VAN KAMPEN MERRITT ADVANTAGE MUNICIPAL INCOME TRUST, N-30D, 1995-12-28

VAN KAMPEN MERRITT ADVANTAGE MUNICIPAL INCOME TRUST
N-30D, 1995-12-28

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<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
Independent Auditors'Report .......... 19
Dividend Reinvestment Plan ........... 20
</TABLE>

VKA ANR 12/95

Letter to Shareholders

November 22, 1995

Dear Shareholder:

The first ten months of 1995 have been very positive for most investors. Both
the fixed-income and equity markets have made considerable gains during the
period ended October 31, 1995.

This year serves as a reminder of just how quickly markets can move and how
difficult it can be to predict the timing of those movements. Moreover, this
year reinforces the importance of maintaining a long-term perspective and
reaffirms the principle that it is time -- not timing -- that leads to
investment success.

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

Economic Overview

Although the third quarter posted a stronger-than-expected annual gross
domestic product growth rate of 4.2 percent, the economy has slowed
significantly this year. This slowdown is due in large part to the Federal
Reserve Board's efforts to tighten monetary supply in 1994 --
a measure that proved successful, as economic growth during the first half of
1995 was substantially lower than its fourth quarter 1994 rate of 5.1 percent.
And, while other key economic data have shown mixed signs during recent months,
the general economic trends for the year continue to support a "soft landing"
scenario.

Comfortable with the economy's rate of growth and level of inflation, the Fed
reversed its trend of raising interest rates and lowered short-term rates by a
quarter percent on July 6. With slowing growth, interest rates declined and the
value of many fixed-income investments rose (bond yields and prices move in
opposite directions).

Performance Summary

The Trust produced a tax-exempt distribution of 7.10 percent<F3>, based on
the closing stock price of $14.375 per common share on October 31, 1995.
Because income from the Trust is exempt from federal income tax, it is
important to compare the Trust's distribution rate to an equivalent taxable
rate. For example, for investors in the 36 percent federal income tax bracket,
the Trust's distribution rate represents a yield equivalent to a taxable
investment earning 11.09 percent<F4>. In fact, many closed-end municipal
bond funds, such as your investment, are currently offering higher yields
(after taxes) over many income alternatives.

As the graph on the following page shows, the Trust's net asset value and
market price have made significant gains over the one-year period. The Trust's
closing stock price, for example, gained more than 12.7 percent from October
1994 to October 1995. Moreover, we are pleased to report the Trust generated a
one-year total return at market price of 21.06 percent<F1>, which includes
reinvestment of dividends for the period ended October 31, 1995.

(Continued on page two)

[GRAPH]

Trust Participates
in Market Gains of '95

Market
Date NAV Price

31-Oct-94 13.99 12.7500
30-Nov-94 13.26 12.6250
31-Dec-94 13.88 12.7500
31-Jan-95 14.46 13.8750
28-Feb-95 15.09 14.5000
31-Mar-95 15.24 14.5000
30-Apr-95 15.10 14.2500
31-May-95 15.52 14.5000
30-Jun-95 15.18 14.5000
31-Jul-95 15.25 14.5000
31-Aug-95 15.33 14.1250
30-Sep-95 15.35 13.8750
31-Oct-95 15.61 14.3750

Based on month-end prices

Economic Outlook

We believe the Fed will move cautiously before it continues to lower
short-term rates, waiting for key indicators to show that the economy has truly
settled into a slow growth pattern. Although current economic data continues to
send mixed signals, we anticipate the economy will grow at an annual rate of 3
percent in the fourth quarter and inflation will run under 3 percent.

Based upon a generally modest growth and low inflation outlook, we believe
the outlook for fixed-income markets is positive. As interest rates fall in
response to a slowing economy, we believe yields on short-term municipal
bonds will continue to move significantly lower than long-term municipal
bonds. Lower short-term rates typically translate into lower leveraging
costs for the Trust, which provides increased opportunities for higher
earnings over time. Additionally, a steepening of the municipal yield curve
would likely increase investor demand for long-term municipal bonds and help
to boost market prices. Long-term municipal bond prices will also benefit
from the combination of low supply of new municipal bond issues and
increased demand driven by scheduled bond maturities.

While there has been varied speculation about the impact of tax reform, no one
is certain about what will finally happen. Consequently, in the near term, the
municipal market may continue to experience periodic market fluctuations as
various proposals come to the forefront. However, in the long term, we believe
the municipal market will remain an attractive investment choice for investors
seeking high current income. We will continue to keep a close watch over any new
developments and evaluate the potential impact they may have on your investment
in the Trust.

Once again, thank you for your continued confidence in your investment with
Van Kampen American Capital and for the privilege of working with you in seeking
to reach your financial goals.

Sincerely,

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

Performance Results for the Period Ended October 31, 1995
Van Kampen Merritt Advantage Municipal Income Trust
(NYSE Ticker Symbol-VKA)

<TABLE>
<CAPTION>
<S> <C>
Total Returns
One-year total return based on market price<F1> ....................................... 21.06%
One-year total return based on NAV<F2> ................................................ 19.46%

Distribution Rates
Distribution rate as a % of initial offer common stock price<F3> ...................... 6.80%
Taxable-equivalent distribution rate as a % of initial offer common stock price<F4> ... 10.63%
Distribution rate as a % of closing common stock price<F3> ........................... 7.10%
Taxable-equivalent distribution rate as a % of closing common stock price<F4> ......... 11.09%

Share Valuations
Net asset value ....................................................................... $ 15.61
Closing common stock price ............................................................ $ 14.375
One-year high common stock price (08/02/95) ........................................... $ 14.750
One-year low common stock price (11/11/94) ........................................... $ 11.500
Preferred share (Series A) rate<F5> .................................................. 3.783%
Preferred share (Series B) rate<F5> .................................................. 3.700%
Preferred share (Series C) rate<F5> ................................................... 3.749%
Preferred share (Series D) rate<F5> ................................................... 3.775%

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

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

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

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

<F5> See "Notes to Financial Statements" footnote #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.
</FN>
</TABLE>

Portfolio of Investments
October 31, 1995
- --------------------------------------------------------------------------------------------------
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 Fund
Ln Ser A (AMBAC Insd) ............................... 5.000% 08/15/15 $ 5,615,186
------------
Alaska 2.8%
5,000 Alaska St Hsg Fin Corp Ser A (MBIA Insd) <F2> ....... 5.875 12/01/30 4,872,950
10,000 Alaska St Hsg Fin Corp Ser A Rfdg ................... 5.000 12/01/18 8,758,600
------------
13,631,550
------------
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 6,159,285
------------
California 7.0%
4,215 California Hlth Fac Fin Auth Rev
Kaiser Permanente Med Cent ........................... 5.450 10/01/13 4,022,374
5,000 California St Pub Wks Brd Lease Rev Var CA St
Univ Projs Ser A ..................................... 5.250 12/01/13 4,586,750
10,000 Foothill / Eastern Tran Corridor Agy CA Toll Road
Rev Sr Lien Ser A ................................... * 01/01/20 1,936,500
2,000 Huntington Park, CA Redev Agy Single Family
Residential Mtg Rev Ser A Rfdg (FHA Gtd) ............. 8.000 12/01/19 2,595,220
2,500 Los Angeles Cnty, CA Pub Wks Fin Auth Rev
Cap Constr Rfdg (AMBAC Insd) ........................ 5.000 03/01/11 2,348,025
7,500 Los Angeles Cnty, CA Tran Comm Sales Tax Rev
Prop C Ser A (Prerefunded @ 07/01/02) ................ 6.500 07/01/20 8,531,850
10,000 San Diego, CA Indl Dev Rev San Diego Gas & Elec
Ser A (Embedded Cap) (MBIA Insd) ..................... 6.100 09/01/18 10,060,300
------------
34,081,019
------------
Colorado 6.2%
4,500 Arapahoe Cnty, CO Cap Impt Trust Fund Hwy
Rev E-470 Proj Ser C ................................ * 08/31/15 1,104,390
10,000 Arapahoe Cnty, CO Cap Impt Trust Fund Hwy
Rev E-470 Proj Ser C ................................ * 08/31/26 1,042,700
6,805 Colorado Hsg Fin Auth Access Pgm Single
Family Pgm Ser E ..................................... 8.125 12/01/24 7,648,275
2,685 Colorado Hsg Fin Auth Single Family Pgm Sr Ser B1 ... 7.900 12/01/25 3,049,677
1,960 Colorado Hsg Fin Auth Single Family Ser D1 Rfdg ...... 8.000 12/01/24 2,225,698
6,000 Denver, CO City & Cnty Arpt Rev Ser A ............... 8.000 11/15/17 6,427,080
2,500 Denver, CO City & Cnty Arpt Rev Ser B (MBIA Insd) ... 5.750 11/15/17 2,440,475
</TABLE>

4 See Notes to Financial Statements

Portfolio of Investments (Continued)
October 31, 1995
- ---------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal Bonds
Colorado (Continued)
$ 2,000 Denver, CO City & Cnty Arpt Rev Ser B ................ 7.500% 11/15/25 $ 2,089,600
3,215 Denver, CO City & Cnty Arpt Rev Ser C ................ 6.350 11/15/01 3,384,045
1,000 Meridian Metro Dist CO Peninsular & Oriental
Steam Navig Co Rfdg .................................. 7.500 12/01/11 1,073,970
------------
30,485,910
------------
District of Columbia 1.1%
5,000 District of Columbia Rev Howard Univ Ser A
(MBIA Insd) .......................................... 7.250 10/01/20 5,493,050
------------
Florida 1.3%
6,250 Broward Cnty, FL Hsg Fin Auth Single Family Mtg Rev ... 6.700 02/01/28 6,489,375
------------
Georgia 1.1%
1,000 Atlanta, GA Spl Purp Fac Rev Delta Airls Ser B ....... 7.900 12/01/18 1,066,680
3,770 Monroe Cnty, GA Dev Auth Pollutn Ctl Rev
Oglethorpe Pwr Corp Scherer Ser A ..................... 6.800 01/01/12 4,238,083
------------
5,304,763
------------
Hawaii 1.5%
5,045 Hawaii St Arpt Sys Rev 2nd Ser (FGIC Insd) ........... 7.500 07/01/20 5,629,312
1,715 Hawaii St Hsg Fin & Dev Corp Single Family
Mtg Purp Rev Ser A (FHA Gtd) ......................... 8.125 07/01/17 1,823,491
------------
7,452,803
------------
Illinois 5.9%
1,620 Aurora, IL Single Family Mtg Rev Ser B Rfdg
(GNMA Collateralized) ................................ 8.050 09/01/25 1,839,607
3,000 Chicago, IL O'Hare Intl Arpt Spl Fac Rev
American Airls Inc Proj Ser B ........................ 7.875 11/01/25 3,222,600
5,000 Chicago, IL O'Hare Intl Arpt Spl Fac Rev
Intl Terminal (MBIA Insd) <F3> ........................ 6.750 01/01/18 5,280,050
5,000 Chicago, IL Sch Fin Auth Ser A (MBIA Insd) ........... 5.000 06/01/09 4,809,000
3,000 Cicero, IL (MBIA Insd) ............................... 6.500 12/01/14 3,211,590
3,545 Illinois Edl Fac Auth Rev Lake Forest College
(FSA Insd) ............................................. 6.750 10/01/21 3,810,911
5,000 Regional Tran Auth IL Ser B (AMBAC Insd) ............. 8.000 06/01/17 6,480,650
------------
28,654,408
------------
Indiana 1.8%
4,000 Indiana Hlth Fac Fin Auth Hosp Rev
Cmnty Hosps Proj (MBIA Insd) .......................... 6.850 07/01/22 4,301,000
2,000 Indiana Hlth Fac Fin Auth Hosp Rev Columbus
Regl Hosp Rfdg (Cap Guar Insd) ....................... 7.000 08/15/15 2,315,040
2,000 Indianapolis, IN Loc Pub Impt Bond Bank Ser D ........ 6.500 02/01/22 2,035,860
------------
8,651,900
------------
</TABLE>

5 See Notes to Financial Statements

Portfolio of Investments (Continued)
October 31, 1995
- ----------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kansas 2.3%
$ 5,500 Burlington, KS Pollutn Ctl Rev KS Gas & Elec Co
Proj Rfdg (MBIA Insd) ............................ 7.000% 06/01/31 $ 6,117,595
1,395 Sedgwick & Shawnee Cntys, KS Single Family Rev
Coll Mtg Ser A Rfdg (GNMA Collateralized) ........ 8.050 05/01/24 1,568,496
3,060 Sedgwick Cnty, KS Single Family Mtg Rev Coll
Ser A Rfdg (GNMA Collateralized) ................. 8.125 05/01/24 3,455,934
------------
11,142,025
------------
Kentucky 1.7%
3,750 Kenton Cnty, KY Arpt Brd Arpt Rev Spl Fac
Delta Airls Proj Ser A .......................... 7.125 02/01/21 3,907,050
4,450 Louisville & Jefferson Cnty, KY Metro Swr Dist
Drainage Rev Rfdg (MBIA Insd) .................... 5.300 05/15/19 4,301,859
------------
8,208,909
------------
Louisiana 1.7%
2,000 Louisiana Hsg Fin Agy Mtg Rev Multi Family
Emerald Pointe Apts (FHA Gtd) ................... 7.100 11/01/33 2,099,200
2,515 Louisiana Hsg Fin Agy Mtg Rev Single Family Access
Pgm Ser B (GNMA Collateralized) .................. 8.000 03/01/25 2,862,145
3,000 Saint Charles Parish, LA Environmental Impt Rev
LA Pwr & Lt Co Ser A (AMBAC Insd) ............... 6.875 07/01/24 3,278,250
------------
8,239,595
------------
Maryland 1.9%
9,000 Maryland St Cmnty Dev Admin Dept Hsg & Cmnty Dev
Single Family Pgm 3rd Ser (FHA Gtd) .............. 7.375 04/01/26 9,391,500
------------
Massachusetts 3.3%
2,500 Chelsea, MA Sch Proj Ln Act 1948 (AMBAC Insd) .... 6.500 06/15/12 2,702,050
3,955 Massachusetts Bay Tran Auth MA Genl Tran Sys
Ser A Rfdg ...................................... 5.500 03/01/12 3,952,548
2,250 Massachusetts Bay Tran Auth MA Genl Tran Sys
Ser B Rfdg (MBIA Insd) <F3> ..................... 6.000 03/01/10 2,343,578
3,500 Massachusetts Muni Whsl Elec Co Pwr Supply Sys
Rev Ser A Rfdg (AMBAC Insd) ...................... 5.000 07/01/10 3,340,400
3,250 Massachusetts St Hlth & Edl Fac Auth Rev
Saint Mem Med Cent Ser A ......................... 6.000 10/01/23 2,567,012
1,000 Massachusetts St Hlth Edl Fac Emerson Hosp
Issue Ser D Rfdg ................................. 5.800 08/15/18 989,310
------------
15,894,898
------------
Michigan 4.1%
1,680 Michigan Higher Edl Fac Auth Rev Ltd Oblig
Hope College Proj Rfdg (Connie Lee Insd) ......... 7.000 10/01/14 1,872,898
3,350 Michigan St Hosp Fin Auth Rev Hosp Mid-MI
Oblig Group ...................................... 6.800 12/01/14 3,501,956
</TABLE>

6 See Notes to Financial Statements

Portfolio of Investments (Continued)
October 31, 1995
- -----------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michigan (Continued)
$ 10,900 Michigan St Hsg Dev Auth Rental Hsg Rev Ser A Rfdg ... 6.600% 04/01/12 $ 11,292,618
3,000 Michigan St Strategic Fund Ltd Oblig Rev
Ser CC Rfdg (FGIC Insd) ............................... 6.950 09/01/21 3,268,200
-------------
19,935,672
-------------
Mississippi 3.1%
6,795 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser B (GNMA Collateralized) ............... 7.900 03/01/25 7,655,655
2,705 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser C (GNMA Collateralized) ............... 8.125 12/01/24 3,039,663
3,965 Mississippi Home Corp Single Family Rev
Mtg Access Pgm Ser E (GNMA Collateralized) ............ 8.100 12/01/25 4,461,378
-------------
15,156,696
-------------
Missouri 0.5%
2,100 Kansas City, MO Arpt Rev Genl Impt Ser A
(Cap Guar Insd) ...................................... 6.900 09/01/10 2,345,238
-------------
New Jersey 5.3%
10,000 New Jersey Econ Dev Auth St Contract Econ Recovery
(Embedded Cap) ........................................ 5.900 03/15/21 10,231,200
8,000 New Jersey Econ Dev Auth Wtr Fac Rev NJ
American Wtr Co Inc Proj Ser A (FGIC Insd) ........... 6.875 11/01/34 8,661,760
2,000 New Jersey St Hwy Auth Garden St Pkwy Genl
Rev Sr Pkwy ........................................... 6.250 01/01/14 2,079,440
4,650 Salem Cnty, NJ Indl Pollutn Ctl Fin Auth Rev
Pub Svc Elec & Gas Ser D Rfdg (MBIA Insd) ............ 6.550 10/01/29 5,000,982
-------------
25,973,382
-------------
New Mexico 0.3%
1,500 Las Cruces, NM Rev (MBIA Insd) <F2> ................... 5.500 12/01/15 1,437,675
-------------
New York 21.8%
1,500 Broome Cnty, NY Ctfs Partn Pub Safety Fac
(MBIA Insd) .......................................... 5.250 04/01/15 1,437,405
1,500 Metropolitan Tran Auth NY Tran Fac Rev Ser K Rfdg ..... 6.250 07/01/11 1,522,380
4,250 New York City Indl Dev Agy Civic Fac Rev
USTA Natl Tennis Cent Proj (FSA Insd) ................ 6.375 11/15/14 4,509,378
250 New York City Muni Wtr Fin Auth Wtr & Swr Sys
Rev Ser C (Prerefunded @ 06/15/97) (AMBAC Insd) ...... 6.500 06/15/21 263,833
10 New York City Ser A .................................. 8.000 08/15/19 11,352
10,000 New York City Ser B (Embedded Cap) ................... 6.600 10/01/16 10,149,600
1,650 New York City Ser C ................................... 7.125 08/15/12 1,730,751
1,325 New York City Ser C ................................... 7.000 08/15/16 1,411,456
2,875 New York City Ser C ................................... 7.250 08/15/24 3,053,250
6,000 New York City Ser D <F2> ............................. 6.000 02/15/25 5,818,500

</TABLE>

7 See Notes to Financial Statements

Portfolio of Investments (Continued)
October 31, 1995
- -----------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York (Continued)
$ 3,970 New York St Dorm Auth Rev City Univ Ser F ............ 5.000% 07/01/14 $ 3,521,350
2,600 New York St Dorm Auth Rev Cons City Univ Sys
2nd Genl Res Ser A .................................... 5.750 07/01/13 2,550,340
5,050 New York St Dorm Auth Rev Cons City Univ Sys
2nd Genl Res Ser B .................................... 5.375 07/01/07 4,938,395
4,050 New York St Dorm Auth Rev Court Fac Lease Ser A ....... 5.300 05/15/07 3,887,838
1,000 New York St Dorm Auth Rev St Univ Edl Fac Ser A
(Prerefunded @ 05/15/99) ............................. 7.125 05/15/09 1,114,600
5,000 New York St Dorm Auth Rev St Univ Edl Fac Ser A Rfdg ... 5.500 05/15/08 4,876,200
2,000 New York St Dorm Auth Rev St Univ Edl Fac Ser B ....... 7.500 05/15/11 2,362,060
3,000 New York St Energy Resh & Dev Auth Elec Fac Rev
Cons Edison Co of NY Inc Proj Ser A .................. 6.750 01/15/27 3,118,290
4,175 New York St Med Care Fac Fin Agy Rev
Mental Hlth Services Fac Ser A ........................ 7.500 02/15/21 4,548,496
2,335 New York St Med Care Fac Fin Agy Rev
Mental Hlth Services Impt Ser B ...................... 7.375 02/15/14 2,525,232
6,750 New York St Med Care Fac Fin Agy Rev NY
Hosp Mtg Ser A (AMBAC Insd) ........................... 6.300 08/15/06 7,495,065
7,000 New York St Med Care Fac Fin Agy Rev NY
Hosp Mtg Ser A (AMBAC Insd) ........................... 6.400 08/15/07 7,767,410
2,000 New York St Med Care Fac Fin Agy Rev NY
Hosp Mtg Ser A (AMBAC Insd) ........................... 6.600 02/15/11 2,195,360
5,000 New York St Med Care Fac Fin Agy Rev Ser A ........... 6.800 02/15/20 5,223,850
2,000 New York St Pwr Auth Rev & Genl Purp Ser AA .......... 6.375 01/01/12 2,110,340
3,000 New York St Pwr Auth Rev & Genl Purp Ser Y ........... 6.750 01/01/18 3,257,610
7,500 New York St Thruway Auth Svc Contract
Rev Loc Hwy & Brdg .................................... 5.250 04/01/13 6,900,750
5,545 New York St Urban Dev Corp Rev St Fac ................ 7.500 04/01/20 6,189,107
2,000 Triborough Brdg & Tunl Auth NY Rev Genl Purp Ser X .... 6.500 01/01/19 2,123,700
-------------
106,613,898
-------------
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 9,822,700
11,000 North Carolina Muni Pwr Agy No 1 Catawba Elec Rev
(Embedded Cap) ........................................ 6.000 01/01/12 10,936,310
-------------
20,759,010
-------------
Ohio 0.7%
3,000 Alliance, OH Wtr Wks Rev (FGIC Insd) .................. 6.650 10/15/17 3,253,980
-------------
Oklahoma 0.4%
2,000 Oklahoma City, OK Indl & Cultural Fac Trust Rev
Dist Heating & Cooling Trigen ......................... 6.750 09/15/17 2,064,480
-------------
</TABLE>

8 See Notes to Financial Statements

Portfolio of Investments (Continued)
October 31, 1995
- ---------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania 0.9%
$ 4,000 Pennsylvania Intergovt Coop Auth Spl Tax Rev
Philadelphia Funding Pgm (FGIC Insd) ............... 6.750% 06/15/21 $ 4,405,520
------------
Rhode Island 1.6%
7,800 Rhode Island Hsg & Mtg Fin Corp
Homeownership Oppty Ser 5 ........................... 6.400 04/01/24 7,789,314
------------
South Carolina 0.5%
2,750 South Carolina Jobs Econ Dev Auth Hosp Fac Rev
Tuomey Regional Med Cent Ser A (MBIA Insd) ......... 5.500 11/01/20 2,654,108
------------
Tennessee 1.1%
5,000 Tennessee Hsg Dev Agy Homeownership Proj T .......... 7.375 07/01/23 5,316,000
------------
Texas 6.1%
4,000 Brazos River Auth TX Pollutn Ctl Rev Coll TX
Utils Elec Co Proj A ............................... 7.875 03/01/21 4,452,160
1,000 Brazos, TX Higher Edl Auth Inc Student Ln Rev
Subser A2 Rfdg ...................................... 6.800 12/01/04 1,088,180
1,430 Brazos, TX Higher Edl Auth Inc Student Ln Rev
Subser C2 Rfdg ..................................... 7.100 11/01/04 1,585,369
5,000 Dallas-Fort Worth, TX Intl Arpt Fac Impt Corp
Rev American Airls Inc ............................. 7.250 11/01/30 5,266,400
5,340 Dallas-Fort Worth, TX Intl Arpt Fac Impt Corp
Rev Delta Airls Inc ................................. 7.625 11/01/21 5,718,339
1,500 Dallas-Fort Worth, TX Intl Arpt Fac Impt Corp
Rev Delta Airls Inc ................................. 7.125 11/01/26 1,545,225
5,140 Little Elm, TX Indpt Sch Dist Rfdg (PSFG Insd) ..... 6.750 08/15/29 5,730,021
2,000 Tarrant Cnty, TX Jr College Dist .................... 5.050 02/15/10 1,921,320
2,000 Texas St Dept Hsg & Cmnty Affairs Single Family
Rev Mtg Jr Lien Ser A Rfdg .......................... 8.100 09/01/15 2,244,320
------------
29,551,334
------------
Utah 1.3%
4,500 Intermountain Pwr Agy UT Pwr Supply Rev Ser B ....... 7.000 07/01/21 4,846,860
1,525 Salt Lake City, UT Arpt Rev Delta Airls Inc Proj ... 7.900 06/01/17 1,627,495
------------
6,474,355
------------
Washington 1.1%
1,400 King Cnty, WA Hsg Auth Hsg Rev
Pooled Sr Ser A Rfdg ............................... 6.700 03/01/15 1,448,160
3,450 Washington St Pub Pwr Supply Sys Nuclear
Proj No 2 Rev Ser B Rfdg (FSA Insd) ................. 7.000 07/01/12 3,818,184
------------
5,266,344
------------
West Virginia 2.6%
2,500 Berkeley Cnty, WV Bldg Comm Hosp
Rev City Hosp Proj .................................. 6.500 11/01/22 2,528,825
5,000 Marshall Cnty, WV Pollutn Ctl Rev OH Pwr Co
Proj Ser C Rfdg (MBIA Insd) ......................... 6.850 06/01/22 5,454,200

</TABLE>

9 See Notes to Financial Statements

Total Long-Term Investments 100.0%
(Cost $462,342,595) <F1> ..................................................... 488,421,097
Liabilities in Excess of Other Assets 0.0% .................................. (130,477)
---------------
Net Assets 100% ............................................................. $ 488,290,620
===============
*Zero coupon bond

<FN>
<F1> At October 31, 1995, cost for federal income tax purposes is $462,342,595;
the aggregate gross unrealized appreciation is $27,053,049 and the aggregate
gross unrealized depreciation is $974,547, resulting in net unrealized
appreciation of $26,078,502.

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

<F3> Assets segregated as collateral for when issued or delayed delivery
purchase commitments.
</FN>
</TABLE>

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

Portfolio Composition by Credit Quality

<S> <C>
AAA ... 41.5%
AA .... 13.9
A ..... 22.3
BBB ... 14.8
BB .... 7.0
B ..... .5
-------
100.0%
=======

</TABLE>

10 See Notes to Financial Statements

Statement of Assets and Liabilities
October 31,1995
- --------------------------------------------------------------------------------------------------------------
<S> <C>
Assets:
Investments, at Market Value (Cost $462,342,595) (Note 1) .................................... $ 488,421,097
Cash ........................................................................................ 622,137
Receivables:
Interest ................................................................................... 8,650,297
Investments Sold ........................................................................... 3,793,781
Unamortized Organizational Expenses (Note 1) ................................................ 15,187
---------------
Total Assets ............................................................................... 501,502,499
---------------
Liabilities:
Payables:
Investments Purchased ...................................................................... 12,117,163
Income Distributions - Common and Preferred Shares ........................................ 501,368
Investment Advisory Fee (Note 2) ........................................................... 268,574
Administrative Fee (Note 2) ............................................................... 82,638
Accrued Expenses ............................................................................. 242,136
---------------
Total Liabilities .......................................................................... 13,211,879
---------------
Net Assets ................................................................................... $ 488,290,620
===============
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 .................................................. 26,078,502
Accumulated Undistributed Net Investment Income ............................................. 3,866,890
Accumulated Net Realized Loss on Investments ................................................. (13,877,546)
---------------
Net Assets Applicable to Common Shares ....................................................... 298,290,620
---------------
Net Assets ................................................................................... $ 488,290,620
===============
Net Asset Value Per Common Share($298,290,620 divided
by 19,106,785 shares outstanding) ............................................................ $ 15.61
===============

</TABLE>

11 See Notes to Financial Statements

Statement of Operations
For the Year Ended October 31,1995
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest ................................................................................. $ 30,294,355
----------------
Expenses:
Investment Advisory Fee (Note 2) ........................................................ 3,080,144
Administrative Fee (Note 2) .............................................................. 947,737
Preferred Share Maintenance (Note 5) ..................................................... 463,021
Legal (Note 2) .......................................................................... 28,355
Trustees Fees and Expenses (Note 2) ...................................................... 23,442
Amortization of Organizational Expenses (Note 1) ........................................ 8,000
Other .................................................................................... 340,949
----------------
Total Expenses ........................................................................... 4,891,648
----------------
Net Investment Income .................................................................... $ 25,402,707
================
Realized and Unrealized Gain/Loss on Investments:
Realized Gain/Loss on Investments:
Proceeds from Sales ...................................................................... $ 364,192,863
Cost of Securities Sold .................................................................. (370,941,794)
----------------
Net Realized Loss on Investments (Including realized loss on closed and expired option and
futures transactions of $124,495 and $6,949,044, respectively) ........................... (6,748,931)
----------------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period ................................................................. (13,178,617)
End of the Period ...................................................................... 26,078,502
----------------
Net Unrealized Appreciation on Investments During the Period ............................. 39,257,119
----------------
Net Realized and Unrealized Gain on Investments .......................................... $ 32,508,188
================
Net Increase in Net Assets from Operations ............................................... $ 57,910,895
================

</TABLE>

12 See Notes to Financial Statements

Statement of Changes in Net Assets
For the Years Ended October 31,1995 and 1994
- ------------------------------------------------------------------------------------------------------
Year Ended Year Ended
October 31,1995 October 31,1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
From Investment Activities:
Operations:
Net Investment Income ............................................. $ 25,402,707 $ 25,870,616
Net Realized Loss on Investments .................................. (6,748,931) (7,128,614)
Net Unrealized Appreciation/Depreciation on Investments
During the Period ................................................ 39,257,119 (53,021,244)
--------------- ---------------
Change in Net Assets from Operations ............................. 57,910,895 (34,279,242)
--------------- ---------------
Distributions from Net Investment Income:
Common Shares ................................................... (19,488,668) (19,488,793)
Preferred Shares ............................................... (7,480,198) (5,449,834)
--------------- ---------------

(26,968,866) (24,938,627)
--------------- ---------------
Distributions from Net Realized Gain on Investments (Note 1):
Common Shares ................................................... -0- (1,270,601)
Preferred Shares ............................................... -0- (360,238)
--------------- ---------------

-0- (1,630,839)
--------------- ---------------
Total Distributions .............................................. (26,968,866) (26,569,466)
--------------- ---------------
Net Change in Net Assets from Investment Activities ............... 30,942,029 (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
$3,866,890 and $5,433,049, respectively) ......................... $ 488,290,620 $ 457,348,591
=============== ===============

</TABLE>

13 See Notes to Financial Statements

Financial Highlights

The following schedule presents financial highlights for one common share
of the Trust outstanding throughout the periods indicated.
- ------------------------------------------------------------------------------------------------
September 25,1992
(Commencement
Year Ended October 31 of Investment
------------------------------------ Operations) to
1995 1994 1993 October 31,1992
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period <F1> .......... $ 13.992 $ 17.177 $ 14.587 $ 14.771
---------- ------------ ---------- -----------------
Net Investment Income ................. 1.330 1.354 1.369 .056
Net Realized and Unrealized
Gain/Loss on Investments ............. 1.701 (3.148) 2.408 (.237)
---------- ------------ ---------- -----------------
Total from Investment Operations ..... 3.031 (1.794) 3.777 (.181)
---------- ------------ ---------- -----------------
Less:
Distributions from
Net Investment Income:
Paid to Common Shareholders ......... 1.020 1.020 .884 -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders .............. .391 .285 .303 .003
Distributions from Net Realized
Gain on Investments (Note 1):
Paid to Common Shareholders ......... -0- .067 -0- -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders .............. -0- .019 -0- -0-
---------- ------------ ---------- -----------------
Total Distributions ................... 1.411 1.391 1.187 .003
---------- ------------ ---------- -----------------
Net Asset Value, End of the Period ... $ 15.612 $ 13.992 $ 17.177 $ 14.587
========== ============ ========== =================

Market Price Per Share
at End of the Period .................. $ 14.375 $ 12.750 $ 16.000 $ 13.875
Total Investment Return at
Market Price (Non-Annualized) <F2> ...... 21.06% (14.17%) 22.08% (7.50%)
Total Return at Net Asset Value
(Non-Annualized) <F3> ................ 19.46% (12.71%) 24.24% (2.73%)
Net Assets at End of the Period
(In millions) ......................... $ 488.3 $ 457.3 $ 518.2 $ 468.7
Ratio of Expenses to Average Net
Assets Applicable to
Common Shares (Annualized) ........... 1.72% 1.64% 1.66% 1.12%
Ratio of Expenses to Average
Net Assets (Annualized) .............. 1.03% 1.00% 1.03% 1.00%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares (Annualized) <F4> ....... 6.31% 6.81% 6.57% 3.52%
Portfolio Turnover .................... 79.26% 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.
</FN>
</TABLE>

14 See Notes to Financial Statements

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

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 (collectively "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.

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

E. Federal Income Taxes-It is the Trust's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.

The Trust intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At October 31, 1995, the Trust had an accumulated capital loss
carryforward for tax purposes of $13,877,546, of which $7,128,615 and $6,748,931
will expire on October 31, 2002 and 2003, respectively.

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 year ended October 31, 1995, the Trust recognized expenses of
approximately $28,200 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

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

VKAC. The Trust's liability under the deferred compensation and retirement plans
at October 31, 1995, was approximately $24,300.

At October 31, 1995, VKAC owned 6,700 common shares of the Trust.

3. Investment Transactions
Aggregate purchases and cost of sales of investment securities, excluding
short-term notes, for the year ended October 31, 1995, were $369,649,883 and
$370,941,794, respectively.

4. Derivative Financial Instruments
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.

The Trust has a variety of reasons to use derivative instruments, such as to
attempt to protect the Trust against possible changes in the market value of its
portfolio and to manage the portfolio's effective yield, maturity and duration.
All of the Trust's portfolio holdings, including derivative instruments, are
marked to market each day with the change in value reflected in the unrealized
appreciation/depreciation on investments. Upon disposition, a realized gain or
loss is recognized accordingly, except for exercised option contracts where the
recognition of gain or loss is postponed until the disposal of the security
underlying the option contract.

Summarized below are the specific types of derivative financial instruments
used by the Trust.

A. Option Contracts-An option contract gives the buyer the right, but not the
obligation to buy (call) or sell (put) an underlying item at a fixed exercise
price during a specified period. These contracts are generally used by the Trust
to manage the portfolio's effective maturity and duration.

Transactions in options for the year ended October 31, 1995, were as follows:

<TABLE>
<CAPTION>
Contracts Premium
- -------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at October 31, 1994 .................... -0- $ -0-
Options Written and Purchased (Net) ................ 3,600 (2,029,073)
Options Terminated in Closing Transactions (Net) ... (1,250) 933,534
Options Expired (Net) .............................. (2,350) 1,095,539
--------- --------------
Outstanding at October 31, 1995 .................... -0- $ -0-
========= ==============

</TABLE>

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

B. Futures Contracts-A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Trust generally invests in futures on U.S. Treasury Bonds and the Municipal Bond
Index and typically closes the contract prior to the delivery date. These
contracts are generally used to manage the portfolio's effective maturity and
duration.

The fluctuation in market value of the contracts is settled daily through a
cash margin account. Realized gains and losses are recognized when the contracts
are closed or expire.

Transactions in futures contracts for the year ended October 31, 1995, were as
follows:

Contracts
- ----------------------------------------------
<S> <C>
Outstanding at October 31, 1994 .... 2,520
Futures Opened ..................... 6,895
Futures Closed ..................... (9,415)
--------
Outstanding at October 31, 1995 ... -0-
========

</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 October 31, 1995 was 3.751%.
During the year ended October 31, 1995, the rates ranged from 2.50% to 5.05%.

The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of Preferred Share Maintenance
expense.

The APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $50,000 per share plus accumulated and unpaid dividends.
The Trust is subject to certain asset coverage tests and the APS are subject to
mandatory redemption if the tests are not met.

Independent Auditors' Report
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders of
Van Kampen Merritt Advantage Municipal Income Trust:

We have audited the accompanying statement of assets and liabilities of Van
Kampen Merritt Advantage Municipal Income Trust (the "Trust"), including the
portfolio of investments, as of October 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods presented. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Van
Kampen Merritt Advantage Municipal Income Trust as of October 31, 1995, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods presented, in conformity with generally accepted
accounting principles.

KPMG Peat Marwick LLP
Chicago, Illinois
December 5, 1995

Dividend Reinvestment Plan

The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at
any time.

If you decide to participate in the Plan, State Street Bank and Trust Company,
as your Plan Agent, will automatically invest your dividends and capital gains
distributions in Common Shares of the Trust for your account.

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

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

Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
changes sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.

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

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

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

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.

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