MOSHER INC /TX, PRES14A, 1996-09-13

MOSHER INC /TX
PRES14A, 1996-09-13

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12

MOSHER, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------
(5) Total fee paid:

- --------------------------------------------------------------------------------

/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:

- --------------------------------------------------------------------------------
(3) Filing Party:

- --------------------------------------------------------------------------------
(4) Date Filed:

- --------------------------------------------------------------------------------
<PAGE> 2

September 27, 1996

Dear Mosher, Inc. Shareholder:

The enclosed proxy statement relates to a meeting of the shareholders of
Mosher, Inc. (the "Fund"). VK/AC Holding, Inc., the corporate parent of the
Fund's investment adviser, has entered into a merger agreement with Morgan
Stanley Group Inc. ("Morgan Stanley") and certain of Morgan Stanley's
affiliates. Pursuant to the merger agreement, your Fund's investment adviser
will become an indirect subsidiary of Morgan Stanley. Your Fund's current
investment adviser will continue to provide the Fund with investment advisory
and management services following the merger. The primary purpose of the meeting
is to permit the Fund's shareholders to consider a new investment advisory
agreement to take effect following the merger, as required by the federal
securities laws. The new investment advisory agreement between your Fund and its
investment adviser will be substantially identical to the Fund's current
investment advisory agreement, except for the dates of execution, effectiveness
and termination.

The attached proxy statement seeks shareholder approval on this item. Although
we encourage you to read carefully the full proxy statement, we have created a
brief question-and-answer section for your convenience.

Your vote is important and your participation
in the governance of your Fund does make a difference.

The proposal has been unanimously approved by the Board of Directors of the
Fund, who recommend you vote "FOR" the proposal. YOUR IMMEDIATE RESPONSE WILL
HELP SAVE ON THE COSTS OF ADDITIONAL SOLICITATIONS. We look forward to your
participation, and we thank you for your continued confidence in Van Kampen
American Capital.

PLEASE SIGN AND RETURN YOUR PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.

Sincerely,
/s/ DON G. POWELL
Don G. Powell
Chief Executive Officer

MOSHER
<PAGE> 3

INFORMATION ABOUT YOUR PROXY STATEMENT

Q. WHY AM I RECEIVING THIS PROXY STATEMENT?
A. Federal securities laws require a vote by the Fund's shareholders on
certain matters whenever the Fund's investment adviser, or its parent
corporation, is subject to a change in control. Morgan Stanley's
acquisition of the corporate parent of your Fund's investment adviser may
be deemed to be a change of control. The proposed item your Fund is
seeking shareholder approval on is:

- approval of a new investment advisory agreement

Please refer to the proxy statement for a detailed explanation of the
proposed item.

Q. HOW WILL THIS AFFECT MY ACCOUNT?
A. Your can expect the same management expertise and high quality shareholder
service you've grown accustomed to. The new investment advisory agreement
between your Fund and its investment adviser will be substantially
identical to the Fund's current investment advisory agreement, except for
the dates of execution, effectiveness and termination. The acquisition
will not cause a change in the portfolio manager of your Fund.

Q. WHY DO I NEED TO VOTE?
A. Your vote is needed to ensure that the proposal can be acted upon. Your
immediate response on the enclosed proxy card will help save on the costs
of any further solicitations for a shareholder vote. We encourage all
shareholders to participate in the governance of their Fund.

Q. HOW DO THE DIRECTORS SUGGEST THAT I VOTE?
A. After careful consideration, the Directors of your Fund unanimously
recommend that you vote "FOR" the item proposed on the enclosed proxy
card.

Q. WHO IS PAYING FOR EXPENSES RELATED TO THE PARTNER MEETING?
A. Van Kampen American Capital will pay for those expenses relating to
reapproval of the investment advisory agreement.

Q. WHERE DO I MAIL MY PROXY CARD?
A. You may use the enclosed postage-paid envelope or mail
your proxy card to:
Boston EquiServe
Attn: Proxy Services Dept.
P.O. Box 592
Boston, MA 02102-7906
<PAGE> 4

Q. WHO DO I CALL IF I HAVE QUESTIONS?
A. We will be happy to answer your questions about the proxy solicitation.
Please call us at 1-800-421-5666 between 7:00 a.m. and 7:00 p.m. Central
time, Monday through Friday.
<PAGE> 5

MOSHER, INC.

2800 POST OAK BOULEVARD
HOUSTON, TEXAS 77056
TELEPHONE (800) 421-5666

NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS

TO BE HELD OCTOBER 29, 1996

A Special Meeting of Shareholders (the "Meeting") of Mosher, Inc. (the
"Fund"), will be held at the offices of Van Kampen American Capital, Inc., 2800
Post Oak Boulevard, Houston, Texas 77056, in the 46th floor conference room, on
Tuesday, October 29, 1996 at 11:00 a.m. for the following purposes:

1. To approve or disapprove a new investment advisory agreement; and

2. To transact such other business as may properly come before the Meeting
or any adjournments thereof.

Shareholders of record at the close of business on September 23, 1996 are
entitled to notice of and to vote at this meeting or any adjournment thereof.

By Order of the Board of Directors,

Arthur H. Rogers, Secretary

September 27, 1996
<PAGE> 6

THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST RECENT ANNUAL REPORT
(AND THE MOST RECENT SEMI-ANNUAL REPORT SUCCEEDING THE ANNUAL REPORT) TO A
SHAREHOLDER UPON REQUEST. ANY SUCH REQUEST SHOULD BE DIRECTED TO THE FUND BY
CALLING (800) 421-5666 OR BY WRITING TO THE FUND AT 2800 POST OAK BOULEVARD,
HOUSTON, TEXAS 77056.

SHAREHOLDERS OF THE FUND ARE INVITED TO ATTEND THE MEETING IN PERSON. IF YOU
DO NOT EXPECT TO ATTEND THE MEETING, PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON
THE ENCLOSED PROXY CARD IN WHICH YOU WERE A SHAREHOLDER AS OF THE RECORD DATE,
DATE AND SIGN SUCH PROXY CARD, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS
ADDRESSED FOR YOUR CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED
STATES.

IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE ASK THAT
YOU MAIL YOUR PROXY PROMPTLY.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU CAST YOUR VOTE:

- FOR APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT.

YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY CARD PROMPTLY
NO MATTER HOW MANY SHARES YOU OWN.
<PAGE> 7

PROXY STATEMENT

MOSHER, INC.

2800 POST OAK BOULEVARD
HOUSTON, TEXAS 77056
TELEPHONE (800) 421-5666

SPECIAL MEETING OF SHAREHOLDERS

OCTOBER 29, 1996

This proxy statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") of Mosher, Inc. (the "Fund"), of proxies to be
voted at a Special Meeting of Shareholders, and all adjournments thereof (the
"Meeting"), to be held at the offices of Van Kampen American Capital, Inc., 2800
Post Oak Boulevard, Houston, Texas 77056, in the 46th floor conference room,
Tuesday, October 29, 1996, at 11:00 a.m. The approximate mailing date of this
proxy statement and accompanying form of proxy is September 27, 1996.

The primary purpose of the Meeting is to permit the Fund's shareholders to
consider a New Advisory Agreement (defined below) to take effect following the
consummation of the transactions contemplated by an Agreement and Plan of
Merger, dated as of June 21, 1996 (the "Merger Agreement"), among Morgan Stanley
Group Inc. ("Morgan Stanley"), MSAM Holdings II, Inc., MSAM Acquisition Inc. and
VK/AC Holding, Inc. ("VKAC Holding"), the indirect parent corporation of the
Fund's investment adviser. Pursuant to the Merger Agreement, the Fund's
investment adviser will become an indirect subsidiary of Morgan Stanley. The
shareholder vote on the New Advisory Agreement is required under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a result of Morgan
Stanley's contemplated acquisition of the investment adviser. The Fund's New
Advisory Agreement is substantially identical to the Fund's Current Advisory
Agreement (defined below), except for the dates of execution, effectiveness and
termination.

Participating in the Meeting are holders of shares of capital stock, par value
$1.00 per share (collectively, the "Shares"), of the Fund.

The Board has fixed the close of business on September 23, 1996, as the record
date (the "Record Date") for the determination of holders of Shares of the Fund
entitled to vote at the Meeting. Shareholders of the Fund on the Record Date
will be entitled to one vote per Share with respect to the proposal submitted to
the Shareholders of the Fund for each Share of the Fund then held.
<PAGE> 8

At the close of business on September 23, 1996, there were issued and
outstanding 1,905,282 Shares of the Fund.

The following table identifies persons known to the Fund to beneficially own
five percent or more of the outstanding capital stock of the Fund.

SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
(AS OF SEPTEMBER 23, 1996)

<TABLE>
<CAPTION>
AMOUNT
AND
NATURE
OF PERCENT
NAME OF ADDRESS BENEFICIAL OF
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP* CLASS
- ----------------- -------------------------------- --------- -------
<S> <C> <C> <C>
Common Stock..... Anne M. Vanberg [154,280] [8.10]
7425 Axminster Ct.
Dallas, Texas 75214-1901
American General Life & Accident [381,057] [20.00]
Insurance Co.
c/o State Street Bank & Trust
Company
P.O. Box 5756
Boston, MA 02114-0012
Howard M. Startzman and Bank [108,915] [5.72]
One, Texas, N.A.,
Independent Co-Executors of the
Estate of E.J. Mosher and
Mildred Mosher
c/o Bank One Trust Co.
235 W. Schroch Rd.
Westerville, OH 43081-2874
</TABLE>

- ---------------

* Unless otherwise indicated, there is sole voting and investment power.

VOTING

With respect to Proposal 1, a "vote of a majority of the outstanding voting
securities" is required, which is defined under the 1940 Act as the lesser of
(i) 67% or more of the voting securities of the Fund entitled to vote thereon
present in

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<PAGE> 9

person or by proxy at the Meeting, if the holders of more than 50% of the
outstanding voting securities entitled to vote thereon are present in person or
represented by proxy, or (ii) more than 50% of the outstanding voting securities
of the Fund entitled to vote thereon.

The Board recommends that you cast your vote:

- FOR approval of the New Advisory Agreement.

All properly executed proxies received prior to the Meeting will be voted at
the Meeting in accordance with the instructions marked thereon. Proxies received
prior to the Meeting on which no vote is indicated will be voted "for" the
proposal as to which it is entitled to vote. Abstentions are counted toward the
calculation of a quorum. An abstention has the same effect as a vote "against"
the proposal. Under Texas law, any unvoted position in a brokerage account with
respect to any matter will be considered as not voted and will not be counted
toward fulfillment of quorum requirements as to that matter. The Fund
understands that some of its shares are held in street name by banks, brokers or
nominees. The Fund believes that all of the matters covered by this proxy
statement are routine matters as to which such banks, brokers or nominees may
exercise their discretion in the event they receive no voting instructions from
their beneficial owners. A majority of the outstanding Shares entitled to vote
on a proposal must be present in person or by proxy to have a quorum to conduct
business at the Meeting.

Shareholders who execute proxies may revoke them at any time before they are
voted by filing with the Fund a written notice of revocation, by delivering a
duly executed proxy bearing a later date or by attending the Meeting and voting
in person.

The Fund knows of no business other than that mentioned in Proposal 1 of the
Notice that will be presented for consideration at the Meeting. If any other
matters are properly presented, it is the intention of the persons named on the
enclosed proxy to vote proxies in accordance with their best judgment. In the
event a quorum is present at the Meeting but sufficient votes to approve the
proposal are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies provided
they determine that such an adjournment and additional solicitation is
reasonable and in the interest of Shareholders based on a consideration of all
relevant factors, including the nature of the relevant proposal, the percentage
of affirmative votes then cast, the percentage of negative votes then cast, the
nature of the proposed solicitation activities and the nature of the reasons for
such further solicitation.

3
<PAGE> 10

- ------------------------------------------------------------------------------
PROPOSAL 1: APPROVAL OF NEW ADVISORY AGREEMENT
- ------------------------------------------------------------------------------

THE ADVISER

Van Kampen American Capital Asset Management, Inc. (the "Adviser") acts as
investment adviser for the Fund. The Adviser has acted as investment adviser for
the Fund since the Fund commenced its investment operations.

The Adviser currently is a wholly-owned subsidiary of Van Kampen American
Capital, Inc. ("VKAC"), which is a wholly-owned subsidiary of VKAC Holding,
which in turn is controlled, through the ownership of a substantial majority of
its common stock, by The Clayton & Dubilier Private Equity Fund IV Limited
Partnership ("C&D L.P."), a Connecticut limited partnership. C&D L.P. is managed
by Clayton, Dubilier & Rice, Inc., a New York based private investment firm. The
General Partner of C&D L.P. is Clayton & Dubilier Associates IV Limited
Partnership ("C&D Associates L.P."). The general partners of C&D Associates L.P.
are Joseph L. Rice, III, B. Charles Ames, William A. Barbe, Alberto Cribiore,
Donald J. Gogel, Leon J. Hendrix, Jr., Hubbard C. Howe and Andrall E. Pearson,
each of whom is a principal of Clayton, Dubilier & Rice, Inc. In addition,
certain officers, directors and employees of VKAC own, in the aggregate,
approximately 6% of the common stock of VKAC Holding and have the right to
acquire, upon the exercise of options (whether or not vested), approximately an
additional 12% of the common stock of VKAC Holding. Currently, and after giving
effect to the exercise of such options, no officer or trustee of the Fund owns
or would own 5% of more of the common stock of VKAC Holding. The addresses of
VKAC Holding, VKAC and the Adviser are One Parkview Plaza, Oakbrook Terrace,
Illinois 60181 and 2800 Post Oak Blvd., Houston, Texas 77056.

Prior to December 1994, the Adviser provided investment advisory services
under the name "American Capital Asset Management, Inc."

INFORMATION CONCERNING MORGAN STANLEY

Morgan Stanley and various of its directly or indirectly owned subsidiaries,
including Morgan Stanley & Co. Incorporated ("Morgan Stanley & Co."), a
registered broker-dealer and investment adviser, and Morgan Stanley
International, are engaged in a wide range of financial services. Their
principal businesses include securities underwriting, distribution and trading;
merger, acquisition, restructuring and other corporate finance advisory
activities; merchant banking; stock brokerage and research services; asset
management; trading of futures, options, foreign exchange, commodities and swaps
(involving foreign exchange, commodities, indices and interest rates); real
estate advice, financing and investing; and global custody, securities clearance
services and securities lending. Morgan Stanley Asset Management Inc. ("MSAM")
also is a wholly-owned subsidiary of Morgan

4
<PAGE> 11

Stanley. As of June 30, 1996, MSAM, together with its affiliated investment
advisory companies, had approximately $103.5 billion of assets under management
and fiduciary advice.

THE ACQUISITION

Pursuant to the Merger Agreement, MSAM Acquisition Inc. will be merged with
and into VKAC Holding and VKAC Holding will be the surviving corporation (the
"Acquisition"). Following the Acquisition, VKAC Holding and the Adviser will be
indirect subsidiaries of Morgan Stanley.

The Adviser anticipates that the consummation of the Acquisition will occur by
the end of November 1996, provided that a number of conditions set forth in the
Merger Agreement are met or waived. The conditions require, among other things,
that as of the closing the shareholders of certain investment companies
(including the Fund) and investors in certain accounts advised by the Adviser or
its affiliates, which investment companies and accounts have aggregate assets in
excess of a specified minimum amount, have approved new investment advisory
agreements or consented to the assignment of existing advisory agreements. At
the closing, MSAM Acquisition Inc. will pay approximately $740 million (based on
VKAC's long-term debt outstanding as of July 31, 1996) in cash to the
stockholders of VKAC Holding (excluding certain management stockholders), and to
persons owning options to purchase stock of VKAC Holding, subject to certain
purchase price adjustments set forth in the Merger Agreement. As of July 31,
1996, VKAC had long-term debt outstanding of approximately $410 million. To the
extent that pre-tax income of VKAC prior to the closing of the Acquisition
permits the repayment of its long-term debt, the purchase price for the equity
interests in VKAC Holding will be increased by the amount of long-term debt
repaid. The purchase price also is subject to certain adjustments based, among
other things, on assets under management of VKAC and its subsidiaries at the
time of closing. The Adviser also contemplates that, as part of the Acquisition,
certain officers and directors of VKAC Holding and its affiliates will
contribute to MSAM Holdings II, Inc. their existing shares of common stock of
VKAC Holding in exchange for approximately $25 million of shares of preferred
stock of MSAM Holdings II, Inc. which, in turn, will be exchangeable into common
stock, par value $1.00 per share, of Morgan Stanley at specified times over a
four year period. Such shares of preferred stock will represent, in the
aggregate, 5% of the combined voting power in MSAM Holdings II, Inc., the
remainder of which will be indirectly owned by Morgan Stanley.

VKAC Holding will engage in certain preparatory transactions prior to the
Acquisition, including the distribution to stockholders of VKAC Holding of (i)
all of VKAC Holding's investment in McCarthy, Crisanti & Maffei, Inc., a wholly-
owned subsidiary engaged in the business of distributing research and financial

5
<PAGE> 12

information, (ii) all of VKAC Holding's investment in Hansberger Global
Investors, Inc., a company in which VKAC Holding made a minority investment in
May 1996, and (iii) certain related cash amounts.

There is no financing condition to the closing of the Acquisition. VKAC has
been advised by Morgan Stanley that as of August 30, 1996, no determination has
been made whether any additional indebtedness will be incurred by Morgan Stanley
and its affiliates or VKAC and its affiliates in connection with the
Acquisition. In addition, the disposition of VKAC's outstanding long-term
indebtedness (including its bank loans and senior notes) in connection with the
Acquisition has not yet been determined.

The operating revenue of VKAC and its subsidiaries for the fiscal year ended
December 31, 1995, less expenses for the same period, was more than adequate to
service VKAC's outstanding debt. VKAC prepaid $80 million of its long-term debt
in 1995, and has continued to make debt prepayments during 1996. VKAC Holding
and VKAC believe, based on the earnings experience of VKAC and its subsidiaries,
that after the Acquisition the operating revenue of VKAC and its subsidiaries
should be more than sufficient to service their debt and that VKAC and its
subsidiaries should be able to conduct their respective operations as now
conducted and as proposed to be conducted.

The Merger Agreement does not contemplate any changes, other than changes in
the ordinary course of business, in the management or operation of the Adviser
relating to the Fund, the personnel managing the Fund or other services or
business activities of the Fund. The Acquisition is not expected to result in
material changes in the business, corporate structure or composition of the
senior management or personnel of the Adviser, or in the manner in which the
Adviser renders services to the Fund. Morgan Stanley has agreed in the Merger
Agreement that, for a period of two years from the date of the Acquisition, it
will cause the Adviser to provide compensation and employee benefits which are
substantially comparable in the aggregate to those presently provided. The
Adviser does not anticipate that the Acquisition or any ancillary transactions
will cause a reduction in the quality of services now provided to the Fund, or
have any adverse effect on the Adviser's ability to fulfill its obligations
under the New Advisory Agreement (defined below) or operate its business in a
manner consistent with past business practices.

Certain officers of the Adviser previously entered into employment agreements
with VKAC Holding which expire from between 1997 and 2000. Certain officers of
the Adviser also previously entered into retention agreements with VKAC Holding,
which will remain in place for two years following the consummation of the
Acquisition. The Merger Agreement contemplates that Morgan Stanley will, and
will cause VKAC Holding to, honor such employment and retention agreements. The
employment agreements and retention agreements are intended to assure that the
services of the officers are available to the Adviser (and thus to the Fund) for
a remaining term of two to four years. As described above, certain officers and

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<PAGE> 13

employees of VKAC and the Adviser are expected to contribute their existing
shares of common stock of VKAC Holding to MSAM Holdings II, Inc. in exchange for
approximately $25 million of preferred stock in MSAM Holdings II, Inc. which, in
turn, will be exchangeable into common stock, par value $1.00 per share, of
Morgan Stanley at specified times over a four year period. Such shares of
preferred stock will represent, in the aggregate, 5% of the combined voting
power in MSAM Holdings II, Inc.

THE ADVISORY AGREEMENTS

Consummation of the Acquisition may constitute an "assignment" (as defined in
the 1940 Act) of the investment advisory agreement currently in effect between
the Fund and the Adviser (the "Current Advisory Agreement"). As required by the
1940 Act, the Current Advisory Agreement provides for its automatic termination
in the event of an assignment. See "The Current Advisory Agreement" below.

In anticipation of the Acquisition and in order for the Adviser to continue to
serve as investment adviser to the Fund after consummation of the Acquisition, a
new investment advisory agreement (the "New Advisory Agreement") between the
Fund and the Adviser must be approved (i) by a majority of the Directors of the
Fund who are not parties to the New Advisory Agreement or interested persons of
any such party ("Disinterested Directors") and (ii) by the holders of a majority
of the outstanding voting securities (within the meaning of the 1940 Act) of the
Fund. See "The New Advisory Agreement" below.

The following summary of the Current Advisory Agreement and the New Advisory
Agreement set forth herein is qualified by reference to Annex A.

THE CURRENT ADVISORY AGREEMENT. The Current Advisory Agreement, dated as of
December 20, 1994, was last approved by Shareholders of the Fund at a meeting
held on December 16, 1994 relating to the acquisition of the Adviser's corporate
parent by The Van Kampen Merritt Companies, Inc.

The Current Advisory Agreement provides that the Adviser will supply
investment research and portfolio management, including the selection of
securities for the Fund to purchase, hold or sell and the selection of brokers
through whom that Fund's portfolio transactions are executed. The Adviser also
administers the business affairs of the Fund, furnishes offices, necessary
facilities and equipment, maintains the corporate financial documents, books and
records, and performs administrative and routine legal functions, including the
preparation of proxy materials and report to Shareholders. The Adviser also pays
the cost of preparing and distributing any dividends on capital gains
distributions declared by the Board.

The Current Advisory Agreement provides that the Adviser shall not be liable
for any error of judgment or of law, or for any loss suffered by the Fund in
connection with the matters to which the Current Advisory Agreement relates
except a loss resulting from willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations or duties under the Current Advisory
Agreement.

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<PAGE> 14

Under the Current Advisory Agreement the Fund pays the Adviser as compensation
for the services rendered an annual fee equal to 0.45% of the Fund's average
weekly net assets. As of July 1, 1995, the Adviser voluntarily agreed to waive
all management fees in excess of 0.35% of the Fund's average weekly net assets.
The Fund's average net assets are determined by taking the average of all
determinations of the net assets during a given calendar month.

The Adviser's activities are subject to the review and supervision of the
Board to which the Adviser renders periodic reports with respect to the Fund's
investment activities. The Current Advisory Agreement may be terminated by
either party, at any time, without penalty, on 30 days' written notice, or upon
such shorter notice as may be mutually agreed upon, and will automatically
terminate in the event of its assignment.

The net assets of the Fund as of August 12, 1996, as well as other investment
companies advised by the Adviser, and other investment companies for which the
Adviser acts as subadviser, the rates of compensation to the Adviser, the
aggregate amount of advisory fees paid by the Fund to the Adviser and the
aggregate amount of any other material payments by the Fund to the Adviser are
set forth at Annex B hereto.

The Fund pays all other expenses incurred in its operation including, but not
limited to, direct charges relating to the purchase and sale of its portfolio
securities, interest charges, fees and expenses of outside legal counsel and
independent auditors, taxes and governmental fees, membership fees in trade
associations, expenses of registering and qualifying its Shares for sale under
federal and state securities laws, expenses of printing and distribution,
expenses of filing reports and other documents filed with governmental agencies,
expenses of annual and special meetings of the Board and Shareholders,
custodians and sub-custodians, fees, expenses and out-of-pocket costs of the
directors, insurance premiums, indemnification and other expenses not expressly
provided for in each Current Advisory Agreement, and any extraordinary expenses
of a nonrecurring nature.

THE NEW ADVISORY AGREEMENT. The Board approved a proposed New Advisory
Agreement between the Fund and the Adviser on September 13, 1996, the form of
which is attached as Annex B. The form of the proposed New Advisory Agreement is
substantially identical to as the Current Advisory Agreement, except for the
dates of execution, effectiveness and termination.

The investment advisory fee as a percentage of net assets payable by the Fund
will be the same under the New Advisory Agreement as under the Current Advisory
Agreement. If the investment advisory fee under the New Advisory Agreement had
been in effect for the Fund's most recently completed fiscal year, advisory fees
paid to the Adviser by the Fund would have been identical to those paid under
the Current Advisory Agreement.

8
<PAGE> 15

The Board of the Fund held a meeting on September 13, 1996, at which meeting
the Directors, including the Disinterested Directors, unanimously approved the
New Advisory Agreement for the Fund and recommended the agreement for approval
by the Shareholders of the Fund at the Meeting. The New Advisory Agreement would
take effect as to the Fund upon the later to occur of (i) the obtaining of
Shareholder approval or (ii) the closing of the Acquisition. The New Advisory
Agreement will continue in effect for an initial two year term and thereafter
for successive annual periods as long as such continuance is approved in
accordance with the 1940 Act.

In evaluating the New Advisory Agreement, the Board took into account that the
Fund's Current Advisory Agreement and its New Advisory Agreement, including the
terms relating to the services to be provided thereunder by the Adviser and the
fees and expenses payable by the Fund, are substantially identical, except for
the dates of execution, effectiveness and termination. The Board also considered
other possible benefits to the Adviser and Morgan Stanley that may result from
the Acquisition, including the continued use of Morgan Stanley & Co. and its
affiliates, to the extent permitted by law, for brokerage services and the
possible retention of MSAM as a subadviser to certain Van Kampen American
Capital investment companies (not including the Fund).

The Board also considered the terms of the Merger Agreement and the possible
effects of the Acquisition upon VKAC's and the Adviser's organization and upon
the ability of the Adviser to provide advisory services to the Fund. The Board
considered the skills and capabilities of the Adviser and the representations of
Morgan Stanley that no material change was planned in the current management or
facilities of the Adviser. In this regard, the Board was informed of the
resources of Morgan Stanley to be made available to VKAC and the Adviser, after
giving effect to the Acquisition, to secure for the Fund quality investment
research, investment advice and other client services. The Board considered the
financial resources of Morgan Stanley and Morgan Stanley's representation to the
Board that it will provide sufficient capital to support the operations of the
Adviser. The Board considered the reputation, expertise and resources of Morgan
Stanley and its affiliates in domestic and international financial markets. The
Board considered the continued employment of members of senior management of the
Adviser and VKAC pursuant to employment and retention agreements and the
incentives provided to such members and other key employees of the Adviser and
VKAC, to be important to help to assure continuity of the personnel primarily
responsible for maintaining the quality of investment advisory and other
services for the Fund.

The Board also considered the effect on the Fund of the Adviser becoming an
affiliated person of Morgan Stanley. Following the Acquisition, the 1940 Act
will prohibit or impose certain conditions on the ability of the Fund to engage
in certain transactions with Morgan Stanley and its affiliates. For example,
absent exemptive relief the Fund will be prohibited from purchasing securities
from Morgan Stanley

9
<PAGE> 16

& Co., a wholly-owned broker-dealer subsidiary of Morgan Stanley, in
transactions in which Morgan Stanley & Co. acts as a principal, and the Fund
will have to satisfy certain conditions in order to engage in securities
transactions in which Morgan Stanley & Co. acts as a broker or to purchase
securities in an underwritten offering in which Morgan Stanley & Co. is acting
as an underwriter. In this connection, management of the Adviser represented to
the Board that they do not believe these prohibitions or conditions will have a
material effect on the management or performance of the Fund.

The Board was advised that Section 15(f) of the 1940 Act is applicable to the
Acquisition. Section 15(f) of the 1940 Act permits, in the context of a change
in control of an investment adviser to a registered investment company, the
receipt by such investment adviser, or any of its affiliated persons, of an
amount of benefit in connection with such sale, as long as two conditions are
satisfied. First, an "unfair burden" must not be imposed on the investment
company for which the investment adviser acts in such capacity as a result of
the sale of such interest, or any express or implied terms, conditions or
understandings applicable thereto. The term "unfair burden," as defined in the
1940 Act, includes any arrangement during the two-year period after the
transaction whereby the investment adviser (or predecessor or successor
adviser), or any interested person of any such adviser, receives or is entitled
to receive any compensation, directly or indirectly, from the investment company
or its securities holders (other than fees for bona fide investment advisory and
other services), or from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of the investment company
(other than ordinary fees for bona fide principal underwriting services).

Management of the Fund is aware of no circumstances arising from the
Acquisition, preparatory transactions to the Acquisition or any potential
financing that might result in the imposition of an "unfair burden" on the Fund.
Moreover, Morgan Stanley has agreed in the Merger Agreement that, upon
consummation of the Acquisition, it will take no action which would have the
effect, directly or indirectly, of violating any of the provisions of Section
15(f) of the 1940 Act in respect of the Acquisition. In this regard, the Merger
Agreement provides that Morgan Stanley will use its reasonable best efforts to
assure that (i) no "unfair burden" will be imposed on the Fund as a result of
the transactions contemplated by the Merger Agreement and (ii) except as
provided in the Merger Agreement, the investment advisory fees paid by the Fund
will not be increased for a period of two years from the closing of the
Acquisition and that, during such period, advisory fee waivers shall not be
permitted to expire except in accordance with their terms. The Adviser may
permit a voluntary fee waiver unilaterally adopted by it to expire at any time
and no assurance can be given that voluntary waivers will not be permitted to
expire during the two year period. During the two year period following the
Acquisition, the Adviser does not intend to change its policies with respect to
the circumstances under which voluntary fee waivers may be permitted to expire.

10
<PAGE> 17

Following the Acquisition, to the extent permitted by applicable law, VKAC
anticipates that the Fund will continue to use Morgan Stanley & Co. and its
affiliates for brokerage services.

The second condition of Section 15(f) is that during the three-year period
immediately following a transaction to which Section 15(f) is applicable, at
least 75% of the subject investment company's board of directors must not be
"interested persons" (as defined in the 1940 Act) of the investment company's
investment adviser or predecessor adviser. The current composition of the Board
of the Fund would be in compliance with such condition subsequent to the
Acquisition.

After consideration of the above factors, and such other factors and
information that the Board deemed relevant, the Directors, including the
Disinterested Directors, unanimously approved the New Advisory Agreement with
respect to the Fund and voted to recommend its approval to the Shareholders of
the Fund.

In the event that Shareholders of the Fund do not approve the New Advisory
Agreement and the Acquisition is consummated, the Board would seek to obtain for
the Fund interim investment advisory services at the lesser of cost or the
current fee rate either from the Adviser or from another advisory organization.
Thereafter, the Board would either negotiate a new investment advisory agreement
with an advisory organization selected by the Board or make appropriate
arrangements, in either event subject to approval of the Shareholders of the
Fund. In the event the Acquisition is not consummated, the Adviser would
continue to serve as investment adviser of the Fund pursuant to the terms of the
Current Advisory Agreement.

SHAREHOLDER APPROVAL

To become effective, the New Advisory Agreement must be approved by a vote of
a majority of the outstanding voting securities of the Fund. The vote of "a
majority of the outstanding voting securities" is defined under the 1940 Act as
the lesser of the vote of (i) 67% or more of the Shares of the Fund entitled to
vote thereon present at the Meeting if the holders of more than 50% of such
outstanding Shares are present in person or represented by proxy; or (ii) more
than 50% of such outstanding Shares of the Fund entitled to vote thereon. The
New Advisory Agreement was unanimously approved by the Board after consideration
of all factors which they determined to be relevant to their deliberations,
including those discussed above. The Board also unanimously determined to submit
the New Advisory Agreement for consideration by the Shareholders of the Fund.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE "FOR" APPROVAL OF THE NEW
ADVISORY AGREEMENT.

11
<PAGE> 18

- ------------------------------------------------------------------------------
OTHER INFORMATION
- ------------------------------------------------------------------------------

DIRECTORS AND OFFICERS OF THE ADVISER

The following table sets forth certain information concerning the principal
executive officers and directors of the Adviser. The address of each of the
following persons is noted below.

<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
---------------- --------------------
<S> <C>
Don G. Powell............... President, Chief Executive Officer and a
2800 Post Oak Blvd. Director of VKAC Holding and VKAC and
Houston, TX 77056 Chairman, Chief Executive Officer and a
Director of Van Kampen American Capital
Distributors, Inc. ("Distributors"), the
Adviser, Van Kampen American Capital
Management, Inc., Van Kampen American Capital
Investment Advisory Corp. (the "VK Adviser"),
and Van Kampen American Capital Advisors, Inc.
Chairman, President and a Director of Van
Kampen American Capital Exchange Corporation,
American Capital Contractual Services, Inc.,
Van Kampen Merritt Equity Holdings Corp., and
American Capital Shareholders Corporation.
Chairman and a Director of ACCESS Investor
Services, Inc. ("ACCESS"), Van Kampen Merritt
Equity Advisors Corp., McCarthy, Crisanti &
Maffei, Inc., and Van Kampen American Capital
Trust Company, Chairman, President and a
Director of Van Kampen American Capital
Services, Inc. Prior to July 1996, Chairman
and Director of VSM, Inc. and VCJ Inc. Prior
to July 1996, President, Chief Executive
Officer and a Trustee/ Director of certain
open-end investment companies and closed end
investment companies advised by the Adviser
and the VK Adviser. Chairman of the Board,
President and Managing General Partner of the
Fund. Director or Trustee of other open-end
investment companies and closed-end investment
companies advised by the Adviser.
</TABLE>

12
<PAGE> 19

<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
---------------- --------------------
<S> <C>
Dennis J. McDonnell......... President, Chief Operating Officer and a
One Parkview Plaza Director of the Adviser, the VK Adviser, Van
Oakbrook Terrace, IL 60181 Kampen American Capital Advisors, Inc. and Van
Kampen American Capital Management, Inc.
Executive Vice President and a Director of
VKAC Holding and VKAC. President and Director
of Van Kampen Merritt Equity Advisors Corp.
Director of Van Kampen Merritt Equity Holding
Corp. and McCarthy, Crisanti & Maffei, S.A.
Chief Executive Officer and Director of
McCarthy, Crisanti & Maffei, Inc. Chairman and
a Director of MCM Asia Pacific Company,
Limited. President and a Trustee/Director of
open-end investment companies and closed-end
investment companies advised by the Adviser
and the VK Adviser. Executive Vice President
of certain open-end investment companies and
closed-end investment companies advised by the
Adviser. Prior to July 1996, President, Chief
Operating Officer and Director of VSM Inc. and
VCJ Inc. Prior to December, 1991, Senior Vice
President of Van Kampen Merritt Inc.

Ronald A. Nyberg............ Executive Vice President, General Counsel and
One Parkview Plaza Secretary of VKAC Holding and VKAC. Executive
Oakbrook Terrace, IL 60181 Vice President, General Counsel and a Director
of the Distributors, the Adviser, the VK
Adviser. Van Kampen American Capital
Management, Inc., Van Kampen Merritt Equity
Advisors Corp., and Van Kampen Merritt Equity
Holdings Corp. Executive Vice President,
General Counsel and Assistant Secretary of Van
Kampen American Capital Advisors, Inc.,
American Capital Contractual Services, Inc.,
Van Kampen American Capital Exchange
Corporation, ACCESS, Van Kampen American
Capital Services, Inc. and American Capital
Shareholders Corporation. Executive Vice
President, General Counsel, Assistant
Secretary and Director of Van Kampen American
Capital Trust Company. General Counsel of
McCarthy, Crisanti & Maffei, Inc. Vice
President and Secretary of open-end investment
companies and closed-end investment companies
advised by the VK Adviser. Vice President of
open-end investment companies and closed-end
investment companies advised by the Adviser.
Director of ICI Mutual Insurance Co., a
provider of insurance to members of the
Investment Company Institute. Prior to July
1996, Executive Vice President and General
Counsel of VSM Inc., and Executive Vice
President, General Counsel and Director of VCJ
Inc.
</TABLE>

13
<PAGE> 20

<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
---------------- --------------------
<S> <C>
William R. Rybak............ Executive Vice President and Chief Financial
One Parkview Plaza Officer of VKAC Holding and VKAC since
Oakbrook Terrace, IL 60181 February 1993, and Treasurer of VKAC Holding
through December 1993. Executive Vice
President, Chief Financial Officer and a
Director of Distributors, the Adviser, the VK
Adviser and Van Kampen American Capital
Management, Inc. Executive Vice President,
Chief Financial Officer, Treasurer and
Director of Van Kampen Merritt Equity Advisors
Corp. Executive Vice President and Chief
Financial Officer of the Van Kampen American
Capital Advisors, Inc., Van Kampen American
Capital Exchange Corporation, Van Kampen
American Capital Trust Company, ACCESS and
American Capital Contractual Services, Inc.
Executive Vice President, Chief Financial
Officer and Treasurer of American Capital
Shareholders Corporation, Van Kampen American
Capital Services, Inc. and Van Kampen Merritt
Equity Holdings Corp. Chief Financial Officer
and Treasurer of McCarthy, Crisanti & Maffei,
Inc. Chairman of the Board of Hinsdale
Financial Corp., a savings and loan holding
company. Prior to July 1996, Executive Vice
President, Chief Financial Officer and a
Director of VCJ Inc., and Executive Vice
President and Chief Financial Officer of VSM
Inc.

Peter W. Hegel.............. Executive Vice President of the Adviser, the
One Parkview Plaza VK Adviser, and Van Kampen American Capital
Oakbrook Terrace, IL 60181 Advisors, Inc. Director of McCarthy, Crisanti
& Maffei, Inc. and Van Kampen American Capital
Management, Inc. Vice President of certain
open-end investment companies and certain
closed-end investment companies advised by the
Adviser and VK Adviser. Prior to July 1996,
Director of VSM Inc.

Robert C. Peck, Jr.......... Executive Vice President of the VK Adviser.
2800 Post Oak Blvd. Executive Vice President and Director of the
Houston, TX 77056 Adviser. Vice President of certain open-end
investment companies and certain closed-end
investment companies advised by the Adviser
and the VK Adviser.

Alan T. Sachtleben.......... Executive Vice President of the VK Adviser.
2800 Post Oak Boulevard Executive Vice President and Director of the
Houston, Texas 77056 Adviser. Vice President of certain open-end
investment companies and closed-end investment
companies advised by the Adviser and the VK
Adviser.
</TABLE>

With respect to the Fund, as of September 23, 1996, the Directors and officers
as a group owned in the aggregate shares.

14
<PAGE> 21

No Director of the Fund has owned any securities of or has had any other
material interest in, or a material interest in a material transaction with, the
Adviser or its respective affiliates since the beginning of the Fund's most
recent fiscal year.

Following the Acquisition, the Adviser will be an affiliate of Morgan Stanley
& Co., a registered broker-dealer. The Fund paid no commissions to Morgan &
Stanley Co. during its most recently completed fiscal year.

- ------------------------------------------------------------------------------
EXPENSES
- ------------------------------------------------------------------------------

VKAC Holding will bear the expense of preparing, printing and mailing the
enclosed form of proxy, the accompanying Notice, this Proxy Statement.

In order to obtain the necessary quorum at the Meeting, additional
solicitation may be made by mail, telephone, telegraph or personal interview by
representatives of the Fund, the Adviser or VKAC, or by First Data Investors
Services Group, a solicitation firm located in Boston, Massachusetts that has
been engaged to assist in proxy solicitation at an estimated cost of
approximately $1,265.

- ------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
- ------------------------------------------------------------------------------

Shareholder proposals intended to be presented at the 1997 Annual Meeting of
the Shareholders of the Fund must be received by January 4, 1997 to be included
in the proxy statement and the form of proxy relating to that meeting.

- ------------------------------------------------------------------------------
GENERAL
- ------------------------------------------------------------------------------

Management of the Fund does not intend to present and does not have reason to
believe that others will present any other items of business at the Meeting.
However, if other matters are properly presented to the Meeting for a vote, the
proxies will be voted upon such matters in accordance with the judgment of the
persons acting under the proxies.

A list of Shareholders of the Fund entitled to be present and vote at the
Meeting will be available at the offices of the Fund, 2800 Post Oak Boulevard,
Houston, Texas 77056, for inspection by any Shareholder during regular business
hours for ten days prior to the date of the Meeting.

Failure of a quorum to be present at the Meeting for the Fund may necessitate
adjournment and may subject the Fund to additional expense.

15
<PAGE> 22

IF YOU CANNOT BE PRESENT IN PERSON, YOU ARE REQUESTED TO FILL IN, SIGN AND
RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.

ARTHUR H. ROGERS, Secretary
September 27, 1996

16
<PAGE> 23

ANNEX A
- ------------------------------------------------------------------------------
FORM OF INVESTMENT ADVISORY AGREEMENT
- ------------------------------------------------------------------------------

THIS AGREEMENT made this day of , 1996 by and between MOSHER,
INC., a Texas corporation, hereinafter referred to as the "CORPORATION," and VAN
KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC., a Delaware corporation,
hereinafter referred to as the "ADVISER."

WITNESSETH:

In consideration of the mutual covenants herein contained and other good and
valuable consideration, the receipt whereof is hereby acknowledged, the parties
hereto agree as follows:

FIRST: ADVISER shall act as investment adviser for the CORPORATION and shall,
in such capacity, supervise the investment and reinvestment of the cash,
securities and other properties comprising the assets of the CORPORATION,
subject at all times to the policies and control of the Board of Directors of
the CORPORATION. ADVISER shall give the CORPORATION the benefit of its best
judgment, efforts and facilities in rendering its services as investment
adviser.

SECOND: In carrying out its obligations under paragraph FIRST hereof, ADVISER
shall:

(1) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign
or otherwise, whether affecting the economy generally or the portfolio of
the CORPORATION, and whether concerning the individual companies whose
securities are included or with respect to securities which the ADVISER
considers desirable for inclusion in the CORPORATION's portfolio; and

(2) determine what industries and companies should, in its opinion, be
represented in the CORPORATION's portfolio and regularly report them to the
Board of Directors of the CORPORATION; and

(3) formulate and implement programs for the purchases and sales of the
securities of such companies as fall within the CORPORATION's objectives and
program (as the implementation of its objectives may be more specifically
detailed from time to time by the Board of Directors or its Financial
Advisory Committee) and regularly report thereon to the Board of Directors
of the CORPORATION; and

(4) take, on behalf of the CORPORATION, all actions which appear to the
ADVISER necessary to carry into effect such purchase and sale programs

A-1
<PAGE> 24

and advisory functions as aforesaid, including the placing of orders for the
purchase and sale of portfolio securities.

THIRD: In placing orders for the purchase and sale of portfolio securities on
behalf of the CORPORATION, ADVISER is authorized to utilize the facilities of
such brokers and dealers who render satisfactory services at customary fees or
commission rates which give due consideration to all pertinent factors,
including, without limitation, the size of the orders and the nature of the
securities involved. ADVISER is further authorized to allocate on a reasonable
basis the orders placed by it on behalf of the CORPORATION to such brokers and
dealers who also provide research or statistical material, and services to the
CORPORATION or ADVISER. ADVISER shall report on said allocations and directions
quarterly to the Board of Directors of the CORPORATION, indicating the brokers
to whom such allocations and directions have been made and the basis therefor.

FOURTH: Any investment program undertaken by the ADVISER pursuant to this
agreement, as well as any other activities undertaken by the ADVISER on behalf
of the CORPORATION pursuant thereto, shall at all times be subject to any
directives of the Board of Directors of the CORPORATION, the Financial Advisory
Committee of said Board, any other committee or committees of the CORPORATION
acting pursuant to authority of the Board, or any officer of the CORPORATION
acting pursuant to like authority.

FIFTH: In carrying out its obligations under this agreement, ADVISER shall at
all times conform to:

(1) all applicable provisions of the Investment Company Act of 1940 and
any rules and regulations adopted thereunder, as amended; and

(2) the provisions of the Articles of Incorporation of the CORPORATION,
as amended; and

(3) the provisions of the Bylaws of the CORPORATION, as amended; and

(4) the provisions of the Registration Statement of the CORPORATION
under the Investment Company Act of 1940, as amended; and

(5) any other applicable provision of state or federal law; and

(6) the provisions of the custody agreement adopted by the CORPORATION
and, in this regard, all securities purchased are to be delivered to the
custodian designated by the CORPORATION and shall be held in the name of the
CORPORATION or such nominee as may be designated by the custodian.

A-2
<PAGE> 25

SIXTH: (1) ADVISER shall furnish, at its expense and without cost to the
CORPORATION, sufficient executive and clerical personnel to prepare, in
accordance with the direction of the CORPORATION's Board of Directors or
officers, as the case may be, all Annual and Semiannual Reports, notices and
proxy solicitation material addressed to the shareholders of the CORPORATION.
The ADVISER will bear the cost of personnel whose normal duties consist of (i)
maintaining the corporate financial accounts and books and records, and (ii)
performing administrative and routine legal functions. ADVISER will also bear
the costs of preparing and distributing any dividends or capital gains
distributions declared by the Board of Directors of the CORPORATION. ADVISER
shall further maintain, at its expense and without cost to the CORPORATION, an
order desk in order to carry out its obligation under subparagraph(4) of
paragraph SECOND hereof to place orders for the purchase and sale of portfolio
securities for the CORPORATION.

(2) Nothing in subparagraph (1) hereof shall be construed to require ADVISER
to bear any of the costs of printing and mailing any of the items referred to in
the first sentence of the said subparagraph (1).

(3) All of the ordinary business expenses of the CORPORATION, including, but
without limitation, audit, legal and custodian fees, shall be borne by the
CORPORATION unless in this paragraph SIXTH specifically provided otherwise.

SEVENTH: The CORPORATION shall pay ADVISER in full compensation for services
rendered hereunder an annual fee equal to 0.45% of the average weekly net asset
value of the CORPORATION. Such fee shall be accrued weekly and paid monthly. The
valuation of the portfolio securities of the CORPORATION for the purposes of
determining such average net assets will be made on the basis of the most
recently quoted bid prices or at bid prices based on a Matrix system (which
considers such factors as yields of prices of municipal bonds of comparable
quality, coupon, maturity and type; indications as to values from dealers; and
general market conditions), furnished by dealers and an independent pricing
service. Prices not available for any of the portfolio securities are valued on
the basis of their fair value determined in good faith by a majority of the
Board of Directors of the CORPORATION, including a majority of the directors not
affiliated with the ADVISER.

EIGHTH: The CORPORATION shall at all times keep the ADVISER fully informed
with regard to the securities owned by it, its funds available or to become
available for investment, and generally as to the condition of its affairs. It
shall furnish the ADVISER with a copy of all financial statements certified by
its financial officer, and a signed copy of each report prepared by certified
public accountants with respect to it, and with such other information with
regard to its affairs as the ADVISER may from time to time reasonably request.

A-3
<PAGE> 26

NINTH: This agreement shall have an initial term of two years from the date
hereof, and shall continue in force from year to year thereafter provided that
such continuance is specifically approved at least annually (a)(i) by the Board
of Directors of the CORPORATION or (ii) by vote of a majority of the outstanding
voting securities (as defined by the Investment Company Act of 1940, as amended)
and (b) by specific approval by a majority of the Directors who are not parties
to this agreement or interested persons (as defined by the Investment Company
Act of 1940, as amended) of a party to the agreement by votes cast in person at
a meeting specifically called for such purpose.

TENTH: (1) This agreement may be terminated at any time, without the payment
of any penalty, by vote of the Board of Directors of the CORPORATION or by vote
of the holders of a majority of the outstanding voting securities of the
CORPORATION, or by the ADVISER, on thirty (30) days' written notice to the other
party. The notice provided for herein may be waived by either party.

(2) In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligation or duties hereunder on the part of ADVISER, it
shall not be subject to liability to the CORPORATION or to any shareholder of
the CORPORATION for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security, except that nothing under this
paragraph shall be deemed a waiver of any right of the CORPORATION or any
shareholder of the CORPORATION that may exist under the federal securities laws.

ELEVENTH: This agreement shall automatically terminate in the event of its
assignment, the term "assignment" for this purpose having the meaning defined in
Section 2(a)(4) of the Investment Company Act of 1940, as amended.

TWELFTH: Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid, to the other party as such other party may
designate for the receipt of such notices. Until further notice to the other
party, it is agreed that the address of the CORPORATION shall be Mosher, Inc.,
c/o Christopher T. Jones, 6115 Berkshire Lane, Dallas, Texas 75225, and that of
the ADVISER for this purpose shall be 2800 Post Oak Blvd., Houston, Texas 77056.

A-4
<PAGE> 27

IN WITNESS WHEREOF, the parties hereto each have caused this Agreement to be
executed in duplicate on the day and year first above written.

MOSHER, INC.

By:__________________________

Name:________________________

Its:_________________________

VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC.

By:__________________________

Name:________________________

Its:_________________________

A-5
<PAGE> 28

ANNEX B

The following table indicates the size of each investment company advised or
subadvised by the Adviser, the advisory fee rate, the amount of advisory fees or
subadvisory fees paid to the Adviser for the last fiscal year, and the amount of
other material fees paid to such persons for such fiscal year. Average net
assets are calculated on a daily basis for open-end funds and on a weekly basis
for closed-end funds.

<TABLE>
<CAPTION>
AMOUNT
OF OTHER
MATERIAL
ANNUAL AGGREGATE PAYMENTS
MANAGEMENT AMOUNT OF TO
NET FEE AS ADVISER/ ADVISER/
ASSETS PERCENT SUBADVISER'S SUBADVISER
ON OF FEE FOR FOR THE
AUGUST AVERAGE LAST LAST
12, NET FISCAL FISCAL
NAME 1996 ASSETS YEAR YEAR
- ------------------------------ -------- -------- --------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
ADVISER
OPEN-END:
Van Kampen American Capital
Comstock Fund............... $1,200.7 (12) $5,080,809 $146,156
Van Kampen American Capital
Corporate Bond Fund......... 195.6 (1) 907,960 71,183
Van Kampen American Capital
Emerging Growth Fund........ 2,261.0 (20) 5,810,837 158,937
Van Kampen American Capital
Enterprise Fund............. 1,372.9 (12) 5,293,215 131,706
Van Kampen American Capital
Equity Income Fund.......... 989.4 (1) 2,603,866 108,597
Van Kampen American Capital
Exchange Fund............... 51.8 (2) 221,917 52,584
Van Kampen American Capital
Global Managed Assets Fund.. 29.6 (15) 27,072 29,687
Van Kampen American Capital
Government Securities
Fund........................ 2,551.3 (4) 14,930,811 361,240
Van Kampen American Capital
Government Target Fund...... 16.0 (2) 78,242+ 49,880
Van Kampen American Capital
Growth and Income Fund...... 678.6 (1) 1,412,556 76,989
Van Kampen American Capital
Harbor Fund................. 447.7 (17) 2,494,437 91,039
Van Kampen American Capital
High Income Corporate Bond
Fund........................ 551.0 (5) 2,650,114 107,087
Van Kampen American Capital
Life Investment Trust
Asset Allocation
Portfolio................. 62.4 (6) 216,539+ 57,576
Domestic Income Portfolio... 22.0 (6) 43,177+ 49,819
</TABLE>

B-1
<PAGE> 29

<TABLE>
<CAPTION>
AMOUNT
OF OTHER
MATERIAL
ANNUAL AGGREGATE PAYMENTS
MANAGEMENT AMOUNT OF TO
NET FEE AS ADVISER/ ADVISER/
ASSETS PERCENT SUBADVISER'S SUBADVISER
ON OF FEE FOR FOR THE
AUGUST AVERAGE LAST LAST
12, NET FISCAL FISCAL
NAME 1996 ASSETS YEAR YEAR
- ------------------------------ -------- -------- --------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Emerging Growth Portfolio... 5.3 (26) $ (15,060)+ $ 3,222
Enterprise Portfolio........ $ 79.3 (6) 299,035+ 55,772
Global Equity Portfolio..... 3.4 (15) (32,048)+ 7,200
Growth and Income
Portfolio................. * (27) * *
Government Portfolio........ 59.8 (6) 256,026+ 57,526
Money Market Portfolio...... 20.6 (6) 40,915+ 48,109
Real Estate Securities
Portfolio................. 35.8 (15) 10,963+ 3,153
Van Kampen American Capital
Limited Maturity Government
Fund........................ 72.3 (3) 312,558+ 65,703
Van Kampen American Capital
Real Estate Securities
Fund........................ 29.6 (15) 98,904+ 48,971
Van Kampen American Capital
Reserve Fund................ 536.0 (1) 1,836,244+ 127,090
Van Kampen American Capital
Pace Fund................... 2,530.8 (12) 11,589,844 351,270
Van Kampen American Capital
Small Capitalization Fund... 219.1 (23) -- 23,710
Van Kampen American Capital
Tax-Exempt Trust High Yield
Municipal Fund.............. 850.8 (17) 3,897,884+ 158,098
Van Kampen American Capital
Texas Tax Free Income Fund.. 17.1 (16) 61,589+ 67,413
Van Kampen American Capital
U.S. Government Trust For
Income...................... 224.5 (18) 1,874,427+ 91,294
Van Kampen American Capital
World Portfolio Series Trust
Van Kampen American Capital
Global Equity Fund........ 209.0 (15) 1,600,616+ 31,987
Van Kampen American Capital
Global Government
Securities Fund........... 140.4 (14) 1,249,294+ 31,987
Common Sense Trust
Common Sense Emerging Growth
Fund...................... 72.5 (9) 2,169+ 6,365
Common Sense Government
Fund...................... 318.8 (13) 1,979,623 92,277
Common Sense Growth Fund.... 2,943.9 (9) 14,436,748 277,991
</TABLE>

B-2
<PAGE> 30

- ---------------

(1) 0.50% on the first $150 million; 0.45% on the next $100 million; 0.40% on
the next $100 million; and 0.35% on the excess over $350 million.

(2) 0.50% on the Fund's average net assets.

(3) 0.50% on the first $1 billion; 0.475% on the next $1 billion; 0.45% of the
next $1 billion; 0.40% on the next $1 billion; and 0.35% on the excess over
$4 billion.

(4) 0.540% on the first $1 billion; 0.515% on the next $1 billion; 0.490% on
the next $1 billion; 0.440% on the next $1 billion; 0.390% on the next $1
billion; 0.340% on the next $1 billion; 0.290% on the next $1 billion; and
0.240% on the excess of over $7 billion.

B-3
<PAGE> 31

(5) 0.625% on the first $150 million; 0.55% on the next $150 million; and 0.50%
on the next $300 million.

(6) 0.50% on the first $500 million of the combined net assets of certain of
the Funds of the Trust; 0.45% on the next $500 million; and 0.40% on the
excess over $1 billion.

(7) 0.60% on the first $300 million: 0.55% on the next $300 million; and 0.50%
on the excess over $600 million.

(8) 0.65% of the Fund's average weekly net assets.

(9) 0.65% on the first $1 billion; 0.60% on the next $1 billion; 0.55% on the
next $1 billion; 0.50% on the next $1 billion; and 0.45% on the excess over
$4 billion.

(10) 0.50% on the first $2 billion; 0.475% on the next $2 billion; and 0.45% on
the excess over $4 billion.

(11) 0.60% on the first $1 billion; 0.55% on the next $1 billion; 0.50% on the
next $1 billion; and 0.45% on the excess over $3 billion.

(12) 0.50% on the first $1 billion; 0.45% on the next $1 billion; 0.40% on the
next $1 billion; and 0.35% on the excess over $3 billion.

(13) 0.60% on the first $1 billion; 0.55% on the next $1 billion; 0.50% on the
next $1 billion; 0.45% on the next $1 billion; 0.40% in the next $1
billion; and 0.35% on the excess over $5 billion.

(14) 0.75% of the Fund's average daily net assets.

(15) 1.00% of the Fund's average daily net assets.

(16) 0.60% on the first $300 million; 0.55% on the next $300 million; and 0.50%
on the excess over $600 million.

(17) 0.55% on the first $350 million; 0.50% on the next $350 million; 0.45% on
the next $350 million; and 0.40% on the excess over $1.05 billion.

(18) 0.60% of the Fund's average daily net assets.

(19) 50% of the fees received by the investment adviser to the Portfolio less
50% of the amount of the excess expenses paid by the investment adviser on
behalf of the Portfolio.

(20) 0.575% on the first $350 million; 0.525% on the next $350 million; 0.475%
on the next $350 million; and 0.425% on the excess over $1.05 billion.

(21) 0.75% of 1.00% of the Portfolio's average daily net assets.

(22) 0.45% on the Fund's average weekly net assets.

(23) The Adviser serves as investment adviser without fee for Van Kampen
American Capital Small Capitalization Fund ("Small Cap"), the shares of
which are held by other Van Kampen American Capital Funds listed above.

B-4
<PAGE> 32

The assets in Small Cap are also reflected in the assets of the Funds that
own shares of Small Cap.

(24) 0.325% of the Portfolio's average daily net assets.

(25) 0.65% of the Fund's average daily net assets.

(26) 0.70% of the Fund's average daily net assets.

(27) 0.60% on the first $500 million; and 0.55% on the excess over $500 million.

* This fund has not commenced operations.

** This fund has not yet completed a full year of operations.

+ This amount is net of either a voluntary advisory fee waiver or expense
reduction.

B-5
<PAGE> 33
MOSHER, INC.

By signing this Proxy card, I hereby appoint Christopher T. Jones, Milton E.
Eliot, and Charles C. Ryrie, or either of them, Proxies to vote at Mosher,
Inc.'s Special Meeting of Shareholders to be held in the 46th floor conference
room of Van Kampen American Capital, Inc., 2800 Post Oak Boulevard, Houston,
Texas 77056 on Tuesday, October 29, 1996 at 11:00 a.m. Central Time, and any
adjournment or postponements thereof on matters which may properly come before
the Special Meeting, in accordance with and as more fully described in the
Notice of Meeting and the Proxy Statement, receipt of which is acknowledged.
This Proxy is solicited on behalf of the Board of Directors.

The Proxies will vote your shares in accordance with your directions on this
card. If you do not indicate your choices on this card, the Proxies will vote
your share FOR all proposals.

PLEASE VOTE, DATE AND SIGN ON OTHER SIDE AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE.

Please sign this proxy exactly as your name appears on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where more
than one name appears, a majority must sign. If a corporation, this signature
should be that of an authorized officer who should state his or her title.

<PAGE> 34
<TABLE>
<S> <C>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE

For Against Abstain

Please refer to the Proxy Statement discussion for / / To approve a new investment / / / / / /
the following matters: IF NO SPECIFICATION IS advisory agreement.
MADE, THE PROXY SHALL BE VOTED FOR THE
PROPOSALS. As to any other matter, said proxies
shall vote in accordance with their best
judgement. THE DIRECTORS RECOMMEND A VOTE
FOR THE FOLLOWING PROPOSAL.

RECORD DATE SHARES:
- ----------------------------------------------------------------

REGISTRATION

- ---------------------------------------------------------------

-------------
Please be sure to sign and date this Proxy. Date
- ---------------------------------------------------------------

Shareholder sign here ___________ Co-owner sign here _________

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DETACH CARD DETACH CARD

</TABLE>