VAN KAMPEN AMERICAN CAPITAL MUNICIPAL INCOME TRUST, DEF 14A, 1997-04-21

VAN KAMPEN AMERICAN CAPITAL MUNICIPAL INCOME TRUST
DEF 14A, 1997-04-21

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<PAGE> 1

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Co-Registrants [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Com-
mission Only (as permitted
by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

VAN KAMPEN AMERICAN CAPITAL MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL CALIFORNIA MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL INTERMEDIATE TERM HIGH INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL LIMITED TERM HIGH INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL INVESTMENT GRADE MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL CALIFORNIA QUALITY MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL NEW YORK QUALITY MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA QUALITY MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL FLORIDA QUALITY MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL OHIO QUALITY MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INSURED MUNICIPALS
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE MUNICIPALS
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE PENNSYLVANIA MUNICIPALS
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE FLORIDA MUNICIPALS
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE NEW JERSEY MUNICIPALS
VAN KAMPEN AMERICAN CAPITAL ADVANTAGE MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL ADVANTAGE PENNSYLVANIA MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL NEW JERSEY VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL OHIO VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL MASSACHUSETTS VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL NEW YORK VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL CALIFORNIA VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA VALUE MUNICIPAL INCOME TRUST
VAN KAMPEN AMERICAN CAPITAL MUNICIPAL OPPORTUNITY TRUST
VAN KAMPEN AMERICAN CAPITAL FLORIDA MUNICIPAL OPPORTUNITY TRUST
VAN KAMPEN AMERICAN CAPITAL MUNICIPAL OPPORTUNITY TRUST II
VAN KAMPEN AMERICAN CAPITAL ADVANTAGE MUNICIPAL INCOME TRUST II
VAN KAMPEN AMERICAN CAPITAL SELECT SECTOR MUNICIPAL TRUST
VAN KAMPEN AMERICAN CAPITAL STRATEGIC SECTOR MUNICIPAL TRUST
THE EXPLORER INSTITUTIONAL TRUST

(Names of Co-Registrants as Specified in Their Charters)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed per Exchange Act Rules 14a-6(i)(1) and 0-11.

[ ] Fee paid previously with preliminary materials.
<PAGE> 2
- APRIL 1997 -

IMPORTANT NOTICE

TO VAN KAMPEN AMERICAN CAPITAL
FUND SHAREHOLDERS

QUESTIONS
& ANSWERS

- --------------------------------------------------------------------------------
Although we recommend that you read the complete Proxy Statement, for your
convenience, we have provided a brief overview of the issues to be voted on.
- --------------------------------------------------------------------------------

Q WHY AM I RECEIVING THIS PROXY STATEMENT?

A Morgan Stanley Group, Inc., the indirect corporate parent of your Fund's
investment adviser, has entered into an agreement to merge with and into Dean
Witter, Discover & Co. Your Fund is seeking shareholder approval of a new
investment advisory agreement, to take effect following the merger. Certain
other proposals also are included in the Proxy Statement. Please refer to the
proxy statement for a detailed explanation of the proposed items.

Q HOW WILL THIS AFFECT MY ACCOUNT?

A You can expect the same level of 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
similar to the Fund's current investment advisory agreement, except for certain
provisions added at the request of your trustees.

Q WILL MY VOTE MAKE A DIFFERENCE?

A Your vote is needed to ensure that the proposals can be acted upon. Your
immediate response on the enclosed proxy card(s) 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(s).

Q HOW DO THE TRUSTEES OF MY FUND SUGGEST THAT I VOTE?

A After careful consideration, the trustees of your Fund unanimously recommend
that you vote "FOR" each of the items proposed on the enclosed proxy card(s).

Q WHO IS PAYING FOR EXPENSES RELATED TO THE SHAREHOLDERS MEETING?

A Morgan Stanley Group, Inc. or its affiliates will pay for those expenses
relating to the shareholder meeting.

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 1-800-341-2929 (1-800-341-2911 for shareholders of the
Explorer Funds) between 7:00 a.m. and 7:00 p.m. Central time, Monday through
Friday. (TDD users call 1-800-421-2833.)

Q WHERE DO I MAIL MY PROXY CARD(S).

A You may use the enclosed postage paid envelope or mail your proxy card(s) to:

Proxy Tabulator
P.O. Box 9111
Hingham, MA 02043-911
<PAGE> 3
ABOUT THE PROXY CARD

Please vote on each issue using blue or black ink to mark an X in one of the
boxes provided on the proxy card.

APPROVAL OF NEW ADVISORY AGREEMENT--mark "For," "Against" or "Abstain"

ELECTION OF TRUSTEES (IF APPLICABLE)--mark "For" "Withhold"

To withhold authority to vote for any individual nominee, write the nominee's
name on the line below.

RATIFICATION OF INDEPENDENT AUDITORS--mark "For," "Against" or "Abstain"

Sign, date and return the proxy card in the enclosed postage-paid envelope.
All registered owners of an account, as shown in the address, must sign the
card. When signing as attorney, trustee, executor, administrator, custodian,
guardian or corporate officer, please indicate your full title.

<TABLE>
<S><C>
SAMPLE

/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE VAN KAMPEN AMERICAN CAPITAL XXXXX TRUST
JOINT MEETING OF SHAREHOLDERS

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. The proposal to approve a new / / / / / / 3. As to the proposal to ratify the / / / / / /
investment advisory agreement. selection of KPMG Peat Marwick LLP
to act as the independent public
accountants for each Fund's current
fiscal year.
2. Authority to vote for the election FOR WITHHOLD
as Class X Trustees the nominees / / / /
named below:

XXXXXXXXX, XXXXXXXXXX, XXXXXXXXXX

To withhold authority to vote for any individual nominee,
write the nominee's name on the line below.

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

Please be sure to sign and date this Proxy. Date

Shareholder sign here Co-owner sign here

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
</TABLE>
<PAGE> 4

April 21, 1997

Dear Van Kampen American Capital Fund Shareholder:

The enclosed proxy statement relates to a joint meeting of the shareholders of
a number of Van Kampen American Capital closed-end investment companies and The
Explorer Institutional Trust open-end investment companies. We are pleased to
announce that Morgan Stanley Group Inc., the indirect corporate parent of the
investment adviser of your Fund, has entered into a merger agreement with Dean
Witter, Discover & Co. Under the terms of the merger agreement, your Fund's
investment adviser will become an indirect subsidiary of the merged company, to
be named Morgan Stanley, Dean Witter, Discover & Co. Your Fund's investment
adviser will continue to provide the Fund with investment advisory and
management services following the merger.

The primary purpose of the shareholder meeting is to permit the shareholders
of each Fund to consider a new investment advisory agreement to take effect
following the merger. The new investment advisory agreement between your Fund
and its investment adviser will be substantially similar to the Fund's current
investment advisory agreement, except for certain provisions added at the
request of your trustees. The attached proxy statement seeks shareholder
approval on this and other items.

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

The proposals have been unanimously approved by the Board of Trustees of each
Fund, who recommend you vote "FOR" each of these proposals. YOUR IMMEDIATE
RESPONSE WILL HELP SAVE ON THE COSTS OF ADDITIONAL SOLICITATIONS. EACH FUND
VOTES SEPARATELY, SO PLEASE SIGN AND RETURN ALL OF YOUR FUND PROXY FORMS. 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(S) IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.

Sincerely,

Dennis J. McDonnell
President and Chairman of the
Boards of Trustees
<PAGE> 5

Dear Van Kampen American Capital Fund Shareholder:

Each proxy card enclosed in this envelope represents your voting privilege in
a separate Van Kampen American Capital Fund. We have grouped your proxy cards
together for your convenience and to reduce postage expenses.

The meeting date for your Van Kampen American Capital Fund is May 28, 1997.
Please sign all proxy cards and return them in the postage-paid envelope
included with this material.

We appreciate the prompt return of your proxy cards.
<PAGE> 6

VAN KAMPEN AMERICAN CAPITAL FUNDS

ONE PARKVIEW PLAZA
OAKBROOK TERRACE, ILLINOIS 60181
TELEPHONE (800) 341-2929

NOTICE OF JOINT MEETING OF SHAREHOLDERS

TO BE HELD MAY 28, 1997

Notice is hereby given to the holders of common shares of beneficial interest
("Common Shares") and preferred shares of beneficial interest (the "Preferred
Shares"), if any, of each of the Van Kampen American Capital Funds listed on
Annex A (the "Funds") to the attached Proxy Statement that a Joint Meeting of
the Shareholders of the Funds (the "Meeting") will be held at the offices of Van
Kampen American Capital, Inc., One Parkview Plaza, Oakbrook Terrace, Illinois
60181, on Wednesday, May 28, 1997, at 2:00 p.m., for the following purposes:

<TABLE>
<S> <C>
1. For each Fund, to approve a new investment advisory
agreement;
2. For each Closed-End Fund, to elect trustees in the following
manner:
2A. With respect to VIG, VKV, VCV, VMV, VJV, VNV, VOV, VPV,
VKS, VOT, VKI and VOF, to elect three trustees by the
holders of the Common Shares of each Fund, each trustee
to serve for a 3 year term or until their successors
shall have been duly elected and qualified;
2B. With respect to VGM, VIM, VIC, VTF, VTJ, VTN, VTP, VMO,
VKA, VAP, VKQ, VQC, VFM, VOQ, VNM, VPQ, VMT, VKC, VLT and
VIT, to elect two trustees, one by the holders of the
Common Shares of each Fund and one by the holders of the
Preferred Shares of each Fund, the Common Shares and the
Preferred Shares of each Fund voting as separate
classes, each trustee to serve for a 3 year term or
until their successors shall have been duly elected and
qualified;
2C. With respect to VKL, to elect two trustees, one by the
holders of the Common Shares of each Fund and one by the
holders of the Preferred Shares of each Fund, the Common
Shares and the Preferred Shares of each Fund voting as
separate classes, each trustee to serve for a 3 year
term or until their successors shall have been duly
elected and qualified;
3. For each Fund, to ratify the selection of KPMG Peat Marwick
LLP as independent auditors for the fiscal year of each
respective Fund ending in 1997; and
4. To transact such other business as may properly come before
the Meeting.
</TABLE>

The Meeting will be an annual meeting for each Closed-End Fund and will be a
special meeting for each Explorer Fund. The Common Shares and the Preferred
Shares of the Closed-End Funds and the Common Shares of the Explorer Funds
sometimes are referred to herein collectively as the "Shares".

Holders of record of the Shares of each Fund at the close of business on April
14, 1997 are entitled to notice of, and to vote at, the Meeting and any
adjournment thereof.

By order of the Board of Trustees

RONALD A. NYBERG,
Vice President and Secretary
April 21, 1997
<PAGE> 7

EACH FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST RECENT ANNUAL
REPORT (AND THE MOST RECENT SEMI-ANNUAL REPORT SUCCEEDING THE ANNUAL REPORT, IF
ANY) TO A SHAREHOLDER UPON REQUEST. ANY SUCH REQUEST SHOULD BE DIRECTED TO THE
VAN KAMPEN AMERICAN CAPITAL FUNDS BY CALLING 1-800-341-2929 (1-800-341-2911 FOR
THE EXPLORER FUNDS) OR BY WRITING TO THE RESPECTIVE FUND AT ONE PARKVIEW PLAZA,
OAKBROOK TERRACE, ILLINOIS 60181.

SHAREHOLDERS OF THE FUNDS 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 WITH RESPECT TO EACH FUND IN WHICH YOU WERE A
SHAREHOLDER AS OF THE RECORD DATE, DATE AND SIGN SUCH PROXY CARD(S), AND RETURN
IT (THEM) 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 TRUSTEES OF EACH FUND RECOMMENDS THAT YOU CAST YOUR VOTE:

- FOR approval of each new investment advisory agreement;

- FOR each of the nominees for the Boards of Trustees of the Closed-End Funds
listed in the Proxy Statement; and

- FOR ratification of KPMG Peat Marwick LLP as independent auditors.

YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY CARD(S) PROMPTLY
NO MATTER HOW MANY SHARES YOU OWN.
<PAGE> 8

PROXY STATEMENT

VAN KAMPEN AMERICAN CAPITAL FUNDS

ONE PARKVIEW PLAZA
OAKBROOK TERRACE, ILLINOIS 60181
TELEPHONE (800) 341-2929

JOINT MEETING OF SHAREHOLDERS

MAY 28, 1997

This Proxy Statement is furnished in connection with the solicitation by the
Boards of Trustees (the "Trustees" or "Board of Trustees") of each of the Van
Kampen American Capital Funds listed on Annex A to this Proxy Statement (the
"Funds") of proxies to be voted at a Joint Meeting of Shareholders of the Funds,
and all adjournments thereof (the "Meeting"), to be held at the offices of Van
Kampen American Capital, Inc., One Parkview Plaza, Oakbrook Terrace, Illinois
60181, on Wednesday, May 28, 1997, at 2:00 p.m. The Meeting will be an annual
meeting for each Closed-End Fund and a special meeting for each Explorer Fund.
The approximate mailing date of this Proxy Statement and accompanying form of
proxy is April 21, 1997.

The primary purpose of the Meeting is to permit each 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 February 4, 1997 (the "Merger Agreement"), between Dean
Witter, Discover & Co. ("Dean Witter Discover") and Morgan Stanley Group Inc.
("Morgan Stanley"), the indirect parent corporation of each Fund's investment
adviser. Pursuant to the Merger Agreement, the investment adviser will become an
indirect subsidiary of the merged company, which will be called Morgan Stanley,
Dean Witter, Discover & Co. ("MSDWD").

Participating in the Meeting are holders of common shares of beneficial
interest (the "Common Shares") and preferred shares of beneficial interest (the
"Preferred Shares"), if any, of each of the Funds as set forth on Annex A to
this Proxy Statement. The Common Shares and the Preferred Shares of the
Closed-End Funds and the Common Shares of the Explorer Fund sometimes are
referred to herein collectively as the "Shares." The Meeting is scheduled as a
joint meeting of the shareholders of the Funds and the shareholders of the Funds
are expected to consider and vote on similar matters. The Boards of Trustees
have determined that the use of a joint proxy statement for the Meeting is in
the best interest of the shareholders of the Funds. In the event that a
shareholder of any Fund present at the Meeting objects to the holding of a joint
meeting and moves for an adjournment
<PAGE> 9

of the meeting of such Fund to a time immediately after the Meeting so that such
Fund's meeting may be held separately, the persons named as proxies will vote in
favor of the adjournment.

Annex A lists the abbreviated name and stock symbol, if any, by which the
Funds sometimes are referred to in this Proxy Statement and groups the Funds
into "Closed-End Funds" and "Explorer Funds". Please refer to Annex A for any
questions you may have regarding whether your Fund is participating at the
Meeting, defined terms relating to the Funds and abbreviated Fund names. Other
Van Kampen American Capital investment companies not listed on Annex A will vote
at separate shareholder meetings on proposals substantially similar to Proposals
1, 2 and 3 in this Proxy Statement. They will hold separate shareholder meetings
because they are supervised by boards of trustees that are not identical to the
Board of Trustees of the Funds or their shareholders will consider proposals
which do not affect the Funds. If you are a shareholder of Van Kampen American
Capital investment companies not listed on Annex A, you will receive one or more
additional proxy statements relating to such other shareholder meetings.

The following table summarizes each proposal to be presented at the Meeting
and the Funds solicited with respect to such proposal:

<TABLE>
<CAPTION>
PROPOSAL AFFECTED FUNDS
-------- --------------
<S> <C> <C>
1. Approval of New Advisory Agreement All Funds
2. Election of Trustees Closed-End Funds*
3. Ratification of Independent Auditors All Funds
</TABLE>

- ---------------
* As defined in Annex A.

VOTING

The Board of Trustees has fixed the close of business on April 14, 1997 as the
record date (the "Record Date") for the determination of holders of Shares of
each Fund entitled to vote at the Meeting. Shareholders of a Fund on the Record
Date will be entitled to one vote per Share with respect to each proposal
submitted to the shareholders of the Fund, with no Share having cumulative
voting rights.

2
<PAGE> 10

The voting requirement for passage of Proposal 1 is the "vote of a majority of
the outstanding voting securities", which is defined under the 1940 Act as the
lesser of (i) 67% or more of the voting securities of each respective Fund
entitled to vote thereon present in 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 each respective Fund entitled to vote
thereon. With respect to Proposal 2, the affirmative vote of a plurality of the
Common Shares of a Closed-End Fund present in person or by proxy at the Meeting
is required to elect the nominee(s) for Trustee of the Closed-End Fund
designated to be elected by the holders of the Common Shares of such Closed-End
Fund and an affirmative vote of a plurality of the Preferred Shares of a
Closed-End Fund present in person or by proxy at the Meeting is required to
elect the nominee(s) for Trustee of the Closed-End Fund designated to be elected
by the holders of the Preferred Shares of such Closed-End Fund. With respect to
Proposal 3, the affirmative vote of a majority of the Shares of a Fund present
in person or by proxy at the Meeting is necessary to ratify the selection of the
independent public accountants. Unless otherwise specified, the Common Shares
and Preferred Shares of the Closed-End Funds vote together as a single class.

The Board of Trustees of each Fund recommends that you cast your vote:

- FOR approval of each New Advisory Agreement.

- FOR each of the nominees for the Boards of Trustees of the Closed-End Funds
listed in the Proxy Statement.

- FOR ratification of KPMG Peat Marwick LLP as independent auditors.

An unfavorable vote on a proposal by the shareholders of one Fund will not
affect the implementation of such a proposal by another Fund, if the proposal is
approved by the shareholders of the other Fund. An unfavorable vote on a
proposal by the shareholders of a Fund will not affect such Fund's
implementation of other proposals that receive a favorable vote. There is no
cumulative voting with respect to the election of Trustees.

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" each
proposal as to which it is entitled to vote. Shares not voted with respect to a
proposal due to an abstention or broker non-vote will be deemed votes not cast
with respect to such proposal, but such Shares will be deemed present for quorum
purposes. 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 respective Fund a written notice of revocation, by
delivering

3
<PAGE> 11

a duly executed proxy bearing a later date or by attending the Meeting and
voting in person.

The Funds know of no business other than that mentioned in Proposals 1, 2 and
3 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 any
of the proposals with respect to one or more Funds or proposals are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting of the concerned Fund with respect to such proposal 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 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.

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

THE ADVISERS

Van Kampen American Capital Investment Advisory Corp. ("Advisory Corp.") acts
as investment adviser for each Closed-End Fund. Van Kampen American Capital
Management, Inc. ("Management Inc.") acts as investment adviser for each
Explorer Fund. Advisory Corp. and Management Inc. sometimes are referred to
herein collectively as the "Advisers" or individually as an "Adviser". One of
the Advisers has acted as investment adviser for each Fund since the Fund
commenced its investment operations. Prior to January 1995, Advisory Corp.
provided investment advisory services under the name Van Kampen Merritt
Investment Advisory Corp. and Management Inc. provided investment advisory
services under the name Van Kampen Merritt Management Inc.

Each Adviser currently is a wholly-owned subsidiary of Van Kampen American
Capital, Inc. ("VKAC"). VKAC is a wholly-owned subsidiary of VK/AC Holding, Inc.
("VKAC Holding"). VKAC Holding is an indirect wholly-owned subsidiary of Morgan
Stanley. The addresses of VKAC Holding, VKAC and the Advisers are One Parkview
Plaza, Oakbrook Terrace, Illinois 60181 and 2800 Post Oak Blvd., Houston, Texas
77056.

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, Morgan Stanley Asset Management Inc., a registered

4
<PAGE> 12

investment adviser, and Morgan Stanley & Co. International Limited, provide a
wide range of financial services on a global basis. Their principal businesses
include securities underwriting, distribution and trading; merger, acquisition,
restructuring real estate, project finance and other corporate finance advisory
activities; merchant banking and other principal investment activities; stock
brokerage and research services; asset management; the trading of foreign
exchange and commodities as well as derivatives on a broad range of asset
categories, rates and indices; real estate advice, financing and investing; and
global custody, securities clearance services and securities lending.

INFORMATION CONCERNING DEAN WITTER, DISCOVER & CO.

Dean Witter Discover is a diversified financial services company offering a
broad range of nationally marketed credit and investment products with a primary
focus on individual customers. Dean Witter Discover has two principal lines of
business: credit services and securities. Its credit services business consists
primarily of the issuance, marketing and servicing of general purpose credit
cards and the provision of transaction processing services, private-label credit
card services and real estate secured loans. It is the largest single issuer of
general purpose credit cards in the United States, as measured by number of
accounts and cardmembers, and the third largest originator and servicer of
credit card receivables, as measured by managed loans. Dean Witter Discover's
securities business is conducted primarily through its wholly-owned
subsidiaries, Dean Witter Reynolds Inc. ("DWR") and Dean Witter InterCapital
Inc. ("InterCapital"). DWR is a full-service securities firm offering a wide
variety of securities products to serve the investment needs of individual
clients through over 9,100 account executives located in 371 branch offices. DWR
is among the largest NYSE members and is a member of other major securities,
futures and options exchanges. InterCapital is a registered investment adviser
that, along with its subsidiaries, services investment companies, individual
accounts and institutional accounts. InterCapital and its wholly-owned
subsidiary, Dean Witter Services Company Inc., serve in various investment
management, advisory and administrative capacities to 102 investment companies
(the "InterCapital Funds") and other portfolios with net assets under management
of approximately $91.4 billion at March 31, 1997.

THE MERGER

Pursuant to the Merger Agreement, Morgan Stanley will be merged (the "Merger")
with and into Dean Witter Discover and the surviving corporation will be named
Morgan Stanley, Dean Witter, Discover & Co. ("MSDWD"). Following the Merger,
each Adviser will be an indirect subsidiary of MSDWD.

Under the terms of the Merger Agreement, each of Morgan Stanley's common
shares will be converted into the right to receive 1.65 shares of MSDWD common
stock and each issued and outstanding share of Dean Witter Discover common

5
<PAGE> 13

stock will thereafter represent one share of MSDWD common stock. Following the
Merger, Morgan Stanley's former shareholders will own approximately 45% and Dean
Witter Discover's former shareholders will own approximately 55% of the
outstanding shares of common stock of MSDWD.

The Merger is expected to be consummated in mid-1997 and is subject to certain
closing conditions, including certain regulatory approvals and the approval of
shareholders of both Morgan Stanley and Dean Witter Discover.

Under the terms of the Merger Agreement, the Board of Directors of MSDWD
initially will consist of fourteen members, two of whom will be Morgan Stanley
insiders and two of whom will be Dean Witter Discover insiders. The remaining
ten directors will be independent directors, with Morgan Stanley and Dean Witter
Discover each nominating five of the ten. The Chairman and Chief Executive
Officer of MSDWD will be the current Chairman and Chief Executive Officer of
Dean Witter Discover, Phillip Purcell. The President and Chief Operating Officer
of MSDWD will be the current President of Morgan Stanley, John Mack.

The Advisers do not anticipate any reduction in the quality of services now
provided to the Funds, and do not expect that the Merger will result in any
material changes in the business of the Advisers or in the manner in which the
Advisers render services to the Funds. The Advisers also anticipate that neither
the Merger nor any ancillary transactions will have any adverse effect on the
Advisers' ability to fulfill their obligations under the New Advisory Agreements
(as defined below) or to operate their business in a manner consistent with past
business practices.

In connection with Morgan Stanley's purchase of VKAC Holding on October 31,
1997, certain officers of the Advisers, including Dennis J. McDonnell, who is a
member of the Board of Trustees, and Don G. Powell, who was a member of the
Board of Trustees prior to August 1996, entered into employment agreements with
VKAC Holding which expire from between 1998 and 2000. Certain of such officers,
including Messrs. McDonnell and Powell also were granted options to purchase
shares of common stock of Morgan Stanley which vest from 1999 to 2001. Certain
officers of the Advisers also entered into retention agreements with VKAC
Holding, which will remain in place following the consummation of the Merger.
The employment agreements and retention agreements are intended to assure that
the services of the officers are available to the Advisers (and thus to the
Funds) until such agreements expire. Finally, certain officers of the Advisers,
including Messrs. McDonnell and Powell, received preferred stock of Morgan
Stanley that is convertible into common stock of Morgan Stanley from 1997 to
2000. As a result of the Merger, such preferred stock shall be convertible into
common stock of MSDWD at the effective time of the Merger.

6
<PAGE> 14

THE ADVISORY AGREEMENTS

In anticipation of the Merger, a majority of the Trustees of each Fund who are
not parties to the New Advisory Agreement or interested persons of any such
party (the "Disinterested Trustees") approved a new investment advisory
agreement (the "New Advisory Agreement") between each Fund and its respective
Adviser. The holders of a majority of the outstanding voting securities (within
the meaning of the 1940 Act) of each Fund are being asked to approve its
respective New Advisory Agreement. See "The New Advisory Agreements" below.

THE CURRENT ADVISORY AGREEMENTS. The Current Advisory Agreement for each
Closed-End Fund was last approved by a majority of the Trustees, including a
majority of the Disinterested Trustees, voting in person at a meeting called for
that purpose on July 18, 1996, relating to the acquisition of Advisory Corp.'s
corporate parent by Morgan Stanley. The Current Advisory Agreement was last
approved by shareholders of each Closed-End Fund at a meeting held on October
23, 1996 relating to the acquisition of Advisory Corp.'s corporate parent by
Morgan Stanley.

The Current Advisory Agreement for each Explorer Fund was last approved by a
majority of the Trustees, including a majority of the Disinterested Trustees,
voting in person at a meeting called for that purpose on July 18, 1996, relating
to the acquisition of Management Inc.'s corporate parent by Morgan Stanley. The
Current Advisory Agreement was last approved by shareholders of each Explorer
Fund at a meeting held on October 23, 1996 relating to the acquisition of
Management Inc.'s corporate parent by Morgan Stanley.

Each Current Advisory Agreement provides that the respective Adviser will
supply investment research and portfolio management, including the selection of
securities for each 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 each Fund, furnishes offices, necessary
facilities and equipment, provides administrative services, and permits its
officers and employees to serve without compensation as Trustees and officers of
such Fund if duly elected to such positions.

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

Each Adviser's activities are subject to the review and supervision of the
Board of Trustees to which the Adviser renders periodic reports with respect to
each Fund's investment activities. The Current Advisory Agreement may be
terminated by

7
<PAGE> 15

either party, at any time, without penalty, upon 60 days written notice, and
automatically terminates in the event of its assignment.

The net assets of each of the Funds as of April 14, 1997, as well as other
investment companies sponsored by VKAC and advised by the Advisers and the rates
of compensation paid thereto are set forth at Annex C hereto. Each respective
Fund paid net advisory expenses, for its most recently completed fiscal year, in
the amounts set forth at Annex D hereto.

Each 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 legal counsel and independent
auditors, taxes and governmental fees, costs of share certificates and any other
expenses (including clerical expenses), expenses in connection with its dividend
reinvestment plan, 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 trustees and shareholders, fees and disbursements of
the transfer agents, custodians and sub-custodians, expenses of disbursing
dividends and distributions, fees, expenses and out-of-pocket costs of the
trustees who are not affiliated with the Advisers, insurance premiums,
indemnification and other expenses not expressly provided for in each Current
Advisory Agreement and any extraordinary expenses of a nonrecurring nature. In
the case of each Explorer Fund, such expenses also include expenses related to
the issuance, sale and repurchase of its Shares. Each Fund also compensates the
Adviser, VKAC and, in the case of the Explorer Funds, the Distributor (defined
below) and ACCESS (defined below) for certain non-advisory services provided
pursuant to agreements discussed below. See "OTHER INFORMATION -- Non-Advisory
Agreements" below.

THE NEW ADVISORY AGREEMENTS. The Board of Trustees approved a proposed New
Advisory Agreement between each Closed-End Fund and Advisory Corp. on March 26,
1997, the form of which is attached hereto as Annex B-1. The Board of Trustees
approved a proposed New Advisory Agreement between each Explorer Fund and
Management Inc. on March 26, 1997, the form of which is attached hereto as Annex
B-2.

The form of the proposed New Advisory Agreement is substantially similar to
the Current Advisory Agreement between each Fund and its respective Adviser. The
material differences between the Current Advisory Agreement and the New Advisory
Agreement are described in this paragraph. Each New Advisory Agreement
designates certain officers of the Adviser and the officers of each Fund as
essential personnel with respect to the operations of the respective Fund. Under
the terms of the New Advisory Agreement, an Adviser may not make any material or
significant personnel changes or replace any essential personnel or materially

8
<PAGE> 16

change the responsibilities or duties of any essential personnel prior to the
first anniversary of the agreement without first informing with the Board of
Trustees in a timely manner. Each New Advisory Agreement also prohibits the
Adviser from changing its name without the prior consent of the Board of
Trustees.

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

In connection with approving the New Advisory Agreements, the Boards of
Trustees held a special telephone meeting on February 10, 1997 and special in-
person meetings on March 20, 1997 and March 26, 1997. At the meetings, the Board
of Trustees considered the possible effects of the Merger upon VKAC, the
Advisers, Van Kampen American Capital Distributors, Inc., the distributor of the
Explorer Funds' shares (the "Distributor"), and ACCESS Investors Services, Inc.,
the transfer agent for each of the Explorer Funds ("ACCESS"), and upon their
ability to provide investment advisory, distribution, transfer agency and other
services to each respective Fund. Representatives of Dean Witter Discover and
VKAC attended one or more of the in-person meetings and represented to the Board
of Trustees that (i) the VKAC family of funds will be maintained and operated as
a separate mutual fund complex and will not be consolidated with Dean Witter
Discover's InterCapital Funds and (ii) VKAC, the Advisers, the Distributor and
ACCESS will be maintained separate from their counterparts in the InterCapital
Fund complex and will be operated for the benefit of the Funds and other
investment companies sponsored by VKAC. The representatives of Dean Witter
Discover also described the financial and other resources available to VKAC and
its affiliates, after giving effect to the Merger, to secure for each Fund
quality investment research, investment advice, distribution, transfer agency
and other client services.

In evaluating the New Advisory Agreements, the Board of Trustees took into
account that each 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 each Fund, are
substantially similar, except for those provisions added to each New Advisory
Agreement at the request of the Trustees. The Board of Trustees considered the
skills and capabilities of the Advisers, the representations of Dean Witter
Discover and VKAC described above and the representations of Dean Witter
Discover and VKAC that no material change was planned in the current management
or facilities of the Advisers as a result of the Merger. The Board of Trustees
also considered the reputation, expertise and resources of Morgan Stanley and
Dean Witter Discover and their affiliates in domestic and international
financial markets. The Board of Trustees

9
<PAGE> 17

considered the continued employment of members of senior management of the
Advisers, the Distributor and ACCESS pursuant to current and future employment
and retention agreements to be important to help assure the continuity of the
personnel primarily responsible for maintaining the quality of investment
advisory and other services for the Funds. The Board of Trustees also considered
the affect of certain shares of preferred stock of Morgan Stanley owned by
senior management of the Advisers becoming immediately convertible into common
stock of Morgan Stanley at the time of the Merger. The Trustees considered the
possible benefits the Advisers may receive as a result of the Merger, including
the continued use, to the extent permitted by law, of Morgan Stanley & Co., DWR
and their affiliates for brokerage services.

The Board of Trustees considered the affects on the Funds of the Advisers
becoming affiliated persons of MSDWD. Following the Merger, the 1940 Act will
prohibit or impose certain conditions on the ability of the Funds to engage in
certain transactions with MSDWD and its affiliates. For example, absent
exemptive relief, the Funds will be prohibited from purchasing securities from
Morgan Stanley & Co. or DWR, both of which will be wholly-owned broker-dealer
subsidiaries of MSDWD, in transactions in which Morgan Stanley & Co. or DWR acts
as a principal, and the Funds will have to satisfy certain conditions in order
to engage in securities transactions in which Morgan Stanley & Co. or DWR act as
a broker or to purchase securities in an underwritten offering in which Morgan
Stanley & Co. or DWR is acting as an underwriter. In this connection, management
of the Advisers represented to the Board of Trustees that they do not believe
these prohibitions or conditions will have a material affect on the management
or performance of the Funds and, to the extent permitted by applicable law, VKAC
anticipates that the Funds will continue to use Morgan Stanley & Co., DWR and
their affiliates for brokerage services. The amount of commissions paid by each
Fund to Morgan Stanley & Co. and DWR, if any, during its most recently completed
fiscal year is set forth on Annex D to this Proxy Statement.

The Board of Trustees was advised that Section 15(f) of the 1940 Act is still
applicable to the Advisers as a result of Morgan Stanley's previous acquisition
of the Advisers' parent corporation on October 31, 1996. 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, provided 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

10
<PAGE> 18

compensation, directly or indirectly, from the investment company or its
security 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 Dean Witter Discover and VKAC are aware of no circumstances
arising from the Merger, preparatory transactions to the Merger or any potential
financing that might result in the imposition of an "unfair burden" on the
Funds.

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 composition of the Board of
Trustees currently complies with such condition and, if each of the nominees set
forth in Proposal 2 below is elected to the Board of Trustees, the composition
of the Boards of Trustees will continue to comply with such condition.

The Board of Trustees, including the Disinterested Trustees, concluded that if
the Merger occurs, entry by each respective Fund into a New Advisory Agreement
would be in the best interest of each Fund and the shareholders of each Fund.
The Board of Trustees of each Fund, including the Disinterested Trustees,
unanimously approved the New Advisory Agreement for each Fund and recommended
each such agreement for approval by the shareholders of the respective Fund at
the Meeting. The New Advisory Agreement would take effect upon the later to
occur of (i) the obtaining of shareholder approval or (ii) the closing of the
Merger. Each New Advisory Agreement will continue in effect until May 1999 and
thereafter for successive annual periods as long as such continuance is approved
in accordance with the 1940 Act.

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

11
<PAGE> 19

SHAREHOLDER APPROVAL

To become effective, each New Advisory Agreement must be approved by the "vote
of a majority of the outstanding voting securities", which is defined under the
1940 Act as the lesser of the vote of (i) 67% or more of the Shares of the
respective 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. Each New Advisory Agreement was unanimously approved by the
Board of Trustees after consideration of all factors which they determined to be
relevant to their deliberations, including those discussed above. The Board of
Trustees also unanimously determined to submit each New Advisory Agreement for
consideration by the shareholders of the respective Fund. THE BOARD OF TRUSTEES
OF EACH FUND RECOMMENDS A VOTE "FOR" APPROVAL OF THE NEW ADVISORY AGREEMENT.
- ------------------------------------------------------------------------------
PROPOSAL 2: ELECTION OF TRUSTEES
- ------------------------------------------------------------------------------

With respect to each of the Closed-End Funds, trustees are to be elected by
the Shareholders in the following manner:

a) With respect to VIG, VKV, VCV, VMV, VJV, VNV, VOV, VPV, VKS, VOT,
VKI and VOF, Class I Trustees are to be elected at the Meeting by the
Shareholders to serve until the later of each respective Closed-End
Fund's Annual Meeting of Shareholders in 2000 or until their successors
have been duly elected and qualified. Holders of Common Shares, voting
as a separate class, will vote with respect to the three nominees set
forth below as Class I Trustees designated to be elected by the holders
of Common Shares. An affirmative vote of a plurality of the Common
Shares of each Fund, voting as a separate class, present at the Meeting
in person or by proxy is required to elect the respective nominees. It
is the intention of the persons named in the enclosed proxy to vote the
Shares represented by them for the election of the respective nominees
listed below unless the proxy is marked otherwise.

b) With respect to VGM, VIM, VIC, VTF, VTJ, VTN, VTP, VMO, VKA, VAP,
VKQ, VQC, VFM, VOQ, VNM, VPQ, VMT, VKC, VLT and VIT, Class II Trustees
are to be elected at the Meeting by the Shareholders to serve until the
later of each respective Closed-End Fund's Annual Meeting of
Shareholders in 2000 or until their successors have been duly elected
and qualified. Holders of Common Shares, voting as a separate class,
will vote with respect to the one nominee set forth below as a Class II
Trustee designated to be elected by the holders of Common Shares.
Holders of Preferred Shares, voting as a separate class, will vote with

12
<PAGE> 20

respect to the one nominee set forth below as a Class II Trustee
designated to be elected by the holders of Preferred Shares. An
affirmative vote of a plurality of the Common Shares of each Closed-End
Fund and a plurality of the Preferred Shares of each Closed-End Fund,
voting as a separate classes, present at the Meeting in person or by
proxy is required to elect the respective nominees. It is the intention
of the persons named in the enclosed proxy to vote the Shares
represented by them for the election of the respective nominees listed
below unless the proxy is marked otherwise.

c) With respect to VKL, Class III Trustees are to be elected at the
Meeting by the Shareholders to serve until the later of the Closed-End
Fund's Annual Meeting of Shareholders in 2000 or until their successors
have been duly elected and qualified. Holders of Common Shares, voting
as a separate class, will vote with respect to the one nominee set
forth below as a Class III Trustee designated to be elected by the
holders of Common Shares. Holders of Preferred Shares, voting as a
separate class, will vote with respect to the one nominee set forth
below as a Class III Trustee designated to be elected by the holders of
Preferred Shares. An affirmative vote of a plurality of the Common
Shares of the Closed-End Fund and a plurality of the Preferred Shares
of the Closed-End Fund, voting as separate classes, present at the
Meeting in person or by proxy is required to elect the respective
nominees. It is the intention of the persons named in the enclosed
proxy to vote the Shares represented by them for the election of the
respective nominees listed below unless the proxy is marked otherwise.

Each of the Trustees has served as a member of the Board of Trustees since his
initial election or appointment to the Board of Trustees as set forth on Annex J
hereto.

The Declaration of Trust of each Closed-End Fund provides that the Board of
Trustees shall consist of not less than three nor more than eleven trustees
divided into three classes, the classes to be as nearly equal in number as
possible. The Trustees of only one class are elected at each annual meeting so
that the regular term of only one class of Trustees will expire annually and any
particular Trustee stands for election only once in each three-year period. In
the event a vacancy occurs on any Board of Trustees by reason of death,
resignation or a reason other than removal by the appropriate class of
shareholders, the remaining Trustees, or remaining Trustee, elected by the class
that elected the vacant Trustee's position will fill the vacancy for the
unexpired term. A vacancy currently exists on the Board of Trustees as a result
of the resignation of Mr. Don G. Powell on August 22, 1996. Although the Board
of Trustees has begun deliberations with respect to filling such vacancy, as of
the date of this Proxy Statement, the Board of Trustees has neither appointed a
new trustee to fill such vacancy nor nominated a new trustee to be voted

13
<PAGE> 21

on by shareholders at the Meeting to fill such vacancy. No representation can be
made as to when such vacancy may be filled.

With respect to each of the Closed-End Funds, pursuant to the 1940 Act, as
long as any Preferred Shares are outstanding, the holders of Preferred Shares
will, voting as a separate class, elect two of the Trustees of the Closed-End
Fund. One each of the Class II Trustees and the Class III Trustees has been
designated to be elected by the holders of the Preferred Shares. Mr. Dammeyer is
currently the Class II Trustee designated to be elected by the holders of the
Preferred Shares and Mr. Myers is currently the Class III Trustee designated to
be elected by the holders of the Preferred Shares.

With respect to each of the Closed-End Funds, each of the nominees has agreed
to serve as a Trustee if elected; however, should any nominees become unable or
unwilling to accept nomination or election, the proxies will be voted for one or
more substitute nominees designated by the present Board of Trustees of each
Closed-End Fund.

The following sets forth the names, addresses, ages, principal occupations and
other information regarding the Trustee nominees and those Trustees whose terms
continue after the Meeting.

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
David C. Arch(1)............... Trustee. Mr. Arch is Chairman and Chief
1800 Swift Drive Executive Officer of Blistex Inc., a
Oak Brook, IL 60521 consumer health care products
Age: 51 manufacturer. Mr. Arch is also a Trustee
of the Van Kampen American Capital Prime
Rate Income Trust.
Rod Dammeyer(2)................ Trustee. Mr. Dammeyer is President, Chief
Two North Riverside Plaza Executive Officer and Director of Anixter
Chicago, IL 60606 International Inc. (formerly known as Itel
Age: 56 Corporation), a value-added provider of
integrated networking and cabling
solutions that support business informa-
tion and network infrastructure
requirements. He is Managing Director of
EGI Corporate Investments, a division of
Equity Group Investments, Inc., a company
that makes private equity investments in
other companies. Mr. Dammeyer is also a
Trustee of the Van Kampen American Capital
Prime Rate Income Trust.
</TABLE>

14
<PAGE> 22

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Trustee. Mr. Kerr is President and Chief
Howard J Kerr(1)............... Executive Officer of Pocklington
736 North Western Ave. Corporation, Inc., an investment holding
P.O. Box 317 company. Mr. Kerr is also a Director of
Lake Forest, IL 60045 Canbra Foods, Ltd., a Canadian oilseed
Age: 61 crushing, refining, processing and
packaging operation. Mr. Kerr is a Trustee
of the Van Kampen American Capital Prime
Rate Income Trust.
Dennis J. McDonnell*(1)........ Chairman, President, Chief Executive
One Parkview Plaza Officer and Trustee. Mr. McDonnell is
Oakbrook Terrace, IL 60181 President, Chief Operating Officer and a
Age: 54 Director of Advisory Corp., Management
Inc., Van Kampen American Capital Asset
Management, Inc. ("Asset Management") and
Van Kampen American Capital Advisors, Inc.
("Advisors Inc.") He is also an Executive
Vice President of VKAC. Director of MCM
Group, Inc., McCarthy, Crisanti & Maffei,
Inc., MCM Asia Pacific Company, Limited
and MCM (Europe) Limited. Prior to
November 1996, Executive Vice President
and a Director of VKAC Holdings. Mr.
McDonnell is the Chairman, President,
Chief Executive Officer and Trustee of Van
Kampen American Capital Prime Rate Income
Trust. Trustee, Chief Executive Officer
and Executive Vice President of certain
open-end investment companies advised by
Advisory Corp. and Asset Management.
Theodore A. Myers(3)........... Trustee. Mr. Myers is the Senior Financial
1940 East 6th Street Advisor (and prior to 1997, an Executive
Cleveland, OH 44114 Vice President and Chief Financial
Age: 66 Officer) of Qualitech Steel Corporation, a
producer of high quality engineered steels
for automotive, transportation and capital
goods industries. Prior to 1997, a
Director of McLouth Steel. A member of the
Arthur Andersen Chief Financial Officer
Advisory Committee. Prior to August, 1993,
Mr. Myers was Senior Vice President, Chief
Financial Officer and a Director of Food
Brands America (formerly known as Doskocil
Companies, Inc.), a food processing and
distribution company. Mr. Myers is also a
Trustee of the Van Kampen American Capital
Prime Rate Income Trust and is a trustee
of COVA Series Trust.
</TABLE>

15
<PAGE> 23

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Trustee. Mr. Sonnenschein is President of
Hugo F. Sonnenschein(3)........ the University of Chicago. Mr.
5801 South Ellis Avenue Sonnenschein is a member of the Board of
Suite 502 Trustees of the University of Rochester
Chicago, IL 60637 and a member of its investment committee.
Age: 56 Prior to July, 1993, Mr. Sonnenschein was
Provost of Princeton University and Dean
of the School of Arts and Sciences at the
University of Pennsylvania. Mr.
Sonnenschein is a member of the National
Academy of Sciences and a fellow of the
American Academy of Arts and Sciences. Mr.
Sonnenschein is also a Trustee of the Van
Kampen American Capital Prime Rate Income
Trust.
Wayne W. Whalen*(2)............ Trustee. Mr. Whalen is a partner in the
333 West Wacker Drive law firm of Skadden, Arps, Slate, Meagher
Chicago, IL 60606 & Flom (Illinois), legal counsel to the
Age: 57 funds in the Fund Complex and certain
open-end investment companies advised by
the Adviser and Asset Management. Mr.
Whalen is also a Trustee of the Van Kampen
American Capital Prime Rate Income Trust
and certain open-end investment companies
advised by the Adviser and Asset
Management.
</TABLE>

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

* Such trustees are "interested persons" (within the meaning of Section 2(a)(19)
of the 1940 Act). Mr. McDonnell is an interested person of the Advisers and
each Closed-End Fund by reason of his position with the Advisers. Mr. Whalen
is an interested person of each Closed-End Fund by reason of his firm acting
as legal counsel for such Funds.

(1) Class I Trustee.

(2) Class II Trustee.

(3) Class III Trustee.

During the fiscal year ended December 31, 1996, the Board of Trustees of VLT
and VIT each held six meetings. During the last fiscal year, each of the
Trustees of such Closed-End Funds attended at least 75% of the meetings of the
respective Board of Trustees, except Mr. Kerr who attended four of the meetings,
and all committee meetings thereof of which such Trustee was a member. During
the fiscal year ended December 31, 1996, the Board of Trustees of such
Closed-End Funds had no standing committees with the exception of an audit
committee and a retirement plan committee, which held two meetings.

During the fiscal year ended October 31, 1996, the Board of Trustees of VIG,
VKV, VCV, VMV, VJV, VNV, VOV, VPV, VKS, VOT, VKI, VOF, VGM, VIM, VIC, VTF, VTJ,
VTN, VTP, VMO, VKA, VAP and VKL each held six meetings. During the last fiscal
year, each of the Trustees of such Closed-End Funds attended

16
<PAGE> 24

at least 75% of the meetings of the respective Board of Trustees during the
period he has been a Trustee, except Mr. Kerr who attended four of the meetings,
and all committee meetings thereof of which such Trustee was a member. During
the fiscal year ended October 31, 1996, the Board of Trustees of such Closed-End
Funds had no standing committees with the exception of an audit committee and
retirement plan committee, which held two meetings.

During the fiscal year ended August 31, 1996, the Board of Trustees of VKQ,
VQC, VFM, VOQ, VNM and VPQ each held six meetings. During the last fiscal year,
each of the Trustees of such Closed-End Funds attended at least 75% of the
meetings of the respective Board of Trustees during the period he has been a
Trustee and all committee meetings thereof of which such Trustee was a member.
During the fiscal year ended August 31, 1996, the Board of Trustees of such
Closed-End Funds had no standing committees with the exception of an audit
committee and retirement plan committee, which held two meetings.

During the fiscal year ended June 30, 1996, the Board of Trustees of VMT and
VKC each held five meetings. During the last fiscal year, each of the Trustees
of such Closed-End Funds attended at least 75% of the meetings of the respective
Board of Trustees during the period he has been a Trustee and all committee
meetings thereof of which such Trustee was a member. During the fiscal year
ended June 30, 1996, the Board of Trustees of such Closed-End Funds had no
standing committees with the exception of an audit committee and retirement plan
committee, which held two meetings.

For the fiscal year of each Closed-End Fund ended in 1996, the audit committee
consisted of Messrs. Arch, Dammeyer, Kerr, Myers and Sonnenschein. The audit
committee makes recommendations to the Board concerning the selection of the
Fund's independent public accountants, reviews with such accountants the scope
and results of the Fund's annual audit and considers any comments that the
accountants may have regarding the Fund's financial statements or books of
account. For the fiscal year of each Fund ended in 1996, the audit committee of
each Closed-End Fund held two meetings. For the fiscal year of each Closed-End
Fund ended in 1996, the retirement plan committee consisted of Messrs. Arch,
Dammeyer and Sonnenschein. The retirement plan committee is responsible for
reviewing the terms of each Fund's retirement plan and reviews any
administrative matters with respect thereto. The retirement plan committee does
not meet on a regular basis, but does meet on an ad hoc basis as necessary to
administer the retirement plan.

Each of the foregoing trustees holds the same position with each of the funds
in the Fund Complex (defined below). As of December 31, 1996, there were 36
funds in the Fund Complex. Each trustee who is not an affiliated person of the
Advisers, the Distributor or VKAC (each a "Non-Affiliated Trustee") is
compensated by an annual retainer and meeting fees for services to the funds in
the Fund Complex.

17
<PAGE> 25

Each fund in the Fund Complex provides a deferred compensation plan to its Non-
Affiliated Trustees that allows trustees to defer receipt of his compensation
and earn a return on such deferred amounts based upon the return of the common
shares of the funds in the Fund Complex as more fully described below. Each fund
in the Fund Complex also provides a retirement plan to its Non-Affiliated
Trustees that provides Non-Affiliated Trustees with compensation after
retirement, provided that certain eligibility requirements are met as more fully
described below.

The compensation of each Non-Affiliated Trustee includes an annual retainer
paid by each Fund in the amount of $2,500 and meeting fees paid by each Fund in
the amount of $250 per meeting of the Board of Trustees, plus expenses.

Each Non-Affiliated Trustee generally can elect to defer receipt of all or a
portion of the compensation earned by such Non-Affiliated Trustee until
retirement. Amounts deferred are retained by the respective Fund and earn a rate
of return determined by reference to the return on the Common Shares of such
Fund or other funds in the Fund Complex as selected by the respective
Non-Affiliated Trustee, with the same economic effect as if such Non-Affiliated
Trustee had invested in one or more funds in the Fund Complex, including the
Funds. To the extent permitted by the 1940 Act, each Fund may invest in
securities of those funds selected by the Non-Affiliated Trustees in order to
match the deferred compensation obligation. The deferred compensation plan is
not funded and obligations thereunder represent general unsecured claims against
the general assets of the respective Fund.

Each Fund has adopted a retirement plan. Under the retirement plan, a Non-
Affiliated Trustee who is receiving trustee's compensation from a Fund prior to
such Non-Affiliated Trustee's retirement, has at least 10 years of service
(including years of service prior to adoption of the retirement plan) and
retires at or after attaining the age of 62, is eligible to receive a retirement
benefit equal to $2,500 per year for each of the ten years following such
trustee's retirement. Trustees retiring prior to the age of 62 or with fewer
than 10 years but more than 5 years of service may receive reduced retirement
benefits from a Fund. Each Non-Affiliated Trustee has served as a member of each
Closed-End Fund's Board of Trustees as set forth in Annex J.

Additional information regarding compensation and benefits for trustees is set
forth below. As indicated in the notes accompanying the table, the amounts
relate to either the respective Closed-End Fund's most recently completed fiscal
year or the Fund Complex' most recently completed calendar year ended December
31, 1996.

18
<PAGE> 26

1996 COMPENSATION TABLE

<TABLE>
<CAPTION>
PENSION OR TOTAL
AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL COMPENSATION
COMPENSATION ACCRUED PER BENEFITS PER BEFORE DEFERRAL
BEFORE DEFERRAL CLOSED-END FUND CLOSED-END FUND FROM THE FUND
FROM EACH CLOSED- AS PART OF FUND UPON COMPLEX PAID
NAME(1) END FUND EXPENSES RETIREMENT(4) TO TRUSTEES(5)
------- ----------------- ------------------- ---------------- ---------------
<S> <C> <C> <C> <C>
David C. Arch (2) (3) $2,500 $138,500
Rod Dammeyer (2) (3) $2,500 $138,500
Howard J Kerr (2) (3) $2,500 $138,500
Theodore A. Myers (2) (3) $2,500 $138,500
Hugo F. Sonnenschein (2) (3) $2,500 $138,500
Wayne W. Whalen (2) (3) $2,500 $138,500
</TABLE>

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

(1) Messrs. Powell and McDonnell, Trustees of each Closed-End Fund during all or
a portion of its 1996 fiscal year, are affiliated persons of the Adviser and
are not eligible for compensation or retirement benefits from the Closed-End
Funds.

(2) The Aggregate Compensation before Deferral from each Closed-End Fund during
its 1996 fiscal year is shown in Annex F. Certain trustees deferred all or a
portion of their 1996 Aggregate Compensation from each Closed-End Fund as
shown in Annex G. The cumulative deferred compensation (including interest)
from each Closed-End Fund at the end of its last fiscal year is shown in
Annex H. The deferred compensation plan is described above the 1996
Compensation Table. Amounts deferred are retained by the respective Closed-
End Fund and earn a rate of return determined by reference to the return on
the Common Shares of such Fund or other funds in the Fund Complex as
selected by the respective Non-Affiliated Trustee, with the same economic
effect as if such Non-Affiliated Trustee had invested in one or more funds
in the Fund Complex, including the Funds. To the extent permitted by the
1940 Act, each Fund may invest in securities of those funds selected by the
Non-Affiliated Trustees in order to match the deferred compensation
obligation.

(3) The retirement benefits accrued per Closed-End Fund as part of such Fund's
expenses during its 1996 fiscal year are shown in Annex I. The retirement
plan is described above the 1996 Compensation Table.

(4) This is the estimated annual benefits payable per Closed-End Fund in each
year of the 10-year period commencing in the year of such Trustee's
retirement from such Closed-End Fund assuming: the Trustee has 10 or more
years of service on the Board of the respective Closed-End Fund (including
years of service prior to adoption of the retirement plan) and retires at or
after attaining the age of 62. Trustees retiring prior to the age of 62 or
with fewer than 10 years of service for the respective Closed-End Fund may
receive reduced retirement benefits from such Closed-End Fund. Each
Non-Affiliated Trustee has served as a member of each Closed-End Fund's
Board of Trustees as set forth in Annex J.

(5) The amounts shown in this column represent the aggregate compensation paid
by all 36 of the investment companies advised by the Advisers that have the
same members on each investment company's Board of Trustees as of December
31, 1996 (the "Fund Complex") before deferral by the Trustee under the
deferred compensation plan. Certain Trustees deferred all or a portion of
their Aggregate Compensation

19
<PAGE> 27

from the Fund Complex during the calendar year ended December 31, 1996.
Amounts deferred are retained by the respective Closed-End Fund and earn a
rate of return determined by reference to the return on the Common Shares of
such Fund or other funds in the Fund Complex, as selected by the respective
Non-Affiliated Trustee, with the same economic effect as if such
Non-Affiliated Trustee had invested in one or more funds in the Fund
Complex, including the Funds. To the extent permitted by the 1940 Act, each
Fund may invest in securities of those investment companies selected by the
Non-Affiliated Trustees in order to match the deferred compensation
obligation. The Advisers and their affiliates also serve as investment
adviser for other investment companies; however, with the exception of
Messrs. McDonnell and Whalen, the Trustees are not trustees of such
investment companies. Combining the Fund Complex with the other investment
companies advised by the Advisers and their affiliates, Mr. Whalen received
Aggregate Compensation of $243,375 during the calendar year ended December
31, 1996.

Section 30(f) of the 1940 Act and Section 16(a) of the Securities Exchange Act
of 1934, as amended, require each of the Closed-End Funds' Trustees, officers,
investment adviser, affiliated persons of the investment adviser and persons who
own more than 10% of a registered class of the Closed-End Fund's equity
securities to file forms with the Securities and Exchange Commission (the "SEC")
and the New York Stock Exchange or American Stock Exchange, as applicable,
reporting their affiliation with the Closed-End Fund and reports of ownership
and changes in ownership of Closed-End Fund Shares. These persons and entities
are required by SEC regulation to furnish the Closed-End Fund with copies of all
such forms they file. Based on a review of these forms furnished to each
Closed-End Fund, each Closed-End Fund believes that during its last fiscal year,
its Trustees, officers, investment adviser and affiliated persons of the
investment adviser complied with the applicable filing requirements, except that
each of the following reports inadvertently were filed late: Form 3s reporting
the ownership of no shares of the Closed-End Funds by Curtis W. Morell and Tanya
M. Loden, who became officers of the Closed-End Funds on May 17, 1996; the
purchase of 9,200 shares of VLT by Mr. Myers, a Trustee of such Closed-End Fund;
and the sale of an aggregate of 9,000 shares of VIG and 22 shares of VMT by the
Distributor.

SHAREHOLDER APPROVAL

With respect to each of the Closed-End Funds, Common Shareholders and
Preferred Shareholders, each voting as a separate class, will vote on the
respective nominees for Trustees. The affirmative vote of a plurality of the
Common Shares present in person or by proxy is required to elect the nominee(s)
for Trustee designated to be elected by the Common Shares, and the affirmative
vote of a plurality of the Preferred Shares present in person or by proxy is
required to elect the nominee(s) designated to be elected by the Preferred
Shares. THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES.

20
<PAGE> 28

- ------------------------------------------------------------------------------
PROPOSAL 3: RATIFICATION OF INDEPENDENT AUDITORS
- ------------------------------------------------------------------------------

The Board of Trustees of each Fund, including a majority of the Trustees who
are not "interested persons" of each Fund (as defined by the 1940 Act), has
selected the firm of KPMG Peat Marwick LLP, independent auditors, to examine the
financial statements for the fiscal year of each Fund ending in 1997. Each Fund
knows of no direct or indirect financial interest of such firm in such Fund.
Such appointment is subject to ratification or rejection by the shareholders of
each Fund, with the shareholders of each Fund voting as a single class.

Representatives of KPMG Peat Marwick LLP are expected to be present at the
Meeting and will be available to respond to questions from shareholders and will
have the opportunity to make a statement if they so desire.

SHAREHOLDER APPROVAL

The shareholders of each Fund, voting with respect to each Fund as a single
class, are entitled to vote on this proposal. The affirmative vote of a majority
of the Shares present in person or by proxy is required to ratify the selection
of the independent auditors. THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR"
RATIFICATION OF THIS PROPOSAL.

21
<PAGE> 29

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

DIRECTORS AND OFFICERS OF THE ADVISERS

The following table sets forth certain information concerning the principal
executive officers and directors of the Advisers not listed above.

DIRECTORS AND OFFICERS OF THE ADVISERS

<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
---------------- --------------------
<S> <C>
Don G. Powell......... Chairman, President, Chief Executive Officer and a
2800 Post Oak Blvd. Director of VKAC. Chairman, Chief Executive Officer
Houston, TX 77056 and a Director of the Distributor, the Advisers, Van
Kampen American Capital Asset Management, Inc.
("Asset Management") and Advisors Inc. Chairman and a
Director of ACCESS, Van Kampen American Capital
Recordkeeping Services, Inc. and Van Kampen American
Capital Trust Company. Chairman, President and a
Director of Van Kampen American Capital Services,
Inc. and Van Kampen American Capital Exchange
Corporation. President, Chief Executive Officer and a
Trustee/ Director of certain open-end investment
companies and closed-end investment companies advised
by Asset Management. Chairman of the Board of
Governors and the Executive Committee of the
Investment Company Institute. Prior to July 1996,
President, Chief Executive Officer and a Trustee/
Director of the funds in the Fund Complex and certain
open-end investment companies advised by the Adviser
and Asset Management.
Ronald A. Nyberg...... Executive Vice President, General Counsel and
One Parkview Plaza Secretary of VKAC. Executive Vice President, General
Oakbrook Terrace, IL Counsel, Assistant Secretary and a Director of the
60181 Distributor, the Advisers and Asset Management Van
Kampen American Capital Trust Company, Van Kampen
American Capital Recordkeeping Services, Inc. and Van
Kampen American Capital Insurance Agency of Illinois,
Inc. Executive Vice President, General Counsel and
Assistant Secretary of Advisors Inc., Van Kampen
American Capital Exchange Corporation, ACCESS and Van
Kampen American Capital Services, Inc. Prior to
November 1996, Executive Vice President, General
Counsel and Secretary of VKAC Holding. Vice President
and Secretary of the funds in the Fund Complex, other
open-end investment companies advised by Asset
Management, open-end investment companies advised by
Management Inc. and closed-end investment companies
advised by the Adviser and Asset Management. Director
of ICI Mutual Insurance Co., a provider of insurance
to members of the Investment Company Institute.
</TABLE>

22
<PAGE> 30
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
---------------- --------------------
<S> <C>
William R. Rybak...... Executive Vice President and Chief Financial Officer
One Parkview Plaza of VKAC VKAC since February 1993. Treasurer of VKAC
Oakbrook Terrace, IL Holding through December 1993 and Chief Financial
60181 Officer of VKAC Holding through October 1996.
Executive Vice President, Chief Financial Officer and
a Director of the Distributor, the Advisers, Asset
Management, Van Kampen American Capital Recordkeeping
Services, Inc. and Van Kampen American Capital
Insurance Agency of Illinois, Inc. Executive Vice
President and Chief Financial Officer of Advisors
Inc., Van Kampen American Capital Exchange
Corporation, Van Kampen American Capital Trust
Company, ACCESS, Van Kampen American Capital
Insurance Agency of Illinois, Inc. and American
Capital Contractual Services, Inc. Director of
Alliance Bancorp, a savings and loan holding company,
and prior to February, 1997, Chairman of the Board of
Hinsdale Financial Corp., a savings and loan holding
company.
Peter W. Hegel........ Executive Vice President of the Advisers and Van
One Parkview Plaza Kampen American Capital Advisors, Inc. Executive Vice
Oakbrook Terrace, IL President and Director of Asset Management. Vice
60181 President of the funds in the Fund Complex and
certain open-end investment companies advised by the
Adviser and Asset Management.
Alan T. Sachtleben.... Executive Vice President of the Advisers and Advisors
2800 Post Oak Blvd. Inc. Executive Vice President and a Director of Asset
Houston, TX 77056 Management. Vice President of open-end investment
companies advised by the Adviser and Asset
Management.
</TABLE>

23
<PAGE> 31

The following table sets forth the trustees and officers of the Funds who are
also officers of the Advisers.

<TABLE>
<CAPTION>
NAME POSITIONS WITH THE FUNDS
---- ------------------------
<S> <C>
Dennis J. McDonnell.................. Trustee and President
Peter W. Hegel....................... Vice President
Curtis W. Morell..................... Vice President and Chief Accounting Officer
Ronald A. Nyberg..................... Vice President and Secretary
Edward C. Wood III................... Vice President and Chief Financial Officer
John M. McCareins.................... Vice President (Explorer Funds only)
Michael P. Kamradt................... Vice President (Explorer Funds only)
Edward A. Treichel................... Vice President (Explorer Funds only)
John L. Sullivan..................... Treasurer
Tanya M. Loden....................... Controller
Nicholas Dalmaso..................... Assistant Secretary
Huey P. Falgout, Jr.................. Assistant Secretary
Scott E. Martin...................... Assistant Secretary
Weston B. Wetherell.................. Assistant Secretary
Steven M. Hill....................... Assistant Treasurer
M. Robert Sullivan................... Assistant Controller
</TABLE>

The officers of the Funds serve for one year or until their respective
successors are chosen and qualified. The Funds' officers receive no compensation
from the Funds, but are all officers of the Advisers, Van Kampen American
Capital Asset Management, the Distributor, VKAC or their affiliates and receive
compensation in such capacities.

NON-ADVISORY AGREEMENTS

Each Fund has entered into one or more other agreements with the Advisers,
VKAC or their affiliates, as set forth below. These agreements do not need to be
voted on by the shareholders of the Funds at the Meeting. The Advisers currently
anticipate that the services provided to the Funds pursuant to these agreements
will continue to be provided after the proposed New Advisory Agreements are
approved.

Administration Agreement. Each of the Funds (with the exception of VMT, VKC,
VIT and VLT) have entered into an administration agreement (the "Administration
Agreement") with the the Distributor pursuant to which the Distributor (or an
affiliate) provides certain administrative services to the Fund. Pursuant to the
Administration Agreement, each Fund pays to the Distributor (or such affiliate)
a fee based on such Fund's average daily or weekly net assets ranging from 0.20
to 0.25 of 1.00%. Under the Administration Agreement, each of such Funds paid
the Distributor the amount set forth at Annex D hereto for its most recently
completed fiscal year.

Distribution Agreement. The Explorer Funds have entered into a distribution
agreement with the Distributor pursuant to which the Distributor, as principal
underwriter, purchases shares for resale to the public, either directly or
through

24
<PAGE> 32

securities dealers. In connection with their consideration of the Merger, the
Board of Trustees considered the affects of the Merger on the Distributor and
the ability of the Distributor to continue distributing the shares of the
Explorer Funds. The new distribution agreement between each Fund and the
Distributor is substantially similar to the current distribution agreement,
except that the new distribution agreement designates certain officers of the
Distributor and the officers of the Explorer Funds to be essential personnel
with respect to the operations of the Explorer Fund. The Distributor may not
make any material or significant personnel changes or replace any essential
personnel or materially change the responsibilities or duties of any essential
personnel prior to the first anniversary of the agreement without first
informing the Board of Trustees in a timely manner. In addition, the Distributor
may not distribute shares of any investment companies other than the Explorer
Funds without the prior approval of the Board of Trustees. The Distributor may
not change its name without the prior consent of the Board of Trustees. The
address of the Distributor is One Parkview Plaza, Oakbrook Terrace, Illinois
60181. Under the Distribution Agreement, each Explorer Fund paid the Distributor
the amount set forth at Annex D hereto for its most recently completed fiscal
year.

Transfer Agency Agreement. The Explorer Funds have entered into a Transfer
Agency Agreement with ACCESS pursuant to which ACCESS provides transfer agency
and dividend disbursing services for such Funds. The address of ACCESS is 7501
Tiffany Springs Parkway, Kansas City, Missouri 64153. For its services, ACCESS
charges each Fund a fee that is determined in accordance with a cost allocation
model developed in conjunction with, and periodically reviewed by, Coopers &
Lybrand LLP. The model allocates among the Funds ACCESS' cost of providing the
Funds with transfer agency services, plus a profit margin approved by the Board
of Trustees. The allocation is based upon a number of factors including the
number of shareholder accounts per Fund, the number and type of shareholder
transactions experienced by each Fund and other factors. Under the Transfer
Agency Agreement, each Explorer Fund paid ACCESS the amount set forth on Annex D
hereto for its most recently completed fiscal year. In connection with their
consideration of the Merger, the Board of Trustees considered the effects of the
Merger on ACCESS and the ability of ACCESS to continue to provide transfer
agency and dividend disbursing services to the Explorer Funds. The new Transfer
Agency Agreement between the Funds and ACCESS is substantially similar to the
current Transfer Agency Agreement, except that the new Transfer Agency Agreement
designates certain officers of the transfer agent and the officers of the Fund
to be essential personnel. ACCESS may not make any material or significant
personnel changes or replace any essential personnel or materially change their
duties and responsibilities prior to the first anniversary of the agreement
without first informing the Board of Trustees in a timely manner.

Fund Accounting Agreement. Each Fund has entered into a Fund Accounting
Agreement with Advisory Corp., and currently receives all accounting services

25
<PAGE> 33

through Advisory Corp. Each Fund shares equally, together with the other mutual
funds advised and distributed by the Advisers, the Distributor and their
affiliates, in 25% of the cost of providing such services, with the remaining
75% of such cost being paid by each Fund based proportionally upon their
respective net assets. Under the Fund Accounting Agreements, each Fund paid the
Adviser the amount set forth at Annex D hereto for its most recently completed
fiscal year.

Legal Services Agreement. Each Fund has entered into a Legal Services
Agreement pursuant to which VKAC provides legal services, including without
limitation maintenance of the Funds' minute books and records, preparation and
oversight of the Funds' regulatory reports, and other information provided to
shareholders, as well as responding to day-to-day legal issues. Payment by each
Fund for such services is made on a cost basis for the employment of personnel
as well as the overhead and equipment necessary to render such services. VKAC
also provides legal services for certain other Van Kampen American Capital
investment companies, some of which do not currently reimburse VKAC for the
provision of such services. VKAC allocates 50% of its costs equally to each Fund
or other investment company and the remaining 50% of such costs are allocated to
specific Funds or other investment companies based on specific time allocations,
or in the event services are attributable only to types of investment companies
(i.e. closed-end or open-end), the relative amount of time spent on each type of
investment companies and then further allocated among investment companies of
that type based upon their respective net asset values. Under the Legal Services
Agreement, each Fund paid VKAC the amount set forth at Annex D hereto for its
most recently completed fiscal year.

SHAREHOLDER INFORMATION

As of April 4, 1997, the trustees and officers of the Funds as a group owned
less than 1% of the outstanding Shares of each Fund. As of April 4, 1997,
certain trustees owned, directly or beneficially, the number of Common Shares of
each Fund as set forth in Annex K. Trustees who do not own any Common Shares of
the Funds have been omitted from the table. Funds which are not owned by any
Trustee also have been omitted from the table. As of April 4, 1997, no trustees
owned any Preferred Shares of the Closed-End Funds. At such date the "interested
persons" of each Fund, as a group, owned an aggregate of less than 5% of the
outstanding shares of the Fund. Shareholders who, to the knowledge of the Funds,
owned beneficially more than 5% of a class of a Fund's outstanding Shares as of
April 4, 1997, are set forth at Annex E hereto.

The number of each Fund's outstanding Shares as of April 14, 1997 is set forth
at Annex C hereto.

26
<PAGE> 34

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

Morgan Stanley or its affiliates will pay for the expense of preparing,
printing and mailing the enclosed form of proxy, the accompanying Notice and
this Proxy Statement. In order to obtain the necessary quorum at the Meeting,
additional solicitation may be made by mail, telephone, telegraph, facsimile or
personal interview by representatives of the Funds, the Advisers or VKAC, the
transfer agents of the Funds or by dealers or their representatives or by First
Data Investor Services Group, a solicitation firm located in Boston,
Massachusetts that has been engaged to assist in proxy solicitations at an
estimated cost of approximately $75,000.
- ------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
- ------------------------------------------------------------------------------

To be considered for presentation at a shareholders' meeting, rules
promulgated by the SEC require that, among other things, a shareholder's
proposal must be received at the offices of the relevant Fund a reasonable time
before a solicitation is made. Timely submission of a proposal does not
necessarily mean that such proposal will be included. Any shareholder who wishes
to submit proposals for consideration at a meeting of such shareholder's Fund
should send such proposal to the respective Fund at One Parkview Plaza, Oakbrook
Terrace, Illinois 60181.

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

Management of each 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 each Fund entitled to be present and vote at the
Meeting will be available at the offices of the respective Fund, One Parkview
Plaza, Oakbrook Terrace, Illinois 60181, 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 any Fund may necessitate
adjournment and may subject such Fund to additional expense.

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.

RONALD A. NYBERG,
Vice President and Secretary
April 21, 1997

27
<PAGE> 35

ANNEX A

VAN KAMPEN AMERICAN CAPITAL FUNDS

The following list sets forth the Van Kampen American Capital investment
companies (the "Funds") participating in the Joint Meeting of Shareholders to be
held at the offices of Van Kampen American Capital, Inc., One Parkview Plaza,
Oakbrook Terrace, Illinois 60181 on Wednesday, May 28, 1997, at 2:00 p.m. The
name in the first column below is the legal name for each Fund and the name in
the second column is the abbreviated name as used in the Proxy Statement. Each
of the Closed-End Funds has issued common shares of beneficial interest, par
value $.01 per share, and each of the Explorer Funds has issued common shares of
beneficial interest, without par value (collectively, the common shares of the
Closed-End Funds and Explorer Fund are referred to herein as the "Common
Shares"). The Closed-End Funds also have issued preferred shares of beneficial
interest (the "Preferred Shares") each with a liquidation preference per share
as designated in the fourth column below.

CLOSED-END FUNDS

<TABLE>
<CAPTION>
PREFERRED SHARES
LEGAL NAME ABBREVIATED NAME STOCK SYMBOL OUTSTANDING
- ---------- ---------------- ------------ ----------------
<S> <C> <C> <C>
Van Kampen American Capital Investment Grade VIG Remarketed Preferred Shares,
Investment Grade Municipal Municipal Trust liquidation preference
Trust $100,000 per share
Van Kampen American Capital California Municipal VKC Remarketed Preferred Shares,
California Municipal Trust Trust liquidation preference
$50,000 per share
Van Kampen American Capital Select Sector VKL Remarketed Preferred Shares,
Select Sector Municipal Municipal Trust liquidation preference
Trust $25,000 per share
Van Kampen American Capital Municipal Trust VKQ Auction Preferred Shares,
Municipal Trust liquidation preference
$50,000 per share
Van Kampen American Capital California Quality VQC Auction Preferred Shares,
California Quality Municipal Trust liquidation preference
Municipal Trust $50,000 per share
Van Kampen American Capital New York Quality VNM Auction Preferred Shares,
New York Quality Municipal Municipal Trust liquidation preference
Trust $50,000 per share
Van Kampen American Capital Pennsylvania Quality VPQ Auction Preferred Shares,
Pennsylvania Quality Municipal Trust liquidation preference
Municipal Trust $50,000 per share
Van Kampen American Capital Florida Quality VFM Auction Preferred Shares,
Florida Quality Municipal Municipal Trust liquidation preference
Trust $50,000 per share
Van Kampen American Capital Ohio Quality Municipal VOQ Auction Preferred Shares,
Ohio Quality Municipal Trust liquidation preference
Trust $50,000 per share
Van Kampen American Capital Trust for Insured VIM Auction Preferred Shares,
Trust for Insured Municipals liquidation preference
Municipals $50,000 per share
Van Kampen American Capital Trust for Investment VGM Auction Preferred Shares,
Trust for Investment Grade Grade Municipals liquidation preference
Municipals $50,000 per share
</TABLE>

A-1
<PAGE> 36
<TABLE>
<CAPTION>
PREFERRED SHARES
LEGAL NAME ABBREVIATED NAME STOCK SYMBOL OUTSTANDING
- ---------- ---------------- ------------ ----------------
<S> <C> <C> <C>
Van Kampen American Capital Trust for Investment VIC Auction Preferred Shares,
Trust for Investment Grade Grade California liquidation preference
California Municipals Municipals $50,000 per share
Van Kampen American Capital Trust for Investment VTN Auction Preferred Shares,
Trust for Investment Grade Grade New York liquidation preference
New York Municipals Municipals $50,000 per share
Van Kampen American Capital Trust for Investment VTP Auction Preferred Shares,
Trust for Investment Grade Grade Pennsylvania liquidation preference
Pennsylvania Municipals Municipals $50,000 per share
Van Kampen American Capital Trust for Investment VTF Auction Preferred Shares,
Trust for Investment Grade Grade Florida liquidation preference
Florida Municipals Municipals $50,000 per share
Van Kampen American Capital Trust for Investment VTJ Auction Preferred Shares,
Trust for Investment Grade Grade New Jersey liquidation preference
New Jersey Municipals Municipals $50,000 per share
Van Kampen American Capital Municipal Opportunity VMO Auction Preferred Shares,
Municipal Opportunity Trust Trust liquidation preference
$50,000 per share
Van Kampen American Capital Advantage Municipal VKA Auction Preferred Shares,
Advantage Municipal Income Income Trust liquidation preference
Trust $50,000 per share
Van Kampen American Capital Advantage Pennsylvania VAP Auction Preferred Shares,
Advantage Pennsylvania Municipal Income liquidation preference
Municipal Income Trust Trust $50,000 per share
Van Kampen American Capital New Jersey Value VJV Auction Preferred Shares,
New Jersey Value Municipal Municipal Income liquidation preference
Income Trust Trust $50,000 per share
Van Kampen American Capital Ohio Value Municipal VOV Auction Preferred Shares,
Ohio Value Municipal Income Income Trust liquidation preference
Trust $50,000 per share
Van Kampen American Capital Massachusetts Value VMV Auction Preferred Shares,
Massachusetts Value Municipal Income liquidation preference
Municipal Income Trust Trust $50,000 per share
Van Kampen American Capital Strategic Sector VKS Auction Preferred Shares,
Strategic Sector Municipal Municipal Trust liquidation preference
Trust $50,000 per share
Van Kampen American Capital New York Value VNV Auction Preferred Shares,
New York Value Municipal Municipal Income liquidation preference
Income Trust Trust $50,000 per share
Van Kampen American Capital California Value VCV Auction Preferred Shares,
California Value Municipal Municipal Income liquidation preference
Income Trust Trust $50,000 per share
Van Kampen American Capital Pennsylvania Value VPV Auction Preferred Shares,
Pennsylvania Value Municipal Income liquidation preference
Municipal Income Trust Trust $50,000 per share
Van Kampen American Capital Value Municipal Income VKV Auction Preferred Shares,
Value Municipal Income Trust liquidation preference
Trust $50,000 per share
Van Kampen American Capital Florida Municipal VOF Auction Preferred Shares,
Florida Municipal Opportunity Trust liquidation preference
Opportunity Trust $50,000 per share
Van Kampen American Capital Municipal Opportunity VOT Auction Preferred Shares,
Municipal Opportunity Trust Trust II liquidation preference
II $50,000 per share
</TABLE>

A-2
<PAGE> 37
<TABLE>
<CAPTION>
PREFERRED SHARES
LEGAL NAME ABBREVIATED NAME STOCK SYMBOL OUTSTANDING
- ---------- ---------------- ------------ ----------------
<S> <C> <C> <C>
Van Kampen American Capital Advantage Municipal VKI Auction Preferred Shares,
Advantage Municipal Income Income Trust II liquidation preference
Trust II $50,000 per share
Van Kampen American Capital Limited Term High VLT Auction Preferred Shares,
Limited Term High Income Income Trust liquidation preference
Trust $50,000 per share
Van Kampen American Capital Intermediate Term High VIT Auction Market Preferred
Intermediate Term High Income Trust Shares, liquidation
Income Trust preference $100,000 per
share
Van Kampen American Capital Municipal Income Trust VMT Rate Adjusted Tax-Exempt
Municipal Income Trust Shares, liquidation
preference $500,000 per
share

EXPLORER FUNDS
Explorer Institutional Active Core Fund Not Not applicable
Active Core Fund applicable
Explorer Institutional Limited Duration Fund Not Not applicable
Limited Duration Fund applicable
</TABLE>

A-3
<PAGE> 38

ANNEX B-1

CLOSED-END FUNDS
FORM OF
INVESTMENT ADVISORY AGREEMENT

THIS INVESTMENT ADVISORY AGREEMENT, dated as of , 1997 (the
"Agreement"), by and between VAN KAMPEN AMERICAN CAPITAL (the "Fund"),
a Massachusetts business trust (the "Trust"), and VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP. (the "Adviser"), a Delaware corporation.

1. (a) RETENTION OF ADVISER BY FUND. Subject to the terms and conditions set
forth herein, the Fund hereby employs the Adviser to act as the investment
adviser for and to manage the investment and reinvestment of the assets of the
Fund in accordance with the Fund's investment objective and policies and
limitations, and to administer its affairs to the extent requested by, and
subject to the review and supervision of, the Board of Trustees of the Fund for
the period and upon the terms herein set forth. The investment of funds shall be
subject to all applicable restrictions of applicable law and of the Declaration
of Trust and By-Laws of the Trust, and resolutions of the Board of Trustees of
the Fund as may from time to time be in force and delivered or made available to
the Adviser.

(b) ADVISER'S ACCEPTANCE OF EMPLOYMENT. The Adviser accepts such employment
and agrees during such period to render such services, to supply investment
research and portfolio management (including without limitation the selection of
securities for the Fund to purchase, hold or sell and the selection of brokers
through whom the Fund's portfolio transactions are executed, in accordance with
the policies adopted by the Fund and its Board of Trustees), to administer the
business affairs of the Fund, to furnish offices and necessary facilities and
equipment to the Fund, to provide administrative services for the Fund, to
render periodic reports to the Board of Trustees of the Fund, and to permit any
of its officers or employees to serve without compensation as trustees or
officers of the Fund if elected to such positions.

(c) ESSENTIAL PERSONNEL. For a period of one year commencing on the effective
date of this Agreement, the Adviser and the Fund agree that the retention of (i)
the chief executive officer, president, chief financial officer and secretary of
the Adviser and (ii) each director, officer and employee of the Adviser or any
of its Affiliates (as defined in the Investment Company Act of 1940, as amended
(the "1940 Act")) who serves as an officer of the Fund (each person referred to
in (i) or (ii) hereinafter being referred to as an "Essential Person"), in his
or her current capacities, is in the best interest of the Fund and the Fund's
shareholders. In connection with the Adviser's acceptance of employment
hereunder, the Adviser hereby agrees and covenants for itself and on behalf of
its Affiliates that neither the

B1-1
<PAGE> 39

Adviser nor any of its Affiliates shall make any material or significant
personnel changes or replace or seek to replace any Essential Person or cause to
be replaced any Essential Person, in each case without first informing the Board
of Trustees of the Fund in a timely manner. In addition, neither the Adviser nor
any Affiliate of the Adviser shall change or seek to change or cause to be
changed, in any material respect, the duties and responsibilities of any
Essential Person, in each case without first informing the Board of Trustees of
the Fund in a timely manner.

(d) INDEPENDENT CONTRACTOR. The Adviser shall be deemed to be an independent
contractor under this Agreement and, unless otherwise expressly provided or
authorized, shall have no authority to act for or represent the Fund in any way
or otherwise be deemed as agent of the Fund.

(e) NON-EXCLUSIVE AGREEMENT. The services of the Adviser to the Fund under
this Agreement are not to be deemed exclusive, and the Adviser shall be free to
render similar services or other services to others so long as its services
hereunder are not impaired thereby.

2. (a) FEE. For the services and facilities described in Section 1, the Fund
will accrue daily and pay to the Adviser at the end of each calendar month an
investment management fee computed based on a fee rate (expressed as a
percentage per annum) applied to the average daily net assets of the Fund as
follows:

<TABLE>
<CAPTION>
FEE PERCENTAGE PER
AVERAGE DAILY ANNUM OF AVERAGE
NET ASSETS DAILY NET ASSETS
------------- ------------------
<S> <C>

</TABLE>

(b) DETERMINATION OF NET ASSET VALUE. The net asset value of the Fund shall be
calculated as of the close of the New York Stock Exchange on the last day the
Exchange is open for trading in each calendar week or such other time or times
as the trustees may determine in accordance with the provisions of applicable
law and the Declaration of Trust and By-Laws of the Trust, and resolutions of
the Board of Trustees of the Fund as from time to time in force. For the purpose
of the foregoing computations, on each such day when net asset value is not
calculated, the net asset value of a share of beneficial interest of the Fund
shall be deemed to be the net asset value of such share as of the close of
business of the last day on which such calculation was made.

(c) PRORATION. For the month and year in which this Agreement becomes
effective or terminates, there shall be an appropriate proration of the
Adviser's fee

B1-2
<PAGE> 40

on the basis of the number of days that the Agreement is in effect during such
month and year, respectively.

3. EXPENSES. In addition to the fee of the Adviser, the Fund shall assume and
pay any expenses for services rendered by a custodian for the safekeeping of the
Fund's securities or other property, for keeping its books of account, for any
other charges of the custodian and for calculating the net asset value of the
Fund as provided above. The Adviser shall not be required to pay, and the Fund
shall assume and pay, the charges and expenses of its operations, including
compensation of the trustees (other than those who are interested persons of the
Adviser), charges and expenses of independent accountants, of legal counsel and
of any transfer or dividend disbursing agent, costs of acquiring and disposing
of portfolio securities, cost of listing shares of the New York Stock Exchange
or other exchange, interest (if any) on obligations incurred by the Fund, costs
of share certificates, membership dues in the Investment Company Institute or
any similar organization, costs of reports and notices to shareholders, costs of
registering shares of the Fund under the federal securities laws, miscellaneous
expenses and all taxes and fees to federal, state or other governmental agencies
on account of the registration of securities issued by the Fund, filing of
corporate documents or otherwise. The Fund shall not pay or incur any obligation
for any management or administrative expenses for which the Fund intends to seek
reimbursement from the Adviser without first obtaining the written approval of
the Adviser. The Adviser shall arrange, if desired by the Fund, for officers or
employees of the Adviser to serve, without compensation from the Fund, as
trustees, officers or agents of the Fund if duly elected or appointed to such
positions and subject to their individual consent and to any limitations imposed
by the law.

4. INTERESTED PERSONS. Subject to applicable statutes and regulations, it is
understood that trustees, officers, shareholders and agents of the Fund are or
may be interested in the Adviser as directors, officers, shareholders, agents or
otherwise and that the directors, officers, shareholders and agents of the
Adviser may be interested in the Fund as trustees, officers, shareholders,
agents or otherwise.

5. LIABILITY. 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 this Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Adviser in the performance of
its obligations and duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.

6. (a) TERM. This Agreement shall become effective on the date hereof and
shall remain in full force until May 31, 1999 unless sooner terminated as
hereinafter provided. This Agreement shall continue in force from year to year
thereafter, but only for so long as such continuance is specifically approved as
least annually, in the manner required by the 1940 Act.

B1-3
<PAGE> 41

(b) TERMINATION. This Agreement shall automatically terminate in the event of
its assignment. This Agreement may be terminated at any time without the payment
of any penalty by the Fund or by the Adviser on sixty (60) days written notice
to the other party. The Fund may effect termination by action of the Board of
Trustees or by vote of a majority of the outstanding shares of stock of the
Fund, accompanied by appropriate notice. This Agreement may be terminated at any
time without the payment of any penalty and without advance notice by the Board
of Trustees or by vote of a majority of the outstanding shares of the Fund in
the event that it shall have been established by a court of competent
jurisdiction that the Adviser or any officer or director of the Adviser has
taken any action which results in a breach of the covenants of the Adviser set
forth herein.

(c) PAYMENT UPON TERMINATION. Termination of this Agreement shall not affect
the right of the Adviser to receive payment on any unpaid balance of the
compensation described in Section 2 earned prior to such termination.

7. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder shall not
thereby affected.

8. NOTICES. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.

9. DISCLAIMER. The Adviser acknowledges and agrees that, as provided by
Section 5.5 of the Declaration of Trust of the Trust, the shareholders,
trustees, officers, employees and other agents of the Trust and the Fund shall
not personally be bound by or liable hereunder, nor shall resort be had to their
private property for the satisfaction of any obligation or claim hereunder.

10. GOVERNING LAW. All questions concerning the validity, meaning and effect
of this Agreement shall be determined in accordance with the laws (without
giving effect to the conflict-of-law principles thereof) of the State of
Delaware applicable to contracts made and to be performed in that state.

11. NAME. In connection with its employment hereunder, the Adviser hereby
agrees and covenants not to change its name without the prior consent of the
Board of Trustees of the Fund.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.

<TABLE>
<S> <C>
VAN KAMPEN AMERICAN CAPITAL VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP. [ ] TRUST
By: --------------------------------- By: ---------------------------------
Name: ------------------------------ Name: ------------------------------
Title: ------------------------------- Title: -------------------------------
</TABLE>

B1-4
<PAGE> 42

ANNEX B-2

EXPLORER FUNDS
FORM OF
INVESTMENT ADVISORY AGREEMENT

THIS INVESTMENT ADVISORY AGREEMENT, dated as of , 1997 (the
"Agreement"), by and between THE EXPLORER INSTITUTIONAL TRUST, a Massachusetts
business trust (the "Trust"), on behalf of its subtrust, FUND (the "Fund")
and VAN KAMPEN AMERICAN CAPITAL MANAGEMENT INC. (the "Adviser"), a Delaware
corporation.

B2-1
<PAGE> 43

connection with the Adviser's acceptance of employment hereunder, the Adviser
hereby agrees and covenants for itself and on behalf of its Affiliates that
neither the Adviser nor any of its Affiliates shall make any material or
significant personnel changes or replace or seek to replace any Essential Person
or cause to be replaced any Essential Person, in each case without first
informing the Board of Trustees of the Fund in a timely manner. In addition,
neither the Adviser nor any Affiliate of the Adviser shall change or seek to
change or cause to be changed, in any material respect, the duties and
responsibilities of any Essential Person, in each case without first informing
the Board of Trustees of the Fund in a timely manner.

<TABLE>
<CAPTION>
FEE PERCENTAGE
PER ANNUM OF
AVERAGE DAILY AVERAGE DAILY
NET ASSETS NET ASSETS
------------- --------------
<S> <C>
</TABLE>

(b) EXPENSE LIMITATION. The Adviser's compensation for any fiscal year of the
Fund shall be reduced by the amount, if any, by which the Fund's expense for
such fiscal year exceeds the most restrictive applicable expense limitation in
any jurisdiction in which the Fund's shares are qualified for offer and sale, as
such limitations set forth in the most recent notice thereof furnished by the
Adviser to the Fund. For purposes of this paragraph there shall be excluded from
computation of the Fund's expenses any amount borne directly or indirectly by
the Fund which is permitted to be excluded from the computation of such
limitation by such statute or regulatory authority. If for any month expenses of
the Fund properly included in such calculation exceed 1/12 of the amount
permitted annually by the most restrictive applicable expense limitation, the
payment to the Adviser for that month shall be reduced, and, if necessary, the
Adviser shall make a refund payment to the Fund, so that the total net expense
for the month will not exceed 1/12 of such

B2-2
<PAGE> 44

amount. As of the end of the Fund's fiscal year, however, the computations and
payments shall be readjusted so that the aggregate compensation payable to the
Adviser for the year is equal to the fee set forth in subsection (a) of this
Section 2, diminished to the extent necessary so that the expenses for the year
do not exceed those permitted by the applicable expense limitation.

In addition to the expense limitation described above, during the term of this
Agreement, the Adviser may determine to waive or reimburse to the Fund all or a
portion of its fees, in order to insure that the total expenses of the Fund,
exclusive of extraordinary costs or expenses such as legal, accounting or other
costs of expenses not incurred in the course of the Fund's ongoing operations,
and expenditures which are capitalized in accordance with generally accepted
accounting principles, but including fees paid to the Adviser pursuant to
subsection 2(a) above, shall not exceed such expense limitation as may be set
forth in the Fund's prospectus from time to time. Interest, taxes, brokers'
commissions and other charges relating to the purchase and sale of securities
are not regarded as expenses for this purpose. The Fund agrees that any waiver
or reimbursement to the Fund by the Adviser pursuant to this paragraph shall be
deemed a contingent liability of the Fund which shall be subject to potential
reimbursement by the Fund to the Adviser, provided the Fund's assets reach a
sufficient size to permit such reimbursement to be made without causing the
annual expense ratio of the Fund to exceed the applicable expense limitation set
forth in the Fund's prospectus from time to time, or such lower amount as may be
imposed by any state expense limitation to which the Fund is subject, and
provided such reimbursement is made within four (4) years of recognition of the
contingent liability by the Fund.

(c) DETERMINATION OF NET ASSET VALUE. The net asset value of the Fund shall be
calculated as of the close of the New York Stock Exchange on each day the
Exchange is open for trading or such other time or times as the trustees may
determine in accordance with the provisions of applicable law and the
Declaration of Trust and By-Laws of the Trust, and resolutions of the Board of
Trustees of the Fund as from time to time in force. For the purpose of the
foregoing computations, on each such day when net asset value is not calculated,
the net asset value of a share of beneficial interest of the Fund shall be
deemed to be the net asset value of such share as of the close of business of
the last day on which such calculation was made.

(d) PRORATION. For the month and year in which this Agreement becomes
effective or terminates, there shall be an appropriate proration of the
Adviser's fee on the basis of the number of days that the Agreement is in effect
during such month and year, respectively.

B2-3
<PAGE> 45

of the custodian and for calculating the net asset value of the Fund as provided
above. The Adviser shall not be required to pay, and the Fund shall assume and
pay, the charges and expenses of its operations, including compensation of the
trustees (other than those who are interested persons of the Adviser and other
than those who are interested persons of the distributor of the Fund but not of
the Adviser, if the distributor has agreed to pay such compensation), charges
and expenses of independent accountants, of legal counsel and of any transfer or
dividend disbursing agent, costs of acquiring and disposing of portfolio
securities, interest (if any) on obligations incurred by the Fund, costs of
share certificates, membership dues in the Investment Company Institute or any
similar organization, costs of reports and notices to shareholders, costs of
registering shares of the Fund under the federal securities laws, miscellaneous
expenses and all taxes and fees to federal, state or other governmental agencies
on account of the registration of securities issued by the Fund, filing of
corporate documents or otherwise. The Fund shall not pay or incur any obligation
for any management or administrative expenses for which the Fund intends to seek
reimbursement from the Adviser without first obtaining the written approval of
the Adviser. The Adviser shall arrange, if desired by the Fund, for officers or
employees of the Adviser to serve, without compensation from the Fund, as
trustees, officers or agents of the Fund if duly elected or appointed to such
positions and subject to their individual consent and to any limitations imposed
by the law.

B2-4
<PAGE> 46

Trustees or by vote of a majority of the outstanding shares of stock of the
Fund, accompanied by appropriate notice. This Agreement may be terminated at any
time without the payment of any penalty and without advance notice by the Board
of Trustee or by vote of a majority of the outstanding shares of the Fund in the
event that it shall have been established by a court of competent jurisdiction
that the Adviser or any officer or director of the Adviser has taken any action
which results in a breach of the covenants of the Adviser set forth herein.

7. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder shall not
thereby affected.

9. DISCLAIMER. The Adviser acknowledges and agrees that, as provided in the
Declaration of Trust of the Trust, the shareholders, trustees, officers,
employees and other agents of the Trust and the Fund shall not personally be
bound by or liable hereunder, nor shall resort be had to their private property
for the satisfaction of any obligation or claim hereunder.

10. USE OF THE NAME "EXPLORER INSTITUTIONAL". Van Kampen American Capital Inc.
("Van Kampen") has consented to the use by the Trust of the identifying word or
name "Explorer Institutional" in the name of the Trust and its Series. Such
consent is conditioned upon the employment of Van Kampen, its successors or any
affiliate thereof, as investment advisor and distributor of the Trust and each
of its Series. As between the Trust and itself, Van Kampen controls the use of
the name of the Trust insofar as such name contains "Explorer Institutional."
The name or identifying word "Explorer Institutional" may be used from time to
time in other connections and for other purposes by Van Kampen or affiliated
entities. Van Kampen may require the Trust to cease using "Explorer
Institutional" in the name of the Trust if the Trust ceases to employ, for any
reason, Van Kampen, an affiliate, or any successor as investment advisor and
distributor of the Trust and each of its Series.

11. GOVERNING LAW. All questions concerning the validity, meaning and effect
of this Agreement shall be determined in accordance with the laws (without
giving effect to the conflict-of-law principles thereof) of the State of
Delaware applicable to contracts made and to be performed in that state.

B2-5
<PAGE> 47

12. NAME. In connection with its employment hereunder, the Adviser hereby
agrees and covenants not to change its name without the prior consent of the
Board of Trustees of the Fund.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.

THE EXPLORER
INSTITUTIONAL TRUST,
on behalf of its sub-trust
[ ] FUND

By:
- --------------------------------
Name:
Title:
VAN KAMPEN
AMERICAN CAPITAL
MANAGEMENT INC.

By:
- --------------------------------
Name:
Title:

B2-6
<PAGE> 48

ANNEX C
The table below sets forth, for each investment company advised by Advisory
Corp. and Management, Inc., the number of the fund's outstanding shares, the
fund's net assets and the rate at which it compensates Advisory Corp. or
Management Inc., for investment advisory services. Each fund for which Advisory
Corp. or Asset Management has waived or reduced its compensation are marked by
an "*". There can be no assurance that Advisory Corp. or Management Inc., will
continue such waiver or reduction.

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
COMMON SHARES PREFERRED SHARES
OUTSTANDING OUTSTANDING NET ASSETS
AS OF AS OF AS OF ANNUAL
APRIL 14, APRIL 14, APRIL 14, ADVISORY FEE
FUNDS 1997 1997 1997 SCHEDULE
----- ------------- ---------------- ---------- ------------
<S> <C> <C> <C> <C>
I. ADVISORY AGREEMENTS BETWEEN ADVISORY CORP. AND
THE CLOSED-END FUNDS
A. Van Kampen American Capital Investment Grade
Municipal Trust............................. 4,839,000 250 $ 74,199,561 .600%
Van Kampen American Capital Trust for Insured
Municipals.................................. 9,648,688 1,800 $244,564,209
Van Kampen American Capital Municipal Income
Trust....................................... 28,227,514 330 $438,770,639
Van Kampen American Capital California
Municipal Trust............................. 3,213,291 400 $ 52,394,670
B. Van Kampen American Capital Trust for
Investment Grade Municipals................. 27,013,149 5,300 $700,870,502 .650%
Van Kampen American Capital Trust for
Investment Grade California Municipals...... 4,619,242 900 $119,174,629
Van Kampen American Capital Trust for
Investment Grade New York Municipals........ 6,200,986 1,200 $160,490,070
Van Kampen American Capital Trust for
Investment Grade Pennsylvania Municipals.... 7,420,970 1,400 $192,003,872
Van Kampen American Capital Trust for
Investment Grade Florida Municipals......... 4,137,306 800 $109,036,402
Van Kampen American Capital Trust for
Investment Grade New Jersey Municipals...... 3,925,373 800 $104,436,247
Van Kampen American Capital Municipal
Opportunity Trust........................... 15,352,890 3,000 $391,978,159
Van Kampen American Capital Advantage
Municipal Income Trust...................... 19,106,785 3,800 $481,440,438
Van Kampen American Capital Advantage
Pennsylvania Municipal Income Trust......... 4,361,902 800 $110,907,277
Van Kampen American Capital New Jersey Value
Municipal Income Trust...................... 2,499,940 500 $ 60,084,869
Van Kampen American Capital Ohio Value
Municipal Income Trust...................... 1,681,438 300 $ 38,739,234
Van Kampen American Capital Massachusetts
Value Municipal Income Trust................ 2,658,295 500 $ 62,681,807
Van Kampen American Capital New York Value
Municipal Income Trust...................... 4,291,172 800 $100,222,797
Van Kampen American Capital Strategic Sector
Municipal Trust............................. 10,806,700 1,900 $238,966,336
</TABLE>

C-1
<PAGE> 49

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
COMMON SHARES PREFERRED SHARES
OUTSTANDING OUTSTANDING NET ASSETS
AS OF AS OF AS OF ANNUAL
APRIL 14, APRIL 14, APRIL 14, ADVISORY FEE
FUNDS 1997 1997 1997 SCHEDULE
----- ------------- ---------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Van Kampen American Capital California Value
Municipal Income Trust...................... 6,029,844 1,200 $148,201,632 .650%
Van Kampen American Capital Pennsylvania
Value Municipal Income Trust................ 4,468,924 900 $109,501,090
Van Kampen American Capital Value Municipal
Income Trust................................ 23,555,115 4,500 $556,406,285
Van Kampen American Capital Florida Municipal
Opportunity Trust........................... 1,683,270 320 $ 22,936,086
Van Kampen American Capital Municipal
Opportunity Trust II........................ 11,681,211 2,300 $272,508,703
Van Kampen American Capital Advantage
Municipal Income Trust II................... 8,168,211 1,600 $187,500,134
C. Van Kampen American Capital Municipal
Trust....................................... 36,270,470 6,000 $873,341,104 .700%
Van Kampen American Capital California
Quality Municipal Trust..................... 9,623,295 1,500 $231,610,324
Van Kampen American Capital New York Quality
Municipal Trust............................. 5,655,638 900 $135,502,915
Van Kampen American Capital Pennsylvania
Quality Municipal Trust..................... 8,153,254 1,300 $198,976,007
Van Kampen American Capital Florida Quality
Municipal Trust............................. 6,484,566 1,000 $155,697,006
Van Kampen American Capital Ohio Quality
Municipal Trust............................. 4,212,910 700 $104,886,266
Van Kampen American Capital Select Sector
Municipal Trust............................. 4,682,128 1,360 $ 93,101,836
D. Van Kampen American Capital Intermediate Term
High Income Trust........................... 13,710,760 588 $142,802,100 .750%
Van Kampen American Capital Limited Term High
Income Trust................................ 8,109,000 900 $109,916,050
E. Van Kampen American Capital Prime Rate Income
Trust....................................... 598,473,607 N/A 5,970,030,121 First $4.0 Billion
.950%
Next $3.5 Billion .900%
Next $2.5 Billion .875%
Over $10.0 Billion
.850%
</TABLE>

C-2
<PAGE> 50

II. ADVISORY AGREEMENTS BETWEEN ADVISORY CORP. AND OTHER INVESTMENT COMPANIES

<TABLE>
<CAPTION>
NUMBER OF
SHARES
OUTSTANDING NET ASSETS
AS OF AS OF ANNUAL
APRIL 14, APRIL 14, ADVISORY FEE
FUNDS 1997 1997 SCHEDULE
----- ----------- ---------- ------------
<S> <C> <C> <C> <C>
A. Van Kampen American Capital California Insured Tax Free
Fund....................................................... 9,646,097 $ 163,334,836 First $100 Million
.500%
Next $150 Million .450%
Next $250 Million .425%
Over $500 Million .400%
B. Van Kampen American Capital Insured Tax Free Income Fund.... 69,155,642 $1,289,795,159 First $500 Million
.525%
Next $500 Million .500%
Next $500 Million .475%
Over $1.5 Billion .450%
C. Van Kampen American Capital Tax Free High Income Fund....... 60,457,824 $ 861,393,223 First $500 Million
.500%
Van Kampen American Capital Municipal Income Fund*.......... 64,107,315 $ 959,978,437 Over $500 Million .450%
Van Kampen American Capital Intermediate Term Municipal
Income Fund*............................................... 3,299,006 $ 33,196,241
Van Kampen American Capital Florida Insured Tax Free Income
Fund*...................................................... 2,884,810 $ 42,443,535
D. Van Kampen American Capital New Jersey Tax Free Income
Fund*...................................................... 1,204,064 $ 17,472,239 First $500 Million
.600%
Van Kampen American Capital New York Tax Free Income
Fund*...................................................... 1,373,760 $ 20,233,852 Over $500 Million .500%
Van Kampen American Capital Pennsylvania Tax Free Income
Fund....................................................... 15,696,014 $ 268,599,884
E. Van Kampen American Capital High Yield Fund*................ 40,814,295 $ 392,912,646 First $500 Million
.750%
Over $500 Million .650%
F. Van Kampen American Capital Short-Term Global Income Fund... 13,128,649 $ 97,896,782 .550%
G. Van Kampen American Capital Strategic Income Fund........... 9,257,872 $ 114,928,876 First $500 Million
.750%
Van Kampen American Capital Growth Fund..................... 6,567,983 $ 100,867,384 Next $500 Million .700%
Van Kampen American Capital Value Fund...................... 104,821 $ 1,269,204 Over $1 Billion .650%
Van Kampen American Capital Aggressive Growth Fund.......... 18,619,629 $ 152,058,318
H. Van Kampen American Capital Utility Fund.................... 8,741,353 $ 130,376,971 First $500 Million
.650%
Next $500 Million .600%
Over $1 Billion .550%
</TABLE>

C-3
<PAGE> 51
<TABLE>
<CAPTION>
NUMBER OF
SHARES
OUTSTANDING NET ASSETS
AS OF AS OF ANNUAL
APRIL 14, APRIL 14, ADVISORY FEE
FUNDS 1997 1997 SCHEDULE
----- ----------- ---------- ------------
<S> <C> <C> <C> <C>
I. Van Kampen American Capital U.S. Government Fund............ 197,602,466 $2,787,212,993 First $500 Million
.550%
Next $500 Million .525%
Next $2 Billion .500%
Next $2 Billion .475%
Next $2 Billion .450%
Next $2 Billion .425%
Next $2 Billion .400%
J. Van Kampen American Capital Tax Free Money Fund*............ 35,320,568 $ 35,295,356 First $500 Million
.500%
Next $500 Million .475%
Next $500 Million .425%
Over $1.5 Billion .375%
K. Van Kampen American Capital Great American Companies Fund... 101,964 $ 1,233,948 First $500 Million
.700%
Van Kampen American Capital Prospector Fund................. 104,019 $ 1,228,624 Next $500 Million .650%
L. Van Kampen American Capital Foreign Securities Fund......... 96,305 $ 949,974 N/A(1)
III. ADVISORY AGREEMENTS BETWEEN MANAGEMENT INC. AND THE EXPLORER FUNDS

<CAPTION>
NUMBER OF
SHARES
OUTSTANDING NET ASSETS
AS OF AS OF ANNUAL
APRIL 14, APRIL 14, ADVISORY FEE
FUNDS 1997 1997 SCHEDULE
------------------------------------------------------------ -------------- -------------- -----------------------
<S> <C> <C> <C> <C>
A. Explorer Institutional Active Core Fund..................... 568,118 $ 5,584,177 First $1 Billion .300%
Explorer Institutional Limited Duration Fund................ 819,333 $ 8,118,017 Over $1 Billion .250%
</TABLE>

- -------------------------
(1)Fund does not charge an advisory fee; shares of the fund are held by other
funds advised by Advisory Corp. or Asset Management. Assets of the Fund also
are reflected in assets of such other funds.

C-4
<PAGE> 52

ANNEX D

The following table sets forth amounts paid by each Fund during its most
recently completed fiscal year pursuant to its investment advisory,
administration, fund accounting, transfer agency, legal services and
distribution agreements.
<TABLE>
<CAPTION>
TRANSFER FUND LEGAL
ADVISORY ADMINISTRATION DISTRIBUTION AGENCY ACCOUNTING SERVICES
FUND EXPENSES EXPENSES EXPENSES EXPENSES EXPENSES EXPENSES
---- -------- -------------- ------------ -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Investment Grade Municipal
Trust........................ $ 458,065 $ 0 $0 $766 $11,233 $12,586
California Municipal Trust..... 321,155 0 0 901 3,300 6,793
Select Sector Municipal
Trust........................ 656,202 0 0 0 3,905 6,975
Municipal Trust................ 6,168,343 1,762,384 0 0 20,669 20,304
California Quality Municipal
Trust........................ 1,626,464 464,704 0 0 7,027 11,865
New York Quality Municipal
Trust........................ 969,646 277,042 0 0 5,053 11,013
Pennsylvania Quality Municipal
Trust........................ 1,409,688 402,768 0 0 6,374 11,584
Florida Quality Municipal
Trust........................ 1,106,747 316,213 0 0 5,465 11,192
Ohio Quality Municipal Trust... 738,569 211,020 0 0 4,360 10,815
Trust for Insured Municipals... 1,495,450 498,483 0 0 7,000 8,365
Trust for Investment Grade
Municipals................... 4,617,555 1,420,786 0 0 16,140 12,456
Trust for Investment Grade
California Municipals........ 783,453 241,063 0 0 16,754 7,213
Trust for Investment Grade New
York Municipals.............. 1,052,341 323,797 0 0 5,269 7,585
Trust for Investment Grade
Pennsylvania Municipals...... 1,266,716 389,759 0 0 5,924 7,884

<CAPTION>
BROKERAGE COMMISSIONS BROKERAGE COMMISSIONS
PAID TO PAID TO DEAN WITTER
FUND MORGAN STANLEY DISCOVER
---- --------------------- ---------------------
<S> <C> <C>
Investment Grade Municipal
Trust........................ $5,652 $0
California Municipal Trust..... 0 0
Select Sector Municipal
Trust........................ 0 0
Municipal Trust................ 5,950 0
California Quality Municipal
Trust........................ 0 0
New York Quality Municipal
Trust........................ 0 0
Pennsylvania Quality Municipal
Trust........................ 0 0
Florida Quality Municipal
Trust........................ 0 0
Ohio Quality Municipal Trust... 0 0
Trust for Insured Municipals... 7,000 0
Trust for Investment Grade
Municipals................... 7,612 0
Trust for Investment Grade
California Municipals........ 0 0
Trust for Investment Grade New
York Municipals.............. 0 0
Trust for Investment Grade
Pennsylvania Municipals...... 0 0
</TABLE>

D-1
<PAGE> 53
<TABLE>
<CAPTION>
TRANSFER FUND LEGAL
ADVISORY ADMINISTRATION DISTRIBUTION AGENCY ACCOUNTING SERVICES
FUND EXPENSES EXPENSES EXPENSES EXPENSES EXPENSES EXPENSES
---- -------- -------------- ------------ -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Trust for Investment Grade
Florida Municipals........... $ 723,634 $ 222,657 $0 $ 0 $12,927 $ 7,137
Trust for Investment Grade New
Jersey Municipals............ 689,441 212,136 0 0 4,162 7,087
Municipal Opportunity Trust.... 2,568,017 790,159 0 0 9,898 9,651
Advantage Municipal Income
Trust........................ 3,172,711 976,219 0 0 40,160 10,457
Advantage Pennsylvania
Municipal Income Trust....... 731,751 225,154 0 0 16,289 7,148
New Jersey Value Municipal
Income Trust................. 392,903 120,893 0 0 12,953 6,676
Ohio Value Municipal Income
Trust........................ 253,388 77,965 0 0 9,211 6,490
Massachusetts Value Municipal
Income Trust................. 409,714 126,066 0 0 13,494 6,701
Strategic Sector Municipal
Trust........................ 1,571,141 362,571 0 0 3,352 8,284
New York Value Municipal Income
Trust........................ 656,299 201,938 0 0 12,384 7,038
California Value Municipal
Income Trust................. 971,557 298,941 0 0 5,024 7,464
Pennsylvania Value Municipal
Income Trust................. 718,303 221,016 0 0 16,281 7,117
Value Municipal Income Trust... 3,658,334 1,125,642 0 0 13,228 11,117
Florida Municipal Opportunity
Trust........................ 257,292 79,167 0 0 12,002 6,608
Municipal Opportunity Trust
II........................... 1,788,330 550,255 0 0 7,518 8,562

<CAPTION>
BROKERAGE COMMISSIONS BROKERAGE COMMISSIONS
PAID TO PAID TO DEAN WITTER
FUND MORGAN STANLEY DISCOVER
---- --------------------- ----------------------
<S> <C> <C>
Trust for Investment Grade
Florida Municipals........... $ 0 $0
Trust for Investment Grade New
Jersey Municipals............ 0 0
Municipal Opportunity Trust.... 350 0
Advantage Municipal Income
Trust........................ 0 0
Advantage Pennsylvania
Municipal Income Trust....... 0 0
New Jersey Value Municipal
Income Trust................. 0 0
Ohio Value Municipal Income
Trust........................ 0 0
Massachusetts Value Municipal
Income Trust................. 0 0
Strategic Sector Municipal
Trust........................ 0 0
New York Value Municipal Income
Trust........................ 0 0
California Value Municipal
Income Trust................. 0 0
Pennsylvania Value Municipal
Income Trust................. 0 0
Value Municipal Income Trust... 0 0
Florida Municipal Opportunity
Trust........................ 0 0
Municipal Opportunity Trust
II........................... 0 0
</TABLE>

D-2
<PAGE> 54
<TABLE>
<CAPTION>
TRANSFER FUND LEGAL
ADVISORY ADMINISTRATION DISTRIBUTION AGENCY ACCOUNTING SERVICES
FUND EXPENSES EXPENSES EXPENSES EXPENSES EXPENSES EXPENSES
---- -------- -------------- ------------ -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Advantage Municipal Income
Trust II..................... $1,228,506 $ 378,002 $0 $ 0 $21,256 $ 1,800
Limited Term High Income
Trust........................ 829,253 0 0 568 3,863 7,780
Intermediate Term High Income
Trust........................ 1,075,076 0 0 736 4,448 8,027
Municipal Income Trust......... 2,651,369 0 0 6,869 11,642 10,697
Active Core Fund............... 0 0 0 0 0 0
Limited Duration Fund.......... 0 0 0 0 0 0

<CAPTION>
BROKERAGE COMMISSIONS BROKERAGE COMMISSIONS
PAID TO PAID TO DEAN WITTER
FUND MORGAN STANLEY DISCOVER
---- --------------------- ----------------------
<S> <C> <C>
Advantage Municipal Income
Trust II..................... $ 0 0
Limited Term High Income
Trust........................ 0 0
Intermediate Term High Income
Trust........................ 0 0
Municipal Income Trust......... 0 0
Active Core Fund............... 0 0
Limited Duration Fund.......... 0
</TABLE>

D-3
<PAGE> 55

ANNEX E
5% HOLDERS AS OF APRIL 4, 1997

<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
FUND BENEFICIAL OWNER OWNERSHIP OF FUND
---- ------------------- ---------- -------
<S> <C> <C> <C>
ACTIVE CORE FUND Wendel & Co. 199,061.617 35.04%
A/C # 200226
FBO Klukwan Inc Permanent
Fund
C/O Bank of NY Mutual FD
Reorg Dept
PO Box 1066
Wall Street Station
New York, NY 10286
Harry C Brousaides TR Boston 176,177.035 31.01%
Plasterers & Cement Masons
Local 534 Deferred Income
Fund
7 Frederika St
Boston, MA 02124-5113
Wendel & Co. 145,180.060 25.55%
A/C # 2002300
FBO Klukwan Inc Educational
TR
C/O Bank of NY Mutual FD
Reorg Dept
PO Box 1066
Wall Street Station
New York, NY 10286

E-1
</TABLE>

<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
FUND BENEFICIAL OWNER OWNERSHIP OF FUND
---- ------------------- ---------- -------
<S> <C> <C> <C>
Wendel & CO. 42,698.896 7.52%
A/C # 200232
FBO Klukwan Inc
Long Island Dir Hld
C/O Bank of NY Mutual FD
Reorg Dept
PO Box 1066
Wall Street Station
New York, NY 10286
LIMITED DURATION FUND Wendel & Co. 678,571.731 82.82%
A/C # 200229
FBO General Income Trust
C/O Bank of NY Mutual FD
Reorg Dept
PO Box 1066
Wall Street Station
New York, NY 10286
Jerry McCall TR 135,761.333 16.57%
Plumbers Local Union
Number 68
Group Protection PL DTD 1981
PO Box 8746
Houston, TX 77249-8746

</TABLE>

E-2
<PAGE> 56

ANNEX F
1996 AGGREGATE COMPENSATION BEFORE DEFERRAL FROM EACH CLOSED-END FUND

<TABLE>
<CAPTION>
NAME OF FUND FISCAL YEAR-END ARCH DAMMEYER KERR MYERS SONNENSCHEIN WHALEN
------------ --------------- ---- -------- ---- ----- ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Municipal Income Trust............................... 06/30 3,757 3,757 3,757 3,757 3,757 3,750
California Municipal Trust........................... 06/30 3,757 3,757 3,757 3,757 3,757 3,750
Municipal Trust...................................... 08/31 4,007 4,007 4,007 4,007 4,007 4,000
California Quality Municipal Trust................... 08/31 4,007 4,007 4,007 4,007 4,007 4,000
New York Quality Municipal Trust..................... 08/31 4,007 4,007 4,007 4,007 4,007 4,000
Florida Quality Municipal Trust...................... 08/31 4,007 4,007 4,007 4,007 4,007 4,000
Ohio Quality Municipal Trust......................... 08/31 4,007 4,007 4,007 4,007 4,007 4,000
Pennsylvania Quality Municipal Trust................. 08/31 4,007 4,007 4,007 4,007 4,007 4,000
Advantage Municipal Income Trust..................... 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Advantage Municipal Income Trust II.................. 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Advantage Pennsylvania Municipal Income Trust........ 10/31 3,757 3,757 3,757 3,757 3,757 3,750
California Value Municipal Income Trust.............. 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Florida Municipal Opportunity Trust.................. 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Investment Grade Municipal Trust..................... 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Massachusetts Value Municipal Income Trust........... 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Municipal Opportunity Trust.......................... 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Municipal Opportunity Trust II....................... 10/31 3,757 3,757 3,757 3,757 3,757 3,750
New Jersey Value Municipal Income Trust.............. 10/31 3,757 3,757 3,757 3,757 3,757 3,750
New York Value Municipal Income Trust................ 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Ohio Value Municipal Income Trust.................... 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Pennsylvania Value Municipal Income Trust............ 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Select Sector Municipal Trust........................ 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Strategic Sector Municipal Trust..................... 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Trust for Insured Municipals......................... 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Trust for Investment Grade California Municipals..... 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Trust for Investment Grade Florida Municipals........ 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Trust for Investment Grade Municipals................ 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Trust for Investment Grade New Jersey Municipals..... 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Trust for Investment Grade New York Municipals....... 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Trust for Investment Grade Pennsylvania Municipals... 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Value Municipal Income Trust......................... 10/31 3,757 3,757 3,757 3,757 3,757 3,750
Intermediate Term High Income Trust.................. 12/31 4,000 4,000 4,000 4,000 4,000 4,000
Limited Term High Income Trust....................... 12/31 4,000 4,000 4,000 4,000 4,000 4,000
</TABLE>

F-1
<PAGE> 57

ANNEX G

1996 AGGREGATE COMPENSATION DEFERRED FOR EACH CLOSED-END FUND

<TABLE>
<CAPTION>
NAME OF FUND FISCAL YEAR-END ARCH DAMMEYER KERR MYERS SONNENSCHEIN WHALEN
------------ --------------- ---- -------- ---- ----- ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Municipal Income Trust................................ 06/30 0 3,757 3,757 0 3,757 3,750
California Municipal Trust............................ 06/30 0 3,757 3,757 0 3,757 3,750
Municipal Trust....................................... 08/31 0 3,757 3,757 0 3,757 3,750
California Quality Municipal Trust.................... 08/31 0 3,757 3,757 0 3,757 3,750
New York Quality Municipal Trust...................... 08/31 0 3,757 3,757 0 3,757 3,750
Florida Quality Municipal Trust....................... 08/31 0 3,757 3,757 0 3,757 3,750
Ohio Quality Municipal Trust.......................... 08/31 0 3,757 3,757 0 3,757 3,750
Pennsylvania Quality Municipal Trust.................. 08/31 0 3,757 3,757 0 3,757 3,750
Advantage Municipal Income Trust...................... 10/31 0 3,507 3,507 0 3,507 3,500
Advantage Municipal Income Trust II................... 10/31 0 3,507 3,507 0 3,507 3,500
Advantage Pennsylvania Municipal Income Trust......... 10/31 0 3,507 3,507 0 3,507 3,500
California Value Municipal Income Trust............... 10/31 0 3,507 3,507 0 3,507 3,500
Florida Municipal Opportunity Trust................... 10/31 0 3,507 3,507 0 3,507 3,500
Investment Grade Municipal Trust...................... 10/31 0 3,507 3,507 0 3,507 3,500
Massachusetts Value Municipal Income Trust............ 10/31 0 3,507 3,507 0 3,507 3,500
Municipal Opportunity Trust........................... 10/31 0 3,507 3,507 0 3,507 3,500
Municipal Opportunity Trust II........................ 10/31 0 3,507 3,507 0 3,507 3,500
New Jersey Value Municipal Income Trust............... 10/31 0 3,507 3,507 0 3,507 3,500
New York Value Municipal Income Trust................. 10/31 0 3,507 3,507 0 3,507 3,500
Ohio Value Municipal Income Trust..................... 10/31 0 3,507 3,507 0 3,507 3,500
Pennsylvania Value Municipal Income Trust............. 10/31 0 3,507 3,507 0 3,507 3,500
Select Sector Municipal Trust......................... 10/31 0 3,507 3,507 0 3,507 3,500
Strategic Sector Municipal Trust...................... 10/31 0 3,507 3,507 0 3,507 3,500
Trust for Insured Municipals.......................... 10/31 0 3,507 3,507 0 3,507 3,500
Trust for Investment Grade California Municipals...... 10/31 0 3,507 3,507 0 3,507 3,500
Trust for Investment Grade Florida Municipals......... 10/31 0 3,507 3,507 0 3,507 3,500
Trust for Investment Grade Municipals................. 10/31 0 3,507 3,507 0 3,507 3,500
Trust for Investment Grade New Jersey Municipals...... 10/31 0 3,507 3,507 0 3,507 3,500
Trust for Investment Grade New York Municipals........ 10/31 0 3,507 3,507 0 3,507 3,500
Trust for Investment Grade Pennsylvania Municipals.... 10/31 0 3,507 3,507 0 3,507 3,500
Value Municipal Income Trust.......................... 10/31 0 3,507 3,507 0 3,507 3,500
Intermediate Term High Income Trust................... 12/31 0 3,750 3,750 0 3,750 3,750
Limited Term High Income Trust........................ 12/31 0 3,750 3,750 0 3,750 3,750
</TABLE>

G-1
<PAGE> 58

ANNEX H

CUMULATIVE COMPENSATION DEFERRED (PLUS INTEREST) FROM EACH CLOSED-END FUND

<TABLE>
<CAPTION>
NAME OF FUND FISCAL YEAR-END ARCH DAMMEYER KERR MYERS SONNENSCHEIN WHALEN
------------ --------------- ---- -------- ---- ----- ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Municipal Income Trust............................... 06/30 0 8,052 8,039 0 8,869 5,811
California Municipal Trust........................... 06/30 0 8,052 8,039 0 8,869 5,811
Municipal Trust...................................... 08/31 0 9,308 9,005 0 10,159 6,870
California Quality Municipal Trust................... 08/31 0 9,308 9,005 0 10,159 6,870
New York Quality Municipal Trust..................... 08/31 0 9,308 9,005 0 10,159 6,870
Florida Quality Municipal Trust...................... 08/31 0 9,308 9,005 0 10,159 6,870
Ohio Quality Municipal Trust......................... 08/31 0 9,308 9,005 0 10,159 6,870
Pennsylvania Quality Municipal Trust................. 08/31 0 9,308 9,005 0 10,159 6,870
Advantage Municipal Income Trust..................... 10/31 0 9,329 9,110 0 10,479 6,994
Advantage Municipal Income Trust II.................. 10/31 0 9,329 9,110 0 10,479 6,994
Advantage Pennsylvania Municipal Income Trust........ 10/31 0 9,329 9,110 0 10,479 6,994
California Value Municipal Income Trust.............. 10/31 0 9,329 9,110 0 10,479 6,994
Florida Municipal Opportunity Trust.................. 10/31 0 9,329 9,110 0 10,479 6,994
Investment Grade Municipal Trust..................... 10/31 0 9,329 9,110 0 10,479 6,994
Massachusetts Value Municipal Income Trust........... 10/31 0 9,329 9,110 0 10,479 6,994
Municipal Opportunity Trust.......................... 10/31 0 9,329 9,110 0 10,479 6,994
Municipal Opportunity Trust II....................... 10/31 0 9,329 9,110 0 10,479 6,994
New Jersey Value Municipal Income Trust.............. 10/31 0 9,329 9,110 0 10,479 6,994
New York Value Municipal Income Trust................ 10/31 0 9,329 9,110 0 10,479 6,994
Ohio Value Municipal Income Trust.................... 10/31 0 9,329 9,110 0 10,479 6,994
Pennsylvania Value Municipal Income Trust............ 10/31 0 9,329 9,110 0 10,479 6,994
Select Sector Municipal Trust........................ 10/31 0 9,329 9,110 0 10,479 6,994
Strategic Sector Municipal Trust..................... 10/31 0 9,329 9,110 0 10,479 6,994
Trust for Insured Municipals......................... 10/31 0 9,329 9,110 0 10,479 6,994
Trust for Investment Grade California Municipals..... 10/31 0 9,329 9,110 0 10,479 6,994
Trust for Investment Grade Florida Municipals........ 10/31 0 9,329 9,110 0 10,479 6,994
Trust for Investment Grade Municipals................ 10/31 0 9,329 9,110 0 10,479 6,994
Trust for Investment Grade New Jersey Municipals..... 10/31 0 9,329 9,110 0 10,479 6,994
Trust for Investment Grade New York Municipals....... 10/31 0 9,329 9,110 0 10,479 6,994
Trust for Investment Grade Pennsylvania Municipals... 10/31 0 9,329 9,110 0 10,479 6,994
Value Municipal Income Trust......................... 10/31 0 9,329 9,110 0 10,479 6,994
Intermediate Term High Income Trust.................. 12/31 0 10,188 10,341 0 12,082 8,276
Limited Term High Income Trust....................... 12/31 0 10,188 10,341 0 12,082 8,276
</TABLE>

H-1
<PAGE> 59

ANNEX I
1996 RETIREMENT BENEFITS ACCRUED PER CLOSED-END FUND

<TABLE>
<CAPTION>
NAME OF FUND FISCAL YEAR-END ARCH DAMMEYER KERR MYERS SONNENSCHEIN WHALEN
------------ --------------- ---- -------- ---- ----- ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Municipal Income Trust................................ 06/30 $269 $466 $775 $1,645 $367 $519
California Municipal Trust............................ 06/30 $268 $465 $775 $1,644 $367 $520
Municipal Trust....................................... 08/31 $228 $404 $748 $1,592 $361 $458
California Quality Municipal Trust.................... 08/31 $228 $404 $748 $1,592 $361 $458
New York Quality Municipal Trust...................... 08/31 $228 $404 $748 $1,592 $361 $458
Florida Quality Municipal Trust....................... 08/31 $228 $404 $748 $1,592 $361 $458
Ohio Quality Municipal Trust.......................... 08/31 $228 $404 $748 $1,592 $361 $458
Pennsylvania Quality Municipal Trust.................. 08/31 $228 $404 $748 $1,592 $361 $458
Advantage Municipal Income Trust...................... 10/31 $213 $383 $733 $1,578 $358 $434
Advantage Municipal Income Trust II................... 10/31 $198 $360 $701 $1,411 $353 $409
Advantage Pennsylvania Municipal Income Trust......... 10/31 $213 $383 $733 $1,578 $358 $434
California Value Municipal Income Trust............... 10/31 $198 $359 $698 $1,403 $351 $407
Florida Municipal Opportunity Trust................... 10/31 $198 $360 $701 $1,411 $353 $409
Investment Grade Municipal Trust...................... 10/31 $248 $436 $756 $1,586 $362 $488
Massachusetts Value Municipal Income Trust............ 10/31 $198 $359 $698 $1,403 $351 $407
Municipal Opportunity Trust........................... 10/31 $213 $382 $731 $1,574 $357 $432
Municipal Opportunity Trust II........................ 10/31 $198 $360 $701 $1,411 $353 $409
New Jersey Value Municipal Income Trust............... 10/31 $198 $359 $698 $1,403 $351 $407
New York Value Municipal Income Trust................. 10/31 $198 $359 $698 $1,403 $351 $407
Ohio Value Municipal Income Trust..................... 10/31 $198 $359 $698 $1,403 $351 $407
Pennsylvania Value Municipal Income Trust............. 10/31 $198 $359 $698 $1,403 $351 $407
Select Sector Municipal Trust......................... 10/31 $198 $360 $701 $1,411 $353 $409
Strategic Sector Municipal Trust...................... 10/31 $200 $363 $706 $1,419 $354 $412
Trust for Insured Municipals.......................... 10/31 $214 $384 $734 $1,583 $359 $434
Trust for Investment Grade California Municipals...... 10/31 $213 $382 $732 $1,575 $357 $431
Trust for Investment Grade Florida Municipals......... 10/31 $213 $382 $732 $1,575 $357 $431
Trust for Investment Grade Municipals................. 10/31 $214 $384 $734 $1,583 $359 $434
Trust for Investment Grade New Jersey Municipals...... 10/31 $213 $382 $732 $1,575 $357 $431
Trust for Investment Grade New York Municipals........ 10/31 $213 $382 $732 $1,575 $357 $431
Trust for Investment Grade Pennsylvania Municipals.... 10/31 $213 $382 $732 $1,575 $357 $431
Value Municipal Income Trust.......................... 10/31 $198 $359 $698 $1,403 $351 $407
Intermediate Term High Income Trust................... 12/31 $247 $433 $752 $1,574 $362 $484
Limited Term High Income Trust........................ 12/31 $244 $429 $749 $1,561 $361 $480
</TABLE>

I-1
<PAGE> 60

ANNEX J

The table below sets forth the year in which each of the nominees to the
Board of Trustees initially was elected or appointed to the Board of Trustees.

<TABLE>
<CAPTION>
ARCH DAMMEYER KERR MCDONNELL MYERS SONNENSCHEIN WHALEN
---- -------- ---- --------- ----- ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
California Municipal Trust (VKC)....... 1988 1998 1992 1998 1998 1994 1988
Intermediate Term High Income Trust
(VIT)................................. 1988 1988 1992 1988 1988 1994 1988
Municipal Income Trust (VMT)........... 1988 1988 1992 1988 1988 1994 1988
Investment Grade Municipal Trust
(VIG)................................. 1989 1989 1992 1989 1989 1994 1989
Limited Term High Income Trust (VLT)... 1989 1989 1992 1989 1989 1994 1989
California Quality Municipal Trust
(VQC)................................. 1991 1991 1992 1991 1991 1994 1991
Florida Quality Municipal Trust
(VFM)................................. 1991 1991 1992 1991 1991 1994 1991
Municipal Trust (VKQ).................. 1991 1991 1992 1991 1991 1994 1991
New York Quality Municipal Trust
(VNM)................................. 1991 1991 1992 1991 1991 1994 1991
Ohio Quality Municipal Trust (VOQ)..... 1991 1991 1992 1991 1991 1994 1991
Pennsylvania Quality Municipal Trust
(VPQ)................................. 1991 1991 1992 1991 1991 1994 1991
Trust for Insured Municipals (VIM)..... 1991 1991 1992 1991 1991 1994 1991
Trust for Investment Grade Municipals
(VGM)................................. 1991 1991 1992 1991 1991 1994 1991
Advantage Municipal Income Trust
(VKA)................................. 1992 1992 1992 1992 1992 1994 1992
Advantage Pennsylvania Municipal Income
Trust (VAP)........................... 1992 1992 1992 1992 1992 1994 1992
Municipal Opportunity Trust (VMO)...... 1992 1992 1992 1992 1992 1994 1992
Strategic Sector Municipal Trust
(VKS)................................. 1992 1992 1992 1992 1992 1994 1992
Trust for Investment Grade California
Municipals (VIC)...................... 1992 1992 1992 1992 1992 1994 1992
Trust for Investment Grade Florida
Municipals (VTF)...................... 1992 1992 1992 1992 1992 1994 1992
Trust for Investment Grade New Jersey
Municipals (VTJ)...................... 1992 1992 1992 1992 1992 1994 1992
Trust for Investment Grade New York
Municipals (VTN)...................... 1992 1992 1992 1992 1992 1994 1992
Trust for Investment Grade Pennsylvania
Municipals (VTP)...................... 1992 1992 1992 1992 1992 1994 1992
Advantage Municipal Income Trust II
(VKI)................................. 1993 1993 1993 1993 1993 1994 1993
California Value Municipal Income Trust
(VCV)................................. 1993 1993 1993 1993 1993 1994 1993
Florida Municipal Opportunity Trust
(VOF)................................. 1993 1993 1993 1993 1993 1994 1993
Massachusetts Value Municipal Income
Trust (VMV)........................... 1993 1993 1993 1993 1993 1994 1993
Municipal Opportunity Trust II (VOT)... 1993 1993 1993 1993 1993 1994 1993
New Jersey Value Municipal Income Trust
(VJV)................................. 1993 1993 1993 1993 1993 1994 1993
New York Value Municipal Income Trust
(VNV)................................. 1993 1993 1993 1993 1993 1994 1993
Ohio Value Municipal Income Trust
(VOV)................................. 1993 1993 1993 1993 1993 1994 1993
Pennsylvania Value Municipal Income
Trust (VPV)........................... 1993 1993 1993 1993 1993 1994 1993
Select Sector Municipal Trust (VKL).... 1993 1993 1993 1993 1993 1994 1993
Value Municipal Income Trust (VKV)..... 1993 1993 1993 1993 1993 1994 1993
</TABLE>

J-1
<PAGE> 61

ANNEX K
TRUSTEE OWNERSHIP OF COMMON SHARES OF THE FUNDS AS OF APRIL 4, 1997

<TABLE>
<CAPTION>
ARCH DAMMEYER MCDONNELL MYERS WHALEN
---- -------- --------- ----- ------
<S> <C> <C> <C> <C> <C>
Intermediate Term High Income Trust (VIT)................... 676 30,661 3,000 35,000 11,681
Municipal Income Trust (VMT)................................ 577 142,043 1,869 100 537
Investment Grade Municipal Trust (VIG)...................... 524 -- 774 -- 539
Limited Term High Income Trust (VLT)........................ 550 7,684 6,759 77,651 352
Municipal Trust (VKQ)....................................... 800 49,047 846 20,900 534
Trust for Insured Municipals (VIM).......................... 300 22,520 419 -- 538
Trust for Investment Grade Municipals (VGM)................. 300 115,439 253 -- 537
Advantage Municipal Income Trust (VKA)...................... 300 20,018 251 -- 535
Municipal Opportunity Trust (VMO)........................... 300 -- 375 -- 534
Strategic Sector Municipal Trust (VKS)...................... 500 11,303 385 -- --
Advantage Municipal Income Trust II (VKI)................... 500 58,507 319 -- --
Municipal Opportunity Trust II (VOT)........................ -- 27,842 323 -- --
Select Sector Municipal Trust (VKL)......................... 508 -- 300 -- --
Value Municipal Income Trust (VKV).......................... -- 3,300 125 -- --
</TABLE>

K-1
<PAGE> 62

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
Aggressive Growth Fund
Emerging Growth Fund
Enterprise Fund
Growth Fund
Pace Fund
Growth & Income
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
Intermediate 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

MORGAN STANLEY FUND, INC.
Aggressive Equity Fund
American Value Fund
Asian Growth Fund
Emerging Markets Fund
Global Equity Allocation Fund
Global Fixed Income Fund
High Yield Fund
International Magnum Fund
Latin American Fund
Worldwide High Income 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 weekdays from 7:00 a.m. to 7:00
p.m. Central time at 1-800-341-2911 for Van Kampen American Capital funds, or
1-800-282-4404 for Morgan Stanley retail funds.
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CLOSED

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[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE FORM OF PROXY
VAN KAMPEN AMERICAN CAPITAL XXXXXXXXXX TRUST

JOINT MEETING OF SHAREHOLDERS

PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned holder of XXXXXX shares of VAN KAMPEN AMERICAN
CAPITAL XXXXXXXXXX TRUST, a Massachusetts business trust (the
"Fund"), hereby appoints Dennis J. McDonnell, Ronald A. Nyberg
and Edward C. Wood III, and each of them, with full power of
substitution and revocation, as proxies to represent the
undersigned at the Joint Meeting of Shareholders to be held at
the offices of Van Kampen American Capital, Inc., One Parkview
Plaza, Oakbrook Terrace, Illinois 60181, on Wednesday, May 28,
1997 at 2:00 p.m., and any and all adjournments thereof (the
"Meeting"), and thereat to vote all XXXXXX shares which the
undersigned would be entitled to vote, with all powers the
undersigned would possess if personally present, in accordance
with the following instructions.

Account No. No. of Shares Proxy No.

<TABLE>
<S> <C> <C> <C> <C>
1. The proposal to approve a new investment advisory agreement; FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Authority to vote for the election as Class X Trustees, the
nominees named below: FOR WITHHOLD
[ ] [ ]
XXXXXXX, XXXXXXX, XXXXXXX
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THE NOMINEE'S NAME ON THE LINE BELOW.
------------------------------------------------------------
The proposal to ratify KPMG Peat Marwick LLP as independent
3. public accountants for each Fund's current fiscal year. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
To transact such other business as may properly come before
4. the Meeting.
</TABLE>

If more than one of the proxies, or their substitutes, are
present at the Meeting or any adjournment thereof, they jointly
(or, if only one is present and voting then that one) shall have
authority and may exercise all powers granted hereby. This Proxy,
when properly executed, will be voted in accordance with the
instructions marked hereon by the undersigned. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED "FOR" EACH OF THE
PROPOSALS DESCRIBED HEREIN AND IN THE DISCRETION OF THE PROXIES
UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.

THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE ACCOMPANYING
NOTICE OF MEETING AND PROXY STATEMENT FOR THE MEETING TO BE HELD
ON MAY 28, 1997.

Date , 1997

----------------------------
Shareholder signature

----------------------------
Co-owner signature (if
applicable)

Please sign this Proxy
exactly as your name or
names appear on the books of
the Fund. When signing as
attorney, trustee, executor,
administrator, custodian,
guardian or corporate
officer, please give full
title. If shares are held
jointly, each holder should
sign.