VAN KAMPEN MERRITT PENNSYLVANIA VALUE MUNICIPAL INCOME TRUST, N-30D, 1995-06-29

VAN KAMPEN MERRITT PENNSYLVANIA VALUE MUNICIPAL INCOME TRUST
N-30D, 1995-06-29

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Table of Contents

<TABLE>
<CAPTION>
<S> <C>
Letter to Shareholders ................ 1
Performance Results ................... 3
Portfolio of Investments ............. 4
Statement of Assets and Liabilities ... 7
Statement of Operations ............... 8
Statement of Changes in Net Assets .... 9
Financial Highlights ................. 10
Notes to Financial Statements ......... 11
</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 27.10 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 22.5 percent from its $10.375 level on October 31, 1994, to
$12.750 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 $0.822 per common share, which represents a tax-exempt
distribution rate of 6.45 percent <F3>, based on the closing stock price of
$12.750
per share on April 30, 1995. For Pennsylvania residents in the combined
marginal tax bracket of 37.80 percent, this distribution rate represents a
yield equivalent to a taxable investment earning 10.37 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 $13.53 12.375
31-May-94 $13.76 13.500
30-Jun-94 $13.42 12.875
31-Jul-94 $13.89 12.625
31-Aug-94 $13.79 12.375
30-Sep-94 $13.17 11.250
31-Oct-94 $12.57 10.375
30-Nov-94 $12.00 10.875
31-Dec-94 $12.53 10.750
31-Jan-95 $13.23 12.000
28-Feb-95 $13.90 12.625
31-Mar-95 $13.95 12.750
30-Apr-95 $13.81 12.750
</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 Journal in 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 Pennsylvania Value Municipal Income Trust
(NYSE Ticker Symbol VPV)
<CAPTION>
<S> <C>

Total Returns

Six-month total return based on market price<F1> .................................. 27.10%
Six-month total return based on NAV<F2> ........................................... 13.33%

Distribution Rates

Distribution rate as a % of initial offer stock price<F3> ......................... 5.48%
Taxable-equivalent distribution rate as a % of initial offer stock price<F4> ...... 8.81%
Distribution rate as a % of 04/30/95 closing stock price<F3> ...................... 6.45%
Taxable-equivalent distribution rate as a % of 04/30/95 closing stock price<F4> ... 10.37%

Share Valuations

Net asset value as of 04/30/95 .................................................... $ 13.81
Preferred share rate as of 04/30/95<F5> ........................................... 4.75%
Closing common stock price as of 04/30/95 ........................................ $ 12.750
Six-month high common stock price (04/28/95) ..................................... $ 12.875
Six-month low common stock price (11/16/94) ...................................... $ 10.250

<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 37.8%
combined federal and state tax bracket, which takes into consideration the
deductibility of individual state taxes paid.
<F5> See "Notes to Financial Statements" footnote #4, 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
Pennsylvania 90.9%
$ 1,000 Allegheny Cnty, PA Indl Dev Auth Med Cent
Rev Presbyterian Med Cent Rfdg (FHA Insd) ............ 6.750% 02/01/26 $ 1,006,000
2,600 Allentown, PA Area Hosp Auth Rev Sacred Heart
Hosp Ser A Rfdg ....................................... 6.750 11/15/14 2,431,728
1,000 Bedford, PA Area Sch Dist (MBIA Insd) ................ 5.500 04/15/17 939,380
925 Berks Cnty, PA Muni Auth Hosp Rev Reading
Hosp & Med Cent Proj B (MBIA Insd) .................... 6.000 10/01/14 911,911
2,000 Butler Cnty, PA Hosp Auth Hosp Rev North Hills
Passavant Hosp Ser A (Cap Guar Insd) ................. 6.900 06/01/09 2,153,540
2,270 Cumberland Cnty, PA Auth Rev First Mtg Carlisle
Hosp & Hlth ........................................... 6.800 11/15/14 2,182,287
3,900 Dauphin Cnty, PA Hosp Auth Rev Cmnty Genl
Osteopathic Hosp Rfdg ................................ 7.375 06/01/16 3,934,242
1,070 Delaware Cnty, PA Auth College Rev Haverford
College Rfdg (MBIA Insd) .............................. 5.400 11/15/13 1,002,109
3,570 Delaware Cnty, PA Auth Hlth Care Rev Mercy Hlth Corp
Southeastern Ser A (Connie Lee Insd) ................. 5.125 11/15/12 3,166,376
1,000 Delaware Cnty, PA Auth Hosp Rev Crozer Chester
Med Cent .............................................. 6.000 12/15/09 932,610
1,675 Delaware Cnty, PA Regl Wtr Quality Ctl Auth Swr
Rev Ser A (FGIC Insd) ................................. 5.500 05/01/12 1,600,195
500 Delaware Cnty, PA Regl Wtr Quality Ctl Auth Swr
Rev Ser B (FGIC Insd) ................................. 5.500 05/01/13 475,335
1,400 Derry, PA Sch Dist Ser A Rfdg (MBIA Insd) ............ 6.550 09/01/06 1,490,286
3,505 Eastern York Sch Dist, PA (MBIA Insd) <F3> ............ 6.000 06/01/09 3,538,963
1,625 Lancaster, PA Hsg Fin Corp Mtg Rev Ser A Rfdg
(FHA Insd) ........................................... 6.800 08/01/23 1,656,590
1,000 Lehigh Cnty, PA Indl Dev Auth Pollutn Ctl Rev PA
Pwr & Lt Co Proj Ser A Rfdg (MBIA Insd) .............. 6.400 11/01/21 1,017,790
2,500 Montgomery Cnty, PA Higher Edl & Hlth Auth Hosp
Rev Abington Mem Hosp Ser A (AMBAC Insd) ............. 5.125 06/01/24 2,154,700
3,850 Montgomery Cnty, PA Indl Dev Auth Rev Pollutn
Ctl Ser E Rfdg (MBIA Insd) <F3> ....................... 6.700 12/01/21 4,031,219
3,250 Pennsylvania Hsg Fin Agy Single Family Mtg Ser 40 .... 6.900 04/01/25 3,334,987
3,000 Pennsylvania Hsg Fin Agy Single Family Mtg Ser 41b ... 6.450 10/01/12 3,030,240
500 Pennsylvania Infrastructure Invt Auth Rev Pennvest
Subser B .............................................. 6.800 09/01/10 530,805
4,000 Pennsylvania St Ctfs Partn Ser A Rfdg (AMBAC Insd) ... 5.100 07/01/04 3,866,040

See Notes to Financial Statements
Page: 5

</TABLE>

<TABLE>
Portfolio of Investments (Continued)
<CAPTION>
April 30,1995 (Unaudited)
- ---------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania (Continued)
$ 4,275 Pennsylvania St Ctfs Partn Ser A Rfdg (AMBAC Insd) ... 5.250% 07/01/10 $ 3,990,413
3,000 Pennsylvania St Ctfs Partn Ser A Rfdg (AMBAC Insd) ... 5.000 07/01/15 2,629,170
2,000 Pennsylvania St Higher Edl Assistance Agy Student Ln
Rev Ser D (AMBAC Insd) ............................... 6.050 01/01/19 1,924,440
1,500 Pennsylvania St Higher Edl Fac Auth
College & Univ Rev Allegheny College Proj B Rfdg ..... 6.000 11/01/22 1,420,950
2,430 Pennsylvania St Higher Edl Fac Auth Rev Ser H
(AMBAC Insd) ......................................... 5.700 06/15/14 2,344,829
2,970 Pennsylvania St Higher Edl Thomas Jefferson
Univ Ser A Rfdg ...................................... 6.625 08/15/09 3,113,392
1,500 Pennsylvania St Proj 1st Ser Rfdg (AMBAC Insd) ........ 6.750 01/01/08 1,595,400
1,500 Pennsylvania St Tpk Comm Tpk Rev Ser L
(AMBAC Insd) ......................................... 6.250 06/01/11 1,528,455
2,000 Philadelphia, PA Auth for Indl Dev Rev ............... 5.500 07/01/10 1,861,540
1,500 Philadelphia, PA Gas Wks Rev 14th Ser (FSA Insd) ..... 6.250 07/01/08 1,545,360
895 Philadelphia, PA Hosp & Higher Edl Fac Auth Rev
Cmnty College Ser A (MBIA Insd) ...................... 6.050 05/01/08 910,099
1,455 Philadelphia, PA Hosp & Higher Edl Fac Auth Rev
Cmnty College Ser B Rfdg (MBIA Insd) ................. 6.500 05/01/09 1,550,317
1,000 Philadelphia, PA Hosp & Higher Edl Fac Auth Rev
Saint Agnes Med Cent Proj Rfdg (FHA Insd) ............ 7.250 08/15/31 1,033,790
5,305 Philadelphia, PA Ser A Rfdg (FGIC Insd) .............. 5.100 05/15/02 5,276,937
3,000 Philadelphia, PA Ser A Rfdg (FGIC Insd) .............. 6.250 11/15/04 3,167,550
5,000 Philadelphia, PA Wtr & Wastewtr Rev Rfdg
(MBIA Insd) <F2> ...................................... 6.750 08/01/03 5,479,250
3,675 Philadelphia, PA Wtr & Wastewtr Rev Rfdg
(AMBAC Insd) ......................................... 5.500 06/15/07 3,626,784
3,000 Philadelphia, PA Wtr & Wastewtr Rev Rfdg
(Cap Guar Insd) ...................................... 5.500 06/15/14 2,820,690
2,500 Schuylkill Cnty, PA Muni Auth Wtr & Swr Rev Ser A
(FGIC Insd) ........................................... 6.625 02/01/11 2,605,650
1,500 Sharon, PA Regl Hlth Sys Auth Hosp Rev Sharon
Regl Hlth Sys Proj A Rfdg ............................. 6.875 12/01/09 1,524,585
1,715 Wayne Cnty, PA Hosp & Hlth Fac Auth Cnty Gtd
Hosp Rev Wayne Mem Hosp Rfdg (MBIA Insd) ............. 5.375 07/01/12 1,592,240
------------
96,929,174
------------

See Notes to Financial Statements

Page: 6

</TABLE>

<FN>
<F1> At April 30, 1995, cost for federal income tax purposes is $103,265,480;
the aggregate gross unrealized appreciation is $1,775,713 and the aggregate
gross unrealized depreciation is $1,145,329, resulting in net unrealized
appreciation of $630,384.
<F2> Securities purchased on a when issued or delayed delivery basis.
<F3> Assets segregated as collateral for when issued or delayed delivery
purchase commitments.
</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 ... 69.9%
AA .... 9.4
A ..... 8.8
BBB ... 11.9
-------
100.0%
-------

See Notes to Financial Statements
Page: 7

</TABLE>

Statement of Assets and Liabilities

<TABLE>
April 30,1995 (Unaudited)
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
Assets:
<S> <C>
Investments, at Market Value (Cost $103,265,480) (Note 1) .................................. $ 103,895,864
Short-Term Investments (Note 1) ............................................................ 1,500,000
Cash ...................................................................................... 42,121
Receivables:
Investments Sold ........................................................................... 4,923,506
Interest ................................................................................... 2,139,890
Unamortized Organizational Expenses (Note 1) .............................................. 14,993
---------------
Total Assets ............................................................................... 112,516,374
---------------
Liabilities:
Payables:
Investments Purchased ...................................................................... 5,542,588
Investment Advisory Fee (Note 2) ........................................................... 57,637
Income Distributions - Common and Preferred Shares ........................................ 54,718
Administrative Fee (Note 2) ............................................................... 17,735
Accrued Expenses ........................................................................... 128,603
---------------
Total Liabilities .......................................................................... 5,801,281
---------------
Net Assets ................................................................................. $ 106,715,093
---------------
Net Assets Consist of:
Preferred Shares ($.01 par value, authorized 100,000,000 shares, 900 issued with liquidation
preference of $50,000 per share) (Note 4) .................................................. $ 45,000,000
---------------
Common Shares ($.01 par value with an unlimited number of shares authorized,
4,468,924 shares issued and outstanding) .................................................. 44,689
Paid in Surplus ........................................................................... 65,577,874
Net Unrealized Appreciation on Investments ................................................ 630,384
Accumulated Undistributed Net Investment Income ........................................... 427,529
Accumulated Net Realized Loss on Investments ............................................... (4,965,383)
---------------
Net Assets Applicable to Common Shares ..................................................... 61,715,093
---------------
Net Assets ................................................................................. $ 106,715,093
---------------
Net Asset Value Per Common Share($61,715,093 divided
by 4,468,924 shares outstanding) ........................................................... $ 13.81
---------------

See Notes to Financial Statements

Page: 8

</TABLE>

Statement of Operations

<TABLE>
For the Six Months Ended April 30,1995 (Unaudited)
- --------------------------------------------------------------------------------
<CAPTION>
Investment Income:
<S> <C>
Interest ....................................................... $ 3,176,040
---------------
Expenses:
Investment Advisory Fee (Note 2) .............................. 333,522
Administrative Fee (Note 2) .................................... 102,622
Preferred Share Maintenance (Note 4) ........................... 68,207
Trustees Fees and Expenses (Note 2) ............................ 9,050
Legal (Note 2) ................................................ 9,050
Amortization of Organizational Expenses (Note 1) .............. 2,478
Other .......................................................... 91,334
---------------
Total Expenses ................................................. 616,263
---------------
Net Investment Income .......................................... $ 2,559,777
---------------
Realized and Unrealized Gain/Loss on Investments:
Realized Gain/Loss on Investments:
Proceeds from Sales ............................................ $ 33,780,751
Cost of Securities Sold ........................................ (35,388,821)
---------------
Net Realized Loss on Investments ............................. (1,608,070)
---------------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period ....................................... (6,683,208)
End of the Period .............................................. 630,384
---------------
Net Unrealized Appreciation on Investments During the Period ... 7,313,592
---------------
Net Realized and Unrealized Gain on Investments ................ $ 5,705,522
---------------
Net Increase in Net Assets from Operations ..................... $ 8,265,299
---------------

See Notes to Financial Statements

Page: 9

</TABLE>

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 ............................................. $ 2,559,777 $ 5,101,522
Net Realized Loss on Investments .................................. (1,608,070) (3,357,313)
Net Unrealized Appreciation/Depreciation on Investments
During the Period ................................................ 7,313,592 (10,638,924)
---------------- ---------------
Change in Net Assets from Operations ............................. 8,265,299 (8,894,715)
---------------- ---------------
Distributions from Net Investment Income:
Common Shares ..................................................... (1,836,703) (3,673,437)
Preferred Shares ................................................. (902,845) (1,218,288)
---------------- ---------------
(2,739,548) (4,891,725)
---------------- ---------------
Distributions from Net Realized Gain on Investments:
Common Shares ..................................................... -0- (51,840)
Preferred Shares ................................................. -0- (9,896)
---------------- ---------------

-0- (61,736)
---------------- ---------------
Total Distributions .............................................. (2,739,548) (4,953,461)
---------------- ---------------
Net Change in Net Assets from Investment Activities ............... 5,525,751 (13,848,176)
Net Assets:
Beginning of the Period .......................................... 101,189,342 115,037,518
---------------- ---------------
End of the Period (Including undistributed net investment income of
$427,529 and $607,300, respectively) ............................. $ 106,715,093 $ 101,189,342
---------------- ---------------
See Notes to Financial Statements

Page: 10

</TABLE>

Financial Highlights

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

<TABLE>
<CAPTION>
April 30,1993
Six Months Year (Commencement
Ended Ended of Investment
April 30, October 31, Operations) to
1995 1994 October 31,1993
---------- ------------ ---------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period <F1> .............. $ 12.573 $ 15.672 $ 14.687
---------- ------------ ---------------
Net Investment Income ................................. .573 1.142 .433
Net Realized and Unrealized Gain/Loss
on Investments ......................................... 1.277 (3.132) .896
---------- ------------ ---------------
Total from Investment Operations ....................... 1.850 (1.990) 1.329
---------- ------------ ---------------
Less:
Distributions from Net Investment Income:
Paid to Common Shareholders ........................... .411 .822 .274
Common Share Equivalent of Distributions Paid
to Preferred Shareholders .............................. .202 .273 .070
Distributions from Net Realized Gain on Investments:
Paid to Common Shareholders ........................... -0- .012 -0-
Common Share Equivalent of Distributions Paid
to Preferred Shareholders .............................. -0- .002 -0-
---------- ------------ ---------------
Total Distributions .................................... .613 1.109 .344
---------- ------------ ---------------
Net Asset Value, End of Period ......................... $ 13.810 $ 12.573 $ 15.672
---------- ------------ ---------------
Market Price Per Share at End of Period ................ $ 12.750 $ 10.375 $ 14.875
Total Investment Return at Market Price
(Non-Annualized) <F2> .................................. 27.10% (25.61%) 1.00%
Total Return at Net Asset Value
(Non-Annualized) <F3> .................................. 13.33% (14.91%) 6.33%
Net Assets at End of Period (In millions) .............. $ 106.7 $ 101.2 $ 115.0
Ratio of Expenses to Average Net Assets Applicable to
Common Shares (Annualized) ............................. 2.10% 1.98% 1.55%
Ratio of Expenses to Average Net Assets (Annualized) ... 1.19% 1.16% 1.14%
Ratio of Net Investment Income to Average Net Assets
Applicable to Common Shares (Annualized) <F4> .......... 5.64% 6.09% 4.75%
Portfolio Turnover .................................... 34.64% 52.74% 8.87%

<FN>
<F1> Net asset value at April 30, 1993 is adjusted for common and preferred
share offering costs of $.313 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.

See Notes to Financial Statements

</TABLE>

Page: 11

Notes to Financial Statements

April 30,1995 (Unaudited)
- --------------------------------------------------------------------------------

1. Significant Accounting Policies

Van Kampen Merritt Pennsylvania Value Municipal Income Trust (the "Trust") is
registered as a non-diversified closed-end management investment company under
the Investment Company Act of 1940, as amended. The Trust commenced investment
operations on April 30, 1993.

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 $25,000.
These costs are being amortized on a straight line basis over the 60 month
period ending April 29, 1998. 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: 12

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
carryforward for tax purposes of $3,357,313, 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 $6,300 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
$13,200.

At April 30, 1995, VKAC owned 6,700 common shares of the Trust.

Page: 13

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 $35,159,623 and
$35,388,821, respectively.

4. Preferred Shares

The Trust has outstanding 900 Auction Preferred Shares ("APS"). Dividends are
cumulative and the dividend rate is currently reset every seven days through an
auction process. The rate in effect on April 30, 1995, was 4.75%. During the six
months ended April 30, 1995, the rates ranged from 2.75% to 6.12%.

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: 14

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: 15

Van Kampen Merritt Pennsylvania Value 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.

Page: 16

Van Kampen Merritt Pennsylvania Value Municipal Income Trust

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