<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Economic Snapshot................................ 2
Portfolio Management Review...................... 3
Glossary of Terms................................ 5
Portfolio of Investments......................... 6
Statement of Assets and Liabilities.............. 8
Statement of Operations.......................... 9
Statement of Changes in Net Assets............... 10
Financial Highlights............................. 11
Notes to Financial Statements.................... 12
</TABLE>
NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
<PAGE> 2
LETTER TO SHAREHOLDERS
January 20, 2000
Dear Shareholder:
As we enter a new century--and millennium--it seems appropriate to take a
look back at the progress that's been made over the last 100 years and how the
world of investing has changed over the generations. Although rapid advances in
technology and science have dramatically altered the world that we live in
today, one of the greatest shifts we've seen is the increasing importance of
investing for many Americans.
Once considered primarily for the wealthy, investing in the stock market is
now available to most people. In fact, almost 79 million individuals--who
represent almost half of all U.S. households--own stocks either directly or
through mutual funds. This is even more impressive when considering that just 16
years earlier, only 19 percent of households owned stocks. Another important
shift has been the need for retirement planning beyond a pension plan or Social
Security. The Investment Company Institute, the leading mutual fund industry
association, reports that 77 percent of all mutual fund shareholders earmarked
retirement as their primary financial goal in 1998.
Through all the changes in the investment environment over the past century,
the general principles that have made generations of investors successful remain
the same. Some that have stood the test of time include:
- INVESTING FOR THE LONG-TERM
- BASING INVESTMENT DECISIONS ON SOUND RESEARCH
- BUILDING A DIVERSIFIED PORTFOLIO
- BELIEVING IN THE VALUE OF PROFESSIONAL INVESTMENT ADVICE
While no one can predict the future, at Van Kampen we believe that these
ideas will remain important tenets for investors well into this century. As we
continue to focus on these principles, we hope that our decades of investment
experience can help bring you closer to your financial goals as we welcome the
new millennium.
Sincerely,
[SIG.]
Richard F. Powers, III
Chairman
Van Kampen Investment Advisory
Corp.
[SIG.]
Dennis J. McDonnell
President
Van Kampen Investment Advisory
Corp.
1
<PAGE> 3
ECONOMIC SNAPSHOT
ECONOMIC GROWTH
The nation's brisk rate of economic growth continued throughout 1999,
bringing the United States to the verge of its longest economic expansion on
record. High levels of consumer spending, a host of new jobs, and increasing
productivity kept the economy strong. Gross domestic product, the primary
measure of economic growth, increased 4.2 percent for the year, including an
impressive annualized rate of 5.7 percent for the third quarter and 5.8 percent
in the fourth quarter.
EMPLOYMENT
The job market remained vibrant throughout the year, with more than 2.7
million U.S. jobs created in 1999. In addition, unemployment dropped to 4.1
percent in October--its lowest rate in three decades. With jobs plentiful and
wages on the rise, most Americans were optimistic about the future. At the end
of the year the consumer confidence index hit its highest level since 1968.
Although wage pressures caused some concerns about the potential erosion of
corporate profits, productivity gains helped keep those concerns muted through
the end of the year.
INFLATION AND INTEREST RATES
Although the Consumer Price Index continued to reflect historically low
inflation--rising only 2.7 percent during 1999--concerns about future increases
in inflation were prevalent throughout the reporting period. The Federal Reserve
Board remained active in guarding against inflation and trying to temper
economic growth. The Fed reversed its three interest-rate cuts from the fall of
1998 by raising rates in June, August, and November 1999.
U.S. GROSS DOMESTIC PRODUCT
Seasonally Adjusted Annualized Rates
Third Quarter 1997 through Fourth Quarter 1999
[BAR GRAPH]
<TABLE>
<S> <C>
97Q3 4
97Q4 3.1
98Q1 6.7
98Q2 2.1
98Q3 3.8
98Q4 5.9
99Q1 3.7
99Q2 1.9
99Q3 5.7
99Q4 5.8
</TABLE>
Source: Bureau of Economic Analysis
2
<PAGE> 4
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN TAX FREE MONEY FUND
We recently spoke with representatives of the adviser of the Van Kampen Tax Free
Money Fund about the key events and economic forces that shaped the markets
during the past six months. The representatives include portfolio managers Reid
Hill, who has managed the Fund since August 1995, and Michael Bird, who has
managed the Fund since August of 1999. They are joined by Peter W. Hegel, chief
investment officer for fixed-income investments. The following discussion
reflects their views on the Fund's performance during the six-month period ended
December 31, 1999.
Q HOW WOULD YOU CHARACTERIZE THE MARKET CONDITIONS IN WHICH THE FUND
OPERATED DURING THE PAST SIX MONTHS?
A There continued to be a shortage of fixed-rate notes in the short-term
municipal bond market, as low interest rates led to a shift from
short-term to long-term borrowing for municipal projects. These conditions
affected short-term bond issuance in two ways--we saw smaller deals and fewer of
them.
The U.S. economy remained strong, leading the Fed to raise interest rates
two times since June 30, 1999. These increases, totaling 50 basis points, caused
some of the volatility we are seeing in the stock and bond markets.
Q HOW DID YOU MANAGE THE FUND IN LIGHT OF THESE CONDITIONS?
A Because of the short supply of fixed-rate notes, we did not see a lot of
value in buying what we considered to be expensive issues in the six-month
to one-year sector. With this in mind, we kept our portfolio as we have in
the past, focusing on smaller bond issues, and investing over half of the Fund's
assets in variable notes.
Toward the end of the year, however, fixed-rate notes started to get
cheaper. Fear of Y2K ramifications prompted investors to sell fixed-rate
municipals in favor of the liquidity of shorter-term paper, such as
variable-rate notes. Consequently, fixed-rate notes began to look more
attractive as yields increased. Because we were already well positioned for Y2K,
we were able to take advantage of this situation by purchasing fixed-rate notes.
Recently, we have found value among smaller bond issues. Smaller deals tend
to be overlooked by many of the bigger players in the municipal market, so they
usually offer a higher yield in order to attract buyers. For example, we
recently purchased part of a serial bond issue from Cobb County, Georgia. We
were able to identify this issue and purchase it at an attractive price due to
diligent analysis by our research staff.
3
<PAGE> 5
Q HOW DID THE FUND PERFORM DURING THE SIX-MONTH REPORTING PERIOD?
A As of December 31, 1999, the Fund's seven-day average yield was 3.63
percent, while the Fund posted a six-month total return of 1.29 percent.
The yield more closely reflects the current earnings of the fund than the
total return calculation. By comparison, the average performance for tax-free
money market funds, as calculated by Lipper Analytical Services, Inc., was 1.41
percent for the six-month period. Past performance does not guarantee future
results.
Because income from the Fund is exempt from federal income tax, it is
important to compare its effective seven-day average yield of 3.63 percent to an
equivalent taxable rate. Shareholders in the 36 percent federal income tax
bracket would need a taxable equivalent rate of 5.67 percent to equal the
tax-free yield earned by the Fund.
Q WHAT IS YOUR ECONOMIC OUTLOOK FOR THE MONTHS AHEAD?
A The economy continues to be strong. Although inflation remains subdued,
fear of rising inflation is present. We will keep a close watch on the
Fed--while interest rates were unchanged at their most recent meeting,
they may need to raise rates again in 2000 if the economy maintains its current
pace.
We believe that supply in the variable-rate sector will remain abundant,
while supply in the fixed-rate note sector will be light by comparison. Overall,
we will pursue the Fund's goal of relative stability, daily liquidity, and a
competitive level of income, and we will look to add value through careful
security selection.
4
<PAGE> 6
GLOSSARY OF TERMS
FEDERAL FUNDS RATE: The interest rate charged by one financial institution
lending federal funds to another. The Federal Reserve Board adjusts the
federal funds rate to affect the direction of interest rates.
FEDERAL RESERVE BOARD (THE FED): The governing body of the Federal Reserve
System, which is the central bank of the United States. Its policy-making
committee, called the Federal Open Market Committee, meets eight times a
year to establish monetary policy and monitor the economic pulse of the
United States.
MATURITY DATE: The date a bond expires, usually at face value.
MUNICIPAL BOND: A debt security issued by a state, municipality, or other state
or local government entity to finance capital expenditures of public
projects, such as the construction of highways, public works, or school
buildings. Interest on public-purpose municipal bonds is exempt from federal
income taxes and, in some states, from state and local income taxes.
NET ASSET VALUE (NAV): The value of a mutual fund share, calculated by deducting
a fund's liabilities from the total assets in its portfolio and dividing
this amount by the number of shares outstanding. The NAV does not include
any initial or contingent deferred sales charge.
SERIAL BONDS: A group of bonds purchased from the same issue, in which blocks of
the issue have different maturity dates.
VARIABLE-RATE NOTE: A short-term municipal debt security issued when either
general interest rates are expected to change or the length of time before
permanent funding is received is uncertain.
YIELD: The annual rate of return on an investment, expressed as a percentage.
5
<PAGE> 7
PORTFOLIO OF INVESTMENTS
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Discount
Par Yield on
Amount Maturity Date of Amortized
(000) Description Date Purchase Cost
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS
DATES 10.1%
$ 500 Brazos River Auth TX Utils Elec Co Proj
Ser 1996 B (AMBAC Insd)................ 01/03/00 4.650% $ 500,000
1,400 Chicago, IL O'Hare Intl Arpt Rev
American Airls Inc Ser B (LOC: Royal
Bank of Canada)........................ 01/03/00 4.800 1,400,000
450 Chicago, IL O'Hare Intl Arpt Spl Fac
Rev American Airls Ser 1983 C (LOC:
Royal Bank of Canada).................. 01/03/00 4.800 450,000
1,200 New York City (LOC: Chase Manhattan
Bank).................................. 01/03/00 4.750 1,200,000
-----------
TOTAL DATES.................................................. 3,550,000
-----------
7 DAY FLOATERS 50.6%
450 Calhoun Cnty, MI Econ Dev Corp Rev
(LOC: Comerica Bank)................... 01/06/00 5.500 450,000
1,000 Connecticut St Hlth & Edl Facs Auth Rev
Yale Univ Ser U2 (GTD: Yale
University)............................ 01/05/00 5.500 1,000,000
1,500 Floyd Cnty, GA Dev Auth Rev Berry
College Inc Proj (LOC: SunTrust
Bank).................................. 01/05/00 5.550 1,500,000
1,400 Illinois Dev Fin Auth Rev Amer
Osteopathic Assoc (LOC: Harris Trust &
Savings Bank).......................... 01/06/00 5.550 1,400,000
1,000 Illinois Dev Fin Auth Rev Roosevelt
Univ Ser 1995 (LOC: Amer Nat'l Bank &
Trust of Chicago)...................... 01/05/00 5.550 1,000,000
3,000 Iowa Fin Auth Rev Burlington Med Cent
(FSA Insd)............................. 01/06/00 5.550 3,000,000
1,000 Melrose Park, IL Indl Dev Rev Ninos
Enterprises Inc Proj (LOC: American
Nat'l Bank & Trust
of Chicago)............................ 01/05/00 5.650 1,000,000
1,000 Montgomery Cnty, MD Hsg Oppntys Comm
Hsg Rev (LOC: Keybank)................. 01/05/00 5.600 1,000,000
1,175 Quad Cities Regl Econ Dev Auth IL Indl
Dev Rev Var Seaberg Inds Inc Proj (LOC:
Norwest Bank).......................... 01/06/00 5.700 1,175,000
1,000 Seattle, WA Wtr Sys Rev (LOC:
Bayerische
Landesbank Girozent)................... 01/05/00 5.550 1,000,000
1,150 Sterling Heights, MI Econ Dev Corp Rev
Rfdg (LOC: PNC Bank)................... 01/06/00 5.550 1,150,000
1,130 Virginia Small Business Fin Auth Rev
Indl Dev Coral Graphic (LOC: Chase
Manhattan Bank)........................ 01/06/00 5.700 1,130,000
1,500 Washington St Hsg Fin Comm Multi-Family
Mtg Rev Rfdg (LOC: Harris Trust &
Savings Bank).......................... 01/04/00 4.950 1,500,000
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Discount
Par Yield on
Amount Maturity Date of Amortized
(000) Description Date Purchase Cost
- -------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
7 DAY FLOATERS (CONTINUED)
$1,000 Wisconsin St Hlth Facs Auth Rev
Franciscan Hlthcare Ser A-2 (LOC:
Toronto Dominion Bank)................. 01/05/00 5.550% $ 1,000,000
500 Wisconsin St Hlth Fasc Auth Rev
Franciscan Hlthcare Ser A-1 (LOC:
Toronto Dominion Bank)................. 01/05/00 5.550 500,000
-----------
TOTAL 7 DAY FLOATERS 50.6%.................................. 17,805,000
-----------
BONDS/NOTES 37.6%
700 Brazos, TX Higher Edl Auth Inc Std Loan
Rev Senior Lien Ser A-2 Rfdg........... 06/01/00 5.750 702,936
850 Cobb Cnty, GA Wtr & Swr Rev Ser A
Rfdg................................... 07/01/00 4.600 852,460
1,000 Dallas, TX Area Rapid Trans Ser B...... 01/24/00 3.850 1,000,000
1,000 Greater TX Std Loan Corp Ser 1996 A
Rfdg (Gtd: Std Loan Mktg Assn)......... 03/01/00 3.000 1,000,000
1,000 Harris Cnty, TX........................ 02/29/00 4.000 1,000,825
1,000 Jackson Cnty, MS Port Fac Rev Chevron
Inc
Proj Rfdg.............................. 05/01/00 3.850 1,000,000
500 Memphis, TN............................ 07/01/00 5.000 503,402
650 Metropolitan Council MN Minneapolis/St
Paul Metro Area Trans Ser C............ 02/01/00 4.300 650,366
855 Missouri St Hlth & Edl Facs Auth Edl
Washington Univ Ser A.................. 06/15/00 3.350 855,000
1,000 Municipal Elec Auth GA Ser 1985 A...... 02/07/00 3.800 1,000,000
500 New England Edl Loan Mktg Std Loan Ser
B Rfdg................................. 06/01/00 5.400 502,849
700 Private Colleges & Univ Auth GA Rev
Emory Univ Proj Ser C.................. 03/09/00 3.700 700,000
550 Rankin Cnty, MS Sch Dist Rfdg.......... 02/01/00 4.000 550,364
1,400 Texas St Ser A......................... 08/31/00 4.500 1,407,093
1,500 Wisconsin St Ser C..................... 05/01/00 5.000 1,506,300
-----------
TOTAL BONDS/NOTES............................................ 13,231,595
-----------
TOTAL INVESTMENTS 98.3% (A).......................................... 34,586,595
OTHER ASSETS IN EXCESS OF LIABILITIES 1.7%........................... 593,281
-----------
NET ASSETS 100.0%.................................................... $35,179,876
===========
</TABLE>
(a) At December 31, 1999, cost is identical for both book and federal income tax
purposes.
AMBAC--AMBAC Indemnity Corporation
FSA--Financial Security Assurance Inc.
LOC--Letter of Credit
See Notes to Financial Statements
7
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at Amortized Cost which Approximates Market.... $34,586,595
Cash........................................................ 326,915
Receivables:
Investments Sold.......................................... 355,000
Interest.................................................. 218,120
Fund Shares Sold.......................................... 139,417
Other....................................................... 11,635
-----------
Total Assets.......................................... 35,637,682
-----------
LIABILITIES:
Payables:
Fund Shares Repurchased................................... 194,677
Income Distributions...................................... 17,395
Distributor and Affiliates................................ 2,699
Trustees' Deferred Compensation and Retirement Plans........ 142,223
Accrued Expenses............................................ 100,812
-----------
Total Liabilities..................................... 457,806
-----------
NET ASSETS.................................................. $35,179,876
===========
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an
unlimited number of shares authorized).................... $35,193,635
Accumulated Net Realized Loss............................... (13,759)
-----------
NET ASSETS (Equivalent to $1.00 per share for 35,197,797
shares outstanding)....................................... $35,179,876
===========
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
STATEMENT OF OPERATIONS
For the Six Months Ended December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $597,953
--------
EXPENSES:
Investment Advisory Fee..................................... 86,176
Distribution (12b-1) and Service Fees....................... 43,021
Shareholder Services........................................ 33,931
Trustees' Fees and Related Expenses......................... 19,602
Shareholder Reports......................................... 14,720
Registration and Filing Fees................................ 13,922
Accounting.................................................. 11,485
Legal....................................................... 4,602
Custody..................................................... 2,484
Other....................................................... 11,194
--------
Total Expenses.......................................... 241,137
Investment Advisory Fee Reduction....................... 86,176
--------
Net Expenses............................................ 154,961
--------
NET INVESTMENT INCOME....................................... $442,992
========
NET REALIZED GAIN........................................... $ -0-
========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $442,992
========
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended December 31, 1999 and
the Year Ended June 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
December 31, 1999 June 30, 1999
- -----------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income........................... $ 442,992 $ 876,447
Net Realized Gain............................... -0- 3,512
----------------- -------------
Change in Net Assets from Operations............ 442,992 879,959
----------------- -------------
Distributions from Net Investment Income........ (442,961) (876,415)
Distributions in Excess of Net Investment
Income........................................ -0- (31)
----------------- -------------
Distributions from and in Excess of Net
Investment Income............................. (442,961) (876,446)
----------------- -------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES.................................... 31 3,513
----------------- -------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold....................... 48,092,424 203,834,945
Net Asset Value of Shares Issued Through
Dividend Reinvestment......................... 386,681 876,446
Cost of Shares Repurchased...................... (46,832,094) (203,186,961)
----------------- -------------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS.................................. 1,647,011 1,524,430
----------------- -------------
TOTAL INCREASE/DECREASE IN NET ASSETS........... 1,647,042 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 $0 and $31, respectively)........... $ 35,179,876 $ 33,532,834
================= =============
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended June 30,
Six Months Ended -----------------------------
December 31, 1999 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....... .013 .025 .029 .028 .029
Less Distributions from and
in Excess of Net
Investment Income......... .013 .025 .029 .028 .029
----------------- ----- ----- ----- -----
Net Asset Value, End of
Period.................... $ 1.00 $1.00 $1.00 $1.00 $1.00
================= ===== ===== ===== =====
Total Return*............... 1.29%** 2.55% 2.93% 2.82% 2.93%
Net Assets at End of Period
(In millions)............. $ 35.2 $33.5 $32.0 $33.1 $35.6
Ratio of Expenses to Average
Net Assets*............... .90% .84% .83% .85% .85%
Ratio of Net Investment
Income to Average Net
Assets*................... 2.57% 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................ 1.40% 1.34% 1.40% 1.45% 1.53%
Ratio of Net Investment
Income to Average Net
Assets.................... 2.07% 2.03% 2.32% 2.17% 2.21%
</TABLE>
** Non-Annualized
See Notes to Financial Statements
11
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
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 or premium is amortized on a straight-line basis
to the maturity of the instrument.
B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
Interest income is recorded on an accrual basis.
C. FEDERAL INCOME TAXES--It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income, if any, to its shareholders.
Therefore, no provision for federal income taxes is required.
The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At June 30, 1999, the Fund had an accumulated capital loss carryforward
for tax purposes of $13,759 which will expire on June 30, 2001.
12
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
D. DISTRIBUTION OF INCOME AND GAINS--The Fund declares dividends from net
investment income daily and automatically reinvests such dividends daily. Net
realized gains, if any, are distributed annually. Shareholders can elect to
receive the cash equivalent of their daily dividends at each month end.
Due to inherent differences in the recognition of 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.
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 six months ended December 31, 1999, the Adviser voluntarily waived
$86,176 of its investment advisory fees. This waiver is voluntary in nature and
can be discontinued at the Adviser's discretion.
For the six months ended December 31, 1999, the Fund recognized expenses of
approximately $900, representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.
For the six months ended December 31, 1999, the Fund recognized expenses of
approximately $15,200 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 six months ended December
31, 1999, the Fund recognized expenses of approximately $23,000. Transfer agency
fees are determined through negotiations with the Fund's Board of Trustees and
are based on competitive market benchmarks.
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
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 December 31, 1999 and June 30, 1999, capital aggregated $35,193,635 and
$33,546,624, respectively. Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
- ----------------------------------------------------------------------------
<S> <C> <C>
Beginning Shares...................... 33,550,784 32,026,330
----------- ------------
Shares Sold........................... 48,092,424 203,834,945
Shares Issued Through Dividend
Reinvestment........................ 386,681 876,446
Shares Repurchased.................... (46,832,092) (203,186,937)
----------- ------------
Net Change in Shares Outstanding...... 1,647,013 1,524,454
----------- ------------
Ending Shares......................... 35,197,797 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 six months ended
December 31, 1999, are payments retained by Van Kampen of approximately $16,700.
14
<PAGE> 16
VAN KAMPEN TAX FREE MONEY FUND
BOARD OF TRUSTEES
J. MILES BRANAGAN
JERRY D. CHOATE
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
PHILLIP B. ROONEY
FERNANDO SISTO
WAYNE W. WHALEN*- Chairman
SUZANNE H. WOOLSEY, PH.D.
PAUL G. YOVOVICH
OFFICERS
RICHARD F. POWERS, III*
President
DENNIS J. MCDONNELL*
Executive Vice President and Chief Investment Officer
A. THOMAS SMITH III*
Vice President and Secretary
JOHN L. SULLIVAN*
Vice President, Treasurer and Chief Financial Officer
STEPHEN L. BOYD*
PETER W. HEGEL*
MICHAEL H. SANTO*
PAUL R. WOLKENBERG*
EDWARD C. WOOD, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN
INVESTMENT ADVISORY CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR
SERVICES INC.
P.O. Box 218256
Kansas City, Missouri 64121-8256
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
KPMG LLP
303 East Wacker Drive
Chicago, Illinois 60601
* "Interested" persons of the Fund, as defined in the Investment Company Act
of 1940.
(C) Van Kampen Funds Inc., 2000. All rights reserved.
(SM) denotes a service mark of Van Kampen Funds Inc.
This report is submitted for the general information of the shareholders of
the Fund. It is not authorized for distribution to prospective investors
unless it has been preceded or is accompanied by an effective prospectus of
the Fund which contains additional information on how to purchase shares, the
sales charge, and other pertinent data. After May 31, 2000, the report, if
used with prospective investors, must be accompanied by a quarterly
performance update.
15
<PAGE> 17
RESULTS OF SHAREHOLDER VOTES
A Joint Special Meeting of the Shareholders of the Fund was held on December 15,
1999, where shareholders voted on the election of trustees and independent
public accountants.
1) With regard to the election of the following trustees by shareholders:
<TABLE>
<CAPTION>
# OF SHARES
----------------------
IN FAVOR WITHHELD
- -------------------------------------------------------------------------
<S> <C> <C>
J. Miles Branagan.............................. 21,355,966 396,124
Jerry D. Choate................................ 21,359,783 392,307
Linda Hutton Heagy............................. 21,355,966 369,124
R. Craig Kennedy............................... 21,388,206 363,885
Mitchell M. Merin.............................. 21,358,284 393,806
Jack E. Nelson................................. 21,355,966 396,124
Richard F. Powers, III......................... 21,358,284 393,806
Phillip B. Rooney.............................. 21,355,966 396,124
Fernando Sisto................................. 21,355,966 396,124
Wayne W. Whalen................................ 21,359,783 392,307
Suzanne H. Woolsey............................. 21,370,050 382,040
Paul G. Yovovich............................... 21,370,050 382,040
</TABLE>
3) With regard to the ratification of KPMG LLP as independent public
accountants for the Fund, 21,075,163 shares voted in the affirmative, 19,808
shares voted against and 657,119 shares abstained.
16
<PAGE> 18
YEAR 2000 UPDATE
As we enter the new century, it's "business as usual" for Van Kampen. Thank you
for the confidence you showed in us during the changeover on January 1, 2000,
and for entrusting us with your investment portfolio. We look forward to
continuing to serve your investment needs.
17
