VAN KAMPEN AMERICAN CAPITAL MUNICIPAL INCOME TRUST, N-30D, 1996-02-28

VAN KAMPEN AMERICAN CAPITAL MUNICIPAL INCOME TRUST
N-30D, 1996-02-28

Previous: NASL VARIABLE LIFE ACCOUNT, 24F-2NT, 1996-02-28

Next: SHEARSON LEHMAN BROTHERS UNIT TRUSTS HIGH YIELD MUN SER 2, 24F-2NT, 1996-02-28

<TABLE>

Table of Contents

<S> <C>
Letter to Shareholders................. 1
Performance Results.................... 3
Portfolio of Investments............... 4
Statement of Assets and Liabilities.... 11
Statement of Operations................ 12
Statement of Changes in Net Assets..... 13
Financial Highlights................... 14
Notes to Financial Statements.......... 16
</TABLE>

CEF SAR 2/96

Letter to Shareholders

January 30, 1996

Dear Shareholder,
For most investors, it would be hard to surpass the success enjoyed during
the second half of 1995. After getting off to a strong start in the first half
of the year, the stock and bond markets continued to enjoy substantial gains,
driven by a combination of continuing economic growth and low inflation. The
strength of equity and fixed income securities in 1995 was particularly
impressive because it followed a year in which both markets declined. People
who remained invested during 1995 generally shared in the growth of the
markets, while investors who retreated after 1994's downturn may have missed
out on the double-digit returns.
The rebound in the markets last year reinforces the importance of maintaining
a long-term perspective for your investments. While the environment for stocks
and bonds remains positive, it is unlikely that 1996 will see a repeat of the
markets' strong 1995 performance. However, over the long-term, stocks have
outperformed virtually all other types of investments, and bonds have met the
needs of investors who seek capital preservation and regular income.

[PHOTO]
Dennis J. McDonnell and Don G. Powell

Economic Overview
The rate of economic growth slowed during the second half of 1995, as measured
by the gross domestic product (the value of all goods and services produced in
the United States). GDP grew at an annual rate of more than 4 percent in the
third quarter of 1995, but slowed to an estimated 2 to 3 percent in the fourth
quarter of the year, with retail and auto sales particularly sluggish. The
slower growth rate eased concerns about inflation and allowed the Federal
Reserve Board in late December to lower short-term interest rates by a
quarter-percentage point. Just as the Fed's raising of short-term rates in 1994
helped slow economic growth in 1995, the reduction in rates during the latter
half of 1995 was expected to help generate moderate economic growth in 1996.
The cut in short-term rates was viewed by the financial markets as a positive
event, pushing up both stock and bond prices. For example, the yield on the Bond
Buyer's Municipal Bond Index fell from 6.37 percent on June 30, 1995 to 5.56
percent on December 31, 1995. Many observers expect the Fed to cut rates further
if Congress and the President are able to reach an agreement on the federal
budget, provided economic conditions justify further easing.

Performance Summary
For the six months ended December 31, 1995, Van Kampen American Capital
Municipal Income Trust, formerly Van Kampen Merritt Municipal Income Trust,
generated a total return at market price of -1.90 percent<F1>. This return
reflects a decrease in market price per common share on the New York Stock
Exchange from $11.125 on June 30, 1995 to $10.50 on December 31, 1995, and
reinvestment of dividends totaling $0.400 per share.

Continued on page two

Additionally, the Trust produced a tax-exempt distribution rate of 7.43
percent<F3>, based on the closing stock price of $10.50 per share on December
31, 1995. Because income from the Trust is exempt from federal income tax, it
is important to compare the Trust's distribution rate to an equivalent taxable
rate. For example, for investors in the 36 percent federal income tax bracket,
the Trust's distribution rate represents a yield equivalent to a taxable
investment earning 11.61 percent.<F4>

Corporate News
As you may have noticed in the performance summary, your Trust has a new name.
At the beginning of January all former Van Kampen Merritt and American Capital
closed-end funds assumed the Van Kampen American Capital name. Please look under
the new heading "VnKmAC" to find your Trust's price in your daily newspaper.

Outlook
Looking ahead, we are cautiously optimistic. We expect the economy to grow at
a rate of 2 to 3 percent throughout 1996, with growth stronger in the second
half of the year as the full impact of the Fed's rate cuts take effect. Lower
rates will have the greatest impact on interest sensitive industries, such as
housing. Although inflation appears to be under control, there probably will be
some upward pressure in 1996 as lower interest rates generate increased economic
activity.
The outlook for the fixed-income market---including municipal bonds---is
positive. In the near-term, we believe domestic markets will benefit from a
stable U.S. dollar and increased business activity driven in part by a number of
recently announced strategic reorganizations of some of the nation's blue chip
industry leaders.
During recent months, debate over tax reform and the federal deficit has
dominated the agenda in Washington. Now that we are in a presidential election
year, tax reform likely will replace the budget battle as the top issue in
Washington. There has been varied speculation about the impact of these issues
on the economy and on various types of investments. We are following the tax
reform debate very closely, and we will keep you updated on this issue
throughout the year.
We appreciate your continued confidence in your investment with Van Kampen
American Capital, and we look forward to communicating with you again regarding
the performance of your Trust.

Sincerely,

Don G. Powell Dennis J. McDonnell
Chairman President
Van Kampen American Capital Van Kampen American Capital
Investment Advisory Corp. Investment Advisory Corp.

Performance Results for the Period Ended December 31, 1995
Van Kampen American Capital Municipal Income Trust

(NYSE Ticker Symbol VMT)

<TABLE>
<CAPTION>
<S> <C>
Total Returns

Six-month total return based on market price<F1>........................... (1.90%)
Six-month total return based on NAV<F2>.................................... 9.20%

Distribution Rates

Distribution rate as a % of closing stock price<F3>........................ 7.43%
Taxable-equivalent distribution rate as a % of closing stock price<F4>..... 11.61%

Share Valuations

Net asset value............................................................ $ 10.24
Closing stock price........................................................ $ 10.500
Six-month high common stock price (08/17/95)............................... $ 11.375
Six-month low common stock price (11/16/95)................................ $ 10.250
Preferred share (Series A) rate<F5>........................................ 3.790%
Preferred share (Series B) rate<F5>........................................ 4.000%
Preferred share (Series C) rate<F5>........................................ 3.982%

<FN>
<F1>Total return based on market price assumes an investment at the market price at
the beginning of the period indicated, reinvestment of all distributions for the
period in accordance with the Trust's dividend reinvestment plan, and sale of
all shares at the closing stock price at the end of the period indicated.

<F2>Total return based on net asset value (NAV) assumes an investment at the
beginning of the period indicated, reinvestment of all distributions for the
period, and sale of all shares at the end of the period, all at NAV.

<F3>Distribution rate represents the monthly annualized distributions of the Trust
at the end of the period and not the earnings of the Trust.

<F4>The taxable-equivalent distribution rate is calculated assuming a 36% federal
tax bracket.

<F5>See "Notes to Financial Statements" footnote #6, for more information
concerning Preferred Share reset periods.

A portion of the interest income may be taxable for those investors subject to
the federal alternative minimum tax (AMT).

Past performance does not guarantee future results. Investment return, stock
price and net asset value will fluctuate with market conditions. Trust shares,
when sold, may be worth more or less than their original cost.
</TABLE>

Portfolio of Investments
December 31, 1995 (Unaudited)
- -------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal Bonds
Alaska 1.5%
$ 345 Alaska St Hsg Fin Corp Rfdg ........................... 7.800% 12/01/30 $ 366,249
2,700 Alaska St Hsg Fin Corp Ser A (MBIA Insd) .............. 5.875 12/01/30 2,710,179
3,500 North Slope Borough, AK Ser B (Cap Guar Insd) ......... 6.100 06/30/99 3,716,860
-----------
6,793,288
-----------
Arkansas 0.2%
1,000 Conway, AR Hosp Rev Conway Regl Hosp Rfdg 8.375 07/01/11 1,098,730
-----------
California 7.0%
5,500 Anaheim, CA Pub Fin Auth Rev (MBIA Insd) .............. 5.625 10/01/22 5,570,730
11,150 California Hsg Fin Agy Rev Homeowner Mtg Ser D ........ * 08/01/20 1,646,520
5,000 Contra Costa, CA Home Mtg Fin Auth Home Mtg Rev (MBIA
Insd) ................................................. * 09/01/17 1,421,050
19,915 Foothill / Eastern Tran Corridor Agy CA Toll Rd Rev Sr
Lien Ser A ............................................ * 01/01/20 4,440,647
5,000 Los Angeles Cnty, CA Pub Wks Fin Auth Lease Rev Multi
Cap Fac Proj IV (MBIA Insd) ........................... 4.750 12/01/13 4,747,900
2,690 Los Angeles Cnty, CA Pub Wks Fin Auth Lease Rev Multi
Cap Fac Proj IV (MBIA Insd) ........................... 5.250 12/01/16 2,651,264
5,000 Mount Diablo, CA Hosp Dist Rev Ser A (Embedded Cap)
(AMBAC Insd) .......................................... 5.125 12/01/23 4,683,200
6,075 Orange Cnty, CA Recovery Ser A Rfdg (MBIA Insd) ....... 6.000 06/01/09 6,509,666
-----------
31,670,977
-----------
Colorado 13.0%
1,000 Arapahoe Cnty, CO Cap Impt Trust Fund Hwy
Rev E-470 Proj Ser B .................................. 6.950 08/31/20 1,085,670
2,000 Arapahoe Cnty, CO Cap Impt Trust Fund Hwy Rev E-470
Proj Ser B ............................................ 7.000 08/31/26 2,170,860
19,000 Arapahoe Cnty, CO Cap Impt Trust Fund Hwy Rev E-470
Proj Ser C ............................................ * 08/31/15 4,930,310
19,405 Arapahoe Cnty, CO Cap Impt Trust Fund Hwy Rev E-470
Proj Ser C ............................................ * 08/31/26 2,140,566
2,000 Denver, CO City & Cnty Arpt Rev Ser A ................. 8.500 11/15/07 2,304,140
12,400 Denver, CO City & Cnty Arpt Rev Ser A ................. 8.250 11/15/12 14,136,620
5,600 Denver, CO City & Cnty Arpt Rev Ser A ................. 8.500 11/15/23 6,417,656
6,000 Denver, CO City & Cnty Arpt Rev Ser A ................. 8.750 11/15/23 7,066,320
5,000 Denver, CO City & Cnty Arpt Rev Ser C (MBIA Insd) ..... 5.600 11/15/25 5,006,100
6,000 Denver, CO City & Cnty Sch Dist No 1 Ser A Rfdg ....... 5.125 12/01/12 5,999,760
2,000 Douglas Cnty, CO Sch Dist No 1 Rev Douglas & Elbert
Cntys Impt Ser A (MBIA Insd) .......................... 6.400 12/15/11 2,224,540

</TABLE>

4 See Notes to Financial Statements

Portfolio of Investments (Continued)
December 31, 1995 (Unaudited)
- -----------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Colorado (Continued)
$ 3,000 Meridian Metro Dist CO Peninsular & Oriental Steam Navig
Co Rfdg .................................................. 7.500% 12/01/11 $ 3,261,180
1,850 Montrose Cnty, CO Ctfs Partn ............................. 6.350 06/15/06 1,866,946
------------
58,610,668
------------
District of Columbia 1.9%
1,000 District of Columbia Ctfs Partn .......................... 6.875 01/01/03 1,019,140
2,775 District of Columbia Hosp Rev Medlantic Hlthcare Ser A
Rfdg (MBIA Insd) ......................................... 5.250 08/15/12 2,735,512
4,500 District of Columbia Ser A (Prerefunded @ 06/01/97)
(AMBAC Insd) <F2> ........................................ 8.000 06/01/07 4,828,230
------------
8,582,882
------------
Florida 5.4%
3,150 Broward Cnty, FL Tourist Dev Tax Spl Rev Convention
Cent Proj (Prerefunded @ 10/01/98) (FGIC Insd) <F2> ...... 7.750 10/01/13 3,521,196
5,000 Dunes, FL Cmnty Dev Dist Rev Wtr & Swr Proj (Prerefunded
@ 10/01/98) .............................................. 8.250 10/01/18 5,645,450
4,660 Florida St Brd Edl Cap Outlay Pub Edl Ser A Rfdg
(Prerefunded @ 06/01/00) ................................. * 06/01/15 1,350,561
1,000 Florida St Muni Pwr Agy Rev All Requirements Pwr Supply
Proj (AMBAC Insd) ........................................ 5.100 10/01/25 973,790
295 Largo, FL Sun Coast Hlth Sys Rev Ser 1993 ................ 5.750 03/01/99 295,590
285 Largo, FL Sun Coast Hlth Sys Rev Ser 1993 ................ 5.750 03/01/01 284,459
3,630 Orange Cnty, FL Hsg Fin Auth Mtg Rev Ser A (GNMA
Collateralized) .......................................... 8.375 03/01/21 3,843,335
5,685 Palm Beach Cnty, FL Hlth Fac Auth Rev JFK Med Cent Inc
Proj Ser 1988 Rfdg (Prerefunded @ 12/01/98) .............. 8.875 12/01/18 6,500,627
1,675 Pinellas Cnty, FL Hlth Fac Auth Sun Coast Hlth Sys Rev
Sun Coast Hosp Ser A (Prerefunded @ 03/01/00)............. 8.500 03/01/20 1,979,582
------------
24,394,590
------------
Georgia 3.0%
7,000 Fulton Cnty, GA Lease Rev <F3> ........................... 7.250 06/15/10 8,037,540
2,300 Georgia Muni Elec Auth Pwr Rev Ser O ..................... 8.125 01/01/17 2,507,000
2,635 Municipal Elec Auth GA Spl Oblig First Crossover (MBIA
Insd) .................................................... 6.500 01/01/20 3,087,561
------------
13,632,101
------------
Idaho 1.1%
4,390 Boise, ID Urban Renewal Agy Park Ser A ................... 8.125 09/01/15 4,917,590
------------
Illinois 11.4%
3,035 Alsip, IL Indl Dev Rev New Process Steel Corp Proj ....... 8.300 10/01/04 3,293,430
2,500 Alton, IL Hosp Fac Rev Saint Anthony's Hlth Cent Proj .... 8.375 09/01/14 2,723,500
14,810 Chicago, IL O'Hare Intl Arpt Spl Fac Rev United Airls Inc
Proj Ser 84A ............................................. 8.850 05/01/18 16,865,628
</TABLE>

5 See Notes to Financial Statements

1,370 Indiana Hlth Fac Fin Auth Hosp Rev Bartholomew Cnty
Hosp Proj (Prerefunded @ 08/15/00) (Cap Guar Insd) ..... 7.750 08/15/20 1,598,283
1,650 Indiana St Edl Fac Auth Rev Univ Evansville Proj ....... 8.125 11/01/10 1,843,941
------------
3,442,224
------------
Louisiana 2.0%
2,046 Lafayette, LA Pub Fin Auth Single Family Mtg Rev
Ser A Var Rate Cpn ..................................... 8.500 11/15/12 2,243,180
5,072 Louisiana Pub Fac Auth Rev Multi-Family Hsg Proj Var
Rate Cpn (GNMA Collateralized) ......................... 8.375 07/20/23 5,488,506
1,250 New Orleans, LA Hsg Dev Multi-Family Rev Ser A (FNMA
Collateralized) ........................................ 7.700 02/01/22 1,358,375
------------
9,090,061
------------
Maine 0.3%
1,335 Maine St Hsg Auth Ser C ................................ 8.300 11/15/20 1,418,117
------------
Maryland 0.5%
4,650 Baltimore, MD Cap Apprec Cons Pub Impt Ser
(FGIC Insd) ............................................ * 10/15/09 2,209,540
------------
Massachusetts 0.7%
2,695 Massachusetts St Hlth & Edl Fac Auth Rev Farmingham
Union Hosp Ser B (Prerefunded @ 07/01/00) .............. 8.500 07/01/10 3,205,999
------------
</TABLE>

6 See Notes to Financial Statements

7,935 Nebraska Invt Fin Single Family Secs Pgm B (Inverse
Fltg) (GNMA Collateralized) ............................. 10.780 03/15/22 9,065,737
------------
Nevada 1.3%
2,605 Nevada Hsg Div Single Family Pgm Ser B .................. 8.375 10/01/20 2,796,754
2,740 Washoe Cnty, NV Hosp Fac Rev Washoe Med Cent A Rfdg (FSA
Insd) ................................................... 6.000 06/01/15 2,844,641
------------
5,641,395
------------
New Jersey 1.5%
6,000 New Jersey St Tpk Auth Tpk Rev Ser C Rfdg
(AMBAC Insd) ............................................ 6.500 01/01/08 6,744,360
------------
New York 10.0%
2,250 New York City Muni Wtr Fin Auth & Swr Sys Rev
(Prerefunded @ 06/15/01) ................................ 7.750 06/15/20 2,665,462
7,000 New York City Ser A Rfdg ................................ 7.000 08/01/04 7,675,500
5,000 New York City Ser A-1 ................................... 6.375 08/01/10 5,222,650
4,500 New York City Ser B (AMBAC Insd) ........................ 7.250 08/15/07 5,448,690
3,800 New York City Ser C ..................................... 7.000 08/15/08 4,046,848

</TABLE>

See Notes to Financial Statements

7,000 North Carolina Eastn Muni Pwr Agy Pwr Sys Rev Ser B
Rfdg (Embedded Cap) ................................. 6.000 01/01/14 7,148,750
4,225 North Carolina Muni Pwr (AMBAC Insd) ................ 5.750 01/01/15 4,286,938
15,000 North Carolina Muni Pwr Agy No 1 Catawba Elec Rev
(Embedded Cap) ...................................... 6.000 01/01/12 15,658,350
------------
27,094,038
------------
North Dakota 0.3%
1,365 North Dakota St Hsg Single Family Mtg Rev Ser A ..... 8.375 07/01/21 1,442,955
------------
Ohio 1.2%
3,940 Mason, OH Hlth Care Fac Rev (FHA Gtd) ............... 7.625 02/01/40 4,349,327
1,000 Ohio St Air Quality Dev Auth Rev JMG Funding Ltd
Partnership Proj Rfdg (AMBAC Insd) .................. 6.375 04/01/29 1,095,580
------------
5,444,907
------------
Oklahoma 0.3%
1,250 Tulsa, OK Indl Auth Hosp Rev Tulsa Reg Med Cent ..... 7.200 06/01/17 1,428,488
------------
Oregon 0.6%
2,500 Oregon St Hsg & Cmnty Svcs Dept Mtg Rev
Single Family Mtg Proj Ser B ........................ 6.875 07/01/28 2,669,625
------------
Pennsylvania 7.6%
6,000 Delaware Cnty, PA Indl Dev Auth Rev Res Recovery
Proj Ser A .......................................... 8.100 12/01/13 6,301,440
1,750 Emmaus, PA Genl Auth Rev Var Loc Govt Bond Pool Pgm
Ser B Var Rate Cpn (BIGI Insd) ...................... 8.000 05/15/18 1,922,847
10,000 Geisinger Auth PA Hlth Sys Muni Cap Ser A (Embedded
Cap) ................................................ 6.400 07/01/22 10,398,700

</TABLE>

See Notes to Financial Statements

Portfolio of Investments (Continued)
December 31, 1995 (Unaudited)
- -----------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania (Continued)
$ 5,000 Pennsylvania St Higher Edl Assistance Agy Student Ln Rev
Ser B (Inverse Fltg) (MBIA Insd) <F2> ................... 10.515% 03/01/20 $ 5,868,750
1,100 Pennsylvania St Higher Edl Fac Auth Rev Med College PA
Ser A ................................................... 8.375 03/01/11 1,201,893
1,750 Philadelphia, PA Sch Dist Ser A (AMBAC Insd) ............ * 07/01/01 1,370,618
2,000 Ridley Park, PA Hosp Auth Rev Hosp Auth Rev Ser 1993 A... 6.000 12/01/13 1,866,880
4,745 Sayre, PA Hlthcare Fac Auth Rev VHA Cap Asset Fin Pgm
Ser A (AMBAC Insd) ...................................... 7.700 12/01/15 5,316,772
------------
34,247,900
------------
Rhode Island 0.3%
1,000 Providence, RI Pub Bldg Auth Ser B (Cap Guar Insd) ...... 7.250 12/15/10 1,140,670
------------
South Carolina 0.4%
1,610 South Carolina St Hsg Fin Dev Auth Homeowner Ser A....... 7.400 07/01/23 1,705,747
------------
Tennessee 4.0%
2,500 Shelby Cnty, TN Hlth Edl Hosp Methodist Hlth Sys Inc
(MBIA Insd) ............................................. 5.500 08/01/12 2,556,900
2,500 Shelby Cnty, TN Hlth Edl Hosp Methodist Hlth Sys Inc
(MBIA Insd) ............................................. 5.250 08/01/15 2,474,250
12,230 Tennessee Hsg Dev Agy Mtg Fin Ser A ..................... 7.125 07/01/26 12,852,752
------------
17,883,902
------------
Texas 4.2%
7,065 Dallas Cnty, TX Util & Reclamation Dist Cap Apprec
(MBIA Insd) ............................................. * 02/15/20 1,316,916
935 Dallas Cnty, TX Util & Reclamation Dist Cap Apprec
(Prerefunded @ 02/15/00) (MBIA Insd) .................... * 02/15/20 183,279
4,820 Harris Cnty, TX Toll Rd (Prerefunded @ 08/15/09) (AMBAC
Insd) ................................................... * 08/15/18 1,318,559
1,000 Harris Cnty, TX Toll Rd (Prerefunded @ 08/15/09) (AMBAC
Insd) ................................................... * 08/15/21 222,540
3,525 Texas Muni Pwr Agy Rev (AMBAC Insd) ..................... * 09/01/07 1,951,581
8,420 Texas St Pub Ppty Fin Corp Rev Mental Hlth & Retardation
Rfdg (Cap Guar Insd) .................................... 5.500 09/01/13 8,561,456
1,860 Texas St Pub Ppty Fin Corp Rev Mental Hlth & Retardation
(Prerefunded @ 01/01/98) (BIGI Insd) .................... 7.875 01/01/08 2,000,932
2,000 Texas St Pub Ppty Fin Corp Rev Mental Hlth & Retardation
(Prerefunded @ 01/01/98) (BIGI Insd) .................... 7.875 01/01/09 2,145,540
1,250 West Side Calhoun Cnty, TX Navig Dist Solid Waste Disp
Union Carbide Chem & Plastics ........................... 8.200 03/15/21 1,427,763
------------
19,128,566
------------
Utah 2.0%
5,210 Salt Lake City, UT Arpt Rev Delta Airls Inc Proj ........ 7.900 06/01/17 5,596,895
3,300 Salt Lake City, UT Hosp Rev IHC Hosp Inc Rfdg (Embedded
Cap) .................................................... 5.500 02/15/17 3,202,914
------------
8,799,809
------------
</TABLE>

See Notes to Financial Statements

*Zero coupon bond

<FN>

<F1> At December 31, 1995, cost for federal income tax purposes is
$404,447,691; the aggregate gross unrealized appreciation is $40,316,967
and the aggregate gross unrealized depreciation is $667,634, resulting in
net unrealized appreciation including futures transactions of
$39,649,333.

<F2> Assets segregated as collateral for open futures transactions.

<F3> Private placement issue.
</TABLE>

The following table summarizes the portfolio composition at December 31, 1995,
based upon quality ratings issued by Standard & Poor's. For securities not rated
by Standard & Poor's, the Moody's rating is used.

<TABLE>
<CAPTION>
Portfolio Composition by Credit Quality
<S> <C>
AAA........... 38.8%
AA............ 9.3
A............. 15.0
BBB........... 25.9
BB............ 5.9
B............. 0.2
Non-Rated..... 4.9
-------
100.0%
=======
</TABLE>

See Notes to Financial Statements

Statement of Assets and Liabilities
December 31, 1995 (Unaudited)
- -----------------------------------------------------------------------------------------------------------
<S> <C>
Assets:
Investments, at Market Value (Cost $404,447,691) (Note 1)................................. $ 444,508,604
Short-Term Investments (Note 1)........................................................... 6,265,000
Cash...................................................................................... 46,674
Receivables:
Interest................................................................................ 7,638,391
Investments Sold........................................................................ 60,000
Other..................................................................................... 9,086
---------------
Total Assets............................................................................ 458,527,755
---------------
Liabilities:
Payables:
Investments Purchased................................................................... 6,940,073
Income Distributions - Common and Preferred Shares...................................... 240,367
Investment Advisory Fee (Note 2)........................................................ 228,014
Margin on Futures (Note 5).............................................................. 12,500
Accrued Expenses.......................................................................... 215,030
---------------
Total Liabilities....................................................................... 7,635,984
---------------
Net Assets................................................................................ $ 450,891,771
===============
Net Assets Consist of:
Preferred Shares ($.01 par value, authorized 1,000,000 shares, 330 issued with
liquidation preference of $500,000 per share) (Note 6).................................. $ 165,000,000
---------------
Common Shares ($.01 par value with an unlimited number of shares authorized,
27,916,834 shares issued and outstanding) (Note 3)...................................... 279,168
Paid in Surplus (Note 3).................................................................. 258,014,715
Net Unrealized Appreciation on Investments................................................ 39,649,333
Accumulated Undistributed Net Investment Income........................................... 1,984,335
Accumulated Net Realized Loss on Investments.............................................. (14,035,780)
---------------
Net Assets Applicable to Common Shares.................................................. 285,891,771
---------------
Net Assets................................................................................ $ 450,891,771
===============
Net Asset Value Per Common Share ($285,891,771 divided by 27,916,834 shares
outstanding).............................................................................. $ 10.24
===============
</TABLE>

See Notes to Financial Statements

Statement of Operations
For the Six Months Ended December 31, 1995 (Unaudited)
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest......................................................................................... $ 14,981,855
---------------
Expenses:
Investment Advisory Fee (Note 2)................................................................. 1,330,390
Preferred Share Maintenance (Note 6)............................................................. 228,738
Legal (Note 2)................................................................................... 21,160
Trustees Fees and Expenses (Note 2).............................................................. 12,102
Other............................................................................................ 216,609
---------------
Total Expenses................................................................................. 1,808,999
---------------
Net Investment Income............................................................................ $ 13,172,856
===============
Realized and Unrealized Gain/Loss on Investments:
Realized Gain/Loss on Investments:
Proceeds from Sales............................................................................ $ 85,049,756
Cost of Securities Sold........................................................................ (80,350,087)
---------------
Net Realized Gain on Investments (Including realized loss on closed and expired option
transactions of $69,811 and realized gain on futures transactions of $94,785).................... 4,699,669
---------------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period........................................................................ 29,850,950
End of the Period (Including unrealized depreciation on open futures transactions of $411,580). 39,649,333
---------------
Net Unrealized Appreciation on Investments During the Period..................................... 9,798,383
---------------
Net Realized and Unrealized Gain on Investments.................................................. $ 14,498,052
===============
Net Increase in Net Assets from Operations....................................................... $ 27,670,908
===============
</TABLE>

See Notes to Financial Statements

Statement of Changes in Net Assets
For the Six Months Ended December 31, 1995 and the Year Ended June 30, 1995
(Unaudited)
- -------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended
December 31, 1995 June 30, 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
From Investment Activities:
Operations:
Net Investment Income.............................................. $ 13,172,856 $ 26,682,469
Net Realized Gain/Loss on Investments.............................. 4,699,669 (13,002,677)
Net Unrealized Appreciation on Investments During the Period....... 9,798,383 11,076,634
----------------- ---------------
Change in Net Assets from Operations .............................. 27,670,908 24,756,426
----------------- ---------------
Distributions from Net Investment Income:
Common Shares.................................................... (11,133,193) (23,197,415)
Preferred Shares................................................. (3,190,347) (6,187,268)
----------------- ---------------
Total Distributions................................................ (14,323,540) (29,384,683)
----------------- ---------------
Net Change in Net Assets from Investment Activities................ 13,347,368 (4,628,257)
From Capital Transactions (Note 3):
Value of Common Shares Issued Through Dividend Reinvestment........ 1,454,867 3,009,912
----------------- ---------------
Total Increase/Decrease in Net Assets.............................. 14,802,235 (1,618,345)
Net Assets:
Beginning of the Period............................................ 436,089,536 437,707,881
----------------- ---------------
End of the Period (Including undistributed net investment income
of $1,984,335 and $3,135,019, respectively) ....................... $ 450,891,771 $ 436,089,536
================= ===============
</TABLE>

See Notes to Financial Statements

Financial Highlights

The following schedule presents financial highlights for one common share of the
Trust outstanding throughout the periods indicated. (Unaudited)
- ----------------------------------------------------------------------------------------------
Six Months Ended Year Ended June 30
December 31, 1995 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the Period <F1>.... $ 9.760 $ 9.924 $ 11.133
----------------- ----------- -----------
Net Investment Income............................ .473 .964 1.000
Net Realized and Unrealized Gain/Loss on
Investments...................................... .523 (.065) (1.214)
----------------- ----------- -----------
Total from Investment Operations................. .996 .899 (.214)
----------------- ----------- -----------
Less:
Distributions from Net Investment Income: Paid
to Common Shareholders........................... .400 .840 .840
Common Share Equivalent of Distributions Paid
to Preferred Shareholders........................ .115 .223 .155
Distributions from and in Excess
of Net Realized Gain on
Investments Paid to Common Shareholders (Note 1). -0- -0- -0
----------------- ----------- -----------
Total Distributions.............................. .515 1.063 .995
----------------- ----------- -----------
Net Asset Value, End of the Period............... $ 10.241 $ 9.760 $ 9.924
================= =========== ===========
Market Price Per Share at End of the Period...... $ 10.500 $ 11.125 $ 11.125
Total Investment Return at Market Price <F2>..... (1.90%)* 8.59% (0.05%)
Total Return at Net Asset Value <F3>............. 9.20%* 7.24% (3.63%)
Net Assets at End of the Period (In millions).... $ 450.9 $ 436.1 $ 437.7
Ratio of Expenses to Average Net Assets
Applicable to Common Shares ..................... 1.31% 1.33% 1.28%
Ratio of Expenses to Average
Net Assets ...................................... .82% .83% .82%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares <F4>............................... 7.23% 7.56% 7.86%
Portfolio Turnover............................... 18.59% 38.43% 44.78%

*Non-Annualized

**If certain expenses had not been assumed by the Adviser for the period ended
June 30, 1989, the ratio of expenses to average net assets applicable to
common shares would have been 1.07% and the ratio of net investment income to
average net assets applicable to common shares would have been 5.99%.

<FN>
<F1> Net asset value at August 26, 1988, is adjusted for common and preferred
share offering costs of $.120 per share.

<F2> Total investment return at market price reflects the change in market
value of the common shares for the period indicated with reinvestment of
dividends in accordance with the Trust's dividend reinvestment plan.

<F3> Total return at net asset value (NAV) reflects the change in value of the
Trust's assets with reinvestment of dividends based upon NAV.

<F4> Net investment income is adjusted for common share equivalent of
distributions paid to preferred shareholders.

N/A = Not Applicable

</TABLE>

Financial Highlights (Continued)

The following schedule presents financial highlights for one common share of the
Trust outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------------------------------------------------------
August 26, 1988
(Commencement
Year Ended June 30 of Investment
---------------------------------------------------------- Operations) to
1993 1992 1991 1990 June 30, 1989
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the Period <F1>.... $ 10.688 $ 9.805 $ 9.534 $ 9.767 $ 9.180
----------------- ----------- ----------- ----------- -------------
Net Investment Income............................ 1.078 1.095 1.093 1.070 .766
Net Realized and Unrealized Gain/Loss on
Investments...................................... .520 .848 .295 (.229) .559
----------------- ----------- ----------- ----------- -------------
Total from Investment Operations................. 1.598 1.943 1.388 .841 1.325
----------------- ----------- ----------- ----------- -------------
Less:
Distributions from Net Investment Income: Paid
to Common Shareholders........................... .829 .791 .725 .685 .501
Common Share Equivalent of Distributions Paid
to Preferred Shareholders........................ .162 .238 .337 .389 .237
Distributions from and in Excess
of Net Realized Gain on
Investments Paid to Common Shareholders (Note 1). .162 .031 .055 -0- -0-
----------------- ----------- ----------- ----------- -------------
Total Distributions.............................. 1.153 1.060 1.117 1.074 .738
----------------- ----------- ----------- ----------- -------------
Net Asset Value, End of the Period............... $ 11.133 $ 10.688 $ 9.805 $ 9.534 $ 9.767
================= =========== =========== =========== =============
Market Price Per Share at End of the Period...... $ 12.000 $ 11.375 $ 10.125 $ 9.250 $ 9.500
Total Investment Return at Market Price <F2>..... 15.20% 21.65% 18.71% 4.65% .10%*
Total Return at Net Asset Value <F3>............. 13.97% 18.08% 11.61% 4.76% 10.62%*
Net Assets at End of the Period (In millions).... $ 467.9 $452.7 $426.7 $ 418.3 $ 424.4
Ratio of Expenses to Average Net Assets
Applicable to Common Shares ..................... 1.25% 1.35% 1.46% 1.43% .92%**
Ratio of Expenses to Average
Net Assets ...................................... .80% .84% .89% .87% N/A
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares <F4>............................... 8.41% 8.41% 7.88% 7.11% 6.15%**
Portfolio Turnover............................... 44.74% 26.53% 68.76% 116.21% 89.63%

*Non-Annualized

<FN>
<F1> Net asset value at August 26, 1988, is adjusted for common and preferred
share offering costs of $.120 per share.

<F3> Total return at net asset value (NAV) reflects the change in value of the
Trust's assets with reinvestment of dividends based upon NAV.

<F4> Net investment income is adjusted for common share equivalent of
distributions paid to preferred shareholders.

N/A = Not Applicable

</TABLE>

Notes to Financial Statements
December 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------

1. Significant Accounting Policies
Van Kampen American Capital Municipal Income Trust (the "Trust") is registered
as a diversified closed-end management investment company under the Investment
Company Act of 1940, as amended. The Fund's investment objective is to provide a
high level of current income exempt from federal income taxes with safety of
principal. The Trust commenced investment operations on August 26, 1988.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements.

A. Security Valuation-Investments are stated at value using market quotations
or, if such valuations are not available, estimates obtained from yield data
relating to instruments or securities with similar characteristics in accordance
with procedures established in good faith by the Board of Trustees. Short-term
securities with remaining maturities of less than 60 days are valued at
amortized cost.

B. Security Transactions-Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when issued" or "delayed delivery"
basis, with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when issued or delayed delivery
purchase commitments until payment is made. At December 31, 1995, there were no
when issued or delayed delivery purchase commitments.

C. Investment Income and Expenses-Interest income and expenses are recorded on
an accrual basis. Bond premium and original issue discount are amortized over
the expected life of each applicable security.
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.

D. Federal Income Taxes-It is the Trust's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substan-

Notes to Financial Statements (Continued)
December 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------

tially all of its taxable income to its shareholders. Therefore, no provision
for federal income taxes is required.
The Trust 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, 1995, the Trust had an accumulated capital loss carryforward
for tax purposes of $464,732, which will expire on June 30, 2002. Net realized
gains or losses may differ for financial and tax reporting purposes primarily as
a result of post October 31 losses which are not recognized for tax purposes
until the first day of the following fiscal year.

E. Distribution of Income and Gains-The Trust declares and pays monthly
dividends from net investment income to common shareholders. Net realized gains,
if any, are distributed annually to common shareholders. Distributions from net
realized gains for book purposes may include short-term capital gains, which are
included as ordinary income for tax purposes.

2. Investment Advisory Agreement and Other Transactions with Affiliates
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen
American Capital Investment Advisory Corp. (the "Adviser") will provide
investment advice and facilities to the Trust for an annual fee payable monthly
of .60% of the average net assets of the Trust.
Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Trust, of which a trustee of the Trust is an affiliated person.
For the six months ended December 31, 1995, the Trust recognized expenses of
approximately $20,300 representing Van Kampen American Capital Distributors,
Inc.'s or its affiliates' (collectively "VKAC") cost of providing accounting,
legal and certain shareholder services to the Trust.
Certain officers and trustees of the Trust are also officers and directors of
VKAC. The Trust does not compensate its officers or trustees who are officers of
VKAC.
The Trust has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer all
or a portion of their compensation to a later date. The retirement plan covers
those trustees who are not officers of VKAC. The Trust's liability under the
deferred compensation and retirement plans at December 31, 1995, was
approximately $34,300.

Notes to Financial Statements (Continued)
December 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------

3. Capital Transactions
At December 31, 1995 and June 30, 1995, common share paid in surplus aggregated
$258,014,715 and $256,561,256, respectively.
Transactions in common shares were as follows:

<TABLE>
<CAPTION>
Six Months Ended Year Ended
December 31, 1995 June 30, 1995
- ---------------------------------------------------------------------------
<S> <C>
Beginning Shares................................ 27,775,981 27,479,484
Shares Issued Through Dividend Reinvestment..... 140,853 296,497
---------- -------------
Ending Shares................................... 27,916,834 27,775,981
========== =============
</TABLE>

4. Investment Transactions
Aggregate purchases and cost of sales of investment securities, excluding
short-term notes, for the six months ended December 31, 1995, were $83,310,886
and $80,350,087, respectively.

5. Derivative Financial Instruments
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Trust has a variety of reasons to use derivative instruments, such as to
attempt to protect the Trust against possible changes in the market value of its
portfolio and to manage the portfolio's effective yield, maturity and duration.
All of the Trust's portfolio holdings, including derivative instruments, are
marked to market each day with the change in value reflected in the unrealized
appreciation/depreciation on investments. Upon disposition, a realized gain or
loss is recognized accordingly, except for exercised option contracts where the
recognition of gain or loss is postponed until the disposal of the security
underlying the option contract.
Summarized below are the specific types of derivative financial instruments
used by the Trust.

Notes to Financial Statements (Continued)
December 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------

A. Option Contracts-An option contract gives the buyer the right, but not the
obligation to buy (call) or sell (put) an underlying item at a fixed exercise
price during a specified period. These contracts are generally used by the Trust
to manage the portfolio's effective maturity and duration.
Transactions in options for the six months ended December 31, 1995, were as
follows:

<TABLE>
<CAPTION>
Contracts Premium
- --------------------------------------------------------------
<S> <C> <C>
Outstanding at June 30, 1995......... -0- $ -0
Options Written and
Purchased (Net)...................... 1,302 (293,868)
Options Terminated in Closing
Transactions (Net)................... (551) (11,787)
Options Expired (Net)................ (701) 276,345
Options Exercised (Net).............. (50) 29,310
--------- ------------
Outstanding at December 31, 1995..... -0- $ -0-
========= ============
</TABLE>

B. Futures Contracts-A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Trust generally invests in futures on U.S. Treasury Bonds and the Municipal
Bond Index and typically closes the contract prior to the delivery date. These
contracts are generally used by the Trust to manage the portfolio's effective
maturity and duration.
The fluctuation in market value of the contracts is settled daily through a
cash margin account. Realized gains and losses are recognized when the contracts
are closed or expire.
Transactions in futures contracts for the six months ended December 31, 1995,
were as follows:

<TABLE>
<CAPTION>
Contracts
- ------------------------------------------------
<S> <C>
Outstanding at June 30, 1995......... 1,150
Futures Opened....................... 640
Futures Closed....................... (1,540)
---------
Outstanding at December 31, 1995..... 250
=========

</TABLE>

Notes to Financial Statements (Continued)
December 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------

The futures contracts outstanding at December 31, 1995, and the descriptions and
unrealized depreciation are as follows:

<TABLE>
<CAPTION>
Unrealized
Contracts Depreciation
- ----------------------------------------------------------------
<S> <C> <C>
Euro $ Futures
Mar 1996 - Sells to Open............... 125 $ 179,228
Mar 1996 - Sells to Open............... 125 232,352
--------- ------------
250 $ 411,580
========= ============
</TABLE>

C. Swap Transactions-These transactions are identified in the portfolio of
investments and represent an agreement between two parties to exchange a
series of cash flows at specified intervals. The cash flows can be indexed to
various indices such as interest rates. The difference in the cash flows is
recorded as an increase or decrease in interest income.

D. Indexed Securities-These instruments are identified in the portfolio of
investments. The price of these securities may be more volatile than the price
of a comparable fixed rate security.
An Inverse Floating security is one where the coupon is inversely indexed to a
short-term floating interest rate multiplied by a specified factor. As the
floating rate rises, the coupon is reduced. Conversely, as the floating rate
declines, the coupon is increased. These instruments are typically used by the
Trust to enhance the yield of the portfolio.
An Embedded Cap security includes a cap strike level such that the coupon
payment may be supplemented by cap payments if the floating rate index upon
which the cap is based rises above the strike level. The Trust invests in these
instruments as a hedge against a rise in the short term interest rates which it
pays on its preferred shares.

6. Preferred Shares
The Trust has outstanding 330 shares of rate adjusted tax-exempt preferred
shares ("Rates") in three series of 110 shares each. Dividends are cumulative
and the rate on each series is currently reset every 28 days through an auction
process. The average rate in effect on December 31, 1995, was 3.924%. During
the six months ended December 31, 1995, the rates ranged from 3.704% to 4.099%.
The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of Preferred Share Maintenance
expense.
The Rates are redeemable at the option of the Trust in whole or in part at a
price of $500,000 per share plus accumulated and unpaid dividends. The Trust is
subject to certain asset coverage tests, and the Rates are subject to mandatory
redemption if the tests are not met.

Van Kampen American Capital Municipal Income Trust
- --------------------------------------------------------------------------------

Officers and Trustees

Don G. Powell*
Chairman and Trustee

Dennis J. McDonnell*
President and Trustee

David C. Arch
Trustee

Rod Dammeyer
Trustee

Howard J Kerr
Trustee

Theodore A. Myers
Trustee

Hugo F. Sonnenschein
Trustee

Wayne W. Whalen*
Trustee

Peter W. Hegel*
Vice President

Ronald A. Nyberg*
Vice President and Secretary

Edward C. Wood, III*
Vice President and Treasurer

Scott E. Martin*
Assistant Secretary

Weston B. Wetherell*
Assistant Secretary

Nicholas Dalmaso*
Assistant Secretary

John L. Sullivan*
Controller

Steven M. Hill*
Assistant Treasurer

Investment Adviser

Van Kampen American Capital Investment Advisory Corp.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181

Custodian and
Transfer Agent

State Street Bank
and Trust Company
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105

Legal Counsel

Skadden, Arps, Slate, Meagher & Flom
333 West Wacker Drive
Chicago, Illinois 60606

Independent Auditors

KPMG Peat Marwick LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601

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

(SM) denotes a service mark of
Van Kampen American Capital Distributors, Inc.