<TABLE>
Table of Contents
<CAPTION>
<S> <C>
Letter to Shareholders ................ 1
Performance Results ................... 3
Portfolio of Investments ............. 4
Statement of Assets and Liabilities ... 11
Statement of Operations ............... 12
Statement of Changes in Net Assets .... 13
Financial Highlights ................. 14
Notes to Financial Statements ......... 15
</TABLE>
Page: 1
Letter to Shareholders
June 16, 1995
Dear Shareholder:
During the six-month period covered by this report, November 1, 1994 through
April 30, 1995, we saw the close of a challenging and difficult year in the
financial markets -- and the beginning of a new year, with renewed optimism and
strength on many fronts.
Market Overview
Most of 1994 was a difficult period for fixed-income investors as the Federal
Reserve Board's crusade against inflation drove interest rates markedly higher.
The yield on 30-year Treasury securities, for example, climbed from 6.35
percent as the year began to a high of 8.16 percent by early November. As
interest rates rose, fixed-income investments declined in value.
The fixed-income markets have rebounded considerably since late 1994, however,
with growing confidence that the Fed's inflation fighting initiatives have taken
hold. The yield on 30-year Treasury securities fell to 7.34 percent by the end
of April 1995 and to approximately 6.50 percent at the time of this writing.
This rate reversal has pushed bond prices back to February 1994 levels. Closed-
end municipal bond funds, in particular, have been among the greatest
beneficiaries in this rally, earning back virtually all of last year's losses
and posting attractive returns.
Performance Summary
The Trust achieved a six-month total return of 15.87 percent <F1>, based on
market price, for the period ended April 30, 1995. This robust performance can
be partially attributed to the Trust's leveraged capital structure, which has
helped it to more fully benefit from a fall in long- term interest rates over
the last six months. While leveraging adds certain financing risks and
volatility, it is designed, over time, to provide shareholders with enhanced
returns by taking advantage of the yield differential between long-term and
short-term interest rates.
Clearly, the Trust recovered from the difficult previous six-month period and
made significant price gains. The Trust's closing stock price, for example,
gained more than 11.5 percent from its $12.750 level on October 31, 1994, to
$14.250 on April 30, 1995. As the graph on the following page shows, we've also
seen the Trust's net asset value rebound during the last six months.
Although intermediate and long-term interest rates eased during this
reporting period, short-term interest rates have remained persistently high,
placing continued pressure on the Trust's preferred rates and common dividend.
The Trust was able, however, to sustain its annualized dividend level in this
environment at $1.02 per common share, which represents a tax-exempt
distribution rate of 7.16 percent <F3>, based on the closing stock price of
$14.25 per share on April 30, 1995. For shareholders in the 36 percent federal
income tax bracket, this distribution rate represents a yield equivalent to a
taxable investment earning 11.19 percent <F4>.
[PHOTO]
Dennis J. McDonnell and Don G. Powell
(Continued on page two)
Page: 2
Outlook
The outlook for fixed-income securities appears favorable. To date, inflation
remains under control, and recent economic data continues to suggest a slowdown
in the economy. First-quarter gross domestic product, for example, grew at an
annual rate of 2.8 percent, substantially lower than its fourth-quarter rate of
5.1 percent last year. Many analysts now expect GDP to grow at an annual rate
between 1 and 2 percent in the second half of this year. Should this scenario
play out, we suspect that the Fed is more likely to lower than raise short-term
rates, which would be a positive development for all fixed-income investors.
Regarding the municipal market, we remain optimistic about the current
supply-and-demand dynamics. With much of the refinancing by municipal issuers
behind us, we expect new-issue supply to remain low in 1995 and demand for
municipals to be steady, if not strong. A decline in supply combined with
steady demand should lend price stability and price support to this market.
We believe the Trust will continue to provide shareholders with long-term value
as we seek to maintain a high level of current income over time.
[GRAPH]
Trust Rebounds in 1995
<TABLE>
COMPARISON OF NAV AND MARKET PRICE OF THE TRUST
<CAPTION>
Measurement Market
Period NAV Price
<S> <C> <C>
30-Apr-94 $14.99 14.000
31-May-94 $15.10 14.500
30-Jun-94 $14.94 14.250
31-Jul-94 $15.20 14.125
31-Aug-94 $15.13 14.000
30-Sep-94 $14.65 13.0625
31-Oct-94 $13.99 12.750
30-Nov-94 $13.26 12.625
31-Dec-94 $13.88 12.750
31-Jan-95 $14.46 13.875
28-Feb-95 $15.09 14.500
31-Mar-95 $15.24 14.500
30-Apr-95 $15.10 14.250
</TABLE>
Corporate News
As you may have already noticed, we have adopted a new design for our
shareholder reports that reflects our new identity as Van Kampen American
Capital. Going forward, we will continue to look for new ways to improve upon
the presentation of information in your Trust's report. In addition, we have
developed a new corporate advertising campaign introducing
Van Kampen American Capital. Full page ads appeared in The Wall Street Journalin
the first quarter of 1995 -- watch for more advertising throughout the year.
We look forward to communicating with you on a regular basis, providing
information about your Trust's performance, new investment opportunities, and
our newly created company. We appreciate your continued confidence in your
investment with Van Kampen American Capital.
Sincerely,
Don G. Powell, Chief Executive Officer
Van Kampen American Capital Investment Advisory Corp.
Dennis J. McDonnell, President
Van Kampen American Capital Investment Advisory Corp.
Page: 3
<TABLE>
Performance Results for the Period Ended April 30, 1995
Van Kampen Merritt Advantage Municipal Income Trust
(NYSE Ticker Symbol VKA)
<CAPTION>
<S> <C>
Total Returns
Six-month total return based on market price<F1> .................................. 15.87%
Six-month total return based on NAV<F2> ........................................... 11.80%
Distribution Rates
Distribution rate as a % of initial offer stock price<F3> ......................... 6.80%
Taxable-equivalent distribution rate as a % of initial offer stock price<F4> ...... 10.63%
Distribution rate as a % of 04/30/95 closing stock price<F3> ...................... 7.16%
Taxable-equivalent distribution rate as a % of 04/30/95 closing stock price<F4> ... 11.19%
Share Valuations
Net asset value as of 04/30/95 .................................................... $ 15.10
Preferred share (A Series) rate as of 04/30/95<F5> ................................ 4.148%
Preferred share (B Series) rate as of 04/30/95<F5> ................................ 4.150%
Preferred share (C Series) rate as of 04/30/95<F5> ................................ 4.170%
Preferred share (D Series) rate as of 04/30/95<F5> ................................ 4.180%
Closing common stock price as of 04/30/95 ........................................ $ 14.250
Six-month high common stock price (04/07/95) ..................................... $ 14.750
Six-month low common stock price (11/11/94) ...................................... $ 11.500
<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 net asset value.
<F3> Distribution rate represents the monthly annualized distributions of the
Trust at the end of April 1995, and not the earnings of the Trust.
<F4> The taxable-equivalent distribution rate is calculated assuming a 36%
federal tax bracket.
<F5> See "Notes to Financial Statements" footnote #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>
Page: 4
<TABLE>
Portfolio of Investments
<CAPTION>
April 30,1995 (Unaudited)
- -------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal Bonds
Alabama 1.1%
$ 6,050 Alabama Wtr Pollutn Ctl Auth Revolving Fd Ln
Ser A (AMBAC Insd) .................................. 5.000% 08/15/15 $ 5,299,800
------------
Alaska 1.7%
10,000 Alaska St Hsg Fin Corp Ser A Rfdg .................. 5.000 12/01/18 8,275,100
------------
Arizona 1.3%
5,500 Pima Cnty, AZ Indl Dev Auth Indl Rev Lease Oblig
Irvington Proj Tucson Ser A Rfdg (FSA Insd) ........ 7.250 07/15/10 6,030,585
------------
California 8.2%
4,215 California Hlth Fac Fin Auth Rev Kaiser Permanente
Med Cent ............................................ 5.450 10/01/13 3,892,173
5,000 California St Pub Wks Brd Lease Rev Var CA St
Univ Projs Ser A .................................... 5.250 12/01/13 4,399,500
4,000 California Statewide Cmntys Dev Auth Rev Ctfs
Partn Insd Hlth Fac Unihealth Ser A (AMBAC Insd) ... 5.500 10/01/06 3,939,880
5,000 Los Angeles Cnty, CA Pub Wks Fin Auth Rev Cap
Construction Rfdg ................................... 5.000 03/01/11 4,399,700
7,500 Los Angeles Cnty, CA Tran Comm Sales Tax Rev
Prop C Ser A (Prerefunded @ 07/01/02) ............... 6.500 07/01/20 8,271,075
10,000 San Diego, CA Indl Dev Rev San Diego Gas & Elec
Ser A (Embedded Cap) (MBIA Insd) .................... 6.100 09/01/18 10,028,400
4,500 San Francisco, CA City & Cnty Redev Agy
Multi-Family Rev Hsg South Beach Proj Rfdg
(GNMA Collateralized) .............................. 5.500 03/01/14 4,119,615
------------
39,050,343
------------
Colorado 5.0%
6,985 Colorado Hsg Fin Auth Access Pgm Single Family
Pgm Ser E .......................................... 8.125 12/01/24 7,722,546
1,185 Colorado Hsg Fin Auth Amt Single Family Pgm
Sr Ser B1 <F2> ..................................... 7.900 12/01/25 1,301,960
1,995 Colorado Hsg Fin Auth Single Family Ser D1 Rfdg ..... 8.000 12/01/24 2,220,056
6,000 Denver, CO City & Cnty Arpt Rev Ser A .............. 8.000 11/15/17 6,229,860
2,000 Denver, CO City & Cnty Arpt Rev Ser B .............. 7.500 11/15/25 2,031,280
3,215 Denver, CO City & Cnty Arpt Rev Ser C .............. 6.350 11/15/01 3,191,402
1,000 Meridian Metro Dist CO Peninsular & Oriental Steam
Navig Co Rfdg ...................................... 7.500 12/01/11 1,056,100
------------
23,753,204
------------
District of Columbia 1.1%
5,000 District of Columbia Rev Howard Univ Ser A
(MBIA Insd) ........................................ 7.250 10/01/20 5,341,200
------------
Florida 1.3%
6,250 Broward Cnty, FL Hsg Fin Auth Single
Family Mtg Rev ...................................... 6.700 02/01/28 6,304,750
------------
See Notes to Financial Statements
</TABLE>
Page: 5
<TABLE>
Portfolio of Investments (Continued)
<CAPTION>
April 30,1995 (Unaudited)
- -----------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Georgia 1.0%
$ 1,000 Atlanta, GA Spl Purp Fac Rev Delta Airls Ser B ... 7.900% 12/01/18 $ 1,038,770
3,770 Monroe Cnty, GA Dev Auth Pollutn Ctl Rev
Oglethorpe Pwr Corp Scherer Ser A ................. 6.800 01/01/12 3,998,537
------------
5,037,307
------------
Hawaii 1.5%
5,045 Hawaii St Arpt Sys Rev 2nd Ser (FGIC Insd) ....... 7.500 07/01/20 5,439,368
1,750 Hawaii St Hsg Fin & Dev Corp Single Family Mtg
Purp Rev Ser A .................................... 8.125 07/01/17 1,851,990
------------
7,291,358
------------
Illinois 6.9%
1,620 Aurora, IL Single Family Mtg Rev Ser B Rfdg
(GNMA Collateralized) ............................ 8.050 09/01/25 1,963,067
3,000 Chicago, IL O'Hare Intl Arpt Spl Fac Rev
American Airls Inc Proj Ser B .................... 7.875 11/01/25 3,129,060
5,000 Chicago, IL O'Hare Intl Arpt Spl Fac Rev
Intl Terminal (MBIA Insd) <F3> .................... 6.750 01/01/18 5,168,250
5,000 Chicago, IL Sch Fin Auth Ser A (MBIA Insd) ....... 5.000 06/01/09 4,519,800
3,000 Cicero, IL (MBIA Insd) ........................... 6.500 12/01/14 3,100,980
3,000 Evergreen Park, IL Hosp Fac Little Co of Mary
Hosp Rev Rfdg (MBIA Insd) ......................... 7.750 02/15/09 3,256,560
3,545 Illinois Edl Fac Auth Rev Lake Forest College
(FSA Insd) ....................................... 6.750 10/01/21 3,685,347
2,250 Illinois St Dedicated Tax Rev Civic Cent Ser A
(AMBAC Insd) ..................................... 6.000 12/15/15 2,185,065
5,000 Regional Tran Auth IL Ser B (AMBAC Insd) ......... 8.000 06/01/17 6,158,000
------------
33,166,129
------------
Indiana 0.9%
2,000 Indiana Hlth Fac Fin Auth Hosp Rev Columbus
Regl Hosp Rfdg (Cap Guar Insd) ................... 7.000 08/15/15 2,230,160
2,000 Indianapolis, IN Loc Pub Impt Bond Bank Ser D .... 6.500 02/01/22 2,013,740
------------
4,243,900
------------
Kansas 2.3%
5,500 Burlington, KS Pollutn Ctl Rev KS Gas & Elec Co
Proj Rfdg (MBIA Insd) ............................. 7.000 06/01/31 5,917,780
1,405 Sedgwick & Shawnee Cntys, KS Single Family Rev
Collateral Mtg Ser A Rfdg (GNMA Collateralized) ... 8.050 05/01/24 1,557,105
3,075 Sedgwick Cnty, KS Single Family Mtg Rev Coll
Ser A Rfdg (GNMA Collateralized) <F2> ............ 8.125 05/01/24 3,412,820
------------
10,887,705
------------
See Notes to Financial Statements
</TABLE>
Page: 6
<TABLE>
Portfolio of Investments (Continued)
<CAPTION>
April 30,1995 (Unaudited)
- ---------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kentucky 1.6%
$ 3,750 Kenton Cnty, KY Arpt Brd Arpt Rev Spl Fac
Delta Airls Proj Ser A ............................... 7.125% 02/01/21 $ 3,734,063
4,450 Louisville & Jefferson Cnty, KY Metro Swr Dist
Drainage Rev Rfdg (MBIA Insd) ......................... 5.300 05/15/19 4,040,199
------------
7,774,262
------------
Louisiana 2.4%
2,000 Louisiana Hsg Fin Agy Mtg Rev Multi-Family
Emerald Pointe Apts (FHA Insd) ....................... 7.100 11/01/33 2,088,000
2,530 Louisiana Hsg Fin Agy Mtg Rev Single Family
Access Pgm Ser B (GNMA Collateralized) ............... 8.000 03/01/25 2,959,215
3,500 Louisiana Pub Fac Auth Hosp Rev Touro Infirmary
Proj Ser A Rfdg ....................................... 6.000 08/15/09 3,183,565
3,000 Saint Charles Parish, LA Enviromental Impt Rev LA
Pwr & Lt Co Ser A (AMBAC Insd) ....................... 6.875 07/01/24 3,143,880
------------
11,374,660
------------
Maryland 2.0%
9,000 Maryland St Cmnty Dev Admin Dept Hsg & Cmnty
Dev Single Family Pgm 3rd Ser (FHA Insd) .............. 7.375 04/01/26 9,345,690
------------
Massachusetts 3.4%
2,500 Chelsea, MA Sch Proj Ln Act 1948 (AMBAC Insd) ......... 6.500 06/15/12 2,631,325
3,955 Massachusetts Bay Tran Auth MA Genl Tran Sys
Ser A Rfdg ........................................... 5.500 03/01/12 3,714,931
2,250 Massachusetts Bay Tran Auth MA Genl Tran Sys
Ser B Rfdg (MBIA Insd) <F3> .......................... 6.000 03/01/10 2,284,853
3,500 Massachusetts Muni Whsl Elec Co Pwr Supply Sys
Rev (AMBAC Insd) ..................................... 5.000 07/01/10 3,147,760
3,250 Massachusetts St Hlth & Edl Fac Auth Rev
Saint Mem Med Cent Ser A .............................. 6.000 10/01/23 2,235,610
2,000 Massachusetts St Hsg Fin Agy (FNMA Collateralized) ... 6.800 11/15/12 2,070,860
------------
16,085,339
------------
Michigan 4.1%
1,680 Michigan Higher Edl Fac Auth Rev Ltd Oblig
Hope Coll Proj Rfdg (Connie Lee Insd) ................ 7.000 10/01/14 1,816,685
3,350 Michigan St Hosp Fin Auth Rev Hosp Mid-MI
Oblig Group ........................................... 6.800 12/01/14 3,387,285
10,900 Michigan St Hsg Dev Auth Rental Hsg Rev Ser A Rfdg ... 6.600 04/01/12 11,082,575
3,000 Michigan St Strategic Fund Ltd Oblig Rev Ser CC
Rfdg (FGIC Insd) ...................................... 6.950 09/01/21 3,194,310
------------
19,480,855
------------
See Notes to Financial Statements
</TABLE>
Page: 7
<TABLE>
Portfolio of Investments (Continued)
<CAPTION>
April 30,1995 (Unaudited)
- ------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mississippi 3.7%
$ 6,795 Mississippi Home Corp Single Family Rev Mtg Access
Pgm Ser B (GNMA Collateralized) .................... 7.900% 03/01/25 $ 7,470,287
2,650 Mississippi Home Corp Single Family Rev Mtg Access
Pgm Ser B (GNMA Collateralized) .................... 6.625 04/01/27 2,657,393
2,795 Mississippi Home Corp Single Family Rev Mtg Access
Pgm Ser C (GNMA Collateralized) .................... 8.125 12/01/24 3,112,764
4,000 Mississippi Home Corp Single Family Rev Mtg Access
Pgm Ser E (GNMA Collateralized) ................... 8.100 12/01/25 4,454,800
------------
17,695,244
------------
Missouri 0.5%
2,100 Kansas City, MO Arpt Rev Amt Genl Impt Ser A
(Cap Guar Insd) ................................... 6.900 09/01/10 2,273,733
------------
New Jersey 5.3%
10,000 New Jersey Econ Dev Auth St Contract Econ Recovery
(Embedded Cap) ..................................... 5.900 09/15/21 9,894,900
8,000 New Jersey Econ Dev Auth Wtr Fac Rev NJ American
Wtr Co Inc Proj Ser A .............................. 6.875 11/01/34 8,446,240
2,000 New Jersey St Hwy Auth Garden St Parkway Genl
Rev Sr Parkway ..................................... 6.250 01/01/14 2,029,160
4,650 Salem Cnty, NJ Indl Pollutn Ctl Fin Auth Rev Pollutn
Ctl Pub Svc Elec & Gas Ser D Rfdg (MBIA Insd) ..... 6.550 10/01/29 4,823,956
------------
25,194,256
------------
New York 19.9%
1,500 Broome Cnty, NY Ctfs Partn Pub Safety Fac
(MBIA Insd) ....................................... 5.250 04/01/15 1,352,430
1,500 Metropolitan Tran Auth NY Transport Fac
Rev Ser K Rfdg ..................................... 6.250 07/01/11 1,492,290
4,250 New York City Indl Dev Agy Civic Fac Rev
USTA Natl Tennis Cent Proj (FSA Insd) ............. 6.375 11/15/14 4,321,018
250 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev Ser C (Prerefunded @ 06/15/97) (AMBAC Insd) ... 6.500 06/15/21 263,130
10 New York City Ser A ............................... 8.000 08/15/19 11,022
10,000 New York City Ser B (Embedded Cap) ................ 6.600 10/01/16 9,991,100
1,650 New York City Ser C ................................ 7.125 08/15/12 1,691,250
6,500 New York City Ser C ................................ 7.000 08/15/16 6,651,905
2,875 New York City Ser C ................................ 7.250 08/15/24 2,965,131
3,970 New York St Dorm Auth Rev City Univ Ser F ......... 5.000 07/01/14 3,333,649
2,600 New York St Dorm Auth Rev Cons City Univ Sys
2nd Genl Res Ser A ................................. 5.750 07/01/13 2,411,786
5,050 New York St Dorm Auth Rev Cons City Univ Sys
2nd Genl Res Ser B ................................. 5.375 07/01/07 4,725,739
4,050 New York St Dorm Auth Rev Court Fac Lease Ser A .... 5.300 05/15/07 3,746,898
See Notes to Financial Statements
</TABLE>
Page: 8
<TABLE>
Portfolio of Investments (Continued)
<CAPTION>
April 30,1995 (Unaudited)
- --------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York (Continued)
$ 1,000 New York St Dorm Auth Rev St Univ Edl Fac
Ser A (Prerefunded @ 05/15/99) <F3> ................. 7.125% 05/15/09 $ 1,102,240
5,000 New York St Dorm Auth Rev St Univ Edl Fac
Ser A Rfdg ............................................ 5.500 05/15/08 4,685,550
2,000 New York St Dorm Auth Rev St Univ Edl Fac Ser B ...... 7.500 05/15/11 2,244,380
4,175 New York St Med Care Fac Fin Agy Rev Mental Hlth
Services Fac Ser A .................................. 7.500 02/15/21 4,485,495
2,365 New York St Med Care Fac Fin Agy Rev Mental Hlth
Services Impt Ser B .................................. 7.375 02/15/14 2,500,822
6,750 New York St Med Care Fac Fin Agy Rev NY Hosp
Mtg Ser A (AMBAC Insd) .............................. 6.300 08/15/06 7,222,702
7,000 New York St Med Care Fac Fin Agy Rev NY Hosp
Mtg Ser A (AMBAC Insd) .............................. 6.400 08/15/07 7,490,490
2,000 New York St Med Care Fac Fin Agy Rev NY Hosp
Mtg Ser A (AMBAC Insd) .............................. 6.600 02/15/11 2,108,840
3,000 New York St Pwr Auth Rev & Genl Purp Ser Y .......... 6.750 01/01/18 3,176,100
7,500 New York St Thruway Auth Svc Contract Rev Loc
Hwy & Brdg .......................................... 5.250 04/01/13 6,565,875
5,545 New York St Urban Dev Corp Rev St Fac ............... 7.500 04/01/20 5,983,332
3,000 Triborough Brdg & Tunl Auth NY Rev Genl Purp
Ser A Rfdg .......................................... 5.000 01/01/12 2,674,680
2,000 Triborough Brdg & Tunl Auth NY Rev Genl Purp Ser X ... 6.500 01/01/19 2,090,000
------------
95,287,854
------------
North Carolina 4.2%
10,000 North Carolina Eastn Muni Pwr Agy Pwr Sys Rev
Ser B Rfdg (Embedded Cap) ........................... 6.000 01/01/14 9,489,900
11,000 North Carolina Muni Pwr Agy No 1 Catawba Elec Rev
(Embedded Cap) ....................................... 6.000 01/01/12 10,716,640
------------
20,206,540
------------
Ohio 0.7%
3,000 Alliance, OH Wtr Wks Rev (FGIC Insd) ................. 6.650 10/15/17 3,153,210
------------
Oklahoma 0.4%
2,000 Oklahoma City, OK Indl & Cultural Fac Trust Rev
Dist Heating & Cooling Trigen ........................ 6.750 09/15/17 2,013,380
------------
Pennsylvania 0.9%
4,000 Pennsylvania Intergovt Coop Auth Spl Tax Rev
Philadelphia Funding Pgm (FGIC Insd) ................ 6.750 06/15/21 4,237,360
------------
Rhode Island 1.6%
7,800 Rhode Island Hsg & Mtg Fin Corp Homeownership
Oppty Ser 5 ......................................... 6.400 04/01/24 7,574,736
------------
Tennessee 1.1%
5,000 Tennessee Hsg Dev Agy Homeownership Proj T ........... 7.375 07/01/23 5,215,500
------------
See Notes to Financial Statements
</TABLE>
Page: 9
<TABLE>
Portfolio of Investments (Continued)
<CAPTION>
April 30,1995 (Unaudited)
- -------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Texas 7.0%
$ 4,000 Brazos River Auth TX Pollutn Ctl Rev Coll TX
Utils Elec Co Proj A ............................... 7.875% 03/01/21 $ 4,346,800
1,000 Brazos, TX Higher Edl Auth Inc Student Ln Rev
Subser A2 Rfdg ...................................... 6.800 12/01/04 1,051,670
2,585 Brazos, TX Higher Edl Auth Inc Student Ln Rev
Subser C2 Rfdg ..................................... 7.100 11/01/04 2,708,615
5,000 Dallas-Fort Worth, TX Intl Arpt Fac Impt Corp Rev
American Airls Inc .................................. 7.250 11/01/30 5,042,550
5,340 Dallas-Fort Worth, TX Intl Arpt Fac Impt Corp Rev
Delta Airls Inc ..................................... 7.625 11/01/21 5,496,088
1,500 Dallas-Fort Worth, TX Intl Arpt Fac Impt Corp Rev
Delta Airls Inc ..................................... 7.125 11/01/26 1,493,445
5,140 Little Elm, TX Indpt Sch Dist Rfdg (PSF Insd) ...... 6.750 08/15/29 5,382,042
3,660 San Antonio, TX Arpt Sys Rev Rfdg .................. 7.375 07/01/12 4,104,544
2,000 Tarrant Cnty, TX Jr College Dist .................... 5.050 02/15/10 1,809,720
2,000 Texas St Dept Hsg & Cmnty Affairs Single Family
Rev Mtg Jr Lien Ser A Rfdg .......................... 8.100 09/01/15 2,226,400
------------
33,661,874
------------
Utah 1.7%
4,500 Intermountain Pwr Agy UT Pwr Supply Rev Ser B ....... 7.000 07/01/21 4,707,585
1,525 Salt Lake City, UT Arpt Rev Delta Airls Inc Proj ... 7.900 06/01/17 1,582,050
2,000 Utah St Hsg Fin Agy Single Family Mtg Senior
Issue C Rfdg (FHA Insd) <F2> ....................... 6.500 07/01/15 1,979,820
------------
8,269,455
------------
Washington 1.1%
1,400 King Cnty, WA Hsg Auth Hsg Rev Rev Pooled
Sr Ser A Rfdg ...................................... 6.700 03/01/15 1,412,348
3,450 Washington St Pub Pwr Supply Sys Nuclear
Proj No 2 Ser B Rev Rfdg (FSA Insd) ................. 7.000 07/01/12 3,656,586
------------
5,068,934
------------
West Virginia 2.5%
2,500 Berkeley Cnty, WV Bldg Comm Hosp Rev City
Hosp Proj ........................................... 6.500 11/01/22 2,422,275
5,000 Marshall Cnty, WV Pollutn Ctl Rev OH Pwr Co Proj
Ser C Rfdg (MBIA Insd) <F3> ........................ 6.850 06/01/22 5,286,950
2,000 West Virginia St Hsg Dev Fd Hsg Fin Ser A .......... 5.550 05/01/17 1,774,920
3,000 West Virginia St Hsg Dev Fd Hsg Fin Ser A .......... 5.450 11/01/21 2,635,020
------------
12,119,165
------------
See Notes to Financial Statements
</TABLE>
Page: 10
<TABLE>
Portfolio of Investments (Continued)
<CAPTION>
April 30, 1995 (Unaudited)
- -------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Wisconsin 2.4%
$ 5,000 Madison, WI Indl Dev Rev Madison Gas & Elec Co
Proj Ser A ................................... 6.750% 04/01/27 $ 5,100,200
3,000 Wisconsin Hsg & Econ Dev Auth Homeownership
Rev Ser A .................................... 6.450 03/01/17 2,999,640
3,500 Wisconsin Hsg & Econ Dev Auth Homeownership
Rev Ser D .................................... 6.650 07/01/25 3,490,515
---------------
11,590,355
---------------
Wyoming 0.5%
2,500 Wyoming Cmnty Dev Auth Insd Single Family
Mtg Ser B .................................... 6.700 06/01/17 2,576,725
---------------
Puerto Rico 0.6%
1,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev
Ser V Rfdg .................................. 5.750 07/01/18 942,610
2,000 Puerto Rico Elec Pwr Auth Pwr Rev Ser N ..... 7.000 07/01/07 2,132,000
---------------
3,074,610
---------------
Total Long-Term Investments 99.9%
(Cost $466,198,181) <F1> ................................................... 477,955,118
Short-Term Investments at Amortized Cost 1.4% ............................ 6,900,000
Liabilities in Excess of Other Assets (1.3%) ............................. (6,325,779)
---------------
Net Assets 100% ........................................................... $ 478,529,339
---------------
<FN>
<F1> At April 30, 1995, cost for federal income tax purposes is $466,198,181;
the aggregate gross unrealized appreciation is $16,275,729 and the aggregate
gross unrealized depreciation is $8,561,728, resulting in net unrealized
appreciation including futures transactions of $7,714,001.
<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 futures transactions.
</FN>
</TABLE>
The following table summarizes the portfolio composition at April 30, 1995,
based upon quality ratings issued by Standard & Poor's. For securities not rated
by Standard & Poor's, the Moody's rating is used.
Portfolio Composition by Credit Quality
<TABLE>
<CAPTION>
<S> <C>
AAA ... 41.8%
AA .... 14.8
A ..... 25.6
BBB ... 10.4
BB .... 6.9
B ..... .5
-------
100.0%
-------
</TABLE>
See Notes to Financial Statements
Page: 11
Statement of Assets and Liabilities
<TABLE>
April 30,1995 (Unaudited)
- --------------------------------------------------------------------------------------------------------------
Assets:
<CAPTION>
<S> <C>
Investments, at Market Value (Cost $466,198,181) (Note 1) .................................... $ 477,955,118
Short-Term Investments (Note 1) .............................................................. 6,900,000
Receivables:
Investments Sold ............................................................................. 13,369,851
Interest ..................................................................................... 9,564,469
Unamortized Organizational Expenses (Note 1) ................................................ 19,220
Other ........................................................................................ 377
---------------
Total Assets ................................................................................. 507,809,035
---------------
Liabilities:
Payables:
Investments Purchased ........................................................................ 28,296,819
Income Distributions - Common and Preferred Shares .......................................... 364,489
Investment Advisory Fee (Note 2) ............................................................. 258,109
Administrative Fee (Note 2) ................................................................. 79,418
Margin on Futures (Note 4) .................................................................. 78,125
Custodian Bank ............................................................................... 4,332
Accrued Expenses ............................................................................. 198,404
---------------
Total Liabilities ............................................................................ 29,279,696
---------------
Net Assets ................................................................................... $ 478,529,339
---------------
Net Assets Consist of:
Preferred Shares ($.01 par value, authorized 100,000,000 shares, 3,800 issued with liquidation
preference of $50,000 per share) (Note 5) .................................................... $ 190,000,000
---------------
Common Shares ($.01 par value with an unlimited number of shares authorized,
19,106,785 shares issued and outstanding) ................................................... 191,068
Paid in Surplus ............................................................................. 282,031,706
Net Unrealized Appreciation on Investments .................................................. 7,714,001
Accumulated Undistributed Net Investment Income ............................................. 4,520,828
Accumulated Net Realized Loss on Investments ................................................. (5,928,264)
---------------
Net Assets Applicable to Common Shares ....................................................... 288,529,339
---------------
Net Assets ................................................................................... $ 478,529,339
---------------
Net Asset Value Per Common Share($288,529,339 divided
by 19,106,785 shares outstanding) ............................................................ $ 15.10
---------------
</TABLE>
See Notes to Financial Statements
Page: 12
Statement of Operations
<TABLE>
For the Six Months Ended April 30,1995 (Unaudited)
- -----------------------------------------------------------------------------------------------------------
Investment Income:
<CAPTION>
<S> <C>
Interest ................................................................................. $ 14,929,701
----------------
Expenses:
Investment Advisory Fee (Note 2) ........................................................ 1,497,286
Administrative Fee (Note 2) .............................................................. 460,703
Preferred Share Maintenance (Note 5) ..................................................... 223,798
Trustees Fees and Expenses (Note 2) ...................................................... 10,920
Legal (Note 2) .......................................................................... 9,385
Amortization of Organizational Expenses (Note 1) ........................................ 3,968
Other .................................................................................... 150,849
----------------
Total Expenses ........................................................................... 2,356,909
----------------
Net Investment Income .................................................................... $ 12,572,792
----------------
Realized and Unrealized Gain/Loss on Investments:
Realized Gain/Loss on Investments:
Proceeds from Sales ...................................................................... $ 300,100,139
Cost of Securities Sold .................................................................. (298,899,788)
----------------
Net Realized Gain on Investments (Including realized gain on closed and expired option and
futures transactions of $10,472 and $2,014,059, respectively) ............................ 1,200,351
----------------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period ................................................................. (13,178,617)
End of the Period (Including unrealized depreciation on open futures transactions
of $4,042,936) ........................................................................... 7,714,001
----------------
Net Unrealized Appreciation on Investments During the Period ............................. 20,892,618
----------------
Net Realized and Unrealized Gain on Investments .......................................... $ 22,092,969
----------------
Net Increase in Net Assets from Operations ............................................... $ 34,665,761
----------------
</TABLE>
See Notes to Financial Statements
Page: 13
Statement of Changes in Net Assets
<TABLE>
For the Six Months Ended April 30,1995 and the Year Ended October 31,1994
(Unaudited)
- ------------------------------------------------------------------------------------------------------
<CAPTION>
Six Months Ended Year Ended
April 30,1995 October 31,1994
<S> <C> <C>
From Investment Activities:
Operations:
Net Investment Income ............................................. $ 12,572,792 $ 25,870,616
Net Realized Gain/Loss on Investments ............................. 1,200,351 (7,128,614)
Net Unrealized Appreciation/Depreciation on Investments
During the Period ................................................ 20,892,618 (53,021,244)
---------------- ---------------
Change in Net Assets from Operations ............................. 34,665,761 (34,279,242)
---------------- ---------------
Distributions from Net Investment Income:
Common Shares ..................................................... (9,744,352) (19,488,793)
Preferred Shares ................................................. (3,740,661) (5,449,834)
---------------- ---------------
(13,485,013) (24,938,627)
---------------- ---------------
Distributions from Net Realized Gain on Investments:
Common Shares ..................................................... -0- (1,270,601)
Preferred Shares ................................................. -0- (360,238)
---------------- ---------------
-0- (1,630,839)
---------------- ---------------
Total Distributions .............................................. (13,485,013) (26,569,466)
---------------- ---------------
Net Change in Net Assets from Investment Activities ............... 21,180,748 (60,848,708)
Net Assets:
Beginning of the Period .......................................... 457,348,591 518,197,299
---------------- ---------------
End of the Period (Including undistributed net investment income of
$4,520,828 and $5,433,049, respectively) ......................... $ 478,529,339 $ 457,348,591
---------------- ---------------
</TABLE>
See Notes to Financial Statements
Page: 14
Financial Highlights
The following schedule presents financial highlights for one common share of the
Trust outstanding throughout the periods indicated.(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 25,1992
Six Months Year Year (Commencement
Ended Ended Ended of Investment
April 30, October 31, October 31, Operations) to
1995 1994 1993 October 31,1992
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period <F1> ............ $ 13.992 $ 17.177 $ 14.587 $ 14.771
Net Investment Income ............... .659 1.354 1.369 .056
Net Realized and Unrealized
Gain/Loss on Investments ........... 1.156 (3.148) 2.408 (.237)
---------- ------------ ----------- -----------------
Total from Investment Operations ... 1.815 (1.794) 3.777 (.181)
---------- ------------ ----------- -----------------
Less:
Distributions from
Net Investment Income:
Paid to Common Shareholders ......... .510 1.020 .884 -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders .............. .196 .285 .303 .003
Distributions from Net Realized
Gain on Investments:
Paid to Common Shareholders ......... -0- .067 -0- -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders .............. -0- .019 -0- -0-
---------- ------------ ----------- -----------------
Total Distributions ................. .706 1.391 1.187 .003
---------- ------------ ----------- -----------------
Net Asset Value, End of Period ..... $ 15.101 $ 13.992 $ 17.177 $ 14.587
---------- ------------ ----------- -----------------
Market Price Per Share
at End of Period .................... $ 14.250 $ 12.750 $ 16.000 $ 13.875
Total Investment Return at
Market Price (Non-Annualized) <F2> .. 15.87% (14.17%) 22.08% (7.50%)
Total Return at Net Asset Value
(Non-Annualized) <F3> .............. 11.80% (12.71%) 24.24% (2.73%)
Net Assets at End of Period
(In millions) ....................... $ 478.5 $ 457.3 $ 518.2 $ 468.7
Ratio of Expenses to Average Net
Assets Applicable to
Common Shares (Annualized) ......... 1.71% 1.64% 1.66% 1.12%
Ratio of Expenses to Average
Net Assets (Annualized) ............ 1.01% 1.00% 1.03% 1.00%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares (Annualized) <F4> ..... 6.41% 6.81% 6.57% 3.52%
Portfolio Turnover .................. 65.29% 132.59% 111.79% 14.83%
<FN>
<F1> Net asset value at September 25, 1992 is adjusted for common and preferred
share offering costs of $.229 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 the common share equivalent of
distributions paid to preferred shareholders.
</TABLE>
See Notes to Financial Statements
Page: 15
Notes to Financial Statements
April 30,1995 (Unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Van Kampen Merritt Advantage Municipal Income Trust (the "Trust") is registered
as a diversified closed-end management investment company under the Investment
Company Act of 1940, as amended. The Trust commenced investment operations on
September 25, 1992.
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 ("VKAC") for costs incurred in connection
with the Trust's organization and initial registration in the amount of $40,000.
These costs are being amortized on a straight line basis over the 60 month
period ending September 24, 1997. 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.
Page: 16
Notes to Financial Statements (Continued)
April 30,1995 (Unaudited)
- --------------------------------------------------------------------------------
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 October 31, 1994, the Trust had an accumulated capital loss
carry forward for tax purposes of $7,128,615, which will expire on October 31,
2002.
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 .65% 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 six months ended April 30, 1995, the Trust recognized expenses of
approximately $12,500 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 April 30, 1995, was approximately
$13,300.
At April 30, 1995, VKAC owned 6,700 common shares of the Trust.
Page: 17
Notes to Financial Statements (Continued)
April 30,1995 (Unaudited)
- --------------------------------------------------------------------------------
3. Investment Transactions
Aggregate purchases and cost of sales of investment securities, excluding
short-term notes, for the six months ended April 30, 1995 were $301,394,538 and
$298,899,788, 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 six months ended April 30, 1995, were as
follows:
<TABLE>
<CAPTION>
Contracts Premium
- -------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at October 31, 1994 .................... -0- $ -0-
Options Written and Purchased (Net) ................ 3,350 (1,894,243)
Options Terminated in Closing Transactions (Net) ... (1,250) 933,534
Options Expired (Net) .............................. (2,100) 960,709
--------- --------------
Outstanding at April 30, 1995 ...................... -0- $ -0-
--------- --------------
</TABLE>
B. Futures Contracts-A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Trust generally invests in futures on U.S. Treasury Bonds and the Municipal Bond
index and typically closes the contract prior to the delivery date. These
contracts are generally used to manage the portfolio's effective maturity and
duration.
Page: 18
Notes to Financial Statements (Continued)
April 30,1995 (Unaudited)
- --------------------------------------------------------------------------------
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 April 30, 1995,
were as follows:
<TABLE>
<CAPTION>
Contracts
- ----------------------------------------------
<S> <C>
Outstanding at October 31, 1994 ... 2,875
Futures Opened .................... 6,095
Futures Closed .................... (5,470)
--------
Outstanding at April 30, 1995 ..... 3,500
--------
</TABLE>
The futures contracts outstanding at April 30, 1995, and the descriptions and
unrealized appreciation/depreciation are as follows:
<TABLE>
<CAPTION>
Unrealized
Appreciation/
Contracts Depreciation
- ----------------------------------------------------------
<S> <C> <C>
Municipal Bond Futures
June 1995 - Buys to Open .... 250 $ (203,580)
U.S. Treasury Bond Futures
June 1995 - Buys to Open .... 600 1,420,158
June 1995 - Sells to Open ... 1,500 (5,173,671)
Sept 1995 - Buys to Open .... 600 426,408
Sept 1995 - Sells to Open ... 550 (512,251)
--------- ---------------
3,500 $ (4,042,936)
--------- ---------------
</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 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.
5. Preferred Shares
The Trust has outstanding 3,800 Auction Preferred Shares ("APS") in four series.
Series A, B and C each contain 1,000 shares while Series D contains 800 shares.
Dividends are cumulative and the dividend rate is reset every 28 days through an
auction process. The average rate in effect on April 30, 1995 was 4.16%. During
the six months ended April 30, 1995, the rates ranged from 2.50% to 5.05%.
Page: 19
Notes to Financial Statements (Continued)
April 30,1995 (Unaudited)
- --------------------------------------------------------------------------------
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.
Page: 20
Funds Distributed by Van Kampen American Capital
GLOBAL AND INTERNATIONAL
Govett Emerging Markets Fund
AC Global Equity Fund
Govett Global Government Income Fund
AC Global Government Securities
AC Global Managed Assets Fund
Govett International Equity Fund
Govett Latin America Fund
Govett Pacific Strategy Fund
VKM Short-Term Global Income Fund
VKM Strategic Income Fund
EQUITY
Growth
AC Emerging Growth Fund
AC Enterprise Fund
AC Pace Fund
Govett Smaller Companies Fund
Growth & Income
VKM Balanced Fund
AC Comstock Fund
AC Equity Income Fund
AC Growth and Income Fund
VKM Growth and Income Fund
AC Harbor Fund
AC Real Estate Securities Fund
VKM Utility Fund
AC Utilities Income Fund
FIXED INCOME
VKM Adjustable Rate U.S. Government Fund
AC Corporate Bond Fund
AC Federal Mortgage Trust
AC Government Securities
VKM High Yield Fund
AC High Yield Investments
VKM Money Market Fund
VKM Prime Rate Income Trust
AC Reserve Fund
VKM U.S. Government Fund
AC U.S. Government Trust for Income
TAX-FREE
VKM California Insured Tax Free Fund
VKM Florida Insured Tax Free Income Fund
VKM Insured Tax Free Income Fund
VKM Limited Term Municipal Income Fund
AC Municipal Bond Fund
VKM Municipal Income Fund
VKM New Jersey Tax Free Income Fund
VKM New York Tax Free Income Fund
VKM Pennsylvania Tax Free Income Fund
AC Tax-Exempt Trust
-- High Yield Municipal Portfolio
-- Insured Municipal Portfolio
VKM Tax Free High Income Fund
VKM Tax Free Money Fund
AC Texas Municipal Securities
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.
Page: 21
Van Kampen Merritt Advantage Municipal Income Trust
Officers and Trustees
Don G. Powell*
Chairman and Trustee
Dennis J. McDonnell*
President and Trustee
David C. Arch
Trustee
Rod Dammeyer
Trustee
Howard J Kerr
Trustee
Theodore A. Myers
Trustee
Hugo F. Sonnenschein
Trustee
Wayne W. Whalen*
Trustee
Peter W. Hegel*
Vice President
Ronald A. Nyberg*
Vice President and Secretary
Edward C. Wood, III*
Vice President and Treasurer
Scott E. Martin*
Assistant Secretary
Weston B. Wetherell*
Assistant Secretary
Nicholas Dalmaso*
Assistant Secretary
John L. Sullivan*
Controller
Steven M. Hill*
Assistant Treasurer
Investment Adviser
Van Kampen American Capital Investment Advisory Corp.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Custodian and Transfer Agent
State Street Bank
and Trust Company
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom
333 West Wacker Drive Chicago, Illinois 60606
Independent Auditors
KPMG Peat Marwick LLP
Peat Marwick Plaza
303 East Wacker Drive Chicago, Illinois 60601
*"Interested" persons of the Trust, as defined in the Investment Company Act of
1940.
(C)Van Kampen American Capital Distributors, Inc., 1995 All rights reserved.
SM denotes a service mark of
Van Kampen American Capital Distributors, Inc.
