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

VAN KAMPEN MERRITT ADVANTAGE MUNICIPAL INCOME TRUST II
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.... 9
Statement of Operations................ 10
Statement of Changes in Net Assets..... 11
Financial Highlights................... 12
Notes to Financial Statements.......... 13
Independent Auditors' Report........... 17
Dividend Reinvestment Plan............. 18
</TABLE>

VKI 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 7.25 percent<F3>, based on
the closing stock price of $11.50 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
11.33 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 16 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 25.22 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 11.93 9.875
30-Nov-94 11.33 10.250
31-Dec-94 11.87 10.000
31-Jan-95 12.43 11.000
28-Feb-95 13.10 11.625
31-Mar-95 13.13 11.500
30-Apr-95 12.95 11.125
31-May-95 13.34 11.375
3O-Jun-95 12.83 11.500
31-Jul-95 12.81 11.375
31-Aug-95 13.02 11.500
3O-Sep-95 13.06 11.500
31-Oct-95 13.31 11.500
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 II
(AMEX Ticker Symbol VKI)

<TABLE>
<CAPTION>
<S> <C>
Total Returns
One-year total return based on market price<F1>........................................ 25.22%
One-year total return based on NAV<F2>................................................. 19.09%

Distribution Rates
Distribution rate as a % of initial offer common stock price<F3>....................... 5.56%
Taxable-equivalent distribution rate as a % of initial offer common stock price<F4>.... 8.69%
Distribution rate as a % of closing common stock price<F3>............................. 7.25%
Taxable-equivalent distribution rate as a % of closing common stock price<F4>.......... 11.33%

Share Valuations
Net asset value........................................................................ $ 13.31
Closing common stock price............................................................. $ 11.500
One-year high common stock price (06/06/95)............................................ $ 12.000
One-year low common stock price (11/15/94)............................................. $ 9.250
Preferred share (Series A) rate<F5>.................................................... 3.875%
Preferred share (Series B) rate<F5>.................................................... 3.700%
<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.
</TABLE>

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.

Portfolio of Investments
October 31, 1995
- ---------------------------------------------------------------------------------------------------
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Municipal Bonds
Alaska 2.9%
$ 3,000 Alaska St Hsg Fin Corp Ser A (MBIA Insd) <F2> ......... 5.875% 12/01/30 $ 2,923,770
3,000 Alaska St Hsg Fin Corp Ser A Rfdg ..................... 5.000 12/01/18 2,627,580
------------
5,551,350
------------
Arizona 1.2%
2,000 Pima Cnty, AZ Indl Dev Auth Indl Rev Lease Oblig
Irvington Proj Tucson Ser A Rfdg (FSA Insd) ........... 7.250 07/15/10 2,239,740
------------
California 5.4%
3,000 Los Angeles Cnty, CA Tran Comm Sales Tax
Rev Prop C 2nd Sr Ser A (MBIA Insd) ................... 6.250 07/01/13 3,158,460
900 Los Angeles, CA Cmnty Redev Agy Cmnty Redev Fin Auth
Rev Grand Cent Sq Ser A ............................... 5.900 12/01/26 806,868
1,000 Montebello, CA Unified Sch Dist Ctfs Partn Cap Impts
Proj .................................................. 6.300 06/01/11 1,013,930
4,000 Orange Cnty, CA Recovery Ser A Rfdg (MBIA Insd) ....... 6.000 06/01/08 4,230,400
1,000 San Diego, CA Swr Rev Ser A (AMBAC Insd) .............. 5.000 05/15/13 931,920
------------
10,141,578
------------
Colorado 6.7%
1,000 Arapahoe Cnty, CO Cap Impt Trust Fund
Hwy Rev E-470 Proj Ser B .............................. 7.000 08/31/26 1,058,610
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
970 Colorado Hsg Fin Auth Access Pgm Single Family Pgm Ser
E ..................................................... 8.125 12/01/24 1,090,202
4,970 Colorado Hsg Fin Auth Single Family Pgm Sr Ser A ...... 8.000 06/01/25 5,680,263
1,100 Denver, CO City & Cnty Arpt Rev Ser A ................. 8.500 11/15/23 1,254,209
1,420 Denver, CO City & Cnty Arpt Rev Ser B (MBIA Insd) ..... 5.750 11/15/17 1,386,190
------------
12,616,564
------------
Florida 1.5%
3,000 Orange Cnty, FL Hlth Fac Auth Rev Hosp
Adventist Hlth Sys (AMBAC Insd) ....................... 5.250 11/15/20 2,815,380
------------
Georgia 2.1%
3,490 De Kalb Cnty, GA Hsg Auth Multi Family Hsg Rev
North Hill Apts Proj Rfdg (FNMA Collateralized) ....... 6.625 01/01/25 3,929,984
------------
</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>
Illinois 9.5%
$ 5,000 Chicago, IL O'Hare Intl Arpt Rev Sr Lien Ser A Rfdg .... 5.000% 01/01/12 $ 4,698,450
1,000 Illinois Hlth Fac Auth Rev Morris Hosp ................. 6.125 12/01/23 917,010
7,375 Illinois Hlth Fac Auth Rev Swedish American Hosp Rfdg
(AMBAC Insd) ........................................... 5.375 11/15/13 7,090,841
5,000 Illinois Hsg Dev Auth Rev Homeowner Mtg Subser A2 (FHA
Gtd) ................................................... 7.125 08/01/26 5,291,000
------------
17,997,301
------------
Iowa 2.2%
3,000 Iowa Fin Auth Hosp Fac Rev Allen Mem
Hosp Ser B Rfdg ........................................ 5.875 02/15/13 2,928,180
1,300 Ottumwa, IA Hosp Fac Rev Rfdg & Impt Ottumwa Regl Hlth
Rfdg ................................................... 6.000 10/01/18 1,181,401
------------
4,109,581
------------
Kentucky 1.5%
3,000 Louisville & Jefferson Cnty, KY Metro Swr
Dist Drainage Rev Rfdg (MBIA Insd) ..................... 5.300 05/15/19 2,900,130
------------
Louisiana 1.0%
1,750 Saint Charles Parish, LA Pollutn Ctl Rev LA
Pwr & Lt Co Proj (FSA Insd) ............................ 7.500 06/01/21 1,971,323
------------
Maryland 3.6%
3,000 Maryland St Cmnty Dev Admin Dept Hsg &
Cmnty Dev Single Family Pgm ............................ 6.800 04/01/24 3,105,120
4,000 Maryland St Hlth & Higher Edl Fac Auth Rev Subn Hosp
Rfdg (AMBAC Insd) ...................................... 5.000 07/01/13 3,734,800
------------
6,839,920
------------
Massachusetts 6.4%
1,200 Massachusetts Bay Tran Auth MA Genl
Tran Sys Ser A Rfdg .................................... 6.250 03/01/12 1,289,340
2,665 Massachusetts Muni Whsl Elec Co Pwr Supply Sys Rev Ser
B Rfdg (MBIA Insd) ..................................... 5.000 07/01/12 2,513,655
2,150 Massachusetts St Cons Ln Ser D ......................... 7.000 07/01/07 2,396,175
1,500 Massachusetts St Hlth & Edl Fac Auth Rev (MBIA Insd) ... 6.750 07/01/24 1,616,325
2,550 Massachusetts St Hlth & Edl Fac Auth Rev Saint Mem Med
Cent Ser A ............................................. 6.000 10/01/23 2,014,117
2,150 Massachusetts St Hsg Fin Agy Hsg Rev Insd Rental Ser A
Rfdg (AMBAC Insd) ...................................... 6.650 07/01/19 2,229,550
------------
12,059,162
------------
</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>
Michigan 3.5%
$ 2,500 Detroit, MI Wtr Supply Sys Rev Rfdg (FGIC Insd) ...... 6.250% 07/01/12 $ 2,633,825
4,000 Michigan St Bldg Auth Rev Ser I Rfdg (AMBAC Insd) .... 5.200 10/01/09 3,966,600
------------
6,600,425
------------
New Mexico 1.6%
1,500 Las Cruces, NM Rev (MBIA Insd) <F2> .................. 5.500 12/01/15 1,437,675
1,590 New Mexico Mtg Fin Auth Single Family Mtg Pgm Ser H
(GNMA Collateralized) ................................ 6.600 07/01/15 1,651,867
------------
3,089,542
------------
New York 26.8%
4,500 New York City Ser A Rfdg ............................. 6.250 08/01/09 4,553,910
5,000 New York City Ser H .................................. 7.200 02/01/13 5,361,450
6,980 New York St Dorm Auth Rev City Univ Ser F ............ 5.500 07/01/12 6,618,366
6,250 New York St Energy Resh & Dev Auth Elec Fac Rev Cons
Edison Co NY Inc Proj Ser A (MBIA Insd) .............. 6.750 01/15/27 6,563,500
2,000 New York St Energy Resh & Dev Auth Fac Rev (MBIA
Insd) ................................................ 6.375 12/01/27 2,068,620
2,500 New York St Environmental Fac Corp Pollutn Ctl Rev St
Wtr Revolving Fund Ser E ............................. 6.500 06/15/14 2,671,200
1,865 New York St Med Care Fac Fin Agy Rev Long Term
Hlthcare Ser C (Cap Guar Insd) ....................... 6.400 11/01/14 1,957,746
3,000 New York St Med Care Fac Fin Agy Rev NY Hosp Mtg Ser
A (AMBAC Insd) ....................................... 6.200 08/15/05 3,311,160
3,000 New York St Med Care Fac Fin Agy Rev NY Hosp Mtg Ser
A (AMBAC Insd) ....................................... 6.800 08/15/24 3,280,980
2,175 New York St Med Care Fac Fin Agy Rev Ser A ........... 6.800 02/15/20 2,272,375
3,430 New York St Mtg Agy Rev Homeowner Mtg Ser 37A (MBIA
Insd) ................................................ 6.375 10/01/14 3,554,029
1,450 New York St Pwr Auth Rev & Genl Purp Ser CC Rfdg
(AMBAC Insd) ......................................... 5.125 01/01/10 1,419,884
1,000 New York St Thruway Auth Svc Contract Rev Loc Hwy &
Brdg (MBIA Insd) ..................................... 5.125 04/01/07 1,003,660
2,500 Port Auth NY & NJ Cons 67th Ser ...................... 6.875 01/01/25 2,672,600
3,505 Port Auth NY & NJ Cons 92nd Ser ...................... 5.000 07/15/15 3,226,212
------------
50,535,692
------------
</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>
Oklahoma 3.3%
$ 3,500 Shawnee, OK Hosp Auth Hosp Rev
Midamerica Hlthcare Inc Rfdg ....................... 6.125% 10/01/14 $ 3,314,395
2,780 Tulsa, OK Arpts Impt Trust Genl Rev (MBIA Insd) .... 7.700 06/01/13 2,979,326
------------
6,293,721
------------
Pennsylvania 2.5%
3,200 Philadelphia, PA Wtr & Wastewtr Rev Rfdg
(Cap Guar Insd) .................................... 5.000 06/15/16 2,935,584
1,700 Sharon, PA Regl Hlth Sys Auth Hosp Rev Sharon Regl
Hlth Sys Proj A Rfdg ............................... 6.875 12/01/09 1,776,262
------------
4,711,846
------------
Rhode Island 2.3%
4,000 Rhode Island Hsg & Mtg Fin Corp Amt
Homeownership Oppty Ser E1 (FHA Gtd) ............... 7.500 10/01/11 4,289,200
------------
South Dakota 1.9%
3,325 South Dakota Student Ln Assistance Corp Student
Ln Rev Ser B (MBIA Insd) ........................... 7.625 08/01/06 3,552,929
------------
Texas 9.5%
2,220 Bexar Cnty, TX Hlth Fac Dev Corp Hosp Rev Baptist
Mem Hosp Sys Proj (MBIA Insd) ...................... 6.625 02/15/12 2,386,322
3,065 Bexar Cnty, TX Hlth Fac Dev Corp Hosp Rev Baptist
Mem Hosp Sys Proj (MBIA Insd) ...................... 6.625 02/15/13 3,294,630
2,070 Bexar Cnty, TX Hlth Fac Dev Corp Hosp Rev Baptist
Mem Hosp Sys Proj (MBIA Insd) ...................... 6.500 08/15/15 2,187,327
1,000 Brazoria Cnty, TX Hlth Fac Dev Corp Hosp Rev
Brazosport Mem Hosp Rfdg (FSA Insd) ................ 5.500 07/01/13 981,100
2,200 Brazos River Auth TX Pollutn Ctl Rev Coll TX Utils
Elec Co Proj Ser A ................................. 8.250 01/01/19 2,454,716
1,705 Brownsville, TX Util Sys Rev ....................... 7.375 01/01/10 1,947,383
3,480 Houston, TX Arpt Sys Rev ........................... 9.500 07/01/10 4,611,557
------------
17,863,035
------------
Virginia 1.7%
3,000 Fairfax Cnty, VA Econ Dev Auth Res Recovery
Rev Ogden Martin Sys Proj Ser A .................... 7.750 02/01/11 3,287,610
------------
</TABLE>

7 See Notes to Financial Statements

*Zero coupon bond

<FN>
<F1> At October 31, 1995, cost for federal income tax purposes is $178,358,685;
the aggregate gross unrealized appreciation is $9,575,531 and the
aggregate gross unrealized depreciation is $753,515, resulting in net
unrealized appreciation of $8,822,016.

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

</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.

<TABLE>
<CAPTION>
Portfolio Composition by Credit Quality
<S> <C>
AAA..... 55.0%
AA...... 13.5
A....... 12.2
BBB..... 17.5
BB...... .7
B....... 1.1
-------
100.0%
=======
</TABLE>

8 See Notes to Financial Statements

Statement of Assets and Liabilities
October 31, 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C>
Assets:
Investments, at Market Value (Cost $178,358,685) (Note 1)..................................... $ 187,180,701
Short-Term Investments (Note 1)............................................................... 2,700,000
Cash.......................................................................................... 84,710
Receivables:
Interest.................................................................................... 3,477,076
Investments Sold............................................................................ 10,338
Unamortized Organizational Expenses (Note 1).................................................. 22,560
---------------
Total Assets................................................................................ 193,475,385
---------------
Liabilities:
Payables:
Investments Purchased....................................................................... 4,364,912
Investment Advisory Fee (Note 2)............................................................ 103,776
Income Distributions - Common and Preferred Shares.......................................... 82,759
Administrative Fee (Note 2)................................................................. 31,931
Accrued Expenses.............................................................................. 151,956
---------------
Total Liabilities........................................................................... 4,735,334
---------------
Net Assets.................................................................................... $ 188,740,051
===============
Net Assets Consist of:
Preferred Shares ($.01 par value, authorized 100,000,000 shares, 1,600 issued with
liquidationpreference of $50,000 per share) (Note 5).......................................... $ 80,000,000
---------------
Common Shares ($.01 par value with an unlimited number of shares authorized,
8,168,211 shares issued and outstanding)...................................................... 81,682
Paid in Surplus .............................................................................. 120,809,877
Net Unrealized Appreciation on Investments.................................................... 8,822,016
Accumulated Undistributed Net Investment Income............................................... 351,793
Accumulated Net Realized Loss on Investments.................................................. (21,325,317)
---------------
Net Assets Applicable to Common Shares...................................................... 108,740,051
---------------
Net Assets.................................................................................... $ 188,740,051
===============
Net Asset Value Per Common Share ($108,740,051 divided by 8,168,211 shares outstanding)....... $ 13.31
===============
</TABLE>

9 See Notes to Financial Statements

Statement of Operations
For the Year Ended October 31, 1995
- --------------------------------------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest.............................................................................. $ 11,462,735
----------------
Expenses:
Investment Advisory Fee (Note 2)...................................................... 1,193,707
Administrative Fee (Note 2)........................................................... 367,295
Preferred Share Maintenance (Note 5).................................................. 247,181
Trustees Fees and Expenses (Note 2)................................................... 24,787
Legal (Note 2)........................................................................ 14,750
Amortization of Organizational Expenses (Note 1)...................................... 7,997
Other................................................................................. 203,337
----------------
Total Expenses........................................................................ 2,059,054
----------------
Net Investment Income................................................................. $ 9,403,681
================
Realized and Unrealized Gain/Loss on Investments:
Realized Gain/Loss on Investments:
Proceeds from Sales................................................................. $ 135,070,207
Cost of Securities Sold............................................................. (144,722,882)
----------------
Net Realized Loss on Investments (Including realized gain on closed and expired
optiontransactions of $15,142 and realized loss on futures transactions of
$6,501,022) .......................................................................... (9,652,675)
----------------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period............................................................. (12,715,565)
End of the Period................................................................... 8,822,016
----------------
Net Unrealized Appreciation on Investments During the Period.......................... 21,537,581
----------------
Net Realized and Unrealized Gain on Investments....................................... $ 11,884,906
================
Net Increase in Net Assets from Operations............................................ $ 21,288,587
================
</TABLE>

10 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.............................................. $ 9,403,681 $ 9,148,644
Net Realized Loss on Investments................................... (9,652,675) (11,658,847)
Net Unrealized Appreciation/Depreciation on Investments During the
Period............................................................. 21,537,581 (13,432,774)
---------------- ----------------
Change in Net Assets from Operations .............................. 21,288,587 (15,942,977)
---------------- ----------------
Distributions from Net Investment Income:
Common Shares.................................................... (6,812,226) (6,812,277)
Preferred Shares................................................. (3,163,786) (2,107,949)
---------------- ----------------
Total Distributions................................................ (9,976,012) (8,920,226)
---------------- ----------------
Net Change in Net Assets from Investment Activities................ 11,312,575 (24,863,203)
---------------- ----------------
From Capital Transactions (Note 5):
Proceeds from Preferred Shares Sold................................ -0- 78,700,899
---------------- ----------------
Total Increase in Net Assets....................................... 11,312,575 53,837,696

Net Assets:
Beginning of the Period............................................ 177,427,476 123,589,780
---------------- ----------------
End of the Period (Including undistributed net investment income
of $351,793 and $924,124, respectively)............................ $ 188,740,051 $ 177,427,476
================ ================
</TABLE>

11 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.
- --------------------------------------------------------------------------------------------
August 27, 1993
Year Year (Commencement
Ended Ended of Investment
October 31, October 31, Operations) to
1995 1994 October 31, 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the Period <F1>.... $ 11.928 $ 14.972 $ 14.921
----------- ----------- ----------------
Net Investment Income............................ 1.151 1.120 .085
Net Realized and Unrealized Gain/Loss on
Investments ..................................... 1.455 (3.072) .125
----------- ----------- ----------------
Total from Investment Operations................. 2.606 (1.952) .210
----------- ----------- ----------------
Less:
Distributions from Net Investment Income:
Paid to Common Shareholders...................... .834 .834 -0-
Common Share Equivalent of Distributions Paid to
Preferred Shareholders........................... .387 .258 -0-
----------- ----------- ----------------
Total Distributions.............................. 1.221 1.092 -0-
----------- ----------- ----------------
Net Asset Value, End of the Period............... $ 13.313 $ 11.928 $ 15.131
=========== =========== ================

Market Price Per Share at End of the Period...... $ 11.500 $ 9.875 $ 14.625
Total Investment Return at Market Price
(Non-Annualized) <F2>............................ 25.22% (27.65%) (2.50%)
Total Return at Net Asset Value
(Non-Annualized) <F3>............................ 19.09% (16.10%) .87%
Net Assets at End of the Period (In millions).... $ 188.7 177.4 123.6
Ratio of Expenses to Average Net Assets
Applicable to Common Shares (Annualized)......... 1.98% 1.82% 1.30%
Ratio of Expenses to Average Net Assets
(Annualized)..................................... 1.12% 1.09% 1.30%
Ratio of Net Investment Income to Average Net
Assets Applicable to Common Shares
(Annualized) <F4>................................ 6.01% 6.34% 3.40%
Portfolio Turnover............................... 79.06% 213.93% 24.25%

<FN>
<F1> Net asset value at August 27, 1993, of $15.000 is adjusted for common
share offering costs of $.079 per common share. Net asset value at October
31, 1993 of $15.131 is adjusted for preferred share offering costs of
$.159 per common share.

<F2> Total investment return at 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>

12 See Notes to Financial Statements

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

1. Significant Accounting Policies
Van Kampen Merritt Advantage Municipal Income Trust II (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 August 27, 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 (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 August 26, 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.

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 $21,325,317, of which $13,795, $11,658,847 and
$9,652,675 will expire on October 31, 2001, 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.

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 $15,000 representing VKAC's cost of providing accounting and legal
services to the Trust.

Certain officers and trustees of the Trust are also officers and directors of
VKAC. The Trust does not compensate its officers or trustees who are officers of
VKAC.

The Trust has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer all
or a portion of their compensation to a later date. The retirement plan covers
those trustees who are not officers of VKAC. The Trust's liability under the
deferred compensation and retirement plans at October 31, 1995, was
approximately $23,900.

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

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

3. Investment Transactions
Aggregate purchases and cost of sales of investment securities, excluding
short-term notes, for the year ended October 31, 1995, were $142,682,574 and
$144,722,882, 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).................. 1,400 (894,118)
Options Terminated in Closing Transactions (Net)..... (600) 439,221
Options Expired...................................... (800) 454,897
--------- ------------
Outstanding at October 31, 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.

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

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:

<TABLE>
<CAPTION>
Contracts
- -----------------------------------------------
<S> <C>
Outstanding at October 31, 1994..... 3,139
Futures Opened...................... 5,298
Futures Closed...................... (8,437)
---------
Outstanding at October 31, 1995..... -0-
=========
</TABLE>

5. Preferred Shares
The Trust has outstanding 1,600 Auction Preferred Shares ("APS") in two series
of 800 shares each. Dividends are cumulative and the dividend rate is currently
reset every seven days for both series through an auction process. The average
rate in effect on October 31, 1995, was 3.788%. During the year ended October
31, 1995, the rates ranged from 3.26% to 6.10%.

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 II:

We have audited the accompanying statement of assets and liabilities of Van
Kampen Merritt Advantage Municipal Income Trust II (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 II 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

Funds Distributed by Van Kampen American Capital
- --------------------------------------------------------------------------------

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

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

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

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

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

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

Van Kampen Merritt Advantage Municipal Income Trust II
- --------------------------------------------------------------------------------

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.