VAN KAMPEN TAX FREE MONEY FUND, 485BPOS, 2000-10-25

VAN KAMPEN TAX FREE MONEY FUND
485BPOS, 2000-10-25

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 2000

REGISTRATION NOS. 33-6745
811-4718
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A

<TABLE>
<S> <C>
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [X]

Post-Effective Amendment No. 19 [X]
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 20 [X]
</TABLE>

VAN KAMPEN
TAX FREE MONEY FUND

(Exact Name of Registrant as Specified in Declaration of Trust)

1 Parkview Plaza, PO Box 5555, Oakbrook Terrace, Illinois 60181-5555
(Address of Principal Executive Offices) (Zip Code)

(630) 684-6000
Registrant's Telephone Number, Including Area Code

A. THOMAS SMITH III
Executive Vice President,
General Counsel and Secretary
Van Kampen Investments Inc.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, Illinois 60181-5555
(Name and Address of Agent for Service)
------------------------

Copies To:
WAYNE W. WHALEN, ESQ.
THOMAS A. HALE, ESQ.
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
(312) 407-0700
------------------------

Approximate Date of Proposed Public Offering: As soon as practicable
following effectiveness of this Registration Statement.

IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:

[ ] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B)

[X] ON OCTOBER 27, 2000 PURSUANT TO PARAGRAPH (B)

[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(1)

[ ] ON (DATE) PURSUANT TO PARAGRAPH (A)(1)

[ ] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(2)

[ ] ON (DATE) PURSUANT TO PARAGRAPH (A)(2) OF RULE 485.

IF APPROPRIATE CHECK THE FOLLOWING BOX:
[ ] THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR
A PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.

TITLE OF SECURITIES BEING REGISTERED: SHARES OF BENEFICIAL INTEREST, PAR
VALUE $0.01 PER SHARE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2

VAN KAMPEN
TAX FREE MONEY FUND

Van Kampen Tax Free Money Fund's investment objective is to seek to provide
investors with a high level of current income exempt from federal income taxes
consistent with the preservation of capital and liquidity through investments in
a diversified portfolio of municipal securities that will mature within twelve
months of the date of purchase.

Shares of the Fund have not been approved or disapproved by the Securities and
Exchange Commission (SEC) or any state regulator, and neither the SEC nor any
state regulator has passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.

This prospectus is dated OCTOBER 27, 2000

[VAN KAMPEN FUNDS LOGO]
<PAGE> 3

TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk/Return Summary................................ 3
Fees and Expenses of the Fund...................... 5
Investment Objective, Policies and Risks........... 5
Investment Advisory Services....................... 8
Purchase of Shares................................. 8
Redemption of Shares............................... 10
Distributions from the Fund........................ 12
Shareholder Services............................... 12
Federal Income Taxation............................ 14
Financial Highlights............................... 17
</TABLE>

No dealer, salesperson or any other person has been authorized to give any
information or to make any representations, other than those contained in this
prospectus, in connection with the offer contained in this prospectus and, if
given or made, such other information or representations must not be relied upon
as having been authorized by the Fund, the Fund's investment adviser or the
Fund's distributor. This prospectus does not constitute an offer by the Fund or
by the Fund's distributor to sell or a solicitation of an offer to buy any of
the securities offered hereby in any jurisdiction to any person to whom it is
unlawful for the Fund to make such an offer in such jurisdiction.

<PAGE> 4

RISK/RETURN SUMMARY

INVESTMENT OBJECTIVE

INVESTMENT STRATEGIES

The Fund's investment adviser seeks to achieve the Fund's investment objective
by investing primarily in a portfolio of high-quality municipal securities.
Municipal securities generally are issued by state and local governments or
regional governmental authorities to raise money for their daily operations or
special projects and the interest on municipal securities generally is exempt
from federal income tax. Under normal market conditions, the Fund invests
substantially all of the Fund's assets in municipal securities whose interest is
exempt from federal income tax (including the federal alternative minimum tax)
at the time of investment. The Fund seeks to maintain a constant net asset value
of $1.00 per share by investing in money market securities with remaining
maturities of not more than 12 months and with a dollar-weighted average
maturity of not more than 90 days.

The Fund buys and sells securities for investment with a view to seeking a high
level of tax-exempt interest income. In selecting securities for investment, the
Fund's investment adviser seeks those securities that it believes entail
reasonable credit risk considered in relation to the Fund's investment policies.
The Fund's investment adviser may sell such securities to adjust the average
maturity or credit quality of the Fund's investment portfolio. The Fund's
investments are limited to those securities that meet maturity, quality and
diversification standards with which money market funds must comply.

INVESTMENT RISKS

An investment in the Fund is subject to risks. An investment in the Fund is not
a deposit of any bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund. There can be no assurance that the Fund will
achieve its investment objective.

INCOME RISK. The income you receive from the Fund is based primarily on
short-term interest rates, which can vary widely over time. If short-term
interest rates drop, your income from the Fund may drop as well.

CREDIT RISK. Credit risk refers to an issuer's ability to make timely payments
of interest and principal. While credit risk is expected to be low for the Fund
because it invests in high-quality securities, an investment in the Fund is not
risk free. The Fund is still subject to the risk that the issuers of such
securities may experience financial difficulties and, as a result, fail to pay
on their obligations.

MARKET RISK. Market risk is the possibility that the market values of securities
owned by the Fund will decline and adversely affect the Fund's net asset value.
The prices of debt securities tend to fall as interest rates rise. Market risk
is expected to be low for the Fund because it invests in high-quality,
short-term securities.

MUNICIPAL SECURITIES RISK. The Fund invests primarily in municipal securities.
The yields of municipal securities may move differently and adversely compared
to the yields of the overall debt securities markets. While the interest
received from municipal securities generally is exempt from federal income tax,
the Fund may from time to time invest a portion of its net assets in taxable
securities. In addition, there could be changes in applicable tax laws or tax
treatments that reduce or eliminate the current federal income tax exemption on
municipal securities or otherwise adversely affect the current federal or state
tax status of municipal securities.

MANAGER RISK. As with any managed fund, the Fund's investment adviser may not be
successful in selecting the best-performing securities or investment techniques,
and the Fund's performance may lag behind that of similar funds.

3
<PAGE> 5

INVESTOR PROFILE

In light of the Fund's investment objective and strategies, the Fund may be
appropriate for investors who:

- Are in a high federal income tax bracket

- Seek current tax-exempt income and protection of capital through investments
in municipal money-market securities

ANNUAL PERFORMANCE

One way to measure the risks of investing in the Fund is to look at how its
performance has varied from year-to-year. The following chart shows the annual
returns of the Fund's shares over the ten calendar years prior to the date of
this prospectus. Remember that the past performance of the Fund is not
indicative of its future performance.

[BAR GRAPH]

<TABLE>
<CAPTION>
ANNUAL RETURN
-------------
<S> <C>
1990 5.79
1991 4.50
1992 2.46
1993 1.85
1994 1.98
1995 3.15
1996 2.75
1997 2.91
1998 2.82
1999 2.53
</TABLE>

The Fund's return for the nine-month period ended September 30, 2000 was 2.52%.
As a result of market activity, current performance may vary from the figures
shown.

During the ten-year period shown in the bar chart, the highest quarterly return
was 1.46% (for the quarter ended December 31, 1990, and the lowest quarterly
return was 0.37% (for the quarter ended March 31, 1994).

COMPARATIVE PERFORMANCE

As a basis for evaluating the Fund's performance and risks, the table below
shows the Fund's average annual total returns for the periods ended December 31,
1999 (the most recently completed calendar year prior to the date of this
prospectus). Remember that the past performance of the Fund is not indicative of
its future performance.

<TABLE>
<CAPTION>
Average Annual
Total Returns
for the
Periods Ended Past Past Past
December 31, 1999 1 Year 5 Years 10 Years
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Van Kampen Tax
Free Money Fund 2.53% 3.00% 3.06%()
......................................................
</TABLE>

Investors can obtain the current 7-day yield of the Fund by calling (800)
341-2911.

4
<PAGE> 6

FEES AND EXPENSES
OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.

<TABLE>
<CAPTION>
<S> <C>
-------------------------------------------

SHAREHOLDER FEES

(fees paid directly from your investment)
-------------------------------------------
</TABLE>

<TABLE>
<S> <C>
Maximum sales charge (load) None
imposed on purchases
...........................................
Maximum deferred sales charge None
(load)
...........................................
Maximum sales charge (load)
imposed on reinvested dividends
None
...........................................
Redemption fee None
...........................................
Exchange fee None
...........................................
</TABLE>

ANNUAL FUND OPERATING EXPENSES

(expenses that are deducted from Fund assets)

<TABLE>
-----------------------------------------------
<S> <C> <C>
<S> <C> <C>
Management fees(1) 0.50%
...........................................
Distribution and/or service 0.25%
(12b-1) fees(2)
...........................................
Other expenses(1) 0.63%
...........................................
Total annual fund operating 1.38%
expenses(1)
...........................................
</TABLE>

(1) The Fund's investment adviser is currently waiving or reimbursing a portion
of the Fund's management fees or other expenses such that actual total
annual fund operating expenses for the fiscal year ended June 30, 2000 were
0.88%. The fee waivers or expense reimbursements can be terminated at any
time.

(2) Shares are subject to an annual service fee of up to 0.25% of the Fund's
average daily net assets. See "Purchase of Shares."

Example:

The following example is intended to help you compare the cost of investing in
the Fund with the costs of investing in other mutual funds.

The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same each year. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:

<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fund Shares $141 $437 $755 $1,657
.........................................................................
</TABLE>

INVESTMENT OBJECTIVE,
POLICIES AND RISKS

The Fund's investment objective is to seek to provide investors with a high
level of current income exempt from federal income taxes consistent with the
preservation of capital and liquidity through investments in a diversified
portfolio of municipal securities that will mature within twelve months of the
date of purchase. The Fund's investment objective is a fundamental policy and
may not be changed without shareholder approval of a majority of the Fund's
outstanding voting securities, as defined in the Investment Company Act of 1940,
as amended (the "1940 Act"). The Fund seeks to maintain a constant net asset
value of $1.00 per share. There are risks inherent in all investments in
securities; accordingly, there can be no assurance that the Fund's net asset
value will not vary or that the Fund will achieve its investment objective.

The Fund's investment adviser seeks to achieve the Fund's investment objective
by investing primarily in a portfolio of high-quality municipal securities.
Municipal securities are obligations issued by or on behalf of states,
territories and possessions of the United States and the District of Columbia
and their political subdivisions, agencies and instrumentalities, the interest
on which (in the opinion of bond counsel or other counsel to the issuer or the
Fund) is exempt from federal income tax at the time of issuance. Under normal
market conditions, up to 100%, but not less than 80%, of the Fund's net assets
are invested in such securities. All of the Fund's investments are subject to
the limitation that they mature within one year of the date of their purchase or
are subject to repurchase agreements maturing within one year. The foregoing
policies in this paragraph are fundamental policies of the Fund and, like the
Fund's investment objective, cannot be changed without shareholder approval. The
Fund also may invest in obligations issued, guaranteed or insured by the U.S.
government, its agencies or instrumentalities, or securities that are fully
collateralized by such obligations or other securities acceptable to the Fund's
investment adviser. Under normal market conditions, the Fund may from time to
time invest temporarily up to 20% of its net assets in taxable securities (or
municipal securities subject to the federal alternative minimum tax) of at least
comparable quality to the municipal securities in which the Fund invests.

5
<PAGE> 7

The Fund seeks to maintain a constant net asset value of $1.00 per share by
investing in money market securities with remaining maturities of not more than
12 months and with a dollar-weighted average maturity of not more than 90 days.

The Fund invests in "high-quality" municipal securities which are securities (a)
rated in one of the two highest ratings categories by any two nationally
recognized statistical rating organizations ("NRSROs") such as Standard & Poor's
("S&P") or Moody's Investor Services, Inc. ("Moody's") (e.g., at least AA by S&P
or Aa by Moody's for bonds, at least MIG-2 or VMIG-2 by Moody's for short-term
municipal securities or at least A-2 or SP-2 by S&P or P-2 by Moody's for
municipal commercial paper) (or any one NRSRO if the instrument was rated by
only one such organization) or (b) unrated municipal securities, if such
securities are of comparable quality as determined in accordance with procedures
established by the Fund's Board of Trustees or if such securities were long-term
securities at the time of issuance but have remaining lives of 365 days or less
and have received long-term ratings in one of the three highest long-term
ratings categories by any two NRSROs (e.g., A or higher by S&P and Moody's) (or
any one NRSRO if the instrument was rated by only one such organization). Credit
quality at the time of purchase determines which securities may be acquired.
Subsequent downgrades in ratings may require reassessment of the credit risks
presented by such securities and may even require their sale. NRSROs assign
ratings based upon their opinions as to the quality of the securities they
undertake to rate, but they do not base their assessment on the market risk of
such securities. It should be emphasized that ratings are general and are not
absolute standards of quality.

In selecting securities for investment, the Fund's investment adviser seeks to
add value and limit risk through careful security selection and by actively
managing the Fund's portfolio. The Fund focuses on those securities that meet
maturity, quality and diversification standards with which money market funds
must comply. While the Fund intends to hold portfolio securities until maturity,
the Fund's investment adviser from time to time may sell such securities prior
to maturity depending on its assessment of the relative yields available on
securities of different maturities and its expectations of future changes in
interest rates or to maintain a stable share price or average maturity of the
Fund's portfolio.

The Fund's dividend and yield are expected to change daily based upon changes in
interest rates and other market conditions. Although the Fund is managed to
maintain a stable $1.00 share price, there is no guarantee that the Fund will be
able to do so.

MUNICIPAL SECURITIES

The issuers of municipal securities obtain funds for various public purposes,
including the construction of a wide range of public facilities such as
airports, highways, bridges, schools, hospitals, housing, mass transportation,
streets and water and sewer works. Other public purposes for which municipal
securities may be issued include refunding outstanding obligations, obtaining
funds for general operating expenses and obtaining funds to lend to other public
institutions and facilities. Certain types of municipal securities are issued to
obtain funding for privately operated facilities.

The Fund invests in municipal securities scheduled to mature in twelve months or
less, which includes, but is not limited to, tax, revenue, bond and grant
anticipation notes; construction loan notes; tax-exempt commercial paper; and
variable or floating rate demand notes. Anticipation notes generally are sold in
anticipation of receiving future taxes, intergovernmental grants or other types
of revenues such as those under state aid programs and generally are sold to
obtain temporary funds for various public purposes. Construction loan notes
generally are issued to provide short-term construction financing for
multi-family housing projects, and frequently are insured by U.S. governmental
agencies or instrumentalities. Tax-exempt commercial paper is an unsecured
promissory obligation issued or guaranteed by a municipal issuer. Variable rate
instruments provide for adjustment of the interest rates on set dates and upon
such adjustment can reasonably be expected to have market values that
approximate amortized cost. Floating rate instruments provide for adjustment of
the interest rates based on a known lending rate, such as a bank's prime rate,
and may be adjusted when such rate changes, or the interest rate may be a market
rate that is adjusted at specified intervals, and at any time can reasonably be
expected to have a market values that approximate amortized cost. Demand
instruments generally are long-term obligations which allow the purchaser, at
its discretion, to redeem the securities before final maturity (typically 7 to
30 days), which under federal guidelines allow the Fund to consider such
securities as having maturities less than the date on the face of

6
<PAGE> 8

such instrument. Municipal securities may not be backed by the faith, credit and
taxing power of the issuer.

The ability of the Fund to achieve its investment objective is dependent on a
number of factors, including the skills of the Fund's investment adviser in
purchasing municipal securities with higher yields and whose issuers have the
continuing ability to meet their obligations for payment of interest and
principal when due. The ability to achieve a high level of income is dependent
on the yields of the securities in the portfolio. Yields on municipal securities
are the product of a variety of factors, including general money market
conditions, general conditions of the municipal securities market, size of a
particular offering, the maturity of the obligation and rating of the issue.
NRSROs assign ratings based upon their opinions as to the quality of the
securities they undertake to rate, but they do not base their assessment on the
market risk of such securities. It should be emphasized that ratings are general
and are not absolute standards of quality. Consequently, municipal securities
with the same maturity, coupon and rating may have different yields while
municipal securities of the same maturity and coupon with different ratings may
have the same yield.

Additionally, from time to time, proposals have been introduced before Congress
that would have the effect of reducing or eliminating the current federal tax
exemption on municipal securities. If such a proposal were enacted, the ability
of the Fund to pay tax-exempt interest dividends might be adversely affected and
the Fund would re-evaluate its investment objective and policies and consider
changes in its structure, including recommending to the shareholders changes in
the Fund's investment objective.

OTHER INVESTMENTS AND RISK FACTORS

For cash management and investment purposes, the Fund may engage in repurchase
agreements collateralized by U.S. government securities. Such transactions are
subject to the risk of default by the counterparty broker-dealer, bank or other
financial institution to the transactions. Investments in repurchase agreements
of more than seven days are limited in conjunction with the Fund's limitation in
illiquid securities.

The Fund may purchase and sell securities on a "when-issued" and "delayed
delivery" basis, although no more than 25% of the Fund's total assets will be
invested in such manner. The Fund accrues no income on such transactions until
the Fund actually takes delivery of the securities. These transactions are
subject to market fluctuation; the value of the securities at delivery may be
more or less than their purchase price. The yields generally available on
comparable securities when delivery occurs may be higher than yields on the
securities obtained pursuant to such transactions. Because the Fund relies on
the buyer or seller to consummate the transaction, failure by the other party to
complete the transaction may result in the Fund missing the opportunity of
obtaining a price or yield considered to be advantageous. The Fund will engage
in when-issued and delayed delivery transactions for the purpose of acquiring
securities consistent with the Fund's investment objective and policies and not
for the purpose of investment leverage.

The Fund also may purchase municipal securities which provide for the right to
resell them back to an issuer, a bank, or a broker-dealer at an agreed upon
price or yield within a specified period of time prior to the maturity date of
such securities. These securities are known as "put" securities or securities
with stand-by commitments. The Fund may pay a higher price for such securities
than would otherwise be paid for the same security without a put. The primary
purpose of purchasing these securities is to permit the Fund to be as fully
invested as practicable in municipal securities while at the same time providing
the Fund with greater liquidity. The Fund's policy is to enter into these
transactions only with issuers, banks or broker-dealers that are determined by
the Fund's investment adviser to present minimal credit risks. If an issuer,
bank or broker-dealer should default on its obligation to repurchase, the Fund
might be unable to recover all or a portion of any loss sustained from having to
sell the security elsewhere.

The Fund may invest up to 10% of the Fund's net assets in illiquid securities
and certain restricted securities. Such securities may be difficult or
impossible to sell at the time and the price that the Fund would like. Thus, the
Fund may have to sell such securities at a lower price, sell other securities
instead to obtain cash or forego other investment opportunities.

Further information about these types of investments and other investment
practices that may be used by the Fund is contained in the Fund's Statement of
Additional Information.

7
<PAGE> 9

INVESTMENT ADVISORY SERVICES

THE ADVISER. Van Kampen Investment Advisory Corp. is the Fund's investment
adviser (the "Adviser" or "Advisory Corp."). The Adviser is a wholly owned
subsidiary of Van Kampen Investments Inc. ("Van Kampen Investments"). Van Kampen
Investments is a diversified asset management company that administers more than
three million retail investor accounts, has extensive capabilities for managing
institutional portfolios, and has more than $100 billion under management or
supervision as of September 30, 2000. Van Kampen Investments has more than 50
open-end funds, 38 closed-end funds and more than 2,700 unit investment trusts
that are professionally distributed by leading authorized dealers nationwide.
Van Kampen Funds Inc., the distributor of the Fund (the "Distributor") and the
sponsor of the funds mentioned above, is also a wholly owned subsidiary of Van
Kampen Investments. Van Kampen Investments is an indirect wholly owned
subsidiary of Morgan Stanley Dean Witter & Co. The Adviser's principal office is
located at 1 Parkview Plaza, Oakbrook Terrace, Illinois 60181-5555.

ADVISORY AGREEMENT. The Fund retains the Adviser to manage the investment of its
assets and to place orders for the purchase and sale of its portfolio
securities. Under an investment advisory agreement between the Adviser and the
Fund (the "Advisory Agreement"), the Fund pays the Adviser a monthly fee
computed based upon an annual rate applied to the average daily net assets of
the Fund as follows:

<TABLE>
<CAPTION>
Average Daily Net Assets % Per Annum
---------------------------------------------
<S> <C> <C> <C>
First $500 million 0.500%
.............................................
Next $500 million 0.475%
.............................................
Next $500 million 0.425%
.............................................
Over $1.5 billion 0.375%
.............................................
</TABLE>

Applying this fee schedule, the effective advisory fee rate (before fee waivers)
was 0.50% of the Fund's average daily net assets for the Fund's fiscal year
ended June 30, 2000. The Fund's average daily net assets are determined by
taking the average of all the determinations of the net assets during a given
calendar month. Such fee is payable for each calendar month as soon as
practicable after the end of that month.

Under the Advisory Agreement, the Adviser furnishes offices, necessary
facilities and equipment, and provides administrative services to the Fund. The
Fund pays all charges and expenses of its day-to-day operations, including
service fees, distribution fees, custodian fees, legal and independent
accountant fees, the costs of reports and proxies to shareholders, compensation
of trustees of the Fund (other than those who are affiliated persons of the
Adviser, Distributor or Van Kampen Investments) and all other ordinary business
expenses not specifically assumed by the Adviser.

From time to time, the Adviser or the Distributor may voluntarily undertake to
reduce the Fund's expenses by reducing the fees payable to them or by reducing
other expenses of the Fund in accordance with such limitations as the Adviser or
Distributor may establish.

The Adviser may utilize, at its own expense, credit analysis, research and
trading support services provided by its affiliate, Van Kampen Asset Management
Inc. ("Asset Management").

PERSONAL INVESTMENT POLICIES. The Fund, the Adviser and the Distributor have
adopted Codes of Ethics designed to recognize the fiduciary relationships among
the Fund, the Adviser, the Distributor and their respective employees. The Codes
of Ethics permit directors, trustees, officers and employees to buy and sell
securities for their personal accounts subject to certain restrictions. Persons
with access to certain sensitive information are subject to pre-clearance and
other procedures designed to prevent conflicts of interest.

PURCHASE OF SHARES

GENERAL

Shares of the Fund are available without a sales charge at the net asset value
per share. The Fund seeks to maintain a constant net asset value of $1.00 per
share. Although such share price is not guaranteed, the Fund is managed and
securities are purchased seeking to maintain a stable $1.00 per share.

Initial investments generally must be at least $1,000 per investor account, and
subsequent investments must be at least $25 per investor account. Minimum
investment amounts may be waived by the Distributor for plans involving periodic
investments and for certain retirement accounts.

8
<PAGE> 10

The shares are offered on a continuous basis through the Distributor as
principal underwriter, which is located at 1 Parkview Plaza, Oakbrook Terrace,
Illinois 60181-5555. Shares may be purchased through members of the National
Association of Securities Dealers, Inc. ("NASD") who are acting as securities
dealers ("dealers") and NASD members or eligible non-NASD members who are acting
as brokers or agents for investors ("brokers"). "Dealers" and "brokers" are
sometimes referred to herein as "authorized dealers."

The offering price for shares is based upon the next calculation of net asset
value per share after an order is received by the Fund's shareholder service
agent, Van Kampen Investor Services Inc. ("Investor Services"), a wholly owned
subsidiary of Van Kampen Investments, and becomes effective. An order becomes
effective when Investor Services receives or converts the purchase amount into
federal funds. Payment by check generally will be converted into federal funds
on the second business day following receipt of payment for the order by
Investor Services. Shares may be purchased on any business day by following the
bank wire transfer instructions described below or by completing the application
accompanying this prospectus and forwarding the application, directly or through
an authorized dealer, to Investor Services.

INITIAL INVESTMENT BY BANK WIRE. To open an account by wire an investor should
telephone Investor Services at (800) 421-6714 and provide the account
registration, the address, tax identification number, the amount being wired and
the name of the wiring bank. Investor Services furnishes the investor with an
account number. The investor's bank should wire the specified amount along with
the Fund and account number and account registration to the Fund's custodian:
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02102, ABA-011000028, attention Van Kampen Investor Services Inc./Van Kampen
Fund Account No. 9900-446-7. The investor should then immediately complete and
mail the account application form to Investor Services. To receive same day
credit to an account, the investor must call Investor Services, at the telephone
number listed above, by 11:00 a.m. Kansas City time with the intent to wire
funds and State Street Bank must then receive such funds by 4:00 p.m. Boston
time.

INITIAL INVESTMENT BY MAIL. To open an account by mail an investor should send a
check payable to the Fund along with a completed account application form to
Investor Services.

SUBSEQUENT INVESTMENTS BY BANK WIRE. The investor's bank should wire the
specified amount along with the Fund and account number and account registration
to the Fund's custodian: State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02102, ABA-011000028, attention Van Kampen
Investor Services Inc./Van Kampen Fund Account No. 9900-446-7. To receive same
day credit to an account, the investor must call Investor Services at (800)
421-6714 by 11:00 a.m. Kansas City time with the intent to wire funds and State
Street Bank must then receive such funds by 4:00 p.m. Boston time.

SUBSEQUENT INVESTMENTS BY MAIL. Subsequent investments may be sent by mail to
Investor Services, indicating the Fund and account number and account
registration.

UNIT INVESTMENT TRUST REINVESTMENT PROGRAM. The Fund permits unitholders of unit
investment trusts to reinvest distributions from such trusts in shares of the
Fund at net asset value per share and with no minimum initial or subsequent
investment requirement, if the administrator of an investor's unit investment
trust program meets certain uniform criteria relating to cost savings by the
Fund and the Distributor. Persons desiring more information with respect to this
program, including the terms and conditions that apply to the program, should
contact their authorized dealer or the Distributor.

The administrator of such a unit investment trust must have an agreement with
the Distributor pursuant to which the administrator will (1) submit a single
bulk order and make payment with a single remittance for all investments in the
Fund during each distribution period by all investors who choose to invest in
the Fund through the program and (2) provide Investor Services with appropriate
backup data for each investor participating in the program in a computerized
format fully compatible with Investor Services' processing system.

To obtain these special benefits, all dividends and capital gain dividends from
the Fund must be reinvested in additional shares and there cannot be any
systematic withdrawal program. There will be no minimum for reinvestments from
unit investment trusts. The Fund will send account activity statements

9
<PAGE> 11

to such participants on a quarterly basis only, even if their investments are
made more frequently. The Fund reserves the right to modify or terminate this
program at any time.

OTHER INFORMATION

The net asset value per share of the Fund is determined twice daily as of 12:00
p.m. and 4:00 p.m. New York time Monday through Friday except on customary
business holidays or except on any day on which no purchase or redemption orders
are received or there is not a sufficient degree of trading in the Fund's
portfolio securities such that the Fund's net asset value per share might be
materially affected. The Fund's Board of Trustees reserves the right to
calculate the net asset value per share and adjust the offering price more or
less frequently if deemed desirable. Net asset value per share is determined by
dividing the value of the Fund's portfolio securities, cash and other assets
(including accrued interest), less all liabilities (including accrued expenses),
by the total number of shares outstanding. The securities held by the Fund are
valued on the basis of amortized cost, which does not take into account
unrealized capital gains or losses. Amortized cost valuation involves initially
valuing a security at its cost and thereafter, applying a constant amortization
to maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the security. While this method provides
certainty in valuation, it may result in periods during which value, as
determined by amortized cost, is higher or lower than the price that the Fund
would receive if it sold the security. Further information about these
procedures is contained in the Fund's Statement of Additional Information.

The Fund has adopted a distribution plan (the "Distribution Plan") with respect
to its shares pursuant to Rule 12b-1 under the 1940 Act. The Fund also has
adopted a service plan (the "Service Plan") with respect to its shares. Under
the Distribution Plan and the Service Plan, the Fund may spend up to a total of
0.25% per year of the Fund's average daily net assets with respect to the shares
of the Fund. From such amount, under the Service Plan, the Fund may spend up to
0.25% per year of the Fund's average daily net assets for the ongoing provision
of services to shareholders by the Distributor and by brokers, dealers or
financial intermediaries and for the maintenance of such shareholders' accounts.
The distribution and service fees on shares offered by the Fund are paid out of
the Fund's assets on an ongoing basis and will increase the cost of your
investment in the Fund. The net income attributable to shares of the Fund will
be reduced by the amount of the distribution fees and other expenses.

The Fund and the Distributor reserve the right to refuse any order for the
purchase of shares. The Fund also reserves the right to suspend the sale of the
Fund's shares in response to conditions in the securities markets or for other
reasons. Shares of
the Fund may be sold in foreign countries
where permissible.

Investor accounts will automatically be credited with additional shares of the
Fund after any Fund distributions, such as dividends and capital gain dividends,
unless the investor instructs the Fund otherwise. Investors wishing to receive
cash instead of additional shares should contact the Fund by telephone at (800)
341-2911 or by writing to the Fund, c/o Van Kampen Investor Services Inc., PO
Box 218256, Kansas City, MO 64121-8256.

REDEMPTION OF
SHARES

Generally shareholders may redeem for cash some or all of their shares without
charge by the Fund at any time. Redemptions completed through an authorized
dealer or a custodian/trustee of a retirement plan account may involve fees
charged by the dealer or custodian/trustee.

Except as specified below under "Telephone Redemption Requests," payment for
shares redeemed generally will be made by check mailed within seven days after
receipt by Investor Services of the redemption request and any other necessary
documents in proper form as described below. Such payment may be postponed or
the right of redemption suspended as provided by the rules of the SEC. Such
payment may, under certain circumstances, be paid wholly or in part by a
distribution-in-kind of portfolio securities. A distribution-in-kind will result
in recognition by the shareholder of a gain or loss for federal income tax
purposes when such securities are distributed, and the shareholder may have
brokerage costs and a gain or loss for federal income tax purposes upon the
shareholder's disposi-

10
<PAGE> 12

tion of such securities. If the shares to be redeemed have been recently
purchased by check, Investor Services may delay the payment of redemption
proceeds until it confirms the purchase check has cleared, which may take up to
15 days from the date of purchase. A taxable gain or loss may be recognized by
the shareholder upon redemption of shares. Certificated shares must be properly
endorsed for transfer and must accompany a written redemption request.

WRITTEN REDEMPTION REQUESTS. Shareholders may request a redemption of shares by
written request in proper form sent directly to Van Kampen Investor Services
Inc., PO Box 218256, Kansas City, MO 64121-8256. The request for redemption
should indicate the number of shares or dollar amount to be redeemed, the Fund
name and the shareholder's account number. The redemption request must be signed
by all persons in whose names the shares are registered. Signatures must conform
exactly to the account registration. If the proceeds of the redemption exceed
$100,000, or if the proceeds are not to be paid to the record owner at the
record address, or if the record address has changed within the previous 15
days, signature(s) must be guaranteed by one of the following: a bank or trust
company; a broker-dealer; a credit union; a national securities exchange,
registered securities association or clearing agency; a savings and loan
association; or a federal savings bank.

Generally, a properly signed written request with any required signature
guarantee is all that is required for a redemption request to be in proper form.
In some cases, however, additional documents may be necessary. Certificated
shares may be redeemed only by written request. The certificates for the shares
being redeemed must be properly endorsed for transfer and must accompany the
written redemption request. Generally, in the event a redemption is requested by
and registered to a corporation, partnership, trust, fiduciary, estate or other
legal entity owning shares of the Fund, a copy of the corporate resolution or
other legal documentation appointing the authorized signer and certified within
the prior 120 days must accompany the redemption request. Retirement plan
distribution requests should be sent to the plan custodian/trustee to be
forwarded to Investor Services. Contact the plan custodian/ trustee for further
information.

In the case of written redemption requests sent directly to Investor Services,
the redemption price is the net asset value per share next determined after the
request in proper form is received by Investor Services.

AUTHORIZED DEALER REDEMPTION REQUESTS. Shareholders may place redemption
requests through an authorized dealer. The redemption price for such shares is
the next determined net asset value per share after an order in proper form is
received by an authorized dealer provided such order is transmitted to the
Distributor prior to the Distributor's close of business on such day. It is the
responsibility of authorized dealers to transmit redemption requests received by
them to the Distributor so they will be received prior to such time. Redemptions
completed through an authorized dealer may involve additional fees charged by
the dealer.

TELEPHONE REDEMPTION REQUESTS. The Fund permits redemption of shares by
telephone and for redemption proceeds to be sent to the address of record for
the account or to the bank account of record as described below. A shareholder
automatically has telephone redemption privileges unless the shareholder
indicates otherwise by checking the applicable box on the account application
form. For accounts that are not established with telephone redemption
privileges, a shareholder may call the Fund at (800) 341-2911 to request that a
copy of the Telephone Redemption Authorization form be sent to the shareholder
for completion. To redeem shares, contact the telephone transaction line at
(800) 421-5684. Shares may also be redeemed by telephone through FundInfo(R)
(automated telephone system), which is generally accessible 24 hours a day,
seven days a week at (800) 847-2424. Van Kampen Investments and its
subsidiaries, including Investor Services, and the Fund employ procedures
considered by them to be reasonable to confirm that instructions communicated by
telephone are genuine. Such procedures include requiring certain personal
identification information prior to acting upon telephone instructions,
tape-recording telephone communications and providing written confirmation of
instructions communicated by telephone. If reasonable procedures are employed,
none of Van Kampen Investments, Investor Services or the Fund will be liable for
following telephone instructions which it reasonably believes to be genuine.
Telephone redemptions may not be available if the shareholder cannot reach
Investor Services by telephone, whether because all telephone lines are busy or
for any other reason; in such case, a shareholder would have to use the Fund's
other redemption procedure previously

11
<PAGE> 13

described. Requests received by Investor Services prior to 12:00 p.m., New York
time, will be processed that day and dividends for that day will not be earned.
Requests received by Investor Services after 12:00 p.m., New York time, will be
treated as requests to redeem as of 4:00 p.m., New York time so that the
investor will receive that day's dividend. These privileges are available for
most accounts other than retirement accounts or accounts with shares represented
by certificates. If an account has multiple owners, Investor Services may rely
on the instructions of any one owner.

For redemptions authorized by telephone, amounts of $50,000 or less may be
redeemed daily if the proceeds are to be paid by check and amounts of at least
$1,000 up to $1 million may be redeemed daily if the proceeds are to be paid by
wire. The proceeds must be payable to the shareholder(s) of record and sent to
the address of record for the account or wired directly to their predesignated
bank account. This privilege is not available if the address of record has been
changed within 15 days prior to a telephone redemption request. Proceeds from
redemptions payable by wire transfer are expected to be wired on the next
business day following the date of redemption. The Fund reserves the right at
any time to terminate, limit or otherwise modify this redemption privilege.

OTHER REDEMPTION INFORMATION. The Fund may redeem any shareholder account that
has a value on the date of the notice of redemption less than the minimum
initial investment as specified in this prospectus. At least 60 days' advance
written notice of any such involuntary redemption will be provided to the
shareholder and such shareholder will be given an opportunity to purchase the
required value of additional shares at the next determined net asset value
without sales charge. Any involuntary redemption may only occur if the
shareholder account is less than the minimum initial investment due to
shareholder redemptions.

DISTRIBUTIONS FROM THE FUND

Shareholders may receive distributions from the Fund of dividends and capital
gain dividends.

DIVIDENDS. Interest earned from investments is the Fund's main source of net
investment income. The Fund's net investment income for dividend purposes is
calculated daily and consists of interest accrued or discount earned, plus or
minus any net realized gains or losses on portfolio securities less any
amortization of premium and the expenses of the Fund. The Fund's present policy,
which may be changed at any time by the Fund's Board of Trustees, is to declare
daily and distribute monthly all, or substantially all, of this net investment
income as dividends to shareholders. All dividends are automatically applied to
purchase additional full and fractional shares of the Fund at the next
determined net asset value unless the shareholder instructs otherwise.
Shareholders may elect to receive monthly payment of dividends in cash by
written instruction to Investor Services.

Dividends are paid to shareholders of record immediately prior to the
determination of net asset value. Investments begin earning dividends on the day
federal funds are received by the Fund prior to 12:00 p.m., New York time. Any
investments for which federal funds are received after 12:00 p.m. will begin
receiving dividends on the next business day.

CAPITAL GAIN DIVIDENDS. Although the Fund expects that its distributions will
consist primarily of dividends from interest income, the Fund may realize
capital gains or losses when it sells securities, depending on whether the sales
prices for the securities are higher or lower than purchase prices. The Fund
distributes any net capital gain to shareholders as capital gain dividends at
least annually. As in the case of dividends, capital gain dividends are
automatically reinvested in additional shares of the Fund at the next determined
net asset value unless the shareholder instructs otherwise.

SHAREHOLDER SERVICES

Listed below are some of the shareholder services the Fund offers to investors.
For a more complete description of the Fund's shareholder services, such as
investment accounts, share certificates, retirement plans, automated clearing
house deposits, dividend diversification and the systematic withdrawal plan,
please refer to the Fund's Statement of Additional Information or contact your
authorized dealer.

12
<PAGE> 14

INTERNET TRANSACTIONS. In addition to performing transactions on your account
through written instruction or by telephone, you may also perform certain
transactions through the internet. Please refer to our web site at
www.vankampen.com for further instructions regarding internet transactions. Van
Kampen Investments and its subsidiaries, including Investor Services, and the
Fund employ procedures considered by them to be reasonable to confirm that
instructions communicated through the internet are genuine. Such procedures
include requiring use of a personal identification number prior to acting upon
internet instructions and providing written confirmation of instructions
communicated through the internet. If reasonable procedures are employed, none
of Van Kampen Investments, Investor Services or the Fund will be liable for
following instructions received through the internet which it reasonably
believes to be genuine. If an account has multiple owners, Investor Services may
rely on the instructions of any one owner.

REINVESTMENT PLAN. A convenient way for investors to accumulate additional
shares is by accepting dividends and capital gain dividends in shares of the
Fund. Such shares are acquired at net asset value per share on the applicable
payable date of the dividend or capital gain dividend. Unless the shareholder
instructs otherwise, the reinvestment plan is automatic. This instruction may be
made by telephone by calling (800) 341-2911 ((800) 421-2833 for the hearing
impaired) or by writing to Investor Services. The investor may, on the account
application form or prior to any declaration, instruct that dividends and/or
capital gain dividends be paid in cash, be reinvested in the Fund at the next
determined net asset value, or be invested in another Participating Fund at the
next determined net asset value.

AUTOMATIC INVESTMENT PLAN. An automatic investment plan is available under which
a shareholder can authorize Investor Services to debit the shareholder's bank
account on a regular basis to invest predetermined amounts in the Fund.
Additional information is available from the Distributor or your authorized
dealer.

CHECK WRITING PRIVILEGE. A shareholder holding shares of the Fund for which
certificates have not been issued and which are not in escrow may write checks
against such shareholder's account by completing the Authorization for
Redemption by Check form and the appropriate section of the account application
form and returning the form and the application to Investor Services. Once the
form is properly completed, signed and returned, a supply of checks and
redemption drafts will be sent to the shareholder. Checks can be written to the
order of any person in any amount of $100 or more.

When a check is presented to the Fund's custodian bank, State Street Bank and
Trust Company (the "Bank") for payment, full and fractional shares required to
cover the amount of the check are redeemed from the shareholder's account by
Investor Services at the next determined net asset value per share. Check
writing redemptions represent the sale of shares. Any gain or loss realized on
the redemption of shares is a taxable event.

Checks will not be honored for redemption of shares held less than 15 calendar
days, unless such shares have been paid for by bank wire. Any shares for which
there are outstanding certificates may not be redeemed by check. If the amount
of the check is greater than the proceeds of all uncertificated shares held in
the shareholder's account, the check will be returned and the shareholder may be
subject to additional charges. A shareholder may not liquidate the entire
account by means of a check. The check writing privilege may be terminated or
suspended at any time by the Fund or by the Bank and neither shall incur any
liability for such amendment or termination or for effecting redemptions to pay
checks reasonably believed to be genuine or for returning or not paying on
checks which have not been accepted for any reason. Retirement plans and
accounts that are subject to backup withholding are not eligible for the check
writing privilege.

EXCHANGE PRIVILEGE. Shares of the Fund may be exchanged for shares of any
Participating Fund (defined below) sold subject to an initial sales charge or
for shares without a sales charge of the Van Kampen Reserve Fund (the "Reserve
Fund"), based on the next determined net asset value per share of each fund
after requesting the exchange, subject to certain limitations. Shares of the
Fund may be exchanged for shares of any Participating Fund or the Reserve Fund
only if shares of that fund are available for sale; however, during periods of
suspension of sales, shares of a Participating Fund or the Reserve Fund may be
available for sale only to existing shareholders of a fund. Shares of the Fund
which have not previously been charged a sales charge (except for shares issued
under the reinvestment option) or that have been charged a lower sales charge
than the sales charge applicable of the shares

13
<PAGE> 15

of the Participating Fund being acquired will have any applicable sales charge
differential imposed upon an exchange into such Participating Fund. Shareholders
seeking an exchange into a Participating Fund or the Reserve Fund should obtain
and read the current prospectus for such fund prior to implementing an exchange.
A prospectus of any of the Participating Funds or the Reserve Fund may be
obtained from an authorized dealer or the Distributor.

As used herein, "Participating Funds" refers to certain open-end investment
companies advised by Asset Management or Advisory Corp. and distributed by the
Distributor as determined from time to time by the Fund's Board of Trustees.

To be eligible for exchange, shares of the Fund must have been registered in the
shareholder's name for at least 30 days prior to an exchange. Shares of the Fund
registered in a shareholder's name for less than 30 days may only be exchanged
upon receipt of prior approval of the Adviser. It is the policy of the Adviser,
under normal circumstances, not to approve such requests.

Exchanges of shares are sales of shares of one Participating Fund and purchases
of shares of another Participating Fund. The sale may result in a gain or loss
for federal income tax purposes. If the shares sold have been held for less than
91 days, the sales charge paid on such shares is carried over and included in
the tax basis of the shares acquired.

A shareholder wishing to make an exchange may do so by sending a written request
to Investor Services, by contacting the telephone transaction line at (800)
421-5684, through FundInfo(R) (automated telephone system) at (800) 847-2424 or
through the internet at www.vankampen.com. A shareholder automatically has these
exchange privileges unless the shareholder indicates otherwise by checking the
applicable box on the account application form. Van Kampen Investments and its
subsidiaries, including Investor Services, and the Fund employ procedures
considered by them to be reasonable to confirm that instructions communicated by
telephone are genuine. Such procedures include requiring certain personal
identification information prior to acting upon telephone instructions,
tape-recording telephone communications, and providing written confirmation of
instructions communicated by telephone. If reasonable procedures are employed,
none of Van Kampen Investments, Investor Services or the Fund will be liable for
following telephone instructions which it reasonably believes to be genuine. If
the exchanging shareholder does not have an account in the fund whose shares are
being acquired, a new account will be established with the same registration,
dividend and capital gain dividend options (except dividend diversification) and
authorized dealer of record as the account from which shares are exchanged,
unless otherwise specified by the shareholder. In order to establish a
systematic withdrawal plan for the new account or reinvest dividends from the
new account into another fund, however, an exchanging shareholder must submit a
specific request. The Fund reserves the right to reject any order to acquire its
shares through exchange. In addition, the Fund and other Participating Funds may
restrict exchanges by shareholders engaged in excessive trading by limiting or
disallowing the exchange privilege to such shareholders. For further information
on these restrictions see the Fund's Statement of Additional Information. The
Fund may modify, restrict or terminate the exchange privilege at any time on 60
days' notice to its shareholders of any termination or material amendment.

Exchange requests received on a business day prior to the time shares of the
funds involved in the request are priced will be processed on the date of
receipt. "Processing" a request means that shares of the fund which the
shareholder is redeeming will be redeemed at the net asset value per share next
determined on the date of receipt. Shares of the fund that the shareholder is
purchasing will also normally be purchased at the net asset value per share,
plus any applicable sales charge, next determined on the date of receipt.
Exchange requests received on a business day after the time that shares of the
funds involved in the request are priced will be processed on the next business
day in the manner described herein.

FEDERAL INCOME TAXATION

The Fund intends to invest in sufficient tax-exempt municipal securities to
permit payment of "exempt-interest dividends" (as defined under applicable
federal income tax law). The aggregate amount of dividends designated as
exempt-interest dividends cannot exceed, however, the excess of the amount of
interest exempt from tax under Section 103 of the

14
<PAGE> 16

Internal Revenue Code of 1986, as amended (the "Code"), received by the Fund
during the year over any amounts disallowed as deductions under Sections 265 and
171(a)(2) of the Code. Since the percentage of dividends which are
exempt-interest dividends is determined on an average annual method for the
taxable year, the percentage of income designated as tax-exempt for any
particular dividend may be substantially different from the percentage of the
Fund's income that was tax-exempt during the period covered by the dividend.

Exempt-interest dividends paid to shareholders generally are not includable in
the shareholders' gross income for federal income tax purposes. Exempt-interest
dividends are included in determining what portion, if any, of a person's social
security and railroad retirement benefits will be includable in gross income
subject to federal income tax.

Under applicable federal income tax law, the interest on certain municipal
securities may be an item of tax preference subject to the federal alternative
minimum tax. The Fund may invest a portion of its assets in municipal securities
subject to this provision so that a portion of its exempt-interest dividends may
be an item of tax preference to the extent such dividends represent interest
received from such municipal securities. Accordingly, investment in the Fund
could cause shareholders to be subject to (or result in an increased liability
under) the federal alternative minimum tax.

Although exempt-interest dividends from the Fund generally may be treated by
shareholders as interest excluded from their gross income, each shareholder is
advised to consult his or her tax adviser with respect to whether
exempt-interest dividends retain this exclusion given the investor's tax
circumstances. For example, exempt-interest dividends may not be excluded if the
shareholder would be treated as a "substantial user" (or a "related person" of a
substantial user, as each term is defined by applicable federal income tax law)
of the facilities financed with respect to any of the tax-exempt obligations
held by the Fund.

If the Fund distributes exempt-interest dividends during the shareholder's
taxable year, some or all of the interest on indebtedness incurred or continued
by a shareholder to purchase or carry shares of the Fund will not be deductible
for federal income tax purposes, based on the ratio of exempt-interest dividends
to the total of exempt-interest dividends plus taxable dividends received by the
shareholder (excluding capital gain dividends) during the year. If a shareholder
receives an exempt-interest dividend with respect to any shares and such shares
are held for six months or less, any loss on the sale or exchange of the shares
will be disallowed to the extent of the amount of such exempt-interest dividend.

While the Fund expects that a major portion of its income will constitute
tax-exempt interest, a portion of its income may consist of investment company
taxable income (consisting generally of ordinary income and net short-term
capital gain, but not net capital gain, which is the excess of net long-term
capital gain over net short-term capital loss). Distributions of such investment
company taxable income are taxable to shareholders as ordinary income to the
extent of the Fund's earnings and profits, whether paid in cash or reinvested in
additional shares. Fund distributions generally will not qualify for the
dividends received deductions for corporations.

Distributions of the Fund's net capital gain as capital gain dividends, if any,
are taxable to shareholders as long-term capital gains, whether paid in cash or
reinvested in additional shares, and regardless of how long the shares of the
Fund have been held by such shareholders. Distributions in excess of the Fund's
earnings and profits will first reduce the adjusted tax basis of a holder's
shares and, after such adjusted tax basis is reduced to zero, will constitute
capital gains to such holder (assuming such shares are held as a capital asset).
Although distributions generally are treated as taxable in the year they are
paid, distributions declared in October, November or December, payable to
shareholders of record on a specified date in such month and paid during January
of the following year will be treated as having been distributed by the Fund and
received by the shareholders on the December 31st prior to the date of payment.
The Fund will inform shareholders of the source and tax status of all
distributions promptly after the close of each calendar year.

The sale or exchange of shares may be a taxable transaction for federal income
tax purposes. Shareholders who sell their shares will generally recognize a gain
or loss in an amount equal to the difference between their adjusted tax basis in
the shares sold and the amount received. If the shares are held by the
shareholder as a capital asset, the gain or loss will be a capital gain or loss.
Any recognized capital gains may

15
<PAGE> 17

be taxed at different rates depending on how long the shareholder held such
shares.

The Fund is required, in certain circumstances, to withhold 31% of dividends and
certain other payments, including redemptions, paid to shareholders who do not
furnish to the Fund their correct taxpayer identification number (in the case of
individuals, their social security number) and certain required certifications
or who are otherwise subject to backup withholding.

Foreign shareholders, including shareholders who are non-resident aliens, may be
subject to U.S. withholding tax on certain distributions (whether received in
cash or in shares) at a rate of 30% or such lower rate as prescribed by an
applicable treaty. Prospective foreign investors should consult their tax
advisers concerning the tax consequences to them of an investment in shares.

The Fund intends to qualify as a regulated investment company under federal
income tax law. If the Fund so qualifies and distributes each year to its
shareholders at least an amount equal to the sum of 90% of its investment
company taxable income and 90% of its net tax-exempt interest income, the Fund
will not be required to pay federal income taxes on any income it distributes to
shareholders. If the Fund distributes less than an amount equal to the sum of
98% of its ordinary income and 98% of its capital gain net income, then the Fund
will be subject to a 4% excise tax on the undistributed amounts.

The federal income tax discussion set forth above is for general information
only. Prospective investors should consult their own tax advisers regarding the
specific federal tax consequences of purchasing, holding and disposing of shares
of the Fund, as well as the effects of state, local and foreign tax law and any
proposed tax law changes.

16
<PAGE> 18

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the Fund's
financial performance for the periods indicated. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information for the fiscal year ended June 30, 2000 has been audited by Ernst &
Young LLP, independent auditors, whose report, along with the Fund's most recent
financial statements, is included in the Statement of Additional Information and
may be obtained by shareholders without charge by calling the telephone number
on the back cover of this prospectus. The information for the fiscal years ended
1999, 1998, 1997 and 1996 has been audited by KPMG LLP. This information should
be read in conjunction with the financial statements and notes thereto included
in the Statement of Additional Information.

<TABLE>
<CAPTION>
Year Ended June 30,
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

Net Asset Value, Beginning of the Period.................... $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------
Net Investment Income..................................... .029 .025 .029 .028 .029

Less Distributions from and in Excess of Net Investment
Income.................................................... .029 .025 .029 .028 .029
------ ------ ------ ------

Net Asset Value, End of Period.............................. $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ======

Total Return *.............................................. 2.88% 2.55% 2.93% 2.82% 2.93%
Net Assets at End of Period (In millions)................... $36.3 $33.5 $32.0 $33.1 $35.6
Ratio of Expenses to Average Net Assets *................... .88% .84% .83% .85% .85%
Ratio of Net Investment Income to Average Net Assets *...... 2.84% 2.53% 2.89% 2.78% 2.89%
----------------
* If certain expenses had not been assumed by the Adviser, total return would have been lower and the ratios would have
been as follows:

Ratio of Expenses to Average Net Assets................... 1.38% 1.34% 1.40% 1.45% 1.53%
Ratio of Net Investment Income to Average Net Assets...... 2.34% 2.03% 2.32% 2.17% 2.21%
</TABLE>

See Financial Statements and Notes thereto

17
<PAGE> 19

BOARD OF TRUSTEES
AND OFFICERS

BOARD OF TRUSTEES

<TABLE>
<S> <C>
J. Miles Branagan Richard F. Powers, III*
Jerry D. Choate Phillip B. Rooney
Linda Hutton Heagy Fernando Sisto
R. Craig Kennedy Wayne W. Whalen*
Mitchell M. Merin* Suzanne H. Woolsey
Jack E. Nelson
</TABLE>

OFFICERS
Richard F. Powers, III*
President

Stephen L. Boyd*

Executive Vice President and Chief Investment Officer

A. Thomas Smith III*
Vice President and Secretary

John H. Zimmermann, III*

Vice President

Michael H. Santo*
Vice President

Richard A. Ciccarone*

Vice President

John R. Reynoldson*

Vice President

John L. Sullivan*

Vice President, Chief Financial Officer and Treasurer

* "Interested persons" of the Fund, as defined in the Investment Company Act of
1940, as amended.

FOR MORE INFORMATION

EXISTING SHAREHOLDERS OR PROSPECTIVE INVESTORS
Call your broker or (800) 341-2911
7:00 a.m. to 7:00 p.m. Central time
Monday through Friday

DEALERS
For dealer information, selling agreements, wire orders, or
redemptions, call the Distributor at (800) 421-5666

TELECOMMUNICATIONS DEVICE FOR THE DEAF
For shareholder and dealer inquiries through Telecommunications Device for the
Deaf (TDD), call (800) 421-2833

FUNDINFO(R)
For automated telephone services, call (800) 847-2424

WEB SITE
www.vankampen.com

VAN KAMPEN TAX FREE MONEY FUND
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Investment Adviser
VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Distributor
VAN KAMPEN FUNDS INC.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555

Transfer Agent
VAN KAMPEN INVESTOR SERVICES INC.
PO Box 218256
Kansas City, MO 64121-8256
Attn: Van Kampen Tax Free Money Fund

Custodian
STATE STREET BANK AND TRUST COMPANY

225 Franklin Street, PO Box 1713

Boston, MA 02105-1713
Attn: Van Kampen Tax Free Money Fund

Legal Counsel
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, IL 60606

Independent Auditors

ERNST & YOUNG LLP

233 South Wacker Drive

Chicago, IL 60606

<PAGE> 20

VAN KAMPEN
TAX FREE MONEY FUND

PROSPECTUS

OCTOBER 27, 2000

A Statement of Additional Information, which
contains more details about the Fund, is
incorporated by reference in its entirety into
this prospectus.

You will find additional information about the
Fund in its annual and semiannual reports to
shareholders.

You can ask questions or obtain a free copy of
the Fund's reports or its Statement of
Additional Information by calling (800)
341-2911 from 7:00 a.m. to 7:00 p.m., Central
time, Monday through Friday.
Telecommunications Device for the Deaf users
may call (800) 421-2833. A free copy of the
Fund's reports can also be ordered from our
web site at www.vankampen.com.

Information about the Fund, including its
reports and Statement of Additional
Information, has been filed with the
Securities and Exchange Commission (SEC). It
can be reviewed and copied at the SEC's Public
Reference Room in Washington, DC or on the
EDGAR database on the SEC's internet site
(http://www.sec.gov). Information on the
operation of the SEC's Public Reference Room
may be obtained by calling the SEC at
1-202-942-8090. You can also request copies of
these materials, upon payment of a duplicating
fee, by electronic request at the SEC's e-mail
address ([email protected]) or by writing the
Public Reference Section of the SEC,
Washington, DC 20549-0102.

[VAN KAMPEN FUNDS LOGO]

The Fund's Investment Company Act
File No. is 811-4718.
TFMM
PRO 10/00
<PAGE> 21

STATEMENT OF ADDITIONAL INFORMATION

VAN KAMPEN
TAX FREE MONEY FUND

Van Kampen Tax Free Money Fund (the "Fund") is a mutual fund with the
investment objective to seek to provide investors with a high level of current
income exempt from federal income taxes consistent with the preservation of
capital and liquidity through investments in a diversified portfolio of
municipal securities that will mature within twelve months of the date of
purchase.

The Fund is organized as a diversified series of the Van Kampen Tax Free
Money Fund, an open-end, management investment company (the "Trust").

This Statement of Additional Information is not a prospectus. This
Statement of Additional Information should be read in conjunction with the
Fund's prospectus (the "Prospectus") dated as of the same date as this Statement
of Additional Information. This Statement of Additional Information does not
include all the information that a prospective investor should consider before
purchasing shares of the Fund. Investors should obtain and read the Prospectus
prior to purchasing shares of the Fund. A Prospectus may be obtained without
charge by writing or calling Van Kampen Funds Inc. at 1 Parkview Plaza, PO Box
5555, Oakbrook Terrace, Illinois 60181-5555 or (800) 341-2911 (or (800) 421-2833
for the hearing impaired).

---------------------------------------------

TABLE OF CONTENTS
---------------------------------------------

<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information......................................... B-2
Investment Objective, Policies and Risks.................... B-3
Investment Restrictions..................................... B-7
Trustees and Officers....................................... B-9
Investment Advisory Agreement............................... B-18
Other Agreements............................................ B-19
Distribution and Service.................................... B-19
Transfer Agent.............................................. B-21
Portfolio Transactions and Brokerage Allocation............. B-21
Shareholder Services........................................ B-23
Redemption of Shares........................................ B-25
Net Asset Value............................................. B-25
Taxation.................................................... B-26
Yield Information........................................... B-31
Other Information........................................... B-33
Description of Securities Ratings........................... B-33
Report of Independent Accountants........................... F-1
Financial Statements........................................ F-2
Notes to Financial Statements............................... F-9
</TABLE>

THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED OCTOBER 27, 2000.

<PAGE> 22

GENERAL INFORMATION

The Fund was originally organized in 1986 as a Massachusetts business trust
under the name Van Kampen Merritt Tax Free Income Fund. As of July 31, 1995, the
Fund was reorganized as a series of the Trust under the name Van Kampen American
Capital Tax Free Money Fund. The Trust is a business trust organized under the
laws of the State of Delaware. On July 14, 1998, the Fund and the Trust adopted
their present names.

Van Kampen Investment Advisory Corp. (the "Adviser" or "Advisory Corp."),
Van Kampen Funds Inc. (the "Distributor") and Van Kampen Investor Services Inc.
("Investor Services") are wholly owned subsidiaries of Van Kampen Investments
Inc. ("Van Kampen Investments"), which is an indirect wholly owned subsidiary of
Morgan Stanley Dean Witter & Co. ("Morgan Stanley Dean Witter"). The principal
office of the Trust, the Fund, the Adviser, the Distributor and Van Kampen
Investments is located at 1 Parkview Plaza, Oakbrook Terrace, Illinois
60181-5555. The principal office of Investor Services is located at 7501 Tiffany
Springs Parkway, Kansas City, Missouri 64153.

Morgan Stanley Dean Witter is a preeminent global financial services firm
that maintains leading market positions in each of its three primary businesses:
securities, asset management, and credit services.

The authorized capitalization of the Trust consists of an unlimited number
of shares of beneficial interest, par value $0.01 per share, which can be
divided into series, such as the Fund, and further subdivided into classes of
each series. Each share represents an equal proportionate interest in the assets
of the series with each other share in such series and no interest in any other
series. No series is subject to the liabilities of any other series. The
Declaration of Trust provides that shareholders are not liable for any
liabilities of the Trust or any of its series, requires inclusion of a clause to
that effect in every agreement entered into by the Trust or any of its series
and indemnifies shareholders against any such liability.

The Fund currently offers one class of shares. Other classes may be
established from time to time in accordance with provisions of the Declaration
of Trust. In the event of liquidation, each share of the Fund is entitled to its
portion of all of the Fund's net assets after all debts and expenses of the Fund
have been paid. Shares of the Trust entitle holders to one vote per share.
Except as otherwise described in the Prospectus or herein, shares do not have
cumulative voting rights, preemptive rights or any conversion, subscription or
exchange rights.

The Fund does not contemplate holding regular meetings of shareholders to
elect Trustees or otherwise. However, the holders of 10% or more of the
outstanding shares may by written request require a meeting to consider the
removal of Trustees by a vote of two-thirds of the shares then outstanding cast
in person or by proxy at such meeting. The Fund will assist such holders in
communicating with other shareholders of the Fund to the extent required by the
Investment Company Act of 1940, as amended (the "1940 Act"), or rules or
regulations promulgated by the Securities and Exchange Commission ("SEC").

The Trustees may amend the Declaration of Trust (including with respect to
any series) in any manner without shareholder approval, except that the Trustees
may not adopt any amendment adversely affecting the rights of shareholders of
any series without approval by a majority of the shares of each affected series
outstanding and entitled to vote

B-2
<PAGE> 23

(or such higher vote as may be required by the 1940 Act or other applicable law)
and except that the Trustees cannot amend the Declaration of Trust to impose any
liability on shareholders, make any assessment on shares or impose liabilities
on the Trustees without approval from each affected shareholder or Trustee, as
the case may be.

Statements contained in this Statement of Additional Information as to the
contents of any contract or other document referred to are not necessarily
complete, and, in each instance, reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement of which
this Statement of Additional Information forms a part, each such statement being
qualified in all respects by such reference.

As of October 6, 2000 no person was known by the Fund to own beneficially
or to hold of record 5% or more of the outstanding shares of the Fund, except as
follows:

<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
NAME AND ADDRESS OF HOLDER SHARES HELD OWNERSHIP
-------------------------- ----------- ----------
<S> <C> <C>
Jerome L. Robinson......................... 4,812,555 15.89%
Re Merchants Bank of New York
200 Old Palisade Rd Apt TH4
Fort Lee, NJ 07024-7000
Billy Yarbrough Tr......................... 2,027,078 6.69%
Yarbrough Fam Trust
DTD 07/23/92
97 Dobbins St
Vacaville, CA 95688-2759
</TABLE>

INVESTMENT OBJECTIVE, POLICIES AND RISKS

The following disclosure supplements the disclosure set forth under the
same caption in the Prospectus and does not, standing alone, present a complete
or accurate explanation of the matters disclosed. Readers must refer also to
this caption in the Prospectus for a complete presentation of the matters
disclosed below.

MONEY MARKET SECURITIES

The Fund seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, the Fund uses the amortized cost method of
valuing the Fund's securities pursuant to Rule 2a-7 under the 1940 Act, certain
requirements of which are summarized below.

In accordance with Rule 2a-7, the Fund is required to (i) maintain a
dollar-weighted average portfolio maturity of 90 days or less, (ii) purchase
only instruments having remaining maturities of 13 months or less and (iii)
invest only in U.S. dollar denominated securities determined in accordance with
procedures established by the Trustees to present minimal credit risks.
Additionally, securities purchased for investment must be rated in one of the
two highest rating categories for debt obligations by any two nationally
recognized statistical rating organizations ("NRSROs") (or any one NRSRO if the
instrument was rated by only one such organization) or, if unrated, are of
comparable quality as determined in accordance with procedures established by
the Fund's Board of Trustees. The NRSROs currently rating instruments of the
type the Fund may purchase include,

B-3
<PAGE> 24

among others, Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's
("S & P").

In addition, the Fund will not invest more than 5% of its total assets in
the securities (including the securities collateralizing a repurchase agreement)
of a single issuer, except that (i) the Fund may invest up to 25% of its total
assets in the "first tier securities" of a single issuer for a period of up to
three business days in certain limited circumstances, (ii) the Fund may invest
in obligations issued or guaranteed by the U.S. government without any such
limitation, and (iii) the Fund may invest, with limitations, more than 5% of its
total assets in securities subject to a guarantee issued by a non-controlled
person. First tier securities are those that have been rated in the highest
rating category for short-term obligations by at least two NRSROs (or one NRSRO
if the instrument was rated by only one such organization), and unrated
securities determined by the Fund's Board of Trustees to be comparable to those
rated in the highest category. The Fund will be limited to 5% of the Fund's
total assets for other permitted investments not in the first tier ("second tier
securities"), with the investment in any one such issuer being limited to no
more than the greater of 1% of the Fund's total assets or $1,000,000. As to each
security, these percentages are measured at the time the Fund purchases the
security.

If a security's rating is downgraded, the Adviser and/or the Fund's Board
of Trustees may have to reassess the security's credit risk. If a security has
ceased to be a first tier security, the Adviser will promptly reassess whether
the security continues to present minimal credit risk. If the Adviser becomes
aware that any NRSRO has downgraded its rating of a second tier security or
rated a previously unrated security below its second highest rating category,
the Fund's Board of Trustees shall promptly reassess whether the security
presents minimal credit risk and whether it is in the best interests of the Fund
to dispose of it. If the Fund disposes of the security within five days of the
Adviser learning of the downgrade, the Adviser will provide the Fund's Board of
Trustees with subsequent notice of such downgrade. If a security is in default,
ceases to be a security permitted for investment, is determined no longer to
present minimal credit risks or if an event of insolvency as defined in Rule
2a-7 occurs, the Fund must dispose of the security as soon as practicable unless
the Fund's Board of Trustees determines it would be in the best interests of the
Fund not to dispose of the security. There can be no assurance that the Fund
will be able to maintain a stable net asset value of $1.00 per share.

REPURCHASE AGREEMENTS

The Fund may engage in repurchase agreements with broker-dealers, banks and
other financial institutions in order to earn a return on temporarily available
cash. A repurchase agreement is a short-term investment in which the purchaser
(i.e., the Fund) acquires ownership of a security and the seller agrees to
repurchase the obligation at a future time and set price, thereby determining
the yield during the holding period. Repurchase agreements involve certain risks
in the event of default by the other party. The Fund may enter into repurchase
agreements with broker-dealers, banks and other financial institutions deemed to
be creditworthy by the Adviser under guidelines approved by the Fund's Board of
Trustees. The Fund will not invest in repurchase agreements maturing in more
than seven days if any such investment, together with any other illiquid
securities held by the Fund, would exceed the Fund's limitation on illiquid
securities described herein. The Fund does not bear the risk of a decline in
value of the underlying security unless the seller

B-4
<PAGE> 25

defaults under its repurchase obligation. In the event of the bankruptcy or
other default of a seller of a repurchase agreement, the Fund could experience
both delays in liquidating the underlying securities and losses including: (a)
possible decline in the value of the underlying security during the period while
the Fund seeks to enforce its rights thereto; (b) possible lack of access to
income on the underlying security during this period; and (c) expenses of
enforcing its rights.

For the purpose of investing in repurchase agreements, the Adviser may
aggregate the cash that certain funds advised or subadvised by the Adviser or
certain of its affiliates would otherwise invest separately into a joint
account. The cash in the joint account is then invested in repurchase agreements
and the funds that contributed to the joint account share pro rata in the net
revenue generated. The Adviser believes that the joint account produces
efficiencies and economies of scale that may contribute to reduced transaction
costs, higher returns, higher quality investments and greater diversity of
investments for the Fund than would be available to the Fund investing
separately. The manner in which the joint account is managed is subject to
conditions set forth in an exemptive order from the SEC permitting this
practice, which conditions are designed to ensure the fair administration of the
joint account and to protect the amounts in that account.

Repurchase agreements are fully collateralized by the underlying securities
and are considered to be loans under the 1940 Act. The Fund pays for such
securities only upon physical delivery or evidence of book entry transfer to the
account of a custodian or bank acting as agent. The seller under a repurchase
agreement will be required to maintain the value of the underlying securities
marked-to-market daily at not less than the repurchase price. The underlying
securities (normally securities of the U.S. government, or its agencies and
instrumentalities) may have maturity dates exceeding one year.

STAND-BY COMMITMENTS

The Fund may acquire "stand-by commitments" with respect to municipal
securities held by the Fund. Under a stand-by commitment, a bank or dealer from
which municipal securities are acquired agrees to purchase from the Fund, at the
Fund's option, the municipal securities at a specified price. Such commitments
are sometimes called "liquidity puts." The amount payable to the Fund upon its
exercise of a stand-by commitment is normally (i) the Fund's acquisition cost of
the municipal securities (excluding any accrued interest which the Fund paid on
their acquisition), less any amortized market premium or plus any amortized
market or original issue discount during the period the Fund owned the
securities, plus (ii) all interest accrued on the securities since the last
interest payment date during that period. Stand-by commitments generally can be
acquired when the remaining maturity of the underlying municipal securities is
not greater than one year, and are exercisable by the Fund at any time before
the maturity of such obligations. The Fund's right to exercise stand-by
commitments is unconditional and unqualified. A stand-by commitment generally is
not transferable by the Fund, although the Fund can sell the underlying
municipal securities to a third party at any time.

The Fund expects that stand-by commitments will generally be available
without the payment of any direct or indirect consideration. However, if
necessary or advisable, the Fund may pay for a stand-by commitment either
separately in cash or by paying a higher price for portfolio securities which
are acquired subject to the commitment (thus reducing the yield to maturity
otherwise available for the same securities). The Fund intends to

B-5
<PAGE> 26

enter into stand-by commitments only with banks and dealers which, in the
opinion of the Fund's investment adviser, present minimal credit risks.

The acquisition of a stand-by commitment would not affect the valuation of
the underlying municipal securities which would continue to be valued in
accordance with the method of valuation employed for the Fund in which they are
held. Stand-by commitments acquired by the Fund would be valued at zero in
determining net asset value. Where the Fund paid any consideration directly or
indirectly for a stand-by commitment, its costs would be reflected as unrealized
depreciation for the period during which the commitment was held by the Fund.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

The Fund may purchase and sell municipal securities on a "when-issued" or
"delayed delivery" basis whereby the Fund buys or sells a security with payment
and delivery taking place in the future. The payment obligation and the interest
rate are fixed at the time the Fund enters into the commitment. No income
accrues to the Fund on municipal securities in connection with such transactions
prior to the date the Fund actually takes delivery of such securities. These
transactions are subject to market risk as the value or yield of a municipal
security at delivery may be more or less than the purchase price or the yield
generally available on municipal securities when delivery occurs. In addition,
the Fund is subject to counterparty risk because it relies on the buyer or
seller, as the case may be, to consummate the transaction, and failure by the
other party to complete the transaction may result in the Fund missing the
opportunity of obtaining a price or yield considered to be advantageous. The
Fund will only make commitments to purchase such securities with the intention
of actually acquiring the securities, but the Fund may sell these securities
prior to settlement date if it is deemed advisable. When the Fund is the buyer
in such a transaction, however, it will maintain, in a segregated account with
its custodian, cash or liquid securities having an aggregate value equal to the
amount of such purchase commitments until payment is made. The Fund will make
commitments to purchase municipal securities on such basis only with the
intention of actually acquiring these securities, but the Fund may sell such
securities prior to the settlement date if such sale is considered to be
advisable. To the extent the Fund engages in "when-issued" and "delayed
delivery" transactions, it will do so for the purpose of acquiring securities
for the Fund's portfolio consistent with the Fund's investment objectives and
policies and not for the purposes of investment leverage. No specific limitation
exists as to the percentage of the Fund's assets which may be used to acquire
securities on a "when-issued" or "delayed delivery" basis.

ILLIQUID SECURITIES

The Fund may invest up to 10% of its net assets in illiquid securities,
which includes securities that are not readily marketable, repurchase agreements
which have a maturity of longer than seven days, and generally includes
securities that are restricted from sale to the public without registration
under the Securities Act of 1933, as amended (the "1933 Act"). The sale of such
securities often requires more time and results in higher brokerage charges or
dealer discounts and other selling expenses than does the sale of liquid
securities trading on national securities exchanges or in the over-the-counter
markets. Restricted securities are often purchased at a discount from the market
price of

B-6
<PAGE> 27

unrestricted securities of the same issuer reflecting the fact that such
securities may not be readily marketable without some time delay. Investments in
securities for which market quotations are not readily available are valued at
fair value as determined in good faith by the Adviser in accordance with
procedures approved by the Fund's Board of Trustees. Ordinarily, the Fund would
invest in restricted securities only when it receives the issuer's commitment to
register the securities without expense to the Fund. However, registration and
underwriting expenses (which typically range from 7% to 15% of the gross
proceeds of the securities sold) may be paid by the Fund. Restricted securities
which can be offered and sold to qualified institutional buyers under Rule 144A
under the 1933 Act ("144A Securities") and are determined to be liquid under
guidelines adopted by and subject to the supervision of the Fund's Board of
Trustees are not subject to the limitation on illiquid securities. Such 144A
Securities are subject to monitoring and may become illiquid to the extent
qualified institutional buyers become, for a time, uninterested in purchasing
such securities. Factors used to determine whether 144A Securities are liquid
include, among other things, a security's trading history, the availability of
reliable pricing information, the number of dealers making quotes or making a
market in such security and the number of potential purchasers in the market for
such security. For purposes hereof, investments by the Fund in securities of
other investment companies will not be considered investments in restricted
securities to the extent permitted by (i) the 1940 Act, as amended from time to
time, (ii) the rules and regulations promulgated by the SEC under the 1940 Act,
as amended from time to time, or (iii) an exemption or other relief (such as "no
action" letters issued by the staff of the SEC interpreting or providing
guidance on the 1940 Act or regulations thereunder) from the provisions of the
1940 Act, as amended from time to time.

INVESTMENT RESTRICTIONS

The Fund has adopted the following fundamental investment restrictions
which may not be changed without shareholder approval by the vote of a majority
of its outstanding voting securities which is defined by the 1940 Act as the
lesser of (i) 67% or more of the Fund's voting securities present at a meeting,
if the holders of more than 50% of the outstanding voting securities of the Fund
are present or represented by proxy; or (ii) more than 50% of the Fund's
outstanding voting securities. The percentage limitations contained in the
restrictions and policies set forth herein apply at the time of purchase of
securities. With respect to the limitations on illiquid securities and
borrowings, the percentage limitations apply at the time of purchase and on an
ongoing basis. These restrictions provide that the Fund shall not:

1. Purchase any securities (other than obligations issued or guaranteed by
the U.S. government or by its agencies or instrumentalities) if, as a
result, more than 5% of the Fund's total assets (taken at current value)
would then be invested in securities of a single issuer or if, as a
result, the Fund would hold more than 10% of the outstanding voting
securities of an issuer except that up to 25% of the Fund's total assets
may be invested without regard to such limitations and except that the
Fund may purchase securities of other investment companies without regard
to such limitation to the extent permitted by (i) the 1940 Act, as amended
from time to time, (ii) the rules and regulations promulgated by the SEC
under the 1940 Act, as

B-7
<PAGE> 28

amended from time to time, or (iii) an exemption or other relief from the
provisions of the 1940 Act, as amended from time to time.

2. Borrow money, except from banks for temporary or emergency purposes or in
reverse repurchase transactions as described in the Prospectus and then
not in amounts in excess of 10% of its net assets at the time of
borrowing. It can mortgage or pledge its assets only in connection with
such borrowing and in amounts not in excess of 20% of the value of its net
assets at the time of such borrowing. The Fund will not purchase any
securities while it has any outstanding borrowings.

3. Buy any securities "on margin" or sell any securities "short."

4. Make investments for the purpose of exercising control or management
except that the Fund may purchase securities of other investment companies
to the extent permitted by (i) the 1940 Act, as amended from time to time,
(ii) the rules and regulations promulgated by the SEC under the 1940 Act,
as amended from time to time, or (iii) an exemption or other relief from
the provisions of the 1940 Act, as amended from time to time.

5. Purchase any security which is restricted as to disposition under federal
securities laws or by contract or which are not readily marketable, or
enter into a repurchase agreement maturing in more than seven days with
respect to any security if, as a result, more than 10% of the Fund's total
assets would be invested in such securities except that the Fund may
purchase securities of other investment companies to the extent permitted
by (i) the 1940 Act, as amended from time to time, (ii) the rules and
regulations promulgated by the SEC under the 1940 Act, as amended from
time to time, or (iii) an exemption or other relief from the provisions of
the 1940 Act, as amended from time to time.

6. Investment in securities issued by other investment companies except as
part of a merger, reorganization or other acquisition and extent permitted
by (i) the 1940 Act, as amended from time to time, (ii) the rules and
regulations promulgated by the SEC under the 1940 Act, as amended from
time to time, or (iii) an exemption or other relief from the provisions of
the 1940 Act, as amended from time to time.

7. Invest in interests in oil, gas or other mineral exploration or
development programs.

8. Make loans, except that the Fund can purchase and hold those publicly
distributed debt securities which it is permitted to buy, and enter into
repurchase agreements.

9. Act as an underwriter of securities, except to the extent the Fund may be
deemed to be an underwriter in connection with the sale of securities held
in its portfolio.

10. Purchase or sell real estate, commodities or commodity contracts.

It is currently the operating policy of the Fund to limit the purchase of
illiquid securities to 10% of the Fund's net assets.

B-8
<PAGE> 29

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 officers of the Fund and
executive officers of the Fund's investment adviser and their principal
occupations for the last five years and their affiliations, if any, with Van
Kampen Investments Inc. ("Van Kampen Investments"), Van Kampen Investment
Advisory Corp. ("Advisory Corp."), Van Kampen Asset Management Inc. ("Asset
Management"), Van Kampen Funds Inc. (the "Distributor"), Van Kampen Management
Inc., Van Kampen Advisors Inc., Van Kampen Insurance Agency of Illinois Inc.,
Van Kampen Insurance Agency of Texas Inc., Van Kampen System Inc., Van Kampen
Recordkeeping Services Inc., American Capital Contractual Services, Inc., Van
Kampen Trust Company, Van Kampen Exchange Corp. and Van Kampen Investor Services
Inc. ("Investor Services"). Advisory Corp. and Asset Management sometimes are
referred to herein collectively as the "Advisers". For purposes hereof, the term
"Fund Complex" includes each of the open-end investment companies advised by the
Advisers (excluding Van Kampen Exchange Fund).

TRUSTEES

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
J. Miles Branagan......................... Private investor. Trustee/Director of each of
1632 Morning Mountain Road the funds in the Fund Complex. Co-founder,
Raleigh, NC 27614 and prior to August 1996, Chairman, Chief
Date of Birth: 07/14/32 Executive Officer and President, MDT
Age: 68 Corporation (now known as Getinge/Castle,
Inc., a subsidiary of Getinge Industrier AB),
a company which develops, manufactures,
markets and services medical and scientific
equipment.

Jerry D. Choate........................... Director of Amgen Inc., a biotechnological
53 Monarch Bay Drive company and Director of Valero Energy
Dana Point, CA 92629 Corporation, an independent refining company.
Date of Birth: 09/16/38 Trustee/Director of each of the funds in the
Age: 62 Fund Complex. Prior to January 1999, Chairman
and Chief Executive Officer of The Allstate
Corporation ("Allstate") and Allstate
Insurance Company. Prior to January 1995,
President and Chief Executive Officer of
Allstate. Prior to August 1994, various
management positions at Allstate.

Linda Hutton Heagy........................ Managing Partner of Heidrick & Stuggles, an
Sears Tower executive search firm. Trustee/Director of
233 South Wacker Drive each of the funds in the Fund Complex. Prior
Suite 7000 to 1997, Partner, Ray & Berndtson, Inc., an
Chicago, IL 60606 executive recruiting and management
Date of Birth: 06/03/48 consulting firm. Formerly, Executive Vice
Age: 52 President of ABN AMRO, N.A., a Dutch bank
holding company. Prior to 1992, Executive
Vice President of La Salle National Bank.
Trustee on the University of
</TABLE>

B-9
<PAGE> 30

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Chicago Hospitals Board, Vice Chair of the
Board of The YMCA of Metropolitan Chicago and
a member of the Women's Board of the
University of Chicago. Prior to 1996, Trustee
of The International House Board, a
fellowship and housing organization for
international graduate students.

R. Craig Kennedy.......................... President and Director, German Marshall Fund
11 DuPont Circle, N.W. of the United States, an independent U.S.
Washington, D.C. 20016 foundation created to deepen understanding,
Date of Birth: 02/29/52 promote collaboration and stimulate exchanges
Age: 48 of practical experience between Americans and
Europeans. Trustee/Director of each of the
funds in the Fund Complex. 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.

Mitchell M. Merin*........................ President and Chief Operating Officer of
Two World Trade Center Asset Management of Morgan Stanley Dean
66th Floor Witter since December 1998. President and
New York, NY 10048 Director since April 1997 and Chief Executive
Date of Birth: 08/13/53 Officer since June 1998 of Morgan Stanley
Age: 47 Dean Witter Advisors Inc. and Morgan Stanley
Dean Witter Services Company Inc. Chairman,
Chief Executive Officer and Director of
Morgan Stanley Dean Witter Distributors Inc.
since June 1998. Chairman and Chief Executive
Officer since June 1998, and Director since
January 1998, of Morgan Stanley Dean Witter
Trust FSB. Director of various Morgan Stanley
Dean Witter subsidiaries. President of the
Morgan Stanley Dean Witter Funds since May
1999. Trustee/Director of each of the funds
in the Fund Complex. Previously Chief
Strategic Officer of Morgan Stanley Dean
Witter Advisors Inc. and Morgan Stanley Dean
Witter Services Company Inc. and Executive
Vice President of Morgan Stanley Dean Witter
Distributors Inc. April 1997-June 1998, Vice
President of the Morgan Stanley Dean Witter
Funds May 1997-April 1999, and Executive Vice
President of Dean Witter, Discover & Co.
</TABLE>

B-10
<PAGE> 31

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Jack E. Nelson............................ President and owner, Nelson Investment
423 Country Club Drive Planning Services, Inc., a financial planning
Winter Park, FL 32789 company and registered investment adviser in
Date of Birth: 02/13/36 the State of Florida. President and owner,
Age: 64 Nelson Ivest Brokerage Services Inc., a
member of the National Association of
Securities Dealers, Inc. and Securities
Investors Protection Corp. Trustee/Director
of each of the funds in the Fund Complex.

Richard F. Powers, III*................... Chairman, President and Chief Executive
1 Parkview Plaza Officer of Van Kampen Investments. Chairman,
P.O. Box 5555 Director and Chief Executive Officer of the
Oakbrook Terrace, IL 60181-5555 Advisers, the Distributor, Van Kampen
Date of Birth: 02/02/46 Advisors Inc. and Van Kampen Management Inc.
Age: 54 Director and officer of certain other
subsidiaries of Van Kampen Investments. Chief
Sales and Marketing Officer of Morgan Stanley
Dean Witter Asset Management Inc.
Trustee/Director and President of each of the
funds in the Fund Complex. Trustee, President
and Chairman of the Board of other investment
companies advised by the Advisers and their
affiliates, and Chief Executive Officer of
Van Kampen Exchange Fund. Prior to May 1998,
Executive Vice President and Director of
Marketing at Morgan Stanley Dean Witter and
Director of Dean Witter Discover & Co. and
Dean Witter Realty. Prior to 1996, Director
of Dean Witter Reynolds Inc.

Phillip B. Rooney......................... Vice Chairman (since April 1997) and Director
One ServiceMaster Way (since 1994) of The ServiceMaster Company, a
Downers Grove, IL 60515 business and consumer services company.
Date of Birth: 07/08/44 Director of Illinois Tool Works, Inc., a
Age: 56 manufacturing company and the Urban Shopping
Centers Inc., a retail mall management
company. Trustee, University of Notre Dame.
Trustee/Director of each of the funds in the
Fund Complex. Prior to 1998, Director of
Stone Smurfit Container Corp., a paper
manufacturing company. From May 1996 through
February 1997 he was President, Chief
Executive Officer and Chief Operating Officer
of Waste Management, Inc., an environmental
services company, and from November 1984
through May 1996 he was President and Chief
Operating Officer of Waste Management, Inc.
</TABLE>

B-11
<PAGE> 32

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Fernando Sisto............................ Professor Emeritus. Prior to August 1996, a
155 Hickory Lane George M. Bond Chaired Professor with Stevens
Closter, NJ 07624 Institute of Technology, and prior to 1995,
Date of Birth: 08/02/24 Dean of the Graduate School, Stevens
Age: 76 Institute of Technology. Director, Dynalysis
of Princeton, a firm engaged in engineering
research. Trustee/Director of each of the
funds in the Fund Complex.

Wayne W. Whalen*.......................... Partner in the law firm of Skadden, Arps,
333 West Wacker Drive Slate, Meagher & Flom (Illinois), legal
Chicago, IL 60606 counsel to the funds in the Fund Complex and
Date of Birth: 08/22/39 other investment companies advised by the
Age: 61 Advisers. Trustee/ Director of each of the
funds in the Fund Complex, and
Trustee/Managing General Partner of other
investment companies advised by the Advisers.

Suzanne H. Woolsey........................ Chief Operating Officer of the National
2101 Constitution Ave., N.W. Academy of Sciences/National Research
Room 206 Council, an independent, federally chartered
Washington, D.C. 20418 policy institution, since 1993. Director of
Date of Birth: 12/27/41 Neurogen Corporation, a pharmaceutical
Age: 58 company, since January 1998. Director of the
German Marshall Fund of the United States,
Trustee of Colorado College, and Vice Chair
of the Board of the Council for Excellence in
Government. Trustee/Director of each of the
funds in the Fund Complex. Prior to 1993,
Executive Director of the Commission on
Behavioral and Social Sciences and Education
at the National Academy of Sciences/National
Research Council. From 1980 through 1989,
Partner of Coopers & Lybrand.
</TABLE>

------------------------------------

* Such trustee is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act). Mr. Whalen is an interested person of each of the funds in
the Fund Complex by reason of his firm currently acting as legal counsel to
each of the funds in the Fund Complex. Messrs. Merin and Powers are interested
persons of each of the funds in the Fund Complex and the Advisers by reason of
their positions with Morgan Stanley Dean Witter or its affiliates.

B-12
<PAGE> 33

OFFICERS

Messrs. Smith, Santo, Ciccarone, Reynoldson, Sullivan and Zimmermann are
located at 1 Parkview Plaza, Oakbrook Terrace, IL 60181-5555. Mr. Boyd is
located at 2800 Post Oak Blvd., Houston, TX 77056.

<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>

A. Thomas Smith III.................. Executive Vice President, General Counsel,
Date of Birth: 12/14/56 Secretary and Director of Van Kampen Investments,
Age: 43 the Advisers, Van Kampen Advisors Inc., Van
Vice President and Secretary Kampen Management Inc., the Distributor, American
Capital Contractual Services, Inc., Van Kampen
Exchange Corp., Van Kampen Recordkeeping Services
Inc., Investor Services, Van Kampen Insurance
Agency of Illinois Inc. and Van Kampen System
Inc. Vice President and Secretary of each of the
funds in the Fund Complex and Vice President and
Secretary/Vice President, Principal Legal Officer
and Secretary of other investment companies
advised by the Advisers or their affiliates.
Prior to January 1999, Vice President and
Associate General Counsel to New York Life
Insurance Company ("New York Life"), and prior to
March 1997, Associate General Counsel of New York
Life. Prior to December 1993, Assistant General
Counsel of The Dreyfus Corporation. Prior to
August 1991, Senior Associate, Willkie Farr &
Gallagher. Prior to January 1989, Staff Attorney
at the Securities and Exchange Commission,
Division of Investment Management, Office of
Chief Counsel.

Michael H. Santo..................... Executive Vice President, Chief Administrative
Date of Birth: 10/22/55 Officer and Director of Van Kampen Investments,
Age: 45 the Advisers, the Distributor, Van Kampen
Vice President Advisors Inc., Van Kampen Management Inc. and Van
Kampen Investor Services Inc., and serves as a
Director or Officer of certain other subsidiaries
of Van Kampen Investments. Vice President of each
of the funds in the Fund Complex and certain
other investment companies advised by the
Advisers and their affiliates. Prior to 1998,
Senior Vice President and Senior Planning Officer
for Individual Asset Management of Morgan Stanley
Dean Witter and its predecessor since 1994. From
1990-1994, First Vice President and Assistant
Controller in Dean Witter's Controller's
Department.
</TABLE>

B-13
<PAGE> 34

<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>
Stephen L. Boyd...................... Executive Vice President and Chief Investment
Date of Birth: 11/16/40 Officer of Van Kampen Investments, and President
Age: 59 and Chief Operating Officer of the Advisers.
Executive Vice President and Chief Executive Vice President and Chief Investment
Investment Officer Officer of each of the funds in the Fund Complex
and certain other investment companies advised by
the Advisers or their affiliates. Prior to April
2000, Executive Vice President and Chief
Investment Officer for Equity Investments of the
Advisers. Prior to October 1998, Vice President
and Senior Portfolio Manager with AIM Capital
Management, Inc. Prior to February 1998, Senior
Vice President and Portfolio Manager of Van
Kampen American Capital Asset Management, Inc.,
Van Kampen American Capital Investment Advisory
Corp. and Van Kampen American Capital Management,
Inc.

Richard A. Ciccarone................. Senior Vice President and Co-head of the Fixed
Date of Birth: 06/15/52 Income Department of the Advisers, Van Kampen
Age: 48 Management Inc. and Van Kampen Advisors Inc.
Vice President Prior to May 2000, he served as Co-head of
Municipal Investments and Director of Research of
the Advisers, Van Kampen Management Inc. and Van
Kampen Advisors Inc. Mr. Ciccarone first joined
the Adviser in June 1983, and worked for the
Adviser until May 1989, with his last position
being a Vice President. From June 1989 to April
1996, he worked at EVEREN Securities (formerly
known as Kemper Securities), with his last
position at EVEREN being an Executive Vice
President. Since April 1996, Mr. Ciccarone has
been a Senior Vice President of the Advisers, Van
Kampen Management Inc. and Van Kampen Advisors
Inc.

John R. Reynoldson................... Senior Vice President and Co-head of the Fixed
Date of Birth: 05/15/53 Income Department of the Advisers, Van Kampen
Age: 47 Management Inc. and Van Kampen Advisors Inc.
Vice President Prior to May 2000, he managed the investment
grade taxable group for the Adviser since July
1999. From July 1988 to June 1999, he managed the
government securities bond group for Asset
Management. Mr. Reynoldson has been with Asset
Management since April 1987, and has been a
Senior Vice President of Asset Management since
July 1988. He has been a Senior Vice President of
the Adviser and Van Kampen Management Inc. since
June 1995 and Senior Vice President of Van Kampen
Advisors Inc. since June 2000.
</TABLE>

B-14
<PAGE> 35

<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>
John L. Sullivan..................... Senior Vice President of Van Kampen Investments
Date of Birth: 08/20/55 and the Advisers. Vice President, Chief Financial
Age: 45 Officer and Treasurer of each of the funds in the
Vice President, Chief Financial Fund Complex and certain other investment
Officer and Treasurer companies advised by the Advisers or their
affiliates.

John H. Zimmermann, III.............. Senior Vice President and Director of Van Kampen
Date of Birth: 11/25/57 Investments, President and Director of the
Vice President Distributor, and President of Van Kampen
Age: 42 Insurance Agency of Illinois Inc. Vice President
of each of the funds in the Fund Complex. From
November 1992 to December 1997, Mr. Zimmermann
was Senior Vice President of the Distributor.
</TABLE>

Each trustee/director holds the same position with each of the funds in the
Fund Complex. As of the date of this Statement of Additional Information, there
are 60 operating funds in the Fund Complex. Each trustee/director who is not an
affiliated person of the Van Kampen Investments, the Advisers or the Distributor
(each a "Non-Affiliated Trustee") is compensated by an annual retainer and
meeting fees for services to the funds in the Fund Complex. Each fund in the
Fund Complex provides a deferred compensation plan to its Non-Affiliated
Trustees that allows trustees/directors to defer receipt of their compensation
and earn a return on such deferred amounts. Deferring compensation has the
economic effect as if the Non-Affiliated Trustee reinvested his or her
compensation into the funds. Each fund in the Fund Complex provides a retirement
plan to its Non-Affiliated Trustees that provides Non-Affiliated Trustees with
compensation after retirement, provided that certain eligibility requirements
are met as more fully described below.

The compensation of each Non-Affiliated Trustee includes an annual retainer
in an amount equal to $50,000 per calendar year, due in four quarterly
installments on the first business day of each quarter. Payment of the annual
retainer is allocated among the funds in the Fund Complex on the basis of the
relative net assets of each fund as of the last business day of the preceding
calendar quarter. The compensation of each Non-Affiliated Trustee includes a per
meeting fee from each fund in the Fund Complex in the amount of $200 per
quarterly or special meeting attended by the Non-Affiliated Trustee, due on the
date of the meeting, plus reasonable expenses incurred by the Non-Affiliated
Trustee in connection with his or her services as a trustee/director, provided
that no compensation will be paid in connection with certain telephonic special
meetings.

Under the deferred compensation plan, each Non-Affiliated Trustee generally
can elect to defer receipt of all or a portion of the compensation earned by
such Non-Affiliated Trustee until retirement. Amounts deferred are retained by
the Fund and earn a rate of return determined by reference to the return on the
common shares of such Fund or other funds in the Fund Complex as selected by the
respective Non-Affiliated Trustee, with the same economic effect as if such
Non-Affiliated Trustee had invested in one or more funds in the Fund Complex. To
the extent permitted by the 1940 Act, the Fund may invest in securities of those
funds selected by the Non-Affiliated Trustees in order to match the

B-15
<PAGE> 36

deferred compensation obligation. The deferred compensation plan is not funded
and obligations thereunder represent general unsecured claims against the
general assets of the Fund.

Under the retirement plan, a Non-Affiliated Trustee who is receiving
compensation from such Fund prior to such Non-Affiliated Trustee's retirement,
has at least 10 years of service (including years of service prior to adoption
of the retirement plan) and retires at or after attaining the age of 60, is
eligible to receive a retirement benefit equal to $2,500 per year for each of
the ten years following such retirement from such Fund. Non-Affiliated Trustees
retiring prior to the age of 60 or with fewer than 10 years but more than 5
years of service may receive reduced retirement benefits from such Fund. Each
trustee/director has served as a member of the Board of Trustees of the Fund
since he or she was first appointed or elected in the year set forth below. The
retirement plan contains a Fund Complex retirement benefit cap of $60,000 per
year.

Additional information regarding compensation and benefits for trustees is
set forth below for the periods described in the notes accompanying the table.

COMPENSATION TABLE

<TABLE>
<CAPTION>
Fund Complex
-------------------------------------------
Aggregate
Aggregate Estimated
Pension or Maximum Total
Aggregate Retirement Annual Compensation
Year First Compensation Benefits Benefits from before
Appointed or before Accrued as the Fund Deferral from
Elected to Deferral from Part of Upon Fund
Name(1) the Board the Trust(2) Expenses(3) Retirement(4) Complex(5)
------- ------------ ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
J. Miles Branagan 1991 $1,440 $40,303 $60,000 $126,000
Jerry D. Choate(1) 1999 1,440 0 60,000 88,700
Linda Hutton Heagy 1995 1,440 5,045 60,000 126,000
R. Craig Kennedy 1995 1,440 3,571 60,000 125,600
Jack E. Nelson 1995 1,440 21,664 60,000 126,000
Phillip B. Rooney 1997 1,440 7,787 60,000 113,400
Fernando Sisto 1978 1,440 72,060 60,000 126,000
Wayne W. Whalen 1995 1,440 15,189 60,000 126,000
Suzanne H. Woolsey(1) 1999 1,240 0 60,000 88,700
</TABLE>

------------------------------------

(1) Trustees not eligible for compensation are not included in the Compensation
Table. Mr. Choate and Ms. Woolsey became members of the Board of Trustees
for the Fund and other funds in the Fund Complex on May 26, 1999 and
therefore do not have a full calendar year of information to report. Paul G.
Yovovich resigned as a member of the Board of Trustees for the Fund and
other funds in the Fund Complex on April 14, 2000.

(2) The amounts shown in this column represent the aggregate compensation before
deferral with respect to the Fund's fiscal year ended June 30, 2000. The
following trustees deferred compensation from the Fund during the fiscal
year ended June 30, 2000: Mr. Branagan, $1,440; Mr. Choate, $1,440; Mr.
Heagy, $1,440; Mr. Kennedy, $872; Mr. Nelson, $1,440; Mr. Rooney, $1,440;
Mr. Sisto, $720; and Mr. Whalen,

B-16
<PAGE> 37

$1,440. Amounts deferred are retained by the Fund and earn a rate of return
determined by reference to either the return on the common shares of the
Fund or other funds in the Fund Complex as selected by the respective
Non-Affiliated Trustee, with the same economic effect as if such
Non-Affiliated Trustee had invested in one or more funds in the Fund
Complex. To the extent permitted by the 1940 Act, each fund may invest in
securities of those funds selected by the Non-Affiliated Trustees in order
to match the deferred compensation obligation. The cumulative deferred
compensation (including interest) accrued with respect to each trustee,
including former trustees, from the Fund as of the Fund's fiscal year ended
June 30, 2000 is as follows: Mr. Branagan, $12,044; Mr. Choate, $1,783; Mr.
Gaughan, $967; Ms. Heagy, $11,137; Mr. Kennedy, $24,981; Mr. Miller,
$12,543; Mr. Nelson, $34,312; Mr. Rooney, $9,129; Mr. Sisto, $5,166 and Mr.
Whalen, $26,981. The deferred compensation plan is described above the
Compensation Table.

(3) The amounts shown in this column represent the sum of the retirement
benefits accrued by the operating investment companies in the Fund Complex
for each of the trustees for the funds' respective fiscal years ended in
1999. The retirement plan is described above the Compensation Table.

(4) For each trustee, this is the sum of the estimated maximum annual benefits
payable by the funds in the Fund Complex for each year of the 10-year period
commencing in the year of such trustee's anticipated retirement. The
retirement plan is described above the Compensation Table.

(5) The amounts shown in this column represent the aggregate compensation paid
by all of the funds in the Fund Complex as of December 31, 1999 before
deferral by the trustees under the deferred compensation plan. Because the
funds in the Fund Complex have different fiscal year ends, the amounts shown
in this column are presented on a calendar year basis. Certain trustees
deferred all or a portion of their aggregate compensation from the Fund
Complex during the calendar year ended December 31, 1999. The deferred
compensation earns a rate of return determined by reference to the return on
the shares of the funds in the Fund Complex as selected by the respective
Non-Affiliated Trustee, with the same economic effect as if such Non-
Affiliated Trustee had invested in one or more funds in the Fund Complex. To
the extent permitted by the 1940 Act, the Fund may invest in securities of
those investment companies selected by the Non-Affiliated Trustees in order
to match the deferred compensation obligation. The Advisers and their
affiliates also serve as investment adviser for other investment companies;
however, with the exception of Mr. Whalen, the Non-Affiliated Trustees were
not trustees of such investment companies. Combining the Fund Complex with
other investment companies advised by the Advisers and their affiliates, Mr.
Whalen received Total Compensation of $279,250 during the calendar year
ended December 31, 1999.

As of October 6, 2000, the trustees and officers of the Fund as a group
owned less than 1% of the shares of the Fund.

The Fund, the Adviser and the Distributor have adopted Codes of Ethics
(collectively, the "Code of Ethics") that set forth general and specific
standards relating to the securities trading activities of their employees. The
Code of Ethics does not prohibit employees from acquiring securities that may be
purchased or held by the Fund, but is

B-17
<PAGE> 38

intended to ensure that all employees conduct their personal transactions in a
manner that does not interfere with the portfolio transactions of the Fund or
other Van Kampen funds, or that such employees take unfair advantage of their
relationship with the Fund. Among other things, the Code of Ethics prohibits
certain types of transactions absent prior approval, imposes various trading
restrictions (such as time periods during which personal transactions may or may
not be made) and requires quarterly reporting of securities transactions and
other matters. All reportable securities transactions and other required reports
are to be reviewed by appropriate personnel for compliance with the Code of
Ethics. Additional restrictions apply to portfolio managers, traders, research
analysts and others who may have access to nonpublic information about the
trading activities of the Fund or other Van Kampen funds or who otherwise are
involved in the investment advisory process. Exceptions to these and other
provisions of the Code of Ethics may be granted in particular circumstances
after review by appropriate personnel.

INVESTMENT ADVISORY AGREEMENT

The Fund and the Adviser are parties to an investment advisory agreement
(the "Advisory Agreement"). Under the Advisory Agreement, the Fund retains the
Adviser to manage the investment of the Fund's assets, including the placing of
orders for the purchase and sale of portfolio securities. The Adviser obtains
and evaluates economic, statistical and financial information to formulate
strategy and implement the Fund's investment objective. The Adviser also
furnishes offices, necessary facilities and equipment, provides administrative
services to the Fund, renders periodic reports to the Fund's Board of Trustees,
and permits its officers and employees to serve without compensation as trustees
of the Trust or officers of the Fund if elected to such positions. The Fund,
however, bears the cost of its day-to-day operations, including service fees,
distribution fees, custodian fees, legal and independent accountant fees, the
costs of reports and proxies to shareholders, compensation of trustees of the
Trust (other than those who are affiliated persons of the Adviser, Distributor
or Van Kampen Investments), and all other ordinary business expenses not
specifically assumed by the Adviser. The Advisory Agreement also provides that
the Adviser shall not be liable to the Fund for any error of judgment or of law,
or for any loss suffered by the Fund in connection with the matters to which the
Advisory Agreement relates, except a loss resulting from willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations and duties
under the Advisory Agreement.

The Advisory Agreement also provides that, in the event the expenses of the
Fund for any fiscal year exceed the most restrictive expense limitation
applicable in any jurisdiction in which the Fund's shares are qualified for
offer and sale (excluding any expenses permitted to be excluded from the
computation under applicable law or regulation), the compensation due the
Adviser will be reduced by the amount of such excess and that, if a reduction in
and refund of the advisory fee is insufficient, the Adviser will pay the Fund
monthly an amount sufficient to make up the deficiency, subject to readjustment
during the fiscal year.

The Advisory Agreement may be continued from year to year if specifically
approved at least annually (a)(i) by the Fund's Board of Trustees or (ii) by a
vote of a majority of the Fund's outstanding voting securities and (b) by a vote
of a majority of the Trustees who are not parties to the agreement or interested
persons of any such party by votes cast in person at a meeting called for such
purpose. The Advisory Agreement provides that it

B-18
<PAGE> 39

shall terminate automatically if assigned and that it may be terminated without
penalty by either party on 60 days' written notice.

During the fiscal years ended June 30, 2000, 1999 and 1998, the Adviser
received no advisory fees from the Fund after fee waivers. During the fiscal
years ended June 30, 2000, 1999 and 1998, the investment advisory fee earned
before fee waivers was approximately, $176,300, $173,700 and $162,100.

OTHER AGREEMENTS

Accounting Services Agreement. The Fund has entered into an accounting
services agreement pursuant to which Advisory Corp. provides accounting services
to the Fund supplementary to those provided by the custodian. Such services are
expected to enable the Fund to more closely monitor and maintain its accounts
and records. The Fund pays all costs and expenses related to such services,
including all salary and related benefits of accounting personnel, as well as
the overhead and expenses of office space and the equipment necessary to render
such services. The Fund shares together with the other Van Kampen funds in the
cost of providing such services with 25% of such costs shared proportionately
based on the respective number of classes of securities issued per fund and the
remaining 75% of such costs based proportionately on the respective net assets
per fund.

During the fiscal years ended June 30, 2000, 1999 and 1998, Advisory Corp.
received approximately $12,700, $26,500 and $20,200, respectively, in accounting
service fees from the Fund.

Legal Services Agreement. The Fund and certain of the other Van Kampen
funds have entered into legal services agreements pursuant to which Van Kampen
Investments provides legal services, including without limitation: accurate
maintenance of each fund's minute books and records, preparation and oversight
of each fund's regulatory reports, and other information provided to
shareholders, as well as responding to day-to-day legal issues on behalf of the
funds. Payment by the funds for such services is made on a cost basis for the
salary and salary related benefits, including but not limited to bonuses, group
insurance and other regular wages for the employment of personnel, as well as
overhead and the expenses related to the office space and the equipment
necessary to render the legal services. Of the total costs for legal services
provided to the Van Kampen funds, one half of such costs are allocated equally
to each fund and the remaining one half of such costs are allocated to specific
funds based on monthly time records.

During the fiscal years ended June 30, 2000, 1999 and 1998 Van Kampen
Investments received approximately $6,500, $7,600, and $7,200, respectively, in
legal service fees from the Fund.

DISTRIBUTION AND SERVICE

The Distributor acts as the principal underwriter of the Fund's shares
pursuant to a written agreement (the "Distribution and Service Agreement"). The
Distributor has the exclusive right to distribute shares of the Fund through
authorized dealers on a continuous basis. The Distributor's obligation is an
agency or "best efforts" arrangement under which the Distributor is required to
take and pay for only such shares of the Fund as may be sold to the public. The
Distributor is not obligated to sell any stated number of shares. The

B-19
<PAGE> 40

Distributor bears the cost of printing (but not typesetting) prospectuses used
in connection with this offering and certain other costs including the cost of
supplemental sales literature and advertising. The Distribution and Service
Agreement is renewable from year to year if approved (a)(i) by the Fund's
Trustees or (ii) by a vote of a majority of the Fund's outstanding voting
securities and (b) by a vote of a majority of Trustees who are not parties to
the Distribution and Service Agreement or interested persons of any party, by
votes cast in person at a meeting called for such purpose. The Distribution and
Service Agreement provides that it will terminate if assigned, and that it may
be terminated without penalty by either party on 90 days' written notice.

The Distributor in its discretion may from time to time, pursuant to
objective criteria established by the Distributor, pay fees to, and sponsor
business seminars for, qualifying authorized dealers for certain services or
activities which are primarily intended to result in sales of shares of the Fund
or other Van Kampen funds. Fees may include payment for travel expenses,
including lodging, incurred in connection with trips taken by invited registered
representatives for meetings or seminars of a business nature. In some instances
additional compensation or promotional incentives may be offered to brokers,
dealers or financial intermediaries that have sold or may sell significant
amounts of shares during specified periods of time. The Distributor may provide
additional compensation to Edward D. Jones & Co. or an affiliate thereof based
on a combination of its quarterly sales of shares of the Fund and other Van
Kampen funds and increases in net assets of the Fund and other Van Kampen funds
over specified thresholds. All of the foregoing payments are made by the
Distributor out of its own assets. Such fees paid for such services and
activities with respect to the Fund will not exceed in the aggregate 1.25% of
the average total daily net assets of the Fund on an annual basis. These
programs will not change the price an investor will pay for shares or the amount
that a Fund will receive from such sale.

The Fund has adopted a distribution plan (the "Distribution Plan") pursuant
to Rule 12b-1 under the 1940 Act. The Fund also has adopted a service plan (the
"Service Plan"). The Distribution Plan and the Service Plan sometimes are
referred to herein as the "Plans". The Plans provide that the Fund may spend a
portion of the Fund's average daily net assets in connection with distribution
of the shares and in connection with the provision of ongoing services to
shareholders. The Distribution Plan and the Service Plan are being implemented
through the Distribution and Service Agreement with the Distributor of the
Fund's shares, sub-agreements between the Distributor and members of the NASD
who are acting as securities dealers and NASD members or eligible non-members
who are acting as brokers or agents and similar agreements between the Fund and
financial intermediaries who are acting as brokers (collectively, "Selling
Agreements") that may provide for their customers or clients certain services or
assistance, which may include, but not be limited to, processing purchase and
redemption transactions, establishing and maintaining shareholder accounts
regarding the Fund, and such other services as may be agreed to from time to
time and as may be permitted by applicable statute, rule or regulation. Brokers,
dealers and financial intermediaries that have entered into sub-agreements with
the Distributor and sell shares of the Fund are referred to herein as "financial
intermediaries."

Certain financial intermediaries may be prohibited under law from providing
certain underwriting or distribution services. If a financial intermediary were
prohibited from acting in any capacity or providing any of the described
services, the Distributor would

B-20
<PAGE> 41

consider what action, if any, would be appropriate. The Distributor does not
believe that termination of a relationship with a financial intermediary would
result in any material adverse consequences to the Fund.

The Distributor must submit quarterly reports to the Board of Trustees of
the Trust, of which the Fund is a series, setting forth all amounts paid under
the Distribution Plan and the purposes for which such expenditures were made,
together with such other information as from time to time is reasonably
requested by the Trustees. The Plans provide that they will continue in full
force and effect from year to year so long as such continuance is specifically
approved by a vote of the Trustees, and also by a vote of the disinterested
Trustees, cast in person at a meeting called for the purpose of voting on the
Plans. Each of the Plans may not be amended to increase materially the amount to
be spent for the services described therein without approval by a vote of a
majority of the outstanding voting shares and all material amendments to either
of the Plans must be approved by the Trustees and also by the disinterested
Trustees. Each of the Plans may be terminated at any time by a vote of a
majority of the disinterested Trustees or by a vote of a majority of the
outstanding voting shares.

The Plans generally provide for the Fund to reimburse the lesser of (i) the
distribution and service fees at the rates specified in the Prospectus or (ii)
the amount of the Distributor's actual expenses incurred. To the extent the
Distributor is not fully reimbursed in a given year, there is no carryover of
such unreimbursed amounts to succeeding years. For the fiscal year ended June
30, 2000, the Fund's aggregate expenses paid under the Plans were $86,807 or
0.25% of the Fund's average daily net assets.

TRANSFER AGENT

The Fund's transfer agent, shareholder service agent and dividend
disbursing agent is Van Kampen Investor Services Inc. The transfer agency prices
are determined through negotiations with the Fund's Board of Trustees and are
based on competitive benchmarks.

PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION

The Adviser is responsible for decisions to buy and sell securities for the
Fund, the selection of brokers and dealers to effect the transactions and the
negotiation of prices and any brokerage commissions on such transactions. While
the Adviser will be primarily responsible for the placement of the Fund's
portfolio business, the policies and practices in this regard will at all times
be subject to review by the Fund's Board of Trustees.

As most transactions made by the Fund are principal transactions at net
prices, the Fund generally incurs little or no brokerage costs. The portfolio
securities in which the Fund invests are normally purchased directly from the
issuer or in the over-the-counter market from an underwriter or market maker for
the securities. Purchases from underwriters of portfolio securities include a
commission or concession paid by the issuer to the underwriter and purchases
from dealers serving as market makers include a spread or markup to the dealer
between the bid and asked price. Sales to dealers are effected at bid prices.
The Fund may also purchase certain money market instruments directly from an
issuer, in which case no commissions or discounts are paid, or may purchase and
sell

B-21
<PAGE> 42

listed securities on an exchange, which are effected through brokers who charge
a commission for their services.

The Adviser is responsible for placing portfolio transactions and does so
in a manner deemed fair and reasonable to the Fund and not according to any
formula. The primary consideration in all portfolio transactions is prompt
execution of orders in an effective manner at the most favorable price. In
selecting broker-dealers and in negotiating prices and any brokerage commissions
on such transactions, the Adviser considers the firm's reliability, integrity
and financial condition and the firm's execution capability, the size and
breadth of the market for the security, the size of and difficulty in executing
the order, and the best net price. There are many instances when, in the
judgment of the Adviser, more than one firm can offer comparable execution
services. In selecting among such firms, consideration may be given to those
firms which supply research and other services in addition to execution
services. The Adviser is authorized to pay higher commissions to brokerage firms
that provide it with investment and research information than to firms which do
not provide such services if the Adviser determines that such commissions are
reasonable in relation to the overall services provided. No specific value can
be assigned to such research services which are furnished without cost to the
Adviser. Since statistical and other research information is only supplementary
to the research efforts of the Adviser to the Fund and still must be analyzed
and reviewed by its staff, the receipt of research information is not expected
to reduce its expenses materially. The investment advisory fee is not reduced as
a result of the Adviser's receipt of such research services. Services provided
may include (a) furnishing advice as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; (b)
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and the performance of
accounts; and (c) effecting securities transactions and performing functions
incidental thereto (such as clearance, settlement and custody). Research
services furnished by firms through which the Fund effects its securities
transactions may be used by the Adviser in servicing all of its advisory
accounts; not all of such services may be used by the Adviser in connection with
the Fund. The Adviser also may place portfolio transactions, to the extent
permitted by law, with brokerage firms affiliated with the Fund, the Adviser or
the Distributor and with brokerage firms participating in the distribution of
the Fund's shares if it reasonably believes that the quality of execution and
the commission are comparable to that available from other qualified firms.
Similarly, to the extent permitted by law and subject to the same considerations
on quality of execution and comparable commission rates, the Adviser may direct
an executing broker to pay a portion or all of any commissions, concessions or
discounts to a firm supplying research or other services.

The Adviser may place portfolio transactions at or about the same time for
other advisory accounts, including other investment companies. The Adviser seeks
to allocate portfolio transactions equitably whenever concurrent decisions are
made to purchase or sell securities for the Fund and another advisory account.
In some cases, this procedure could have an adverse effect on the price or the
amount of securities available to the Fund. In making such allocations among the
Fund and other advisory accounts, the main factors considered by the Adviser are
the respective sizes of the Fund and other advisory accounts, the respective
investment objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment

B-22
<PAGE> 43

commitments generally held and opinions of the persons responsible for
recommending the investment.

During the past three years, the Fund paid no commissions to brokers on the
purchase or sale of portfolio securities.

SHAREHOLDER SERVICES

The Fund offers a number of shareholder services designed to facilitate
investment in its shares at little or no extra cost to the investor. Below is a
description of such services. The following information supplements the section
in the Fund's Prospectus captioned "Shareholder Services."

INVESTMENT ACCOUNT

Each shareholder has an investment account under which the investor's
shares of the Fund are held by Investor Services, the Fund's transfer agent.
Investor Services performs bookkeeping, data processing and administrative
services related to the maintenance of shareholder accounts. Except as described
in the Prospectus and this Statement of Additional Information, after each share
transaction in an account, the shareholder receives a statement showing the
activity in the account. Each shareholder who has an account in any Van Kampen
fund will receive statements quarterly from Investor Services showing any
reinvestments of dividends and capital gain dividends and any other activity in
the account since the preceding statement. Such shareholders also will receive
separate confirmations for each purchase or sale transaction other than
reinvestment of dividends and capital gain dividends and systematic purchases or
redemptions. Additional shares may be purchased at any time through authorized
dealers, by bank wire or by mailing a check directly to Investor Services.

SHARE CERTIFICATES

Generally, the Fund will not issue share certificates. However, upon
written or telephone request to the Fund, a share certificate will be issued
representing shares (with the exception of fractional shares) of the Fund. A
shareholder will be required to surrender such certificates upon an exchange or
redemption of the shares represented by the certificate. In addition, if such
certificates are lost the shareholder must write to Van Kampen Funds Inc., c/o
Investor Services, PO Box 218256, Kansas City, MO 64121-8256, requesting an
"Affidavit of Loss" and obtain a Surety Bond in a form acceptable to Investor
Services. On the date the letter is received, Investor Services will calculate
the fee for replacing the lost certificate equal to no more than 1.50% of the
net asset value of the issued shares, and bill the party to whom the replacement
certificate was mailed.

RETIREMENT PLANS

Eligible investors may establish individual retirement accounts ("IRAs");
SEP; 401(k) plans; Section 403(b)(7) plans in the case of employees of public
school systems and certain non-profit organizations; or other pension or profit
sharing plans. Documents and forms containing detailed information regarding
these plans are available from the

B-23
<PAGE> 44

Distributor. Van Kampen Trust Company serves as custodian under the IRA,
403(b)(7) and Money Purchase and Profit Sharing Keogh plans.

AUTOMATED CLEARING HOUSE("ACH") DEPOSITS

Shareholders can use ACH to have redemption proceeds deposited
electronically into their bank accounts. Redemption proceeds transferred to a
bank account via the ACH plan are available to be credited to the account on the
second business day following normal payment. In order to utilize this option,
the shareholder's bank must be a member of ACH. In addition, the shareholder
must fill out the appropriate section of the account application form. The
shareholder must also include a voided check or deposit slip from the bank
account into which redemption proceeds are to be deposited together with the
completed application. Once Investor Services has received the application and
the voided check or deposit slip, such shareholder's designated bank account,
following any redemption, will be credited with the proceeds of such redemption.
Once enrolled in the ACH plan, a shareholder may terminate participation at any
time by writing Investor Services or by calling (800) 341-2911 ((800) 421-2833
for the hearing impaired).

DIVIDEND DIVERSIFICATION

A shareholder may, upon written request, by completing the appropriate
section of the account application form or by calling (800) 341-2911 ((800)
421-2833 for the hearing impaired), elect to have all dividends and capital gain
dividends paid on shares of the Fund invested into shares of any Participating
Fund or the Van Kampen Reserve Fund so long as the investor has a pre-existing
account for such shares of the other fund. Both accounts must be of the same
type, either non-retirement or retirement. If the accounts are retirement
accounts, they must both be for the same type of retirement plan (e.g. IRA,
403(b)(7), 401(k), Money Purchase and Profit Sharing Keogh) and for the benefit
of the same individual. If a qualified, pre-existing account does not exist, the
shareholder must establish a new account subject to minimum investment and other
requirements of the fund into which distributions would be invested.
Distributions are invested into the selected fund at its net asset value per
share as of the payable date of the distribution from the Fund.

SYSTEMATIC WITHDRAWAL PLAN

A shareholder may establish a monthly, quarterly, semiannual or annual
withdrawal plan if the shareholder owns shares in a single account valued at
$10,000 or more at the next determined net asset value per share at the time the
plan is established. If a shareholder own shares in a single account valued at
$5,000 or more at the next determined net asset value per share at the time the
plan is established, the shareholder may establish a quarterly, semiannual or
annual withdrawal plan. This plan provides for the orderly use of the entire
account, not only the income but also the capital, if necessary. Each payment
represents the proceeds of a redemption of shares on which any capital gain or
loss will be recognized. The planholder may arrange for periodic checks in any
amount, not less than $25. Such a systematic withdrawal plan may also be
maintained by an investor purchasing shares for a retirement plan which can be
established on a form made available by the Fund when Van Kampen Trust Company
serves as the plan custodian. See "Shareholder Services--Retirement Plans."

B-24
<PAGE> 45

Under the plan, sufficient shares of the Fund are redeemed to provide the
amount of the periodic withdrawal payment. Dividends and capital gain dividends
on shares held in accounts with systematic withdrawal plans are reinvested in
additional shares at the next determined net asset value per share. If periodic
withdrawals continuously exceed reinvested dividends and capital gain dividends,
the shareholder's original investment will be correspondingly reduced and
ultimately exhausted. Any gain or loss realized by the shareholder upon
redemption of shares is a taxable event. The Fund reserves the right to amend or
terminate the systematic withdrawal program upon 30 days' notice to its
shareholders.

REDEMPTION OF SHARES

Redemptions are not made on days during which the New York Stock Exchange
(the "Exchange") is closed. The right of redemption may be suspended and the
payment therefor may be postponed for more than seven days during any period
when (a) the Exchange is closed for other than customary weekends or holidays;
(b) the SEC determines trading on the Exchange is restricted; (c) the SEC
determines an emergency exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund to fairly determine the value of its net assets; or (d)
the SEC, by order, so permits.

In addition, if the Fund's Board of Trustees determines that payment wholly
or partly in cash would be detrimental to the best interests of the remaining
shareholders of the Fund, the Fund may pay the redemption proceeds in whole or
in part by a distribution-in-kind of portfolio securities held by the Fund in
lieu of cash in conformity with applicable rules of the SEC. A
distribution-in-kind will result in recognition by the shareholder of a gain or
loss for federal income tax purposes when such securities are distributed, and
the shareholder may have brokerage costs and a gain or loss for federal income
tax purposes upon the shareholder's disposition of such securities.

NET ASSET VALUE

Calculations are made to compare the amortized cost basis of the portfolio
with current market rates at such intervals as the Fund or the Board of Trustees
deem appropriate, to determine the extent, if any, to which the net asset value
per share calculated by using available market quotations deviates from $1.00
per share based on amortized cost. Market valuations are obtained using market
quotations provided by market makers, estimates of market values or values
obtained from published yield data of money market instruments. In the event
such deviation should exceed 1/2 of one percent, the Board of Trustees is
required to promptly consider what action, if any, should be initiated. If the
Board of Trustees believes that the extent of any deviation from a $1.00
amortized cost price per share may result in material dilution or other unfair
results to new or existing shareholders, it will take such steps as it considers
appropriate to eliminate or reduce these consequences to the extent reasonably
practicable. Such steps may include selling Fund securities prior to maturity;
shortening the average maturity of the Fund; withholding or reducing dividends;
or utilizing a net asset value per share determined by using available market
quotations.

B-25
<PAGE> 46

TAXATION

FEDERAL INCOME TAXATION OF THE FUND

The Fund has elected and qualified, and intends to continue to qualify each
year, to be treated as a regulated investment company under Subchapter M of the
Code. To qualify as a regulated investment company, the Fund must comply with
certain requirements of the Code relating to, among other things, the source of
its income and diversification of its assets.

If the Fund so qualifies and distributes each year to its shareholders at
least an amount equal to the sum of (i) 90% of its investment company taxable
income (generally including ordinary income and net short-term capital gain, but
not net capital gain, which is the excess of net long-term capital gain over net
short-term capital loss) and (ii) 90% of its net tax-exempt interest income, and
meets certain other requirements, it will not be required to pay federal income
taxes on any income it distributes to shareholders. The Fund intends to
distribute at least the minimum amount necessary to satisfy the 90% distribution
requirement. The Fund will not be subject to federal income tax on any net
capital gain distributed to shareholders.

To avoid a 4% excise tax, the Fund will be required to distribute, by
December 31st of each year, at least an amount equal to the sum of (i) 98% of
its ordinary income (not including tax-exempt income) for such year and (ii) 98%
of its capital gain net income (the latter of which generally is computed on the
basis of the one-year period ending on October 31st of such year), plus any
amounts that were not distributed in previous taxable years. For purposes of the
excise tax, any ordinary income or capital gain net income retained by, and
subject to federal income tax in the hands of, the Fund will be treated as
having been distributed.

If the Fund failed to qualify as a regulated investment company or failed
to satisfy the 90% distribution requirement in any taxable year, the Fund would
be taxed as an ordinary corporation on its taxable income (even if such income
were distributed to its shareholders) and all distributions out of earnings and
profits would be taxed to shareholders as ordinary income. In addition, the Fund
could be required to recognize unrealized gains, pay taxes and interest charges
and make distributions before requalifying for taxation as a regulated
investment company.

Investments of the Fund in securities issued at a discount or providing for
deferred interest or payment of interest in kind are subject to special tax
rules that will affect the amount, timing and character of distributions to
shareholders. For example, with respect to securities issued at a discount, the
Fund will be required to accrue as income each year a portion of the discount
and to distribute such income each year in order to maintain its qualification
as a regulated investment company and to avoid income and excise taxes. To
generate sufficient cash to make distributions necessary to satisfy the 90%
distribution requirement and to avoid income and excise taxes, the Fund may have
to dispose of securities that it would otherwise have continued to hold.

B-26
<PAGE> 47

DISTRIBUTIONS TO SHAREHOLDERS

The Fund intends to invest in sufficient tax-exempt municipal securities to
permit payment of "exempt-interest dividends" (as defined in the Code).
Dividends paid by the Fund from the net tax-exempt interest earned from
municipal securities qualify as exempt-interest dividends if, at the close of
each quarter of its taxable year, at least 50% of the value of the total assets
of the Fund consists of such securities.

Certain limitations on the use and investment of the proceeds of state and
local government bonds and other funds must be satisfied in order to maintain
the exclusion from gross income for interest on such bonds. These limitations
generally apply to bonds issued after August 15, 1986. In light of these
requirements, bond counsel qualify their opinions as to the federal tax status
of bonds issued after August 15, 1986 by making them contingent on the issuer's
future compliance with these limitations. Any failure on the part of an issuer
to comply could cause the interest on its bonds to become taxable to investors
retroactive to the date the bonds were issued.

Except as provided below, exempt-interest dividends paid to shareholders
generally are not includable in the shareholders' gross income for federal
income tax purposes. The percentage of the total dividends paid by the Fund
during any taxable year that qualify as exempt-interest dividends will be the
same for all shareholders of the Fund receiving dividends during the year.

Interest on certain "private-activity bonds" is an item of tax preference
subject to the alternative minimum tax on individuals and corporations. The Fund
invests a portion of its assets in municipal securities subject to this
provision so that a portion of its exempt-interest dividends is an item of tax
preference to the extent such dividends represent interest received from these
private-activity bonds. Accordingly, investment in the Fund could cause
shareholders to be subject to (or result in an increased liability under) the
alternative minimum tax. Per capita volume limitations on certain
private-activity bonds could limit the amount of such bonds available for
investment by the Fund.

Exempt-interest dividends are included in determining what portion, if any,
of a person's social security and railroad retirement benefits will be
includable in gross income subject to federal income tax.

Although exempt-interest dividends generally may be treated by Fund
shareholders as items of interest excluded from their gross income, each
shareholder is advised to consult his tax adviser with respect to whether
exempt-interest dividends retain this exclusion if the shareholder would be
treated as a "substantial user" (or a "related person" of a substantial user) of
the facilities financed with respect to any of the tax-exempt obligations held
by the Fund. "Substantial user" is defined under U.S. Treasury Regulations to
include a non-exempt person who regularly uses in his trade or business a part
of any facilities financed with the tax-exempt obligations and whose gross
revenues derived from such facilities exceed 5% of the total revenues derived
from the facilities by all users, or who occupies more than 5% of the useable
area of the facilities or for whom the facilities or a part thereof were
specifically constructed, reconstructed or acquired. Examples of "related
persons" include certain related natural persons, affiliated corporations, a
partnership and its partners and an S corporation and its shareholders.

B-27
<PAGE> 48

While the Fund expects that a major portion of its income will constitute
tax-exempt interest, a portion may consist of investment company taxable income.
Distributions of the Fund's investment company taxable income are taxable to
shareholders as ordinary income to the extent of the Fund's earnings and
profits, whether paid in cash or reinvested in additional shares. Distributions
of the Fund's net capital gain capital gain dividends, if any, are taxable to
shareholders as long-term capital gains regardless of the length of time shares
of the Fund have been held by such shareholders. Distributions in excess of the
Fund's earnings and profits will first reduce the adjusted tax basis of a
holder's shares and, after such adjusted tax basis is reduced to zero, will
constitute capital gains to such holder (assuming such shares are held as a
capital asset). For a summary of the tax rates applicable to capital gains
(including capital gain dividends), see "Capital Gains Rates" below. Some or all
of the interest on indebtedness incurred to purchase or carry shares of a mutual
fund which distributes exempt-interest dividends during the year will not be
deductible for federal income tax purposes, depending upon the ratio of the
exempt-interest dividends to the total of exempt-interest dividends plus taxable
dividends received by the shareholder (excluding capital gain dividends) during
the year. Tax-exempt shareholders not subject to federal income tax on their
income generally will not be taxed on distributions from the Fund.

Shareholders receiving distributions in the form of additional shares
issued by the Fund will be treated for federal income tax purposes as receiving
a distribution in an amount equal to the fair market value of the shares
received, determined as of the distribution date. The basis of such shares will
equal the fair market value on the distribution date.

The Fund will inform shareholders of the source and tax status of all
distributions promptly after the close of each calendar year. The aggregate
amount of dividends designated as exempt-interest dividends cannot exceed the
excess of the amount of interest exempt from tax under Section 103 of the Code
received by the Fund during the year over any amounts disallowed as deductions
under Sections 265 and 171(a)(2) of the Code. Since the percentage of dividends
which are exempt-interest dividends is determined on an average annual method
for the taxable year, the percentage of income designated as tax-exempt for any
particular dividend may be substantially different from the percentage of the
Fund's income that was tax exempt during the period covered by the dividend.
Distributions from the Fund generally will not be eligible for the dividends
received deduction for corporations.

Although dividends generally will be treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders of
record on a specified date in such month and paid during January of the
following year will be treated as having been distributed by the Fund and
received by the shareholders on the December 31st prior to the date of payment.
In addition, certain other distributions made after the close of a taxable year
of the Fund may be "spilled back" and treated as paid by the Fund (except for
purposes of the 4% excise tax) during such taxable year. In such case,
shareholders will be treated as having received such dividends in the taxable
year in which the distribution was actually made.

B-28
<PAGE> 49

SALE OF SHARES

The sale of shares (including transfers in connection with a redemption or
repurchase of shares) may be a taxable transaction for federal income tax
purposes. Selling shareholders will generally recognize gain or loss in an
amount equal to the difference between their adjusted tax basis in the shares
sold and the amount received. If the shares sold are held as a capital asset,
the gain or loss will be a capital gain or loss. For a summary of the maximum
tax rates applicable to capital gains (including capital gain dividends), see
"Capital Gains Rates" below. Any loss recognized upon a taxable disposition of
shares held for six months or less will be disallowed to the extent of any
exempt-interest dividends received with respect to such shares and will be
treated as a long-term capital loss to the extent of any capital gain dividends
received with respect to such shares. For purposes of determining whether shares
have been held for six months or less, the holding period is suspended for any
periods during which the shareholder's risk of loss is diminished as a result of
holding one or more other positions in substantially similar or related property
or through certain options or short sales.

CAPITAL GAINS RATES

The maximum tax rate applicable to net capital gains recognized by
individuals and other non-corporate taxpayers investing in the Fund is (i) the
same as the maximum ordinary income tax rate for capital assets held for one
year or less or (ii) 20% for capital assets held for more than one year. The
maximum long-term capital gains rate for corporations is 35%.

NON-U.S. SHAREHOLDERS

A shareholder who is not (i) a citizen or resident of the United States,
(ii) a corporation or partnership created or organized under the laws of the
United States or any state thereof, (iii) an estate, the income of which is
subject to United States federal income taxation regardless of its source or
(iv) a trust whose administration is subject to the primary supervision of a
United States court and which has one or more United States fiduciaries who have
the authority to control all substantial decisions of the trust (a "Non-U.S.
Shareholder") generally will be subject to withholding of United States federal
income tax at a 30% rate (or lower applicable treaty rate) on dividends from the
Fund (other than capital gain dividends) that are not "effectively connected"
with a United States trade or business carried on by such shareholder.
Accordingly, investment in the Fund is likely to be appropriate for a Non-U.S.
Shareholder only if such person can utilize a foreign tax credit or
corresponding tax benefit in respect of such United States withholding tax.

Non-effectively connected capital gain dividends and gains realized from
the sale of shares will not be subject to United States federal income tax in
the case of (i) a Non-U.S. Shareholder that is a corporation and (ii) an
individual Non-U.S. Shareholder who is not present in the United States for more
than 182 days during the taxable year (assuming that certain other conditions
are met). However, certain Non-U.S. Shareholders may nonetheless be subject to
backup withholding on capital gain dividends and gross proceeds paid to them
upon the sale of their shares. See "Backup Withholding" below.

B-29
<PAGE> 50

If income from the Fund or gains realized from the sale of shares are
effectively connected with a Non-U.S. Shareholder's United States trade or
business, then such amounts will be subject to United States federal income tax
on a net basis at the tax rates applicable to United States citizens or domestic
corporations. Non-U.S. Shareholders that are corporations may also be subject to
an additional "branch profits tax" with respect to income from the Fund that is
effectively connected with a United States trade or business.

United States Treasury Regulations, generally effective for payments made
after December 31, 2000, modify the withholding, backup withholding and
information reporting rules, including the procedures to be followed by foreign
investors in establishing foreign status. Shareholders and prospective foreign
investors should consult their tax advisors concerning the applicability and
effect of such Treasury Regulations on an investment in shares of the Fund.

The tax consequences to a Non-U.S. Shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described in
this section. Non-U.S. Shareholders may be required to provide appropriate
documentation to establish their entitlement to the benefits of such a treaty.
Foreign investors are advised to consult their tax advisers with respect to the
tax implications of purchasing, holding and disposing of shares of the Fund.

BACKUP WITHHOLDING

The Fund may be required to withhold federal income tax at a rate of 31%
("backup withholding") from dividends and redemption proceeds paid to
non-corporate shareholders. This tax may be withheld from dividends if (i) the
shareholder fails to properly furnish the Fund with its correct taxpayer
identification number, (ii) the IRS notifies the Fund that the shareholder has
failed to properly report certain interest and dividend income to the IRS and to
respond to notices to that effect or (iii) when required to do so, the
shareholder fails to certify that he or she is not subject to backup
withholding. Redemption proceeds may be subject to backup withholding under the
circumstances described in (i) above.

Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from payments made to a shareholder may be refunded or
credited against such shareholder's U.S. federal income tax liability, if any,
provided that the required information is furnished to the IRS.

INFORMATION REPORTING

The Fund must report annually to the IRS and to each shareholder (other
than a Non-U.S. Shareholder) the amount of dividends paid to such shareholder
and the amount, if any, of tax withheld pursuant to backup withholding rules
with respect to such dividends. In the case of a Non-U.S. Shareholder, the Fund
must report to the IRS and such shareholder the aggregate amount of dividends
paid that are subject to backup withholding (if any) and the amount of tax
withheld with respect to such dividends pursuant to the backup withholding
rules. This information may also be made available to the tax authorities in the
Non-U.S. Shareholder's country of residence. Generally, dividends paid to
Non-U.S. Shareholders that are subject to the 30% federal income tax withholding
described above under "Non-U.S. Shareholders" are not subject to backup
withholding.

B-30
<PAGE> 51

GENERAL

The federal income tax discussion set forth above is for general
information only. Prospective investors and shareholders should consult their
tax advisers regarding the specific federal tax consequences of purchasing,
holding and disposing of shares, as well as the effects of state, local and
foreign tax law and any proposed tax law changes.

YIELD INFORMATION

From time to time the Fund may advertise its "yield" and "effective yield."

Both yield figures are based on historical earnings and are not intended to
indicate future performance. The "yield" of the Fund refers to the income
generated by an investment in the Fund over a seven-day period (which period
will be stated in the advertisement). This income is then "annualized." That is,
the amount of income generated by the investment during that week is assumed to
be generated each week over a 52-week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly but, when annualized,
the income earned by an investment in the Fund is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment.

The yield of the Fund is its net income expressed in annualized terms. The
SEC requires by rule that a yield quotation set forth in an advertisement for a
"money market" fund be computed by a standardized method based on a historical
seven-calendar-day period. The standardized yield is computed by determining the
net change (exclusive of realized gains and losses and unrealized appreciation
and depreciation) in the value of a hypothetical pre-existing account having a
balance of one share at the beginning of the period, dividing the net change in
account value by the value of the account at the beginning of the base period to
obtain the base period return, and multiplying the base period return by 365/7.
The determination of net change in account value reflects the value of
additional shares purchased with dividends from the original share, dividends
declared on both the original share and such additional shares, and all fees
that are charged to all shareholder accounts, in proportion to the length of the
base period and the Fund's average account size. The Fund may also calculate its
effective yield by compounding the unannualized base period return (calculated
as described above) by adding 1 to the base period return, raising the sum to a
power equal to 365 divided by 7, and subtracting one.

The yield and effective yield quoted at any time represent the amounts
being earned on a current basis for the indicated period and are a function of
the types of instruments held in the Fund's portfolio, their quality and length
of maturity, and the Fund's operating expenses. The length of maturity for the
Fund is the average dollar-weighted maturity of the Fund. This means that the
Fund has an average maturity of a stated number of days for all of its issues.
The calculation is weighted by the relative value of the investment.

The yield and effective yield fluctuate daily as the income earned on the
investments of the Fund fluctuates. Accordingly, there is no assurance that the
yield and effective yield quoted on any given occasion will remain in effect for
any period of time. It should also be emphasized that there is no guarantee that
the net asset value will remain constant. A shareholder's investment in the Fund
is not insured. Investors comparing results of the

B-31
<PAGE> 52

Fund with investment results and yields from other sources such as banks or
savings and loan associations should understand this distinction.

Other funds of the money market type as well as banks and savings and loan
associations may calculate their yield on a different basis, and the yield
quoted by the Fund could vary upwards or downwards if another method of
calculation or base period were used.

Additionally, since yield and effective yield fluctuate, yield data cannot
necessarily be used to compare an investment in the Fund's shares with bank
deposits, savings accounts and similar investment alternatives which often
provide an agreed or guaranteed fixed yield for a stated period of time.
Shareholders should remember that yield and effective yield are generally a
function of the types of instruments held in a fund's portfolio, their quality,
and length of maturity, such Fund's operating expenses and market conditions.

From time to time marketing materials may provide a portfolio manager
update, an Adviser update and discuss general economic conditions and outlooks.
The Fund's marketing materials may also show the Fund's asset class
diversification, top sector holdings and largest holdings. Materials may also
mention how the Distributor believes the Fund compares relative to other Van
Kampen funds. The Fund may also be marketed on the internet.

In reports or other communications to shareholders or in advertising
material, the Fund may compare its performance with that of other mutual funds
as listed in the rankings or ratings prepared by Lipper Analytical Services,
Inc., CDA, Morningstar Mutual Funds or similar independent services which
monitor the performance of mutual funds with the Consumer Price Index, the Dow
Jones Industrial Average, Standard & Poor's indices, NASDAQ Composite Index,
other appropriate indices of investment securities, or with investment or
savings vehicles. The performance information may also include evaluations of
the Fund published by nationally recognized ranking or rating services and by
nationally recognized financial publications. Such comparative performance
information will be stated in the same terms in which the comparative data or
indices are stated. Such advertisements and sales material may include the yield
quotation as of a current period. Such yield information will be calculated
pursuant to rules established by the SEC and will be computed separately for
each class of the Fund's shares. For these purposes, the performance of the
Fund, as well as the performance of other mutual funds or indices, do not
reflect sales charges, the inclusion of which would reduce the Fund's
performance. The Fund will include performance data for each class of shares of
the Fund in any advertisement or information including performance data of the
Fund.

The Fund may also utilize performance information in hypothetical
illustrations. For example, the Fund may, from time to time: (1) illustrate the
benefits of tax-deferral by comparing taxable investments to investments made
through tax-deferred retirement plans; (2) illustrate in graph or chart form, or
otherwise, the benefits of dollar-cost averaging by comparing investments made
pursuant to a systematic investment plan to investments made in a rising market;
(3) illustrate allocations among different types of mutual funds for investors
at different stages of their lives; and (4) in reports or other communications
to shareholders or in advertising material, illustrate the benefits of
compounding at various assumed yields.

B-32
<PAGE> 53

The Fund's Annual Report and Semiannual Report contain additional
performance information. A copy of the Annual Report or Semiannual Report may be
obtained without charge by calling or writing the Fund at the telephone number
and address printed on the cover of this Statement of Additional Information.

OTHER INFORMATION

CUSTODY OF ASSETS

All securities owned by the Fund and all cash, including proceeds from the
sale of shares of the Fund and of securities in the Fund's investment portfolio,
are held by State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, as custodian. The custodian also provides accounting
services to the Fund.

SHAREHOLDER REPORTS

Semiannual statements are furnished to shareholders, and annually such
statements are audited by the independent auditors.

INDEPENDENT AUDITORS

Independent auditors perform an annual audit of the financial statements of
the Fund. The Trust's Board of Trustees has engaged Ernst & Young LLP, located
at 233 South Wacker Drive, Chicago, Illinois 60606, to be the independent
auditors, effective May 18, 2000. The change in independent auditors was
approved by the Fund's audit committee and the Fund's Board of Trustees,
including Trustees who are not "interested persons" of the Fund (as defined in
the 1940 Act).

KPMG LLP, located at 303 West Wacker Drive, Chicago, Illinois 60601
("KPMG"), ceased being the Fund's independent auditors effective April 14, 2000.
The cessation of the client-auditor relationship between the Fund and KPMG was
based solely on a possible future business relationship by KPMG with an
affiliate of the Fund's investment adviser. The change in independent auditors
was approved by the Fund's audit committee and the Fund's Board of Trustees,
including Trustees who are not "interested persons" of the Fund (as defined in
the 1940 Act).

LEGAL COUNSEL

Counsel to the Fund is Skadden, Arps, Slate, Meagher & Flom (Illinois).

DESCRIPTION OF SECURITIES RATINGS

Below is a description of the two highest rating categories for short-term
debt obligations and long-term debt obligations by the "nationally recognized
statistical rating organizations." The ratings descriptions are based on
information supplied by the ratings organizations to subscribers.

B-33
<PAGE> 54

SHORT-TERM DEBT RATINGS

MOODY'S INVESTORS SERVICE, INC. ("Moody's"): The following rating
designations for commercial paper (defined by Moody's as promissory obligations
not having original maturity in excess of one year), are judged by Moody's to be
investment grade, and indicate the relative repayment capacity of rated issuers:

<TABLE>
<S> <C>
PRIME-1: Superior ability for repayment. Ability will normally be
evidenced by the following characteristics: (a) leading
market positions in well-established industries; (b) high
rates of return on funds employed; (c) conservative
capitalization structures with moderate reliance on debt
and ample asset protection; (d) broad margins in earning
coverage of fixed financial charges and high internal
cash generation; and (e) well-established access to a
range of financial markets and assured sources of
alternate liquidity.

PRIME-2: Strong ability for repayment. This will normally be
evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios,
while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample
alternate liquidity is maintained.

PRIME-3: Acceptable ability for repayment. The effect of industry
characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may
result in changes in the level of debt protection
measurements and may require relatively high financial
leverage. Adequate alternate liquidity is maintained.
</TABLE>

The following rating designations for state and municipal notes, are judged
by Moody's to be investment grade, and indicate the relative repayment capacity
of rated issuers:

<TABLE>
<S> <C>
MIG-1/
VMIG-1: This designation denotes superior credit quality.
Excellent protection is afforded by established cash
flows, highly reliable liquidity support or demonstrated
broad-based access to the market for refinancing.
MIG-2/
VMIG-2: This designation denotes strong credit quality. Margins
of protection are ample though not so large as in the
preceding group.
MIG-3/
VMIG-3: This designation denotes acceptable credit quality.
Liquidity and cash-flow protection may be narrow, and
market access for refinancing is likely to be less
well-established.
</TABLE>

B-34
<PAGE> 55

STANDARD & POOR'S ("S&P"): The following ratings by S&P for commercial
paper (defined by S&P as debt having an original maturity of no more than 365
days) assess the likelihood of payment:

<TABLE>
<C> <S>
A-1: A short-term obligation rated "A-1" is rated in the
highest category by Standard & Poor's. The obligor's
capacity to meet its financial commitment on the
obligation is strong. Within this category, certain
obligations are designated with a plus sign (+). This
indicates that the obligor's capacity to meet its
financial commitment on these obligations is extremely
strong.

A-2: A short-term obligation rated "A-2" is somewhat more
susceptible to the adverse effects of changes in
circumstances and economic conditions than obligations in
higher rating categories. However, the obligor's capacity
to meet its financial commitment on the obligation is
satisfactory.

A-3: A short-term obligation rated "A-3" exhibits adequate
protection parameters. However, adverse economic
conditions or changing circumstances are more likely to
lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
</TABLE>

The following ratings by S&P for state and municipal notes assess the
likelihood of payment:

<TABLE>
<C> <S>
SP-1: Strong capacity to pay principal and interest. An issue
determined to possess a very strong capacity to pay debt
service is given a plus (+) designation.

SP-2: Satisfactory capacity to pay principal and interest, with
some vulnerability to adverse financial and economic
changes over the term of the notes.
</TABLE>

FITCH IBCA, DUFF & PHELPS. Fitch's short-term debt credit ratings are
applied to the spectrum of corporate, structured, and public finance. They cover
sovereign (including supranational and subnational), financial, bank, insurance,
and other corporate entities and the securities they issue, as well as municipal
and other public finance entities, and securities backed by receivables or other
financial assets, and counterparties. When applied to an entity, these
short-term ratings assess its general creditworthiness on a senior basis. When
applied to specific issues and programs, these ratings take into account the
relative preferential position of the holder of the security and reflect the
terms, conditions, and covenants attaching to that security.

Short-term debt credit ratings assess the capacity to meet foreign currency
or local currency commitments. Both "foreign currency" and "local currency"
ratings are internationally comparable assessments. The local currency rating
measures the probability of payment within the relevant sovereign state's
currency and jurisdiction and therefore, unlike the foreign currency rating,
does not take account of the possibility of foreign exchange controls limiting
transfer into foreign currency.

B-35
<PAGE> 56

A short-term rating has a time horizon of less than 12 months for most
obligations, or up to three years for U.S. public finance securities, and thus
places greater emphasis on the liquidity necessary to meet the financial
commitments in a timely manner.

<TABLE>
<C> <S>
F-1: Highest credit quality, indicates the best capacity for
timely payment of financial commitments; may have an
added "+" to denote any exceptionally strong credit
feature.

F-2: Good credit quality. A satisfactory capacity for timely
payment of financial commitments, but the margin of
safety is not as great as in the case of the higher
ratings.

F-3: Fair credit quality. The capacity for timely payment of
financial commitments is adequate; however, near-term
adverse changes could result in a reduction to
non-investment grade.
</TABLE>

Notes: "+" or "-" may be appended to a rating to denote relative status within
major rating categories. Such suffixes are not added to short-term
ratings other than "F-1".

LONG-TERM DEBT RATINGS

These ratings are relevant for securities purchased by the Fund with a
remaining maturity of 397 days or less, or for rating issuers of short-term
obligations. Bonds (including municipal bonds) are rated as follows:

MOODY'S INVESTORS SERVICE, INC.:

<TABLE>
<C> <S>
AAA: Judged to be the best quality. They carry the smallest
degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin, and principal
is secure. While the various protective elements are
likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong
positions of such issues.

AA: Judged to be of high quality by all standards. Together
with "Aaa" group they comprise what are generally known
as high-grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large
as in "Aaa" securities or fluctuations of protective
elements may be of greater amplitude or there may be
other elements present which make the long-term risks
appear somewhat larger than in "Aaa" securities.

A: Possess many favorable investment attributes and are to
be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered
adequate, but elements may be present which suggest a
susceptibility to impairment some time in the future.
</TABLE>

Moody's applies numerical modifiers "1", "2" and "3" in its "Aa" and "A"
rating classifications. The modifier "1" indicates that the security ranks in
the higher end of its

B-36
<PAGE> 57

generic rating category; the modifier "2" indicates a mid-range ranking; and the
modifier "3" indicates that the issue ranks in the lower end of its generic
rating category.

STANDARD & POOR'S:

<TABLE>
<C> <S>
AAA: The highest rating assigned by S&P. Capacity to meet its
financial commitment on the obligation is extremely
strong.

AA: Differs from the highest rated obligations only in small
degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.

A: Somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than
obligations in higher rated categories. Capacity to meet
its financial commitment on the obligation is still
strong.
</TABLE>

FITCH IBCA, DUFF & PHELPS

<TABLE>
<C> <S>
AAA: Highest credit quality. "AAA" ratings denote the lowest
expectation of credit risk. They are assigned only in case
of exceptionally strong capacity for timely payment of
financial commitments. This capacity is highly unlikely to
be adversely affected by foreseeable events.

AA: Very high credit quality. "AA" ratings denote a very low
expectation of credit risk. They indicate very strong
capacity for timely payment of financial commitments. This
capacity is not significantly vulnerable to foreseeable
events.

A: High credit quality. "A" ratings denote a low expectation
of credit risk. The capacity for timely payment of
financial commitments is considered strong. This capacity
may, nevertheless, be more vulnerable to changes in
circumstances or in economic conditions than is the case
for higher ratings.

BBB: Good credit quality. "BBB" ratings indicate that there is
currently a low expectation of credit risk. The capacity
for timely payment of financial commitments is considered
adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this
capacity. This is the lowest investment-grade category.
</TABLE>

B-37
<PAGE> 58

REPORT OF INDEPENDENT AUDITORS

To the Shareholders and Board of Trustees of Van Kampen Tax Free Money Fund

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Van Kampen Tax Free Money Fund (the "Fund"), as
of June 30, 2000, and the related statement of operations, changes in net assets
and financial highlights for the year 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 based on
our audit. The statement of changes in net assets of the Fund for the year ended
June 30, 1999, and the financial highlights for each of the four years in the
period then ended were audited by other auditors whose report dated August 5,
1999, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards generally
accepted in the 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. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of June 30, 2000, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the 2000 financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Fund at June 30, 2000, the results of its operations, changes in
net assets and financial highlights for the year then ended, in conformity with
accounting principles generally accepted in the United States.

[SIG]

Chicago, Illinois
August 10, 2000

F-1
<PAGE> 59

BY THE NUMBERS

YOUR FUND'S INVESTMENTS

June 30, 2000
THE FOLLOWING PAGES DETAIL YOUR FUND'S PORTFOLIO OF INVESTMENTS AT THE END OF
THE REPORTING PERIOD.

<TABLE>
<CAPTION>
DISCOUNT
PAR YIELD ON
AMOUNT MATURITY DATE OF AMORTIZED
(000) SECURITY DESCRIPTION DATE PURCHASE COST
<C> <S> <C> <C> <C>
MUNICIPAL BONDS 100.3%
DATES 24.3%
$1,400 Brazos River Auth TX Utils Elec Co Proj
Ser 1996 B (AMBAC Insd).................. 07/03/00 4.800% $ 1,400,000
3,600 Iowa Fin Auth Rev Burlington Med Cent
(FSA Insd)............................... 07/03/00 4.700 3,600,000
1,400 Jackson Cnty, MS Port Fac Rev Chevron Inc
Proj Rfdg................................ 07/03/00 4.550 1,400,000
600 New York City (LOC: Chase Manhattan
Bank).................................... 07/03/00 4.500 600,000
800 New York City Ser B (FGIC Insd).......... 07/01/00 4.750 800,000
300 New York City Ser B (FGIC Insd).......... 07/01/00 4.750 300,000
700 New York City Ser B (FGIC Insd).......... 07/01/00 4.750 700,000
-----------
TOTAL DATES................................................... 8,800,000
-----------

7 DAY FLOATERS 44.5%
450 Calhoun Cnty, MI Econ Dev Corp Rev (LOC:
Comerica Bank)........................... 07/06/00 4.550 450,000
1,500 Floyd Cnty, GA Dev Auth Rev Berry College
Inc Proj (LOC: SunTrust Bank)............ 07/05/00 4.800 1,500,000
1,000 Franklin Cnty, TN Hlth & Edl Facs Brd Rev
Univ of the South........................ 07/05/00 4.800 1,000,000
500 Gibson Cnty, IN Pollutn Ctl Rev Toyota
Mtr Mfg Proj Ser A....................... 07/01/00 4.150 500,000
500 Gibson Cnty, IN Pollutn Ctl Rev Toyota
Mtr Mfg Proj Ser A....................... 07/05/00 4.900 500,000
1,400 Illinois Dev Fin Auth Rev Amer
Osteopathic Assoc (LOC: Harris Trust &
Savings Bank)............................ 07/06/00 4.800 1,400,000
1,000 Illinois Dev Fin Auth Rev Roosevelt Univ
Ser 1995 (LOC: American Nat'l Bank &
Trust of Chicago)........................ 07/05/00 4.800 1,000,000
1,000 Louisiana Loc Govt Envir Facs Cmnty Dev
Auth Rev Shreveport Indp (MBIA Insd)..... 07/01/00 4.500 1,000,000
</TABLE>

See Notes to Financial Statements

F-2
<PAGE> 60

YOUR FUND'S INVESTMENTS

June 30, 2000

<TABLE>
<CAPTION>
DISCOUNT
PAR YIELD ON
AMOUNT MATURITY DATE OF AMORTIZED
(000) SECURITY DESCRIPTION DATE PURCHASE COST
<C> <S> <C> <C> <C>

7 DAY FLOATERS (CONTINUED)
$1,000 Montgomery Cnty, MD Hsg Oppntys Comm Hsg
Rev (FNMA Insd).......................... 07/05/00 4.950% $ 1,000,000
1,600 North Miami, FL Edl Facs Rev Miami Cnty
Day Sch Proj (LOC: Bank of America)...... 07/06/00 4.800 1,600,000
1,175 Quad Cities Regl Econ Dev Auth IL Indl
Dev Rev Var Seaberg Inds Inc Proj (LOC:
Norwest Bank)............................ 07/01/00 4.350 1,175,000
1,000 Seattle, WA Wtr Sys Rev (LOC: Bayerische
Landesbank Girozent)..................... 07/05/00 4.950 1,000,000
1,020 Virginia Small Business Fin Auth Rev Indl
Dev Coral Graphic (LOC: Chase Manhattan
Bank).................................... 07/06/00 5.000 1,020,000
1,500 Washington St Hsg Fin Comm Multi-Family
Mtg Rev Rfdg (LOC: Harris Trust & Savings
Bank).................................... 07/04/00 5.100 1,500,000
500 Wisconsin St Hlth Facs Auth Rev
Franciscan Hlthcare Ser A-1 (LOC: Toronto
Dominion Bank)........................... 07/05/00 4.950 500,000
1,000 Wisconsin St Hlth Facs Auth Rev
Franciscan Hlthcare Ser A-2 (LOC: Toronto
Dominion Bank)........................... 07/05/00 4.950 1,000,000
-----------
TOTAL 7 DAY FLOATERS 44.5%................................... 16,145,000
-----------
BONDS/NOTES 31.5%
1,000 Arizona Sch Dist Tax Antic Note Ser A.... 07/31/00 4.050 999,213
850 Cobb Cnty, GA Wtr & Swr Rev Ser A Rfdg... 07/01/00 4.600 850,000
225 Dade Cnty, FL Sch Brd Ctfs Partn Ser A
(AMBAC Insd)............................. 05/01/01 4.600 225,077
1,000 Dallas, TX Area Rapid Trans Ser B........ 07/11/00 4.200 1,000,000
1,000 Greater TX Student Ln Corp Ser 1996 A
Rfdg (Gtd: Student Ln Marketing Assn).... 03/01/01 4.280 1,000,000
825 Iowa Student Ln Liquidity Corp Student Ln
Rev Ser A................................ 03/01/01 6.350 835,092
500 Memphis, TN.............................. 07/01/00 5.000 500,000
420 Minnesota St Hsg Fin Agy Single Family
Mtg Ser D................................ 07/01/00 4.500 420,000
300 Missouri St Hlth & Edl Facs Auth Edl
Washington Univ Ser D.................... 12/15/00 4.350 300,000
</TABLE>

See Notes to Financial Statements

F-3
<PAGE> 61

YOUR FUND'S INVESTMENTS

June 30, 2000

<TABLE>
<CAPTION>
DISCOUNT
PAR YIELD ON
AMOUNT MATURITY DATE OF AMORTIZED
(000) SECURITY DESCRIPTION DATE PURCHASE COST
<C> <S> <C> <C> <C>
BONDS/NOTES (CONTINUED)
$ 475 Missouri St Hlth & Edl Facs Auth Edl
Washington Univ Ser D.................... 06/15/01 4.450% $ 475,000
1,000 Municipal Elec Auth GA Ser 1985 A........ 08/01/00 4.150 1,000,000
1,000 New Mexico St Severance Tax Rfdg Ser A... 07/01/00 5.000 1,000,000
550 Shelby Cnty, TN Rfdg Amt Ser A........... 08/01/00 5.250 550,202
1,400 Texas St Ser A........................... 08/31/00 4.500 1,401,781
870 University Cincinnati OH Rcpts Bond Antic
Notes Ser AY-1........................... 10/05/00 5.250 871,448
-----------
TOTAL BONDS/NOTES 31.5%...................................... 11,427,813
-----------

TOTAL INVESTMENTS 100.3% (A)........................................... 36,372,813
LIABILITIES IN EXCESS OF OTHER ASSETS (0.3%)........................... (112,048)
-----------

NET ASSETS 100.0%...................................................... $36,260,765
===========
</TABLE>

(a) At June 30, 2000, cost is identical for both book and federal income tax
purposes.

AMBAC--AMBAC Indemnity Corporation
FGIC--Financial Guaranty Insurance Company
FNMA--Federal National Mortgage Association
FSA--Financial Security Assurance Inc.
LOC--Letter of Credit
MBIA--Municipal Bond Investors Assurance Corp.

See Notes to Financial Statements

F-4
<PAGE> 62

FINANCIAL STATEMENTS
Statement of Assets and Liabilities
June 30, 2000

<TABLE>
<S> <C>
ASSETS:
Investments, at Amortized Cost which Approximates Market.... $36,372,813
Receivables:
Interest.................................................. 300,172
Investments Sold.......................................... 30,000
Fund Shares Sold.......................................... 28,163
Other....................................................... 9,816
-----------
Total Assets............................................ 36,740,964
-----------
LIABILITIES:
Payables:
Custodian Bank............................................ 200,597
Distributor and Affiliates................................ 35,159
Income Distributions...................................... 22,259
Fund Shares Repurchased................................... 16,024
Trustees' Deferred Compensation and Retirement Plans........ 152,207
Accrued Expenses............................................ 53,953
-----------
Total Liabilities....................................... 480,199
-----------
NET ASSETS.................................................. $36,260,765
===========
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an
unlimited number of shares authorized).................... $36,274,524
Accumulated Net Realized Loss............................... (13,759)
-----------
NET ASSETS (Equivalent to $1.00 per share for 36,278,684
shares outstanding)....................................... $36,260,765
===========
</TABLE>

See Notes to Financial Statements

F-5
<PAGE> 63

Statement of Operations
For the Year Ended June 30, 2000

<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $1,310,771
----------
EXPENSES:
Investment Advisory Fee..................................... 176,265
Distribution (12b-1) and Service Fees....................... 88,065
Shareholder Services........................................ 68,014
Trustees' Fees and Related Expenses......................... 36,403
Shareholder Reports......................................... 33,261
Registration and Filing Fees................................ 28,482
Audit....................................................... 24,522
Legal....................................................... 8,057
Custody..................................................... 7,708
Other....................................................... 17,305
----------
Total Expenses.......................................... 488,082
Investment Advisory Fee Reduction....................... 176,265
Less Credits Earned on Cash Balances.................... 2,767
----------
Net Expenses............................................ 309,050
----------
NET INVESTMENT INCOME....................................... $1,001,721
==========
NET REALIZED GAIN........................................... $ -0-
==========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $1,001,721
==========
</TABLE>

See Notes to Financial Statements

F-6
<PAGE> 64

Statement of Changes in Net Assets
For the Years Ended June 30, 2000 and 1999

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 2000 JUNE 30, 1999
------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 1,001,721 $ 876,447
Net Realized Gain....................................... -0- 3,512
------------- -------------
Change in Net Assets from Operations.................... 1,001,721 879,959
------------- -------------

Distributions from Net Investment Income................ (1,001,690) (876,415)
Distributions in Excess of Net Investment Income........ -0- (31)
------------- -------------
Distributions from and in Excess of Net Investment
Income................................................ (1,001,690) (876,446)
------------- -------------

NET CHANGE IN NET ASSETS FROM
INVESTMENT ACTIVITIES................................. 31 3,513
------------- -------------

FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold............................... 116,122,679 203,834,945
Net Asset Value of Shares Issued Through Dividend
Reinvestment.......................................... 1,001,690 876,446
Cost of Shares Repurchased.............................. (114,396,469) (203,186,961)
------------- -------------
NET CHANGE IN NET ASSETS FROM
CAPITAL TRANSACTIONS.................................. 2,727,900 1,524,430
------------- -------------
TOTAL INCREASE IN NET ASSETS............................ 2,727,931 1,527,943
NET ASSETS:
Beginning of the Period................................. 33,532,834 32,004,891
------------- -------------
End of the Period (Including accumulated distributions
in excess of net investment income of $31 in 1999).... $ 36,260,765 $ 33,532,834
============= =============
</TABLE>

See Notes to Financial Statements

F-7
<PAGE> 65

Financial Highlights
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------
2000 1999 1998 1997 1996
-----------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...... $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Net Investment Income................... .029 .025 .029 .028 .029
Less Distributions from and in Excess of
Net Investment Income................. .029 .025 .029 .028 .029
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD............ $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====

Total Return*............................. 2.88% 2.55% 2.93% 2.82% 2.93%
Net Assets at End of Period (In
millions)............................... $36.3 $33.5 $32.0 $33.1 $35.6
Ratio of Expenses to Average Net
Assets*................................. .88% .84% .83% .85% .85%
Ratio of Net Investment Income to Average
Net Assets*............................. 2.84% 2.53% 2.89% 2.78% 2.89%
* If certain expenses had not been assumed by Van Kampen, total return would have been
lower and the ratios would have been as follows:
Ratio of Expenses to Average
Net Assets.............................. 1.38% 1.34% 1.40% 1.45% 1.53%
Ratio of Net Investment Income to Average
Net Assets.............................. 2.34% 2.03% 2.32% 2.17% 2.21%
</TABLE>

See Notes to Financial Statements

F-8
<PAGE> 66

NOTES TO
FINANCIAL STATEMENTS

June 30, 2000

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen Tax Free Money Fund (the "Fund") is organized as a Delaware business
trust. The Fund is an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended. The Fund's
investment objective is to seek to provide investors a high level of current
income exempt from federal income taxes consistent with the preservation of
capital and liquidity through investments in a diversified portfolio of
municipal securities that will mature within 12 months of the date of purchase.
The Fund commenced investment operations on November 5, 1986.

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

A. SECURITY VALUATION Investments are valued at amortized cost, which
approximates market. Under this valuation method, a portfolio instrument is
valued at cost and any discount is accreted and any premium is amortized on a
straight-line basis to the maturity of the instrument.

B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
Interest income is recorded on an accrual basis.

C. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income, if any, to its shareholders.
Therefore, no provision for federal income taxes is required.

The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At June 30, 2000, the Fund had an accumulated capital loss carryforward
for tax purposes of $13,759 which will expire on June 30, 2001.

D. DISTRIBUTION OF INCOME AND GAINS The Fund declares dividends from net
investment income daily and automatically reinvests such dividends daily. Net

F-9
<PAGE> 67

NOTES TO
FINANCIAL STATEMENTS

June 30, 2000

realized gains, if any, are distributed annually. Shareholders can elect to
receive the cash equivalent of their daily dividends at each month end.

Due to inherent differences in the recognition of certain expenses under
generally accepted accounting principles and federal income tax purposes, the
amount of distributed net investment income may differ for a particular period.
These differences are temporary in nature, but may result in book basis
distribution in excess of net investment income for certain periods.

E. EXPENSE REDUCTIONS During the year ended June 30, 2000, the Fund's custody
fee was reduced by $2,767 as a result of credit earned on overnight cash
balances.

2. INVESTMENT ADVISORY FEES AND
OTHER TRANSACTIONS WITH AFFILIATES

Under the terms of the Fund's Investment Advisory Agreement, Van Kampen
Investment Advisory Corp. (the "Adviser") will provide investment advice and
facilities to the Fund for an annual fee payable monthly as follows:

<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS % PER ANNUM
<S> <C>
First $500 million.......................................... .500 of 1%
Next $500 million........................................... .475 of 1%
Next $500 million........................................... .425 of 1%
Over $1.5 billion........................................... .375 of 1%
</TABLE>

For the year ended June 30, 2000, the Adviser voluntarily waived $176,265 of
its investment advisory fees. This waiver is voluntary in nature and can be
discontinued at the Adviser's discretion.

For the year ended June 30, 2000, the Fund recognized expenses of
approximately $1,600, representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.

For the year ended June 30, 2000, the Fund recognized expenses of
approximately $19,200 representing Van Kampen Funds Inc's. or its affiliates'
(collectively "Van Kampen") cost of providing accounting and legal services to
the Fund.

Van Kampen Investor Services Inc., an affiliate of the Adviser, serves as
the shareholder servicing agent for the Fund. For the year ended June 30, 2000,
the Fund recognized expenses of approximately $45,800. Transfer agency fees are
determined through negotiations with the Fund's Board of Trustees and are based
on competitive market benchmarks.

F-10
<PAGE> 68

NOTES TO
FINANCIAL STATEMENTS

June 30, 2000

Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are
officers of Van Kampen.

The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Fund. The maximum
annual benefit per trustee under the plan is $2,500.

3. CAPITAL TRANSACTIONS

At June 30, 2000 and June 30, 1999, capital aggregated $36,274,524 and
$33,546,624, respectively. Transactions in shares were as follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 2000 JUNE 30, 1999
<S> <C> <C>
Beginning Shares....................................... 33,550,784 32,026,330
------------ ------------
Shares Sold............................................ 116,122,679 203,834,945
Shares Issued Through Dividend Reinvestment............ 1,001,690 876,446
Shares Repurchased..................................... (114,396,469) (203,186,937)
------------ ------------
Net Change in Shares Outstanding....................... 2,727,900 1,524,454
------------ ------------
Ending Shares.......................................... 36,278,684 33,550,784
============ ============
</TABLE>

4. DISTRIBUTION AND SERVICE PLANS

The Fund and its shareholders have adopted a distribution plan pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended, and a service plan
(collectively the "Plans"). The Plans govern payments for the distribution of
the Fund's shares, ongoing shareholder services and maintenance of shareholder
accounts. Annual fees under the Plans of up to .25% of the Fund's average net
assets are accrued daily. Included in these fees for the year ended June 30,
2000, are payments retained by Van Kampen of approximately $32,600.

F-11
<PAGE> 69

PART C. OTHER INFORMATION

ITEM 23. EXHIBITS.

<TABLE>
<C> <S>
(a)(1) Declaration of Trust(2)
(2) Certificate of Amendment(4)
(b) Bylaws(2)
(d) Investment Advisory Agreement(3)
(e)(1) Distribution and Service Agreement(3)
(2) Form of Dealer Agreement(1)
(3) Form of Broker Fully Disclosed Clearing Agreement(1)
(4) Form of Bank Fully Disclosed Clearing Agreement(1)
(f)(1) Form of Trustee Deferred Compensation Plan(5)
(2) Form of Trustee Retirement Plan(5)
(g)(1) Custodian Contract(3)
(2) Transfer Agency and Service Agreement(3)
(h)(1) Fund Accounting Agreement(3)
(2) Amended and Restated Legal Services Agreement(3)
(i)(1) Opinion of Skadden, Arps, Slate, Meagher & Flom
(Illinois)(1)
(2) Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois)+
(j)(1) Consent of Ernst & Young LLP+
(2) Consent of KPMG LLP+
(3) Opinion of KPMG LLP+
(k) Not applicable
(l) Not applicable
(m)(1) Plan of Distribution pursuant to Rule 12b-1(2)
(2) Form of Shareholder Assistance Agreement(2)
(3) Form of Administrative Services Agreement(2)
(4) Service Plan(2)
(p) Code of Ethics of the Fund, Investment Adviser and
Distributor+
(q) Power of Attorney+
(z)(1) List of certain investment companies in response to Item
27(a)+
(2) List of officers and directors of Van Kampen Funds Inc. in
response to Item 27(b)+
</TABLE>

-------------------------
(1) Incorporated herein by reference to Post-Effective Amendment No. 12 to
Registrant's Registration Statement on Form N-1A, File No. 33-6745, filed
August 3, 1995.

(2) Incorporated herein by reference to Post-Effective Amendment No. 14 to
Registrant's Registration Statement on Form N-1A, File No. 33-6745, filed
October 28, 1996.

(3) Incorporated herein by reference to Post-Effective Amendment No. 15 to
Registrant's Registration Statement on Form N-1A, File No. 33-6745, filed
October 27, 1997.

(4) Incorporated herein by reference to Post-Effective Amendment No. 16 to
Registrant's Registration Statement on Form N-1A, File No. 33-6745, filed
September 29, 1998.

(5) Incorporated herein by reference to Post-Effective Amendment No. 81 to Van
Kampen Harbor Fund's Registration Statement on Form N-1A, File Nos. 2-12685
and 811-739, filed April 29, 1999.

+ Filed herewith.

C-1
<PAGE> 70

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

See the Statement of Additional Information.

ITEM 25. INDEMNIFICATION.

Pursuant to Del. Code Ann. Title 12 Section 3817, a Delaware business trust
may provide in its governing instrument for the indemnification of its officers
and trustees from and against any and all claims and demands whatsoever.

Reference is made to Article 8, Section 8.4 of the Registrant's Agreement
and Declaration of Trust. Article 8; Section 8.4 of the Agreement and
Declaration of Trust provides that each officer and trustee of the Registrant
shall be indemnified by the Registrant against all liabilities incurred in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which the officer or trustee may be or
may have been involved by reason of being or having been an officer or trustee,
except that such indemnity shall not protect any such person against a liability
to the Registrant or any shareholder thereof to which such person would
otherwise be subject by reason of (i) not acting in good faith in the reasonable
belief that such person's actions were not in the best interest of the Trust,
(ii) willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office, or (iii) for a criminal
proceeding not having a reasonable cause to believe that such conduct was
unlawful (collectively "Disabling Conduct"). Absent a court determination that
an officer or trustee seeking indemnification was not liable on the merits or
guilty of Disabling Conduct in the conduct of his or her office, the decision by
the Registrant to indemnify such person must be based upon the reasonable
determination of independent counsel or non-party independent trustees, after
review of the facts, that such officer or trustee is not guilty of Disabling
Conduct in the conduct of his or her office.

The Registrant has purchased insurance on behalf of its officers and
trustees protecting such persons from liability arising from their activities as
officers or trustees of the Registrant. The insurance does not protect or
purport to protect such persons from liability to the Registrant or to its
shareholders to which such officers or trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of their office.

Conditional advancing of indemnification monies may be made if the trustee
or officer undertakes to repay the advance unless it is ultimately determined
that he or she is entitled to the indemnification and only if the following
conditions are met: (1) the trustee or officer provides a security for the
undertaking; (2) the Registrant is insured against losses arising from lawful
advances; or (3) a majority of a quorum of the Registrant's disinterested,
non-party trustees, or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts, that a recipient of
the advance ultimately will be found entitled to indemnification.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "1933 Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by the trustee, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the shares being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.

Pursuant to Section 7 of the Distribution and Service Agreement, the
Registrant agrees to indemnify and hold harmless Van Kampen Funds Inc. (the
"Distributor") and each of its trustees and officers and each person, if any,
who controls the Distributor within the meaning of Section 15 of the 1933 Act
against any loss, liability, claim, damages or expense (including the reasonable
cost of investigating or defending any alleged

C-2
<PAGE> 71

loss, liability, claim, damages, or expense and reasonable counsel fees) arising
by reason of any person acquiring any shares, based upon the ground that the
Registration Statement, prospectus, shareholder reports or other information
filed or made public by the Registrant (as from time to time amended) included
an untrue statement of a material fact or omitted to state a material fact
required to be stated or necessary in order to make the statements not
misleading under the 1933 Act, or any other statute or the common law. The
Registrant does not agree to indemnify the Distributor or hold it harmless to
the extent that the statement or omission was made in reliance upon, and in
conformity with, information furnished to the Registrant by or on behalf of the
Distributor. In no case is the indemnity of the Registrant in favor of the
Distributor or any person indemnified to be deemed to protect the Distributor or
any person against any liability to the Fund or its security holders to which
the Distributor or such person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties under the
agreement.

Pursuant to the agreement by which Van Kampen Investor Services Inc.
("Investor Services") is appointed transfer agent of the Fund, the Registrant
agrees to indemnify and hold Investor Services harmless against any losses,
damages, costs, charges, payments, liabilities and expenses (including
reasonable counsel fees) arising out of or attributable to:

(1) the performance of Investor Services under the agreement provided that
Investor Services acted in good faith with due diligence and without negligence
or willful misconduct.

(2) reliance by Investor Services on, or reasonable use by, Investor
Services of information, records and documents which have been prepared on
behalf of, or have been furnished by, the Fund, or the carrying out by Investor
Services of any instructions or requests of the Fund.

(3) the offer or sale of the Fund's shares in violation of any federal or
state law or regulation or ruling by any federal agency unless such violation
results from any failure by Investor Services to comply with written
instructions from the Fund that such offers or sales were not permitted under
such law, rule or regulation.

(4) the refusal of the Fund to comply with terms of the agreement, or the
Fund's lack of good faith, negligence or willful misconduct or breach of any
representation or warranty made by the Fund under the agreement provided that if
the reason for such failure is attributable to any action of the Fund's
investment adviser or distributor or any person providing accounting or legal
services to the Fund, Investor Services only will be entitled to indemnification
if such entity is otherwise entitled to the indemnification from the Fund.

See also "Investment Advisory Agreement" in the Statement of Additional
Information.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

See "Investment Advisory Services" in the Prospectus and "Investment
Advisory Agreement," "Other Agreements" and "Trustees and Officers" in the
Statement of Additional Information for information regarding the business of
Van Kampen Investment Advisory Corp. (the "Adviser"). For information as to the
business, profession, vocation and employment of a substantial nature of each of
the officers and directors of the Adviser, reference is made to the Adviser's
current Form ADV (File No. 801-18161) filed under the Investment Advisers Act of
1940, as amended, incorporated herein by reference.

ITEM 27. PRINCIPAL UNDERWRITERS

(a) The sole principal underwriter is Van Kampen Funds Inc. (the
"Distributor") which acts as principal underwriter for certain investment
companies and unit investment trusts. See Exhibit (z)(1).

(b) Van Kampen Funds Inc. is an affiliated person of the Registrant and is
the only principal underwriter for the Registrant. The name, principal business
address and positions and offices with Van Kampen Funds Inc. of each of the
trustees and officers are disclosed in Exhibit (z)(2). Except as disclosed under
the heading, "Trustees and Officers" in Part B of this Registration Statement,
none of such persons has any position or office with the Registrant.

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.

All accounts, books and other documents of the Registrant required by
Section 31(a) of the Investment Company Act of 1940, as amended, and the rules
promulgated thereunder to be maintained (i) by the Registrant, will be
maintained at its offices located at 1 Parkview Plaza, Oakbrook Terrace,
Illinois 60181-5555; Van Kampen Investor Services Inc., 7501 Tiffany Springs
Parkway, Kansas City, Missouri 64153; or at State Street Bank and Trust Company,
1776 Heritage Drive, North Quincy, Massachusetts 02171, (ii) by the Adviser,
will be maintained at its offices located at 1 Parkview Plaza, PO Box 5555,
Oakbrook Terrace, Illinois 60181-5555 and (iii) by Van Kampen Funds Inc., the
principal underwriter, will be maintained at its offices located at 1 Parkview
Plaza, Oakbrook Terrace, Illinois 60181-5555.

ITEM 29. MANAGEMENT SERVICES.

Not applicable.

ITEM 30. UNDERTAKINGS.

Not applicable.

C-4
<PAGE> 73

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended (the
"1933 Act"), and the Investment Company Act of 1940, as amended, the Registrant,
VAN KAMPEN TAX FREE MONEY FUND, certifies that it meets all of the requirements
for effectiveness of this Amendment to the Registration Statement pursuant to
Rule 485(b) under the 1933 Act and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Oakbrook Terrace, and State of Illinois, on the
25th day of October, 2000.

VAN KAMPEN TAX FREE MONEY FUND
By: /s/ A. THOMAS SMITH III
-------------------------------------
A. Thomas Smith III, Secretary

Pursuant to the requirements of the 1933 Act, this amendment to the
Registration Statement has been signed on October 25, 2000, by the following
persons in the capacities indicated.

<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<S> <C>
Principal Executive Officer:
/s/ RICHARD F. POWERS, III* Trustee and President
---------------------------------------------------
Richard F. Powers, III
Principal Financial Officer:

/s/ JOHN L. SULLIVAN* Vice President, Chief Financial Officer and
--------------------------------------------------- Treasurer
John L. Sullivan
Trustees:

/s/ J. MILES BRANAGAN* Trustee
---------------------------------------------------
J. Miles Branagan

/s/ JERRY D. CHOATE* Trustee
---------------------------------------------------
Jerry D. Choate

/s/ LINDA HUTTON HEAGY* Trustee
---------------------------------------------------
Linda Hutton Heagy

/s/ R. CRAIG KENNEDY* Trustee
---------------------------------------------------
R. Craig Kennedy

/s/ MITCHELL M. MERIN* Trustee
---------------------------------------------------
Mitchell M. Merin

/s/ JACK E. NELSON* Trustee
---------------------------------------------------
Jack E. Nelson

/s/ PHILLIP B. ROONEY* Trustee
---------------------------------------------------
Phillip B. Rooney

/s/ FERNANDO SISTO* Trustee
---------------------------------------------------
Fernando Sisto

/s/ WAYNE W. WHALEN* Trustee
---------------------------------------------------
Wayne W. Whalen

/s/ SUZANNE H. WOOLSEY* Trustee
---------------------------------------------------
Suzanne H. Woolsey
---------------
* Signed by A. Thomas Smith III pursuant to a power of attorney filed herewith.
/s/ A. THOMAS SMITH III October 25, 2000
------------------------------------------------
A. Thomas Smith III
Attorney-in-Fact
</TABLE>

C-5
<PAGE> 74

SCHEDULE OF EXHIBITS TO

POST-EFFECTIVE AMENDMENT 19 TO FORM N-1A

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
(i)(2) Consent of Skadden, Arps, Slate, Meagher & Flom (Illinois)
(j)(1) Consent of Ernst & Young LLP
(2) Consent of KPMG LLP
(3) Opinion of KPMG LLP
(p) Code of Ethics of the Fund, Investment Adviser and
Distributor
(q) Power of Attorney
(z)(1) List of certain investment companies in response to Item
27(a)
(2) List of Officers and Directors of Van Kampen Funds Inc. in
response to Item 27(b)
</TABLE>