
(a)........................................... 5.900 08/01/18 733,522
675 Fresno, CA Uni Sch Dist Rfdg Ser C (MBIA Insd)
(a)........................................... 5.900 08/01/19 788,656
720 Fresno, CA Uni Sch Dist Rfdg Ser C (MBIA Insd)
(a)........................................... 5.900 08/01/20 844,798
2,000 Glendale, CA Redev Agy Tax Ctr Glendale Redev
Proj (MBIA Insd).............................. 5.250 12/01/20 2,151,920
2,425 Glendora, CA Pub Fin Auth Tax Alloc Proj No 1
Ser A (MBIA Insd)............................. 5.000 09/01/24 2,504,540
2,000 Golden St Tob Securitization Asset Bkd Ser
A1............................................ 5.750 06/01/47 1,908,520
5,000 Golden St Tob Securitization Corp CA Tob
Settlement Rev Asset Bkd Sr Ser A1 (d)........ 5.125 06/01/47 4,310,275
7,000 Golden St Tob Securitization Corp CA Tob
Settlement Rev Asset Bkd Sr Ser A1 (d)........ 5.750 06/01/47 6,679,820
2,230 Hanford, CA High Sch Dist Election 1998 Ser C
(MBIA Insd) (a)............................... 5.700 08/01/28 2,455,520
2,275 Hawaiian Gardens, CA Redev Agy Proj No 1 Tax
Alloc Ser A (AMBAC Insd)...................... 5.000 12/01/25 2,372,620
3,000 Hesperia, CA Pub Fin Auth Rev Redev & Hsg Proj
Ser A (XLCA Insd)............................. 5.000 09/01/31 3,098,280
2,500 Huntington Beach, CA High Election 2004 (FSA
Insd)......................................... 5.000 08/01/26 2,602,325
</Table>
See Notes to Financial Statements 15
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$ 2,000 Imperial Irr Dist CA Ctf Partn Elec Sys Proj
(FSA Insd).................................... 5.250% 11/01/23 $ 2,101,340
1,950 Imperial Irr Dist CA Ctf Partn Wtr Sys Proj
(AMBAC Insd) (a).............................. 5.000 07/01/19 2,028,253
2,000 Inglewood, CA Redev Agy Tax Alloc Merged Redev
Proj Rfdg Ser A (AMBAC Insd).................. 5.250 05/01/23 2,212,480
1,715 Irvine, CA Pub Fac & Infrastructure Ser B
(AMBAC Insd) (a).............................. 5.000 09/02/23 1,774,322
2,000 La Canada, CA Uni Sch Dist Election 2004 Ser A
(MBIA Insd)................................... 5.500 08/01/28 2,153,720
2,000 La Quinta, CA Fin Auth Loc Ser A (AMBAC
Insd)......................................... 5.000 09/01/29 2,070,300
2,000 La Quinta, CA Fin Auth Loc Ser A (AMBAC
Insd)......................................... 5.250 09/01/24 2,139,500
2,000 La Quinta, CA Redev Agy Tax Alloc Redev Proj
Area No 1 (AMBAC Insd)........................ 5.000 09/01/22 2,092,520
2,500 Lehman Muni Tr Rcpt Various St Ser 07 K14
(MBIA Insd) (b) (f)........................... 6.164 05/15/47 1,842,650
1,000 Livermore-Amador Vly Wtr Mgmt Agy CA Swr Rev
Ser A (AMBAC Insd)............................ 5.250 08/01/16 1,059,760
1,545 Long Beach, CA Bd Fin Auth Pub Lease Safety
Fac Proj (AMBAC Insd) (a)..................... 5.250 11/01/20 1,646,661
2,000 Long Beach, CA Cmnty College Dist 2002
Election Ser B (FGIC Insd).................... 5.000 05/01/25 2,087,800
1,975 Los Angeles, CA Ctf Partn Real Ppty Pgm Ser T
(MBIA Insd) (a)............................... 5.000 02/01/19 2,065,317
2,000 Los Angeles, CA Dept Wtr & Pwr Sys Ser C (MBIA
Insd)......................................... 5.000 07/01/26 2,081,580
1,210 Los Angeles, CA Mtg Rev FHA Sec 8 Asstd Proj
Rfdg Ser A (MBIA Insd)........................ 6.100 07/01/25 1,211,307
1,375 Los Angeles, CA Spl Assmt Landscaping & Dist
No 96 Ser 1 (AMBAC Insd) (a).................. 5.000 03/01/21 1,439,020
1,000 Los Angeles Cnty, CA Ctf Partn Disney Pkg Proj
Rfdg (AMBAC Insd)............................. 4.750 03/01/23 1,007,970
1,000 Los Angeles Cnty, CA Met Tran Auth Sales Tax
Rev Prop A First Tier Sr Rfdg Ser C (AMBAC
Insd)......................................... 5.000 07/01/23 1,028,270
1,265 Los Angeles Cnty, CA Sch Regionalized Business
Svcs Ctf Partn Cap Apprec Pooled Fin Ser A
(AMBAC Insd).................................. * 08/01/24 575,651
1,000 Lynwood, CA Uni Sch Dist 2002 Election Ser A
(FSA Insd).................................... 5.000 08/01/27 1,040,740
1,500 Modesto, CA Irr Rect Ctf Partn Cap Impt Ser A
(FSA Insd).................................... 5.250 07/01/18 1,583,775
1,105 Monrovia, CA Fin Auth Lease Rev Hillside
Wilderness Preserve (AMBAC Insd).............. 5.000 12/01/20 1,170,162
</Table>
16 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$ 2,000 Montclair, CA Redev Agy Tax Redev Proj No V
Rfdg (MBIA Insd).............................. 5.000% 10/01/20 $ 2,096,020
1,570 Mountain View, CA Shoreline Tax Alloc Ser A
(MBIA Insd) (a)............................... 5.250 08/01/16 1,655,675
1,105 National City, CA Cmnty Dev Commn Redev Proj
Rfdg Ser B (AMBAC Insd)....................... 5.250 08/01/32 1,155,764
1,000 Novato, CA Uni Sch Dist (FSA Insd)............ 5.000 08/01/28 1,037,750
3,915 Oak Grove, CA Sch Dist 1995 Election (FGIC
Insd)......................................... 5.250 08/01/25 4,087,456
1,300 Oceanside, CA Ctf Partn Rfdg Ser A (AMBAC
Insd)......................................... 5.200 04/01/23 1,355,614
1,145 Pacifica, CA Wastewtr Rev Rfdg (AMBAC Insd)... 5.000 10/01/25 1,186,392
1,200 Palm Desert, CA Fin Auth Tax Alloc Rev Proj
Area No 4 Rfdg Ser A (MBIA Insd).............. 5.000 10/01/29 1,243,584
1,340 Palm Springs, CA Fin Lease Rev Convention Ctr
Proj Rfdg Ser A (MBIA Insd)................... 5.250 11/01/19 1,426,792
3,545 Panama-Buena Vista Uni Sch Dist CA Ctf Partn
Sch Constr Proj (MBIA Insd)................... 5.000 09/01/30 3,659,503
2,020 Pomona, CA Pub Fin Auth Rev Merged Redev Proj
Ser AD (MBIA Insd) (a)........................ 5.000 02/01/15 2,110,132
1,110 Pomona, CA Pub Fin Auth Rev Merged Redev Proj
Ser AD (MBIA Insd) (a)........................ 5.000 02/01/16 1,159,528
1,000 Pomona, CA Pub Fin Auth Rev Sub Merged Redev
Proj.......................................... 5.125 02/01/33 970,930
1,430 Pomona, CA Pub Fin Auth Rev Swr Proj Ser BA
(AMBAC Insd).................................. 4.500 12/01/46 1,360,531
1,360 Port Hueneme, CA Ctf Partn Cap Impt Pgm Rfdg
(MBIA Insd)................................... 6.000 04/01/19 1,586,059
1,055 Poway, CA Redev Agy Tax Alloc Paguay Redev
Proj (AMBAC Insd) (a)......................... 5.3750 6/15/20 1,127,869
3,000 Rancho Cucamonga, CA Redev Agy Rancho Redev
Proj (MBIA Insd).............................. 5.375 09/01/25 3,147,270
2,000 Rancho Mirage, CA Jt Pwrs Fin Auth Rev
Eisenhower Med Ctr Ser A...................... 5.000 07/01/47 1,976,340
860 Redding, CA Elec Sys Rev Ctf Partn (MBIA Insd)
(b) (e)....................................... 8.599 07/01/22 1,165,635
1,400 Redding, CA Redev Agy Tax Alloc Canby Hilltop
Cypress Redev Ser A (MBIA Insd)............... 5.000 09/01/23 1,462,566
3,775 Riverside, CA Lease Rev Ctf Partn Galleria at
Tyler Pub Impt (FGIC Insd).................... 5.000 09/01/36 3,874,660
3,775 Riverside Cnty, CA Ctf Partn Historic
Courthouse Proj Ser B (FGIC Insd) (a)......... 5.000 11/01/27 3,902,972
6,375 Rohnert Pk, CA Cmnty Dev Comm Tax Alloc Rev
Hsg Redev Proj Ser H (FGIC Insd) (d).......... 4.375 08/01/37 5,998,708
2,160 Roseville, CA Jt Uni High Sch Election 2004
Ser A (FGIC Insd) (a)......................... 5.000 08/01/26 2,248,409
</Table>
See Notes to Financial Statements 17
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$ 70 Sacramento, CA City Fin Auth Rev Cap Impt
(AMBAC Insd).................................. 5.000% 12/01/33 $ 71,883
2,000 Sacramento Cnty, CA San Dist Fin Auth Rev
Sacramento Regl Cnty San (FGIC Insd).......... 5.000 12/01/29 2,089,300
2,535 San Diego, CA Pub Fac Fin Auth Rev Pooled Fin
Southcrest Ser B (Radian Insd)................ 5.250 10/01/27 2,600,479
2,000 San Francisco, CA City & Cnty Second Ser Issue
26B (FGIC Insd)............................... 5.000 05/01/22 2,070,760
2,250 San Jose, CA Redev Agy Tax Alloc Merged Area
Redev Proj Rfdg Ser C (MBIA Insd)............. 4.250 08/01/30 2,094,390
1,000 San Leandro, CA Jt Proj Area Fin (MBIA
Insd)......................................... 5.100 12/01/26 1,046,810
1,340 Sanger, CA Uni Sch Dist Ctf Cap Impt Prog (FSA
Insd) (a)..................................... 5.000 03/01/25 1,398,786
2,000 Santa Fe Springs, CA Cmnty Dev Comm Tax Alloc
Rfdg Ser A (MBIA Insd) (a).................... 5.375 09/01/20 2,106,260
2,065 Santa Fe Springs, CA Cmnty Dev Comm Tax Alloc
Rfdg Ser A (MBIA Insd)........................ 5.375 09/01/21 2,167,982
2,450 Santa Monica, CA Cmnty College Rfdg Ser A
(AMBAC Insd) (a).............................. 5.250 02/01/23 2,578,551
1,460 Shafter, CA Cmnty Dev Agy Tax Alloc Rev Cmnty
Dev Proj Area No 1 Rfdg Ser A (FSA Insd)...... 5.000 11/01/36 1,502,384
1,000 Shasta, CA Jt Pwr Fin Auth Cnty Admin Bldg
Proj Ser A (MBIA Insd)........................ 5.250 04/01/22 1,051,410
1,340 Soledad, CA Redev Agy Tax Alloc Soledad Redev
Proj Ser A (XLCA Insd)........................ 5.000 12/01/32 1,382,746
1,000 South Gate, CA Pub Fin Auth South Gate Redev
Proj No 1 (XLCA Insd)......................... 5.750 09/01/22 1,095,840
2,150 Temecula, CA Redev Agy Tax Alloc Rev Temecula
Redev Proj No 1 (MBIA Insd)................... 5.125 08/01/27 2,211,705
1,670 Tobacco Securitization Auth Southn CA Tob
Settlement ((Acquired 01/05/07 & 08/23/07,
Cost $1,793,546)) (b) (c)..................... 7.244 06/01/46 983,279
2,500 Turlock, CA Pub Fin Auth Tax Alloc Rev (FSA
Insd)......................................... 5.000 09/01/36 2,571,525
1,340 Vallejo City, CA Uni Sch Dist Rfdg Ser A (MBIA
Insd) (h)..................................... 5.900 02/01/20 1,569,569
3,170 Washington, CA Uni Sch Dist New High Sch Proj
(AMBAC Insd).................................. 5.125 08/01/37 3,288,907
3,655 Woodland, CA Fin Auth Wastewater Rev Second Sr
Lien (MBIA Insd) (a).......................... 5.000 03/01/30 3,781,975
------------
239,597,936
------------
</Table>
18 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
VIRGIN ISLANDS 0.5%
$ 1,200 Virgin Islands Wtr & Pwr Auth Ser A........... 5.000% 07/01/26 $ 1,201,740
------------
TOTAL LONG-TERM INVESTMENTS 106.6%
(Cost $236,694,428)........................................................ 240,799,676
TOTAL SHORT-TERM INVESTMENTS 4.6%
(Cost $10,400,000)......................................................... 10,400,000
------------
TOTAL INVESTMENTS 111.2%
(Cost $247,094,428)........................................................ 251,199,676
LIABILITY FOR FLOATING RATE NOTE OBLIGATIONS RELATED TO SECURITIES
HELD (12.2%)
(Cost ($27,530,000))
(27,530) Note with interest rates ranging from 3.88% to 3.92% at September
30, 2007 and a contractual maturities of collateral ranging from
2021 to 2047 (See Note 1) (g).................................... (27,530,000)
------------
TOTAL NET INVESTMENTS 99.0%
(Cost $219,564,428)........................................................ 223,669,676
OTHER ASSETS IN EXCESS OF LIABILITIES 1.0%.................................. 2,281,228
------------
NET ASSETS 100.0%........................................................... $225,950,904
============
</Table>
Percentages are calculated as a percentage of net assets.
* Zero coupon bond
(a) The Fund owns 100% of the outstanding bond issuance.
(b) Inverse Floating Rate
(c) This security is restricted and may be resold only in transactions exempt
from registration which are normally those transactions with qualified
institutional buyers. Restricted securities comprise 0.4% of net assets.
(d) Underlying security related to Inverse Floaters entered into by the Fund.
See Note 1.
(e) Escrowed to Maturity
(f) 144A-Private Placement security which is exempt from registration under Rule
144A of the Securities Act of 1933, as amended. This security may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(g) Floating rate notes. The interest rates shown reflect the rates in effect at
September 30, 2007.
See Notes to Financial Statements 19
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
(h) All or a portion of this security has been physically segregated in
connection with open futures contracts.
AGL--Assured Guaranty Ltd.
AMBAC--AMBAC Indemnity Corp.
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 SEPTEMBER 30, 2007:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
SHORT CONTRACTS:
U.S. Treasury Bond Futures, December 2007
(Current Notional Value of $111,344 per contract)......... 73 $64,513
== =======
</Table>
20 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
September 30, 2007
<Table>
ASSETS:
Total Investments (Cost $247,094,428)....................... $251,199,676
Cash........................................................ 442,301
Receivables:
Interest.................................................. 2,570,294
Investments Sold.......................................... 1,638,888
Fund Shares Sold.......................................... 109,947
Other....................................................... 178,077
------------
Total Assets............................................ 256,139,183
------------
LIABILITIES:
Floating Rate Note Obligations.............................. 27,530,000
Payables:
Investments Purchased..................................... 1,637,720
Fund Shares Repurchased................................... 334,763
Income Distributions...................................... 211,727
Investment Advisory Fee................................... 87,199
Distributor and Affiliates................................ 34,402
Trustees' Deferred Compensation and Retirement Plans........ 253,119
Accrued Expenses............................................ 99,349
------------
Total Liabilities....................................... 30,188,279
------------
NET ASSETS.................................................. $225,950,904
============
NET ASSETS CONSIST OF:
Capital (Par value of $0.01 per share with an unlimited
number of shares authorized).............................. $221,447,584
Net Unrealized Appreciation................................. 4,169,761
Accumulated Undistributed Net Investment Income............. 647,297
Accumulated Net Realized Loss............................... (313,738)
------------
NET ASSETS.................................................. $225,950,904
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $194,231,993 and 10,894,753 shares of
beneficial interest issued and outstanding)............. $ 17.83
Maximum sales charge (4.75%* of offering price)......... 0.89
------------
Maximum offering price to public........................ $ 18.72
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $17,199,211 and 949,200 shares of
beneficial interest issued and outstanding)............. $ 18.12
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $10,658,115 and 597,543 shares of
beneficial interest issued and outstanding)............. $ 17.84
============
Class I Shares:
Net asset value and offering price per share (Based on
net assets of $3,861,585 and 216,677 shares of
beneficial interest issued
and outstanding)........................................ $ 17.82
============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
See Notes to Financial Statements 21
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended September 30, 2007
<Table>
INVESTMENT INCOME:
Interest.................................................... $11,617,647
-----------
EXPENSES:
Investment Advisory Fee..................................... 1,080,608
Distribution (12b-1) and Service Fees
Class A................................................... 480,346
Class B................................................... 54,229
Class C................................................... 101,372
Interest and Residual Trust Expenses........................ 535,067
Transfer Agent Fees......................................... 116,768
Accounting and Administrative Expenses...................... 83,185
Custody..................................................... 80,253
Professional Fees........................................... 74,573
Reports to Shareholders..................................... 51,795
Trustees' Fees and Related Expenses......................... 36,380
Registration Fees........................................... 3,048
Other....................................................... 32,561
-----------
Total Expenses.......................................... 2,730,185
Less Credits Earned on Cash Balances.................... 7,076
-----------
Net Expenses............................................ 2,723,109
-----------
NET INVESTMENT INCOME....................................... $ 8,894,538
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 652,086
Futures................................................... (907,231)
-----------
Net Realized Loss........................................... (255,145)
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 12,516,570
-----------
End of the Period:
Investments............................................. 4,105,248
Futures................................................. 64,513
-----------
4,169,761
-----------
Net Unrealized Depreciation During the Period............... (8,346,809)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(8,601,954)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 292,584
===========
</Table>
22 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets
<Table>
<Caption>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2007 SEPTEMBER 30, 2006
----------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.............................. $ 8,894,538 $ 8,831,670
Net Realized Gain/Loss............................. (255,145) 926,419
Net Unrealized Depreciation During the Period...... (8,346,809) (685,615)
------------ ------------
Change in Net Assets from Operations............... 292,584 9,072,474
------------ ------------
Distributions from Net Investment Income:
Class A Shares................................... (7,471,118) (7,346,494)
Class B Shares................................... (824,873) (1,198,106)
Class C Shares................................... (328,345) (355,129)
Class I Shares................................... (161,601) (110,088)
------------ ------------
(8,785,937) (9,009,817)
------------ ------------
Distributions from Net Realized Gain:
Class A Shares................................... (785,151) (2,396,767)
Class B Shares................................... (94,337) (396,499)
Class C Shares................................... (40,739) (152,451)
Class I Shares................................... (15,774) (31,914)
------------ ------------
(936,001) (2,977,631)
------------ ------------
Total Distributions................................ (9,721,938) (11,987,448)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES....................................... (9,429,354) (2,914,974)
------------ ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold.......................... 45,950,720 38,204,676
Net Asset Value of Shares Issued Through Dividend
Reinvestment..................................... 6,991,136 8,620,544
Cost of Shares Repurchased......................... (46,667,483) (51,173,595)
------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS..................................... 6,274,373 (4,348,375)
------------ ------------
TOTAL DECREASE IN NET ASSETS....................... (3,154,981) (7,263,349)
NET ASSETS:
Beginning of the Period............................ 229,105,885 236,369,234
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of $647,297
and $544,551, respectively)...................... $225,950,904 $229,105,885
============ ============
</Table>
See Notes to Financial Statements 23
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
FINANCIAL HIGHLIGHTS
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS A SHARES ----------------------------------------------
2007 2006 2005 2004 2003
----------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD..... $18.57 $18.80 $18.93 $18.84 $19.45
------ ------ ------ ------ ------
Net Investment Income...................... 0.72(a) 0.71(a) 0.72 0.75 0.74
Net Realized and Unrealized Gain/Loss...... (0.68) 0.03 0.01 0.06 (0.44)
------ ------ ------ ------ ------
Total from Investment Operations............. 0.04 0.74 0.73 0.81 0.30
------ ------ ------ ------ ------
Less:
Distributions from Net Investment Income... 0.71 0.73 0.74 0.72 0.75
Distributions from Net Realized Gain....... 0.07 0.24 0.12 -0- 0.16
------ ------ ------ ------ ------
Total Distributions.......................... 0.78 0.97 0.86 0.72 0.91
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD........... $17.83 $18.57 $18.80 $18.93 $18.84
====== ====== ====== ====== ======
Total Return (b)............................. 0.15% 4.14% 3.96% 4.42% 1.67%
Net Assets at End of the Period (In
millions).................................. $194.2 $190.0 $188.0 $183.0 $195.4
Ratio of Expenses to Average Net Assets...... 1.16% 0.91% 0.92% 0.89% 0.87%
Ratio of Net Investment Income to Average Net
Assets..................................... 3.91% 3.86% 3.83% 4.00% 3.93%
Portfolio Turnover........................... 37% 31% 25% 16% 25%
SUPPLEMENTAL RATIO:
Ratios of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses).................................. 0.93% 0.91% 0.92% 0.89% 0.87%
</Table>
(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 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.
24 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS B SHARES ----------------------------------------------
2007 2006 2005 2004 2003
----------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD..... $18.86 $19.07 $19.03 $18.82 $19.44
------ ------ ------ ------ ------
Net Investment Income...................... 0.73(a) 0.77(a) 0.79 0.72 0.60
Net Realized and Unrealized Gain/Loss...... (0.69) 0.02 (0.03) 0.07 (0.45)
------ ------ ------ ------ ------
Total from Investment Operations............. 0.04 0.79 0.76 0.79 0.15
------ ------ ------ ------ ------
Less:
Distributions from Net Investment Income... 0.71 0.76 0.60 0.58 0.61
Distributions from Net Realized Gain....... 0.07 0.24 0.12 -0- 0.16
------ ------ ------ ------ ------
Total Distributions.......................... 0.78 1.00 0.72 0.58 0.77
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD........... $18.12 $18.86 $19.07 $19.03 $18.82
====== ====== ====== ====== ======
Total Return (b)............................. 0.10%(c) 4.40%(c) 4.10%(c) 4.29%(c) 0.87%
Net Assets at End of the Period (In
millions).................................. $ 17.2 $ 25.3 $ 33.7 $ 41.1 $ 49.8
Ratio of Expenses to Average Net Assets...... 1.17%(c) 0.69%(c) 0.81%(c) 1.09%(c) 1.62%
Ratio of Net Investment Income to Average Net
Assets..................................... 3.90%(c) 4.08%(c) 3.96%(c) 3.80%(c) 3.18%
Portfolio Turnover........................... 37% 31% 25% 16% 25%
SUPPLEMENTAL RATIO:
Ratios of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses).................................. 0.93%(c) 0.69%(c) 0.81%(c) 1.09%(c) 1.62%
</Table>
(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 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.
(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).
See Notes to Financial Statements 25
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS C SHARES ----------------------------------------------
2007 2006 2005 2004 2003
----------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD..... $18.58 $18.81 $18.93 $18.82 $19.43
------ ------ ------ ------ ------
Net Investment Income...................... 0.58(a) 0.57(a) 0.59 0.61 0.61
Net Realized and Unrealized Gain/Loss...... (0.68) 0.03 0.01 0.08 (0.45)
------ ------ ------ ------ ------
Total from Investment Operations............. (0.10) 0.60 0.60 0.69 0.16
------ ------ ------ ------ ------
Less:
Distributions from Net Investment Income... 0.57 0.59 0.60 0.58 0.61
Distributions from Net Realized Gain....... 0.07 0.24 0.12 -0- 0.16
------ ------ ------ ------ ------
Total Distributions.......................... 0.64 0.83 0.72 0.58 0.77
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD........... $17.84 $18.58 $18.81 $18.93 $18.82
====== ====== ====== ====== ======
Total Return (b)............................. -0.57%(d) 3.36% 3.26%(d) 3.75%(d) 0.92%(c)
Net Assets at End of the Period (In
millions).................................. $ 10.7 $ 9.9 $ 12.0 $ 12.6 $ 18.1
Ratio of Expenses to Average Net Assets...... 1.88%(d) 1.66% 1.61%(d) 1.59%(d) 1.62%
Ratio of Net Investment Income to Average Net
Assets..................................... 3.19%(d) 3.11% 3.15%(d) 3.30%(d) 3.20%(c)
Portfolio Turnover........................... 37% 31% 25% 16% 25%
SUPPLEMENTAL RATIO:
Ratios of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses).................................. 1.65%(d) 1.66% 1.61%(d) 1.59%(d) 1.62%
</Table>
(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) 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).
26 See Notes to Financial Statements
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED AUGUST 12, 2005
SEPTEMBER 30, (COMMENCEMENT OF
CLASS I SHARES ---------------- OPERATIONS) TO
2007 2006 SEPTEMBER 30, 2005
--------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD............. $18.57 $18.80 $18.87
------ ------ ------
Net Investment Income.............................. 0.76(a) 0.74(a) 0.09
Net Realized and Unrealized Gain/Loss.............. (0.69) 0.05 (0.06)
------ ------ ------
Total from Investment Operations..................... 0.07 0.79 0.03
------ ------ ------
Less:
Distributions from Net Investment Income........... 0.75 0.78 0.10
Distributions from Net Realized Gain............... 0.07 0.24 -0-
------ ------ ------
Total Distributions.................................. 0.82 1.02 0.10
------ ------ ------
NET ASSET VALUE, END OF THE PERIOD................... $17.82 $18.57 $18.80
====== ====== ======
Total Return (b)..................................... 0.35% 4.40% 0.17%*
Net Assets at End of the Period (In millions)........ $ 3.9 $ 3.9 $ 2.6
Ratio of Expenses to Average Net Assets.............. 0.91% 0.66% 0.73%
Ratio of Net Investment Income to Average Net
Assets............................................. 4.16% 4.11% 4.03
Portfolio Turnover................................... 37% 31% 25%*
SUPPLEMENTAL RATIO:
Ratios of Expenses to Average Net Assets (Excluding
Interest and Residual Trust Expenses).............. 0.68% 0.66% 0.73%
</Table>
* Non-Annualized
(a) Based on average shares outstanding.
(b) 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.
See Notes to Financial Statements 27
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007
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 last reported 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. Interest rate swaps are valued
using market quotations obtained from brokers. 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 September 30, 2007, 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.
28
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 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.
At September 30, 2007, the cost and related gross unrealized appreciation
and depreciation were as follows:
<Table>
Cost of investments for tax purposes........................ $218,889,713
============
Gross tax unrealized appreciation........................... $ 8,554,474
Gross tax unrealized depreciation........................... (3,774,511)
------------
Net tax unrealized appreciation on investments.............. $ 4,779,963
============
</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 and a portion of futures gains,
which are included in ordinary income for tax purposes.
The tax character of distributions paid during the years ended September 30,
2007 and 2006 was as follows:
<Table>
<Caption>
2007 2006
Distributions paid from:
Ordinary income........................................... $ 70,484 $ 95,063
Tax exempt income......................................... 8,771,483 9,038,938
Long-term capital gain.................................... 866,832 2,883,508
---------- -----------
$9,708,799 $12,017,509
========== ===========
</Table>
Permanent differences, primarily due to the Fund's investment in other
regulated investment companies, resulted in the following reclassification among
the Fund's components of net assets at September 30, 2007:
<Table>
<Caption>
ACCUMULATED UNDISTRIBUTED NET ACCUMULATED NET
INVESTMENT INCOME REALIZED LOSS CAPITAL
$(5,855) $ 5,855 $ -0-
</Table>
As of September 30, 2007, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed ordinary income............................... $ 1,112
Undistributed tax-exempt income............................. 853,475
Undistributed long-term capital gain........................ 0
</Table>
29
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of gains or losses recognized on securities for
tax purposes but not for book, post-October losses of $699,552 which are not
recognized for tax purposes until the first day of the following fiscal year,
and gains or losses recognized for tax purposes on open futures transactions on
September 30, 2007.
F. FLOATING RATE NOTE OBLIGATIONS RELATED TO SECURITIES HELD The Fund enters
into transactions in which it transfers to dealer trusts fixed rate bonds in
exchange for cash and residual interest in the dealer trusts' assets and cash
flows, which are in the form of inverse floating rate investments. The dealer
trusts fund the purchases of the fixed rate bonds by issuing floating rate notes
to third parties and allowing the Fund to retain residual interests in the
bonds. The Fund enters into shortfall agreements with the dealer trusts, which
commit the Fund to pay the dealer trusts, in certain circumstances, the
difference between the liquidation value of the fixed rate bonds held by the
dealer trusts and the liquidation value of the floating rate notes held by third
parties, as well as any shortfalls in interest cash flows. The residual
interests held by the Fund (inverse floating rate investments) include the right
of the Fund (1) to cause the holders of the floating rate notes to tender their
notes at par at the next interest rate reset date, and (2) to transfer the
municipal bond from the dealer trusts to the Fund, thereby collapsing the dealer
trusts. The Fund accounts for the transfer of bonds to the dealer trusts as
secured borrowings, with the securities transferred remaining in the Fund's
investments assets, and the related floating rate notes reflected as Fund
liabilities under the caption "Floating Rate Note Obligations" on the Statement
of Assets and Liabilities. The Fund records the interest income from the fixed
rate bonds under the caption "Interest" and records the expenses related to
floating rate note obligations and any administrative expenses of the dealer
trusts under the caption "Interest and Residual Trust Expenses" in the Fund's
Statement of Operations. The notes issued by the dealer trust have interest
rates that reset weekly and the floating rate note holders have the option to
tender their notes to the dealer trusts for redemption at par at each reset
date. At September 30, 2007, Fund investments with a value of $37,548,303 are
held by the dealer trusts and serve as collateral for the $27,530,000 in
floating rate notes outstanding at that date. Contractual maturities of the
floating rate notes and interest rates in effect at September 30, 2007 are
presented on the Portfolio of Investments. The average floating rate notes
outstanding and average annual interest and fee rate related to residual
interests during the fiscal year ended September 30, 2007 were $13,958,462 and
3.83%, respectively.
G. 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.
H. EXPENSE REDUCTIONS During the year ended September 30, 2007, the Fund's
custody fee was reduced by $7,076 as a result of credits earned on cash
balances.
30
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 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 $100 million.......................................... 0.500%
Next $150 million........................................... 0.450%
Next $250 million........................................... 0.425%
Over $500 million........................................... 0.400%
</Table>
For the year ended September 30, 2007, the Fund recognized expenses of
approximately $40,400 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 year ended September 30,
2007, the Fund recognized expenses of approximately $62,500 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 "Professional Fees" on the Statement of Operations. Services provided
pursuant to the Accounting Services and CCO Employment agreement are reported as
part of "Accounting and Administrative 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 year ended
September 30, 2007, the Fund recognized expenses of approximately $96,600
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 $155,707 are included in
"Other" assets on the Statement of Assets and Liabilities at September 30, 2007.
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 year ended September 30, 2007, Van Kampen, as Distributor for the
Fund, received commissions on sales of the Fund's Class A Shares of
approximately $82,000 and
31
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
contingent deferred sales charge (CDSC) on redeemed shares of approximately
$13,100. Sales charges do not represent expenses of the Fund.
3. CAPITAL TRANSACTIONS
For the years ended September 30, 2007 and 2006, transactions were as follows:
<Table>
<Caption>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2007 SEPTEMBER 30, 2006
-------------------------- --------------------------
SHARES VALUE SHARES VALUE
Sales:
Class A........................... 2,286,579 $ 41,753,037 1,812,267 $ 33,433,166
Class B........................... 46,367 859,170 49,974 934,624
Class C........................... 146,193 2,686,456 108,337 2,004,651
Class I........................... 35,591 652,057 100,465 1,832,235
---------- ------------ ---------- ------------
Total Sales......................... 2,514,730 $ 45,950,720 2,071,043 $ 38,204,676
========== ============ ========== ============
Dividend Reinvestment:
Class A........................... 323,583 $ 5,922,642 380,862 $ 7,032,383
Class B........................... 34,865 649,311 60,585 1,135,274
Class C........................... 13,208 241,808 16,821 310,888
Class I........................... 9,695 177,375 7,689 141,999
---------- ------------ ---------- ------------
Total Dividend Reinvestment......... 381,351 $ 6,991,136 465,957 $ 8,620,544
========== ============ ========== ============
Repurchases:
Class A........................... (1,945,511) $(35,463,292) (1,962,076) $(36,181,704)
Class B........................... (471,233) (8,732,613) (536,985) (10,050,277)
Class C........................... (97,048) (1,775,435) (229,765) (4,227,565)
Class I........................... (38,170) (696,143) (38,520) (714,049)
---------- ------------ ---------- ------------
Total Repurchases................... (2,551,962) $(46,667,483) (2,767,346) $(51,173,595)
========== ============ ========== ============
</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 and allocated on a pro rata basis to
each class of shares. For the year ended September 30, 2007, the Fund received
redemption fees of approximately $1,800, which are reported as part of "Cost of
Shares Repurchased" on the Statements of Changes in Net Assets. The per share
impact from redemption fees paid to the Fund was less than $0.01.
5. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $107,631,862 and $90,734,969,
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.
32
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
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 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 these instances, 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 counterparties 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 futures 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 year ended September 30, 2007,
were as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at September 30, 2006........................... -0-
Futures Opened.............................................. 1340
Futures Closed.............................................. (1267)
-----
Outstanding at September 30, 2007........................... 73
=====
</Table>
B. INVERSE FLOATING RATE INVESTMENTS The Fund may invest a portion of its assets
in inverse floating rate instruments, either through outright purchases of
inverse floating rate securities or through the transfer of bonds to a dealer
trust in exchange for cash and residual interests in the dealer trust. These
investments are typically used by the Fund in seeking to enhance the yield of
the portfolio. These instruments typically involve greater risks than a fixed
rate municipal bond. In particular, these instruments are acquired through
leverage or may have leverage embedded in them and therefore involve many of the
risks associated with leverage. Leverage is a speculative technique that may
expose the Fund to greater risk and increased costs. Leverage may cause the
Fund's net asset value to be more volatile than if it had not been leveraged
because leverage tends to magnify the effect of any increases or decreases in
the value of the Fund's portfolio securities. The use of leverage may also cause
the Fund to liquidate portfolio positions when it may not be advantageous to do
so in order to satisfy its obligations with respect to inverse floating rate
instruments.
33
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
C. INTEREST RATE SWAPS The Fund may enter into forward interest rate swap
transactions intended to help the Fund manage its overall interest rate
sensitivity, either shorter or longer, generally to more closely align the
Fund's interest rate sensitivity with that of the broader municipal market.
Forward interest rate swap transactions involve the Fund's agreement with a
counterparty to pay, in the future, a fixed or variable rate payment in exchange
for the counterparty paying the Fund a variable or fixed rate payment, the
accruals for which would begin at a specified date in the future (the "effective
date"). The amount of the payment obligation is based on the notional amount of
the forward swap contract and the termination date of the swap (which is akin to
a bond's maturity). The value of the Fund's swap commitment would increase or
decrease based primarily on the extent to which long-term interest rates for
bonds having a maturity of the swap's termination date increases or decreases.
The Fund may terminate a swap contract prior to the effective date, at which
point a realized gain or loss is recognized. When a forward swap is terminated,
it ordinarily does not involve the delivery of securities or other underlying
assets or principal, but rather is settled in cash on a net basis. The Fund
intends, but is not obligated, to terminate its forward swaps before the
effective date. Accordingly, the risk of loss with respect to the swap
counterparty on such transactions is limited to the credit risk associated with
a counterparty failing to honor its commitment to pay any realized gain to the
Fund upon termination. To reduce such credit risk, all counterparties are
required to pledge collateral daily (based on the daily valuation of each swap)
on behalf of the Fund with a value approximately equal to the amount of any
unrealized gain. Reciprocally, when the Fund has an unrealized loss on a swap
contract, the Fund has instructed the custodian to pledge cash or liquid
securities as collateral with a value approximately equal to the amount of the
unrealized loss. Collateral pledges are monitored and subsequently adjusted if
and when the swap valuations fluctuate. Restricted cash for segregating
purposes, if any, is shown on the Statement of Assets and Liabilities.
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 $7,300 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.
34
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
9. ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation 48, Accounting for Uncertainty in Income Taxes -- an
interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting
for income taxes by prescribing the minimum recognition threshold a tax position
must meet before being recognized in the financial statements. FIN 48 is
effective for the fiscal years beginning after December 15, 2006 and is to be
applied to all open tax years as of the effective date. Recent SEC guidance
allows implementing FIN 48 in the fund NAV calculations as late as the funds
last NAV calculation in the first required financial statement period. As a
result, the Fund will incorporate FIN 48 in its semi annual report on March 31,
2008. The impact to the Fund's financial statements, if any, is currently being
assessed.
In addition, in September 2006, Statement of Financial Accounting Standards
No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for
fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 will have on the Fund's financial statement disclosures.
35
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of Van Kampen California Insured Tax
Free Fund
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Van Kampen California Insured Tax
Free Fund (one of the Funds constituting the Van Kampen Tax Free Trust (the
"Fund")) as of September 30, 2007, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for the each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
We were not engaged to perform an audit of the Fund's internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of September 30, 2007, by correspondence with the
custodian and brokers or by other appropriate auditing procedures where replies
from brokers were not received. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen California Insured Tax Free Fund of the Van Kampen Tax Free Trust at
September 30, 2007, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended, in conformity with U.S. generally accepted accounting principles.
Chicago, Illinois /s/ Ernst & Young LLP
November 16, 2007
36
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
DENNIS SHEA
Vice President
J. DAVID GERMANY
Vice President
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
STUART N. SCHULDT
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
522 Fifth Avenue
New York, New York 10036
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
One Parkview Plaza - Suite 100
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
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
For federal income tax purposes, the following information is furnished with
respect to the distributions paid by the Fund during its taxable year ended
September 30, 2007. The Fund designated 99.9% of the income distributions as a
tax-exempt income distribution. The Fund designated and paid $866,832 as a
long-term capital gain distribution. In January, the Fund provides tax
information to shareholders for the preceding calendar year.
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
37
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
TRUSTEES AND OFFICERS
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees and the Fund's officers appointed by the Board of
Trustees. The tables below list the trustees and executive officers of the Fund
and their principal occupations during the last five years, other directorships
held by trustees and their affiliations, if any, with Van Kampen Investments,
the Adviser, the Distributor, Van Kampen Advisors Inc., Van Kampen Exchange
Corp. and Investor Services. The term "Fund Complex" includes each of the
investment companies advised by the Adviser as of the date of this Annual
Report. Trustees serve until reaching their retirement age or until their
successors are duly elected and qualified. Officers are annually elected by the
trustees.
INDEPENDENT TRUSTEES:
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (62) Trustee Trustee Chairman and Chief 73 Trustee/Director/Managing
Blistex Inc. since 2003 Executive Officer of General Partner of funds
1800 Swift Drive Blistex Inc., a consumer in the Fund Complex.
Oak Brook, IL 60523 health care products Director of the Heartland
manufacturer. Alliance, a nonprofit
organization serving
human needs based in
Chicago. Board member of
the Illinois
Manufacturers'
Association.
Jerry D. Choate (69) Trustee Trustee Prior to January 1999, 73 Trustee/Director/Managing
33971 Selva Road since 1999 Chairman and Chief General Partner of funds
Suite 130 Executive Officer of the in the Fund Complex.
Dana Point, CA 92629 Allstate Corporation Director of H&R Block,
("Allstate") and Allstate Amgen Inc., a
Insurance Company. Prior biotechnological company,
to January 1995, and Valero Energy
President and Chief Corporation, an
Executive Officer of independent refining
Allstate. Prior to August company.
1994, various management
positions at Allstate.
</Table>
38
<Table>
<Caption>
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
TRUSTEES AND OFFICERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Rod Dammeyer (67) Trustee Trustee President of CAC, L.L.C., 73 Trustee/Director/Managing
CAC, L.L.C. since 2003 a private company General Partner of funds
4350 LaJolla Village Drive offering capital in the Fund Complex.
Suite 980 investment and management Director of Quidel
San Diego, CA 92122-6223 advisory services. Corporation, Stericycle,
Inc., Ventana Medical
Systems, Inc. and Trustee
of The Scripps Research
Institute. Prior to April
2007, Director of GATX
Corporation. Prior to
April 2004, Director of
TheraSense, Inc. Prior to
January 2004, Director of
TeleTech Holdings Inc.
and Arris Group, Inc.
Linda Hutton Heagy+ (59) Trustee Trustee Managing Partner of 73 Trustee/Director/Managing
Heidrick & Struggles since 1995 Heidrick & Struggles, an General Partner of funds
233 South Wacker Drive international executive in the Fund Complex.
Suite 7000 search firm. Prior to Trustee on the University
Chicago, IL 60606 1997, Partner of Ray & of Chicago Hospitals
Berndtson, Inc., an Board, Vice Chair of the
executive recruiting Board of the YMCA of
firm. Prior to 1995, Metropolitan Chicago and
Executive Vice President a member of the Women's
of ABN AMRO, N.A., a bank Board of the University
holding company. Prior to of Chicago.
1990, Executive Vice
President of The Exchange
National Bank.
</Table>
39
<Table>
<Caption>
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
TRUSTEES AND OFFICERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
R. Craig Kennedy (55) Trustee Trustee Director and President of 73 Trustee/Director/Managing
1744 R Street, NW since 1993 the German Marshall Fund General Partner of funds
Washington, DC 20009 of the United States, an in the Fund Complex.
independent U.S. Director of First Solar,
foundation created to Inc.
deepen understanding,
promote collaboration and
stimulate exchanges of
practical experience
between Americans and
Europeans. Formerly,
advisor to the Dennis
Trading Group Inc., a
managed futures and
option company that
invests money for
individuals and
institutions. Prior to
1992, President and Chief
Executive Officer,
Director and member of
the Investment Committee
of the Joyce Foundation,
a private foundation.
Howard J Kerr (72) Trustee Trustee Prior to 1998, President 73 Trustee/Director/Managing
14 Huron Trace since 2003 and Chief Executive General Partner of funds
Galena, IL 61036 Officer of Pocklington in the Fund Complex.
Corporation, Inc., an Director of the Lake
investment holding Forest Bank & Trust.
company. Director of the Marrow
Foundation.
Jack E. Nelson (71) Trustee Trustee President of Nelson 73 Trustee/Director/Managing
423 Country Club Drive since 1985 Investment Planning General Partner of funds
Winter Park, FL 32789 Services, Inc., a in the Fund Complex.
financial planning
company and registered
investment adviser in the
State of Florida.
President of Nelson Ivest
Brokerage Services Inc.,
a member of FINRA,
Securities Investors
Protection Corp. and the
Municipal Securities
Rulemaking Board.
President of Nelson Sales
and Services Corporation,
a marketing and services
company to support
affiliated companies.
</Table>
40
<Table>
<Caption>
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
TRUSTEES AND OFFICERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Hugo F. Sonnenschein (67) Trustee Trustee President Emeritus and 73 Trustee/Director/Managing
1126 E. 59th Street since 2003 Honorary Trustee of the General Partner of funds
Chicago, IL 60637 University of Chicago and in the Fund Complex.
the Adam Smith Trustee of the University
Distinguished Service of Rochester and a member
Professor in the of its investment
Department of Economics committee. Member of the
at the University of National Academy of
Chicago. Prior to July Sciences, the American
2000, President of the Philosophical Society and
University of Chicago. a fellow of the American
Academy of Arts and
Sciences.
</Table>
41
<Table>
<Caption>
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
TRUSTEES AND OFFICERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Suzanne H. Woolsey, Ph.D. Trustee Trustee Chief Communications 73 Trustee/Director/Managing
(65) since 1999 Officer of the National General Partner of funds
815 Cumberstone Road Academy of in the Fund Complex.
Harwood, MD 20776 Sciences/National Director of Fluor Corp.,
Research Council, an an engineering,
independent, federally procurement and
chartered policy construction
institution, from 2001 to organization, since
November 2003 and Chief January 2004. Director of
Operating Officer from Intelligent Medical
1993 to 2001. Prior to Devices, Inc., a symptom
1993, Executive Director based diagnostic tool for
of the Commission on physicians and clinical
Behavioral and Social labs. Director of the
Sciences and Education at Institute for Defense
the National Academy of Analyses, a federally
Sciences/National funded research and
Research Council. From development center,
1980 through 1989, Director of the German
Partner of Coopers & Marshall Fund of the
Lybrand. United States, Director
of the Rocky Mountain
Institute of Technology
and the Colorado College.
</Table>
42
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
TRUSTEES AND OFFICERS continued
INTERESTED TRUSTEE:*
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Wayne W. Whalen* (68) Trustee Trustee Partner in the law firm 73 Trustee/Director/Managing
333 West Wacker Drive since 1985 of Skadden, Arps, Slate, General Partner of funds
Chicago, IL 60606 Meagher & Flom LLP, legal in the Fund Complex.
counsel to funds in the Director of the Abraham
Fund Complex. Lincoln Presidential
Library Foundation.
</Table>
+ As indicated above, Ms. Heagy is an employee of Heidrick and Struggles, an
international executive search firm ("Heidrick"). Heidrick has been (and may
continue to be) engaged by Morgan Stanley from time to time to perform
executive searches. Such searches have been unrelated to Van Kampen's or
Morgan Stanley's asset management businesses and have been done by
professionals at Heidrick without any involvement by Ms. Heagy. Ethical wall
procedures exist to ensure that Ms. Heagy will not have any involvement with
any searches performed by Heidrick for Morgan Stanley. Ms. Heagy does not
receive any compensation, directly or indirectly, for searches performed by
Heidrick for Morgan Stanley. Ms. Heagy does own common shares of Heidrick
(representing less than 1% of Heidrick's outstanding common shares).
* Mr. Whalen is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act) of certain funds in the Fund Complex by reason of he and
his firm currently providing legal services as legal counsel to such funds
in the Fund Complex.
43
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
TRUSTEES AND OFFICERS continued
OFFICERS:
<Table>
<Caption>
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Ronald E. Robison (68) President and Officer President of funds in the Fund Complex since September 2005
522 Fifth Avenue Principal Executive since 2003 and Principal Executive Officer of funds in the Fund Complex
New York, NY 10036 Officer since May 2003. Managing Director of Van Kampen Advisors
Inc. since June 2003. Director of Investor Services since
September 2002. Director of the Adviser, Van Kampen
Investments and Van Kampen Exchange Corp. since January
2005. Managing Director of Morgan Stanley and Morgan Stanley
& Co. Incorporated. Managing Director and Director of Morgan
Stanley Investment Management Inc. Chief Administrative
Officer, Managing Director and Director of Morgan Stanley
Investment Advisors Inc. and Morgan Stanley Services Company
Inc. Managing Director and Director of Morgan Stanley
Distributors Inc. and Morgan Stanley Distribution Inc. Chief
Executive Officer and Director of Morgan Stanley Trust.
Executive Vice President and Principal Executive Officer of
the Institutional and Retail Morgan Stanley Funds. Director
of Morgan Stanley SICAV. Previously, Chief Global Operations
Officer of Morgan Stanley Investment Management Inc. and
Executive Vice President of funds in the Fund Complex from
May 2003 to September 2005.
Dennis Shea (54) Vice President Officer Managing Director of Morgan Stanley Investment Advisors
522 Fifth Avenue since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser
New York, NY 10036 and Van Kampen Advisors Inc. Chief Investment Officer--
Global Equity of the same entities since February 2006. Vice
President of Morgan Stanley Institutional and Retail Funds
since February 2006. Vice President of funds in the Fund
Complex since March 2006. Previously, Managing Director and
Director of Global Equity Research at Morgan Stanley from
April 2000 to February 2006.
J. David Germany (53) Vice President Officer Managing Director of Morgan Stanley Investment Advisors
20 Bank Street, since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser
Canary Wharf and Van Kampen Advisors Inc. Chief Investment Officer--
London, GBR E14 4AD Global Fixed Income of the same entities since December
2005. Managing Director and Director of Morgan Stanley
Investment Management Ltd. Director of Morgan Stanley
Investment Management (ACD) Limited since December 2003.
Vice President of Morgan Stanley Institutional and Retail
Funds since February 2006. Vice President of funds in the
Fund Complex since March 2006.
</Table>
44
<Table>
<Caption>
VAN KAMPEN CALIFORNIA INSURED TAX FREE FUND
TRUSTEES AND OFFICERS continued
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Amy R. Doberman (45) Vice President Officer Managing Director and General Counsel--U.S. Investment
522 Fifth Avenue since 2004 Management; Managing Director of Morgan Stanley Investment
New York, NY 10036 Management Inc., Morgan Stanley Investment Advisors Inc. and
the Adviser. Vice President of the Morgan Stanley
Institutional and Retail Funds since July 2004 and Vice
President of funds in the Fund Complex since August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeltus Investment Management,
Inc. from January 1997 to July 2000.
Stefanie V. Chang (41) Vice President Officer Executive Director of Morgan Stanley Investment Management
522 Fifth Avenue and Secretary since 2003 Inc. Vice President and Secretary of funds in the Fund
New York, NY 10036 Complex.
John L. Sullivan (52) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza - Suite 100 Officer since 1996 August 2004. Prior to August 2004, Director and Managing
Oakbrook Terrace, IL 60181 Director of Van Kampen Investments, the Adviser, Van Kampen
Advisors Inc. and certain other subsidiaries of Van Kampen
Investments, Vice President, Chief Financial Officer and
Treasurer of funds in the Fund Complex and head of Fund
Accounting for Morgan Stanley Investment Management Inc.
Prior to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
Stuart N. Schuldt (45) Chief Financial Officer Officer Executive Director of Morgan Stanley Investment Management
1 Parkview Plaza - Suite 100 and Treasurer since 2007 Inc. since June 2007. Chief Financial Officer and Treasurer
Oakbrook Terrace, IL 60181 of funds in the Fund Complex since June 2007. Prior to June
2007, Senior Vice President of Northern Trust Company,
Treasurer and Principal Financial Officer for Northern Trust
U.S. mutual fund complex.
</Table>
45
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.
The Statement of Additional Information includes additional information
about Fund trustees and is available, without charge, upon request by
calling 1-800-847-2424.
Van Kampen Funds Inc.
1 Parkview Plaza - Suite 100
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2007 Van Kampen Funds Inc.
All rights reserved. Member FINRA/SIPC.
41, 341, 541, 641
CAIANN 11/07
(VAN KAMPEN INVESTMENTS LOGO) IU07-04507P-Y09/07
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
Municipal Income Fund performed during the annual 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 September 30,
2007.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A CLASS A, B AND C SHARE
OR CLASS I SHARE PROSPECTUS FOR THE FUND BEING OFFERED. THE PROSPECTUSES
CONTAIN INFORMATION ABOUT THE FUND, INCLUDING THE INVESTMENT OBJECTIVES,
RISKS, CHARGES AND EXPENSES. TO OBTAIN AN ADDITIONAL 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 THE FUND WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. THE FUND IS SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY
THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL DECLINE AND,
THEREFORE, THE VALUE OF THE FUND SHARES MAY 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 9/30/07
PERFORMANCE OF A $10,000 INVESTMENT
This chart compares your fund's performance to that of the Lehman Brothers
Municipal Bond Index from 9/30/97 through 9/30/07. Class A shares, adjusted for
sales charges.
(LINE GRAPH)
<Table>
<Caption>
VAN KAMPEN MUNICIPAL INCOME LEHMAN BROTHERS MUNICIPAL BOND
FUND INDEX
--------------------------- ------------------------------
9/97 9522 10000
9788 10271
9895 10390
10029 10548
9/98 10338 10871
10294 10937
10314 11034
10074 10839
9/99 9899 10796
9735 10712
9919 11025
9993 11192
9/00 10165 11462
10520 11964
10729 12229
10752 12309
9/01 11073 12654
10915 12577
10988 12695
11391 13160
9/02 11998 13785
11938 13785
12065 13950
12365 14310
9/03 12394 14321
12579 14517
12747 14768
12439 14419
9/04 12915 14980
13058 15168
12997 15162
13419 15606
9/05 13403 15587
13516 15701
13602 15739
13642 15744
9/06 14136 16281
14290 16461
14380 16594
14235 16484
9/07 14229 16784
</Table>
<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
- -------------------------------------------------------------------------------------------------------
AVERAGE W/MAX W/MAX W/MAX
ANNUAL 4.75% 4.00% 1.00%
TOTAL W/O SALES SALES W/O SALES SALES W/O SALES SALES W/O SALES
RETURNS CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE CHARGES
Since Inception 5.66% 5.36% 4.45% 4.45% 3.87% 3.87% 3.37%
10-year 4.10 3.59 3.48 3.48 3.31 3.31 --
5-year 3.47 2.47 2.69 2.43 2.68 2.68 --
1-year 0.66 -4.12 -0.09 -3.94 -0.10 -1.06 0.98
- -------------------------------------------------------------------------------------------------------
30-Day SEC Yield 3.71% 3.15% 3.16% 4.14%
</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 eight 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
1
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.
2
Fund Report
FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2007
MARKET CONDITIONS
Strong fundamental and technical factors supported the municipal bond market
throughout much of the reporting period, helping it to perform well through the
second quarter of 2007. In July, however, contagion from the troubled subprime
mortgage sector led to an increasingly illiquid and volatile market, and a
flight to quality that led Treasury bonds to outperform all other sectors of the
fixed income market, including both investment grade and below investment grade
municipal bonds.
Up until that time, demand for municipal bonds had been quite strong as
institutional investors and non-traditional buyers such as hedge funds and
arbitrage investors continued to flock to the market. As market liquidity began
to dry up, however, institutional demand fell off and refunding activity, which
had been robust, virtually halted. Although the supply of municipal bonds was
declining as well, the decrease in demand put significant pressure on prices at
the same time that the Treasury market was rallying. As a result, credit spreads
widened, with the most significant widening occurring in the lower-rated
segments of the market, where spreads on municipal bonds rated BBB and below
(including non-rated bonds) widened by 40 to 50 basis points.
In mid-September, following the 50 basis point reduction in the target federal
funds rate by the Federal Open Market Committee (the "Fed"), the market began to
stabilize, liquidity improved, and municipal credit spreads began to tighten
again. Despite these improvements, however, municipal bonds underperformed
Treasuries for the overall reporting period.
Overall, municipal bond yields ended the period higher, but most of the yield
increases occurred in the intermediate to long maturity portion of the yield
curve, while yields on the front end of the curve decreased slightly. As a
result, the municipal yield curve steepened over the course of the period, with
the differential between two-year and 30-year maturities widening to about 100
basis points.
3
PERFORMANCE ANALYSIS
All share classes of Van Kampen Municipal Income Fund underperformed the Lehman
Brothers Municipal Bond Index for the 12 months ended September 30, 2007,
assuming no deduction of applicable sales charges.
TOTAL RETURNS FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2007
<Table>
<Caption>
- -------------------------------------------------------------------
LEHMAN BROTHERS
MUNICIPAL BOND
CLASS A CLASS B CLASS C CLASS I INDEX
0.66% -0.09% -0.10% 0.98% 3.09%
- -------------------------------------------------------------------
</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.
Various factors contributed to the Fund's relative underperformance for the
reporting period, one of which was its overweight versus the benchmark Lehman
Brothers Municipal Bond Index in BBB and non-rated bonds. While this position
was additive to performance for much of the period as lower-rated bonds
outperformed higher-quality issues, in the last few months performance of the
lower-rated segment of the market suffered due to significant spread widening.
As a result, the Fund's larger weighting in lower-rated, higher-yielding bonds
detracted from overall performance.
In the fourth quarter of 2006 and the first quarter of this year, we added
positions in inverse floating-rate securities* in the housing and tobacco
sectors. Inverse floating-rate securities are, by nature, highly sensitive to
interest rate changes and therefore, the performance of the Fund's holdings in
these securities waned as interest rates rose, dampening overall returns.
Additionally, housing bond prices declined, particularly in first six months of
this year, due to the ongoing high supply of these issues and spread widening in
the sector. The tobacco bond sector was the hardest hit sector of the municipal
market in July and August. Although the fundamental credit quality of tobacco
bonds remained solid, the combination of an abundant supply, the liquidity
squeeze in the market, and the flight to quality (tobacco bonds are lower-rated)
caused spreads in the sector to widen dramatically. As a result, the Fund's
holdings in both tobacco bonds and housing bonds hindered performance.
In order to help manage the portfolio's interest-rate risk, we used a U.S.
Treasury futures hedge. This hedge performed well as interest rates rose.
However, the flight to quality in August fueled a Treasury market rally that
hurt the performance of the Fund's hedge and consequently detracted from overall
returns.
4
Conversely, a greater relative weighting in pre-refunded bonds versus the Lehman
Brothers Municipal Bond Index was additive to performance for the period. These
short-maturity securities performed well as they did not experience the sell off
that longer-maturity bonds did when yields on the long end of the curve rose. As
such, the Fund's positioning here proved beneficial.
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.
*An inverse floating-rate security, or "inverse floater", is a variable rate
security whose coupon rate changes in the opposite direction from the change in
the reference rate used to calculate the coupon rate.
5
<Table>
<Caption>
RATINGS ALLOCATION AS OF 9/30/07
AAA/Aaa 47.8%
AA/Aa 11.1
A/A 5.2
BBB/Baa 11.3
BB/Ba 1.2
B/B 0.5
Non-Rated 22.9
<Caption>
TOP FIVE SECTORS AS OF 9/30/07
Hospital 15.4%
General Purpose 12.9
Life Care 8.9
Single-Family 8.0
Wholesale Electric 5.9
<Caption>
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 9/30/07
California 19.0%
New York 10.9
Texas 9.1
Illinois 8.6
New Jersey 6.0
Colorado 5.2
Florida 4.4
Missouri 3.8
Massachusetts 3.5
North Carolina 3.1
Kansas 3.0
Michigan 3.0
Wisconsin 2.7
Indiana 2.6
Arizona 2.5
Connecticut 2.2
Washington 2.2
Ohio 2.0
Maryland 1.9
Utah 1.9
Virginia 1.7
Minnesota 1.4
Pennsylvania 1.4
Alabama 1.3
District of Columbia 1.3
Iowa 1.3
Nevada 1.3
Oregon 1.0
Tennessee 1.0
Idaho 0.7
South Carolina 0.7
Rhode Island 0.6
North Dakota 0.5
New Hampshire 0.4
Oklahoma 0.4
</Table>
<Table>
(continued on next page)
</Table>
6
<Table>
<Caption>
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 9/30/07
(continued from previous page)
South Dakota 0.4%
Alaska 0.3
Georgia 0.3
Vermont 0.3
Montana 0.2
Delaware 0.1
West Virginia 0.0*
-----
Total Investments 114.2
Liability for Floating Rate Note Obligations Related to
Securities Held (14.6)
-----
Total Net Investments 99.6
Other Assets In Excess of Liabilities 0.4
-----
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 and sectors are as a
percentage of total 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. Ratings allocation based upon ratings as issued by Standard
and Poor's and Moody's, respectively.
7
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. The semiannual reports and the
annual reports are filed electronically with the Securities and Exchange
Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. 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 email 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.
8
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.
9
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 charges on redemptions of Class B and Class C
Shares; and redemption fees; 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 4/1/07 - 9/30/07.
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 or redemption fees.
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*
------------------------------------------------
4/1/07 9/30/07 4/1/07-9/30/07
Class A
Actual...................................... $1,000.00 $ 989.50 $6.93
Hypothetical................................ 1,000.00 1,018.10 7.03
(5% annual return before expenses)
Class B
Actual...................................... 1,000.00 986.41 10.76
Hypothetical................................ 1,000.00 1,014.24 10.91
(5% annual return before expenses)
Class C
Actual...................................... 1,000.00 985.70 10.60
Hypothetical................................ 1,000.00 1,014.39 10.76
(5% annual return before expenses)
Class I
Actual...................................... 1,000.00 991.45 5.79
Hypothetical................................ 1,000.00 1,019.25 5.87
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 1.39%, 2.16%,
2.13% and 1.16% for Class A, B, C and I Shares, respectively, multiplied by
the average account value over the period, multiplied by 183/365 (to reflect
the one-half year period).
Assumes all dividends and distributions were reinvested.
10
The following table shows what expenses a shareholder would have paid, excluding
interest and residual trust expenses.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
------------------------------------------------
4/1/07 9/30/07 4/1/07-9/30/07
Class A
Actual...................................... $1,000.00 $ 989.50 $4.39
Hypothetical................................ 1,000.00 1,020.66 4.46
(5% annual return before expenses)
Class B
Actual...................................... 1,000.00 986.41 8.12
Hypothetical................................ 1,000.00 1,016.90 8.24
(5% annual return before expenses)
Class C
Actual...................................... 1,000.00 985.70 8.16
Hypothetical................................ 1,000.00 1,016.85 8.29
(5% annual return before expenses)
Class I
Actual...................................... 1,000.00 991.45 3.10
Hypothetical................................ 1,000.00 1,021.96 3.14
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 0.88%, 1.63%,
1.64% and 0.62% for Class A, B, C and I Shares, respectively, multiplied by
the average account value over the period, multiplied by 183/365 (to reflect
the one-half year period).
Assumes all dividends and distributions were reinvested.
11
Investment Advisory Agreement Approval
Both the Investment Company Act of 1940 and the terms of the Fund's investment
advisory agreement require that the investment advisory agreement between the
Fund and its investment adviser be approved annually both by a majority of the
Board of Trustees and by a majority of the independent trustees voting
separately.
At meetings held on April 17, 2007 and May 30, 2007, the Board of Trustees, and
the independent trustees voting separately, considered and ultimately determined
that the terms of the investment advisory agreement are fair and reasonable and
approved the continuance of the investment advisory agreement as being in the
best interests of the Fund and its shareholders. In making its determination,
the Board of Trustees considered materials that were specifically prepared by
the investment adviser at the request of the Board and Fund counsel, and by an
independent provider of investment company data contracted to assist the Board,
relating to the investment advisory agreement review process. The Board also
considered information received periodically about the portfolio, performance,
the investment strategy, portfolio management team and fees and expenses of the
Fund. The Board of Trustees considered the investment advisory agreement over a
period of several months and the trustees held sessions both with the investment
adviser and separate from the investment adviser in reviewing and considering
the investment advisory agreement.
In approving the investment advisory agreement, the Board of Trustees
considered, among other things, the nature, extent and quality of the services
provided by the investment adviser, the performance, fees and expenses of the
Fund compared to other similar funds and other products, the investment
adviser's expenses in providing the services and the profitability of the
investment adviser and its affiliated companies. The Board of Trustees
considered the extent to which any economies of scale experienced by the
investment adviser are shared with the Fund's shareholders, and the propriety of
existing and alternative breakpoints in the Fund's investment advisory fee
schedule. The Board of Trustees considered comparative advisory fees of the Fund
and other investment companies and/or other products at different asset levels,
and considered the trends in the industry versus historical and projected assets
of the Fund. The Board of Trustees evaluated other benefits the investment
adviser and its affiliates derive from their relationship with the Fund. The
Board of Trustees reviewed information about the foregoing factors and
considered changes, if any, in such information since its previous approval. The
Board of Trustees discussed the financial strength of the investment adviser and
its affiliated companies and the capability of the personnel of the investment
adviser, and specifically the strength and background of its portfolio
management personnel. The Board of Trustees reviewed the statutory and
regulatory requirements for approval and disclosure of investment advisory
agreements. The Board of Trustees, including the independent trustees,
12
evaluated all of the foregoing and does not believe any single factor or group
of factors control or dominate the review process, and, after considering all
factors together, has determined, in the exercise of its business judgment, that
approval of the investment advisory agreement is in the best interests of the
Fund and its shareholders. The following summary provides more detail on certain
matters considered but does not detail all matters considered.
Nature, Extent and Quality of the Services Provided. On a regular basis, the
Board of Trustees considers the roles and responsibilities of the investment
adviser as a whole and for those specific portfolio management, support and
trading functions servicing the Fund. The trustees discuss with the investment
adviser the resources available and used in managing the Fund. The Fund
discloses information about its portfolio management team members and their
experience in its prospectus. The trustees also discuss certain other services
which are provided on a cost-reimbursement basis by the investment adviser or
its affiliates to the Van Kampen funds including certain accounting,
administrative and legal services. The Board has determined that the nature,
extent and quality of the services provided by the investment adviser support
its decision to approve the investment advisory agreement.
Performance, Fees and Expenses of the Fund. On a regular basis, the Board of
Trustees reviews the performance, fees and expenses of the Fund compared to its
peers and to appropriate benchmarks. In addition, the Board spends more focused
time on the performance of the Fund and other funds in the Van Kampen complex,
paying specific attention to underperforming funds. The trustees discuss with
the investment adviser the performance goals and the actual results achieved in
managing the Fund. When considering a fund's performance, the trustees and the
investment adviser place emphasis on trends and longer-term returns (focusing on
one-year, three-year and five-year performance with special attention to
three-year performance) and, when a fund's weighted performance is under the
fund's benchmark, they discuss the causes and where necessary seek to make
specific changes to investment strategy or investment personnel. The Fund
discloses more information about its performance elsewhere in this report and in
the Fund's prospectus. The trustees discuss with the investment adviser the
level of advisory fees for this Fund relative to comparable funds and other
products advised by the adviser and others in the marketplace. The trustees
review not only the advisory fees but other fees and expenses (whether paid to
the adviser, its affiliates or others) and the Fund's overall expense ratio. The
Fund discloses more information about its fees and expenses in its prospectus.
The Board has determined that the performance, fees and expenses of the Fund
support its decision to approve the investment advisory agreement.
Investment Adviser's Expenses in Providing the Service and Profitability. At
least annually, the trustees review the investment adviser's expenses in
providing services to the Fund and other funds advised by the investment adviser
and the profitability of the investment adviser. These profitability reports are
put
13
together by the investment adviser with the oversight of the Board. The trustees
discuss with the investment adviser its revenues and expenses, including among
other things, revenues for advisory services, portfolio management-related
expenses, revenue sharing arrangement costs and allocated expenses both on an
aggregate basis and per fund. The Board has determined that the analysis of the
investment adviser's expenses and profitability support its decision to approve
the investment advisory agreement.
Economies of Scale. On a regular basis, the Board of Trustees considers the size
and growth prospects of the Fund and how that relates to the Fund's expense
ratio and particularly the Fund's advisory fee rate. In conjunction with its
review of the investment adviser's profitability, the trustees discuss with the
investment adviser how more (or less) assets can affect the efficiency or
effectiveness of managing the Fund's portfolio and whether the advisory fee
level is appropriate relative to current and projected asset levels and/or
whether the advisory fee structure reflects economies of scale as asset levels
change. The Board has determined that its review of the actual and potential
economies of scale of the Fund support its decision to approve the investment
advisory agreement.
Other Benefits of the Relationship. On a regular basis, the Board of Trustees
considers other benefits to the investment adviser and its affiliates derived
from its relationship with the Fund and other funds advised by the investment
adviser. These benefits include, among other things, fees for transfer agency
services provided to the funds, in certain cases research received by the
adviser generated from commission dollars spent on funds' portfolio trading, and
in certain cases distribution or service related fees related to funds' sales.
The trustees review with the investment adviser each of these arrangements and
the reasonableness of its costs relative to the services performed. The Board
has determined that the other benefits received by the investment adviser or its
affiliates support its decision to approve the investment advisory agreement.
14
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
MUNICIPAL BONDS 114.2%
ALABAMA 1.3%
$2,000 Birmingham Baptist Med Ctr AL Spl Care Fac Fin
Auth Rev Baptist Hlth Sys Inc Ser A............. 5.000% 11/15/30 $ 1,921,720
1,000 Jefferson Cnty, AL Ltd Oblig Sch Wt Ser A....... 5.000 01/01/24 1,030,520
3 Mobile, AL Indl Dev Brd Solid Waste Disp Rev
Mobile Energy Svc Co Proj Rfdg.................. 6.950 01/01/20 291
2,250 Montgomery Cnty, AL Pub Bldg Wt Fac Proj (MBIA
Insd)........................................... 5.000 03/01/31 2,325,690
3,425 University AL Birmingham Hosp Rev Ser A (AMBAC
Insd) (a)....................................... 5.000 09/01/36 3,492,733
------------
8,770,954
------------
ALASKA 0.3%
2,000 Northern Tob Sec Corp Rev Bkd Ser A............. 5.000 06/01/46 1,668,100
------------
ARIZONA 2.5%
1,000 Cottonwood, AZ Wtr Rev Sys Sr Lien (XLCA
Insd)........................................... 5.000 07/01/30 1,038,360
1,000 Flagstaff, AZ Indl Dev Auth Rev Sr Living Cmnty
Northn AZ Rfdg.................................. 5.700 07/01/42 949,330
7,000 Glendale, AZ Indl Dev Auth Rfdg................. 5.000 12/01/35 6,649,860
5,000 Phoenix, AZ Civic Impt Corp Sr Lien Ser B (FGIC
Insd) (AMT)..................................... 5.250 07/01/32 5,100,700
2,750 University of AZ Med Ctr Corp................... 5.000 07/01/35 2,632,492
------------
16,370,742
------------
CALIFORNIA 19.0%
4,870 Anaheim, CA Pub Fin Auth Lease Rev Cap Apprec
Sub Pub Impt Proj Ser C (FSA Insd).............. * 09/01/20 2,739,862
1,875 California Cnty, CA Tob Agy Tob Sec Sonoma Cnty
Corp Rfdg....................................... 5.250 06/01/45 1,654,406
2,000 California Cnty, CA Tob Sec Agy Tob LA Cnty Sec
(f)............................................. 0/5.250 06/01/21 1,625,180
1,200 California Hlth Fac Fin Auth Rev Kaiser
Permanente Ser A................................ 5.250 04/01/39 1,220,160
6,690 California Hsg Fin Agy Rev Home Mtg Ser I (AMT)
(a)............................................. 4.800 08/01/36 6,403,194
10,000 California Infrastructure & Econ Dev Bk Bay Area
Toll Brdg First Lien A (FSA Insd) (Prerefunded @
7/01/13) (a).................................... 5.250 07/01/20 10,902,250
305 California Infrastructure & Econ Dev Bk Rev Bay
Area Toll Brdgs First Lien A (FSA Insd)
(Prerefunded @ 7/01/13)......................... 5.250 07/01/20 332,517
13,155 California St Dept Wtr Res Pwr Supply Rev Ser A
(MBIA Insd) (a)................................. 5.250 05/01/20 14,255,458
3,500 California St Pub Wks Brd Lease Rev Dept
Corrections Ser C............................... 5.250 06/01/28 3,625,615
15,000 California St (XLCA Insd) (a) (b)............... 5.250 10/01/20 15,972,900
1,350 California Statewide Cmnty Dev Auth Rev
Daughters of Charity Hlth Ser A................. 5.000 07/01/39 1,275,143
</Table>
See Notes to Financial Statements 15
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
CALIFORNIA (CONTINUED)
$3,000 California Statewide Cmnty Dev Auth Rev Hlth Fac
Adventist Hlth Ser A............................ 5.000% 03/01/35 $ 3,004,500
1,600 California Statewide Cmnty Dev Auth Rev Kaiser
Permanente Ser B................................ 5.000 03/01/41 1,585,808
2,200 California Statewide Cmnty Dev Auth Rev Kaiser
Permanente Ser B................................ 5.250 03/01/45 2,227,544
3,000 California Statewide Cmnty Dev Auth Rev Kaiser
Permanente Ser C................................ 5.250 08/01/31 3,071,160
1,250 California Statewide Cmnty Dev Auth Rev CA
Baptist Univ Ser A.............................. 5.500 11/01/38 1,236,150
2,250 California Statewide Cmnty Dev Auth Rev Windrush
Sch............................................. 5.500 07/01/37 2,212,583
3,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap
Apprec Rfdg (MBIA Insd)......................... * 01/15/17 1,897,560
21,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap
Apprec Rfdg..................................... * 01/15/24 8,317,680
15,000 Foothill/Eastern Corridor Agy CA Toll Rd Rev Cap
Apprec Rfdg..................................... * 01/15/30 4,106,250
8,000 Golden St Tob Securitization Ser A-1............ 5.750 06/01/47 7,634,080
2,000 Hesperia, CA Pub Fin Auth Rev Redev & Hsg Proj
Ser A (XLCA Insd)............................... 5.000 09/01/37 2,055,880
11,200 Los Angeles, CA Uni Sch Dist Ser A-1 Rfdg (MBIA
Insd) (a)....................................... 4.500 01/01/28 11,103,736
6,695 San Francisco, CA City & Cnty Second Rfdg Ser
Issue 29 B (FGIC Insd).......................... 5.125 05/01/20 7,022,653
5,000 Tobacco Sec Auth Southn CA Tob Settlement Sr Ser
A1.............................................. 5.000 06/01/37 4,357,000
1,600 Turlock, CA Hlth Fac Rev Emanuel Med Ctr Inc.... 5.375 10/15/34 1,606,928
5,000 West Contra Costa CA Uni Election of 2002 Ser B
(FSA Insd)...................................... 5.000 08/01/26 5,193,300
------------
126,639,497
------------
COLORADO 5.2%
2,840 Adams Cnty, CO Single Family Mtg Rev Ser A (b)
(c)............................................. 8.875 08/01/10 3,237,458
5,000 Arapahoe Cnty, CO Wtr & Waste Proj Ser A (MBIA
Insd)........................................... 5.125 12/01/32 5,202,900
5,000 Colorado Ed & Cultural Fac Auth Rev Impt Charter
Sch Peak to Peak Rfdg (XLCA Insd)............... 5.250 08/15/34 5,209,000
3,000 Colorado Hlth Fac Auth Rev Amern Baptist Home
Ser A........................................... 5.900 08/01/37 2,966,490
3,000 Colorado Hlth Fac Auth Rev Covenant Retirement
Cmntys Inc...................................... 5.000 12/01/35 2,845,770
1,000 Colorado Hlth Fac Auth Rev Evangelical Lutheran
Ser A........................................... 5.250 06/01/34 1,002,990
5,000 Colorado Springs, CO Util Rev Sys Sub Lien Impt
Rfdg Ser A...................................... 5.000 11/15/21 5,210,650
</Table>
16 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
COLORADO (CONTINUED)
$5,000 Colorado Springs, CO Util Rev Sys Sub Lien Impt
Rfdg Ser A...................................... 5.000% 11/15/29 $ 5,092,050
500 Montezuma Cnty, CO Hosp Dist Hlth Fac Enterprise
Hosp Rfdg (d)................................... 5.900 10/01/37 500,745
1,830 North Range Met Dist No 2 CO Ltd Tax............ 5.500 12/15/27 1,757,605
1,500 Park Creek Met Dist CO Rev Sr Ltd Tax Ppty
Rfdg............................................ 5.500 12/01/37 1,535,085
------------
34,560,743
------------
CONNECTICUT 2.2%
5,570 Bridgeport, CT Rfdg Ser A (FGIC Insd) (a) (b)... 5.375 08/15/15 6,000,923
5,900 Bridgeport, CT Rfdg Ser A (FGIC Insd) (a)....... 5.375 08/15/16 6,356,454
1,000 Connecticut St Dev Auth Hlth Fac Rev Alzheimers
Res Ctr Conn Inc Proj........................... 5.500 08/15/27 968,240
1,500 Connecticut St Hlth & Ed Fac Auth Rev Hosp for
Spl Care Ser C (Radian Insd).................... 5.250 07/01/37 1,503,285
------------
14,828,902
------------
DELAWARE 0.1%
630 New Castle Cnty, DE Rev Newark Charter Sch Inc
Proj............................................ 5.000 09/01/22 615,409
------------
DISTRICT OF COLUMBIA 1.3%
5,150 District Columbia Tax Incrmnt Gallery Place Proj
(FSA Insd)...................................... 5.250 07/01/27 5,394,264
3,000 Metropolitan Washington DC Arpt Auth Sys Ser A
(FGIC Insd) (AMT)............................... 5.250 10/01/32 3,062,130
------------
8,456,394
------------
FLORIDA 4.4%
1,000 Alachua Cnty, FL Indl Dev Rev North FL
Retirement Vlg.................................. 5.250 11/15/17 978,430
1,000 Alachua Cnty, FL Indl Dev Rev North FL
Retirement Vlg.................................. 5.875 11/15/36 1,012,480
5,000 Broward Cnty, FL Arpt Sys Rev Ser J-I (AMBAC
Insd) (AMT)..................................... 5.250 10/01/26 5,119,200
1,100 Capital Tr Agy FL Rev Ft Lauderdale Proj
(AMT)........................................... 5.750 01/01/32 1,112,034
570 Escambia Cnty, FL Hlth Fac Auth Rev (AMBAC
Insd)........................................... 5.950 07/01/20 592,389
2,465 Fiddlers Creek Cmnty Dev Dist No 1 FL Spl Assmt
Rev............................................. 6.000 05/01/38 2,452,847
5,000 Grand Bay at Doral Cmnty Dev Dist FL Ser B...... 6.000 05/01/17 4,933,500
1,000 Halifax Hosp Med Ctr FL Hosp Rev Impt Rfdg Ser
A............................................... 5.250 06/01/26 1,020,520
1,750 Orange Cnty, FL Hlth Fac Auth Rev First Mtg
Orlando Lutheran Tower.......................... 5.500 07/01/38 1,682,170
595 Orange Cnty, FL Tourist Dev Tax Rev (AMBAC Insd)
(c)............................................. 6.000 10/01/16 597,761
4,765 Orlando, FL Util Commn Wtr Rfdg................. 5.250 10/01/19 5,063,337
</Table>
See Notes to Financial Statements 17
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
FLORIDA (CONTINUED)
$1,675 Sarasota Cnty, FL Hlth Fac Auth Retirement Fac
Rev Vlg On The Isle Proj Rfdg................... 5.500% 01/01/27 $ 1,655,252
3,000 Seminole Tribe, FL Spl Oblig Ser A (e).......... 5.250 10/01/27 3,001,140
------------
29,221,060
------------
GEORGIA 0.3%
2,000 Atlanta, GA Tax Allocation Eastside Proj Ser
B............................................... 5.600 01/01/30 1,925,260
------------
IDAHO 0.7%
680 Idaho Hlth Fac Auth Rev Valley Vista Care Corp
Rfdg............................................ 6.125 11/15/27 695,647
3,750 Idaho Hsg & Fin Assn Single Family Mtg Rev Ser
E-1 Class I (AMT)............................... 4.900 07/01/38 3,619,800
------------
4,315,447
------------
ILLINOIS 8.6%
750 Bartlett, IL Tax Increment Rev Sr Lien Quarry
Redev Proj Rfdg................................. 5.600 01/01/23 759,563
1,500 Bolingbrook, IL Sales Tax Rev Bolingbrook (f)... 0/6.250 01/01/24 1,520,070
500 Chicago, IL Increment Alloc Rev Diversey
Narragansett Proj (Acquired 08/01/06, Cost
$533,660) (g)................................... 7.460 02/15/26 522,675
3,000 Chicago, IL Lakefront Millennium Pkg Fac (MBIA
Insd)........................................... 5.650 01/01/19 3,296,550
1,000 Chicago, IL Met Wtr Reclamation Capital Impt
Bonds (c)....................................... 7.000 01/01/11 1,068,800
8,050 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt Third
Lien C-2 Rfdg (XLCA Insd) (AMT)................. 5.250 01/01/34 8,199,649
2,010 Chicago, IL Proj Rfdg Ser C (FGIC Insd)
(Prerefunded @ 7/01/10) (b)..................... 5.750 01/01/16 2,144,710
1,200 Chicago, IL Proj Rfdg Ser C (FGIC Insd) (b)..... 5.750 01/01/16 1,276,668
15 Chicago, IL Single Family Mtg Rev Ser A (GNMA
Collateralized) (AMT)........................... 7.000 09/01/27 15,390
885 Chicago, IL Tax Increment Alloc Santn Drain &
Ship Canal Ser A................................ 7.750 01/01/14 904,851
5,000 Cook Cnty, IL Ser A (FGIC Insd) (Prerefunded @
5/15/11)........................................ 5.500 11/15/31 5,330,050
1,000 Gilberts, IL Spl Svc Area No 19 Spl Tax Ser 1... 5.375 03/01/16 972,010
3,000 Hampshire, IL Spl Svc Area No 17 Spl Tax Crown
Dev Proj Oakstead Ser A......................... 6.000 03/01/45 2,949,330
1,185 Huntley, IL Increment Alloc Rev Huntley Redev
Proj Ser A...................................... 8.500 12/01/15 1,192,110
1,500 Illinois Fin Auth Rev Christian Homes Inc Rfdg
Ser A........................................... 5.750 05/15/31 1,442,775
1,000 Illinois Fin Auth Rev Kewanee Hosp Proj......... 5.100 08/15/31 906,460
4,700 Illinois Hsg Dev Auth Rev Homeowner Mtg Sub Ser
C-2 (AMT)....................................... 5.150 08/01/37 4,707,567
5,000 Illinois St Ser 1 (FSA Insd).................... 5.250 12/01/21 5,326,550
</Table>
18 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
ILLINOIS (CONTINUED)
$9,250 Metropolitan Pier & Expo Auth IL Dedicated St
Tax Rev Cap Apprec McCormick Rfdg (MBIA Insd)
(f)............................................. 0/5.400% 06/15/19 $ 7,926,602
1,500 Metropolitan Pier & Expo Auth IL Dedicated St
Tax McCormick Pl Expn Proj A Rfdg............... 5.500 06/15/27 1,500,795
2,004 Pingree Grove Village, IL Spl Svc Area No 1 Spl
Tax Cambridge Lakes Proj Ser 05................. 5.250 03/01/15 2,026,625
1,500 Plano, IL Spl Svc Area No 6 Spl Tax Lakewood
Springs Club Proj............................... 5.800 03/01/37 1,437,750
549 Volo Vlg, IL Spl Svc Area No 3 Symphony Meadows
Proj Ser 1...................................... 6.000 03/01/36 541,237
994 Yorkville, IL Utd City Spl Svc Area Spl Tax No
2004-107 Raintree Vlg IL Proj................... 6.250 03/01/35 1,011,276
------------
56,980,063
------------
INDIANA 2.6%
4,350 Indiana Hlth & Ed Fac Fin Cmnty Fndtn Northwest
IN.............................................. 5.500 03/01/37 4,346,651
5,000 Indiana Hlth Fac Fin Auth Hosp Rev Cmnty Proj
Ser A (AMBAC Insd).............................. 5.000 05/01/35 5,086,650
1,860 Indiana Hlth Fac Fin Auth Rev Hoosier Care Proj
Ser A........................................... 7.125 06/01/34 1,889,481
550 Indianapolis, IN Loc Pub Impt Ser D............. 6.750 02/01/14 615,224
140 Saint Joseph Cnty, IN Redev Dist Tax Increment
Rev Ser B (b)................................... * 06/30/11 105,770
140 Saint Joseph Cnty, IN Redev Dist Tax Increment
Rev Ser B (b)................................... * 06/30/12 97,966
135 Saint Joseph Cnty, IN Redev Dist Tax Increment
Rev Ser B (b)................................... * 06/30/13 87,491
130 Saint Joseph Cnty, IN Redev Dist Tax Increment
Rev Ser B (b)................................... * 06/30/14 78,029
130 Saint Joseph Cnty, IN Redev Dist Tax Increment
Rev Ser B (b)................................... * 06/30/15 72,277
135 Saint Joseph Cnty, IN Redev Dist Tax Increment
Rev Ser B (b)................................... * 06/30/16 69,516
225 Saint Joseph Cnty, IN Redev Dist Tax Increment
Rev Ser B (b)................................... * 06/30/17 107,311
3,295 Vigo Cnty, IN Elem Sch Bldg First Mtg Impt &
Rfdg (FSA Insd) (Prerefunded @ 1/10/13)......... 5.250 01/10/22 3,553,460
1,500 Vigo Cnty, IN Hosp Auth Rev Union Hosp Inc
(Acquired 06/27/07, Cost $1,483,680) (g)........ 5.500 09/01/27 1,460,985
------------
17,570,811
------------
IOWA 1.3%
1,125 Coralville, IA Ctf Partn Ser D.................. 5.250 06/01/26 1,154,070
1,100 Iowa Fin Auth Hlthcare Fac Rev Madrid Home
Proj............................................ 5.750 11/15/24 1,101,584
2,400 Iowa Fin Auth Hosp Fac Rev Trinity Regl Hosp
Proj (FSA Insd)................................. 5.750 07/01/17 2,452,008
</Table>
See Notes to Financial Statements 19
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
IOWA (CONTINUED)
$1,000 Jefferson Cnty, IA Hosp Rev Jefferson Cnty Hosp
Proj Ser C...................................... 5.950% 08/01/37 $ 995,750
1,000 Tobacco Settlement Auth IA Tob Settlement Rev
Ser C........................................... 5.375 06/01/38 908,200
2,500 Tobacco Settlement Auth IA Tob Settlement Rev
Ser C........................................... 5.625 06/01/46 2,336,375
------------
8,947,987
------------
KANSAS 3.0%
1,100 Labette Cnty, KS Hosp Rev Rfdg & Impt Ser A..... 5.750 09/01/37 1,101,595
6,620 Lawrence, KS Hosp Rev Lawrence Mem Hosp......... 5.125 07/01/36 6,679,911
3,000 Lenexa, KS Hlthcare Fac Rev Rfdg & Impt......... 5.500 05/15/39 2,988,630
1,600 Manhattan, KS Hlthcare Fac Rev Meadowlark Hills
Retirement Ser A................................ 5.000 05/15/24 1,459,696
800 Manhattan, KS Hlthcare Fac Rev Meadowlark Hills
Retirement Ser A................................ 5.000 05/15/36 683,416
400 Manhattan, KS Hlthcare Fac Rev Meadowlark Hills
Retirement Ser B................................ 5.125 05/15/42 346,576
6,600 Sedgwick Cnty, KS Uni Sch Dist No 259 Wichita
(MBIA Insd) (b)................................. 5.625 09/01/13 6,953,628
------------
20,213,452
------------
MARYLAND 1.9%
4,500 Gaithersburg, MD Econ Dev Rev Asbury MD Oblig
Group Ser A..................................... 5.125 01/01/36 4,349,745
1,000 Howard Cnty, MD Retirement Cmnty Vantage House
Fac Ser B Rfdg.................................. 5.250 04/01/37 918,100
5,605 Maryland St Cmnty Dev Admin Dept Hsg & Cmnty Dev
(AMT)........................................... 5.050 09/01/32 5,606,850
600 Maryland St Hlth & Higher Edenwald Ser A........ 5.400 01/01/37 591,696
1,250 Prince Georges Cnty, MD Spl Oblig Natl Harbor
Proj............................................ 5.200 07/01/34 1,188,437
------------
12,654,828
------------
MASSACHUSETTS 3.5%
2,400 Massachusetts St Dev Fin Agy Rev Linden Ponds
Inc Fac Ser A................................... 5.750 11/15/35 2,358,768
3,500 Massachusetts St Hlth & Ed Fac Auth Rev Ser G
(MBIA Insd)..................................... 5.000 07/01/13 3,503,570
2,000 Massachusetts St Hlth & Ed Fac Auth Rev Univ MA
Mem Issue Ser D................................. 5.000 07/01/33 1,936,520
1,500 Massachusetts St Hsg Fin Agy Hsg Rev Single
Family Ser 130 (AMT)............................ 5.000 12/01/37 1,471,245
2,650 Massachusetts St Indl Fin Agy Rev First Mtg
Reeds Landing Proj (Prerefunded @ 10/01/08)..... 7.450 10/01/28 2,820,103
10,000 Massachusetts St Rites PA 1290 (FSA Insd) (a)... 5.000 03/01/24 10,838,350
------------
22,928,556
------------
</Table>
20 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
MICHIGAN 3.0%
$ 775 Detroit, MI Loc Dev Fin Auth Tax Increment Sub
Ser C (Acquired 09/08/97, Cost $775,000) (g).... 6.850% 05/01/21 $ 791,283
5,000 Detroit, MI Sew Disp Rev Sr Lien Ser A (FGIC
Insd) (Prerefunded @ 7/01/11)................... 5.125 07/01/31 5,275,400
5,000 Michigan St Strategic Fd Detroit Edison Co Proj
Rfdg Ser C (XLCA Insd) (AMT).................... 5.450 12/15/32 5,167,300
1,840 Michigan St Strategic Fd Solid Genesee Pwr Stad
Proj Rfdg (AMT)................................. 7.500 01/01/21 1,839,705
2,000 Michigan Tob Settlement Fin Auth Tob Settlement
Asset Sr Ser A.................................. 6.000 06/01/48 1,999,500
5,000 Western Townships MI Utils Ser A Rfdg (MBIA
Insd)........................................... 5.250 01/01/16 5,172,700
------------
20,245,888
------------
MINNESOTA 1.4%
1,000 Columbia Heights, MN Multi-Family & Hlthcare Fac
Rev Crest View Corp Proj Ser A Rfdg............. 5.700 07/01/42 958,410
1,000 Dakota Cnty, MN Cmnty Dev Agy Multi-Family Hsg
Rev Commons Marice Proj Rfdg Ser A.............. 5.000 05/01/42 856,770
550 Inver Grove Heights, MN Presbyterian Homes Care
Rfdg............................................ 5.500 10/01/33 520,927
2,000 Minneapolis, MN Hsg & Hlthcare Fac Rev
Providence Proj Ser A Rfdg...................... 5.625 10/01/27 1,960,020
150 North Oaks, MN Sr Hsg Rev Presbyterian Homes
North Oaks...................................... 6.000 10/01/27 152,082
425 North Oaks, MN Sr Hsg Rev Presbyterian Homes
North Oaks...................................... 6.000 10/01/33 428,494
125 North Oaks, MN Sr Hsg Rev Presbyterian Homes
North Oaks...................................... 6.125 10/01/39 126,021
2,000 Saint Paul, MN Hsg & Redev Auth Hlthcare Fac Rev
Hlth Partners Oblig Grp Proj.................... 5.250 05/15/36 1,980,860
2,000 Saint Paul, MN Hsg & Redev Auth Hosp Rev Hlth
East Proj....................................... 6.000 11/15/35 2,078,640
------------
9,062,224
------------
MISSOURI 3.8%
1,000 Carthage, MO Hosp Rev........................... 5.750 04/01/22 999,020
1,000 Carthage, MO Hosp Rev........................... 5.875 04/01/30 1,004,310
3,000 Kansas City, MO Indl Dev Auth Plaza Lib Proj.... 6.000 03/01/16 3,072,780
500 Kansas City, MO Tax Increment Fin Comm Tax
Increment Rev Kansas City MO Maincor Proj Ser
A............................................... 5.250 03/01/18 495,040
2,275 Missouri Jt Muni Elec Util Comnty Pwr Proj Rev
Plum Point Proj (MBIA Insd)..................... 5.000 01/01/26 2,369,321
1,200 Missouri St Hlth & Ed Fac Auth Rev Sr Living Fac
Lutheran Rfdg Ser B............................. 5.125 02/01/27 1,197,000
3,325 Raytown Mo Annual Raytown Live Redev Plan Proj
1............................................... 5.125 12/01/31 3,325,998
1,300 Saint Louis Cnty, MO Indl Dev Auth Hlth Fac Rev
Ranken Jordan Proj Rfdg......................... 5.000 11/15/35 1,161,446
</Table>
See Notes to Financial Statements 21
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
MISSOURI (CONTINUED)
$1,000 Saint Louis Cnty, MO Indl Dev Auth Sr Living Fac
Rev Friendship Vlg West Cnty Ser A.............. 5.375% 09/01/21 $ 1,024,690
3,000 Saint Louis Cnty, MO Indl Dev Auth Sr Living Fac
Rev Friendship Vlg West Cnty Ser A.............. 5.500 09/01/28 3,044,550
500 Saint Louis Cnty, MO Indl Dev Auth Sr Living Fac
Rev St Andrews Res for Srs Ser A................ 6.375 12/01/30 506,285
1,250 Saint Louis Cnty, MO Indl Dev Auth Sr Living Fac
Rev St Andrews Res for Srs Ser A................ 6.375 12/01/41 1,261,025
300 Saint Louis, MO Tax Increment Rev Scullin Redev
Area Ser A...................................... 10.000 08/01/10 328,317
2,745 Springfield, MO Pub Bldg Corp Leasehold Rev
(AMBAC Insd) (AMT) (a).......................... 4.550 07/01/29 2,562,670
3,355 Springfield, MO Pub Bldg Corp Leasehold Rev
(AMBAC Insd) (AMT) (a).......................... 4.600 07/01/36 3,132,153
------------
25,484,605
------------
MONTANA 0.2%
1,000 Forsyth, MT Pollutn Ctl Rev Northwestn Corp
Colstrip Rfdg (AMBAC Insd)...................... 4.650 08/01/23 1,002,890
------------
NEVADA 1.3%
5,300 Clark Cnty, NV Indl Dev Rev Southwest Gas Corp
Proj Ser A (FGIC Insd) (a)...................... 4.750 09/01/36 5,059,407
655 Mesquite, NV Spl Impt Dist No 07-01 Loc Impt
Anthem at Mesquite.............................. 5.850 08/01/18 665,965
560 Mesquite, NV Spl Impt Dist No 07-01 Loc Impt
Anthem at Mesquite.............................. 6.000 08/01/27 563,461
2,490 Reno, NV Hosp Rev Renown Regl Med Ctr Proj Ser A
(a)............................................. 5.250 06/01/37 2,511,525
------------
8,800,358
------------
NEW HAMPSHIRE 0.4%
700 New Hampshire Higher Ed & Hlth Fac Auth Rev
(b)............................................. 8.800 06/01/09 738,171
330 New Hampshire Higher Ed & Hlth Fac Auth Rev
Daniel Webster College Issue Rfdg (b)........... 6.100 07/01/09 331,713
585 New Hampshire St Business Fin Auth Elec Fac Rev
Plymouth Cogeneration (AMT) (Acquired 06/29/93,
Cost $572,582) (g).............................. 7.750 06/01/14 593,090
1,000 New Hampshire St Business Fin Auth Rev Alice
Peck Day Hlth Sys Ser A (Prerefunded @
10/01/09)....................................... 6.875 10/01/19 1,076,650
------------
2,739,624
------------
NEW JERSEY 6.0%
375 Burlington Cnty, NJ Bridge Comm Econ Dev Rev The
Evergreens Proj (d)............................. 5.625 01/01/38 374,152
3,250 Landis, NJ Sew Auth Rev (FGIC Insd) (h)......... 7.940 09/19/19 3,845,530
3,905 Middlesex Cnty, NJ Util Auth Swr Rev Rfdg Ser A
(MBIA Insd)..................................... 6.250 08/15/10 4,064,871
</Table>
22 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
NEW JERSEY (CONTINUED)
$2,000 New Jersey Econ Dev Auth Cig Tax................ 5.750% 06/15/34 $ 2,101,360
750 New Jersey Econ Dev Auth Retirement Cmnty Rev
Seabrook Vlg Inc Fac Rfdg....................... 5.250 11/15/26 715,980
190 New Jersey St Tpk Auth Tpk Rev Ser C (MBIA Insd)
(c)............................................. 6.500 01/01/16 219,055
565 New Jersey St Tpk Auth Tpk Rev Ser C (MBIA
Insd)........................................... 6.500 01/01/16 648,219
2,725 New Jersey St Tpk Auth Tpk Rev Ser C (MBIA Insd)
(c)............................................. 6.500 01/01/16 3,141,707
5,710 New Jersey St Trans Corp Ctf Fed Trans Admin Gnt
Ser A (AMBAC Insd).............................. 5.750 09/15/10 5,934,631
10,000 New Jersey St Trans Corp Ctf Fed Trans Admin Gnt
Ser B (AMBAC Insd) (Prerefunded @ 9/15/10)...... 6.000 09/15/15 10,693,500
2,000 Tobacco Settlement Fin Corp NJ Ser 1A........... 4.750 06/01/34 1,665,780
8,000 Tobacco Settlement Fin Corp NJ (a).............. 5.000 06/01/41 6,780,878
------------
40,185,663
------------
NEW YORK 10.9%
5,000 Metropolitan Trans Auth NY Rev Ser B (FGIC
Insd)........................................... 5.250 11/15/18 5,377,400
5,000 New York City Hsg Dev Multi Family Rev Ser K
(AMT)........................................... 5.000 11/01/37 4,919,500
2,500 New York City Indl Dev Agy Polytechnic Univ Proj
(ACA Insd)...................................... 5.250 11/01/37 2,468,200
3,000 New York City Indl Dev Agy Rev Liberty 7 World
Trade Ctr Ser A................................. 6.250 03/01/15 3,137,460
2,300 New York City Indl Dev Agy Spl Fac Rev Amern Air
JFK Intl Arpt (AMT)............................. 7.625 08/01/25 2,611,029
1,000 New York City Indl Dev Agy Spl Fac Rev Amern
Airl JFK Intl Arpt (AMT)........................ 7.750 08/01/31 1,143,810
2,845 New York City Ser B (MBIA Insd)................. 5.875 08/01/15 3,042,301
14,515 New York City Ser B (MBIA Insd) (Prerefunded @
8/01/10)........................................ 5.875 08/01/15 15,572,563
10,000 New York City Ser C (MBIA Insd) (a)............. 5.000 06/15/27 10,424,800
10,000 New York City Transitional Fin Auth Future Tax
Secd Ser C (AMBAC Insd) (a)..................... 5.250 08/01/19 10,664,850
750 New York Liberty Dev Corp Rev Natl Sports Museum
Proj Ser A (Acquired 08/07/06, Cost $750,000)
(g) (i)......................................... 6.125 02/15/19 764,992
20 New York St Dorm Auth Rev St Supported Debt 2007
Mental Ser A.................................... 5.750 02/15/11 20,433
15 New York St Dorm Auth Rev St Supported Debt 2007
Mental Ser A.................................... 5.750 02/15/12 15,325
2,500 New York St Energy Resh & Dev Auth Gas Fac Rev
(h)............................................. 7.129 04/01/20 2,657,875
3,000 New York St Energy Resh & Dev Auth Gas Fac Rev
Brooklyn Union Gas Ser B (AMT) (h).............. 8.854 07/01/26 3,172,500
</Table>
See Notes to Financial Statements 23
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$1,300 Seneca Nation Indians Cap Impt Auth NY Spl Oblig
Ser A (e)....................................... 5.000% 12/01/23 $ 1,243,736
5,000 Triborough Brdg & Tunl Auth NY Gen Rfdg Ser B... 5.000 11/15/22 5,198,550
------------
72,435,324
------------
NORTH CAROLINA 3.1%
2,000 Charlotte Mecklenberg Hosp Auth NC Hlthcare Fac
Rev Ser A (Prerefunded @ 1/15/15)............... 5.000 01/15/45 2,158,740
1,100 North Carolina Med Care Commn Hlthcare Fac Rev
First Mtg Salemtowne Proj Rfdg.................. 5.100 10/01/30 1,034,759
2,000 North Carolina Med Care Commn Retirement Fac Rev
First Mtg Forest at Duke Rfdg................... 5.125 09/01/27 1,980,220
8,500 North Carolina Muni Pwr Agy Ser A (MBIA Insd)... 5.250 01/01/19 9,038,220
6,160 North Carolina Med Care Commn Hlth Sys Rev
Mission Hlth Combined Group (a)................. 5.000 10/01/36 6,225,265
------------
20,437,204
------------
NORTH DAKOTA 0.5%
1,000 Grand Forks, ND Sr Hsg Rev 4000 Vly Square Proj
Rfdg............................................ 5.200 12/01/26 932,120
1,125 Ward Cnty, ND Hlthcare Fac Rev Trinity Obligated
Group Rfdg...................................... 5.125 07/01/25 1,128,848
1,000 Ward Cnty, ND Hlthcare Fac Rev Trinity Obligated
Group Rfdg...................................... 5.125 07/01/29 988,290
------------
3,049,258
------------
OHIO 2.0%
3,340 Adams Cnty Hosp Fac Impt Rev Adams Cnty Hosp
Proj............................................ 6.250 09/01/20 3,138,431
500 Cuyahoga Cnty, OH Hlthcare Indpt Living Fac Rev
Eliza Jennings Sr Care Ser A.................... 5.750 05/15/27 493,020
6,000 Hamilton Cnty, OH Hlthcare Rev Life Rev Life
Enriching Cmnty Proj Rfdg Ser A................. 5.000 01/01/37 5,669,580
3,000 Ohio St Higher Ed Fac Commn Rev Hosp-Univ Hosp
Hlth Sys Inc Ser A.............................. 5.250 01/15/46 3,019,500
1,000 Tuscarawas Cnty, OH Hosp Fac Rev Twin City Hosp
Proj............................................ 6.100 11/01/22 998,950
------------
13,319,481
------------
OKLAHOMA 0.4%
2,250 Oklahoma City, OK Pub Ppty Auth Hotel Tax Rev
(FGIC Insd)..................................... 5.250 10/01/29 2,370,915
240 Oklahoma Hsg Fin Agy Single Family Rev Mtg Class
B (GNMA Collateralized) (AMT)................... 7.997 08/01/18 257,650
------------
2,628,565
------------
OREGON 1.0%
5,000 Oregon Hlth Sciences Univ Insd Ser A (MBIA
Insd)........................................... 5.250 07/01/22 5,286,150
1,000 Port Morrow, OR Pollutn Ctl Portland Rfdg....... 5.200 05/01/33 1,017,520
------------
6,303,670
------------
</Table>
24 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
PENNSYLVANIA 1.4%
$2,000 Allegheny Cnty, PA Hosp Dev Auth Rev Hlth Sys
West PA Ser A................................... 5.000% 11/15/28 $ 1,877,020
1,885 Montgomery Cnty, PA Indl Dev Auth Rev Mtg
Whitemarsh Continuing Care Proj................. 6.250 02/01/35 1,932,690
5,250 Philadelphia, PA Auth Indl Dev Lease Rev Ser B
(FSA Insd)...................................... 5.500 10/01/16 5,654,513
------------
9,464,223
------------
RHODE ISLAND 0.6%
1,075 Rhode Island Hsg & Mtg Fin Corp Homeownership
Oppty-57-B (AMT)................................ 5.350 10/01/37 1,092,458
710 Rhode Island St Econ Dev Corp Rev (b)........... 7.250 07/01/10 732,613
2,000 Rhode Island St Hlth & Ed Bldg Higher Ed Johnson
& Wales Rfdg (XLCA Insd)........................ 5.375 04/01/19 2,122,860
------------
3,947,931
------------
SOUTH CAROLINA 0.7%
700 Piedmont Muni Pwr Agy SC Elec Rev Rfdg.......... 5.000 01/01/25 699,965
500 South Carolina Jobs Econ Dev Auth Hlth Fac Rev
First Mtg Wesley Commons Rfdg................... 5.125 10/01/26 454,740
500 South Carolina Jobs Econ Dev Auth Hlthcare Fac
Rev First Mtg Lutheran Homes Rfdg............... 5.125 05/01/13 496,025
500 South Carolina Jobs Econ Dev Auth Hlthcare Fac
Rev First Mtg Lutheran Homes Rfdg............... 5.000 05/01/12 496,740
1,000 South Carolina Jobs Econ Dev Auth Rev Woodlands
at Furman Proj Ser A (d)........................ 6.000 11/15/27 1,009,340
200 South Carolina Jobs Econ Dev Auth Hlthcare Fac
Rev First Mtg Lutheran Homes Rfdg............... 5.000 05/01/15 194,698
1,000 South Carolina Jobs Econ Dev Auth Hlthcare Fac
Rev First Mtg Lutheran Homes Rfdg............... 5.625 05/01/42 951,800
------------
4,303,308
------------
SOUTH DAKOTA 0.4%
2,010 South Dakota Hsg Dev Auth Homeownership Mtg Ser
E (AMT) (Acquired 11/30/06, Cost $2,100,000) (g)
(h)............................................. 5.648 05/01/36 1,421,271
1,250 South Dakota St Hlth & Ed Fac Auth Rev Sioux Vly
Hosp & Hlth Sys A............................... 5.250 11/01/34 1,281,525
------------
2,702,796
------------
TENNESSEE 1.0%
1,000 Chattanooga, TN Hlth Ed & Hsg Fac Brd Rev CDFI
Phase I LLC Proj Rfdg Ser A..................... 5.000 10/01/25 957,070
4,000 Elizabethton, TN Hlth & Ed Fac Brd Rev Rfdg Ser
B (MBIA Insd) (b)............................... 7.750 07/01/29 4,695,240
1,000 Sullivan Cnty, TN Hlth Ed & Hsg Fac Brd Hosp Rev
Wellmont Hlth Sys Proj Ser C.................... 5.250 09/01/36 986,050
------------
6,638,360
------------
</Table>
See Notes to Financial Statements 25
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
TEXAS 9.1%
$2,000 Alliance Arpt Auth Inc TX Spl Fac Rev FedEx Corp
Proj Rfdg (AMT)................................. 4.850% 04/01/21 $ 1,963,280
450 Angelina & Neches Riv Auth TX Indl Dev Corp
Environmental Aspen Pwr LLC Proj Ser A (AMT).... 6.500 11/01/29 443,282
500 Bexar Cnty, TX Hlth Fac Dev Corp Hosp Rev Saint
Luke's Lutheran Hosp (c)........................ 7.000 05/01/21 636,345
3,170 Brazos Riv Auth TX Pollutn Ctl Rev Adj TXU Elec
Co Proj Rfdg Ser C (AMT)........................ 5.750 05/01/36 3,159,317
5,000 Dallas-Fort Worth, TX Intl Arpt Rev Jt Impt &
Rfdg Ser A (FGIC Insd) (AMT).................... 5.500 11/01/31 5,175,650
5,000 Harris Cnty-Houston, TX Sports Auth Spl Rev Jr
Lien Rfdg Ser B (MBIA Insd)..................... 5.250 11/15/40 5,130,900
10,000 Houston, TX Hotel Occupancy Tax Convention &
Entmt Ser B (AMBAC Insd)........................ 5.750 09/01/14 10,753,600
7,500 Lower CO Riv Auth TX Rev Rfdg Ser A (FSA Insd)
(Acquired 10/20/99, Cost $7,623,805) (g) (h).... 7.607 05/15/14 8,174,025
6,250 Lower CO Riv Auth TX Rev Rfdg Ser A (FSA Insd)
(Acquired 10/20/99, Cost $6,312,134) (g) (h).... 7.607 05/15/15 6,811,687
3,250 Lower CO Riv Auth TX Rev Rfdg Ser A (FSA Insd)
(Acquired 10/20/99, Cost $3,254,875) (g) (h).... 7.607 05/15/16 3,543,182
625 Lufkin, TX Hlth Fac Dev Corp Hlth Sys Rev
Memorial Hlth Sys East TX (d)................... 5.500 02/15/37 626,300
2,000 Metropolitan Hlth Fac Dev Corp TX Wilson N Jones
Mem Hosp Proj................................... 7.200 01/01/21 2,055,840
2,200 Tarrant Cnty, TX Cultural Ed Fac Fin Corp
Retirement Fac C C Young Mem Hom Proj........... 5.750 02/15/25 2,181,960
1,500 Tarrant Cnty, TX Cultural Ed Fac Fin Corp
Retirement Fac C C Young Mem Hom Proj........... 5.750 02/15/29 1,477,230
500 Tarrant Cnty, TX Cultural Ed Fac Fin Corp Fac
Retirement Buckner Retirement Svc Inc Proj...... 5.000 11/15/17 526,290
1,500 Tarrant Cnty, TX Cultural Ed Fac Fin Corp
Retirement Fac Buckingham Sr Living Cmnty Inc... 5.750 11/15/37 1,461,150
5,000 Tarrant Cnty, TX Cultural Ed Fac Fin Corp
Retirement Fac Buckner Retirement Svcs Inc
Proj............................................ 5.250 11/15/37 5,100,100
975 Texas St Dept Hsg & Cmnty Affairs Home Mtg Rev
Coll Rfdg Ser C-2 (GNMA Collateralized) (AMT)
(h)............................................. 9.160 07/02/24 1,031,696
------------
60,251,834
------------
UTAH 1.9%
1,340 Hildale, UT Elec Rev Gas Turbine Elec Fac Proj
(j)............................................. 7.800 09/01/15 412,050
1,000 Hildale, UT Elec Rev Gas Turbine Elec Fac Proj
(j)............................................. 7.800 09/01/25 307,500
1,000 Hildale, UT Elec Rev Gas Turbine Elec Fac Proj
(j)............................................. 8.000 09/01/20 307,500
11,000 Salt Lake City, UT Hosp Rev IHC Hosp Inc Rfdg... 6.150 02/15/12 11,825,330
------------
12,852,380
------------
</Table>
26 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- --------------------------------------------------------------------------------------------
VERMONT 0.3%
$1,000 Vermont Econ Dev Auth Mtg Wake Robin Corp Proj
Ser A........................................... 5.375% 05/01/36 $ 957,070
1,000 Vermont Ed & Hlth Bldg Fin Agy Rev Bennington
College Proj.................................... 6.625 10/01/29 1,026,740
------------
1,983,810
------------
VIRGINIA 1.7%
1,300 Lexington, VA Indl Dev Auth Res Care Fac Rev Mtg
Kendal at Lexington Ser A....................... 5.500 01/01/37 1,239,979
1,000 Peninsula Town Ctr Cmnty Dev Auth VA Spl
Oblig........................................... 6.450 09/01/37 1,035,120
4,000 Virginia St Hsg Auth Dev Auth Ser B (AMT) (a)... 4.850 01/01/36 3,830,700
5,840 Virginia St Hsg Auth Dev Auth Rental Hsg Ser D
(AMT) (a)....................................... 4.650 01/01/39 5,435,405
------------
11,541,204
------------
WASHINGTON 2.2%
8,000 King Cnty, WA Sch Dist No 411 (FGIC Insd) (b)... 5.250 12/01/20 8,542,560
1,440 Skagit Cnty, WA Pub Hosp Dist No 001 Rev Skagit
VY Hosp......................................... 5.750 12/01/32 1,490,904
5,000 Washington St Hsg Fin Commn Single Family Prog
Ser 2A (GNMA Collateralized) (AMT).............. 4.700 12/01/38 4,685,400
------------
14,718,864
------------
WEST VIRGINIA 0.0%
250 Ohio Cnty, W VA Cnty Commn Tax Increment Rev
Fort Henry Centre Fin Dist Ser A................ 5.850 06/01/34 249,808
------------
WISCONSIN 2.7%
4,000 Wisconsin Hsg & Econ Dev Auth Home Ownership Rev
Ser A (a)....................................... 4.800 03/01/38 3,807,720
6,000 Wisconsin Hsg & Econ Dev Auth Home Ownership Rev
Ser C (AMT) (a)................................. 5.125 09/01/28 6,037,890
8,000 Wisconsin Hsg & Econ Dev Auth Home Ownership Rev
Ser C (AMT) (a)................................. 5.200 03/01/38 8,050,520
------------
17,896,130
------------
TOTAL INVESTMENTS 114.2%
(Cost $748,288,630)........................................................ 758,913,607
LIABILITY FOR FLOATING RATE NOTE OBLIGATIONS RELATED TO SECURITIES HELD (14.6%)
(Cost $97,050,000)
(97,050) Notes with interest rates ranging from 3.88% to 4.00% at September
30, 2007 and contractual maturities of collateral ranging from 2015
to 2041 (See Note 1) (k)........................................... (97,050,000)
------------
</Table>
See Notes to Financial Statements 27
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION VALUE
- --------------------------------------------------------------------------------------------
TOTAL NET INVESTMENTS $99.6%
(Cost $651,238,630)........................................................ $661,863,607
OTHER ASSETS IN EXCESS OF LIABILITIES 0.4%.................................. 2,793,673
------------
NET ASSETS 100.0%............................................................ $664,657,280
============
</Table>
Percentages are calculated as a percentage of net assets.
* Zero coupon bond
(a) Underlying security related to Inverse Floaters entered into by the Fund.
See Notes 1 and 6.B.
(b) The Fund owns 100% of the outstanding bond issuance.
(c) Escrowed to Maturity
(d) Security purchased on a when-issued or delayed delivery basis.
(e) 144A-Private Placement security which is exempt from registration under Rule
144A of the Securities Act of 1933, as amended. This security may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(f) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(g) This security is restricted and may be resold only in transactions exempt
from registration which are normally those transactions with qualified
institutional buyers. Restricted securities comprise 3.6% of net assets.
(h) Inverse Floating Rate
(i) All or portion of this security has been physically segregated in connection
with open futures contracts.
(j) Non-income producing security.
(k) Floating rate notes. The interest rates shown reflect rates in effect at
September 30, 2007.
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.
Radian--Radian Asset Assurance
XLCA--XL Capital Assurance Inc.
28 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
FUTURES CONTRACTS OUTSTANDING AS OF SEPTEMBER 30, 2007:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
SHORT CONTRACTS:
U.S. Treasury Bond Futures, December 2007 (Current Notional
Value of $111,344 per contract)........................... 238 $209,821
---- --------
</Table>
See Notes to Financial Statements 29
VAN KAMPEN MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
September 30, 2007
<Table>
ASSETS:
Total Investments (Cost $748,288,630)....................... $758,913,607
Receivables:
Interest.................................................. 8,943,290
Fund Shares Sold.......................................... 942,594
Investments Sold.......................................... 50,000
Other....................................................... 248,373
------------
Total Assets............................................ 769,097,864
------------
LIABILITIES:
Floating Rate Note Obligations.............................. 97,050,000
Payables:
Investments Purchased..................................... 2,508,712
Fund Shares Repurchased................................... 1,730,999
Custodian Bank............................................ 1,536,080
Income Distributions...................................... 618,421
Investment Advisory Fee................................... 266,461
Distributor and Affiliates................................ 223,569
Trustees' Deferred Compensation and Retirement Plans........ 324,249
Accrued Expenses............................................ 182,093
------------
Total Liabilities....................................... 104,440,584
------------
NET ASSETS.................................................. $664,657,280
============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $687,071,234
Net Unrealized Appreciation................................. 10,834,798
Accumulated Undistributed Net Investment income............. 3,475,267
Accumulated Net Realized Loss............................... (36,724,019)
------------
NET ASSETS.................................................. $664,657,280
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $625,933,640 and 43,815,102 shares of
beneficial interest issued and outstanding)............. $ 14.29
Maximum sales charge (4.75%* of offering price)......... 0.71
------------
Maximum offering price to public........................ $ 15.00
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $20,941,784 and 1,468,051 shares of
beneficial interest issued and outstanding)............. $ 14.27
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $17,389,785 and 1,221,001 shares of
beneficial interest issued and outstanding)............. $ 14.24
============
Class I Shares:
Net asset value and offering price per share (Based on
net assets of $392,071 and 27,444 shares of beneficial
interest issued and outstanding)........................ $ 14.29
============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
30 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended September 30, 2007
<Table>
INVESTMENT INCOME:
Interest.................................................... $ 36,811,207
------------
EXPENSES:
Interest and Residual Trust Expenses........................ 2,766,200
Investment Advisory Fee..................................... 3,266,018
Distribution (12b-1) and Service Fees
Class A................................................... 1,561,700
Class B................................................... 258,123
Class C................................................... 160,732
Transfer Agent Fees......................................... 374,072
Accounting and Administrative Expenses...................... 149,789
Professional Fees........................................... 106,216
Reports to Shareholders..................................... 103,292
Registration Fees........................................... 56,446
Trustees' Fees and Related Expenses......................... 42,365
Custody..................................................... 37,992
Other....................................................... 36,494
------------
Total Expenses.......................................... 8,919,439
Less Credits Earned on Cash Balances.................... 23,064
------------
Net Expenses............................................ 8,896,375
------------
NET INVESTMENT INCOME....................................... $ 27,914,832
============
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ (1,881,199)
Futures................................................... (2,659,055)
------------
Net Realized Loss........................................... (4,540,254)
------------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 30,434,316
------------
End of the Period:
Investments............................................. 10,624,977
Futures................................................. 209,821
------------
10,834,798
------------
Net Unrealized Depreciation During the Period............... (19,599,518)
------------
NET REALIZED AND UNREALIZED LOSS............................ $(24,139,772)
============
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 3,775,060
============
</Table>
See Notes to Financial Statements 31
VAN KAMPEN MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets
<Table>
<Caption>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2007 SEPTEMBER 30, 2006
----------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.............................. $ 27,914,832 $ 27,665,939
Net Realized Loss.................................. (4,540,254) (5,627,230)
Net Unrealized Appreciation/Depreciation During the
Period........................................... (19,599,518) 11,427,554
------------- ------------
Change in Net Assets from Operations............... 3,775,060 33,466,263
------------- ------------
Distributions from Net Investment Income:
Class A Shares................................... (27,862,124) (26,130,470)
Class B Shares................................... (951,197) (1,254,229)
Class C Shares................................... (595,050) (498,465)
Class I Shares................................... (53,788) (60,090)
------------- ------------
Total Distributions................................ (29,462,159) (27,943,254)
------------- ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES....................................... (25,687,099) 5,523,009
------------- ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold.......................... 128,071,880 86,101,699
Net Asset Value of Shares Issued Through Dividend
Reinvestment..................................... 21,913,353 19,662,764
Cost of Shares Repurchased......................... (118,477,242) (91,989,700)
------------- ------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS..................................... 31,507,991 13,774,763
------------- ------------
TOTAL INCREASE IN NET ASSETS....................... 5,820,892 19,297,772
NET ASSETS:
Beginning of the Period............................ 658,836,388 639,538,616
------------- ------------
End of the Period (Including accumulated
undistributed net investment income of $3,475,267
and $5,044,228, respectively).................... $ 664,657,280 $658,836,388
============= ============
</Table>
32 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS continued
Statement of Cash Flows
For the Year Ended September 30, 2007
<Table>
CHANGE IN NET ASSETS FROM OPERATIONS........................ $ 3,775,060
-------------
Adjustments to Reconcile the Change in Net Assets from
Operations to Net Cash Provided by Operating Activities:
Purchases of Investments.................................. (293,350,366)
Proceeds from Sales/Maturities of Investments............. 203,214,925
Net Sales of Short-Term Investments....................... 5,000,000
Amortization of Premium................................... 1,838,933
Accretion of Discount..................................... (2,212,051)
Net Realized Loss on Investments.......................... 1,881,199
Net Change in Unrealized Depreciation on Investments...... 19,858,151
Decrease in Interest Receivables and Other Assets......... (658,293)
Decrease in Receivable for Investments Sold............... 1,873,667
Decrease in Variation Margin on Futures................... 3,281
Increase in Investments Purchased Payable................. 1,011,903
Increase in Accrued Expenses and Other Payables........... 37,753
-------------
Total Adjustments....................................... (61,500,898)
-------------
NET CASH PROVIDED BY OPERATING ACTIVITIES................... (57,725,838)
-------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Shares Sold................................. 127,957,977
Repurchased Shares........................................ (117,913,039)
Dividends Paid (net of reinvested dividends of
$21,913,353)............................................ (7,607,742)
Proceeds from Floating Rate Note Obligations.............. 52,960,000
-------------
NET CASH PROVIDED BY FINANCING ACTIVITIES............... 55,397,196
-------------
NET DECREASE IN CASH FOR THE PERIOD..................... (2,328,642)
Cash at Beginning of Period................................. 792,562
-------------
Cash at End of Period....................................... $ (1,536,080)
=============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Year for Interest...................... $ 2,766,200
=============
</Table>
See Notes to Financial Statements 33
VAN KAMPEN MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS A SHARES ------------------------------------------
2007 2006 2005 2004 2003
------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD...... $14.84 $14.71 $14.81 $14.84 $15.03
------ ------ ------ ------ ------
Net Investment Income (a)................... .62 .64 .64 .66 .67
Net Realized and Unrealized Gain/Loss....... (.52) .14 (.09) (.05) (.19)
------ ------ ------ ------ ------
Total from Investment Operations.............. .10 .78 .55 .61 .48
Less Distributions from Net Investment
Income...................................... .65 .65 .65 .64 .67
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD............ $14.29 $14.84 $14.71 $14.81 $14.84
====== ====== ====== ====== ======
Total Return (b).............................. .66% 5.46% 3.78% 4.20% 3.31%
Net Assets at End of the Period (In
millions)................................... $625.9 $613.6 $587.6 $609.4 $658.5
Ratio of Expenses to Average Net Assets....... 1.28% 1.11% 1.04% .98% .92%
Ratio of Net Investment Income to Average Net
Assets...................................... 4.21% 4.40% 4.35% 4.46% 4.53%
Portfolio Turnover............................ 28% 16% 30% 11% 43%
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses)................................... .87% .89% .88% .89% .88%
</Table>
(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 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.
34 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS B SHARES ------------------------------------------
2007 2006 2005 2004 2003
------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD...... $14.82 $14.69 $14.79 $14.82 $15.02
------ ------ ------ ------ ------
Net Investment Income (a)................... .51 .53 .53 .55 .56
Net Realized and Unrealized Gain/Loss....... (.52) .14 (.09) (.05) (.20)
------ ------ ------ ------ ------
Total from Investment Operations.............. (.01) .67 .44 .50 .36
Less Distributions from Net Investment
Income...................................... .54 .54 .54 .53 .56
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD............ $14.27 $14.82 $14.69 $14.79 $14.82
====== ====== ====== ====== ======
Total Return (b).............................. -.09% 4.69% 3.03% 3.41% 2.48%
Net Assets at End of the Period (In
millions)................................... $ 20.9 $ 29.6 $ 38.1 $ 48.8 $ 58.4
Ratio of Expenses to Average Net Assets....... 2.03% 1.86% 1.79% 1.73% 1.67%
Ratio of Net Investment Income to Average Net
Assets...................................... 3.45% 3.64% 3.60% 3.71% 3.78%
Portfolio Turnover............................ 28% 16% 30% 11% 43%
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses)................................... 1.62% 1.64% 1.63% 1.64% 1.63%
</Table>
(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.
See Notes to Financial Statements 35
VAN KAMPEN MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS C SHARES ------------------------------------------
2007 2006 2005 2004 2003
------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD...... $14.79 $14.67 $14.77 $14.80 $15.00
------ ------ ------ ------ ------
Net Investment Income (a)................... .50 .53 .53 .55 .56
Net Realized and Unrealized Gain/Loss....... (.51) .13 (.09) (.05) (.20)
------ ------ ------ ------ ------
Total from Investment Operations.............. (.01) .66 .44 .50 .36
Less Distributions from Net Investment
Income...................................... .54 .54 .54 .53 .56
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD............ $14.24 $14.79 $14.67 $14.77 $14.80
====== ====== ====== ====== ======
Total Return (b).............................. -.10% 4.62% 3.03% 3.43% 2.48%
Net Assets at End of the Period (In
millions)................................... $ 17.4 $ 14.3 $ 12.5 $ 13.7 $ 17.0
Ratio of Expenses to Average Net Assets....... 2.04% 1.86% 1.79% 1.73% 1.67%
Ratio of Net Investment Income to Average Net
Assets...................................... 3.46% 3.65% 3.60% 3.71% 3.78%
Portfolio Turnover............................ 28% 16% 30% 11% 43%
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses)................................... 1.62% 1.64% 1.63% 1.64% 1.63%
</Table>
(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.
36 See Notes to Financial Statements
VAN KAMPEN MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED AUGUST 12, 2005
SEPTEMBER 30, (COMMENCEMENT OF
CLASS I SHARES ---------------- OPERATIONS) TO
2007 2006 SEPTEMBER 30, 2005
--------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD............. $14.83 $14.71 $14.71
------ ------ ------
Net Investment Income (a).......................... .65 .68 .09
Net Realized and Unrealized Gain/Loss.............. (.50) .13 -0-**
------ ------ ------
Total from Investment Operations..................... .15 .81 .09
Less Distributions from Net Investment Income........ .69 .69 .09
------ ------ ------
NET ASSET VALUE, END OF THE PERIOD................... $14.29 $14.83 $14.71
====== ====== ======
Total Return (b)..................................... .98% 5.65% .60%*
Net Assets at End of the Period (In millions)........ $ 0.4 $ 1.4 $ 1.3
Ratio of Expenses to Average Net Assets.............. 1.03% .86% .82%
Ratio of Net Investment Income to Average Net
Assets............................................. 4.42% 4.67% 4.56%
Portfolio Turnover................................... 28% 16% 30%
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net Assets (Excluding
Interest and Residual Trust Expenses).............. .62% .64% .66%
</Table>
* Non-Annualized
** Amount is less than $.01.
(a) Based on average shares outstanding.
(b) 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.
See Notes to Financial Statements 37
VAN KAMPEN MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007
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.
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 September 30, 2007, the Fund had $2,508,712 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
38
VAN KAMPEN MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
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, 2007, the Fund had an accumulated capital loss
carryforward for tax purposes of $32,062,970, which will expire according to the
following schedule.
<Table>
<Caption>
AMOUNT EXPIRATION
$ 4,180,889................................................. September 30, 2008
9,728,055................................................. September 30, 2009
7,248,633................................................. September 30, 2010
10,905,393................................................. September 30, 2015
</Table>
At September 30, 2007, the cost and related gross unrealized appreciation
and depreciation are as follows:
<Table>
Cost of investments for tax purposes........................ $651,399,260
============
Gross tax unrealized appreciation........................... 21,603,609
Gross tax unrealized depreciation........................... (11,139,262)
------------
Net tax unrealized appreciation investments................. $ 10,464,347
============
</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 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 years ended September 30,
2007 and 2006 was as follows:
<Table>
<Caption>
2007 2006
Distributions paid from:
Ordinary income........................................... $ 35,564 $ 105,229
Tax-exempt income......................................... 29,485,531 27,858,452
----------- -----------
$29,521,095 $27,963,681
=========== ===========
</Table>
Permanent differences, primarily due to the reclassification of accretion
adjustments, resulted in the following reclassifications among the Fund's
components of net assets at September 30, 2007:
<Table>
<Caption>
ACCUMULATED UNDISTRIBUTED ACCUMULATED NET
NET INVESTMENT INCOME REALIZED LOSS CAPITAL
$(21,634) $21,634 $-0-
</Table>
39
VAN KAMPEN MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
As of September 30, 2007, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed ordinary income............................... $ 8,822
Undistributed tax-exempt income............................. 5,695,373
</Table>
Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of post October losses of $4,498,516 which are
not recognized for tax purposes until the first day of the following fiscal year
and gains or losses recognized for tax purposes on open futures transactions on
September 30, 2007.
F. EXPENSE REDUCTIONS During the year ended September 30, 2007, the Fund's
custody fee was reduced by $23,064 as a result of credits earned on cash
balances.
G. FLOATING RATE NOTE OBLIGATIONS RELATED TO SECURITIES HELD The Fund enters
into transactions in which it transfers to dealer trusts fixed rate bonds in
exchange for cash and residual interest in the dealer trusts' assets and cash
flows, which are in the form of inverse floating rate investments. The dealer
trusts fund the purchases of the fixed rate bonds by issuing floating rate notes
to third parties and allowing the Fund to retain residual interests in the
bonds. The Fund enters into shortfall agreements with the dealer trusts, which
commit the Fund to pay the dealer trusts, in certain circumstances, the
difference between the liquidation value of the fixed rate bonds held by the
dealer trusts and the liquidation value of the floating rate notes held by third
parties, as well as any shortfalls in interest cash flows. The residual
interests held by the Fund (inverse floating rate investments) include the right
of the Fund (1) to cause the holders of the floating rate notes to tender their
notes at par at the next interest rate reset date, and (2) to transfer the
municipal bond from the dealer trusts to the Fund, thereby collapsing the dealer
trusts. The Fund accounts for the transfer of bonds to the dealer trusts as
secured borrowings, with the securities transferred remaining in the Fund's
investments assets, and the related floating rate notes reflected as Fund
liabilities under the caption "Floating Rate Note Obligations" on the Statement
of Assets and Liabilities. The Fund records the interest income from the fixed
rate bonds under the caption "Interest" and records the expenses related to
floating rate note obligations and any administrative expenses of the dealer
trusts under the caption "Interest and Residual Trust Expenses" in the Fund's
Statement of Operations. The notes issued by the dealer trust have interest
rates that reset weekly and the floating rate note holders have the option to
tender their notes to the dealer trusts for redemption at par at each reset
date. At September 30, 2007, Fund investments with a value of $159,849,781 are
held by the dealer trusts and serve as collateral for the $97,050,000 in
floating rate notes outstanding at that date. Contractual maturities of the
floating rate notes and interest rates in effect at September 30, 2007 are
presented on the Portfolio of Investments. The average floating rate notes
outstanding and average annual interest and fee rate related to residual
interests during the fiscal year ended September 30, 2007 were $69,049,231 and
4.01%, respectively.
40
VAN KAMPEN MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 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.......................................... .50%
Over $500 million........................................... .45%
</Table>
For the year ended September 30, 2007, the Fund recognized expenses of
approximately $18,000 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 year ended September 30,
2007, the Fund recognized expenses of approximately $91,500 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 "Professional Fees" on the Statement of Operations. Services provided
pursuant to the Accounting Services and CCO Employment agreement are reported as
part of "Accounting and Administrative 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 year ended
September 30, 2007, the Fund recognized expenses of approximately $302,800
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 $218,012 are included in
"Other" assets on the Statements of Assets and Liabilities at September 30,
2007. 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 year ended September 30, 2007, Van Kampen as Distributor for the
Fund, received commissions on sales of the Fund's Class A Shares of
approximately $209,700 and contingent deferred sales charge (CDSC) on redeemed
shares of approximately $57,800. Sales charges do not represent expenses of the
Fund.
41
VAN KAMPEN MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
3. CAPITAL TRANSACTIONS
For the years ended September 30, 2007 and 2006, transactions were as follows:
<Table>
<Caption>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2007 SEPTEMBER 30, 2006
--------------------------- --------------------------
SHARES VALUE SHARES VALUE
Sales:
Class A.......................... 7,958,556 $ 116,581,855 5,173,374 $ 75,736,363
Class B.......................... 232,994 3,415,117 308,856 4,508,963
Class C.......................... 529,298 7,705,059 366,639 5,340,515
Class I.......................... 25,014 369,849 35,407 515,858
---------- ------------- ---------- ------------
Total Sales........................ 8,745,862 $ 128,071,880 5,884,276 $ 86,101,699
========== ============= ========== ============
Dividend Reinvestment:
Class A.......................... 1,420,178 $ 20,771,004 1,258,124 $ 18,406,616
Class B.......................... 45,058 659,229 57,246 835,581
Class C.......................... 29,448 429,344 24,712 360,477
Class I.......................... 3,660 53,776 4,107 60,090
---------- ------------- ---------- ------------
Total Dividend Reinvestment........ 1,498,344 $ 21,913,353 1,344,189 $ 19,662,764
========== ============= ========== ============
Repurchases:
Class A.......................... (6,919,500) $(100,953,481) (5,014,627) $(73,329,393)
Class B.......................... (805,247) (11,759,781) (965,243) (14,079,445)
Class C.......................... (302,403) (4,386,869) (281,046) (4,104,067)
Class I.......................... (94,713) (1,377,111) (32,456) (476,795)
---------- ------------- ---------- ------------
Total Repurchases.................. (8,121,863) $(118,477,242) (6,293,372) $(91,989,700)
========== ============= ========== ============
</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 and allocated on a pro rata basis to
each class of shares. For the year ended September 30, 2007, the Fund received
redemption fees of approximately $2,200, which are reported as part of "Cost of
Shares Repurchased" on the Statement of Changes in Net Assets. The per share
impact from redemption fees paid to the Fund was less than $0.01.
5. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $293,350,366 and $203,214,925,
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
42
VAN KAMPEN MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
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 these instances,
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 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 year ended September 30, 2007,
were as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at September 30, 2006........................... 35
Futures Opened.............................................. 1,339
Futures Closed.............................................. (1,136)
------
Outstanding at September 30, 2007........................... 238
======
</Table>
B. INVERSE FLOATING RATE INVESTMENTS The Fund may invest a portion of its assets
in inverse floating rate instruments, either through outright purchases of
inverse floating rate securities or through the transfer of bonds to a dealer
trust in exchange for cash and residual interests in the dealer trust. These
investments are typically used by the Fund in seeking to enhance the yield of
the portfolio. These instruments typically involve greater risks than a fixed
rate municipal bond. In particular, these instruments are acquired through
leverage or may have leverage embedded in them and therefore involve many of the
risks associated with leverage. Leverage is a speculative technique that my
expose the Fund to greater risk and increased costs. Leverage may cause the
Fund's net asset value to be more volatile than if it had not been leveraged
because leverage tends to magnify the effect of any increases or decreases in
the value of the Fund's portfolio securities. The use of leverage may also cause
the Fund to liquidate portfolio positions when it may not be advantageous to do
so in order to satisfy its obligations with respect to inverse floating rate
instruments.
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,
43
VAN KAMPEN MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
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 $2,488,400 and $226,100
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. ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation 48, Accounting for Uncertainty in Income Taxes--an interpretation
of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for income taxes
by prescribing the minimum recognition threshold a tax position must meet before
being recognized in the financial statements. FIN 48 is effective for the fiscal
years beginning after December 15, 2006 and is to be applied to all open tax
years as of the effective date. Recent SEC guidance allows implementing FIN 48
in the fund NAV calculations as late as the funds last NAV calculation in the
first required financial statement period. As a result, the Fund will
incorporate FIN 48 in its semi annual report on March 31, 2008. The impact to
the Fund's financial statements, if any, is currently being assessed.
In addition, in September 2006, Statement of Financial Accounting Standards
No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for
fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 will have on the Fund's financial statement disclosures.
44
VAN KAMPEN MUNICIPAL INCOME FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of Van Kampen Municipal Income Fund
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Van Kampen Municipal Income Fund (one
of the Funds constituting the Van Kampen Tax Free Trust (the "Fund")) as of
September 30, 2007, and the related statements of operations and cash flows for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for the each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
We were not engaged to perform an audit of the Fund's internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of September 30, 2007, by correspondence with the
custodian and brokers or by other appropriate auditing procedures where replies
from brokers were not received. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Van Kampen Municipal Income Fund of the Van Kampen Tax Free Trust at September
30, 2007, the results of its operations and its cash flows for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and its financial highlights for each of the five years in the
period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Chicago, Illinois
November 16, 2007
45
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
DENNIS SHEA
Vice President
J. DAVID GERMANY
Vice President
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
STUART N. SCHULDT
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
522 Fifth Avenue
New York, New York 10036
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
One Parkview Plaza - Suite 100
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
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
For federal income tax purposes, the following information is furnished with
respect to the distributions paid by the Fund during its taxable year ended
September 30, 2007. The Fund designated 99.9% of the income distributions as a
tax-exempt income distribution. In January, the Fund provides tax information
to shareholders for the preceding calendar year
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
46
VAN KAMPEN MUNICIPAL INCOME FUND
TRUSTEES AND OFFICERS
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees and the Fund's officers appointed by the Board of
Trustees. The tables below list the trustees and executive officers of the Fund
and their principal occupations during the last five years, other directorships
held by trustees and their affiliations, if any, with Van Kampen Investments,
the Adviser, the Distributor, Van Kampen Advisors Inc., Van Kampen Exchange
Corp. and Investor Services. The term "Fund Complex" includes each of the
investment companies advised by the Adviser as of the date of this Annual
Report. Trustees serve until reaching their retirement age or until their
successors are duly elected and qualified. Officers are annually elected by the
trustees.
INDEPENDENT TRUSTEES:
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (62) Trustee Trustee Chairman and Chief 73 Trustee/Director/Managing
Blistex Inc. since 2003 Executive Officer of General Partner of funds
1800 Swift Drive Blistex Inc., a consumer in the Fund Complex.
Oak Brook, IL 60523 health care products Director of the Heartland
manufacturer. Alliance, a nonprofit
organization serving
human needs based in
Chicago. Board member of
the Illinois
Manufacturers'
Association.
Jerry D. Choate (69) Trustee Trustee Prior to January 1999, 73 Trustee/Director/Managing
33971 Selva Road since 1999 Chairman and Chief General Partner of funds
Suite 130 Executive Officer of the in the Fund Complex.
Dana Point, CA 92629 Allstate Corporation Director of H&R Block,
("Allstate") and Allstate Amgen Inc., a
Insurance Company. Prior biotechnological company,
to January 1995, and Valero Energy
President and Chief Corporation, an
Executive Officer of independent refining
Allstate. Prior to August company.
1994, various management
positions at Allstate.
</Table>
47
<Table>
<Caption>
VAN KAMPEN MUNICIPAL INCOME FUND
TRUSTEES AND OFfiCERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Rod Dammeyer (67) Trustee Trustee President of CAC, L.L.C., 73 Trustee/Director/Managing
CAC, L.L.C. since 2003 a private company General Partner of funds
4350 LaJolla Village Drive offering capital in the Fund Complex.
Suite 980 investment and management Director of Quidel
San Diego, CA 92122-6223 advisory services. Corporation, Stericycle,
Inc., Ventana Medical
Systems, Inc. and Trustee
of The Scripps Research
Institute. Prior to April
2007, Director of GATX
Corporation. Prior to
April 2004, Director of
TheraSense, Inc. Prior to
January 2004, Director of
TeleTech Holdings Inc.
and Arris Group, Inc.
Linda Hutton Heagy+ (59) Trustee Trustee Managing Partner of 73 Trustee/Director/Managing
Heidrick & Struggles since 1995 Heidrick & Struggles, an General Partner of funds
233 South Wacker Drive international executive in the Fund Complex.
Suite 7000 search firm. Prior to Trustee on the University
Chicago, IL 60606 1997, Partner of Ray & of Chicago Hospitals
Berndtson, Inc., an Board, Vice Chair of the
executive recruiting Board of the YMCA of
firm. Prior to 1995, Metropolitan Chicago and
Executive Vice President a member of the Women's
of ABN AMRO, N.A., a bank Board of the University
holding company. Prior to of Chicago.
1990, Executive Vice
President of The Exchange
National Bank.
</Table>
48
<Table>
<Caption>
VAN KAMPEN MUNICIPAL INCOME FUND
TRUSTEES AND OFfiCERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
R. Craig Kennedy (55) Trustee Trustee Director and President of 73 Trustee/Director/Managing
1744 R Street, NW since 1993 the German Marshall Fund General Partner of funds
Washington, DC 20009 of the United States, an in the Fund Complex.
independent U.S. Director of First Solar,
foundation created to Inc.
deepen understanding,
promote collaboration and
stimulate exchanges of
practical experience
between Americans and
Europeans. Formerly,
advisor to the Dennis
Trading Group Inc., a
managed futures and
option company that
invests money for
individuals and
institutions. Prior to
1992, President and Chief
Executive Officer,
Director and member of
the Investment Committee
of the Joyce Foundation,
a private foundation.
Howard J Kerr (72) Trustee Trustee Prior to 1998, President 73 Trustee/Director/Managing
14 Huron Trace since 2003 and Chief Executive General Partner of funds
Galena, IL 61036 Officer of Pocklington in the Fund Complex.
Corporation, Inc., an Director of the Lake
investment holding Forest Bank & Trust.
company. Director of the Marrow
Foundation.
Jack E. Nelson (71) Trustee Trustee President of Nelson 73 Trustee/Director/Managing
423 Country Club Drive since 1990 Investment Planning General Partner of funds
Winter Park, FL 32789 Services, Inc., a in the Fund Complex.
financial planning
company and registered
investment adviser in the
State of Florida.
President of Nelson Ivest
Brokerage Services Inc.,
a member of FINRA,
Securities Investors
Protection Corp. and the
Municipal Securities
Rulemaking Board.
President of Nelson Sales
and Services Corporation,
a marketing and services
company to support
affiliated companies.
</Table>
49
<Table>
<Caption>
VAN KAMPEN MUNICIPAL INCOME FUND
TRUSTEES AND OFfiCERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Hugo F. Sonnenschein (67) Trustee Trustee President Emeritus and 73 Trustee/Director/Managing
1126 E. 59th Street since 2003 Honorary Trustee of the General Partner of funds
Chicago, IL 60637 University of Chicago and in the Fund Complex.
the Adam Smith Trustee of the University
Distinguished Service of Rochester and a member
Professor in the of its investment
Department of Economics committee. Member of the
at the University of National Academy of
Chicago. Prior to July Sciences, the American
2000, President of the Philosophical Society and
University of Chicago. a fellow of the American
Academy of Arts and
Sciences.
</Table>
50
<Table>
<Caption>
VAN KAMPEN MUNICIPAL INCOME FUND
TRUSTEES AND OFfiCERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Suzanne H. Woolsey, Ph.D. Trustee Trustee Chief Communications 73 Trustee/Director/Managing
(65) since 1999 Officer of the National General Partner of funds
815 Cumberstone Road Academy of in the Fund Complex.
Harwood, MD 20776 Sciences/National Director of Fluor Corp.,
Research Council, an an engineering,
independent, federally procurement and
chartered policy construction
institution, from 2001 to organization, since
November 2003 and Chief January 2004. Director of
Operating Officer from Intelligent Medical
1993 to 2001. Prior to Devices, Inc., a symptom
1993, Executive Director based diagnostic tool for
of the Commission on physicians and clinical
Behavioral and Social labs. Director of the
Sciences and Education at Institute for Defense
the National Academy of Analyses, a federally
Sciences/National funded research and
Research Council. From development center,
1980 through 1989, Director of the German
Partner of Coopers & Marshall Fund of the
Lybrand. United States, Director
of the Rocky Mountain
Institute of Technology
and the Colorado College.
</Table>
51
VAN KAMPEN MUNICIPAL INCOME FUND
TRUSTEES AND OFFICERS continued
INTERESTED TRUSTEE:*
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Wayne W. Whalen* (68) Trustee Trustee Partner in the law firm 73 Trustee/Director/Managing
333 West Wacker Drive since 1990 of Skadden, Arps, Slate, General Partner of funds
Chicago, IL 60606 Meagher & Flom LLP, legal in the Fund Complex.
counsel to funds in the Director of the Abraham
Fund Complex. Lincoln Presidential
Library Foundation.
</Table>
+ As indicated above, Ms. Heagy is an employee of Heidrick and Struggles, an
international executive search firm ("Heidrick"). Heidrick has been (and may
continue to be) engaged by Morgan Stanley from time to time to perform
executive searches. Such searches have been unrelated to Van Kampen's or
Morgan Stanley's asset management businesses and have been done by
professionals at Heidrick without any involvement by Ms. Heagy. Ethical wall
procedures exist to ensure that Ms. Heagy will not have any involvement with
any searches performed by Heidrick for Morgan Stanley. Ms. Heagy does not
receive any compensation, directly or indirectly, for searches performed by
Heidrick for Morgan Stanley. Ms. Heagy does own common shares of Heidrick
(representing less than 1% of Heidrick's outstanding common shares).
* Mr. Whalen is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act) of certain funds in the Fund Complex by reason of he and
his firm currently providing legal services as legal counsel to such funds
in the Fund Complex.
52
VAN KAMPEN MUNICIPAL INCOME FUND
TRUSTEES AND OFFICERS continued
OFFICERS:
<Table>
<Caption>
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Ronald E. Robison (68) President and Officer President of funds in the Fund Complex since September 2005
522 Fifth Avenue Principal Executive since 2003 and Principal Executive Officer of funds in the Fund Complex
New York, NY 10036 Officer since May 2003. Managing Director of Van Kampen Advisors
Inc. since June 2003. Director of Investor Services since
September 2002. Director of the Adviser, Van Kampen
Investments and Van Kampen Exchange Corp. since January
2005. Managing Director of Morgan Stanley and Morgan Stanley
& Co. Incorporated. Managing Director and Director of Morgan
Stanley Investment Management Inc. Chief Administrative
Officer, Managing Director and Director of Morgan Stanley
Investment Advisors Inc. and Morgan Stanley Services Company
Inc. Managing Director and Director of Morgan Stanley
Distributors Inc. and Morgan Stanley Distribution Inc. Chief
Executive Officer and Director of Morgan Stanley Trust.
Executive Vice President and Principal Executive Officer of
the Institutional and Retail Morgan Stanley Funds. Director
of Morgan Stanley SICAV. Previously, Chief Global Operations
Officer of Morgan Stanley Investment Management Inc. and
Executive Vice President of funds in the Fund Complex from
May 2003 to September 2005.
Dennis Shea (54) Vice President Officer Managing Director of Morgan Stanley Investment Advisors
522 Fifth Avenue since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser
New York, NY 10036 and Van Kampen Advisors Inc. Chief Investment Officer--
Global Equity of the same entities since February 2006. Vice
President of Morgan Stanley Institutional and Retail Funds
since February 2006. Vice President of funds in the Fund
Complex since March 2006. Previously, Managing Director and
Director of Global Equity Research at Morgan Stanley from
April 2000 to February 2006.
J. David Germany (53) Vice President Officer Managing Director of Morgan Stanley Investment Advisors
20 Bank Street, since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser
Canary Wharf and Van Kampen Advisors Inc. Chief Investment Officer--
London, GBR E14 4AD Global Fixed Income of the same entities since December
2005. Managing Director and Director of Morgan Stanley
Investment Management Ltd. Director of Morgan Stanley
Investment Management (ACD) Limited since December 2003.
Vice President of Morgan Stanley Institutional and Retail
Funds since February 2006. Vice President of funds in the
Fund Complex since March 2006.
</Table>
53
<Table>
<Caption>
VAN KAMPEN MUNICIPAL INCOME FUND
TRUSTEES AND OFfiCERS continued
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Amy R. Doberman (45) Vice President Officer Managing Director and General Counsel--U.S. Investment
522 Fifth Avenue since 2004 Management; Managing Director of Morgan Stanley Investment
New York, NY 10036 Management Inc., Morgan Stanley Investment Advisors Inc. and
the Adviser. Vice President of the Morgan Stanley
Institutional and Retail Funds since July 2004 and Vice
President of funds in the Fund Complex since August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeltus Investment Management,
Inc. from January 1997 to July 2000.
Stefanie V. Chang (41) Vice President Officer Executive Director of Morgan Stanley Investment Management
522 Fifth Avenue and Secretary since 2003 Inc. Vice President and Secretary of funds in the Fund
New York, NY 10036 Complex.
John L. Sullivan (52) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza - Suite 100 Officer since 1996 August 2004. Prior to August 2004, Director and Managing
Oakbrook Terrace, IL 60181 Director of Van Kampen Investments, the Adviser, Van Kampen
Advisors Inc. and certain other subsidiaries of Van Kampen
Investments, Vice President, Chief Financial Officer and
Treasurer of funds in the Fund Complex and head of Fund
Accounting for Morgan Stanley Investment Management Inc.
Prior to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
Stuart N. Schuldt (45) Chief Financial Officer Officer Executive Director of Morgan Stanley Investment Management
1 Parkview Plaza - Suite 100 and Treasurer since 2007 Inc. since June 2007. Chief Financial Officer and Treasurer
Oakbrook Terrace, IL 60181 of funds in the Fund Complex since June 2007. Prior to June
2007, Senior Vice President of Northern Trust Company,
Treasurer and Principal Financial Officer for Northern Trust
U.S. mutual fund complex.
</Table>
54
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.
The Statement of Additional Information includes additional information
about Fund trustees and is available, without charge, upon request by
calling 1-800-847-2424.
Van Kampen Funds Inc.
1 Parkview Plaza - Suite 100
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2007 Van Kampen Funds Inc.
All rights reserved. Member FINRA/SIPC.
49, 349, 549, 649
MIFANN 11/07
(VAN KAMPEN INVESTMENTS LOGO) IU07-04621P-Y09/07
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
Intermediate Term Municipal Income Fund performed during the annual
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 September 30, 2007.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A CLASS A, B, AND C
SHARE OR CLASS I SHARE PROSPECTUS FOR THE FUND BEING OFFERED. THE
PROSPECTUSES CONTAIN INFORMATION ABOUT THE FUND, INCLUDING THE INVESTMENT
OBJECTIVES, RISKS, CHARGES AND EXPENSES. TO OBTAIN AN ADDITIONAL
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 THE FUND WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. THE FUND IS SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY
THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL DECLINE AND,
THEREFORE, THE VALUE OF THE FUND SHARES MAY 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 9/30/07
PERFORMANCE OF A $10,000 INVESTMENT
This chart compares your fund's performance to that of the Lehman Brothers
Municipal Bond Index from 9/30/97 through 9/30/07. Class A shares, adjusted for
sales charges.
(LINE GRAPH)
<Table>
<Caption>
VAN KAMPEN INTERMEDIATE TERM LEHMAN BROTHERS MUNICIPAL BOND
MUNICIPAL INCOME FUND INDEX
---------------------------- ------------------------------
9/97 9524 10000
9753 10271
9884 10390
10027 10548
9/98 10275 10871
10335 10937
10426 11034
10296 10839
9/99 10265 10796
10173 10712
10298 11025
10466 11192
9/00 10689 11462
10836 11964
11109 12229
11180 12309
9/01 11458 12654
11385 12577
11479 12695
11912 13160
9/02 12430 13785
12435 13785
12557 13950
12792 14310
9/03 12843 14321
13022 14517
13145 14768
12927 14419
9/04 13337 14980
13494 15168
13444 15162
13789 15606
9/05 13778 15587
13873 15701
13900 15739
13902 15744
9/06 14317 16281
14440 16461
14537 16594
14471 16484
9/07 14694 16784
</Table>
<Table>
<Caption>
I SHARES
A SHARES B SHARES C SHARES SINCE
since 5/28/93 since 5/28/93 since 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 CHARGES CHARGES CHARGES CHARGES CHARGES CHARGES
Since Inception 5.10% 4.74% 4.67% 4.67% 4.14% 4.14% 3.49%
10-year 4.43 3.92 3.96 3.96 3.67 3.67 --
5-year 3.40 2.40 3.26 3.00 2.68 2.68 --
1-year 2.63 -2.22 2.59 -1.37 1.88 0.89 2.98
- -------------------------------------------------------------------------------------------------------
SEC 30-day Yield 3.29% 3.47% 2.71% 3.70%
- -------------------------------------------------------------------------------------------------------
Unsubsidized
SEC 30-day Yield 3.20% 3.37% 2.61% 3.60%
</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 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 eight 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
1
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 30-day yield is a calculation for determining the amount of
portfolio income, excluding non-income items as prescribed by the SEC. The
unsubsidized SEC 30-day 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.
2
Fund Report
FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2007
MARKET CONDITIONS
Strong fundamental and technical factors supported the municipal bond market
throughout much of the reporting period, helping it to perform well through the
second quarter of 2007. In July, however, contagion from the troubled subprime
mortgage sector led to an increasingly illiquid and volatile market, and a
flight to quality that led Treasury bonds to outperform all other sectors of the
fixed income market, including both investment grade and below investment grade
municipal bonds.
Up until that time, demand for municipal bonds had been quite strong as
institutional investors and non-traditional buyers such as hedge funds and
arbitrage investors continued to flock to the market, which helped to keep
credit spreads tight. As market liquidity began to dry up, however,
institutional demand fell off and refunding activity, which had been robust,
virtually halted. Although the supply of municipal bonds was declining as well,
the decrease in demand put significant pressure on prices at the same time that
the Treasury market was rallying. As a result, credit spreads widened, with the
most significant widening occurring in the lower-rated segments of the market,
where spreads on municipal bonds rated BBB and below (including non-rated bonds)
widened by 40 to 50 basis points.
In mid-September, following the 50 basis point reduction in the target federal
funds rate by the Federal Open Market Committee (the "Fed"), the market began to
stabilize, liquidity improved, and municipal credit spreads began to tighten
again. Despite these improvements, however, municipal bonds underperformed
Treasuries for the overall reporting period.
Overall, municipal bond yields ended the period higher, but most of the yield
increases occurred in the intermediate to long maturity portion of the yield
curve, while yields on the front end of the curve decreased slightly. As a
result, the municipal yield curve steepened over the course of the period, with
the differential between two-year and 30-year maturities widening to about 100
basis points.
3
PERFORMANCE ANALYSIS
All share classes of Van Kampen Intermediate Term Municipal Income Fund
underperformed the Lehman Brothers Municipal Bond Index for the 12 months ended
September 30, 2007, assuming no deduction of applicable sales charges.
TOTAL RETURNS FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2007
<Table>
<Caption>
- -------------------------------------------------------------------
LEHMAN BROTHERS
CLASS CLASS CLASS CLASS MUNICIPAL BOND
A B C I INDEX
2.63% 2.59% 1.88% 2.98% 3.09%
- -------------------------------------------------------------------
</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.
Various factors contributed to the Fund's relative underperformance for the
reporting period, one of which was its overweight versus the benchmark Lehman
Brothers Municipal Bond Index in BBB and non-rated bonds. While this position
was additive to performance for much of the period as lower rated bonds
outperformed higher quality issues, in the last few months performance of the
lower rated segment of the market suffered due to significant spread widening.
As a result, the Fund's larger weighting in lower rated, higher yielding bonds
detracted from overall performance.
The Fund's yield curve positioning, which favored the intermediate portion of
the curve, hindered performance during the period. The Fund was overweighted
versus the benchmark Lehman Brothers Municipal Bond Index in bonds with
maturities of 10 to 15 years and underweighted in bonds with maturities of less
than 10 years. This posture tempered relative returns as yields in the
intermediate part of the curve experienced greater increases than those on the
short end. An underweight to pre-refunded bonds also detracted from relative
performance. These short maturity securities performed well because they did not
experience the sell off that longer maturity bonds did when yields on the long
end of the curve rose. Therefore, while the Fund's holdings here added to
returns, their comparatively smaller weighting versus the Lehman Brothers
Municipal Bond Index diminished relative performance.
An underweight to tobacco bonds, however, was additive to performance. This
sector was the hardest hit sector of the municipal market in July and August.
Although the fundamental credit quality of tobacco bonds remained solid, the
combination of an abundant supply, the liquidity squeeze in the market, and the
flight to quality (tobacco bonds are lower-rated) caused spreads in the sector
to widen dramatically. The Fund's lower relative allocation to these bonds
helped to reduce the negative effect of spread widening on performance. The
Fund's duration (a measure of interest rate sensitivity) posture remained
neutral relative to the benchmark index and therefore, did not have a material
impact on performance.
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 9/30/07
AAA/Aaa 63.2%
AA/Aa 5.6
A/A 5.4
BBB/Baa 7.6
Non-Rated 18.2
<Caption>
TOP FIVE SECTORS AS OF 9/30/07
Public Education 14.2%
Retail Electric 11.2
General Purpose 8.8
Higher Education 7.8
Hospital 7.0
<Caption>
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 9/30/07
Pennsylvania 9.9%
Missouri 8.2
New Jersey 5.7
Illinois 5.4
California 5.3
Florida 5.2
Ohio 4.6
Colorado 4.1
Indiana 3.9
Alabama 3.7
South Carolina 3.7
Maryland 3.6
Oregon 3.6
Texas 3.2
New York 2.4
Arizona 2.4
Tennessee 2.4
New Mexico 2.3
Michigan 2.3
North Carolina 2.1
Kansas 2.1
West Virginia 1.7
Nebraska 1.5
South Dakota 1.5
Georgia 1.2
Kentucky 1.0
Washington 1.0
Virginia 1.0
Arkansas 0.9
Iowa 0.5
Wisconsin 0.5
Delaware 0.5
North Dakota 0.5
Minnesota 0.4
Connecticut 0.1
</Table>
<Table>
(continued on next page)
</Table>
5
<Table>
<Caption>
SUMMARY OF INVESTMENTS BY STATE CLASSIFICATION AS OF 9/30/07
(continued from previous page)
Montana 0.1
Massachusetts 0.0*
-----
Total Investments 98.5
Other Assets in Excess of Liabilities 1.5
-----
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. The semiannual reports and the
annual reports are filed electronically with the Securities and Exchange
Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. 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 email 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 charges on redemptions of Class B and Class C
Shares; and redemption fees; 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 4/1/07 - 9/30/07.
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 or redemption fees.
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*
-------------------------------------------------
4/1/07 9/30/07 4/1/07-9/30/07
Class A
Actual..................................... $1,000.00 $1,010.77 $ 5.24
Hypothetical............................... 1,000.00 1,019.85 5.27
(5% annual return before expenses)
Class B
Actual..................................... 1,000.00 1,010.63 5.19
Hypothetical............................... 1,000.00 1,019.90 5.22
(5% annual return before expenses)
Class C
Actual..................................... 1,000.00 1,007.13 8.91
Hypothetical............................... 1,000.00 1,016.19 8.95
(5% annual return before expenses)
Class I
Actual..................................... 1,000.00 1,012.99 3.84
Hypothetical............................... 1,000.00 1,021.26 3.85
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 1.04%, 1.03%,
1.77% and 0.76%, for Class A, B, C and I Shares, respectively, multiplied by
the average account value over the period, multiplied by 183/365 (to reflect
the one-half year period). These ratios reflect an expense waiver.
Assumes all dividends and distributions were reinvested.
9
Investment Advisory Agreement Approval
Both the Investment Company Act of 1940 and the terms of the Fund's investment
advisory agreement require that the investment advisory agreement between the
Fund and its investment adviser be approved annually both by a majority of the
Board of Trustees and by a majority of the independent trustees voting
separately.
At meetings held on April 17, 2007 and May 30, 2007, the Board of Trustees, and
the independent trustees voting separately, considered and ultimately determined
that the terms of the investment advisory agreement are fair and reasonable and
approved the continuance of the investment advisory agreement as being in the
best interests of the Fund and its shareholders. In making its determination,
the Board of Trustees considered materials that were specifically prepared by
the investment adviser at the request of the Board and Fund counsel, and by an
independent provider of investment company data contracted to assist the Board,
relating to the investment advisory agreement review process. The Board also
considered information received periodically about the portfolio, performance,
the investment strategy, portfolio management team and fees and expenses of the
Fund. The Board of Trustees considered the investment advisory agreement over a
period of several months and the trustees held sessions both with the investment
adviser and separate from the investment adviser in reviewing and considering
the investment advisory agreement.
In approving the investment advisory agreement, the Board of Trustees
considered, among other things, the nature, extent and quality of the services
provided by the investment adviser, the performance, fees and expenses of the
Fund compared to other similar funds and other products, the investment
adviser's expenses in providing the services and the profitability of the
investment adviser and its affiliated companies. The Board of Trustees
considered the extent to which any economies of scale experienced by the
investment adviser are shared with the Fund's shareholders, and the propriety of
existing and alternative breakpoints in the Fund's investment advisory fee
schedule. The Board of Trustees considered comparative advisory fees of the Fund
and other investment companies and/or other products at different asset levels,
and considered the trends in the industry versus historical and projected assets
of the Fund. The Board of Trustees evaluated other benefits the investment
adviser and its affiliates derive from their relationship with the Fund. The
Board of Trustees reviewed information about the foregoing factors and
considered changes, if any, in such information since its previous approval. The
Board of Trustees discussed the financial strength of the investment adviser and
its affiliated companies and the capability of the personnel of the investment
adviser, and specifically the strength and background of its portfolio
management personnel. The Board of Trustees reviewed the statutory and
regulatory requirements for approval and disclosure of investment advisory
agreements. The Board of Trustees, including the independent trustees,
10
evaluated all of the foregoing and does not believe any single factor or group
of factors control or dominate the review process, and, after considering all
factors together, has determined, in the exercise of its business judgment, that
approval of the investment advisory agreement is in the best interests of the
Fund and its shareholders. The following summary provides more detail on certain
matters considered but does not detail all matters considered.
Nature, Extent and Quality of the Services Provided. On a regular basis, the
Board of Trustees considers the roles and responsibilities of the investment
adviser as a whole and for those specific portfolio management, support and
trading functions servicing the Fund. The trustees discuss with the investment
adviser the resources available and used in managing the Fund. The Fund
discloses information about its portfolio management team members and their
experience in its prospectus. The trustees also discuss certain other services
which are provided on a cost-reimbursement basis by the investment adviser or
its affiliates to the Van Kampen funds including certain accounting,
administrative and legal services. The Board has determined that the nature,
extent and quality of the services provided by the investment adviser support
its decision to approve the investment advisory agreement.
Performance, Fees and Expenses of the Fund. On a regular basis, the Board of
Trustees reviews the performance, fees and expenses of the Fund compared to its
peers and to appropriate benchmarks. In addition, the Board spends more focused
time on the performance of the Fund and other funds in the Van Kampen complex,
paying specific attention to underperforming funds. The trustees discuss with
the investment adviser the performance goals and the actual results achieved in
managing the Fund. When considering a fund's performance, the trustees and the
investment adviser place emphasis on trends and longer-term returns (focusing on
one-year, three-year and five-year performance with special attention to
three-year performance) and, when a fund's weighted performance is under the
fund's benchmark, they discuss the causes and where necessary seek to make
specific changes to investment strategy or investment personnel. The Fund
discloses more information about its performance elsewhere in this report and in
the Fund's prospectus. The trustees discuss with the investment adviser the
level of advisory fees for this Fund relative to comparable funds and other
products advised by the adviser and others in the marketplace. The trustees
review not only the advisory fees but other fees and expenses (whether paid to
the adviser, its affiliates or others) and the Fund's overall expense ratio. The
Fund discloses more information about its fees and expenses in its prospectus.
The Board has determined that the performance, fees and expenses of the Fund
support its decision to approve the investment advisory agreement.
Investment Adviser's Expenses in Providing the Service and Profitability. At
least annually, the trustees review the investment adviser's expenses in
providing services to the Fund and other funds advised by the investment adviser
and the profitability of the investment adviser. These profitability reports are
put
11
together by the investment adviser with the oversight of the Board. The trustees
discuss with the investment adviser its revenues and expenses, including among
other things, revenues for advisory services, portfolio management-related
expenses, revenue sharing arrangement costs and allocated expenses both on an
aggregate basis and per fund. The Board has determined that the analysis of the
investment adviser's expenses and profitability support its decision to approve
the investment advisory agreement.
Economies of Scale. On a regular basis, the Board of Trustees considers the size
and growth prospects of the Fund and how that relates to the Fund's expense
ratio and particularly the Fund's advisory fee rate. In conjunction with its
review of the investment adviser's profitability, the trustees discuss with the
investment adviser how more (or less) assets can affect the efficiency or
effectiveness of managing the Fund's portfolio and whether the advisory fee
level is appropriate relative to current and projected asset levels and/or
whether the advisory fee structure reflects economies of scale as asset levels
change. The Board has determined that its review of the actual and potential
economies of scale of the Fund support its decision to approve the investment
advisory agreement.
Other Benefits of the Relationship. On a regular basis, the Board of Trustees
considers other benefits to the investment adviser and its affiliates derived
from its relationship with the Fund and other funds advised by the investment
adviser. These benefits include, among other things, fees for transfer agency
services provided to the funds, in certain cases research received by the
adviser generated from commission dollars spent on funds' portfolio trading, and
in certain cases distribution or service related fees related to funds' sales.
The trustees review with the investment adviser each of these arrangements and
the reasonableness of its costs relative to the services performed. The Board
has determined that the other benefits received by the investment adviser or its
affiliates support its decision to approve the investment advisory agreement.
12
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
MUNICIPAL BONDS 98.5%
ALABAMA 3.7%
$1,260 Dothan Houston Cnty, AL Arpt Auth (MBIA
Insd) (AMT) (a)............................. 5.400% 12/01/15 $ 1,325,167
1,000 Jefferson Cnty, AL Pub Bldg Auth Lease Rev
Wts (AMBAC Insd)............................ 5.125 04/01/21 1,063,910
1,500 Montgomery Cnty, AL Pub Bldg Auth Rev Wts
Fac Proj (MBIA Insd) (a).................... 5.000 03/01/23 1,569,720
------------
3,958,797
------------
ARIZONA 2.4%
1,000 Arizona St Univ Rev Sys Rfdg (AMBAC Insd)... 5.000 07/01/20 1,056,510
1,000 Maricopa Cnty, AZ Uni Sch Dist No 48
Scottsdale Sch Impt Proj Ser B (FSA Insd)
(Prerefunded @ 07/01/16).................... 4.750 07/01/23 1,069,770
390 Pima Cnty, AZ Indl Dev Auth Indl Rev Lease
Oblig Irvington Proj Tucson Rfdg Ser A (FSA
Insd)....................................... 7.250 07/15/10 400,904
------------
2,527,184
------------
ARKANSAS 0.9%
950 University of AR Rev UALR Cap Impt Ser B
(FSA Insd).................................. 4.500 12/01/19 976,695
------------
CALIFORNIA 5.3%
1,090 California Ed Fac Auth Rev Occidental
College Ser A (MBIA Insd) (a)............... 5.000 10/01/20 1,156,850
1,000 California St (AMBAC Insd) (a).............. 6.400 09/01/08 1,026,460
1,500 California St Dept Wtr Res Pwr Ser A (AMBAC
Insd) (Prerefunded @ 05/01/12).............. 5.375 05/01/18 1,633,425
565 Perris, CA Pub Fin Auth Rev Tax Alloc (a)... 4.750 10/01/13 564,118
1,100 Santa Clara, CA Elec Rev Sub Ser A (MBIA
Insd)....................................... 5.250 07/01/20 1,176,736
------------
5,557,589
------------
COLORADO 4.1%
500 Colorado Hlth Fac Auth Rev Christian Living
Cmnty Proj Ser A............................ 5.250 01/01/15 496,095
1,560 Colorado Springs, CO Util Rev Sys Sub Lien
Impt Ser A.................................. 5.000 11/15/19 1,647,032
1,000 Denver, CO City & Cnty Arpt Rev Rfdg Ser D
(FSA Insd) (AMT)............................ 5.500 11/15/12 1,064,100
1,000 Denver, CO Convention Ctr Hotel Auth Rev
Rfdg (XLCA Insd)............................ 5.250 12/01/14 1,086,140
------------
4,293,367
------------
CONNECTICUT 0.1%
115 New Haven, CT Indl Fac Rev Adj Govt Ctr
Thermal Energies (AMT)...................... 7.250 07/01/09 115,569
------------
</Table>
See Notes to Financial Statements 13
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
DELAWARE 0.5%
$ 500 New Castle Cnty, DE Rev Newark Charter Sch
Inc Proj.................................... 5.000% 09/01/22 $ 488,420
------------
FLORIDA 5.2%
1,000 Brevard Cnty, FL Sch Brd Ctf Rfdg Ser B
(FGIC Insd)................................. 5.000 07/01/20 1,045,400
1,000 Broward Cnty, FL Arpt Sys Rev Rfdg Ser E
(MBIA Insd) (AMT)........................... 5.375 10/01/13 1,023,510
500 Halifax, FL Hosp Med Ctr Rev Impt & Rfdg Ser
A........................................... 5.250 06/01/19 521,365
1,500 Orange Cnty, FL Sch Brd Ctf Ser A (AMBAC
Insd)....................................... 5.250 08/01/14 1,607,985
500 Saint Johns Cnty, FL Indl Dev Auth Hlthcare
Glenmoor Proj Ser A......................... 5.000 01/01/16 490,685
750 Seminole Tribe, FL Spl Oblig Rev Ser A
(b)......................................... 5.750 10/01/22 788,737
------------
5,477,682
------------
GEORGIA 1.2%
1,000 Atlanta, GA Tax Alloc Atlantic Sta Proj Rfdg
(AGL Insd).................................. 5.250 12/01/17 1,097,190
155 Forsyth Cnty, GA Hosp Auth Rev Antic Ctf GA
Baptist Hlthcare Sys Proj (c)............... 6.000 10/01/08 156,679
------------
1,253,869
------------
ILLINOIS 5.4%
545 Clay Cnty, IL Hosp Rev (Prerefunded @
12/01/08) (a)............................... 5.500 12/01/10 565,786
500 Hodgkins, IL Tax Increment Rev Sr Lien
Rfdg........................................ 5.000 01/01/14 522,060
57 Huntley, IL Spl Svc Area No 7 Spl Tax (c)... 6.000 03/01/09 58,224
1,295 Huntley, IL Spl Svc Area No 7 Spl Tax Rfdg
(AGL Insd) (a).............................. 4.600 03/01/17 1,321,586
500 Illinois Fin Auth Rev Landing at Plymouth Pl
Proj Ser A.................................. 5.250 05/15/14 497,480
1,000 Illinois Fin Auth Student Hsg Rev MJH Ed
Assistance IV Sr Ser A...................... 5.500 06/01/19 976,790
500 Lincolnshire, IL Spl Svc Area Sedgebrook
Proj........................................ 5.000 03/01/11 505,860
241 Pingree Grove Village, IL Spl Svc Area No 1
Spl Tax Cambridge Lakes Proj Ser 05......... 5.250 03/01/15 243,721
1,000 Round Lake Beach, IL Tax.................... 4.650 12/15/13 1,009,680
------------
5,701,187
------------
INDIANA 3.9%
1,000 Allen Cnty, IN Juvenile Just Ctr First Mtg
(AMBAC Insd)................................ 5.500 01/01/18 1,072,060
1,000 Carmel Cnty, IN Redev Auth Opt Income Tax
Lease Rent Rev (MBIA Insd).................. 5.000 07/01/22 1,049,460
</Table>
14 See Notes to Financial Statements
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
INDIANA (CONTINUED)
$ 750 Crown Point, IN Multi-Sch Bldg Corp First
Mtg Rfdg (FSA Insd)......................... 4.250% 07/15/23 $ 726,113
830 Hobart, IN Bldg Corp First Mtg (FGIC Insd)
(a)......................................... 5.500 07/15/13 909,713
400 Saint Joseph Cnty, IN Econ Dev Rev Holy
Cross Vlg Notre Dame Proj Ser A............. 5.750 05/15/13 409,808
------------
4,167,154
------------
IOWA 0.5%
500 Coralville, IA Ctf Partn Ser D.............. 5.250 06/01/22 518,290
------------
KANSAS 2.1%
500 Burlington, KS Environmental Impt Rev
(Mandatory Put 10/01/07).................... 4.750 09/01/15 500,040
500 Kansas St Dev Fin Auth Hlth Fac Rev Hays Med
Ctr Inc Ser L............................... 5.250 11/15/16 533,265
1,000 Shawnee Cnty, KS Sch Dist 501 Topeka
(Prerefunded @ 02/01/12).................... 5.000 02/01/20 1,057,200
120 Wyandotte Cnty, KS City KS Univ Brd of
Public Util Office Bldg Complex Proj (MBIA
Insd)....................................... 5.000 05/01/11 125,506
------------
2,216,011
------------
KENTUCKY 1.0%
1,000 Louisville & Jefferson Cnty, KY Ser C (FSA
Insd) (AMT)................................. 5.500 07/01/17 1,080,140
------------
MARYLAND 3.6%
1,000 Baltimore, MD Convention Ctr Hotel Rev Ser A
(XLCA Insd)................................. 5.250 09/01/22 1,074,750
1,000 Maryland St Econ Dev Corp Student Hsg Rev
Univ MD College Pk Proj Rfdg (CIFG Insd).... 5.000 06/01/13 1,067,260
625 Maryland St Econ Dev Corp Univ MD College Pk
Proj (c).................................... 5.750 06/01/13 693,887
500 Maryland St Hlth & Higher King Farm
Presbyterian Cmnty Ser B.................... 5.000 01/01/17 489,275
500 Prince Georges Cnty, MD Spl Oblig Natl
Harbor Proj................................. 4.700 07/01/15 499,160
------------
3,824,332
------------
MASSACHUSETTS 0.0%
25 Massachusetts St Indl Fin Agy Rev Gtr Lynn
Mental Hlth (Acquired 06/24/98, Cost
$25,000) (c) (d)............................ 6.200 06/01/08 25,390
------------
</Table>
See Notes to Financial Statements 15
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
MICHIGAN 2.3%
$1,000 Brighton, MI Area Sch Dist Rfdg (a)......... 5.250% 05/01/18 $ 1,066,940
1,000 Brighton, MI Area Sch Dist Rfdg............. 5.250 05/01/20 1,066,940
250 Michigan St Strategic Fd Ltd Oblig United
Waste Sys Proj (AMT)........................ 5.200 04/01/10 254,135
------------
2,388,015
------------
MINNESOTA 0.4%
430 Inver Grove Heights, MN Presbyterian Homes
Care Rfdg................................... 5.000 10/01/16 414,886
------------
MISSOURI 8.2%
500 Fenton, MO Tax Increment Rev Gravois Bluffs
Redev Proj Rfdg............................. 5.000 04/01/13 522,360
610 Ferguson, MO Tax Increment Rev Crossing at
Halls Ferry Rfdg (a)........................ 5.500 04/01/14 615,801
1,350 Kansas City, MO Indl Dev Auth Plaza Lib
Proj........................................ 6.000 03/01/16 1,382,751
1,000 Macon, MO Ctf Partn (MBIA Insd)............. 5.250 08/01/17 1,029,280
2,125 O'Fallon, MO Ctf Partn (MBIA Insd) (a)...... 5.375 02/01/18 2,256,368
500 Raytown, MO Annual Raytown Live Redev Plan
Proj 1...................................... 5.000 12/01/16 520,880
2,000 Saint Charles, MO Ctf Partn Ser B........... 5.500 05/01/18 2,113,000
250 Saint Louis Cnty, MO Indl Dev Auth Sr Living
Fac Rev Friendship Vlg West Cnty Ser A...... 5.250 09/01/17 257,695
------------
8,698,135
------------
MONTANA 0.1%
110 Crow Fin Auth, MT Tribal Purp Rev (Acquired
12/11/97, Cost $110,000) (d)................ 5.400 10/01/07 110,011
------------
NEBRASKA 1.5%
1,500 University of NE Fac Corp Defd Maint (AMBAC
Insd)....................................... 5.000 07/15/17 1,626,915
------------
NEW JERSEY 5.7%
1,400 Essex Cnty, NJ Impt Auth Lease Gtd Cnty
Correctional Fac Proj (FGIC Insd)
(Prerefunded @ 10/01/10).................... 5.750 10/01/30 1,489,404
1,500 New Jersey Econ Dev Auth Rev Cig Tax........ 5.500 06/15/16 1,588,725
1,000 New Jersey Hlthcare Fac Fin Auth Rev Saint
Clare's Hosp Inc Rfdg Ser A (Radian Insd)... 5.250 07/01/20 1,028,540
455 Rahway, NJ Ctf Partn (MBIA Insd)............ 5.500 02/15/16 478,928
565 Rahway, NJ Ctf Partn (MBIA Insd)............ 5.600 02/15/17 596,787
930 Tobacco Settlement Fin Corp NJ Ser 1A....... 4.500 06/01/23 880,310
------------
6,062,694
------------
</Table>
16 See Notes to Financial Statements
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
NEW MEXICO 2.3%
$1,000 Jicarilla, NM Apache Nation Rev Ser A
(Acquired 10/23/03, Cost $1,020,380) (d).... 5.500% 09/01/23 $ 1,062,630
1,310 New Mexico Fin Auth Rev Sr Lien Pub Proj
Revolving Fd Ser B (MBIA Insd).............. 5.000 06/01/17 1,411,826
------------
2,474,456
------------
NEW YORK 2.4%
135 Brookhaven, NY Indl Dev Agy Sr Residential
Hsg Rev Woodcrest Estates Fac Ser A (AMT)... 5.875 12/01/09 136,026
1,000 Long Island Pwr Auth NY Elec Gen Ser C
(Prerefunded @ 09/01/13).................... 5.500 09/01/17 1,103,060
500 New York City Indl Dev Agy Rev Liberty 7
World Trade Ctr Ser A....................... 6.250 03/01/15 522,910
780 New York City Indl Dev Agy Spl Fac Rev Term
One Group Assn Proj (AMT)................... 5.000 01/01/10 800,366
5 Niagara Falls, NY Pub Impt (MBIA Insd)...... 6.900 03/01/20 5,014
------------
2,567,376
------------
NORTH CAROLINA 2.1%
630 North Carolina Eastn Muni Pwr Agy Pwr Sys
Rev Ser D................................... 6.450 01/01/14 665,715
500 North Carolina Med Care Commn Hlthcare Fac
First Mtg Salemtowne Rfdg (a)............... 5.000 10/01/15 502,290
1,000 North Carolina Muni Pwr Agy Ser A (MBIA
Insd)....................................... 5.250 01/01/19 1,063,320
------------
2,231,325
------------
NORTH DAKOTA 0.5%
500 Grand Forks, ND Sr Hsg Rev 4000 Vly Square
Proj Rfdg................................... 5.000 12/01/16 482,135
------------
OHIO 4.6%
500 Adams Cnty Hosp Fac Impt Rev Adams Cnty Hosp
Proj........................................ 6.250 09/01/20 469,825
500 Athens Cnty, OH Hosp Fac Rev & Impt
O'Bleness Mem Rfdg Ser A.................... 6.250 11/15/13 518,200
1,370 Cleveland, OH Non Tax Rev Cleveland Stad
Proj Rfdg (AMBAC Insd)...................... 5.125 12/01/20 1,450,077
355 Dayton, OH Spl Fac Rev Afco Cargo Day LLC
Proj (AMT) (a).............................. 6.000 04/01/09 355,476
750 Ohio Muni Elec Generation Agy Jt Venture 5
Ctf Ben Int Rfdg (AMBAC Insd)............... 5.000 02/15/21 782,175
1,160 Sugarcreek, OH Loc Sch Dist Sch Impt & Rfdg
(MBIA Insd) (Prerefunded @ 12/01/13) (a).... 5.250 12/01/18 1,264,736
------------
4,840,489
------------
</Table>
See Notes to Financial Statements 17
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
OREGON 3.6%
$2,575 Emerald Peoples Util Dist OR Rfdg Ser A (FSA
Insd) (a)................................... 5.250% 11/01/16 $ 2,789,343
1,000 Port Morrow, OR Pollutn Ctl Portland Gen
Rfdg Ser A (Mandatory Put 05/01/09)......... 5.200 05/01/33 1,017,520
------------
3,806,863
------------
PENNSYLVANIA 9.9%
500 Allegheny Cnty, PA Indl Dev Auth Lease Rev
Residential Res Inc Proj.................... 5.000 09/01/21 498,890
250 Allegheny Cnty, PA Redev Auth Rev Pittsburgh
Mills Proj.................................. 5.100 07/01/14 250,958
1,120 Canon McMillan Sch Dist PA Rfdg Ser A (MBIA
Insd)....................................... 5.000 12/15/15 1,199,464
500 Monroe Cnty, PA Hosp Auth Rev Hosp Pocono
Med Ctr..................................... 5.000 01/01/17 513,200
500 Montgomery Cnty, PA Indl Dev Auth Rev Mtg
Whitemarsh Cont Care Proj................... 6.000 02/01/21 513,070
900 Philadelphia, PA Gas Wks Rev Ser 3 (FSA
Insd)....................................... 5.000 08/01/10 933,579
950 Philadelphia, PA Gas Wks Rev Ser 18 (AGL
Insd)....................................... 5.250 08/01/18 1,015,664
2,000 Philadelphia, PA Redev Auth Rev Neighborhood
Trans Ser A (FGIC Insd)..................... 5.500 04/15/16 2,152,820
1,090 Wilson, PA Area Sch Dist (FGIC Insd)........ 5.125 03/15/17 1,155,269
2,070 York Cnty, PA Sch Technology (FGIC Insd)
(Prerefunded @ 02/15/13).................... 5.375 02/15/16 2,247,668
------------
10,480,582
------------
SOUTH CAROLINA 3.7%
1,020 Berkeley Cnty, SC Impt & Rfdg (FSA Insd).... 5.000 09/01/17 1,088,819
1,000 Kershaw Cnty, SC Pub Sch Fndtn Installment
Pwr Rev Kershaw Cnty Sch Dist Proj (CIFG
Insd)....................................... 5.000 12/01/22 1,048,300
1,065 Lexington, SC Wtr & Swr Rev & Impt Comb Rfdg
Ser A (MBIA Insd) (a)....................... 5.000 04/01/14 1,108,889
500 South Carolina Jobs Econ Dev Auth Hlthcare
Fac Rev First Mtg Lutheran Homes Rfdg....... 5.000 05/01/12 496,740
135 South Carolina Jobs Econ Dev Auth Hlthcare
Fac Rev First Mtg Lutheran Homes Rfdg....... 5.125 05/01/13 133,927
------------
3,876,675
------------
SOUTH DAKOTA 1.5%
1,515 Minnehaha Cnty, SD Ctf Ltd Tax (FSA Insd)... 5.000 12/01/18 1,603,461
------------
</Table>
18 See Notes to Financial Statements
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
TENNESSEE 2.4%
$ 415 Chattanooga, TN Hlth Ed Hsg Fac CDFI Phase I
LLC Proj Rfdg Ser A......................... 5.000% 10/01/15 $ 418,677
700 Franklin, TN Spl Sch Dist Cap Apprec (FSA
Insd)....................................... * 06/01/15 517,531
1,000 Gatlinburg, TN Pub Bldg Auth Rfdg (AMBAC
Insd)....................................... 5.750 12/01/11 1,084,410
500 Shelby Cnty, TN Hlth Ed & Hsg Fac Brd Rev
Trezevant Manor Proj Ser A.................. 5.250 09/01/16 499,980
------------
2,520,598
------------
TEXAS 3.2%
500 Hidalgo Cnty, TX Hlth Svc Mission Hosp Inc
Proj........................................ 5.000 08/15/13 513,545
350 Hidalgo Cnty, TX Hlth Svc Mission Hosp Inc
Proj........................................ 5.000 08/15/19 352,545
1,000 Lower Colorado Riv Auth TX LCRA Svc Corp
Proj Rfdg (FGIC Insd)....................... 5.000 05/15/17 1,040,640
250 Lufkin, TX Hlth Fac Dev Corp Hlth Sys Rev
Mem East Texas (e).......................... 5.125 02/15/22 246,860
500 Mesquite, TX Hlth Fac Dev Retirement
Christian Care.............................. 5.000 02/15/15 504,980
195 San Antonio, TX Hsg Fin Corp Multi-Family
Hsg Rev Beverly Oaks Apt Proj Ser A (a)..... 7.500 02/01/10 198,535
500 Tarrant Cnty, TX Cultural Ed Fac Fin Corp
Buckner Retirement Svc Inc Proj............. 5.000 11/15/17 526,290
------------
3,383,395
------------
VIRGINIA 1.0%
1,000 Tobacco Settlement Fin Corp VA Asset Bkd.... 5.250 06/01/19 1,044,650
------------
WASHINGTON 1.0%
1,000 Klickitat Cnty, WA Pub Util Dist No 001 Elec
Rev Rfdg Ser B (FGIC Insd).................. 5.250 12/01/22 1,077,230
------------
WEST VIRGINIA 1.7%
250 Ohio Cnty, WV Cnty Commn Tax Increment Rev
Fort Henry Ctr Fin Dist Ser A............... 5.625 06/01/22 251,088
1,500 West Virginia St Hosp Fin Auth (MBIA
Insd)....................................... 6.100 01/01/18 1,556,775
------------
1,807,863
------------
</Table>
See Notes to Financial Statements 19
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
WISCONSIN 0.5%
$ 500 Wisconsin St Hlth & Ed Fac Beaver Dam Cmnty
Hosp Inc Ser A.............................. 5.500% 08/15/14 $ 500,495
------------
TOTAL INVESTMENTS 98.5%
(Cost $102,287,436)....................................................... 104,179,925
OTHER ASSETS IN EXCESS OF LIABILITIES 1.5%................................. 1,564,285
------------
NET ASSETS 100.0%.......................................................... $105,744,210
============
</Table>
Percentages are calculated as a percentage of net assets.
* Zero coupon bond
(a) The Fund owns 100% of the outstanding bond issuance.
(b) 144A-Private Placement security which is exempt from registration under Rule
144A of the Securities Act of 1933, as amended. This security may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(c) Escrowed to Maturity
(d) Security is restricted and may be resold only in transactions exempt from
registration which are normally those transactions with qualified
institutional buyers. Restricted securities comprise 1.1% of net assets.
(e) Security purchased on a when-issued or delayed delivery basis.
AGL--Assured Guaranty Ltd.
AMBAC--AMBAC Indemnity Corp.
AMT--Alternative Minimum Tax
CIFG--CDC IXIS Financial Guaranty
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.
20 See Notes to Financial Statements
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
September 30, 2007
<Table>
ASSETS:
Total Investments (Cost $102,287,436)....................... $104,179,925
Receivables:
Investments Sold.......................................... 2,091,330
Interest.................................................. 1,447,711
Fund Shares Sold.......................................... 50,320
Other....................................................... 168,181
------------
Total Assets............................................ 107,937,467
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 1,025,758
Custodian Bank............................................ 557,885
Fund Shares Repurchased................................... 156,815
Income Distributions...................................... 69,120
Investment Advisory Fee................................... 34,903
Distributor and Affiliates................................ 19,130
Trustees' Deferred Compensation and Retirement Plans........ 241,041
Accrued Expenses............................................ 88,605
------------
Total Liabilities....................................... 2,193,257
------------
NET ASSETS.................................................. $105,744,210
============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $103,641,250
Net Unrealized Appreciation................................. 1,892,489
Accumulated Undistributed Net Investment Income............. 306,740
Accumulated Net Realized Loss............................... (96,269)
------------
NET ASSETS.................................................. $105,744,210
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $81,397,937 and 7,688,774 shares of
beneficial interest issued and outstanding)............. $ 10.59
Maximum sales charge (4.75%* of offering price)......... 0.53
------------
Maximum offering price to public........................ $ 11.12
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $11,104,664 and 1,035,053 shares of
beneficial interest issued and outstanding)............. $ 10.73
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $13,010,217 and 1,230,514 shares of
beneficial interest issued and outstanding)............. $ 10.57
============
Class I Shares:
Net asset value and offering price per share (Based on
net assets of $231,392 and 21,858 shares of beneficial
interest issued and outstanding)........................ $ 10.59
============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
See Notes to Financial Statements 21
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended September 30, 2007
<Table>
INVESTMENT INCOME:
Interest.................................................... $ 4,885,544
-----------
EXPENSES:
Investment Advisory Fee..................................... 539,874
Distribution (12b-1) and Service Fees
Class A................................................... 200,897
Class B................................................... 32,431
Class C................................................... 135,218
Accounting and Administrative Expenses...................... 71,683
Professional Fees........................................... 66,210
Transfer Agent Fees......................................... 61,658
Reports to Shareholders..................................... 51,928
Registration Fees........................................... 42,527
Trustees' Fees and Related Expenses......................... 31,906
Custody..................................................... 12,174
Other....................................................... 23,311
-----------
Total Expenses.......................................... 1,269,817
Investment Advisory Fee Reduction....................... 107,975
Less Credits Earned on Cash Balances.................... 2,770
-----------
Net Expenses............................................ 1,159,072
-----------
NET INVESTMENT INCOME....................................... $ 3,726,472
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 44,489
Futures................................................... (146,668)
-----------
Net Realized Loss........................................... (102,179)
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 2,840,451
End of the Period......................................... 1,892,489
-----------
Net Unrealized Depreciation During the Period............... (947,962)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(1,050,141)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 2,676,331
===========
</Table>
22 See Notes to Financial Statements
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets
<Table>
<Caption>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2007 SEPTEMBER 30, 2006
---------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................ $ 3,726,472 $ 3,877,834
Net Realized Gain/Loss............................... (102,179) 228,777
Net Unrealized Appreciation/Depreciation During the
Period............................................. (947,962) 45,442
------------ ------------
Change in Net Assets from Operations................. 2,676,331 4,152,053
------------ ------------
Distributions from Net Investment Income:
Class A Shares..................................... (2,770,289) (2,855,993)
Class B Shares..................................... (441,554) (553,231)
Class C Shares..................................... (373,168) (430,486)
Class I Shares..................................... (33,145) (22,966)
------------ ------------
(3,618,156) (3,862,676)
------------ ------------
Distributions from Net Realized Gain:
Class A Shares..................................... -0- (390,380)
Class B Shares..................................... -0- (76,687)
Class C Shares..................................... -0- (80,238)
Class I Shares..................................... -0- (2,627)
------------ ------------
-0- (549,932)
------------ ------------
Total Distributions.................................. (3,618,156) (4,412,608)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES......................................... (941,825) (260,555)
------------ ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold............................ 26,136,611 23,378,784
Net Asset Value of Shares Issued Through Dividend
Reinvestment....................................... 2,714,649 3,272,076
Cost of Shares Repurchased........................... (31,830,839) (38,938,362)
------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS... (2,979,579) (12,287,502)
------------ ------------
TOTAL DECREASE IN NET ASSETS......................... (3,921,404) (12,548,057)
NET ASSETS:
Beginning of the Period.............................. 109,665,614 122,213,671
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of $306,740 and
$202,213, respectively)............................ $105,744,210 $109,665,614
============ ============
</Table>
See Notes to Financial Statements 23
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS A SHARES ------------------------------------------------
2007 2006 2005 2004 2003
------------------------------------------------
NET ASSET VALUE, BEGINNING OF
THE PERIOD................................ $10.68 $10.69 $10.72 $10.76 $10.86
------ ------ ------ ------ ------
Net Investment Income..................... .38(a) .37(a) .36 .37 .38
Net Realized and Unrealized Gain/Loss..... (.10) .04 (.01) .04 (.03)
------ ------ ------ ------ ------
Total from Investment Operations............ .28 .41 .35 .41 .35
------ ------ ------ ------ ------
Less:
Distributions from Net Investment
Income.................................. .37 .37 .37 .37 .40
Distributions from Net Realized Gain...... -0- .05 .01 .08 .05
------ ------ ------ ------ ------
Total Distributions......................... .37 .42 .38 .45 .45
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD.......... $10.59 $10.68 $10.69 $10.72 $10.76
====== ====== ====== ====== ======
Total Return * (b).......................... 2.63% 3.91% 3.31% 3.84% 3.33%
Net Assets at End of the Period (In
millions)................................. $ 81.4 $ 79.4 $ 88.2 $ 76.5 $ 70.1
Ratio of Expenses to Average Net Assets *... .98% .99% .99% .93% .84%
Ratio of Net Investment Income to Average
Net Assets *.............................. 3.54% 3.46% 3.32% 3.50% 3.55%
Portfolio Turnover.......................... 11% 21% 34% 60% 35%
* 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................................. 1.08% 1.09% 1.09% 1.03% 1.04%
Ratio of Net Investment Income to Average
Net Assets............................. 3.44% 3.36% 3.22% 3.40% 3.35%
</Table>
(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 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.
24 See Notes to Financial Statements
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS B SHARES ------------------------------------------------------
2007 2006 2005 2004 2003
------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD................................. $10.82 $10.82 $10.75 $10.78 $10.84
------ ------ ------ ------ ------
Net Investment Income.................. .38(a) .39(a) .40 .30 .32
Net Realized and Unrealized
Gain/Loss............................ (.10) .04 (.03) .04 (.01)
------ ------ ------ ------ ------
Total from Investment Operations......... .28 .43 .37 .34 .31
------ ------ ------ ------ ------
Less:
Distributions from Net
Investment Income.................... .37 .38 .29 .29 .32
Distributions from Net Realized Gain... -0- .05 .01 .08 .05
------ ------ ------ ------ ------
Total Distributions...................... .37 .43 .30 .37 .37
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD....... $10.73 $10.82 $10.82 $10.75 $10.78
====== ====== ====== ====== ======
Total Return * (b)....................... 2.59%(d) 4.13%(d) 3.47%(d) 3.15%(d) 2.96%(c)
Net Assets at End of the Period
(In millions).......................... $ 11.1 $ 14.6 $ 16.9 $ 20.3 $ 23.9
Ratio of Expenses to Average
Net Assets *........................... .98%(d) .78%(d) .82%(d) 1.67%(d) 1.59%
Ratio of Net Investment Income to Average
Net Assets *........................... 3.55%(d) 3.67%(d) 3.51%(d) 2.76%(d) 3.08%(c)
Portfolio Turnover....................... 11% 21% 34% 60% 35%
* 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.............................. 1.08%(d) .88%(d) .92%(d) 1.77%(d) 1.79%
Ratio of Net Investment Income to
Average Net Assets.................. 3.45%(d) 3.57%(d) 3.41%(d) 2.66%(d) 2.88%(c)
</Table>
(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 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.
(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).
See Notes to Financial Statements 25
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS C SHARES ------------------------------------------------------
2007 2006 2005 2004 2003
------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD................................. $10.66 $10.68 $10.70 $10.73 $10.82
------ ------ ------ ------ ------
Net Investment Income.................. .30(a) .29(a) .29 .30 .30
Net Realized and Unrealized
Gain/Loss............................ (.10) .03 (.01) .04 (.02)
------ ------ ------ ------ ------
Total from Investment Operations......... .20 .32 .28 .34 .28
------ ------ ------ ------ ------
Less:
Distributions from Net
Investment Income.................... .29 .29 .29 .29 .32
Distributions from Net Realized Gain... -0- .05 .01 .08 .05
------ ------ ------ ------ ------
Total Distributions...................... .29 .34 .30 .37 .37
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD....... $10.57 $10.66 $10.68 $10.70 $10.73
====== ====== ====== ====== ======
Total Return * (b)....................... 1.88%(d) 3.04% 2.64%(d) 3.17%(d) 2.69%(c)
Net Assets at End of the Period
(In millions).......................... $ 13.0 $ 14.7 $ 16.5 $ 18.1 $ 21.4
Ratio of Expenses to Average Net
Assets*................................ 1.72%(d) 1.74% 1.64%(d) 1.66%(d) 1.59%
Ratio of Net Investment Income to Average
Net Assets *........................... 2.81%(d) 2.71% 2.69%(d) 2.77%(d) 2.84%(c)
Portfolio Turnover....................... 11% 21% 34% 60% 35%
* 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.............................. 1.82%(d) 1.84% 1.74%(d) 1.76%(d) 1.79%
Ratio of Net Investment Income to
Average Net Assets.................. 2.71%(d) 2.61% 2.59%(d) 2.67%(d) 2.64%(c)
</Table>
(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) 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).
26 See Notes to Financial Statements
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
AUGUST 12, 2005
YEAR ENDED (COMMENCEMENT
SEPTEMBER 30, OF OPERATIONS) TO
CLASS I SHARES ------------------ SEPTEMBER 30,
2007 2006 2005
--------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD............... $10.67 $10.69 $ 10.70
------ ------ -------
Net Investment Income................................ .40(a) .39(a) .05
Net Realized and Unrealized Gain/Loss................ (.09) .03 (.01)
------ ------ -------
Total from Investment Operations....................... .31 .42 .04
------ ------ -------
Less:
Distributions from Net Investment Income............. .39 .39 .05
Distributions from Net Realized Gain................. -0- .05 -0-
------ ------ -------
Total Distributions.................................... .39 .44 .05
------ ------ -------
NET ASSET VALUE, END OF THE PERIOD..................... $10.59 $10.67 $ 10.69
====== ====== =======
Total Return * (b)..................................... 2.98% 4.08% 0.38%**
Net Assets at End of the Period (In millions).......... $ .2 $ .9 $ .6
Ratio of Expenses to Average Net Assets *.............. .72% .72% .77%
Ratio of Net Investment Income to Average Net Assets
*.................................................... 3.79% 3.73% 3.59%
Portfolio Turnover..................................... 11% 21% 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............. .82% .82% .87%
Ratio of Net Investment Income to Average Net
Assets............................................ 3.69% 3.63% 3.49%
</Table>
** Non-Annualized
(a) Based on average shares outstanding.
(b) 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.
See Notes to Financial Statements 27
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007
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. 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 September 30, 2007, the Fund had $246,860 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.
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
28
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
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 law 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, 2007, the Fund had an accumulated capital loss
carryforward for tax purposes of $54,717, which will expire on September 30,
2015.
At September 30, 2007, the cost and related gross unrealized appreciation
and depreciation were as follows:
<Table>
Cost of investments for tax purposes........................ $102,269,280
============
Gross tax unrealized appreciation........................... $ 2,184,587
Gross tax unrealized depreciation........................... (273,942)
------------
Net tax unrealized appreciation on investments.............. $ 1,910,645
============
</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 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 years ended September 30,
2007 and 2006 were as follows.
<Table>
<Caption>
2007 2006
Distributions paid from:
Ordinary income........................................... $ 336 $ 467,011
Tax-exempt income......................................... 3,627,442 3,880,983
Long-term capital gain.................................... -0- 84,585
---------- ----------
$3,627,778 $4,432,579
========== ==========
</Table>
Permanent differences, primarily due to the Fund's investment in other
regulated investment companies, resulted in the following reclassifications
among the Fund's components of net assets at September 30, 2007:
<Table>
<Caption>
ACCUMULATED UNDISTRIBUTED ACCUMULATED NET
NET INVESTMENT INCOME REALIZED LOSS CAPITAL
$(3,789) $3,789 $-0-
</Table>
As of September 30, 2007, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed ordinary income............................... $ 976
Undistributed tax-exempt income............................. 568,118
</Table>
29
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of gains or losses recognized on securities for
tax purposes but not for book, and post October losses of $44,704 which are not
recognized for tax purposes until the first day of the following fiscal year.
F. EXPENSE REDUCTIONS During the year ended September 30, 2007, the Fund's
custody fee was reduced by $2,770 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 year ended September 30, 2007, the Adviser waived $107,975 of its
investment advisory fee. This represents .10% of the Fund's average daily net
assets for the period. This waiver is voluntary in nature and can be
discontinued at the Adviser's discretion.
For the year ended September 30, 2007, the Fund recognized expenses of
approximately $5,200 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 CCO provides compliance services to the Fund. The costs of
these services are allocated to each fund. For the year ended September 30,
2007, the Fund recognized expenses of approximately $57,100 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 "Professional Fees" on the Statement of Operations. Services provided
pursuant to the Accounting Services and CCO Employment agreement are reported as
part of "Accounting and Administrative 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 year ended
September 30, 2007, the Fund recognized expenses of approximately $50,600
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 $146,631 are included in
"Other" assets on the Statement of Assets and Liabilities at September 30, 2007.
30
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
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 year ended September 30, 2007, Van Kampen, as Distributor for the
Fund, received commissions on sales of the Fund's Class A Shares of
approximately $16,300 and contingent deferred sales charge (CDSC) on redeemed
shares of approximately $16,800. Sales charges do not represent expenses of the
Fund.
3. CAPITAL TRANSACTIONS
For the years ended September 30, 2007 and 2006, transactions were as follows:
<Table>
<Caption>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2007 SEPTEMBER 30, 2006
-------------------------- --------------------------
SHARES VALUE SHARES VALUE
Sales:
Class A........................... 2,069,571 $ 21,969,724 1,797,066 $ 19,041,928
Class B........................... 87,996 948,261 122,999 1,315,764
Class C........................... 258,040 2,730,716 243,523 2,575,766
Class I........................... 45,869 487,910 42,334 445,326
---------- ------------ ---------- ------------
Total Sales......................... 2,461,476 $ 26,136,611 2,205,922 $ 23,378,784
========== ============ ========== ============
Dividend Reinvestment:
Class A........................... 207,569 $ 2,204,540 242,302 $ 2,565,280
Class B........................... 24,258 261,159 35,247 377,806
Class C........................... 20,340 215,805 28,688 303,396
Class I........................... 3,120 33,145 2,418 25,594
---------- ------------ ---------- ------------
Total Dividend Reinvestment......... 255,287 $ 2,714,649 308,655 $ 3,272,076
========== ============ ========== ============
Repurchases:
Class A........................... (2,027,021) $(21,501,383) (2,853,781) $(30,222,471)
Class B........................... (429,923) (4,619,061) (367,467) (3,939,234)
Class C........................... (427,744) (4,534,247) (436,595) (4,611,782)
Class I........................... (111,522) (1,176,148) (15,578) (164,875)
---------- ------------ ---------- ------------
Total Repurchases................... (2,996,210) $(31,830,839) (3,673,421) $(38,938,362)
========== ============ ========== ============
</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 and allocated on a pro rata basis to
each class of shares. For the year ended September 30, 2007, 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 $12,058,121 and $12,767,403,
respectively.
31
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 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 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
to 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 these instances, 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
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. 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 year ended September 30, 2007 were
as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at September 30, 2006........................... 45
Futures Opened.............................................. 100
Futures Closed.............................................. (145)
----
Outstanding at September 30, 2007........................... 0
====
</Table>
7. DISTRIBUTIONS 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 $2,300 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.
32
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
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. ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation 48, Accounting for Uncertainty in Income Taxes -- an
interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting
for income taxes by prescribing the minimum recognition threshold a tax position
must meet before being recognized in the financial statements. FIN 48 is
effective for fiscal years beginning after December 15, 2006 and is to be
applied to all open tax years as of the effective date. Recent SEC guidance
allows implementing FIN 48 in the fund NAV calculations as late as the fund's
last NAV calculation in the first required financial statement period. As a
result, the Fund will incorporate FIN 48 in its semi annual report on March 31,
2008. The impact to the Fund's financial statements, if any, is currently being
assessed.
In addition, in September 2006, Statement of Financial Accounting Standards
No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for
fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 will have on the Fund's financial statement disclosures.
33
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of Van Kampen Intermediate Term
Municipal Income Fund
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Van Kampen Intermediate Term
Municipal Income Fund (one of the Funds constituting the Van Kampen Tax Free
Trust (the "Fund")) as of September 30, 2007, and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
the each of the five years in the period then ended. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
We were not engaged to perform an audit of the Fund's internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of September 30, 2007, by correspondence with the
custodian and brokers or by other appropriate auditing procedures where replies
from brokers were not received. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen Intermediate Term Municipal Income Fund of the Van Kampen Tax Free Trust
at September 30, 2007, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
November 16, 2007
34
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME
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
DENNIS SHEA
Vice President
J. DAVID GERMANY
Vice President
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
STUART N. SCHULDT
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
522 Fifth Avenue
New York, New York 10036
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
One Parkview Plaza - Suite 100
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
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
For federal income tax purposes, the following information is furnished with
respect to the distributions paid by the Fund during its taxable year ended
September 30, 2007. The Fund designated 100% of the income distributions as a
tax-exempt income distribution. In January, the Fund provides tax information
to shareholders for the preceding calendar year.
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
35
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
TRUSTEES AND OFFICERS
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees and the Fund's officers appointed by the Board of
Trustees. The tables below list the trustees and executive officers of the Fund
and their principal occupations during the last five years, other directorships
held by trustees and their affiliations, if any, with Van Kampen Investments,
the Adviser, the Distributor, Van Kampen Advisors Inc., Van Kampen Exchange
Corp. and Investor Services. The term "Fund Complex" includes each of the
investment companies advised by the Adviser as of the date of this Annual
Report. Trustees serve until reaching their retirement age or until their
successors are duly elected and qualified. Officers are annually elected by the
trustees.
INDEPENDENT TRUSTEES:
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (62) Trustee Trustee Chairman and Chief 73 Trustee/Director/Managing
Blistex Inc. since 2003 Executive Officer of General Partner of funds
1800 Swift Drive Blistex Inc., a consumer in the Fund Complex.
Oak Brook, IL 60523 health care products Director of the Heartland
manufacturer. Alliance, a nonprofit
organization serving
human needs based in
Chicago. Board member of
the Illinois
Manufacturers'
Association.
Jerry D. Choate (69) Trustee Trustee Prior to January 1999, 73 Trustee/Director/Managing
33971 Selva Road since 1999 Chairman and Chief General Partner of funds
Suite 130 Executive Officer of the in the Fund Complex.
Dana Point, CA 92629 Allstate Corporation Director of H&R Block,
("Allstate") and Allstate Amgen Inc., a
Insurance Company. Prior biotechnological company,
to January 1995, and Valero Energy
President and Chief Corporation, an
Executive Officer of independent refining
Allstate. Prior to August company.
1994, various management
positions at Allstate.
</Table>
36
<Table>
<Caption>
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
TRUSTEES AND OFfiCERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Rod Dammeyer (67) Trustee Trustee President of CAC, L.L.C., 73 Trustee/Director/Managing
CAC, L.L.C. since 2003 a private company General Partner of funds
4350 LaJolla Village Drive offering capital in the Fund Complex.
Suite 980 investment and management Director of Quidel
San Diego, CA 92122-6223 advisory services. Corporation, Stericycle,
Inc., Ventana Medical
Systems, Inc. and Trustee
of The Scripps Research
Institute. Prior to April
2007, Director of GATX
Corporation. Prior to
April 2004, Director of
TheraSense, Inc. Prior to
January 2004, Director of
TeleTech Holdings Inc.
and Arris Group, Inc.
Linda Hutton Heagy+ (59) Trustee Trustee Managing Partner of 73 Trustee/Director/Managing
Heidrick & Struggles since 1995 Heidrick & Struggles, an General Partner of funds
233 South Wacker Drive international executive in the Fund Complex.
Suite 7000 search firm. Prior to Trustee on the University
Chicago, IL 60606 1997, Partner of Ray & of Chicago Hospitals
Berndtson, Inc., an Board, Vice Chair of the
executive recruiting Board of the YMCA of
firm. Prior to 1995, Metropolitan Chicago and
Executive Vice President a member of the Women's
of ABN AMRO, N.A., a bank Board of the University
holding company. Prior to of Chicago.
1990, Executive Vice
President of The Exchange
National Bank.
</Table>
37
<Table>
<Caption>
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
TRUSTEES AND OFfiCERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
R. Craig Kennedy (55) Trustee Trustee Director and President of 73 Trustee/Director/Managing
1744 R Street, NW since 1993 the German Marshall Fund General Partner of funds
Washington, DC 20009 of the United States, an in the Fund Complex.
independent U.S. Director of First Solar,
foundation created to Inc.
deepen understanding,
promote collaboration and
stimulate exchanges of
practical experience
between Americans and
Europeans. Formerly,
advisor to the Dennis
Trading Group Inc., a
managed futures and
option company that
invests money for
individuals and
institutions. Prior to
1992, President and Chief
Executive Officer,
Director and member of
the Investment Committee
of the Joyce Foundation,
a private foundation.
Howard J Kerr (72) Trustee Trustee Prior to 1998, President 73 Trustee/Director/Managing
14 Huron Trace since 2003 and Chief Executive General Partner of funds
Galena, IL 61036 Officer of Pocklington in the Fund Complex.
Corporation, Inc., an Director of the Lake
investment holding Forest Bank & Trust.
company. Director of the Marrow
Foundation.
Jack E. Nelson (71) Trustee Trustee President of Nelson 73 Trustee/Director/Managing
423 Country Club Drive since 1993 Investment Planning General Partner of funds
Winter Park, FL 32789 Services, Inc., a in the Fund Complex.
financial planning
company and registered
investment adviser in the
State of Florida.
President of Nelson Ivest
Brokerage Services Inc.,
a member of FINRA,
Securities Investors
Protection Corp. and the
Municipal Securities
Rulemaking Board.
President of Nelson Sales
and Services Corporation,
a marketing and services
company to support
affiliated companies.
</Table>
38
<Table>
<Caption>
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
TRUSTEES AND OFfiCERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Hugo F. Sonnenschein (67) Trustee Trustee President Emeritus and 73 Trustee/Director/Managing
1126 E. 59th Street since 2003 Honorary Trustee of the General Partner of funds
Chicago, IL 60637 University of Chicago and in the Fund Complex.
the Adam Smith Trustee of the University
Distinguished Service of Rochester and a member
Professor in the of its investment
Department of Economics committee. Member of the
at the University of National Academy of
Chicago. Prior to July Sciences, the American
2000, President of the Philosophical Society and
University of Chicago. a fellow of the American
Academy of Arts and
Sciences.
</Table>
39
<Table>
<Caption>
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
TRUSTEES AND OFfiCERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Suzanne H. Woolsey, Ph.D. Trustee Trustee Chief Communications 73 Trustee/Director/Managing
(65) since 1999 Officer of the National General Partner of funds
815 Cumberstone Road Academy of in the Fund Complex.
Harwood, MD 20776 Sciences/National Director of Fluor Corp.,
Research Council, an an engineering,
independent, federally procurement and
chartered policy construction
institution, from 2001 to organization, since
November 2003 and Chief January 2004. Director of
Operating Officer from Intelligent Medical
1993 to 2001. Prior to Devices, Inc., a symptom
1993, Executive Director based diagnostic tool for
of the Commission on physicians and clinical
Behavioral and Social labs. Director of the
Sciences and Education at Institute for Defense
the National Academy of Analyses, a federally
Sciences/National funded research and
Research Council. From development center,
1980 through 1989, Director of the German
Partner of Coopers & Marshall Fund of the
Lybrand. United States, Director
of the Rocky Mountain
Institute of Technology
and the Colorado College.
</Table>
40
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
TRUSTEES AND OFFICERS continued
INTERESTED TRUSTEE:*
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Wayne W. Whalen* (68) Trustee Trustee Partner in the law firm 73 Trustee/Director/Managing
333 West Wacker Drive since 1993 of Skadden, Arps, Slate, General Partner of funds
Chicago, IL 60606 Meagher & Flom LLP, legal in the Fund Complex.
counsel to funds in the Director of the Abraham
Fund Complex. Lincoln Presidential
Library Foundation.
</Table>
+ As indicated above, Ms. Heagy is an employee of Heidrick and Struggles, an
international executive search firm ("Heidrick"). Heidrick has been (and may
continue to be) engaged by Morgan Stanley from time to time to perform
executive searches. Such searches have been unrelated to Van Kampen's or
Morgan Stanley's asset management businesses and have been done by
professionals at Heidrick without any involvement by Ms. Heagy. Ethical wall
procedures exist to ensure that Ms. Heagy will not have any involvement with
any searches performed by Heidrick for Morgan Stanley. Ms. Heagy does not
receive any compensation, directly or indirectly, for searches performed by
Heidrick for Morgan Stanley. Ms. Heagy does own common shares of Heidrick
(representing less than 1% of Heidrick's outstanding common shares).
* Mr. Whalen is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act) of certain funds in the Fund Complex by reason of he and
his firm currently providing legal services as legal counsel to such funds
in the Fund Complex.
41
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
TRUSTEES AND OFFICERS continued
OFFICERS:
<Table>
<Caption>
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Ronald E. Robison (68) President and Officer President of funds in the Fund Complex since September 2005
522 Fifth Avenue Principal Executive since 2003 and Principal Executive Officer of funds in the Fund Complex
New York, NY 10036 Officer since May 2003. Managing Director of Van Kampen Advisors
Inc. since June 2003. Director of Investor Services since
September 2002. Director of the Adviser, Van Kampen
Investments and Van Kampen Exchange Corp. since January
2005. Managing Director of Morgan Stanley and Morgan Stanley
& Co. Incorporated. Managing Director and Director of Morgan
Stanley Investment Management Inc. Chief Administrative
Officer, Managing Director and Director of Morgan Stanley
Investment Advisors Inc. and Morgan Stanley Services Company
Inc. Managing Director and Director of Morgan Stanley
Distributors Inc. and Morgan Stanley Distribution Inc. Chief
Executive Officer and Director of Morgan Stanley Trust.
Executive Vice President and Principal Executive Officer of
the Institutional and Retail Morgan Stanley Funds. Director
of Morgan Stanley SICAV. Previously, Chief Global Operations
Officer of Morgan Stanley Investment Management Inc. and
Executive Vice President of funds in the Fund Complex from
May 2003 to September 2005.
Dennis Shea (54) Vice President Officer Managing Director of Morgan Stanley Investment Advisors
522 Fifth Avenue since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser
New York, NY 10036 and Van Kampen Advisors Inc. Chief Investment Officer--
Global Equity of the same entities since February 2006. Vice
President of Morgan Stanley Institutional and Retail Funds
since February 2006. Vice President of funds in the Fund
Complex since March 2006. Previously, Managing Director and
Director of Global Equity Research at Morgan Stanley from
April 2000 to February 2006.
J. David Germany (53) Vice President Officer Managing Director of Morgan Stanley Investment Advisors
20 Bank Street, since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser
Canary Wharf and Van Kampen Advisors Inc. Chief Investment Officer--
London, GBR E14 4AD Global Fixed Income of the same entities since December
2005. Managing Director and Director of Morgan Stanley
Investment Management Ltd. Director of Morgan Stanley
Investment Management (ACD) Limited since December 2003.
Vice President of Morgan Stanley Institutional and Retail
Funds since February 2006. Vice President of funds in the
Fund Complex since March 2006.
</Table>
42
<Table>
<Caption>
VAN KAMPEN INTERMEDIATE TERM MUNICIPAL INCOME FUND
TRUSTEES AND OFfiCERS continued
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Amy R. Doberman (45) Vice President Officer Managing Director and General Counsel--U.S. Investment
522 Fifth Avenue since 2004 Management; Managing Director of Morgan Stanley Investment
New York, NY 10036 Management Inc., Morgan Stanley Investment Advisors Inc. and
the Adviser. Vice President of the Morgan Stanley
Institutional and Retail Funds since July 2004 and Vice
President of funds in the Fund Complex since August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeltus Investment Management,
Inc. from January 1997 to July 2000.
Stefanie V. Chang (41) Vice President Officer Executive Director of Morgan Stanley Investment Management
522 Fifth Avenue and Secretary since 2003 Inc. Vice President and Secretary of funds in the Fund
New York, NY 10036 Complex.
John L. Sullivan (52) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza - Suite 100 Officer since 1996 August 2004. Prior to August 2004, Director and Managing
Oakbrook Terrace, IL 60181 Director of Van Kampen Investments, the Adviser, Van Kampen
Advisors Inc. and certain other subsidiaries of Van Kampen
Investments, Vice President, Chief Financial Officer and
Treasurer of funds in the Fund Complex and head of Fund
Accounting for Morgan Stanley Investment Management Inc.
Prior to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
Stuart N. Schuldt (45) Chief Financial Officer Officer Executive Director of Morgan Stanley Investment Management
1 Parkview Plaza - Suite 100 and Treasurer since 2007 Inc. since June 2007. Chief Financial Officer and Treasurer
Oakbrook Terrace, IL 60181 of funds in the Fund Complex since June 2007. Prior to June
2007, Senior Vice President of Northern Trust Company,
Treasurer and Principal Financial Officer for Northern Trust
U.S. mutual fund complex.
</Table>
43
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.
(continued on back)
Van Kampen Intermediate Term Municipal Income Fund
An Important Notice Concerning Our U.S. Privacy Policy continued
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 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.
The Statement of Additional Information includes additional information
about Fund trustees and is available, without charge, upon request by
calling 1-800-847-2424.
Van Kampen Funds Inc.
1 Parkview Plaza - Suite 100
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2007 Van Kampen Funds Inc.
All rights reserved. Member FINRA/SIPC.
138, 338, 538, 638
INFANN 11/07
(VAN KAMPEN INVESTMENTS LOGO) IU07-04620P-Y09/07
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen New
York Tax Free Income Fund performed during the annual 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 September 30, 2007.
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 AN ADDITIONAL 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 THE FUND WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. THE FUND IS SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY
THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL DECLINE AND,
THEREFORE, THE VALUE OF THE FUND SHARES MAY 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 9/30/07
PERFORMANCE OF A $10,000 INVESTMENT
This chart compares your fund's performance to that of the Lehman Brothers
Municipal Bond Index and the Lehman Brothers New York Municipal Bond Index from
9/30/97 through 9/30/07. Class A shares, adjusted for sales charges.
(LINE GRAPH)
<Table>
<Caption>
VAN KAMPEN NEW YORK TAX LEHMAN BROTHERS NEW YORK LEHMAN BROTHERS MUNICIPAL
FREE INCOME FUND MUNICIPAL BOND INDEX BOND INDEX
----------------------- ------------------------ -------------------------
9/97 9526 10000 10000
9842 10281 10271
9997 10418 10390
10181 10588 10548
9/98 10543 10913 10871
10580 10988 10937
10666 11087 11034
10456 10890 10839
9/99 10268 10850 10796
10063 10765 10712
10339 11092 11025
10477 11264 11192
9/00 10772 11527 11462
11304 12057 11964
11544 12324 12229
11652 12426 12309
9/01 11954 12703 12654
11811 12641 12577
11966 12796 12695
12418 13231 13160
9/02 13105 13859 13785
13059 13863 13785
13194 14033 13950
13556 14383 14310
9/03 13588 14412 14321
13843 14598 14517
13999 14837 14768
13734 14492 14419
9/04 14286 15049 14980
14430 15222 15168
14382 15213 15162
14889 15639 15606
9/05 14899 15612 15587
14991 15726 15701
15102 15773 15739
15112 15774 15744
9/06 15638 16295 16281
15822 16470 16461
15937 16602 16594
15838 16513 16484
9/07 15848 16815 16784
</Table>
<Table>
<Caption>
A SHARES B SHARES C SHARES
since 7/29/94 since 7/29/94 since 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 CHARGES CHARGES CHARGES CHARGES CHARGES
Since Inception 5.94% 5.55% 5.47% 5.47% 5.35% 5.35%
10-year 5.22 4.71 4.59 4.59 4.45 4.45
5-year 3.87 2.87 3.16 2.90 3.10 3.10
1-year 1.34 -3.46 0.95 -2.93 0.66 -0.31
- ----------------------------------------------------------------------------------------------
30-Day SEC Subsidized Yield 3.96% 4.00% 3.41%
30-Day SEC Yield 3.73% 3.75% 3.17%
</Table>
PAST PERFORMANCE 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 eight 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.
1
Fund Report
FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2007
MARKET CONDITIONS
Strong fundamental and technical factors supported the municipal bond market
throughout much of the reporting period, helping it to perform well through the
second quarter of 2007. In July, however, contagion from the troubled subprime
mortgage sector led to an increasingly illiquid and volatile market, and a
flight to quality that led Treasury bonds to outperform all other sectors of the
fixed income market, including both investment grade and below investment grade
municipal bonds.
Up until that time, demand for municipal bonds had been quite strong as
institutional investors and non-traditional buyers such as hedge funds and
arbitrage investors continued to flock to the market. Given the low prevailing
interest rates, demand for higher-yielding municipal bonds was particularly
robust, which served to keep credit spreads tight. As market liquidity began to
dry up, however, institutional demand fell off and refunding activity, which had
been high, virtually halted. Although the supply of municipal bonds was
declining as well, the decrease in demand put significant pressure on prices at
the same time that the Treasury market was rallying. As a result, credit spreads
widened, with the most significant widening occurring in the lower-rated
segments of the market, where spreads on municipal bonds rated BBB and below
(including non-rated bonds) widened by 40 to 50 basis points.
In mid-September, following the 50 basis point reduction in the target federal
funds rate by the Federal Open Market Committee (the "Fed"), the market began to
stabilize, liquidity improved, and municipal credit spreads began to tighten
again. Despite these improvements, however, municipal bonds underperformed
Treasuries for the overall reporting period.
Overall, municipal bond yields ended the period higher, but most of the yield
increases occurred in the intermediate to long maturity portion of the yield
curve, while yields on the front end of the curve decreased slightly. As a
result, the municipal yield curve steepened over the course of the period, with
the differential between two-year and 30-year maturities widening to about 100
basis points.
The supply of municipal bonds appeared to be heading toward a record for a
calendar year, with total new issuance year-to-date reaching $323 billion as of
September 30, 2007. Although some new issue deals scheduled to come to market in
New York when interest rates were rising so quickly were postponed, the state
continued to be the second largest issuer of municipal bonds in the country. The
low interest rate environment for much of the period, coupled with the large
supply of municipal bonds, led to a high amount of refundings in the state,
wherein new bonds are issued to repay outstanding bonds prior to
2
their stated maturities. Overall, New York's economy continued to expand and its
credit outlook remains positive.
PERFORMANCE ANALYSIS
All share classes of Van Kampen New York Tax Free Income Fund underperformed the
Lehman Brothers New York Municipal Bond Index and the Lehman Brothers Municipal
Bond Index for the 12 months ended September 30, 2007, assuming no deduction of
applicable sales charges.
TOTAL RETURNS FOR THE 12-MONTH PERIOD ENDED SEPTEMBER 30, 2007
<Table>
<Caption>
- -------------------------------------------------------------------------------------
LEHMAN BROTHERS
NEW YORK LEHMAN BROTHERS
CLASS A CLASS B CLASS C MUNICIPAL BOND INDEX MUNICIPAL BOND INDEX
1.34% 0.95% 0.66% 3.19% 3.09%
- -------------------------------------------------------------------------------------
</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.
Various factors contributed to the Fund's relative underperformance for the
reporting period, one of which was an overweight versus both the Lehman Brothers
Municipal Bond Index and the Lehman Brothers New York Municipal Bond Index in
BBB and non-rated bonds. While this position was additive to performance for
much of the period as lower rated bonds outperformed higher quality issues, in
the last few months performance of the lower rated segment of the market
suffered due to significant spread widening. As a result, the Fund's larger
relative weighting there detracted from overall performance.
An overweight in tobacco bonds also dampened performance. The tobacco sector was
the hardest hit sector of the municipal market in July and August, after
particularly strong performance in the preceding months. The fundamental credit
quality of tobacco bonds remained solid, but the combination of an abundant
supply, the liquidity squeeze in the market, and the flight to quality (tobacco
bonds are lower rated) caused spreads in the sector to widen dramatically.
Therefore, while the Fund's position in the sector was beneficial for much of
the period, it held back returns in the latter months. In addition, the Fund's
tobacco bonds holdings are newer, more recently issued securities and therefore,
did not benefit from the pre-refundings of older bonds that took place during
the period. The Fund also had a higher allocation to health care bonds, which
hindered returns late in the period when the sector's performance waned.
We maintained a focus on the long end of the yield curve, favoring bonds with
maturities of 25 years or more. This yield-curve positioning was additive to
performance for much of the period when interest rates on the long end of the
3
curve were falling. In the latter months, however, longer-term yields rose and
the Fund's emphasis here hindered performance.
An overweight to housing bonds was also additive to overall performance. The
Fund's holdings in the sector were in higher-coupon issues, which outperformed
lower-coupon issues during the fiscal year. Strong security selection in
transportation and utilities also boosted returns, but an underweight to these
sectors detracted somewhat as they performed well. The Fund's duration (a
measure of interest-rate risk) positioning remained neutral and had no material
impact on overall performance.
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 9/30/07
AAA/Aaa 31.1%
AA/Aa 29.8
A/A 8.0
BBB/Baa 15.9
BB/Ba 5.1
B/B 1.5
Non-Rated 8.6
<Caption>
TOP FIVE SECTORS AS OF 9/30/07
Hospital 17.8%
General Purpose 12.6
Higher Education 9.6
Student Housing 7.2
Master Tobacco Settlement 6.9
</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 as a
percentage of total investments. Top Five 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.
5
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. The semiannual reports and the
annual reports are filed electronically with the Securities and Exchange
Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. 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 email 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.
6
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.
7
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 charges on redemptions of Class B and C Shares;
and redemption fees; 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 4/1/07 - 9/30/07.
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 costs 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 or redemption fees.
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*
------------------------------------------------
4/1/07 9/30/07 4/1/07-9/30/07
Class A
Actual...................................... $1,000.00 $ 994.43 $3.70
Hypothetical................................ 1,000.00 1,021.36 3.75
(5% annual return before expenses)
Class B
Actual...................................... 1,000.00 994.28 3.70
Hypothetical................................ 1,000.00 1,021.36 3.75
(5% annual return before expenses)
</Table>
8
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
------------------------------------------------
4/1/07 9/30/07 4/1/07-9/30/07
Class C
Actual...................................... 1,000.00 990.60 7.44
Hypothetical................................ 1,000.00 1,017.60 7.54
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 0.74%, 0.74%
and 1.49%, for Class A, B and C Shares, respectively, multiplied by the
average account value over the period, multiplied by 183/365 (to reflect the
one-half year period). These expense ratios reflect an expense waiver.
Assumes all dividends and distributions were reinvested.
The following table shows what expenses a shareholder would have paid, excluding
interest and residual trust expenses.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
------------------------------------------------
4/1/07 9/30/07 4/1/07-9/30/07
Class A
Actual...................................... $1,000.00 $ 994.43 $3.60
Hypothetical................................ 1,000.00 1,021.46 3.65
(5% annual return before expenses)
Class B
Actual...................................... 1,000.00 994.28 3.75
Hypothetical................................ 1,000.00 1,021.31 3.80
(5% annual return before expenses)
Class C
Actual...................................... 1,000.00 990.60 7.34
Hypothetical................................ 1,000.00 1,017.70 7.44
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 0.72%, 0.75%
and 1.47%, for Class A, B and C Shares, respectively, multiplied by the
average account value over the period, multiplied by 183/365 (to reflect the
one-half year period). These expense ratios reflect an expense waiver.
Assumes all dividends and distributions were reinvested.
9
Investment Advisory Agreement Approval
Both the Investment Company Act of 1940 and the terms of the Fund's investment
advisory agreement require that the investment advisory agreement between the
Fund and its investment adviser be approved annually both by a majority of the
Board of Trustees and by a majority of the independent trustees voting
separately.
At meetings held on April 17, 2007 and May 30, 2007, the Board of Trustees, and
the independent trustees voting separately, considered and ultimately determined
that the terms of the investment advisory agreement are fair and reasonable and
approved the continuance of the investment advisory agreement as being in the
best interests of the Fund and its shareholders. In making its determination,
the Board of Trustees considered materials that were specifically prepared by
the investment adviser at the request of the Board and Fund counsel, and by an
independent provider of investment company data contracted to assist the Board,
relating to the investment advisory agreement review process. The Board also
considered information received periodically about the portfolio, performance,
the investment strategy, portfolio management team and fees and expenses of the
Fund. The Board of Trustees considered the investment advisory agreement over a
period of several months and the trustees held sessions both with the investment
adviser and separate from the investment adviser in reviewing and considering
the investment advisory agreement.
In approving the investment advisory agreement, the Board of Trustees
considered, among other things, the nature, extent and quality of the services
provided by the investment adviser, the performance, fees and expenses of the
Fund compared to other similar funds and other products, the investment
adviser's expenses in providing the services and the profitability of the
investment adviser and its affiliated companies. The Board of Trustees
considered the extent to which any economies of scale experienced by the
investment adviser are shared with the Fund's shareholders, and the propriety of
existing and alternative breakpoints in the Fund's investment advisory fee
schedule. The Board of Trustees considered comparative advisory fees of the Fund
and other investment companies and/or other products at different asset levels,
and considered the trends in the industry versus historical and projected assets
of the Fund. The Board of Trustees evaluated other benefits the investment
adviser and its affiliates derive from their relationship with the Fund. The
Board of Trustees reviewed information about the foregoing factors and
considered changes, if any, in such information since its previous approval. The
Board of Trustees discussed the financial strength of the investment adviser and
its affiliated companies and the capability of the personnel of the investment
adviser, and specifically the strength and background of its portfolio
management personnel. The Board of Trustees reviewed the statutory and
regulatory requirements for approval and disclosure of investment advisory
agreements. The Board of Trustees, including the independent trustees,
10
evaluated all of the foregoing and does not believe any single factor or group
of factors control or dominate the review process, and, after considering all
factors together, has determined, in the exercise of its business judgment, that
approval of the investment advisory agreement is in the best interests of the
Fund and its shareholders. The following summary provides more detail on certain
matters considered but does not detail all matters considered.
Nature, Extent and Quality of the Services Provided. On a regular basis, the
Board of Trustees considers the roles and responsibilities of the investment
adviser as a whole and for those specific portfolio management, support and
trading functions servicing the Fund. The trustees discuss with the investment
adviser the resources available and used in managing the Fund. The Fund
discloses information about its portfolio management team members and their
experience in its prospectus. The trustees also discuss certain other services
which are provided on a cost-reimbursement basis by the investment adviser or
its affiliates to the Van Kampen funds including certain accounting,
administrative and legal services. The Board has determined that the nature,
extent and quality of the services provided by the investment adviser support
its decision to approve the investment advisory agreement.
Performance, Fees and Expenses of the Fund. On a regular basis, the Board of
Trustees reviews the performance, fees and expenses of the Fund compared to its
peers and to appropriate benchmarks. In addition, the Board spends more focused
time on the performance of the Fund and other funds in the Van Kampen complex,
paying specific attention to underperforming funds. The trustees discuss with
the investment adviser the performance goals and the actual results achieved in
managing the Fund. When considering a fund's performance, the trustees and the
investment adviser place emphasis on trends and longer-term returns (focusing on
one-year, three-year and five-year performance with special attention to
three-year performance) and, when a fund's weighted performance is under the
fund's benchmark, they discuss the causes and where necessary seek to make
specific changes to investment strategy or investment personnel. The Fund
discloses more information about its performance elsewhere in this report and in
the Fund's prospectus. The trustees discuss with the investment adviser the
level of advisory fees for this Fund relative to comparable funds and other
products advised by the adviser and others in the marketplace. The trustees
review not only the advisory fees but other fees and expenses (whether paid to
the adviser, its affiliates or others) and the Fund's overall expense ratio. The
Fund discloses more information about its fees and expenses in its prospectus.
The Board has determined that the performance, fees and expenses of the Fund
support its decision to approve the investment advisory agreement.
Investment Adviser's Expenses in Providing the Service and Profitability. At
least annually, the trustees review the investment adviser's expenses in
providing services to the Fund and other funds advised by the investment adviser
and the profitability of the investment adviser. These profitability reports are
put
11
together by the investment adviser with the oversight of the Board. The trustees
discuss with the investment adviser its revenues and expenses, including among
other things, revenues for advisory services, portfolio management-related
expenses, revenue sharing arrangement costs and allocated expenses both on an
aggregate basis and per fund. The Board has determined that the analysis of the
investment adviser's expenses and profitability support its decision to approve
the investment advisory agreement.
Economies of Scale. On a regular basis, the Board of Trustees considers the size
and growth prospects of the Fund and how that relates to the Fund's expense
ratio and particularly the Fund's advisory fee rate. In conjunction with its
review of the investment adviser's profitability, the trustees discuss with the
investment adviser how more (or less) assets can affect the efficiency or
effectiveness of managing the Fund's portfolio and whether the advisory fee
level is appropriate relative to current and projected asset levels and/or
whether the advisory fee structure reflects economies of scale as asset levels
change. The Board has determined that its review of the actual and potential
economies of scale of the Fund support its decision to approve the investment
advisory agreement.
Other Benefits of the Relationship. On a regular basis, the Board of Trustees
considers other benefits to the investment adviser and its affiliates derived
from its relationship with the Fund and other funds advised by the investment
adviser. These benefits include, among other things, fees for transfer agency
services provided to the funds, in certain cases research received by the
adviser generated from commission dollars spent on funds' portfolio trading, and
in certain cases distribution or service related fees related to funds' sales.
The trustees review with the investment adviser each of these arrangements and
the reasonableness of its costs relative to the services performed. The Board
has determined that the other benefits received by the investment adviser or its
affiliates support its decision to approve the investment advisory agreement.
12
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
MUNICIPAL BONDS 100.7%
NEW YORK 99.8%
$2,000 Albany, NY Indl Dev Agy Civic Fac Rev Albany Law
Sch Univ Ser A.................................. 5.000% 07/01/31 $ 1,957,660
1,290 Albany, NY Indl Dev Agy Indl Dev Rev Albany
College of Pharmacy Ser A....................... 5.625 12/01/34 1,315,413
500 Amherst, NY Indl Dev Agy Civic Beechwood
Hlthcare Ctr Inc................................ 5.200 01/01/40 447,415
330 Bethlehem, NY Indl Dev Agy Sr Hsg Rev Van Allen
Proj Ser A (Prerefunded @ 06/01/09)............. 6.875 06/01/39 355,044
400 Dutchess Cnty, NY Indl Dev Agy Elant Fishkill
Inc Ser A....................................... 5.250 01/01/37 378,284
1,000 East Rochester, NY Hsg Auth Rev Sr Living
Woodland Vlg Proj Rfdg.......................... 5.500 08/01/33 973,040
1,250 Erie Cnty, NY Indl Dev Agy Sch Fac Rev City of
Buffalo Proj (FSA Insd)......................... 5.750 05/01/21 1,356,975
1,250 Erie Cnty, NY Indl Dev Agy Sch Fac Rev City of
Buffalo Proj (FSA Insd)......................... 5.750 05/01/22 1,350,125
1,000 Erie Cnty, NY Tob Asset Sec Corp Ser A.......... 5.000 06/01/45 924,500
1,530 Hempstead Town, NY Indl Dev Adelphi Univ Civic
Fac............................................. 5.000 10/01/35 1,533,595
1,250 Hempstead Town, NY Indl Dev Adelphi Univ Civic
Fac............................................. 5.750 06/01/22 1,313,512
1,290 Islip, NY Res Recovery Agy Res 1985 Fac Ser E
(FSA Insd) (AMT)................................ 5.750 07/01/22 1,398,012
1,000 Livingston Cnty, NY Indl Dev Agy Civic Fac Rev
Nicholas H Noyes Mem Hosp....................... 6.000 07/01/30 1,006,310
1,500 Long Island Pwr Auth NY Elec Sys Rev Gen Ser
B............................................... 5.000 12/01/35 1,528,980
1,500 Metropolitan Trans Auth NY Rev Ser A............ 5.000 11/15/23 1,579,110
1,000 Metropolitan Trans Auth NY Rev Rfdg Ser A (AMBAC
Insd)........................................... 5.500 11/15/19 1,082,640
1,000 Metropolitan Trans Auth NY Svc Contract Rfdg Ser
A............................................... 5.125 01/01/29 1,032,960
1,000 Monroe Cnty, NY Indl Dev Agy Nazareth College
Rochester Proj (MBIA Insd)...................... 5.250 10/01/21 1,064,530
1,320 Montgomery Cnty, NY Indl Dev Agy Lease Rev HFM
Boces Ser A (XLCA Insd)......................... 5.000 07/01/34 1,353,673
1,500 New York City Hlth & Hosp Corp Rev Hlth Sys Ser
A (FSA Insd).................................... 5.500 02/15/18 1,611,030
1,000 New York City Hlth & Hosp Corp Rev Hlth Sys Ser
A (FSA Insd).................................... 5.500 02/15/19 1,074,020
2,000 New York City Hsg Dev Corp Multi-Family Hsg Rev
Ser B1 (AMT).................................... 5.150 11/01/37 2,008,160
1,000 New York City Hsg Dev Corp Multi-Family Hsg Rev
Ser J1.......................................... 4.850 05/01/36 1,004,280
2,500 New York City Hsg Dev Corp Multi-Family Hsg Rev
Ser L (AMT)..................................... 5.050 11/01/39 2,474,400
</Table>
See Notes to Financial Statements 13
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$1,000 New York City Hsg Dev Corp Ser A (AMT).......... 5.500% 11/01/34 $ 1,015,940
445 New York City Indl Dev Agy Civic Fac Rev Cmnty
Res
Developmentally Disabled........................ 7.500 08/01/26 449,980
500 New York City Indl Dev Agy Civic Fac Rev College
of New Rochelle Proj............................ 5.750 09/01/17 510,620
1,245 New York City Indl Dev Agy Civic Fac Rev Ctr for
Nursing Ser B................................... 5.375 08/01/27 1,186,535
1,405 New York City Indl Dev Agy Fac Rev Royal
Charter-NY Presbyterian (FSA Insd).............. 5.375 12/15/16 1,524,650
500 New York City Indl Dev Agy Rev Liberty 7 World
Trade Ctr Ser A................................. 6.250 03/01/15 522,910
500 New York City Indl Dev Agy Rev Liberty 7 World
Trade Ctr Ser A................................. 6.500 03/01/35 522,840
1,125 New York City Indl Dev Agy Rev Liberty Iac/
Interactive Corp................................ 5.000 09/01/35 1,074,319
500 New York City Indl Dev Agy Spl Fac Rev Amern
Airl JFK Intl Arpt (AMT)........................ 7.750 08/01/31 571,905
1,500 New York City Indl Dev Agy Spl Fac Rev JetBlue
Airways Corp Proj (AMT)......................... 5.125 05/15/30 1,315,845
2,000 New York City Indl Dev Agy Spl Fac Rev Term One
Group Assn Proj (AMT) (a)....................... 5.500 01/01/19 2,137,335
1,400 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev Ser B....................................... 5.000 06/15/36 1,436,120
500 New York City Muni Wtr Fin Ser B................ 6.000 06/15/33 534,265
2,500 New York City Ser A............................. 5.500 08/01/20 2,704,300
2,500 New York City Ser G............................. 5.000 08/01/24 2,592,150
2,390 New York City Ser G............................. 5.000 12/01/28 2,460,218
1,500 New York City Ser J............................. 5.000 03/01/24 1,550,190
1,000 New York City Transitional Cultural Res Rev
Amern Museum Nat History Ser A (MBIA Insd)...... 5.000 07/01/44 1,023,700
1,025 New York City Transitional Future Tax Secd Ser
B............................................... 5.500 02/01/15 1,091,840
1,335 New York City Transitional Future Tax Secd Ser C
(AMBAC Insd).................................... 5.250 08/01/21 1,423,751
2,475 New York Cnty Tob Tr IV Settlement Pass Thru Ser
A............................................... 5.000 06/01/45 2,286,306
750 New York Liberty Dev Corp Rev Natl Sports Museum
Proj Ser A (Acquired 08/07/06, Cost $750,000)
(b)............................................. 6.125 02/15/19 764,993
1,500 New York St Dorm Auth Lease Rev Muni Hlth Fac
Impt Pgm Ser 1 (FSA Insd)....................... 5.500 01/15/14 1,592,565
2,000 New York St Dorm Auth Rev Catholic Hlth L I
Oblig Grp....................................... 5.000 07/01/27 1,969,000
1,000 New York St Dorm Auth Rev City Univ Cons Third
Ser 1 (FGIC Insd)............................... 5.250 07/01/25 1,031,220
1,230 New York St Dorm Auth Rev City Univ Rfdg Ser D
(FSA Insd)...................................... 5.750 07/01/12 1,301,684
</Table>
14 See Notes to Financial Statements
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$ 650 New York St Dorm Auth Rev City Univ Sys Cons Ser
A............................................... 5.625% 07/01/16 $ 718,698
1,000 New York St Dorm Auth Rev City Univ Sys Cons Ser
B............................................... 6.000 07/01/14 1,085,040
1,890 New York St Dorm Auth Rev Dept Ed (d)........... 5.250 07/01/21 2,002,739
1,000 New York St Dorm Auth Rev Insd Brooklyn Law Sch
Ser B (XLCA Insd)............................... 5.375 07/01/23 1,072,690
1,040 New York St Dorm Auth Rev Insd NY St Rehab Assn
Ser A (AMBAC Insd) (d).......................... 5.500 07/01/15 1,121,650
1,200 New York St Dorm Auth Rev
Miriam Osborn Mem Home Ser B (ACA Insd)......... 6.375 07/01/29 1,280,328
2,000 New York St Dorm Auth Rev Mtg Montefiore Hosp
(FGIC Insd)..................................... 5.000 08/01/33 2,051,120
1,000 New York St Dorm Auth Rev Non St Supported Debt
L I Jewish (a).................................. 5.000 11/01/26 1,012,350
1,000 New York St Dorm Auth Rev Non St Supported Debt
L I Jewish (a).................................. 5.000 11/01/34 1,012,350
2,000 New York St Dorm Auth Rev Non St Supported Debt
Mt Sinai NYU Hlth Ser C......................... 5.500 07/01/26 2,017,060
1,500 New York St Dorm Auth Rev Non St Supported Debt
NYU Hosp Ctr Ser A.............................. 5.000 07/01/20 1,494,990
3,000 New York St Dorm Auth Rev Non St Supported Debt
NYU Hosp Ctr Ser A.............................. 5.000 07/01/36 2,782,260
750 New York St Dorm Auth Rev Nursing Home Menorah
Campus (FHA Gtd)................................ 5.950 02/01/17 766,305
2,000 New York St Dorm Auth Rev Non St Supported Debt
Providence Rest (ACA Insd)...................... 5.250 07/01/25 2,027,180
1,000 New York St Dorm Auth Rev Secd Hosp North Gen
Hosp Rfdg....................................... 5.750 02/15/18 1,087,190
365 New York St Dorm Auth Rev St Supported Debt
Bal-2007-Mental Ser B (MBIA Insd)............... 5.250 08/15/31 380,034
1,000 New York St Dorm Auth Rev St Univ Ed Fac 1989
Res (MBIA Insd) (Prerefunded @ 05/15/10)........ 6.000 05/15/15 1,072,040
500 New York St Energy Resh & Dev Auth Gas Fac Rev
Brooklyn Union Gas Ser B (AMT) (c).............. 8.854 07/01/26 528,750
2,200 New York St Environmental Fac Corp St Clean Wtr
& Drinking NYC Muni Wtr Fin Auth Sub Ser B...... 5.000 06/15/26 2,301,838
1,000 New York St Environmental Fac Corp St Clean Wtr
& Drinking Revolving Fd Pooled Fin Pgm Ser I.... 5.250 09/15/19 1,067,120
2,280 New York St Loc Govt Assistance Corp Rfdg Ser
E............................................... 6.000 04/01/14 2,515,273
1,905 New York St Mtg Agy Rev for Homeowner Mtg Ser
130 (AMT)....................................... 4.800 10/01/37 1,816,246
650 New York St Mtg Agy Rev Ser 82 (AMT)............ 5.650 04/01/30 673,894
</Table>
See Notes to Financial Statements 15
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
NEW YORK (CONTINUED)
$ 940 New York St Mtg Agy Rev Ser 101 (AMT)........... 5.400% 04/01/32 $ 950,613
500 New York St Urban Dev Corp Rev Correctional Fac
Rfdg Ser A...................................... 5.500 01/01/14 537,460
220 Oneida Cnty, NY Indl Dev Agy Civic Fac Saint
Elizabeth Med Ser A............................. 5.875 12/01/29 220,664
1,000 Rensselaer Cnty, NY Indl Dev Agy Indl Dev Rev
Franciscan Heights LP Proj Ser A (AMT) (LOC: JP
Morgan Chase Bank).............................. 5.375 12/01/36 1,035,400
2,500 Rensselaer Cnty, NY Sch Dist Ctf Partn (XLCA
Insd)........................................... 5.000 06/01/26 2,615,300
1,000 Rockland Cnty, NY Solid Waste Ser B (AMBAC Insd)
(AMT)........................................... 5.000 12/15/23 1,030,600
1,000 Seneca Nation Indians Cap Impt Auth NY Spl Oblig
Ser A (e)....................................... 5.000 12/01/23 956,720
1,500 Suffolk Cnty, NY Indl Dev Agy Civic Fac Rev
Eastrn Long Island Hosp Assn (Acquired 06/22/07,
Cost $1,472,445) (b)............................ 5.375 01/01/27 1,422,330
825 Suffolk Cnty, NY Indl Dev Agy Civic Fac Rev
Family Svc League Suffolk Cnty (LOC: Fleet
National Bank).................................. 5.000 11/01/34 840,741
250 Syracuse, NY Indl Dev Agy Rev First Mtg Jewish
Home Ser A...................................... 7.375 03/01/21 264,218
2,000 Tobacco Settlement Fin Corp NY Ser B............ 5.500 06/01/22 2,132,540
325 Triborough Brdg & Tunl Auth NY Rev Gen Purp Ser
A............................................... 5.000 01/01/32 331,399
2,000 Triborough Brdg & Tunl Auth NY Rev Gen Purp Ser
A............................................... 5.250 01/01/18 2,113,320
1,090 Tsasc, Inc. NY Ser 1............................ 5.000 06/01/34 1,026,464
2,500 Tsasc, Inc. NY Ser 1............................ 5.125 06/01/42 2,362,700
1,000 Ulster Cnty, NY Res Recovery Agy Solid Waste Sys
Rev Rfdg (AMBAC Insd)........................... 5.250 03/01/18 1,060,040
160 Upper Mohawk Vly Regl Wtr Fin Auth NY Wtr Sys
Rev (AMBAC Insd)................................ 5.750 04/01/20 169,622
840 Upper Mohawk Vly Regl Wtr Fin Auth NY Wtr Sys
Rev (AMBAC Insd) (Prerefunded @ 04/01/10)....... 5.750 04/01/20 893,231
310 Utica, NY Indl Dev Agy Civic Fac Rev Utica
College Proj Ser A.............................. 5.750 08/01/28 312,353
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 1,020,960
500 Westchester Cnty, NY Indl Dev Agy Mtg Kendal on
Hudson Proj Ser A............................... 6.375 01/01/24 523,635
2,000 Westchester Tob Asset Sec Corp NY............... 5.125 06/01/45 1,891,740
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 1,097,850
------------
121,415,894
------------
</Table>
16 See Notes to Financial Statements
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2007 continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- -------------------------------------------------------------------------------------------
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 $ 1,079,850
------------
TOTAL INVESTMENTS 100.7%
(Cost $121,006,101)....................................................... 122,495,744
LIABILITY FOR FLOATING RATE NOTE OBLIGATIONS RELATED TO SECURITIES
HELD (2.5%)
(Cost ($3,000,000))
(3,000) Notes with interest rates ranging from 3.91% to 4.01% at September
30, 2007 and contractual maturities of collateral ranging from
2019 to 2034 (f).................................................. (3,000,000)
------------
TOTAL NET INVESTMENTS 98.2%
(Cost $118,006,101)....................................................... 119,495,744
OTHER ASSETS IN EXCESS OF LIABILITIES 1.8%................................. 2,189,049
------------
NET ASSETS 100.0%.......................................................... $121,684,793
============
</Table>
Percentages are calculated as a percentage of net assets.
(a) Underlying security related to Inverse Floaters entered into by the Fund.
(b) This Security is restricted and may be resold only in transactions exempt
from registration which are normally those transactions with qualified
institutional buyers. Restricted securities comprise 1.8% of net assets.
(c) Inverse Floating Rate. The interest rates shown reflect the rates in effect
at September 30, 2007.
(d) The Fund owns 100% of the outstanding bond issuance.
(e) 144A-Private Placement security which is exempt from registration under Rule
144A of the Securities Act of 1933, as amended. This security may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(f) Floating rate notes. The interest rates shown reflect the rates in effect at
September 30, 2007.
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.
See Notes to Financial Statements 17
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
September 30, 2007
<Table>
ASSETS:
Total Investments (Cost $121,006,101)....................... $122,495,744
Receivables:
Interest.................................................. 1,787,392
Fund Shares Sold.......................................... 1,241,122
Investments Sold.......................................... 180,000
Other....................................................... 114,766
------------
Total Assets............................................ 125,819,024
------------
LIABILITIES:
Payables:
Floating Rate Note Obligations............................ 3,000,000
Custodian Bank............................................ 537,927
Fund Shares Repurchased................................... 173,088
Income Distributions...................................... 120,996
Investment Advisory Fee................................... 21,686
Distributor and Affiliates................................ 16,346
Trustees' Deferred Compensation and Retirement Plans........ 180,291
Accrued Expenses............................................ 83,897
------------
Total Liabilities....................................... 4,134,231
------------
NET ASSETS.................................................. $121,684,793
============
NET ASSETS CONSIST OF:
Capital (Par value of $0.01 per share with an unlimited
number of shares authorized).............................. $119,646,093
Net Unrealized Appreciation................................. 1,489,643
Accumulated Undistributed Net Investment Income............. 351,015
Accumulated Net Realized Gain............................... 198,042
------------
NET ASSETS.................................................. $121,684,793
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $82,260,919 and 5,136,825 shares of
beneficial interest issued and outstanding)............. $ 16.01
Maximum sales charge (4.75%* of offering price)......... 0.80
------------
Maximum offering price to public........................ $ 16.81
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $20,511,918 and 1,284,031 shares of
beneficial interest issued and outstanding)............. $ 15.97
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $18,911,956 and 1,182,676 shares of
beneficial interest issued and outstanding)............. $ 15.99
============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
18 See Notes to Financial Statements
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Year Ended September 30, 2007
<Table>
INVESTMENT INCOME:
Interest.................................................... $ 6,091,720
-----------
EXPENSES:
Investment Advisory Fee..................................... 581,776
Distribution (12b-1) and Service Fees
Class A................................................... 200,056
Class B................................................... 171,000
Class C................................................... 179,677
Interest And Residual Trust Expenses........................ 115,560
Transfer Agent Fees......................................... 65,661
Professional Fees........................................... 62,513
Accounting and Administrative Expenses...................... 59,544
Reports to Shareholders..................................... 47,797
Trustees' Fees and Related Expenses......................... 30,662
Custody..................................................... 14,334
Registration Fees........................................... 5,289
Other....................................................... 21,091
-----------
Total Expenses............................................ 1,554,960
Investment Advisory Fee Reduction......................... 309,455
Less Credits Earned on Cash Balances...................... 3,759
-----------
Net Expenses.............................................. 1,241,746
-----------
NET INVESTMENT INCOME....................................... $ 4,849,974
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 235,010
Futures................................................... 11,549
-----------
Net Realized Gain........................................... 246,559
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 5,155,008
End of the Period......................................... 1,489,643
-----------
Net Unrealized Depreciation During the Period............... (3,665,365)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(3,418,806)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 1,431,168
===========
</Table>
See Notes to Financial Statements 19
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets
<Table>
<Caption>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2007 SEPTEMBER 30, 2006
----------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.............................. $ 4,849,974 $ 4,468,397
Net Realized Gain.................................. 246,559 480,212
Net Unrealized Appreciation/Depreciation During the
Period........................................... (3,665,365) 308,177
------------ ------------
Change in Net Assets from Operations............... 1,431,168 5,256,786
------------ ------------
Distributions from Net Investment Income:
Class A Shares................................... (3,319,285) (2,816,473)
Class B Shares................................... (945,559) (1,008,247)
Class C Shares................................... (620,061) (572,354)
------------ ------------
(4,884,905) (4,397,074)
------------ ------------
Distributions from Net Realized Gain:
Class A Shares................................... (112,999) (1,332,049)
Class B Shares................................... (41,402) (632,017)
Class C Shares................................... (26,599) (347,951)
------------ ------------
(181,000) (2,312,017)
------------ ------------
Total Distributions................................ (5,065,905) (6,709,091)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES....................................... (3,634,737) (1,452,305)
------------ ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold.......................... 31,644,946 21,951,233
Net Asset Value of Shares Issued Through Dividend
Reinvestment..................................... 3,695,428 4,826,992
Cost of Shares Repurchased......................... (29,862,385) (25,286,714)
------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS..................................... 5,477,989 1,491,511
------------ ------------
TOTAL INCREASE IN NET ASSETS....................... 1,843,252 39,206
NET ASSETS:
Beginning of the Period............................ 119,841,541 119,802,335
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of $351,015
and $388,711, respectively)...................... $121,684,793 $119,841,541
============ ============
</Table>
20 See Notes to Financial Statements
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
FINANCIAL HIGHLIGHTS
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS A SHARES ----------------------------------------------
2007 2006 2005 2004 2003
----------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD..... $16.47 $16.67 $16.60 $16.40 $16.49
------ ------ ------ ------ ------
Net Investment Income...................... 0.67(a) 0.66(a) 0.64 0.65 0.69
Net Realized and Unrealized Gain/Loss...... (0.43) 0.11 0.06 0.17 (0.10)
------ ------ ------ ------ ------
Total from Investment Operations............. 0.24 0.77 0.70 0.82 0.59
------ ------ ------ ------ ------
Less:
Distributions from Net Investment Income... 0.68 0.65 0.63 0.62 0.68
Distributions from Net Realized Gain....... 0.02 0.32 -0- -0- -0-
------ ------ ------ ------ ------
Total Distributions.......................... 0.70 0.97 0.63 0.62 0.68
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD........... $16.01 $16.47 $16.67 $16.60 $16.40
====== ====== ====== ====== ======
Total Return* (b)............................ 1.34% 4.96% 4.29% 5.13% 3.69%
Net Assets at End of the Period (In
millions).................................. $ 82.3 $ 73.8 $ 67.8 $ 62.2 $ 63.6
Ratio of Expenses to Average Net Assets*..... .81% .73% .76% .76% .55%
Ratio of Net Investment Income to Average Net
Assets*.................................... 4.12% 4.05% 3.87% 3.94% 4.19%
Portfolio Turnover........................... 13% 30% 41% 15% 27%
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses)*................................. .72% .73% .76% .76% .55%
* 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... 1.06% .98% 1.01% 1.09% 1.06%
Ratio of Net Investment Income to Average
Net Assets.............................. 3.87% 3.80% 3.62% 3.60% 3.68%
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses).................................. .97% .98% 1.01% 1.09% 1.06%
</Table>
(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 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 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.
See Notes to Financial Statements 21
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS B SHARES ----------------------------------------------
2007 2006 2005 2004 2003
----------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD..... $16.43 $16.63 $16.58 $16.38 $16.47
------ ------ ------ ------ ------
Net Investment Income...................... 0.60(a) 0.54(a) 0.52 0.52 0.56
Net Realized and Unrealized Gain/Loss...... (0.43) 0.11 0.04 0.18 (0.09)
------ ------ ------ ------ ------
Total from Investment Operations............. 0.17 0.65 0.56 0.70 0.47
------ ------ ------ ------ ------
Less:
Distributions from Net Investment Income... 0.61 0.53 0.51 0.50 0.56
Distributions from Net Realized Gain....... 0.02 0.32 -0- -0- -0-
------ ------ ------ ------ ------
Total Distributions.......................... 0.63 0.85 0.51 0.50 0.56
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD........... $15.97 $16.43 $16.63 $16.58 $16.38
====== ====== ====== ====== ======
Total Return* (b)............................ .95%(c) 4.18% 3.40% 4.36% 2.93%
Net Assets at End of the Period (In
millions).................................. $ 20.5 $ 28.6 $ 33.9 $ 38.6 $ 40.5
Ratio of Expenses to Average Net Assets*..... 1.23%(c) 1.48% 1.51% 1.51% 1.29%
Ratio of Net Investment Income to Average Net
Assets*.................................... 3.69%(c) 3.30% 3.12% 3.19% 3.45%
Portfolio Turnover........................... 13% 30% 41% 15% 27%
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses).................................. 1.14%(c) 1.48% 1.51% 1.51% 1.29%
* 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... 1.48%(c) 1.73% 1.76% 1.84% 1.80%
Ratio of Net Investment Income to Average
Net Assets.............................. 3.44%(c) 3.05% 2.87% 2.85% 2.94%
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses)*................................. 1.39%(c) 1.73% 1.76% 1.84% 1.80%
</Table>
(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 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) 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).
22 See Notes to Financial Statements
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
FINANCIAL HIGHLIGHTS continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
YEAR ENDED SEPTEMBER 30,
CLASS C SHARES ----------------------------------------------
2007 2006 2005 2004 2003
----------------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD..... $16.45 $16.65 $16.59 $16.39 $16.48
------ ------ ------ ------ ------
Net Investment Income...................... 0.55(a) 0.54(a) 0.52 0.52 0.56
Net Realized and Unrealized Gain/Loss...... (0.43) 0.11 0.05 0.18 (0.09)
------ ------ ------ ------ ------
Total from Investment Operations............. 0.12 0.65 0.57 0.70 0.47
------ ------ ------ ------ ------
Less:
Distributions from Net Investment Income... 0.56 0.53 0.51 0.50 0.56
Distributions from Net Realized Gain....... 0.02 0.32 -0- -0- -0-
------ ------ ------ ------ ------
Total Distributions.......................... 0.58 0.85 0.51 0.50 0.56
------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE PERIOD........... $15.99 $16.45 $16.65 $16.59 $16.39
====== ====== ====== ====== ======
Total Return* (b)............................ .66%(d) 4.14%(d) 3.46%(d) 4.36% 2.92%(c)
Net Assets at End of the Period (In
millions).................................. $ 18.9 $ 17.4 $ 18.1 $ 17.5 $ 17.7
Ratio of Expenses to Average Net Assets*..... 1.55%(d) 1.46%(d) 1.47%(d) 1.51% 1.30%
Ratio of Net Investment Income to Average Net
Assets*.................................... 3.37%(d) 3.32%(d) 3.14%(d) 3.19% 3.45%(c)
Portfolio Turnover........................... 13% 30% 41% 15% 27%
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses)*................................. 1.46%(d) 1.46%(d) 1.47%(d) 1.51% 1.30%
* 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... 1.80%(d) 1.71%(d) 1.72%(d) 1.84% 1.81%
Ratio of Net Investment Income to Average
Net Assets.............................. 3.12%(d) 3.10%(d) 2.89%(d) 2.85% 2.94%(c)
SUPPLEMENTAL RATIO:
Ratio of Expenses to Average Net Assets
(Excluding Interest and Residual Trust
Expenses).................................. 1.71%(d) 1.71%(d) 1.72%(d) 1.84% 1.81%
</Table>
(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) 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 23
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007
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 provide investors with a high level of current income
exempt from federal, New York State and New York City income taxes, consistent
with the preservation of capital. The Fund seeks to achieve its investment
objective by investing primarily 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
September 30, 2007, 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. Interest rate swaps are valued using market
quotations from brokers. 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 September 30, 2007, 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.
24
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 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.
At September 30, 2007, the cost and related gross unrealized appreciation
and depreciation were as follows:
<Table>
Cost of investments for tax purposes........................ $117,944,695
============
Gross tax unrealized appreciation........................... $ 2,944,928
Gross tax unrealized depreciation........................... (1,393,879)
------------
Net tax unrealized appreciation on investments.............. $ 1,551,049
============
</Table>
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares 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 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 years ended September 30,
2007 and 2006 was as follows:
<Table>
<Caption>
2007 2006
Distributions paid from:
Ordinary income........................................... $ 7,504 $ 140,635
Tax-exempt income......................................... 4,864,884 4,392,841
Long-term capital gain.................................... 181,000 2,171,980
---------- ----------
$5,053,388 $6,705,456
========== ==========
</Table>
Permanent differences, due to the Fund's investment in other regulated
investment companies, resulted in the following reclassifications among the
Fund's components of net assets at September 30, 2007:
<Table>
<Caption>
ACCUMULATED UNDISTRIBUTED ACCUMULATED NET
NET INVESTMENT INCOME REALIZED GAIN CAPITAL
$(2,765) $2,765 $-0-
</Table>
As of September 30, 2007, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed ordinary income............................... $ 598
Undistributed tax-exempt income............................. 615,974
Undistributed long-term capital gain........................ 141,267
</Table>
Net realized gains or losses may differ for financial reporting and tax
purposes primarily as a result of gains or losses recognized on securities for
tax purposes but not for book purposes.
25
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
F. EXPENSE REDUCTIONS During the year ended September 30, 2007, the Fund's
custody fee was reduced by $3,759 as a result of credits earned on cash
balances.
G. FLOATING RATE NOTE OBLIGATIONS RELATED TO SECURITIES HELD The Fund enters
into transactions in which it transfers to dealer trusts fixed rate bonds in
exchange for cash and residual interests in the dealer trusts' assets and cash
flows, which are in the form of inverse floating rate investments. The dealer
trusts fund the purchases of the fixed rate bonds by issuing floating rate notes
to third parties and allowing the Fund to retain residual interests in the
bonds. The Fund enters into shortfall agreements with the dealer trusts, which
commit the Fund to pay the dealer trusts, in certain circumstances, the
difference between the liquidation value of the fixed rate bonds held by the
dealer trusts and the liquidation value of the floating rate notes held by third
parties, as well as any shortfalls in interest cash flows. The residual
interests held by the Fund (inverse floating rate investments) include the right
of the Fund (1) to cause the holders of the floating rate notes to tender their
notes at par at the next interest rate reset date, and (2) to transfer the
municipal bond from the dealer trusts to the Fund, thereby collapsing the dealer
trusts. The Fund accounts for the transfer of bonds to the dealer trusts as
secured borrowings, with the securities transferred remaining in the Fund's
investment assets, and the related floating rate notes reflected as Fund
liabilities under the caption "Floating Rate Note Obligations" on the Statement
of Assets and Liabilities. The Fund records the interest income from the fixed
rate bonds under the caption "Interest" and records the expenses related to
floating rate note obligations and any administrative expenses of the dealer
trusts under the caption "Interest and Residual Trust Expenses" in the Fund's
Statement of Operations. The notes issued by the dealer trusts have interest
rates that reset weekly and the floating rate note holders have the option to
tender their notes to the dealer trusts for redemption at par at each reset
date. At September 30, 2007, Fund investments with a value of $4,162,035 are
held by the dealer trusts and serve as collateral for the $3,000,000 in floating
rate notes outstanding at that date. Contractual maturities of the floating rate
notes and interest rates in effect at September 30, 2007 are presented on the
Portfolio of Investments. The average floating rate notes outstanding and
average annual interest and fee rate related to residual interests during the
fiscal year ended September 30, 2007 were $3,000,000 and 3.85%, respectively.
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>
For the year ended September 30, 2007, the Adviser voluntarily waived
$309,455 of its investment advisory fees. This represents .25% of its average
daily net assets for the period. This waiver is voluntary and can be
discontinued at any time.
For the year ended September 30, 2007, the Fund recognized expenses of
approximately $4,100 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, of
26
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
which a trustee of the Fund is a partner of such firm and he and his law firm
provide legal services as 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 year ended September 30,
2007, the Fund recognized expenses of approximately $51,300 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 "Professional Fees" on the Statement of Operations. Services provided
pursuant to the Accounting Services and CCO Employment agreement are reported as
part of "Accounting and Administrative 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 year ended
September 30, 2007, the Fund recognized expenses of approximately $47,300
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 $91,234 are included in
"Other" assets on the Statement of Assets and Liabilities at September 30, 2007.
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 year ended September 30, 2007, Van Kampen, as Distributor for the
Fund, received commissions on sales of the Fund's Class A Shares of
approximately $51,700 and contingent deferred sales charge (CDSC) on redeemed
shares of approximately $29,500. Sales charges do not represent expenses of the
Fund.
27
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
3. CAPITAL TRANSACTIONS
For the years ended September 30, 2007 and 2006, transactions were as follows:
<Table>
<Caption>
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 2007 SEPTEMBER 30, 2006
-------------------------- --------------------------
SHARES VALUE SHARES VALUE
Sales:
Class A........................... 1,535,307 $ 25,062,602 1,111,770 $ 18,163,119
Class B........................... 96,750 1,586,178 122,535 2,005,119
Class C........................... 306,654 4,996,166 108,099 1,782,995
---------- ------------ ---------- ------------
Total Sales......................... 1,938,711 $ 31,644,946 1,342,404 $ 21,951,233
========== ============ ========== ============
Dividend Reinvestment:
Class A........................... 156,432 $ 2,553,492 182,158 $ 2,972,744
Class B........................... 43,499 708,551 74,600 1,204,963
Class C........................... 26,581 433,385 41,056 649,285
---------- ------------ ---------- ------------
Total Dividend Reinvestment......... 226,512 $ 3,695,428 297,814 $ 4,826,992
========== ============ ========== ============
Repurchases:
Class A........................... (1,037,755) $(16,785,256) (878,472) $(14,316,761)
Class B........................... (597,695) (9,710,635) (495,061) (8,061,368)
Class C........................... (207,771) (3,366,494) (178,507) (2,908,585)
---------- ------------ ---------- ------------
Total Repurchases................... (1,843,221) $(29,862,385) (1,552,040) $(25,286,714)
========== ============ ========== ============
</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 and allocated on a pro rata basis to
each class of shares. For the year ended September 30, 2007, the Fund received
redemption fees of approximately $5,900, which are reported as part of "Cost of
Shares Repurchased" on the Statements of Changes in Net Assets. The per share
impact from redemption fees paid to the Fund was less than $0.01.
5. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $21,610,517 and $16,055,588,
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
28
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
contract. In these instances, 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 investment. 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 or 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 year ended September 30, 2007 are
as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at September 30, 2006........................... 29
Futures Opened.............................................. 44
Futures Closed.............................................. (73)
---
Outstanding at September 30, 2007........................... -0-
===
</Table>
B. INVERSE FLOATING RATE INVESTMENTS The Fund may invest a portion of its assets
in inverse floating rate instruments, either through outright purchases of
inverse floating rate securities or through the transfer of bonds to a dealer
trust in exchange for cash and residual interests in the dealer trust. These
investments are typically used by the Fund in seeking to enhance the yield of
the portfolio. These instruments typically involve greater risks than a fixed
rate municipal bond. In particular, these instruments are acquired through
leverage or may have leverage embedded in them and therefore involve many of the
risks associated with leverage. Leverage is a speculative technique that may
expose the Fund to greater risk and increased costs. Leverage may cause the
Fund's net asset value to be more volatile than if it had not been leveraged
because leverage tends to magnify the effect of any increases or decreases in
the value of the Fund's portfolio securities. The use of leverage may also cause
the Fund to liquidate portfolio positions when it may not be advantageous to do
so in order to satisfy its obligations with respect to inverse floating rate
instruments.
C. INTEREST RATE SWAPS The Fund may enter into forward interest rate swap
transactions intended to help the Fund manage its overall interest rate
sensitivity, either shorter or longer, generally to more closely align the
Fund's interest rate sensitivity with that of the broader municipal market.
Forward interest rate swap transactions involve the Fund's agreement with a
counterparty to pay, in the future, a fixed or variable rate payment in exchange
for the counterparty paying the Fund a variable or fixed rate payment, the
accruals for which would
29
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
begin at a specified date in the future (the "effective date"). The amount of
the payment obligation is based on the notional amount of the forward swap
contract and the termination date of the swap (which is akin to a bond's
maturity). The value of the Fund's swap commitment would increase or decrease
based primarily on the extent to which long-term interest rates for bonds having
a maturity of the swap's termination date increases or decreases. The Fund may
terminate a swap contract prior to the effective date, at which point a realized
gain or loss is recognized. When a forward swap is terminated, it ordinarily
does not involve the delivery of securities or other underlying assets or
principal, but rather is settled in cash on a net basis. The Fund intends, but
is not obligated, to terminate its forward swaps before the effective date.
Accordingly, the risk of loss with respect to the swap counterparty on such
transactions is limited to the credit risk associated with a counterparty
failing to honor its commitment to pay any realized gain to the Fund upon
termination. To reduce such credit risk, all counterparties are required to
pledge collateral daily (based on the daily valuation of each swap) on behalf of
the Fund with a value approximately equal to the amount of any unrealized gain.
Reciprocally, when the Fund has an unrealized loss on a swap contract, the Fund
has instructed the custodian to pledge cash or liquid securities as collateral
with a value approximately equal to the amount of the unrealized loss.
Collateral pledges are monitored and subsequently adjusted if and when the swap
valuations fluctuate. Restricted cash, if any, for segregating purposes is shown
on the Statement of Assets and Liabilities.
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 $14,100 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. ACCOUNTING PRONOUNCEMENTS
In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation 48, Accounting for Uncertainty in Income Taxes--an interpretation
of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for income taxes
by prescribing the minimum recognition threshold a tax position must meet before
being recognized in the financial statements. FIN 48 is effective for the fiscal
years beginning after December 15, 2006 and is
30
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2007 continued
to be applied to all open tax years as of the effective date. Recent SEC
guidance allows implementing FIN 48 in the fund NAV calculations as late as the
fund's last NAV calculation in the first required financial statement period. As
a result, the Fund will incorporate FIN 48 in its semiannual report on March 31,
2008. The impact to the Fund's financial statements, if any, is currently being
assessed.
In addition, in September 2006, Statement of Financial Accounting Standards
No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for
fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 will have on the Fund's financial statement disclosures.
31
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of Van Kampen New York Tax Free Income
Fund
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Van Kampen New York Tax Free Income
Fund (one of the Funds constituting the Van Kampen Tax Free Trust (the "Fund"))
as of September 30, 2007, and the related statement of operations for the year
then ended, the statements of changes in net assets for each of the two years in
the period then ended, and the financial highlights for the each of the five
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
We were not engaged to perform an audit of the Fund's internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of September 30, 2007, by correspondence with the
custodian. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Van Kampen New York Tax Free Income Fund of the Van Kampen Tax Free Trust at
September 30, 2007, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and its financial highlights for each of the five years in the period then
ended, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Chicago, Illinois
November 16, 2007
32
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
DENNIS SHEA
Vice President
J. DAVID GERMANY
Vice President
AMY R. DOBERMAN
Vice President
STEFANIE V. CHANG
Vice President and Secretary
JOHN L. SULLIVAN
Chief Compliance Officer
STUART N. SCHULDT
Chief Financial Officer and Treasurer
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
522 Fifth Avenue
New York, New York 10036
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
One Parkview Plaza-Suite 100
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
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
For federal income tax purposes, the following information is furnished with
respect to the distributions paid by the Fund during its taxable year ended
September 30, 2007. The Fund designated 99.8% of the income distributions as a
tax-exempt income distribution. The Fund designated and paid $181,000 as a
long-term capital gain distribution. In January, the Fund provides tax
information to shareholders for the preceding calendar year.
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
33
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
TRUSTEES AND OFFICERS
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees and the Fund's officers appointed by the Board of
Trustees. The tables below list the trustees and executive officers of the Fund
and their principal occupations during the last five years, other directorships
held by trustees and their affiliations, if any, with Van Kampen Investments,
the Adviser, the Distributor, Van Kampen Advisors Inc., Van Kampen Exchange
Corp. and Investor Services. The term "Fund Complex" includes each of the
investment companies advised by the Adviser as of the date of this Annual
Report. Trustees serve until reaching their retirement age or until their
successors are duly elected and qualified. Officers are annually elected by the
trustees.
INDEPENDENT TRUSTEES:
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
David C. Arch (62) Trustee Trustee Chairman and Chief 73 Trustee/Director/Managing
Blistex Inc. since 2003 Executive Officer of General Partner of funds
1800 Swift Drive Blistex Inc., a consumer in the Fund Complex.
Oak Brook, IL 60523 health care products Director of the Heartland
manufacturer. Alliance, a nonprofit
organization serving
human needs based in
Chicago. Board member of
the Illinois
Manufacturers'
Association.
Jerry D. Choate (69) Trustee Trustee Prior to January 1999, 73 Trustee/Director/Managing
33971 Selva Road since 1999 Chairman and Chief General Partner of funds
Suite 130 Executive Officer of the in the Fund Complex.
Dana Point, CA 92629 Allstate Corporation Director of H&R Block,
("Allstate") and Allstate Amgen Inc., a
Insurance Company. Prior biotechnological company,
to January 1995, and Valero Energy
President and Chief Corporation, an
Executive Officer of independent refining
Allstate. Prior to August company.
1994, various management
positions at Allstate.
</Table>
34
<Table>
<Caption>
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
TRUSTEES AND OFFICERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Rod Dammeyer (67) Trustee Trustee President of CAC, L.L.C., 73 Trustee/Director/Managing
CAC, L.L.C. since 2003 a private company General Partner of funds
4350 LaJolla Village Drive offering capital in the Fund Complex.
Suite 980 investment and management Director of Quidel
San Diego, CA 92122-6223 advisory services. Corporation, Stericycle,
Inc., Ventana Medical
Systems, Inc. and Trustee
of The Scripps Research
Institute. Prior to April
2007, Director of GATX
Corporation. Prior to
April 2004, Director of
TheraSense, Inc. Prior to
January 2004, Director of
TeleTech Holdings Inc.
and Arris Group, Inc.
Linda Hutton Heagy+ (59) Trustee Trustee Managing Partner of 73 Trustee/Director/Managing
Heidrick & Struggles since 1995 Heidrick & Struggles, an General Partner of funds
233 South Wacker Drive international executive in the Fund Complex.
Suite 7000 search firm. Prior to Trustee on the University
Chicago, IL 60606 1997, Partner of Ray & of Chicago Hospitals
Berndtson, Inc., an Board, Vice Chair of the
executive recruiting Board of the YMCA of
firm. Prior to 1995, Metropolitan Chicago and
Executive Vice President a member of the Women's
of ABN AMRO, N.A., a bank Board of the University
holding company. Prior to of Chicago.
1990, Executive Vice
President of The Exchange
National Bank.
</Table>
35
<Table>
<Caption>
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
TRUSTEES AND OFFICERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
R. Craig Kennedy (55) Trustee Trustee Director and President of 73 Trustee/Director/Managing
1744 R Street, NW since 1994 the German Marshall Fund General Partner of funds
Washington, DC 20009 of the United States, an in the Fund Complex.
independent U.S. Director of First Solar,
foundation created to Inc.
deepen understanding,
promote collaboration and
stimulate exchanges of
practical experience
between Americans and
Europeans. Formerly,
advisor to the Dennis
Trading Group Inc., a
managed futures and
option company that
invests money for
individuals and
institutions. Prior to
1992, President and Chief
Executive Officer,
Director and member of
the Investment Committee
of the Joyce Foundation,
a private foundation.
Howard J Kerr (72) Trustee Trustee Prior to 1998, President 73 Trustee/Director/Managing
14 Huron Trace since 2003 and Chief Executive General Partner of funds
Galena, IL 61036 Officer of Pocklington in the Fund Complex.
Corporation, Inc., an Director of the Lake
investment holding Forest Bank & Trust.
company. Director of the Marrow
Foundation.
Jack E. Nelson (71) Trustee Trustee President of Nelson 73 Trustee/Director/Managing
423 Country Club Drive since 1994 Investment Planning General Partner of funds
Winter Park, FL 32789 Services, Inc., a in the Fund Complex.
financial planning
company and registered
investment adviser in the
State of Florida.
President of Nelson Ivest
Brokerage Services Inc.,
a member of FINRA,
Securities Investors
Protection Corp. and the
Municipal Securities
Rulemaking Board.
President of Nelson Sales
and Services Corporation,
a marketing and services
company to support
affiliated companies.
</Table>
36
<Table>
<Caption>
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
TRUSTEES AND OFFICERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Hugo F. Sonnenschein (67) Trustee Trustee President Emeritus and 73 Trustee/Director/Managing
1126 E. 59th Street since 2003 Honorary Trustee of the General Partner of funds
Chicago, IL 60637 University of Chicago and in the Fund Complex.
the Adam Smith Trustee of the University
Distinguished Service of Rochester and a member
Professor in the of its investment
Department of Economics committee. Member of the
at the University of National Academy of
Chicago. Prior to July Sciences, the American
2000, President of the Philosophical Society and
University of Chicago. a fellow of the American
Academy of Arts and
Sciences.
</Table>
37
<Table>
<Caption>
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
TRUSTEES AND OFFICERS continued
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INDEPENDENT TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Suzanne H. Woolsey, Ph.D. Trustee Trustee Chief Communications 73 Trustee/Director/Managing
(65) since 1999 Officer of the National General Partner of funds
815 Cumberstone Road Academy of in the Fund Complex.
Harwood, MD 20776 Sciences/National Director of Fluor Corp.,
Research Council, an an engineering,
independent, federally procurement and
chartered policy construction
institution, from 2001 to organization, since
November 2003 and Chief January 2004. Director of
Operating Officer from Intelligent Medical
1993 to 2001. Prior to Devices, Inc., a symptom
1993, Executive Director based diagnostic tool for
of the Commission on physicians and clinical
Behavioral and Social labs. Director of the
Sciences and Education at Institute for Defense
the National Academy of Analyses, a federally
Sciences/National funded research and
Research Council. From development center,
1980 through 1989, Director of the German
Partner of Coopers & Marshall Fund of the
Lybrand. United States, Director
of the Rocky Mountain
Institute of Technology
and the Colorado College.
</Table>
38
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
TRUSTEES AND OFFICERS continued
INTERESTED TRUSTEE:*
<Table>
<Caption>
NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
POSITION(S) LENGTH OF COMPLEX
NAME, AGE AND ADDRESS HELD WITH TIME PRINCIPAL OCCUPATION(S) OVERSEEN OTHER DIRECTORSHIPS
OF INTERESTED TRUSTEE FUND SERVED DURING PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
Wayne W. Whalen* (68) Trustee Trustee Partner in the law firm 73 Trustee/Director/Managing
333 West Wacker Drive since 1994 of Skadden, Arps, Slate, General Partner of funds
Chicago, IL 60606 Meagher & Flom LLP, legal in the Fund Complex.
counsel to funds in the Director of the Abraham
Fund Complex. Lincoln Presidential
Library Foundation.
</Table>
+ As indicated above, Ms. Heagy is an employee of Heidrick and Struggles, an
international executive search firm ("Heidrick"). Heidrick has been (and may
continue to be) engaged by Morgan Stanley from time to time to perform
executive searches. Such searches have been unrelated to Van Kampen's or
Morgan Stanley's asset management businesses and have been done by
professionals at Heidrick without any involvement by Ms. Heagy. Ethical wall
procedures exist to ensure that Ms. Heagy will not have any involvement with
any searches performed by Heidrick for Morgan Stanley. Ms. Heagy does not
receive any compensation, directly or indirectly, for searches performed by
Heidrick for Morgan Stanley. Ms. Heagy does own common shares of Heidrick
(representing less than 1% of Heidrick's outstanding common shares).
* Mr. Whalen is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act) of certain funds in the Fund Complex by reason of he and
his firm currently providing legal services as legal counsel to such funds
in the Fund Complex.
39
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
TRUSTEES AND OFFICERS continued
OFFICERS:
<Table>
<Caption>
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Ronald E. Robison (68) President and Officer President of funds in the Fund Complex since September 2005
522 Fifth Avenue Principal Executive since 2003 and Principal Executive Officer of funds in the Fund Complex
New York, NY 10036 Officer since May 2003. Managing Director of Van Kampen Advisors
Inc. since June 2003. Director of Investor Services since
September 2002. Director of the Adviser, Van Kampen
Investments and Van Kampen Exchange Corp. since January
2005. Managing Director of Morgan Stanley and Morgan Stanley
& Co. Incorporated. Managing Director and Director of Morgan
Stanley Investment Management Inc. Chief Administrative
Officer, Managing Director and Director of Morgan Stanley
Investment Advisors Inc. and Morgan Stanley Services Company
Inc. Managing Director and Director of Morgan Stanley
Distributors Inc. and Morgan Stanley Distribution Inc. Chief
Executive Officer and Director of Morgan Stanley Trust.
Executive Vice President and Principal Executive Officer of
the Institutional and Retail Morgan Stanley Funds. Director
of Morgan Stanley SICAV. Previously, Chief Global Operations
Officer of Morgan Stanley Investment Management Inc. and
Executive Vice President of funds in the Fund Complex from
May 2003 to September 2005.
Dennis Shea (54) Vice President Officer Managing Director of Morgan Stanley Investment Advisors
522 Fifth Avenue since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser
New York, NY 10036 and Van Kampen Advisors Inc. Chief Investment Officer--
Global Equity of the same entities since February 2006. Vice
President of Morgan Stanley Institutional and Retail Funds
since February 2006. Vice President of funds in the Fund
Complex since March 2006. Previously, Managing Director and
Director of Global Equity Research at Morgan Stanley from
April 2000 to February 2006.
J. David Germany (53) Vice President Officer Managing Director of Morgan Stanley Investment Advisors
20 Bank Street, since 2006 Inc., Morgan Stanley Investment Management Inc., the Adviser
Canary Wharf and Van Kampen Advisors Inc. Chief Investment Officer--
London, GBR E14 4AD Global Fixed Income of the same entities since December
2005. Managing Director and Director of Morgan Stanley
Investment Management Ltd. Director of Morgan Stanley
Investment Management (ACD) Limited since December 2003.
Vice President of Morgan Stanley Institutional and Retail
Funds since February 2006. Vice President of funds in the
Fund Complex since March 2006.
</Table>
40
<Table>
<Caption>
VAN KAMPEN NEW YORK TAX FREE INCOME FUND
TRUSTEES AND OFFICERS continued
TERM OF
OFFICE AND
POSITION(S) LENGTH OF
NAME, AGE AND HELD WITH TIME PRINCIPAL OCCUPATION(S)
ADDRESS OF OFFICER FUND SERVED DURING PAST 5 YEARS
Amy R. Doberman (45) Vice President Officer Managing Director and General Counsel--U.S. Investment
522 Fifth Avenue since 2004 Management; Managing Director of Morgan Stanley Investment
New York, NY 10036 Management Inc., Morgan Stanley Investment Advisors Inc. and
the Adviser. Vice President of the Morgan Stanley
Institutional and Retail Funds since July 2004 and Vice
President of funds in the Fund Complex since August 2004.
Previously, Managing Director and General Counsel of
Americas, UBS Global Asset Management from July 2000 to July
2004 and General Counsel of Aeltus Investment Management,
Inc. from January 1997 to July 2000.
Stefanie V. Chang (41) Vice President Officer Executive Director of Morgan Stanley Investment Management
522 Fifth Avenue and Secretary since 2003 Inc. Vice President and Secretary of funds in the Fund
New York, NY 10036 Complex.
John L. Sullivan (52) Chief Compliance Officer Chief Compliance Officer of funds in the Fund Complex since
1 Parkview Plaza - Suite 100 Officer since 1996 August 2004. Prior to August 2004, Director and Managing
Oakbrook Terrace, IL 60181 Director of Van Kampen Investments, the Adviser, Van Kampen
Advisors Inc. and certain other subsidiaries of Van Kampen
Investments, Vice President, Chief Financial Officer and
Treasurer of funds in the Fund Complex and head of Fund
Accounting for Morgan Stanley Investment Management Inc.
Prior to December 2002, Executive Director of Van Kampen
Investments, the Adviser and Van Kampen Advisors Inc.
Stuart N. Schuldt (45) Chief Financial Officer Officer Executive Director of Morgan Stanley Investment Management
1 Parkview Plaza - Suite 100 and Treasurer since 2007 Inc. since June 2007. Chief Financial Officer and Treasurer
Oakbrook Terrace, IL 60181 of funds in the Fund Complex since June 2007. Prior to June
2007, Senior Vice President of Northern Trust Company,
Treasurer and Principal Financial Officer for Northern Trust
U.S. mutual fund complex.
</Table>
41
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.
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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
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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.
The Statement of Additional Information includes additional information
about Fund trustees and is available, without charge, upon request by
calling 1-800-847-2424.
Van Kampen Funds Inc.
1 Parkview Plaza - Suite 100
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2007 Van Kampen Funds Inc.
All rights reserved. Member FINRA/SIPC.
235, 325, 425
NYTFANN 11/07
(VAN KAMPEN INVESTMENTS LOGO) IU07-04679P-Y09/07
Item 2. Code of Ethics.
(a) The Trust has adopted a code of ethics (the "Code of Ethics") that applies
to its principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the Trust or a
third party.
(b) No information need be disclosed pursuant to this paragraph.
(c) Due to personnel changes at the Adviser, the list of covered officers set
forth in Exhibit B was amended in November 2006 and June 2007 and the
general counsel's designee set forth in Exhibit C was amended in October
and December 2006. All three editions of Exhibit B and all three editions
of Exhibit C are attached.
(d) Not applicable.
(e) Not applicable.
(f)
(1) The Trust's Code of Ethics is attached hereto as Exhibit 12(1).
(2) Not applicable.
(3) Not applicable.
Item 3. Audit Committee Financial Expert.
The Trust's Board of Trustees has determined that it has three "audit committee
financial experts" serving on its audit committee, each of whom are
"independent" Trustees : Rod Dammeyer, Jerry D. Choate and R. Craig Kennedy.
Under applicable securities laws, a person who is determined to be an audit
committee financial expert will not be deemed an "expert" for any purpose,
including without limitation for the purposes of Section 11 of the Securities
Act of 1933, as a result of being designated or identified as an audit committee
financial expert. The designation or identification of a person as an audit
committee financial expert does not impose on such person any duties,
obligations, or liabilities that are greater than the duties, obligations, and
liabilities imposed on such person as a member of the audit committee and Board
of Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services.
(a)(b)(c)(d) and (g). Based on fees billed for the periods shown:
2007
REGISTRANT COVERED ENTITIES(1)
---------- -------------------
AUDIT FEES.............. $256,500 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES... $ 0 $781,800(2)
TAX FEES............. $ 17,025(3) $ 59,185(4)
ALL OTHER FEES....... $ 0 $ 74,100(5)
TOTAL NON-AUDIT FEES.... $ 17,025 $915,085
TOTAL................... $273,525 $915,085
2006
REGISTRANT COVERED ENTITIES(1)
---------- -------------------
AUDIT FEES.............. $243,100 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES... $ 0 $ 706,000(2)
TAX FEES............. $ 15,300(3) $ 79,422(4)
ALL OTHER FEES....... $ 0 $ 832,851(5)
TOTAL NON-AUDIT FEES.... $ 15,300 $1,618,273
TOTAL................... $258,400 $1,618,273
N/A- Not applicable, as not required by Item 4.
(1) Covered Entities include the Adviser (excluding sub-advisors) and any
entity controlling, controlled by or under common control with the Adviser
that provides ongoing services to the Registrant.
(2) Audit-Related Fees represent assurance and related services provided that
are reasonably related to the performance of the audit of the financial
statements of the Covered Entities' and funds advised by the Adviser or its
affiliates, specifically attestation services provided in connection with a
SAS 70 Report.
(3) Tax Fees represent tax advice and compliance services provided in
connection with the review of the Registrant's tax.
(4) Tax Fees represent tax advice services provided to Covered Entities,
including research and identification of PFIC entities.
(5) All Other Fees represent attestation services provided in connection with
performance presentation standards and assistance with compliance policies
and procedures.
(e)(1) The audit committee's pre-approval policies and procedures are as
follows:
JOINT AUDIT COMMITTEE
AUDIT AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY AND PROCEDURES
OF THE
VAN KAMPEN FUNDS
AS ADOPTED JULY 23, 2003 AND AMENDED MAY 26, 2004(1)
1. STATEMENT OF PRINCIPLES
The Audit Committee of the Board is required to review and, in its sole
discretion, pre-approve all Covered Services to be provided by the Independent
Auditors to the Fund and Covered Entities in order to assure that services
performed by the Independent Auditors do not impair the auditor's independence
from the Fund.(2)
The SEC has issued rules specifying the types of services that an
independent auditor may not provide to its audit client, as well as the audit
committee's administration of the engagement of the independent auditor. The
SEC's rules establish two different approaches to pre-approving services, which
the SEC considers to be equally valid. Proposed services either: may be
pre-approved without consideration of specific case-by-case services by the
Audit Committee ("general pre-approval"); or require the specific pre-approval
of the Audit Committee ("specific pre-approval"). The Audit Committee believes
that the combination of these two approaches in this Policy will result in an
effective and efficient procedure to pre-approve services performed by the
Independent Auditors. As set forth in this Policy, unless a type of service has
received general pre-approval, it will require specific pre-approval by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
authority has been delegated) if it is to be provided by the Independent
Auditors. Any proposed services exceeding pre-approved cost levels or budgeted
amounts will also require specific pre-approval by the Audit Committee.
For both types of pre-approval, the Audit Committee will consider whether
such services are consistent with the SEC's rules on auditor independence. The
Audit Committee will also consider whether the Independent Auditors are best
positioned to provide the most effective and efficient services, for reasons
such as its familiarity with the Fund's business, people, culture, accounting
systems, risk profile and other factors, and whether the service might enhance
the Fund's ability to manage or control risk or improve audit quality. All such
factors will be considered as a whole, and no one factor should necessarily be
determinative.
The Audit Committee is also mindful of the relationship between fees for
audit and non-audit services in deciding whether to pre-approve any such
services and may determine for each fiscal year, the appropriate ratio between
the total amount of fees for Audit, Audit-related and Tax services for the Fund
(including any Audit-related or Tax service fees for Covered Entities that were
subject to pre-approval), and the total amount of fees for certain permissible
non-audit services classified as All Other services for the Fund (including any
such services for Covered Entities subject to pre-approval).
The appendices to this Policy describe the Audit, Audit-related, Tax and
All Other services that have the general pre-approval of the Audit Committee.
The term of any general pre-approval is 12 months from the date of pre-approval,
unless the Audit Committee considers and provides a different period and states
otherwise. The Audit Committee will annually review and pre-approve the services
that may be provided by the Independent Auditors without obtaining specific
pre-approval from the Audit Committee. The Audit Committee will add to or
subtract from the list of general pre-approved services from time to time, based
on subsequent determinations.
The purpose of this Policy is to set forth the policy and procedures by
which the Audit Committee intends to fulfill its responsibilities. It does not
delegate the Audit Committee's responsibilities to pre-approve services
performed by the Independent Auditors to management.
- ----------
(1) This Joint Audit Committee Audit and Non-Audit Services Pre-Approval Policy
and Procedures (the "Policy"), amended as of the date above, supercedes and
replaces all prior versions that may have been amended from time to time.
(2) Terms used in this Policy and not otherwise defined herein shall have the
meanings as defined in the Joint Audit Committee Charter.
The Fund's Independent Auditors have reviewed this Policy and believes that
implementation of the Policy will not adversely affect the Independent Auditors'
independence.
2. DELEGATION
As provided in the Act and the SEC's rules, the Audit Committee may
delegate either type of pre-approval authority to one or more of its members.
The member to whom such authority is delegated must report, for informational
purposes only, any pre-approval decisions to the Audit Committee at its next
scheduled meeting.
3. AUDIT SERVICES
The annual Audit services engagement terms and fees are subject to the
specific pre-approval of the Audit Committee. Audit services include the annual
financial statement audit and other procedures required to be performed by the
Independent Auditors to be able to form an opinion on the Fund's financial
statements. These other procedures include information systems and procedural
reviews and testing performed in order to understand and place reliance on the
systems of internal control, and consultations relating to the audit. The Audit
Committee will monitor the Audit services engagement as necessary, but no less
than on a quarterly basis, and will also approve, if necessary, any changes in
terms, conditions and fees resulting from changes in audit scope, Fund structure
or other items.
In addition to the annual Audit services engagement approved by the Audit
Committee, the Audit Committee may grant general pre-approval to other Audit
services, which are those services that only the Independent Auditors reasonably
can provide. Other Audit services may include statutory audits and services
associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4,
etc.), periodic reports and other documents filed with the SEC or other
documents issued in connection with securities offerings.
The Audit Committee has pre-approved the Audit services in Appendix B.1.
All other Audit services not listed in Appendix B.1 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).
4. AUDIT-RELATED SERVICES
Audit-related services are assurance and related services that are
reasonably related to the performance of the audit or review of the Fund's
financial statements or, to the extent they are Covered Services, the Covered
Entities' financial statements, or that are traditionally performed by the
Independent Auditors. Because the Audit Committee believes that the provision of
Audit-related services does not impair the independence of the auditor and is
consistent with the SEC's rules on auditor independence, the Audit Committee may
grant general pre-approval to Audit-related services. Audit-related services
include, among others, accounting consultations related to accounting, financial
reporting or disclosure matters not classified as "Audit services"; assistance
with understanding and implementing new accounting and financial reporting
guidance from rulemaking authorities; agreed-upon or expanded audit procedures
related to accounting and/or billing records required to respond to or comply
with financial, accounting or regulatory reporting matters; and assistance with
internal control reporting requirements under Forms N-SAR and/or N-CSR.
The Audit Committee has pre-approved the Audit-related services in Appendix
B.2. All other Audit-related services not listed in Appendix B.2 must be
specifically pre-approved by the Audit Committee (or by any member of the Audit
Committee to which pre-approval has been delegated).
5. TAX SERVICES
The Audit Committee believes that the Independent Auditors can provide Tax
services to the Fund and, to the extent they are Covered Services, the Covered
Entities, such as tax compliance, tax planning and tax advice without impairing
the auditor's independence, and the SEC has stated that the Independent Auditors
may provide such services. Hence, the Audit Committee believes it may grant
general pre-approval to those Tax services that have historically been provided
by the Independent Auditors, that the Audit Committee has reviewed and believes
would not impair the independence of the Independent Auditors, and that are
consistent with the SEC's rules on auditor independence. The Audit Committee
will not permit the retention of the
Independent Auditors in connection with a transaction initially recommended by
the Independent Auditors, the sole business purpose of which may be tax
avoidance and the tax treatment of which may not be supported in the Internal
Revenue Code and related regulations. The Audit Committee will consult with
Director of Tax or outside counsel to determine that the tax planning and
reporting positions are consistent with this policy.
Pursuant to the preceding paragraph, the Audit Committee has pre-approved
the Tax Services in Appendix B.3. All Tax services involving large and complex
transactions not listed in Appendix B.3 must be specifically pre-approved by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
has been delegated), including tax services proposed to be provided by the
Independent Auditors to any executive officer or trustee/director/managing
general partner of the Fund, in his or her individual capacity, where such
services are paid for by the Fund (generally applicable only to internally
managed investment companies).
6. ALL OTHER SERVICES
The Audit Committee believes, based on the SEC's rules prohibiting the
Independent Auditors from providing specific non-audit services, that other
types of non-audit services are permitted. Accordingly, the Audit Committee
believes it may grant general pre-approval to those permissible non-audit
services classified as All Other services that it believes are routine and
recurring services, would not impair the independence of the auditor and are
consistent with the SEC's rules on auditor independence.
The Audit Committee has pre-approved the All Other services in Appendix
B.4. Permissible All Other services not listed in Appendix B.4 must be
specifically pre-approved by the Audit Committee (or by any member of the Audit
Committee to which pre-approval has been delegated).
A list of the SEC's prohibited non-audit services is attached to this
policy as Appendix B.5. The SEC's rules and relevant guidance should be
consulted to determine the precise definitions of these services and the
applicability of exceptions to certain of the prohibitions.
7. PRE-APPROVAL FEE LEVELS OR BUDGETED AMOUNTS
Pre-approval fee levels or budgeted amounts for all services to be provided
by the Independent Auditors will be established annually by the Audit Committee.
Any proposed services exceeding these levels or amounts will require specific
pre-approval by the Audit Committee. The Audit Committee is mindful of the
overall relationship of fees for audit and non-audit services in determining
whether to pre-approve any such services. For each fiscal year, the Audit
Committee may determine the appropriate ratio between the total amount of fees
for Audit, Audit-related, and Tax services for the Fund (including any
Audit-related or Tax services fees for Covered Entities subject to
pre-approval), and the total amount of fees for certain permissible non-audit
services classified as All Other services for the Fund (including any such
services for Covered Entities subject to pre-approval).
8. PROCEDURES
All requests or applications for services to be provided by the Independent
Auditors that do not require specific approval by the Audit Committee will be
submitted to the Fund's Chief Financial Officer and must include a detailed
description of the services to be rendered. The Fund's Chief Financial Officer
will determine whether such services are included within the list of services
that have received the general pre-approval of the Audit Committee. The Audit
Committee will be informed on a timely basis of any such services rendered by
the Independent Auditors. Requests or applications to provide services that
require specific approval by the Audit Committee will be submitted to the Audit
Committee by both the Independent Auditors and the Fund's Chief Financial
Officer, and must include a joint statement as to whether, in their view, the
request or application is consistent with the SEC's rules on auditor
independence.
The Audit Committee has designated the Fund's Chief Financial Officer to
monitor the performance of all services provided by the Independent Auditors and
to determine whether such services are in compliance with this Policy. The
Fund's Chief Financial Officer will report to the Audit Committee on a periodic
basis on the results of its monitoring. A sample report is included as Appendix
B.7. Both the Fund's Chief Financial Officer and management will immediately
report to the chairman of the Audit Committee any breach of this Policy that
comes to the attention of the Fund's Chief Financial Officer or any member of
management.
9. ADDITIONAL REQUIREMENTS
The Audit Committee has determined to take additional measures on an annual
basis to meet its responsibility to oversee the work of the Independent Auditors
and to assure the auditor's independence from the Fund, such as reviewing a
formal written statement from the Independent Auditors delineating all
relationships between the Independent Auditors and the Fund, consistent with
Independence Standards Board No. 1, and discussing with the Independent Auditors
its methods and procedures for ensuring independence.
10. COVERED ENTITIES
Covered Entities include the Fund's investment adviser(s) and any entity
controlling, controlled by or under common control with the Fund's investment
adviser(s) that provides ongoing services to the Fund(s). Beginning with
non-audit service contracts entered into on or after May 6, 2003, the Fund's
audit committee must pre-approve non-audit services provided not only to the
Fund but also to the Covered Entities if the engagements relate directly to the
operations and financial reporting of the Fund. This list of Covered Entities
would include:
- - Van Kampen Investments Inc.
- - Van Kampen Asset Management
- - Van Kampen Advisors Inc.
- - Van Kampen Funds Inc.
- - Van Kampen Investor Services Inc.
- - Morgan Stanley Investment Management Inc.
- - Morgan Stanley Trust Company
- - Morgan Stanley Investment Management Ltd.
- - Morgan Stanley Investment Management Company
- - Morgan Stanley Asset & Investment Trust Management Company Ltd.
(e)(2) Beginning with non-audit service contracts entered into on or after May
6, 2003, the audit committee also is required to pre-approve services to Covered
Entities to the extent that the services are determined to have a direct impact
on the operations or financial reporting of the Registrant. 100% of such
services were pre-approved by the audit committee pursuant to the Audit
Committee's pre-approval policies and procedures (included herein).
(f) Not applicable.
(g) See table above.
(h) The audit committee of the Board of Trustees has considered whether the
provision of services other than audit services performed by the auditors to the
Registrant and Covered Entities is compatible with maintaining the auditors'
independence in performing audit services.
Item 5. Audit Committee of Listed Registrants.
(a) The Trust has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Exchange Act whose members are: R.
Craig Kennedy, Jerry D. Choate, Rod Dammeyer.
(b) Not applicable.
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-CSR
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) The Code of Ethics for Principal Executive and Senior Financial Officers is
attached hereto.
(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: November 20, 2007
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: November 20, 2007
By: /s/ Stuart N. Schuldt
---------------------------------
Name: Stuart N. Schuldt
Title: Principal Financial Officer
Date: November 20, 2007