VAN KAMPEN MERRITT MUNICIPAL TRUST, N-30D, 1995-10-27

VAN KAMPEN MERRITT MUNICIPAL TRUST
N-30D, 1995-10-27

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Table of Contents

<S> <C>
Letter to Shareholders................. 1
Performance Results.................... 3
Portfolio of Investments............... 4
Statement of Assets and Liabilities.... 14
Statement of Operations................ 15
Statement of Changes in Net Assets..... 16
Financial Highlights................... 17
Notes to Financial Statements.......... 18
Independent Auditors' Report........... 24
Dividend Reinvestment Plan............. 25
</TABLE>

Letter to Shareholders

October 12, 1995

Dear Shareholder:
The first eight months of 1995 have been very positive for most investors.
Both the fixed-income and stock markets have made considerable gains for the
period ended August 31, 1995.
This year serves as a reminder of just how quickly markets can move and how
difficult it can be to predict the timing of those movements. Moreover, this
year reinforces the importance of maintaining a long-term perspective and
reaffirms the principle that it is time---not timing---that leads to
investment success.

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

Economic Overview

Due in large part to the Federal Reserve Board's efforts to tighten monetary
supply in 1994, the economy has slowed significantly this year. Evidence of
this guided slowdown was reflected in gross domestic product for the second
quarter, which grew at an annual rate of 1.3 percent, substantially lower than
its first quarter rate of 2.7 percent and fourth quarter 1994 rate of 5.1
percent. While other key economic data, including unemployment rates and
housing starts, have shown mixed signs during recent months, the general trends
for the year continue to support a "soft landing" scenario.
Comfortable with the economy's rate of growth and level of inflation, the Fed
reversed its trend of raising interest rates and lowered short-term rates by
0.25 percent on July 6. Financial markets, perceiving the Fed's monetary
initiatives had taken hold without driving the economy into a recession,
rallied through much of the year. With slowing growth, interest rates declined
and the value of many fixed-income investments rose (bond yields and prices
move in the opposite direction). For example, the yield on 30-year Treasury
securities fell from 7.88 percent at the end of December to 6.66 percent at the
end of August, while its price rose more than 14 percent. Likewise, the yield
on the Bond Buyer's Municipal Bond Index fell from 7.28 percent at the end of
December to 6.30 percent at the end of August. Although municipal bond yields
have declined, they are still offering competitive yields, particularly to
those investors in higher tax brackets.

Performance Summary

The Trust produced a tax-exempt distribution rate of 7.16 percent<F3>, based
on the closing stock price of $14.25 per common share on August 31, 1995. Since
income from the Trust is exempt from federal income tax, it is also important to
compare the Trust's distribution rate to

(Continued on page two)

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 11.19 percent<F4>. Additionally, for the one-
year period ended August 31, 1995, the Trust generated a total return at market
price of 2.39 percent<F1>, which includes reinvestment of dividends and capital
gains.
One element influencing the performance of the municipal market this year has
been the ongoing debate over tax reform. While there has been varied
speculation about the impact of reform, no one is certain about what will
happen. Consequently, the municipal market may continue to experience short-term
market fluctuations as various proposals come to the forefront. We will keep a
close watch over any new developments and evaluate the potential impact they may
have on your investment in the Trust.

Outlook

We believe the Fed will move cautiously before it continues to lower
short-term rates, waiting for further signs that the economy has settled into a
slow growth pattern. We anticipate the economy will grow at an annual rate
between 2 and 3 percent in the second half of the year, and that inflation will
run at an annualized rate between 3.1 and 3.3 percent. Based upon a generally
modest growth and low inflation outlook, we believe fixed-income
markets---including municipal bonds---will continue to make positive gains.

As interest rates continue to fall in response to further easing by the Fed,
we believe yields on short-term municipal bonds will continue to move
significantly lower than long-term municipal bonds. Lower short-term rates
typically translate into lower leveraging costs for the Trust,
which provides increased opportunities for higher earnings over time. We
believe the Trust's portfolio is well positioned to take advantage of a
declining and sustained short-term interest rate environment.
Once again, it is important to remember that financial markets will inevitably
experience highs and lows, but by maintaining a long-term investment
perspective, you may ride the ups and downs of the markets more easily as you
pursue your investment goals.
Thank you for your continued confidence in your investment with Van Kampen
American Capital and for the privilege of working with you in seeking to reach
your financial goals.

Sincerely,

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

<TABLE>
Performance Results for the Period Ended August 31, 1995
Van Kampen Merritt Municipal Trust
(NYSE Ticker Symbol VKQ)
<CAPTION>
<S> <C>
Total Returns

One-year total return based on market price<F1>................................... 2.39%
One-year total return based on NAV<F2>............................................ 8.55%

Distribution Rates

Distribution rate as a % of initial offer common stock price<F3>.................. 6.80%
Taxable-equivalent distribution rate as a % of initial offer common stock
price<F4>......................................................................... 10.63%
Distribution rate as a % of closing common stock price<F3>........................ 7.16%
Taxable-equivalent distribution rate as a % of closing common stock price<F4>..... 11.19%

Share Valuations

Net asset value .................................................................. $ 15.73
Closing common stock price........................................................ $ 14.250
One-year high common stock price (03/01/95)....................................... $ 15.125
One-year low common stock price (11/16/94)........................................ $ 12.125
Preferred share (Series A) rate<F5>............................................... 3.749%
Preferred share (Series B) rate<F5>............................................... 3.760%
Preferred share (Series C) rate<F5>............................................... 3.720%
Preferred share (Series D) rate<F5>............................................... 3.770%

<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
income tax bracket.

<F5>See "Notes to Financial Statements" footnote #5, 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>

<TABLE>
Portfolio of Investments
August 31, 1995
- ---------------------------------------------------------------------------------------------------
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal Bonds
California 9.3%
$ 2,000 California Hlth Fac Fin Auth Rev Kaiser
Permanente Med Cent .................................... 5.450% 10/01/13 $ 1,850,420
2,000 California St Pub Wks Brd Lease Rev Dept of Justice
Bldg Ser A (FSA Insd) .................................. 5.800 05/01/15 1,988,200
1,500 California Statewide Cmntys Ctfs Sutter Hlth Oblig
Group (MBIA Insd) ...................................... 5.500 08/15/22 1,392,810
8,500 Castaic Union Sch Dist Cap Apprec Ser A (FGIC Insd) .... * 05/01/18 2,134,520
5,000 Contra Costa, CA Home Mtg Fin Auth Home Mtg Rev (MBIA
Insd) .................................................. * 09/01/17 1,226,650
7,775 Delano, CA Ctfs Partn Ser A ............................ 9.250 01/01/22 8,861,167
50,000 Foothill/Eastern Tran Corridor Agy CA Toll Road Rev Ser
A ...................................................... * 01/01/26 6,076,500
4,000 Foothill/Eastern Tran Corridor Agy CA Toll Road Rev Ser
A ...................................................... 6.500 01/01/32 3,950,080
4,775 Los Angeles, CA Multi Family Rev Ser G Rfdg (FSA Insd)
........................................................ 5.650 01/01/14 4,585,098
8,000 Metropolitan Wtr Dist Southern CA Wtrwks Rev ........... 5.950 08/05/22 7,790,320
10,000 Orange Cnty, CA Recovery Ser A Rfdg (MBIA Insd) ........ 6.000 06/01/09 10,115,700
5,695 Sacramento, CA City Fin Auth Rev Comb Proj B (MBIA
Insd) .................................................. * 11/01/14 1,791,818
20,000 San Diego, CA Indl Dev Rev San Diego Gas & Elec Ser A
(Embedded Cap) (MBIA Insd) ............................. 6.210 09/01/18 20,060,000
13,000 Southern CA Pub Pwr Auth Pwr Proj Rev Ser A Palo Verdo
Proj Rfdg (AMBAC Insd) ................................. * 07/01/14 4,173,260
5,835 University CA Rev Multi Purp Proj Ser C Rfdg (AMBAC
Insd) .................................................. 5.000 09/01/14 5,209,138
------------
81,205,681
------------
Colorado 11.1%
9,000 Arapahoe Cnty, CO Cap Impt Trust Fund Hwy
Rev Cap Apprec Sr E-470 Ser C .......................... * 08/31/15 2,104,200
19,500 Arapahoe Cnty, CO Cap Impt Trust Fund Hwy Rev Cap
Apprec Sr E-470 Ser C .................................. * 08/31/26 1,989,585
1,000 Arapahoe Cnty, CO Cap Impt Trust Fund Hwy Rev Sr E-470
Ser B .................................................. 7.000 08/31/26 1,025,760
5,000 Boulder Cnty, CO Rev Natl Cent Atmosphere Rfdg & Impt
........................................................ 6.900 12/01/07 5,505,400
8,500 Boulder Cnty, CO Rev Natl Cent Atmosphere Rfdg & Impt
........................................................ 7.000 12/01/13 9,027,170
2,425 Colorado Hsg Fin Auth Single Family Pgm Sr Gtd Mtg Ln
D3 (FHA Gtd) ........................................... 7.200 08/01/23 2,527,044
10,000 Denver, CO City & Cnty Arpt Rev Ser A .................. 8.250 11/15/12 11,186,500
</TABLE>

4 See Notes to Financial Statements

Georgia 1.1%
5,438 Cobb Cnty, GA Dev Auth Rev Grantor Tr Ctfs Franklin
Forest Ser A .......................................... 8.000 06/01/22 5,546,250
4,000 Muni Elec Auth GA Proj One Subser A (AMBAC Insd) ...... 6.250 01/01/14 4,088,120
-------------
9,634,370
-------------

Hawaii 1.6%
13,000 Hawaii St Arpt Sys Rev Ser 2 .......................... 7.000 07/01/18 13,652,470
-------------

Illinois 12.5%
5,000 Bedford Park, IL Tax Increment Rev Sr Lien
Bedford City Sq Proj .................................. 9.250 02/01/12 5,510,150
2,500 Chicago, IL O'Hare Intl Arpt Spl Fac Rev American
Airls Inc Proj Rfdg ................................... 8.200 12/01/24 2,858,850
8,000 Chicago, IL O'Hare Intl Arpt Spl Fac Rev Intl Terminal
(MBIA Insd) ........................................... 6.750 01/01/18 8,282,080
7,475 Chicago, IL O'Hare Intl Arpt Spl Fac Rev United Airls
Inc ................................................... 8.400 05/01/04 8,180,266
10,600 Chicago, IL O'Hare Intl Arpt Spl Fac Rev United Airls
Inc ................................................... 8.500 05/01/18 11,592,902
</TABLE>

5 See Notes to Financial Statements

<TABLE>
Portfolio of Investments (Continued)
August 31, 1995
- -------------------------------------------------------------------------------------------------------
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Illinois (Continued)
$ 4,635 Chicago, IL O'Hare Intl Arpt Spl Fac Rev United Airls Inc
Ser A ..................................................... 8.400% 05/01/18 $ 5,047,376
4,670 Chicago, IL O'Hare Intl Arpt Spl Fac Rev United Airls Inc
Ser B ..................................................... 8.950 05/01/18 5,282,938
1,200 Hodgkins, IL Tax Increment ................................ 9.500 12/01/09 1,354,128
3,600 Hodgkins, IL Tax Increment (Prerefunded @ 12/01/01)........ 9.500 12/01/09 4,547,700
4,000 Hodgkins, IL Tax Increment Rev Ser A Rfdg ................. 7.625 12/01/13 4,054,960
2,500 Illinois Hlth Fac Auth Rev Evangelical Hosp Ser C Rfdg
(FSA Insd) ................................................ 6.750 04/15/12 2,650,425
7,750 Illinois Hlth Fac Auth Rev Fairview Oblig Group Proj A..... 9.500 10/01/22 8,378,603
4,850 Illinois Hlth Fac Auth Rev Hinsdale Hosp Ser B Rfdg ....... 9.000 11/15/15 5,560,525
1,500 Illinois Hlth Fac Auth Rev Sarah Bush Lincoln Hlth Cent ... 7.250 05/15/12 1,553,535
10,000 Illinois Hlth Fac Auth Rev Servantcor Ser A (Var Rate Cpn)
(Prerefunded @ 08/15/01) .................................. 8.000 08/15/21 11,871,300
2,000 Illinois Hsg Dev Auth Rev Homeowner Mtg Subser A2 (FHA
Gtd) ...................................................... 7.125 08/01/26 2,106,080
60 Roselle, IL Multi Family Hsg Rev Waterbury Apts
Ser A Rfdg (GNMA Collateralized) .......................... 6.500 01/01/96 60,430
65 Roselle, IL Multi Family Hsg Rev Waterbury Apts Ser A Rfdg
(GNMA Collateralized) ..................................... 6.500 01/01/97 66,472
70 Roselle, IL Multi Family Hsg Rev Waterbury Apts Ser A Rfdg
(GNMA Collateralized) ..................................... 6.500 01/01/98 72,404
75 Roselle, IL Multi Family Hsg Rev Waterbury Apts Ser A Rfdg
(GNMA Collateralized) ..................................... 6.500 01/01/99 78,116
80 Roselle, IL Multi Family Hsg Rev Waterbury Apts Ser A Rfdg
(GNMA Collateralized) ..................................... 6.500 01/01/00 83,571
85 Roselle, IL Multi Family Hsg Rev Waterbury Apts Ser A Rfdg
(GNMA Collateralized) ..................................... 6.500 01/01/01 89,315
90 Roselle, IL Multi Family Hsg Rev Waterbury Apts Ser A Rfdg
(GNMA Collateralized) ..................................... 6.500 01/01/02 94,946
95 Roselle, IL Multi Family Hsg Rev Waterbury Apts Ser A Rfdg
(GNMA Collateralized) ..................................... 6.500 01/01/03 100,543
100 Roselle, IL Multi Family Hsg Rev Waterbury Apts Ser A Rfdg
(GNMA Collateralized) ..................................... 6.500 01/01/04 105,986
105 Roselle, IL Multi Family Hsg Rev Waterbury Apts Ser A Rfdg
(GNMA Collateralized) ..................................... 6.500 01/01/05 111,316
4,260 Roselle, IL Multi Family Hsg Rev Waterbury Apts Ser A Rfdg
(GNMA Collateralized) ..................................... 7.000 01/01/25 4,494,896
2,000 Southern IL Univ Rev Cap Apprec Hsg & Aux Fac Sys A (MBIA
Insd) ..................................................... * 04/01/18 507,020
3,800 Winnebago & Boone Cntys, IL Sch Dist No 205 (Cap Guar
Insd) <F3> ................................................ 7.125 02/01/01 4,268,768
</TABLE>
6 See Notes to Financial Statements

Louisiana 1.9%
825 East Baton Rouge, LA Mtg Fin Auth Single Family Mtg
Purchase Ser A Rfdg (GNMA Collateralized) ........... 7.100 10/01/24 870,977
8,950 East Baton Rouge, LA Mtg Fin Auth Single Family Mtg
Purchase Ser C Rfdg ................................. 7.000 04/01/32 9,341,742
5,000 New Orleans, LA Rfdg (AMBAC Insd) ................... * 09/01/11 1,978,200
4,700 New Orleans, LA Rfdg (AMBAC Insd) ................... * 09/01/12 1,743,277
2,000 New Orleans, LA Rfdg (AMBAC Insd) ................... * 09/01/16 570,880
8,000 Orleans Parish, LA Sch Brd Rfdg (FGIC Insd) ......... * 02/01/15 2,421,680
-------------
16,926,756
-------------

Maryland 3.0%
2,300 Baltimore, MD (FGIC Insd) ........................... * 10/15/06 1,269,163
3,920 Baltimore, MD (FGIC Insd) ........................... * 10/15/07 2,016,958
139,445 Maryland St Cmnty Dev Admin Dept Hsg & Cmnty Dev
Single Family Rev Pgm 6 ............................. * 04/01/30 11,203,011
6,500 Maryland St Hlth & Higher Edl Fac Auth Rev Northwest
Hosp Cent Proj & Rfdg (AMBAC Insd) .................. 5.250 07/01/13 6,071,195
3,500 Maryland St Hlth & Higher Edl Fac Auth Rev Suburban
Hosp Rfdg (AMBAC Insd) .............................. 5.125 07/01/21 3,125,325
2,735 Northeast, MD Waste Disp Auth Solid Waste Rev
Montgomery Cnty Res Recovery Proj Ser A ............. 6.200 07/01/10 2,778,951
-------------
26,464,603
-------------
</TABLE>
7 See Notes to Financial Statements

<TABLE>
Portfolio of Investments (Continued)
August 31, 1995
- ------------------------------------------------------------------------------------------------
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Massachusetts 0.9%
$ 1,000 Billerica, MA Indl Rev Cabot Corp ................ 7.750% 09/01/14 $ 1,005,560
2,600 Massachusetts St Hlth & Edl Fac Auth Rev Med Cent
of Central MA .................................... 7.100 07/01/21 2,764,684
3,000 Massachusetts St Hlth & Edl Fac Auth Rev New
England Med Cent Hosp Ser G
(MBIA Insd) <F4>............................. 3.100/5.000 07/01/13 2,445,330
1,375 Massachusetts St Hlth & Edl Fac Auth Rev
Winchester Hosp Ser D Rfdg (Connie Lee Insd) .... 5.750 07/01/14 1,331,866
------------
7,547,440
------------
Michigan 0.7%
2,000 Michigan Muni Bond Auth Rev Loc Govt Ln
Ser C-A (FSA Insd) ............................... * 06/15/13 703,560
5,000 Portage Lake, MI Wtr & Swr Auth Ser II
(Prerefunded @ 10/01/02) ......................... 7.625 10/01/20 5,341,650
------------
6,045,210
------------
Minnesota 0.1%
6,000 Southern MN Muni Pwr Agy Pwr Supply Sys Rev
Ser A (MBIA Insd) ................................ * 01/01/24 1,096,320
------------
Mississippi 0.1%
1,000 Claiborne Cnty, MS Pollutn Ctl Rev Sys Energy Res
Inc Rfdg ......................................... 7.300 05/01/25 1,030,080
------------
Missouri 1.0%
1,740 Good Shepherd Nursing Home Dist MO
Nursing Home Fac Rev ............................. 7.625 08/15/15 1,755,503
2,730 Good Shepherd Nursing Home Dist MO Nursing Home
Fac Rev .......................................... 7.750 08/15/25 2,746,735
3,750 Hannibal, MO Indl Dev Auth Hlth Fac Rev Hannibal
Regl Hlthcare Sys Inc ............................ 9.500 03/01/22 4,509,525
------------
9,011,763
------------
Montana 0.8%
3,000 Montana St Brd Invt Res Recovery Rev Yellowstone
Energy L P Proj .................................. 7.000 12/31/19 2,891,220
3,900 Montana St Coal Severance Tax Broadwater Pwr Proj
Ser A Rfdg ....................................... 6.875 12/01/17 4,097,964
------------
6,989,184
------------
Nevada 0.5%
1,925 Clark Cnty, NV Passenger Fac Las Vegas Macarran
Intl Arpt (MBIA Insd) ............................ 5.750 07/01/23 1,825,246
1,000 Henderson, NV Loc Impt Dist No T-4 Ser A ......... 8.500 11/01/12 1,058,600
1,750 Nevada St Rfdg ................................... 4.375 08/01/03 1,684,673
------------
4,568,519
------------
</TABLE>
8 See Notes to Financial Statements

<TABLE>
Portfolio of Investments (Continued)
August 31, 1995
- ------------------------------------------------------------------------------------------------
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New Jersey 4.3%
$ 1,515 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd) ......................................... *% 03/01/99 $ 1,307,627
1,000 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg (FGIC
Insd) ............................................... * 03/01/00 820,680
1,000 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg (FGIC
Insd) ............................................... * 03/01/02 743,600
1,000 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg (FGIC
Insd) ............................................... * 03/01/03 706,310
1,000 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg (FGIC
Insd) ............................................... * 03/01/04 669,300
1,460 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd) ......................................... * 03/01/05 923,902
1,465 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg (FGIC
Insd) ............................................... * 03/01/06 872,232
1,615 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg (FGIC
Insd) ............................................... * 03/01/07 901,961
1,555 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg (FGIC
Insd) ............................................... * 03/01/08 812,581
25,000 New Jersey Econ Dev Auth St Contract Econ
Recovery (Embedded Cap) ............................. 5.970 03/15/21 24,731,000
5,000 Union Cnty, NJ Util Auth Solid Waste Rev Ser A ...... 7.150 06/15/09 5,167,000
------------
37,656,193
------------
New Mexico 0.2%
1,220 Santa Fe, NM Single Family Mtg Rev Rfdg ............. 8.450 12/01/11 1,330,659
------------
New York 16.3%
4,000 Herkimer Cnty, NY Indl Dev Agy Indl Dev Rev
Burrows Paper Corp Recycling ........................ 8.000 01/01/09 4,259,840
5,550 Metropolitan Tran Auth NY Svcs Contract Commuter Fac
Ser N Rfdg .......................................... 6.000 07/01/11 5,515,812
4,000 Metropolitan Tran Auth NY Svcs Contract Tran Fac .... 7.000 07/01/09 4,279,240
1,900 Metropolitan Tran Auth NY Svcs Contract Tran Fac Ser
N Rfdg .............................................. 6.000 07/01/11 1,888,296
6,000 New York City Hlth & Hosp Corp Rev Ser A Rfdg (AMBAC
Insd) ............................................... 5.750 02/15/22 5,848,620
4,000 New York City Muni Wtr Fin Auth Wtr & Swr Sys Rev
Ser A ............................................... 6.000 06/15/25 3,896,720
1,500 New York City Ser A ................................. 7.750 08/15/12 1,651,125
19,000 New York City Ser A Rfdg ............................ 6.000 08/01/05 19,083,220
7,000 New York City Ser B ................................. 7.500 02/01/05 7,789,880
6,000 New York City Ser B ................................. 5.600 08/15/07 5,806,980
1,500 New York City Ser C ................................. 7.100 08/15/10 1,553,115
2,585 New York City Ser F ................................. 8.250 11/15/02 2,984,770
</TABLE>
9 See Notes to Financial Statements

<TABLE>
Portfolio of Investments (Continued)
August 31, 1995
- ---------------------------------------------------------------------------------------------------
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York (Continued)
$ 6,000 New York St Dorm Auth Rev Court Fac Lease Ser A ....... 5.250% 05/15/21 $ 5,222,940
3,000 New York St Energy Resh & Dev Auth St Svc Contract Rev
Westn NY Nuclear Svc Cent Proj ........................ 5.400 04/01/98 3,065,010
7,375 New York St Environmental Fac Corp Pollutn Ctl Rev St
Wtr Revolving Fund Ser E .............................. 6.700 06/15/10 7,977,906
4,000 New York St Loc Govt Assistance Corp Ser C ............ 5.500 04/01/22 3,725,640
10,735 New York St Med Care Fac Fin Agy Rev Mental Hlth Svcs
Fac Impt Ser D ........................................ 7.400 02/15/18 11,621,711
3,075 New York St Med Care Fac Fin Agy Rev Mental Hlth Svcs
Ser A (FSA Insd) ...................................... 5.250 08/15/23 2,779,493
5,000 New York St Pwr Auth Rev & Genl Purp Ser CC Rfdg (FGIC
Insd) ................................................. 5.125 01/01/10 4,829,750
1,000 New York St Urban Dev Corp Rev Correctional Cap Fac
Ser 5 (MBIA Insd) ..................................... 5.500 01/01/25 944,430
10,000 New York St Urban Dev Corp Rev Correctional Cap Fac
Ser A Rfdg ............................................ 5.500 01/01/08 9,737,400
4,110 New York St Urban Dev Corp Rev Correctional Fac
Ser A Rfdg ............................................ 5.400 01/01/06 3,943,093
19,000 New York St Urban Dev Corp Rev St Fac ................. 7.500 04/01/11 20,644,640
3,000 Onondaga Cnty, NY Indl Dev Agy Swr Fac Rev Bristol -
Meyers Squibb Co Proj ................................. 5.750 03/01/24 2,942,310
-------------
141,991,941
-------------
North Carolina 2.6%
10,000 North Carolina Eastn Muni Pwr Agy Pwr Sys Rev
Ser B Rfdg (Embedded Cap) ............................. 6.070 01/01/14 9,491,900
13,300 North Carolina Muni Pwr Agy No 1 Catawba Elec
Rev (Embedded Cap) .................................... 6.000 01/01/12 12,925,871
-------------
22,417,771
-------------
North Dakota 0.4%
3,460 Ward Cnty, ND Hlthcare Fac Rev Saint Josephs
Hosp Corp Proj Ser A .................................. 7.500 11/01/15 3,480,379
-------------
Ohio 1.0%
2,220 Columbus, OH Ser C Rfdg ............................... 5.250 09/15/11 2,152,090
5,375 Franklin Cnty, OH Hosp Rev Holy Cross Hlth Sys Ser B
Rfdg (MBIA Insd) ...................................... 5.250 06/01/10 5,156,076
250 Marion Cnty, OH Indl Dev Rev Kmart Corp Proj Rfdg ..... 6.375 02/01/02 258,000
1,000 Ohio St Air Quality Dev Auth Rev JMG Funding Ltd
Partnership Proj Rfdg (AMBAC Insd) .................... 6.375 04/01/29 1,034,060
195 Portage Cnty, OH Indl Dev Rev Kmart Corp Proj Rfdg .... 6.350 12/01/00 201,193
250 Washington Cnty, OH Indl Dev Rev Kmart Corp Proj Rfdg.. 6.400 03/15/03 255,073
-------------
9,056,492
-------------
</TABLE>
10 See Notes to Financial Statements

<TABLE>
Portfolio of Investments (Continued)
August 31, 1995
- ---------------------------------------------------------------------------------------------------
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Oklahoma 1.9%
$ 4,425 Cleveland Cnty, OK Home Ln Auth Single Family
Mtg Rev Rfdg ............................................ 8.000% 08/01/12 $ 4,802,408
1,240 Kay Cnty, OK Home Fin Auth Rev Single Family Mtg Ser A
Rfdg (AMBAC Insd) ....................................... 7.000 11/01/11 1,327,073
9,495 Oklahoma Hsg Fin Agy Single Family Rev Mtg Class B (GNMA
Collateralized) ......................................... 7.997 08/01/18 10,040,963
------------
16,170,444
------------
Pennsylvania 3.4%
3,250 Butler Cnty, PA Hosp Auth Hosp Rev Butler Mem Hosp
Ser A (FSA Insd) ........................................ 5.250 07/01/12 3,032,770
10,000 Geisinger Auth PA Hlth Sys Muni Cap Ser A (Embedded Cap). 6.060 07/01/22 10,099,700
16,000 Philadelphia, PA Wtr & Wastewtr Rev Reg Fixed Airs (FGIC
Insd) ................................................... 5.650 06/15/12 15,509,760
1,000 Ridley Park, PA Hosp Auth Rev Hosp Auth Rev Ser 1993 A... 6.000 12/01/13 883,650
------------
29,525,880
------------
Rhode Island 1.6%
2,450 Providence, RI Redev Agy Ctfs Partn Ser A ............... 8.000 09/01/24 2,585,754
3,470 Rhode Island Hsg & Mtg Fin Corp Homeownership Oppty Ser
3B ...................................................... 8.050 04/01/22 3,722,998
4,750 Rhode Island Hsg & Mtg Fin Corp Ser 8 (Inverse Fltg) .... 9.911 04/01/24 5,046,875
2,000 Rhode Island St Hlth & Edl Bldg Corp Rev Higher Edl Fac
Roger Williams (Connie Lee Insd) ........................ 7.250 11/15/24 2,227,980
------------
13,583,607
------------
Tennessee 0.7%
1,010 Campbell Cnty, TN Indl Dev Brd Indl Dev Rev
Kmart Corp Rfdg ......................................... 6.400 04/15/08 1,039,452
4,273 Shelby Cnty, TN Hlth Edl & Hsg Fac Brd Rev Multi Family
Mtg Rock Creek Plaza Rfdg ............................... 7.375 01/20/27 4,641,601
------------
5,681,053
------------
Texas 8.8%
10,000 Austin, TX Arpt Sys Rev Prior Lien Ser A
(MBIA Insd) <F2> ........................................ 6.125 11/15/25 9,992,000
6,155 Brazos Cnty, TX Hlth Fac Dev Corp Franciscan Svcs Rev
Saint Joseph Hosp & Hlth Cent Ser B Rfdg ................ 6.000 01/01/19 5,858,083
6,000 Brazos River Auth TX Pollutn Ctl Rev Coll TX Util Elec
Co Proj A (AMBAC Insd) .................................. 6.750 04/01/22 6,298,020
1,750 Brazos River Auth TX Rev Coll Houston Lt & Pwr Co Proj B
Rfdg .................................................... 8.250 05/01/15 1,936,602
1,000 Brazos, TX Higher Edl Auth Inc Student Ln Rev Subser C2
Rfdg .................................................... 7.100 11/01/04 1,103,280
5,000 Coastal Bend Hlth Fac Dev (AMBAC Insd) .................. 5.929 11/15/13 4,971,450
</TABLE>
11 See Notes to Financial Statements

<TABLE>
Portfolio of Investments (Continued)
August 31, 1995
- ---------------------------------------------------------------------------------------------------
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Texas (Continued)
$ 15,000 Dallas-Fort Worth, TX Intl Arpt Fac Impt Corp Rev
American Airls Inc .................................... 7.500% 11/01/25 $ 15,767,700
3,600 Dallas-Fort Worth, TX Intl Arpt Fac Impt Corp Rev
Delta Airls Inc ....................................... 7.625 11/01/21 3,820,284
3,245 Fort Worth, TX Hsg Fin Corp Home Mtg Rev Ser A Rfdg ... 8.500 10/01/11 3,580,598
1,973 Texas Genl Svcs Cmnty Partn Int ....................... 7.250 08/15/11 1,973,132
21,550 Texas St Pub Ppty Fin Corp Rev Mental Hlth &
Retardation Rfdg (Cap Guar Insd) ...................... 5.250 09/01/08 21,112,966
-------------
76,414,115
-------------
Utah 1.1%
4,030 Bountiful, UT Hosp Rev South Davis Cmnty Hosp Proj .... 9.500 12/15/18 4,319,193
3,000 Salt Lake City, UT Hosp Rev IHC Hosp Inc Rfdg
(Embedded Cap) ........................................ 5.500 02/15/17 2,760,060
2,130 Utah St Hsg Fin Agy Single Family Mtg Insd Ser E2 (FHA
Gtd) .................................................. 7.150 07/01/24 2,223,294
-------------
9,302,547
-------------
Virginia 1.5%
4,970 Hanover Cnty, VA Indl Dev Auth Hosp Rev Mem
Regional Med Cent Proj (MBIA Insd) .................... 5.500 08/15/25 4,645,707
1,500 Henrico Cnty, VA Indl Dev Auth Pub Fac Lease Rev
Henrico Cnty Regl Jail Proj ........................... 6.500 08/01/10 1,591,995
1,500 Henrico Cnty, VA Indl Dev Auth Pub Fac Lease Rev
Henrico Cnty Regl Jail Proj ........................... 7.125 08/01/21 1,649,640
5,000 Roanoke, VA Indl Dev Auth Hosp Rev Roanoke Mem Hosp
Carilion Hlth Sys Ser B Rfdg (MBIA Insd) .............. 4.700 07/01/20 4,710,100
1,050 Virginia St Hsg Dev Auth Comwlth Mtg Ser A Subser A1
(FHA Gtd) ............................................. * 07/01/29 78,299
-------------
12,675,741
-------------
Washington 0.1%
5,000 Bellevue, WA Convention Cent Auth Spl Oblig
Rev Rfdg (MBIA Insd) .................................. * 02/01/24 857,950
-------------
West Virginia 0.8%
6,550 Harrison Cnty, WV Cnty Cmnty Solid Waste Disp
Rev Potomac Edison Co Ser A ........................... 6.875 04/15/22 6,841,213
-------------
Wisconsin 1.8%
2,200 Janesville, WI Indl Dev Rev Simmons Mfg Co ............ 7.000 10/15/17 2,316,314
1,000 Madison, WI Indl Dev Rev Madison Gas & Elec Co
Proj Ser A ............................................ 6.750 04/01/27 1,047,620
</TABLE>
12 See Notes to Financial Statements

Short-Term Investments at Amortized Cost 0.6%....................................... 5,020,000

Liabilities in Excess of Other Assets (0.8%)........................................ (6,444,425)
------------
Net Assets 100%.....................................................................$ 870,677,191
============

*Zero coupon bond

<FN>
<F1> At August 31, 1995, cost for federal income tax purposes is $833,231,685;
the aggregate gross unrealized appreciation is $42,974,296 and the
aggregate gross unrealized depreciation is $4,298,805, resulting in net
unrealized appreciation including open option and futures transactions of
$38,675,491.

<F2> Securities purchased on a when issued or delayed delivery basis.

<F3> Assets segregated as collateral for when issued or delayed delivery
purchase commitments and open option and futures transactions.

<F4> Security is a "Step-up" bond where the coupon increases or steps up at a
predetermined date.
</TABLE>

The following table summarizes the portfolio composition at August 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........... 33.4%
AA............ 9.1
A............. 18.8
BBB........... 18.0
BB............ 10.3
Non-Rated..... 10.4
-------
100.0%
=======
</TABLE>
13 See Notes to Financial Statements

<TABLE>
<CAPTION>
Statement of Assets and Liabilities
August 31, 1995
- -----------------------------------------------------------------------------------------------
<S> <C>
Assets:
Investments, at Market Value (Cost $833,231,685) (Note 1)..................... $ 872,101,616
Short-Term Investments (Note 1)............................................... 5,020,000
Receivables:
Interest.................................................................... 13,595,953
Investments Sold............................................................ 15,000
Margin on Futures (Note 4).................................................. 7,813
Options at Market Value (Net premiums paid of $58,620) (Note 4)............... 116,407
Unamortized Organizational Expenses (Note 1).................................. 10,724
---------------
Total Assets................................................................ 890,867,513
---------------
Liabilities:
Payables:
Investments Purchased....................................................... 13,585,953
Custodian Bank.............................................................. 4,872,815
Income Distributions - Common and Preferred Shares.......................... 596,960
Investment Advisory Fee (Note 2)............................................ 511,578
Administrative Fee (Note 2)................................................. 146,165
Accrued Expenses.............................................................. 476,851
---------------
Total Liabilities........................................................... 20,190,322
---------------
Net Assets.................................................................... $ 870,677,191
===============
Net Assets Consist of:
Preferred Shares ($.01 par value, authorized 100,000,000 shares, 6,000 issued
with liquidation preference of $50,000 per share) (Note 5).................... $ 300,000,000
---------------
Common Shares ($.01 par value with an unlimited number of shares
authorized,36,270,469 shares issued and outstanding).......................... 362,705
Paid in Surplus............................................................... 536,860,572
Net Unrealized Appreciation on Investments.................................... 38,675,491
Accumulated Undistributed Net Investment Income............................... 2,585,705
Accumulated Net Realized Loss on Investments.................................. (7,807,282)
---------------
Net Assets Applicable to Common Shares...................................... 570,677,191
---------------
Net Assets.................................................................... $ 870,677,191
===============
Net Asset Value Per Common Share ($570,677,191 divided by 36,270,469 shares
outstanding).................................................................. $ 15.73
===============
</TABLE>
14 See Notes to Financial Statements

<TABLE>
<CAPTION>
Statement of Operations
For the Year Ended August 31, 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest.................................................................................. $ 56,675,057
----------------
Expenses:
Investment Advisory Fee (Note 2).......................................................... 5,956,023
Administrative Fee (Note 2)............................................................... 1,701,721
Preferred Share Maintenance (Note 5)...................................................... 795,515
Legal (Note 2)............................................................................ 92,925
Trustees Fees and Expenses (Note 2)....................................................... 24,967
Amortization of Organizational Expenses (Note 1).......................................... 9,990
Other..................................................................................... 541,748
----------------
Total Expenses.......................................................................... 9,122,889
----------------
Net Investment Income..................................................................... $ 47,552,168
================
Realized and Unrealized Gain/Loss on Investments:
Realized Gain/Loss on Investments:
Proceeds from Sales..................................................................... $ 396,579,677
Cost of Securities Sold................................................................. (403,493,648)
----------------
Net Realized Loss on Investments (Including realized loss on closed and expired option
and futures transactions of $1,335,557 and $7,935,059, respectively)...................... (6,913,971)
----------------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period................................................................. 22,127,253
End of the Period (Including unrealized appreciation on open option transactions of
$57,787 and unrealized depreciation on open futures transactions of $252,227)........... 38,675,491
----------------
Net Unrealized Appreciation on Investments During the Period.............................. 16,548,238
----------------
Net Realized and Unrealized Gain on Investments........................................... $ 9,634,267
================
Net Increase in Net Assets from Operations................................................ $ 57,186,435
================
</TABLE>
15 See Notes to Financial Statements

<TABLE>
Statement of Changes in Net Assets
For the Years Ended August 31, 1995 and 1994
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Year Ended Year Ended
August 31, 1995 August 31, 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
From Investment Activities:
Operations:
Net Investment Income.............................................. $ 47,552,168 $ 48,873,784
Net Realized Gain/Loss on Investments.............................. (6,913,971) 2,250,416
Net Unrealized Appreciation/Depreciation on Investments During the
Period............................................................. 16,548,238 (53,912,962)
--------------- ---------------
Change in Net Assets from Operations .............................. 57,186,435 (2,788,762)
--------------- ---------------
Distributions from Net Investment Income:
Common Shares.................................................... (39,316,420) (40,477,323)
Preferred Shares................................................. (11,636,297) (10,171,759)
--------------- ---------------
Total Distributions................................................ (50,952,717) (50,649,082)
--------------- ---------------
Net Change in Net Assets from Investment Activities................ 6,233,718 (53,437,844)
Net Assets:
Beginning of the Period............................................ 864,443,473 917,881,317
--------------- ---------------
End of the Period (Including undistributed net investment income
of $2,585,705 and $5,986,254, respectively)........................ $ 870,677,191 $ 864,443,473
=============== ===============
</TABLE>
16 See Notes to Financial Statements

<TABLE>
Financial Highlights
The following schedule presents financial highlights for one common share
of the Trust outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
September 27, 1991
(Commencement
Year Ended August 31 of Investment
------------------------------------ Operations) to
1995 1994 1993 August 31, 1992
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period <F1>........... $ 15.562 $ 17.035 $ 16.328 $ 14.808
---------- ----------- ---------- --------------
Net Investment Income.................. 1.311 1.347 1.410 1.166
Net Realized and Unrealized Gain/Loss
on Investments......................... .266 (1.424) .780 1.370
---------- ----------- ---------- --------------
Total from Investment Operations....... 1.577 (.077) 2.190 2.536
---------- ----------- ---------- --------------
Less:
Distributions from Net
Investment Income:
Paid to Common Shareholders............ 1.084 1.116 1.100 .811
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders........................... .321 .280 .246 .205
Distributions from Net Realized Gain
on Investments:
Paid to Common Shareholders............ -0- -0- .111 -0-
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders........................... -0- -0- .026 -0-
---------- ----------- ---------- --------------
Total Distributions.................... 1.405 1.396 1.483 1.016
---------- ----------- ---------- --------------
Net Asset Value, End of the Period..... $ 15.734 $ 15.562 $ 17.035 $ 16.328
========== =========== ========== ==============
Market Price Per Share
at End of the Period................... $ 14.250 $ 15.000 $ 16.750 $ 16.125
Total Investment Return at Market
Price (Non-Annualized) <F2>............ 2.39% (3.94%) 11.90% 13.24%
Total Return at Net Asset Value
(Non-Annualized) <F3>.................. 8.55% (2.22%) 12.31% 14.64%
Net Assets at End of the Period
(In millions).......................... $ 870.7 $ 864.4 $ 917.9 $ 891.7
Ratio of Expenses to Average Net
Assets Applicable to Common Shares
(Annualized)........................... 1.65% 1.64% 1.59% 1.49%
Ratio of Expenses to Average Net
Assets (Annualized).................... 1.07% 1.09% 1.06% 1.03%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares (Annualized) <F4>........ 6.48% 6.52% 7.08% 6.85%
Portfolio Turnover..................... 48.51% 46.85% 48.45% 99.51%

<FN>

<F1> Net asset value at September 27, 1991, is adjusted for common and
preferred share offering costs of $.192 per common 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.
</TABLE>
17 See Notes to Financial Statements

Notes to Financial Statements
August 31, 1995
- --------------------------------------------------------------------------------

1. Significant Accounting Policies

Van Kampen Merritt Municipal Trust (the "Trust") is registered as a diversified
closed-end management investment company under the Investment Company Act of
1940, as amended. The Trust commenced investment operations on September 27,
1991.
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.

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

D. Organizational Expenses - The Trust has reimbursed Van Kampen American
Capital Distributors, Inc. or its affiliates (collectively "VKAC") for costs
incurred in connection with the Trust's organization and initial registration
in the amount of $50,000. These costs are being amortized on a straight line
basis over the 60 month period ending September 26, 1996. Van Kampen American
Capital Investment Advisory Corp. (the "Adviser") has agreed that in the event
any of the initial shares of the Trust originally purchased by VKAC are
redeemed during the amortization period, the Trust will be reimbursed for any
unamortized organizational expenses in the same proportion as the number of
shares redeemed bears to the number of initial shares held at the time of
redemption.

Notes to Financial Statements (Continued)
August 31, 1995
- --------------------------------------------------------------------------------

E. 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 substantially 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 August 31, 1995, the Trust had an accumulated capital loss
carry forward for tax purposes of $1,408,871. Of this amount, $893,311 and
$515,560 will expire on August 31, 2001 and 2003, respectively.
Net realized gains or losses may differ for financial and tax reporting
purposes primarily as a result of post October 31 losses which may not be
recognized for tax purposes until the first day of the following fiscal year.

F. 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 on a pro rata basis to common and preferred
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, the Adviser will
provide investment advice and facilities to the Trust for an annual fee payable
monthly of .70% of the average net assets of the Trust. In addition, the Trust
will pay a monthly administrative fee to VKAC, the Trust's Administrator, at an
annual rate of .20% of the average net assets of the Trust. The administrative
services provided by the Administrator include record keeping and reporting
responsibilities with respect to the Trust's portfolio and preferred shares and
providing certain services to shareholders.
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 year ended August 31, 1995, the Trust recognized expenses of
approximately $45,900 representing VKAC's cost of providing accounting and legal
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.

Notes to Financial Statements (Continued)
August 31, 1995
- --------------------------------------------------------------------------------

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 August 31, 1995, was approximately
$22,000.
At August 31, 1995, VKAC owned 6,700 common shares of the Trust.

3. Investment Transactions

Aggregate purchases and cost of sales of investment securities, excluding
short-term notes, for the year ended August 31, 1995, were $437,169,790 and
$403,493,648, respectively.

4. 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.

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 year ended August 31, 1995, were as follows:

<TABLE>
<CAPTION>
Contracts Premium
- ---------------------------------------------------------------------------
<S> <C> <C>

Outstanding at August 31, 1994 1,600 $ (883,247)
Options Written and Purchased (Net) 13,824 (3,342,660)
Options Terminated in Closing Transactions (Net) (6,176) 1,925,830
Options Expired (Net) (8,098) 2,308,441
Options Exercised (Net) (1,050) (66,984)
--------- --------------
Outstanding at August 31, 1995 100 $ (58,620)
========= ==============
</TABLE>

Notes to Financial Statements (Continued)
August 31, 1995
- --------------------------------------------------------------------------------

The related futures contracts of the outstanding option transactions as of
August 31, 1995, and the descriptions and market values are as follows:

<TABLE>
<CAPTION>
Exp. Month/ Market Value
Contracts Exercise Price of Option
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Oct 1995 US Treasury Bond Futures
Purchased Puts 50 Oct/108 $ 4,688
Purchased Calls 50 Oct/111 111,719
--------- ------------
100 $ 116,407
========= ============
</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 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 year ended August 31, 1995, were as
follows:

<TABLE>
<CAPTION>
Contracts
- ----------------------------------------------
<S> <C>
Outstanding at August 31, 1994..... 1,950
Futures Opened..................... 34,724
Futures Closed..................... (35,224)
---------
Outstanding at August 31, 1995..... 1,450
=========
</TABLE>

Notes to Financial Statements (Continued)
August 31, 1995
- --------------------------------------------------------------------------------

The futures contracts outstanding as of August 31, 1995, and the descriptions
and unrealized appreciation/depreciation are as follows:

<TABLE>
<CAPTION>
Unrealized
Appreciation/
Contracts Depreciation
- --------------------------------------------------------------------------------
<S> <C> <C>
US Treasury Bond Futures
Sept 1995-Buys to Open................................ 200 $ 460,886
5-Year US Treasury Note Futures
Sept 1995-Sells to Open............................... 400 (303,228)
Municipal Bond Index Futures
Sept 1995-Sells to Open............................... 150 (57,461)
Euro Dollar Note
Dec 1995-Sells to Open................................ 200 20,736
Euro Dollar Note
Mar 1996-Sells to Open................................ 500 (373,160)
--- ----------
1,450 $(252,227)
===== ==========
</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
increases or decreases 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.

Notes to Financial Statements (Continued)
August 31, 1995
- --------------------------------------------------------------------------------

5. Preferred Shares

The Trust has outstanding 6,000 Auction Preferred Shares ("APS") in four series
of 1,500 shares each. Dividends are cumulative and the dividend rate is
periodically reset through an auction process. The dividend periods for Series A
and Series C are 7 days, while Series B and Series D are 28 days. The average
rate in effect on August 31, 1995, was 3.75%. During the year ended August 31,
1995, the rates ranged from 3.02% to 5.50%.
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 APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $50,000 per share plus accumulated and unpaid dividends.
The Trust is subject to certain asset coverage tests, and the APS are subject to
mandatory redemption if the tests are not met.

Independent Auditors' Report

The Board of Trustees and Shareholders of
Van Kampen Merritt Municipal Trust:

We have audited the accompanying statement of assets and liabilities of Van
Kampen Merritt Municipal Trust (the "Trust"), including the portfolio of
investments, as of August 31, 1995, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods presented. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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
August 31, 1995, by correspondence with the custodian and brokers. 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 audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Van
Kampen Merritt Municipal Trust as of August 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the periods presented, in conformity with generally accepted accounting
principles.

KPMG Peat Marwick LLP
Chicago, Illinois
October 11, 1995

Dividend Reinvestment Plan

The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
If you decide to participate in the Plan, State Street Bank and Trust Company,
as your Plan Agent, will automatically invest your dividends and capital gains
distributions in Common Shares of the Trust for your account.

How to Participate

If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be
re-registered in your own name which will enable your participation in the Plan.

How the Plan Works

Participants in the Plan will receive the equivalent in Common Shares valued on
the valuation date, generally at the lower of market price or net asset value,
except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, or if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Trust's Common Shares,
resulting in the acquisition of fewer Common Shares than if the dividend or
distribution had been paid in Common Shares issued by the Trust. All
reinvestments are in full and fractional Common Shares and are carried to three
decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
changes sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.

Costs of the Plan

The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for
reinvesting dividends or capital gains distributions, except for certain
brokerage commissions, as described above.

Tax Implications

You will receive tax information annually for your personal records and to help
you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income
tax which may be payable on dividends or distributions.

Right to Withdraw

Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA
02266-8200. If you withdraw, you will receive, without charge, a share
certificate issued in your name for all full Common Shares credited to your
account under the Plan and a cash payment will be made for any fractional Common
Share credited to your account under the Plan. You may again elect to
participate in the Plan at any time by calling 1-800-341-2929 or writing to the
Trust at:
One Parkview Plaza, Oakbrook Terrace, IL 60181
Attn: Closed-End Funds

Funds Distributed by Van Kampen American Capital

GLOBAL AND INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund

EQUITY
Growth
Emerging Growth Fund
Enterprise Fund
Pace Fund
Growth & Income
Balanced Fund
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund

FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income

TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Limited Term Municipal Income Fund
Municipal Income Fund
New Jersey Tax Free Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
Texas Tax Free Income Fund

THE GOVETT FUNDS
Emerging Markets Fund
Global Income Fund
International Equity Fund
Latin America Fund
Pacific Strategy Fund
Smaller Companies Fund

Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us direct at 1-800-421-5666 weekdays
from 7:00 a.m. to 7:00 p.m. Central time.

Van Kampen Merritt Municipal 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.