VAN KAMPEN AMERICAN CAPITAL MUNICIPAL TRUST, N-30D, 1996-04-29

VAN KAMPEN AMERICAN CAPITAL MUNICIPAL TRUST
N-30D, 1996-04-29

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<PAGE> 1

TABLE OF CONTENTS

<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 4
Portfolio of Investments......................... 5
Statement of Assets and Liabilities.............. 15
Statement of Operations.......................... 16
Statement of Changes in Net Assets............... 17
Financial Highlights............................. 18
Notes to Financial Statements.................... 19
</TABLE>

VKQ SAR 4/96
<PAGE> 2

LETTER TO SHAREHOLDERS

April 15, 1996

Dear Shareholder,
We are pleased to report that the
Van Kampen American Capital Municipal
Trust (formerly Van Kampen Merritt
Municipal Trust) continued its strong
performance over the first half of its
fiscal year, having achieved a total [PHOTO DENNIS J. MCDONNELL
return at market price of 8.09 AND DON G. POWELL]
percent(1) for the six months ended
February 29, 1996.
Additionally, the Trust offered a
tax-exempt distribution rate of 6.86
percent(3), based on the closing common
stock price of $14.875 per share on February 29, 1996. Because income from the
Trust is exempt from federal income tax, this distribution rate represents a
yield equivalent to a taxable investment earning 10.72 percent(4) (for investors
in the 36 percent federal income tax bracket).

CUMULATIVE TOTAL RETURN

While the six-month results are attractive for investors, the return for
each period will vary according to changing market conditions. It is important,
therefore, to look at the Trust's cumulative results to see the full benefit of
its long-term investment approach.
Since beginning operations on September 27, 1991, the Trust's cumulative
total return at net asset value was 47.18 percent. The Trust's performance
demonstrates the value of experienced portfolio management, as well as the
importance of reinvesting distributions. Together, these factors reinforce our
confidence in the long-term approach we utilize in managing the Trust.

EXTENSIVE EXPERIENCE IN MUNICIPAL BONDS

This year, we will celebrate 22 years of experience in investing in
municipal bonds. Thanks to our long-term investment record, Van Kampen American
Capital Investment Advisory Corp. today manages over $12 billion in municipal
bonds. We attribute much of our success to skillful, in-depth credit analysis of
the securities in which we invest, conducted by one of the largest municipal
research departments in the industry. Over the years, careful attention to the
Trust's overall credit composition (refer to the pie chart on page 2), average
bond maturity, duration and coupon structure also have benefited the Trust's
performance.

Continued on page two

1
<PAGE> 3

MUNICIPAL MARKET OVER THE PAST SIX MONTHS

The slowdown in the economy continued through the end of 1995, reflected by
weak consumer demand and disappointing retail sales during the holiday season.
Severe winter weather in many parts of the country further dampened retail
activity and hindered distribution and manufacturing.
These conditions helped to keep inflation in check, prompting the
Federal Reserve Board to continue easing short-term interest rates. In turn,
long-term interest rates declined, causing the price of bonds to increase.
Municipal bond yields declined in concert with other interest rates, with the
yield on the Bond Buyer's 40 Municipal Bond Index dropping by 40 basis points
to 5.71 percent. At the same time, the Index increased by 3.5 percent to 118.72.
The beginning of 1996 was marked by an increase in market volatility, which
effectively ended the decline in muni yields. This volatility was triggered in
part by three factors: fiscal uncertainty caused by two unprecedented shutdowns
of the federal government, presidential primary debates about impending tax
reform, and an unexpected reversal in a number of key economic indicators, which
consequently sent the market mixed signals on the direction of the economy.
Still, due to the government shutdowns and the unusually harsh weather, the
market remained skeptical of the predictive value of economic statistics issued
for January and February. Interest rates have fluctuated as the market attempts
to determine whether the economy will remain slow throughout 1996.

[Credit Quality Graph]

Portfolio Composition by Credit Quality as of February 29, 1996

<TABLE>
<S> <C>
AAA............ 34.7%
AA............. 8.9%
A.............. 16.2%
BBB............ 22.9%
BB............. 6.8%
Non-Rated...... 10.5%
</TABLE>

OUTLOOK FOR THE MUNICIPAL MARKET

In general, we anticipate a pickup in economic activity during the first
half of the year, with possibilities of an increase in inflation and an economic
slowdown toward the end of the year. We believe the Fed will be cautious in its
monetary policy toward short-term interest rates, as mixed economic news
continues to be reported.
The Fed is expected to maintain its focus on growing the economy at an
annual rate of 2 to 3 percent, while striving to keep inflation at bay. Interest
rates are likely to remain within the range experienced over the past several
years, with a continuation of historically low rates.
This type of market environment (of relatively low rates) typically lends
itself to the use of an investment technique called leveraging, which involves
borrowing short-term funds to purchase long-term municipal securities. The
yields available on these long-term securities tend to be higher than those on
short-term securities, thereby offsetting the cost of the short-term borrowing.
The additional income earned through leveraging can then be used to enhance the
distribution rate of the leveraged investment portfolio. (Conversely, a rise in
interest rates may tend to produce an unfavorable effect on the Trust's common

Continued on page three

2
<PAGE> 4

share performance and would likely cause the Trust to underperform a
non-leveraged portfolio.)
Although short-term municipal rates have recently notched lower, due to the
series of Fed easings since 1995, short-term rates in general are significantly
higher than two years ago. This short-term rate pressure, combined with efforts
to manage the Trust's callable bonds, have impacted the Trust's earning
potential and required a dividend cut. This adjustment from $.0850 per share to
$.0800 was effective March 15, 1996 and payable March 31, 1996.
As of February 29, 1996, the Trust held securities from 39 states and the
Commonwealth of Puerto Rico. We believe the Trust continues to be appropriate
for investors who seek a high level of current income and the broader
diversification available in national municipal bond funds.

TOP 5 INDUSTRY HOLDINGS BY SECTOR AS OF FEBRUARY 29, 1996

Health Care........................................ 16.0%
General Purpose.................................... 10.6%
Industrial Revenue................................. 9.6%
Single-Family Housing.............................. 8.6%
Retail Electric / Gas / Telephone.................. 8.1%

RESEARCH AND LONG-TERM RETURNS

We believe that the cumulative return of the Trust--and the performance
achieved by many of our other municipal bond funds--demonstrates our commitment
to thorough research and a long-term, value-oriented investment approach.
Thank you for your confidence in Van Kampen American Capital and in your
Trust's management team.

Sincerely,

DON G. POWELL
Don G. Powell
Chairman
Van Kampen American Capital
Investment Advisory Corp.

DENNIS J. McDONNELL
Dennis J. McDonnell
President
Van Kampen American Capital
Investment Advisory Corp.

3
<PAGE> 5

PERFORMANCE RESULTS FOR THE PERIOD ENDED FEBRUARY 29, 1996

VAN KAMPEN AMERICAN CAPITAL MUNICIPAL TRUST
(NYSE TICKER SYMBOL -- VKQ)

<TABLE>
<S> <C>
COMMON SHARE TOTAL RETURNS
Six-month total return based on market price(1)............. 8.09%
Six-month total return based on NAV(2)...................... 7.70%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock price(3)... 6.86%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)..................................... 10.72%
SHARE VALUATIONS
Net asset value............................................. $16.42
Closing common stock price.................................. $14.875
Six-month high common stock price (02/01/96)................ $15.250
Six-month low common stock price (09/28/95)................. $13.625
Preferred share (Series A) rate(5).......................... 3.370%
Preferred share (Series B) rate(5).......................... 3.400%
Preferred share (Series C) rate(5).......................... 3.400%
Preferred share (Series D) rate(5).......................... 3.450%
</TABLE>

(1) 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.

(2) 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.

(3) Distribution rate represents the monthly annualized distributions of the
Trust at the end of the period and not the earnings of the Trust.

(4) The taxable-equivalent distribution rate is calculated assuming a 36%
federal income tax bracket.

(5) 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.

4
<PAGE> 6

PORTFOLIO OF INVESTMENTS

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS
ALASKA 0.3%
$ 3,000 Alaska St Hsg Fin Corp Ser A (MBIA Insd)....... 5.875% 12/01/30 $ 2,979,870
------------
CALIFORNIA 8.7%
2,000 California St Pub Wks Brd Lease Rev Dept of
Justice Bldg Ser A (FSA Insd).................. 5.800 05/01/15 2,043,540
8,500 Castaic Union Sch Dist, CA Cap Apprec Ser A
(FGIC Insd).................................... * 05/01/18 2,331,550
5,000 Contra Costa, CA Home Mtg Fin Auth Home Mtg Rev
(MBIA Insd).................................... * 09/01/17 1,367,550
7,705 Delano, CA Ctfs Partn Ser A.................... 9.250 01/01/22 8,784,393
1,000 East Bay, CA Muni Util Dist Wtr Sys Rev Rfdg
(FGIC Insd).................................... 4.750 06/01/21 897,570
50,000 Foothill/Eastern Tran Corridor Agy CA Toll Rd
Rev Sr Lien Ser A.............................. * 01/01/26 7,478,500
20,875 Foothill/Eastern Tran Corridor Agy CA Toll Rd
Rev Sr Lien Ser A.............................. * 01/01/28 2,706,861
3,500 Loma Linda, CA Hosp Rev Loma Linda Univ Med
Cent Rfdg (MBIA Insd).......................... 5.375 12/01/22 3,346,770
4,775 Los Angeles, CA Multi Family Rev Ser G Rfdg
(FSA Insd)..................................... 5.650 01/01/14 4,727,011
10,000 Orange Cnty, CA Recovery Ser A Rfdg (MBIA
Insd).......................................... 6.000 06/01/09 10,738,600
5,695 Sacramento, CA City Fin Auth Rev Comb Proj B
(MBIA Insd).................................... * 11/01/14 2,004,925
20,000 San Diego, CA Indl Dev Rev San Diego Gas & Elec
Ser A (Embedded Cap) (MBIA Insd)............... 6.100 09/01/18 20,875,000
13,000 Southern CA Pub Pwr Auth Pwr Proj Rev Ser A
Palo Verdo Proj Rfdg (AMBAC Insd).............. * 07/01/14 4,662,710
5,835 University of CA Rev Multi Purp Proj Ser C Rfdg
(AMBAC Insd)................................... 5.000 09/01/14 5,463,486
------------
77,428,466
------------
COLORADO 10.5%
19,500 Arapahoe Cnty, CO Cap Impt Trust Fund Hwy Rev
E-470 Proj Ser C............................... * 08/31/26 2,200,965
5,000 Boulder Cnty, CO Rev Natl Cent Atmosphere Rfdg
& Impt......................................... 6.900 12/01/07 5,466,550
8,500 Boulder Cnty, CO Rev Natl Cent Atmosphere Rfdg
& Impt......................................... 7.000 12/01/13 9,290,585
2,330 Colorado Hsg Fin Auth Single Family Pgm Sr Gtd
Mtg Ln D3 (FHA Gtd)............................ 7.200 08/01/23 2,426,066
10,000 Denver, CO City & Cnty Arpt Rev Ser A.......... 8.250 11/15/12 11,586,600
12,800 Denver, CO City & Cnty Arpt Rev Ser A.......... 8.500 11/15/23 14,964,224
8,535 Denver, CO City & Cnty Arpt Rev Ser A.......... 8.000 11/15/25 9,780,769
3,500 Denver, CO City & Cnty Arpt Rev Ser B (MBIA
Insd).......................................... 5.750 11/15/17 3,497,515
5,100 Denver, CO City & Cnty Arpt Rev Ser D.......... 7.000 11/15/25 5,583,582
27,000 Meridian Metro Dist CO Peninsular & Oriental
Steam Navig Co Rfdg (c)........................ 7.500 12/01/11 29,577,420
------------
94,374,276
------------
</TABLE>

See Notes to Financial Statements

5
<PAGE> 7

PORTFOLIO OF INVESTMENTS (CONTINUED)

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONNECTICUT 0.9%
$ 7,140 Connecticut St Hlth & Edl Fac Auth Rev Nursing
Home Proj AHF/Hartford......................... 7.125% 11/01/24 $ 8,161,520
------------
DELAWARE 0.5%
2,000 Delaware St Econ Dev Auth Rev Exempt Fac
Delmarva Pwr & Lt Co........................... 7.500 10/01/17 2,180,500
2,460 Delaware St Hsg Auth Rev Sr Home Mtg Ser B
Subser B2...................................... 7.200 12/01/21 2,564,771
------------
4,745,271
------------
FLORIDA 2.0%
6,000 Florida St Board Edl Cap Outlay Pub Edl Ser E
Rfdg........................................... 5.000 06/01/16 5,646,240
1,000 Florida St Correctional Privatization Comm Ctfs
Partn (AMBAC Insd)............................. 5.000 08/01/17 946,500
1,000 Hillsborough Cnty, FL Indl Dev Auth Indl Dev
Rev Univ Cmnty Hosp (MBIA Insd)................ 5.750 08/15/14 1,010,540
7,840 Sarasota Cnty, FL Hlth Fac Auth Rev Hlthcare
Kobernick/Meadow Park (Prerefunded @
07/01/02)...................................... 10.000 07/01/22 10,228,613
------------
17,831,893
------------
GEORGIA 1.1%
5,438 Cobb Cnty, GA Dev Auth Rev Grantor Tr Ctfs
Franklin Forest Ser A.......................... 8.000 06/01/22 5,559,735
4,000 Muni Elec Auth GA Proj One Subser A (AMBAC
Insd).......................................... 6.250 01/01/14 4,258,080
------------
9,817,815
------------
IDAHO 0.2%
1,600 Idaho Hsg Agy Single Family Mtg Mezz G2 (AMBAC
Insd).......................................... 6.125 07/01/12 1,609,504
------------
ILLINOIS 11.8%
5,000 Bedford Park, IL Tax Increment Rev Sr Lien
Bedford City Sq Proj........................... 9.250 02/01/12 5,637,650
2,500 Chicago, IL O'Hare Intl Arpt Spl Fac Rev
American Airls Inc Proj Rfdg................... 8.200 12/01/24 2,935,475
7,475 Chicago, IL O'Hare Intl Arpt Spl Fac Rev United
Airls Inc...................................... 8.400 05/01/04 8,206,578
10,600 Chicago, IL O'Hare Intl Arpt Spl Fac Rev United
Airls Inc...................................... 8.500 05/01/18 11,888,324
4,635 Chicago, IL O'Hare Intl Arpt Spl Fac Rev United
Airls Inc Ser A................................ 8.400 05/01/18 5,092,150
4,670 Chicago, IL O'Hare Intl Arpt Spl Fac Rev United
Airls Inc Ser B................................ 8.950 05/01/18 5,374,890
1,200 Hodgkins, IL Tax Increment..................... 9.500 12/01/09 1,401,204
3,600 Hodgkins, IL Tax Increment (Prerefunded @
12/01/01)...................................... 9.500 12/01/09 4,657,824
4,000 Hodgkins, IL Tax Increment Rev Ser A Rfdg...... 7.625 12/01/13 4,162,440
2,500 Illinois Dev Fin Auth Rev Catholic Charities
Hsg Dev........................................ 6.350 01/01/25 2,485,000
2,500 Illinois Health Fac Auth Rev Evangelical Hosp
Ser C Rfdg (FSA Insd).......................... 6.750 04/15/12 2,765,925
</TABLE>

See Notes to Financial Statements

6
<PAGE> 8

PORTFOLIO OF INVESTMENTS (CONTINUED)

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ILLINOIS (CONTINUED)
$ 7,750 Illinois Hlth Fac Auth Rev Fairview Oblig Group
Proj A (Prerefunded @ 10/01/02)................ 9.500% 10/01/22 $ 9,968,437
4,760 Illinois Hlth Fac Auth Rev Hinsdale Hosp Ser B
Rfdg........................................... 9.000 11/15/15 5,472,334
1,500 Illinois Hlth Fac Auth Rev Sarah Bush Lincoln
Hlth Cent...................................... 7.250 05/15/12 1,582,200
10,000 Illinois Hlth Fac Auth Rev Servantcor Ser A
(Prerefunded @ 08/15/01)....................... 8.000 08/15/21 11,893,600
1,995 Illinois Hsg Dev Auth Rev Homeowner Mtg Subser
A2 (FHA Gtd)................................... 7.125 08/01/26 2,116,934
65 Roselle, IL Multi Family Hsg Rev Waterbury Apts
Ser A Rfdg (GNMA Collateralized)............... 6.500 01/01/97 65,866
70 Roselle, IL Multi Family Hsg Rev Waterbury Apts
Ser A Rfdg (GNMA Collateralized)............... 6.500 01/01/98 71,718
75 Roselle, IL Multi Family Hsg Rev Waterbury Apts
Ser A Rfdg (GNMA Collateralized)............... 6.500 01/01/99 77,317
80 Roselle, IL Multi Family Hsg Rev Waterbury Apts
Ser A Rfdg (GNMA Collateralized)............... 6.500 01/01/00 82,979
85 Roselle, IL Multi Family Hsg Rev Waterbury Apts
Ser A Rfdg (GNMA Collateralized)............... 6.500 01/01/01 88,597
90 Roselle, IL Multi Family Hsg Rev Waterbury Apts
Ser A Rfdg (GNMA Collateralized)............... 6.500 01/01/02 94,115
95 Roselle, IL Multi Family Hsg Rev Waterbury Apts
Ser A Rfdg (GNMA Collateralized)............... 6.500 01/01/03 99,464
100 Roselle, IL Multi Family Hsg Rev Waterbury Apts
Ser A Rfdg (GNMA Collateralized)............... 6.500 01/01/04 104,862
105 Roselle, IL Multi Family Hsg Rev Waterbury Apts
Ser A Rfdg (GNMA Collateralized)............... 6.500 01/01/05 110,165
4,260 Roselle, IL Multi Family Hsg Rev Waterbury Apts
Ser A Rfdg (GNMA Collateralized)............... 7.000 01/01/25 4,546,400
2,000 Southern IL Univ Rev Cap Apprec Hsg & Aux Fac
Sys A (MBIA Insd).............................. * 04/01/18 551,260
3,800 Winnebago & Boone Cntys, IL Sch Dist No 205
(FSA Insd) (c)................................. 7.125 02/01/01 4,282,258
4,125 Winnebago & Boone Cntys, IL Sch Dist No 205
(FSA Insd)..................................... 7.200 02/01/02 4,735,129
4,475 Winnebago & Boone Cntys, IL Sch Dist No 205
(FSA Insd)..................................... 7.300 02/01/03 5,230,380
------------
105,781,475
------------
INDIANA 0.6%
2,500 Indiana Bond Bank Spl Pgm Ser F................ 7.150 08/01/15 2,730,325
2,000 Plymouth, IN Multi Sch Bldg Corp First Mtg
(Prerefunded @ 01/01/02) (AMBAC Insd).......... 6.750 01/01/13 2,277,240
------------
5,007,565
------------
</TABLE>

See Notes to Financial Statements

7
<PAGE> 9

PORTFOLIO OF INVESTMENTS (CONTINUED)

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KANSAS 2.5%
$ 20,000 Burlington, KS Pollutn Ctl Rev KS Gas & Elec Co
Proj Rfdg (MBIA Insd).......................... 7.000% 06/01/31 $ 22,526,400
------------
KENTUCKY 1.0%
2,000 Ashland, KY Solid Waste Rev Ashland Oil Inc
Proj........................................... 7.200 10/01/20 2,135,240
4,000 Elsmere, KY Indl Dev Rev Rfdg.................. 6.750 04/01/10 4,141,800
3,000 Kentucky Econ Dev Fin Auth Hosp Fac Rev Saint
Claire Med Cent Proj Rfdg (Connie Lee Insd).... 5.625 09/01/21 2,956,050
------------
9,233,090
------------
LOUISIANA 1.5%
825 East Baton Rouge, LA Mtg Fin Auth Single Family
Mtg Purchase Ser A Rfdg (GNMA
Collateralized)................................ 7.100 10/01/24 872,685
8,485 East Baton Rouge, LA Mtg Fin Auth Single Family
Mtg Purchase Ser C Rfdg........................ 7.000 04/01/32 8,863,346
2,000 New Orleans, LA Rfdg (AMBAC Insd).............. * 09/01/16 629,200
8,000 Orleans Parish, LA Sch Brd Rfdg (FGIC Insd).... * 02/01/15 2,652,480
------------
13,017,711
------------
MAINE 0.1%
1,000 Maine Vets Homes Rev........................... 7.750 10/01/20 1,011,010
------------
MARYLAND 2.7%
2,300 Baltimore, MD (FGIC Insd)...................... * 10/15/06 1,337,450
3,920 Baltimore, MD (FGIC Insd)...................... * 10/15/07 2,124,718
139,445 Maryland St Cmnty Dev Admin Dept Hsg & Cmnty
Dev Single Family Rev Pgm 6.................... * 04/01/30 11,671,547
6,500 Maryland St Hlth & Higher Edl Fac Auth Rev
Northwest Hosp Cent Proj & Rfdg (AMBAC Insd)... 5.250 07/01/13 6,301,685
2,735 Northeast, MD Waste Disp Auth Solid Waste Rev
Montgomery Cnty Res Recovery Proj Ser A........ 6.200 07/01/10 2,855,860
------------
24,291,260
------------
MASSACHUSETTS 1.0%
1,000 Billerica, MA Indl Rev Cabot Corp.............. 7.750 09/01/14 1,013,920
2,600 Massachusetts St Hlth & Edl Fac Auth Rev Med
Cent of Central MA............................. 7.100 07/01/21 2,821,936
3,000 Massachusetts St Hlth & Edl Fac Auth Rev New
England Med Cent Hosp Ser G (Embedded Swap)
(MBIA Insd).................................... 3.100 07/01/13 2,608,170
1,375 Massachusetts St Hlth & Edl Fac Auth Rev
Winchester Hosp Ser D Rfdg (Connie Lee Insd)... 5.750 07/01/14 1,387,141
1,000 Massachusetts St Hsg Fin Agy Hsg Rev Rental Mtg
Ser E (AMBAC Insd)............................. 6.000 07/01/37 996,870
------------
8,828,037
------------
</TABLE>

See Notes to Financial Statements

8
<PAGE> 10

PORTFOLIO OF INVESTMENTS (CONTINUED)

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par Amount
(000) Description Coupon Maturity Market Value
------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MICHIGAN 1.2%
$ 2,000 Michigan Muni Bond Auth Rev Loc Govt Ln Ser C-A
(FSA Insd)..................................... * 06/15/13 $ 760,480
2,000 Michigan St Hosp Fin Auth Rev Saratoga Comm
Hosp Rfdg...................................... 8.750% 06/01/10 2,131,800
1,700 Paw Paw, MI Pub Sch Dist Bldg & Site (FGIC
Insd).......................................... 5.600 05/01/15 1,702,873
5,000 Portage Lake, MI Wtr & Swr Auth Ser II
(Prerefunded
@ 10/01/02).................................... 7.625 10/01/20 5,912,600
------------
10,507,753
------------
MINNESOTA 0.1%
6,000 Southern MN Muni Pwr Agy Pwr Supply Sys Rev Ser
A (MBIA Insd).................................. * 01/01/24 1,253,640
------------
MISSISSIPPI 0.1%
1,000 Claiborne Cnty, MS Pollutn Ctl Rev Sys Energy
Res Inc Rfdg................................... 7.300 05/01/25 1,052,450
------------
MISSOURI 1.2%
1,740 Good Shepherd Nursing Home Dist MO Nursing Home
Fac Rev........................................ 7.625 08/15/15 1,793,540
2,730 Good Shepherd Nursing Home Dist MO Nursing Home
Fac Rev........................................ 7.750 08/15/25 2,806,031
3,750 Hannibal, MO Indl Dev Auth Hlth Fac Rev
Hannibal Regl Hlthcare Sys Inc................. 9.500 03/01/22 4,519,162
2,000 Sikeston, MO Elec Rev Rfdg (MBIA Insd)......... 5.000 06/01/11 1,942,680
------------
11,061,413
------------
MONTANA 0.8%
3,000 Montana St Brd Invt Res Recovery Rev
Yellowstone Energy L P Proj.................... 7.000 12/31/19 2,908,470
3,900 Montana St Coal Severance Tax Broadwater Pwr
Proj Ser A Rfdg................................ 6.875 12/01/17 4,179,903
------------
7,088,373
------------
NEVADA 0.5%
1,925 Clark Cnty, NV Passenger Fac Las Vegas Macarran
Intl Arpt (MBIA Insd).......................... 5.750 07/01/23 1,913,007
995 Henderson, NV Loc Impt Dist No T-4 Ser A....... 8.500 11/01/12 1,049,954
1,750 Nevada St Rfdg................................. 4.375 08/01/03 1,739,535
------------
4,702,496
------------
</TABLE>

See Notes to Financial Statements

9
<PAGE> 11

PORTFOLIO OF INVESTMENTS (CONTINUED)

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW JERSEY 4.4%
$ 1,515 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd).................................... * 03/01/99 $ 1,339,442
1,000 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd).................................... * 03/01/00 837,720
1,000 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd).................................... * 03/01/02 762,790
1,000 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd).................................... * 03/01/03 725,170
1,000 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd).................................... * 03/01/04 690,500
1,460 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd).................................... * 03/01/05 955,804
1,465 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd).................................... * 03/01/06 895,203
1,615 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd).................................... * 03/01/07 936,829
1,555 Eastern Camden Cnty, NJ Regl Sch Dist Rfdg
(FGIC Insd).................................... * 03/01/08 847,490
25,000 New Jersey Econ Dev Auth St Contract Econ
Recovery (Embedded Cap)........................ 5.900% 03/15/21 26,149,500
5,000 Union Cnty, NJ Util Auth Solid Waste Rev Ser
A.............................................. 7.150 06/15/09 5,150,300
------------
39,290,748
------------
NEW MEXICO 0.1%
1,103 Santa Fe, NM Single Family Mtg Rev Rfdg........ 8.450 12/01/11 1,177,851
------------
NEW YORK 15.6%
4,000 Herkimer Cnty, NY Indl Dev Agy Indl Dev Rev
Burrows Paper Corp Recycling................... 8.000 01/01/09 4,259,960
5,550 Metropolitan Tran Auth NY Svcs Contract
Commuter Fac
Ser N Rfdg..................................... 6.000 07/01/11 5,594,511
4,000 Metropolitan Tran Auth NY Svcs Contract Tran
Fac............................................ 7.000 07/01/09 4,375,680
1,900 Metropolitan Tran Auth NY Svcs Contract Tran
Fac
Ser N Rfdg..................................... 6.000 07/01/11 1,915,238
6,000 New York City Hlth & Hosp Corp Rev Ser A Rfdg
(AMBAC Insd)................................... 5.750 02/15/22 6,001,920
19,000 New York City Ser A............................ 6.000 08/01/05 19,396,150
1,500 New York City Ser A............................ 7.750 08/15/12 1,681,950
7,000 New York City Ser B............................ 7.500 02/01/05 7,852,530
6,000 New York City Ser B............................ 5.600 08/15/07 5,834,400
1,500 New York City Ser C............................ 7.100 08/15/10 1,612,950
2,585 New York City Ser F............................ 8.250 11/15/02 2,972,569
2,970 New York St Dorm Auth Rev City Univ Sys Cons
2nd Gen A (AMBAC Insd)......................... 5.250 07/01/11 2,937,419
1,000 New York St Dorm Auth Rev City Univ Sys Cons
Ser A.......................................... 5.625 07/01/16 992,730
6,000 New York St Dorm Auth Rev Court Fac Lease Ser
A.............................................. 5.250 05/15/21 5,502,060
3,000 New York St Energy Resh & Dev Auth St Svc
Contract Rev Westn NY Nuclear Svc Cent Proj.... 5.400 04/01/98 3,072,360
7,375 New York St Environmental Fac Corp Pollutn Ctl
Rev St Wtr Revolving Fund Ser E................ 6.700 06/15/10 8,213,242
10,735 New York St Med Care Fac Fin Agy Rev Mental
Hlth Svcs Fac Ser D............................ 7.400 02/15/18 12,081,169
</TABLE>

See Notes to Financial Statements

10
<PAGE> 12

PORTFOLIO OF INVESTMENTS (CONTINUED)

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEW YORK (CONTINUED)
$ 3,075 New York St Med Care Fac Fin Agy Rev Mental
Hlth Svcs Ser A (FSA Insd)..................... 5.250% 08/15/23 $ 2,898,249
2,730 New York St Med Care Fac Fin Agy Rev Montefiore
Med Cent Insd Mtg A (AMBAC Insd)............... 5.750 02/15/25 2,737,617
5,000 New York St Pwr Auth Rev & Genl Purp Ser CC
Rfdg (FGIC Insd)............................... 5.125 01/01/10 4,906,900
2,225 New York St Urban Dev Corp Rev Correctional Cap
Fac Ser A Rfdg................................. 5.500 01/01/08 2,208,602
1,000 New York St Urban Dev Corp Rev Correctional Cap
Fac Ser 5 (MBIA Insd).......................... 5.500 01/01/25 983,580
3,110 New York St Urban Dev Corp Rev Correctional Fac
Ser A Rfdg..................................... 5.400 01/01/06 3,079,398
19,000 New York St Urban Dev Corp Rev St Fac
(Prerefunded @ 04/01/01)....................... 7.500 04/01/11 22,095,480
3,000 Onondaga Cnty, NY Indl Dev Agy Swr Fac Rev
Bristol-Meyers Squibb Co Proj.................. 5.750 03/01/24 3,082,590
3,375 Port Auth, NY & NJ Cons 102nd Ser (MBIA
Insd).......................................... 5.600 10/15/11 3,450,026
------------
139,739,280
------------
NORTH CAROLINA 2.7%
10,000 North Carolina Eastn Muni Pwr Agy Pwr Sys Rev
Ser B Rfdg (Embedded Cap)...................... 6.000 01/01/14 10,097,900
13,300 North Carolina Muni Pwr Agy No 1 Catawba Elec
Rev (Embedded Cap)............................. 6.000 01/01/12 13,767,229
------------
23,865,129
------------
NORTH DAKOTA 0.4%
3,460 Ward Cnty, ND Hlthcare Fac Rev Saint Josephs
Hosp Corp Proj Ser A........................... 7.500 11/01/15 3,544,389
------------
OHIO 1.0%
5,375 Franklin Cnty, OH Hosp Rev Holy Cross Hlth Sys
Ser B Rfdg (MBIA Insd)......................... 5.250 06/01/10 5,355,865
250 Marion Cnty, OH Indl Dev Rev Kmart Corp Proj
Rfdg........................................... 6.375 02/01/02 225,545
2,000 Montgomery Cnty, OH Hosp Rev Dayton Osteopathic
Hosp Proj Rfdg................................. 6.000 12/01/12 1,857,220
1,000 Ohio St Air Quality Dev Auth Rev JMG Funding
Ltd Partnership Proj Rfdg (AMBAC Insd)......... 6.375 04/01/29 1,064,090
185 Portage Cnty, OH Indl Dev Rev Kmart Corp Proj
Rfdg........................................... 6.350 12/01/00 169,943
250 Washington Cnty, OH Indl Dev Rev Kmart Corp
Proj Rfdg...................................... 6.400 03/15/03 222,462
------------
8,895,125
------------
</TABLE>

See Notes to Financial Statements

11
<PAGE> 13

PORTFOLIO OF INVESTMENTS (CONTINUED)

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OKLAHOMA 2.4%
$ 4,200 Cleveland Cnty, OK Home Ln Auth Single Family
Mtg Rev Rfdg................................... 8.000% 08/01/12 $ 4,549,314
1,240 Kay Cnty, OK Home Fin Auth Rev Single Family
Mtg Ser A Rfdg (AMBAC Insd).................... 7.000 11/01/11 1,449,324
9,415 Oklahoma Hsg Fin Agy Single Family Rev Mtg
Class B (GNMA Collateralized).................. 7.997 08/01/18 10,291,254
3,000 Tulsa, OK Indl Auth Hosp Rev Tulsa Regl Med
Cent (Prerefunded @ 06/01/03).................. 7.200 06/01/17 3,521,430
1,500 Tulsa, OK Muni Arpt Tran Rev American Airls
Inc............................................ 7.600 12/01/30 1,638,540
------------
21,449,862
------------
PENNSYLVANIA 3.4%
3,250 Butler Cnty, PA Hosp Auth Hosp Rev Butler Mem
Hosp Ser A (FSA Insd).......................... 5.250 07/01/12 3,166,313
10,000 Geisinger Auth PA Hlth Sys Muni Cap Ser A
(Embedded Cap)................................. 6.400 07/01/22 10,673,700
16,000 Philadelphia, PA Wtr & Wastewtr Rev Reg Fixed
Airs (FGIC Insd)............................... 5.650 06/15/12 16,078,720
1,000 Ridley Park, PA Hosp Auth Rev Hosp Auth Rev Ser
1993 A......................................... 6.000 12/01/13 917,630
------------
30,836,363
------------
RHODE ISLAND 1.5%
2,450 Providence, RI Redev Agy Ctfs Partn Ser A...... 8.000 09/01/24 2,649,553
3,470 Rhode Island Hsg & Mtg Fin Corp Homeownership
Oppty Ser 3B................................... 8.050 04/01/22 3,674,626
4,750 Rhode Island Hsg & Mtg Fin Corp Ser 8 (Inverse
Fltg).......................................... 10.337 04/01/24 5,207,187
2,000 Rhode Island St Hlth & Edl Bldg Corp Rev Higher
Edl Fac Roger Williams (Connie Lee Insd)....... 7.250 11/15/24 2,272,600
------------
13,803,966
------------
TENNESSEE 0.6%
1,010 Campbell Cnty, TN Indl Dev Brd Indl Dev Rev
Kmart Corp Rfdg................................ 6.400 04/15/08 843,885
4,258 Shelby Cnty, TN Hlth Edl & Hsg Fac Brd Rev
Multi Family Mtg Rock Creek Plaza Rfdg (GNMA
Collateralized)................................ 7.375 01/20/27 4,607,637
------------
5,451,522
------------
TEXAS 7.3%
4,155 Brazos Cnty, TX Hlth Fac Dev Corp Franciscan
Svcs Rev Saint Joseph Hosp & Hlth Cent Ser B
Rfdg........................................... 6.000 01/01/19 4,086,152
6,000 Brazos River Auth TX Pollutn Ctl Rev Coll TX
Util Elec Co Proj A (AMBAC Insd)............... 6.750 04/01/22 6,513,360
1,750 Brazos River Auth TX Rev Coll Houston Lt & Pwr
Co Proj B Rfdg................................. 8.250 05/01/15 1,894,305
555 Brazos, TX Higher Edl Auth Inc Student Ln Rev
Subser C2 Rfdg................................. 7.100 11/01/04 611,116
</TABLE>

See Notes to Financial Statements

12
<PAGE> 14

PORTFOLIO OF INVESTMENTS (CONTINUED)

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TEXAS (CONTINUED)
$ 5,000 Coastal Bend Hlth Fac Dev (AMBAC Insd)......... 5.929% 11/15/13 $ 5,073,750
15,000 Dallas-Fort Worth, TX Intl Arpt Fac Impt Corp
Rev American Airls Inc......................... 7.500 11/01/25 16,168,950
3,600 Dallas-Fort Worth, TX Intl Arpt Fac Impt Corp
Rev Delta Airls Inc............................ 7.625 11/01/21 3,926,988
3,045 Fort Worth, TX Hsg Fin Corp Home Mtg Rev Ser A
Rfdg........................................... 8.500 10/01/11 3,342,679
1,940 Texas Genl Svcs Comm Partn Interest Lease
Purchase Ctfs.................................. 7.250 08/01/11 1,988,260
21,550 Texas St Pub Ppty Fin Corp Rev Mental Hlth &
Retardation Rfdg (FSA Insd).................... 5.250 09/01/08 21,799,118
------------
65,404,678
------------
UTAH 1.3%
4,005 Bountiful, UT Hosp Rev South Davis Cmnty Hosp
Proj........................................... 9.500 12/15/18 4,432,414
2,000 Murray City, UT Hosp Rev Inc Hlth Serv Inc Rfdg
(MBIA Insd) (b)................................ 4.750 05/15/20 1,791,820
3,000 Salt Lake City, UT Hosp Rev IHC Hosp Inc Rfdg
(Embedded Cap)................................. 5.500 02/15/17 2,933,040
2,050 Utah St Hsg Fin Agy Single Family Mtg Insd Ser
E2 (FHA Gtd)................................... 7.150 07/01/24 2,149,671
------------
11,306,945
------------
VIRGINIA 1.7%
4,970 Hanover Cnty, VA Indl Dev Auth Hosp Rev Mem
Regl Med Cent Proj (MBIA Insd)................. 5.500 08/15/25 4,853,006
1,500 Henrico Cnty, VA Indl Dev Auth Pub Fac Lease
Rev Henrico Cnty Regl Jail Proj................ 6.500 08/01/10 1,639,260
1,500 Henrico Cnty, VA Indl Dev Auth Pub Fac Lease
Rev Henrico Cnty Regl Jail Proj................ 7.125 08/01/21 1,701,465
1,750 Loudoun Cnty, VA Indl Dev Auth Loudoun Hosp
Cent (FSA Insd)................................ 5.800 06/01/26 1,786,820
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 4,932,800
1,050 Virginia St Hsg Dev Auth Comwlth Mtg Ser A
Subser A1 (FHA Gtd)............................ * 07/01/29 81,270
------------
14,994,621
------------
WASHINGTON 0.1%
5,000 Bellevue, WA Convention Cent Auth Spl Oblig Rev
Rfdg (MBIA Insd)............................... * 02/01/24 980,600
------------
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 6,935,402
------------
</TABLE>

See Notes to Financial Statements

13
<PAGE> 15

PORTFOLIO OF INVESTMENTS (CONTINUED)

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Par Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WISCONSIN 1.8%
$ 2,200 Janesville, WI Indl Dev Rev Simmons Mfg Co..... 7.000% 10/15/17 $ 2,254,054
1,000 Madison, WI Indl Dev Rev Madison Gas & Elec Co
Proj A......................................... 6.750 04/01/27 1,069,650
5,250 Wisconsin Hsg & Econ Dev Auth Hsg Rev Ser B.... 7.050 11/01/22 5,586,735
7,280 Wisconsin St Hlth & Edl Fac Auth Rev Children's
Hosp (Embedded Cap) (FGIC Insd)................ 5.000 08/15/10 7,127,193
------------
16,037,632
------------
WYOMING 1.0%
4,000 Wyoming Cmnty Dev Auth Single Family Ser G (FHA
Gtd)........................................... 7.250 06/01/21 4,234,280
4,000 Wyoming Cmnty Dev Auth Single Family Ser H..... 7.100 06/01/12 4,256,040
------------
8,490,320
------------
PUERTO RICO 0.9%
2,449 Puerto Rico Comwlth Dept of Hlth Lease Purchase
Ctfs........................................... 7.250 04/07/01 2,455,817
2,000 Puerto Rico Elec Pwr Auth Pwr Rev Ser P
(Prerefunded @ 07/01/01)....................... 7.000 07/01/21 2,301,380
1,000 Puerto Rico Elec Pwr Auth Pwr Rev Ser Z Rfdg... 5.500 07/01/12 985,100
2,000 Puerto Rico Elec Pwr Auth Pwr Rev Ser Z Rfdg... 5.500 07/01/16 1,936,840
------------
7,679,137
------------
TOTAL LONG-TERM INVESTMENTS 96.3%
(Cost $799,105,892) (a)....................................................... 862,194,858
SHORT-TERM INVESTMENTS AT AMORTIZED COST 1.3%.................................. 12,018,000
OTHER ASSETS IN EXCESS OF LIABILITIES 2.4%..................................... 21,451,113
------------
NET ASSETS 100%................................................................ $895,663,971
============
</TABLE>

*Zero coupon bond
(a) At February 29, 1996, cost for federal income tax purposes is
$799,105,892; the aggregate gross unrealized appreciation is $64,805,566
and the aggregate gross unrealized depreciation is $1,854,230, resulting
in net unrealized appreciation including futures transactions of
$62,951,336.
(b) Securities purchased on a when issued or delayed delivery basis.
(c) Assets segregated as collateral for when issued or delayed delivery
purchase commitments and open futures transactions.

See Notes to Financial Statements

14
<PAGE> 16

STATEMENT OF ASSETS AND LIABILITIES

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Investments, at Market Value (Cost $799,105,892) (Note 1)............. $ 862,194,858
Short-Term Investments (Note 1)....................................... 12,018,000
Cash.................................................................. 92,785
Receivables:
Interest............................................................ 13,129,690
Investments Sold.................................................... 11,750,824
Unamortized Organizational Expenses (Note 1).......................... 5,743
Other................................................................. 16,260
-------------
Total Assets.................................................... 899,208,160
-------------
LIABILITIES:
Payables:
Investments Purchased............................................... 1,837,665
Income Distributions - Common and Preferred Shares.................. 750,554
Investment Advisory Fee (Note 2).................................... 500,332
Administrative Fee (Note 2)......................................... 142,952
Margin on Futures (Note 4).......................................... 21,877
Accrued Expenses...................................................... 290,809
-------------
Total Liabilities............................................... 3,544,189
-------------
NET ASSETS............................................................ $ 895,663,971
=============
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............................ 62,951,336
Accumulated Undistributed Net Investment Income....................... 2,019,220
Accumulated Net Realized Loss on Investments.......................... (6,529,862)
-------------
Net Assets Applicable to Common Shares.......................... 595,663,971
-------------
NET ASSETS............................................................ $ 895,663,971
=============
NET ASSET VALUE PER COMMON SHARE ($595,663,971 divided
by 36,270,469 shares outstanding)................................... $ 16.42
=============
</TABLE>

See Notes to Financial Statements

15
<PAGE> 17

STATEMENT OF OPERATIONS

For the Six Months Ended February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.............................................................. $ 28,217,090
-------------
EXPENSES:
Investment Advisory Fee (Note 2)...................................... 3,090,857
Administrative Fee (Note 2)........................................... 883,102
Preferred Share Maintenance (Note 5).................................. 384,456
Legal (Note 2)........................................................ 20,880
Trustees Fees and Expenses (Note 2)................................... 11,688
Amortization of Organizational Expenses (Note 1)...................... 4,981
Other................................................................. 271,041
-------------
Total Expenses.................................................... 4,667,005
-------------
NET INVESTMENT INCOME................................................. $ 23,550,085
=============
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Realized Gain/Loss on Investments:
Proceeds from Sales................................................. $ 133,363,949
Cost of Securities Sold............................................. (132,086,529)
-------------
Net Realized Gain on Investments (Including realized loss on closed
and expired option and futures transactions of $446,650 and
$3,959,671, respectively)........................................... 1,277,420
-------------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period............................................. 38,675,491
End of the Period (Including unrealized depreciation on open futures
transactions
of $137,630)...................................................... 62,951,336
-------------
Net Unrealized Appreciation on Investments During the Period.......... 24,275,845
-------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS....................... $ 25,553,265
=============
NET INCREASE IN NET ASSETS FROM OPERATIONS............................ $ 49,103,350
=============
</TABLE>

See Notes to Financial Statements

16
<PAGE> 18

STATEMENT OF CHANGES IN NET ASSETS

For the Six Months Ended February 29, 1996
and the Year Ended August 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Six Months Ended Year Ended
February 29, 1996 August 31, 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................ $ 23,550,085 $ 47,552,168
Net Realized Gain/Loss on Investments................ 1,277,420 (6,913,971)
Net Unrealized Appreciation on Investments
During the Period.................................. 24,275,845 16,548,238
------------ ------------
Change in Net Assets from Operations................. 49,103,350 57,186,435
------------ ------------
Distributions from Net Investment Income:
Common Shares...................................... (18,497,492) (39,316,420)
Preferred Shares................................... (5,619,078) (11,636,297)
------------ ------------
Total Distributions.................................. (24,116,570) (50,952,717)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES......................................... 24,986,780 6,233,718
NET ASSETS:
Beginning of the Period.............................. 870,677,191 864,443,473
------------ ------------
End of the Period (Including undistributed net
investment income of $2,019,220 and $2,585,705,
respectively)...................................... $895,663,971 $870,677,191
============ ============
</TABLE>

See Notes to Financial Statements

17
<PAGE> 19

FINANCIAL HIGHLIGHTS

The following schedule presents financial highlights for one common share
of the Trust outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
September 27, 1991
Six Months (Commencement
Ended Year Ended August 31 of Investment
February 29, -------------------- Operations) to
1996 1995 1994 1993 August 31, 1992
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period (a).... $15.734 $15.562 $17.035 $16.328 $14.808
------- ------- ------- ------- -------
Net Investment Income.......... .649 1.311 1.347 1.410 1.166
Net Realized and Unrealized
Gain/Loss on Investments..... .705 .266 (1.424) .780 1.370
------- ------- ------- ------- -------
Total from Investment
Operations..................... 1.354 1.577 (.077) 2.190 2.536
------- ------- ------- ------- -------
Less:
Distributions from Net
Investment Income:
Paid to Common
Shareholders............... .510 1.084 1.116 1.100 .811
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders..... .155 .321 .280 .246 .205
Distributions from Net Realized
Gain on Investments:
Paid to Common
Shareholders............... -0- -0- -0- .111 -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders..... -0- -0- -0- .026 -0-
------- ------ ------ ------ -------
Total Distributions.............. .665 1.405 1.396 1.483 1.016
------- ------ ------ ------ -------
Net Asset Value, End of the
Period......................... $16.423 $15.734 $15.562 $17.035 $16.328
======= ======= ======= ======= =======
Market Price Per Share at End of
the Period..................... $14.875 $14.250 $15.000 $16.750 $16.125
Total Investment Return at Market
Price (b)...................... 8.09%* 2.39% (3.94%) 11.90% 13.24%*
Total Return at Net Asset Value
(c)............................ 7.70%* 8.55% (2.22%) 12.31% 14.64%*
Net Assets at End of the Period
(In millions).................. $895.7 $870.7 $864.4 $917.9 $891.7
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares......................... 1.59% 1.65% 1.64% 1.59% 1.49%
Ratio of Expenses to Average
Net Assets..................... 1.05% 1.07% 1.09% 1.06% 1.03%
Ratio of Net Investment Income to
Average Net Assets Applicable
to Common Shares (d)........... 6.10% 6.48% 6.52% 7.08% 6.85%
Portfolio Turnover............... 11.06% 48.51% 46.85% 48.45% 99.51%
</TABLE>

(a) Net asset value at September 27, 1991, is adjusted for common and preferred
share offering costs of $.192 per common share.

(b) 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.

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

(d) Net investment income is adjusted for common share equivalent of
distributions paid to preferred shareholders.

* Non-Annualized

See Notes to Financial Statements

18
<PAGE> 20

NOTES TO FINANCIAL STATEMENTS

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen American Capital 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's investment objective is to provide
a high level of current income exempt from federal income tax, consistent with
preservation of capital. The Trust will invest in a portfolio consisting
substantially of municipal obligations rated investment grade at the time of
investment, but may invest up to 20% of its assets in unrated securities which
are believed to be of comparable quality to those rated investment grade. 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. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

A. SECURITY VALUATION--Investments are 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.

19
<PAGE> 21

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

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.

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
carryforward 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 dividends from
net investment income to common shareholders monthly. 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

20
<PAGE> 22

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

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 six months ended February 29, 1996, the Trust recognized expenses of
approximately $26,000 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.

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 February 29, 1996, was
approximately $36,100.

At February 29, 1996, 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 six months ended February 29, 1996, were $96,474,177
and $132,086,529, 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.

21
<PAGE> 23

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

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 six months ended February 29, 1996, were as
follows:

<TABLE>
<CAPTION>
CONTRACTS PREMIUM
- --------------------------------------------------------------------------
<S> <C> <C>
Outstanding at August 31, 1995................... 100 $ (58,620)
Options Written and Purchased (Net).............. 1,210 (616,020)
Options Terminated in Closing Transactions
(Net).......................................... (485) 235,127
Options Expired (Net)............................ (625) 298,953
Options Exercised (Net).......................... (200) 140,560
----- ---------
Outstanding at February 29, 1996................. -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 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 February 29,
1996, were as follows:

<TABLE>
<CAPTION>
CONTRACTS
- -----------------------------------------------------------------------
<S> <C>
Outstanding at August 31, 1995............................. 1,450
Futures Opened............................................. 3,600
Futures Closed............................................. (4,050)
------
Outstanding at February 29, 1996........................... 1,000
======
</TABLE>

22
<PAGE> 24

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

The futures contracts outstanding as of February 29, 1996, and the
descriptions and unrealized appreciation/depreciation are as follows:

<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION/
CONTRACTS DEPRECIATION
- ----------------------------------------------------------------------------
<S> <C> <C>
US Treasury Bond Futures
Mar 1996--Sells to Open...................... 50 $ 257,407
5-Year US Treasury Note Futures
Mar 1996--Sells to Open...................... 400 378,524
Municipal Bond Index Futures
Mar 1996--Sells to Open...................... 50 74,599
Euro Dollar Note
Mar 1996--Sells to Open...................... 500 (848,160)
----- ---------
1,000 $(137,630)
===== =========
</TABLE>

C. 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
Fund 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.

An Embedded Swap security includes a swap component such that the fixed
coupon component of the underlying bond is adjusted by the difference between
the security's fixed swap rate and the floating swap index. As the floating rate
rises, the coupon is reduced. Conversely, as the floating rate declines, the
coupon is increased. The Trust invests in these instruments as a hedge against a
rise in the short-term interest rates which it pays its preferred shares.

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

23
<PAGE> 25

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

February 29, 1996 (Unaudited)
- --------------------------------------------------------------------------------

Series B and Series D are 28 days. The average rate in effect on February 29,
1996, was 3.41%. During the six months ended February 29, 1996, the rates ranged
from 3.34% to 4.79%.

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.

24
<PAGE> 26

VAN KAMPEN AMERICAN CAPITAL 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.