HYPERION 2005 INVESTMENT GRADE OPPORTUNITY TERM TRUST INC, DEF 14A, 1999-02-26

HYPERION 2005 INVESTMENT GRADE OPPORTUNITY TERM TRUST INC
DEF 14A, 1999-02-26

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HYPERION 2005 INVESTMENT GRADE OPPORTUNITY
TERM TRUST, INC.
One Liberty Plaza o New York, New York
10006-1404

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

February 26, 1999 To the Stockholders:

The Annual Meeting of Stockholders of Hyperion 2005 Investment Grade
Opportunity Term Trust, Inc. (the "Trust") will be held at The Millenium Hilton,
55 Church Street (next to the World Trade Center), New York, New York 10007, on
Tuesday, April 20, 1999, at 9:00 a.m., for the following purposes:

1. To elect directors (Proposal 1).

2. To ratify or reject the selection of PricewaterhouseCoopers
LLP as the independent accountants of the Trust for the
fiscal year ending December 31, 1999 (Proposal 2).

3. To transact any other business that may properly come before the
meeting.

The close of business on February 19, 1999 has been fixed as the record
date for the determination of stockholders entitled to notice of and to vote at
the meeting.

By Order of the Board of Directors,

Patricia A. Sloan

Secretary

WE NEED YOUR PROXY VOTE IMMEDIATELY.

YOU MAY THINK YOUR VOTE IS NOT IMPORTANT, BUT IT IS VITAL. THE MEETING OF
STOCKHOLDERS OF THE TRUST WILL BE UNABLE TO CONDUCT ANY BUSINESS IF LESS THAN A
MAJORITY OF THE SHARES ELIGIBLE TO VOTE IS REPRESENTED. IN THAT EVENT, THE
TRUST, AT STOCKHOLDERS' EXPENSE, WOULD CONTINUE TO SOLICIT VOTES IN AN ATTEMPT
TO ACHIEVE A QUORUM. CLEARLY, YOUR VOTE COULD BE CRITICAL TO ENABLE THE TRUST TO
HOLD THE MEETING AS SCHEDULED, SO PLEASE RETURN YOUR PROXY CARD IMMEDIATELY. YOU
AND ALL OTHER STOCKHOLDERS WILL BENEFIT FROM YOUR COOPERATION.

Instructions for Signing Proxy Cards

The following general rules for signing proxy cards may be of
assistance to you and eliminate the time and expense to the Trust involved in
validating your vote if you fail to sign your proxy card properly.

1. Individual Accounts. Sign
your name exactly as it appears in the
registration on the proxy card.

2. Joint Accounts. Either party
may sign, but the name of the party
signing should conform exactly to the name
shown in the registration.

3. All Other Accounts. The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration.
For example:

Registration Valid Signature

Corporate Accounts
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
Trust Accounts
(1) ABC Trust John B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78 Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr.
UGMA John B. Smith
(2) John B. Smith John B. Smith, Jr., Executor

HYPERION 2005 INVESTMENT GRADE OPPORTUNITY
TERM TRUST, INC.
One Liberty Plaza o New York, New York
10006-1404

PROXY STATEMENT

This proxy statement is furnished in connection with a solicitation by
the Board of Directors of Hyperion 2005 Investment Grade Opportunity Term Trust,
Inc. (the "Trust") of proxies to be used at the Annual Meeting of Stockholders
of the Trust to be held at The Millenium Hilton, 55 Church Street (next to the
World Trade Center), New York, New York 10007, at 9:00 a.m. on Tuesday, April
20, 1999, and at any adjournment or adjournments thereof for the purposes set
forth in the accompanying Notice of Annual Meeting of Stockholders. This proxy
statement and the accompanying form of proxy are first being mailed to
stockholders on or about February 26, 1999. Stockholders who execute proxies
retain the right to revoke them by written notice received by the Secretary of
the Trust at any time before they are voted. Unrevoked proxies will be voted in
accordance with the specifications thereon and, unless specified to the
contrary, will be voted FOR the re-election of one nominee for director, FOR the
election of the two nominees, Mr. Robert F. Birch and Andrew M. Carter, for
director, and FOR the ratification of the selection of PricewaterhouseCoopers
LLP as the independent accountants of the Trust for the fiscal year ending
December 31, 1999. The close of business on February 19, 1999 has been fixed as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting. Each stockholder is entitled to one vote for each share
held. Abstentions will be treated as shares that are present and entitled to
vote for purposes of determining the presence of a quorum but as unvoted for
purposes of determining the approval of any matters submitted to stockholders
for a vote. Broker non-votes will not be counted for purposes of determining the
presence of a quorum or determining whether a proposal has been approved. On the
record date there were 17,066,173 shares outstanding.

PROPOSAL 1: ELECTION OF DIRECTORS

The Trust's Articles of Incorporation provide that the Trust's Board of
Directors shall be divided into three classes: Class I, Class II and Class III.
The terms of office of the present directors in each class expire at the Annual
Meeting in the year indicated or thereafter in each case when their respective
successors are elected and qualified: Class II, 1999, Class III, 2000, and Class
I, 2001. At each subsequent annual election, Directors chosen to succeed those
whose terms are expiring will be identified as being of that same class and will
be elected for a three-year term. The effect of these staggered terms is to
limit the ability of other entities or persons to acquire control of the Trust
by delaying the replacement of a majority of the Board of Directors.

The term of Leo M. Walsh, Jr., the member of Class II currently serving
on the Board of Directors, expires at this year's Annual Meeting. The persons
named in the accompanying form of proxy intend to vote at the Annual Meeting
(unless directed not to so vote) for the re-election of Mr. Walsh. The persons
named in the accompanying form of proxy also intend to vote (unless directed not
to so vote) for the election of Mr. Robert F. Birch and Andrew M. Carter to
serve as Class II directors until the 2002 Annual Meeting of Stockholders. On
July 21, 1998, the Board of Directors elected Mr. Carter to fill the vacancy
created by the resignation of Garth Marston, who resigned on June 10, 1998. On
December 8, 1998, the Board elected Mr. Birch as a Class II Director to fill a
newly created director position. The elections of Messrs. Carter and Birch are
subject to shareholder approval. Each nominee has indicated that he or she will
serve if elected, but if either nominee should be unable to serve, the proxy or
proxies will be voted for any other person or persons, as the case may be,
determined by the persons named in the proxy in accordance with their judgment.

As described above, there is one nominee for re-election and two
nominees for election to the Board of Directors at this time. Proxies cannot be
voted for a greater number of persons than the three nominees currently proposed
to serve on the Board of Directors.

The following table provides information concerning each of the eight
members and nominees of the Board of Directors of the Trust:

<TABLE>
<S> <C> <C> <C>
Shares of Common
Stock
Beneficially Owned
Directly or
Name and Office Principal Occupation During Past Five Years, Indirectly, on
with the Trust Other Directorships and Age Director Since Dec. 31, 1998(**)
-------------- --------------------------- -------------- -----------------

Class II Nominees to serve until 2002 Annual Meeting of Stockholders:
Andrew M. Carter*
Director, Chairman of the Board Chairman and Chief Executive Officer of Hyperion Capital
Management, Inc. (November 1998-Present). Vice Chairman of
The China Business Group (1996-Present), and presently
officer of four charitable boards: The New England
Conservatory, The Loomis Chaffee School, The William E.
Simon Graduate School of Business Administration at the
University of Rochester, and The Big Brother Association of
Boston. Director of several investment companies advised by
Hyperion Capital Management, Inc. (July 1998-Present).
Formerly President and Founding Principal, Andrew M. Carter
& Company (1994-1998); Director and Senior Vice President,
Jennison Associates Capital Corp. (1975-1993); Founder,
Standard & Poor's/Carter, Doyle (1972-1975); Vice President,
Head of Fixed Income Group, Wellington Management Co.
(1968-1972); and Manager of the Harvard Endowment bond
portfolio, Harvard Treasurer's Office (1964-1968).
Age 58 July 1998 # -

Leo M. Walsh, Jr.
Director, Chairman of the Director and/or Trustee of several investment companies
Audit Committee advised by Hyperion Capital Management, Inc. or by its
affiliates (1989-Present). Financial Consultant for
Merck-Medco Managed Care L.L.C. (formerly Medco Containment
Services Inc.) (1994-Present). Formerly, Director of
Equitable Real Estate Hyperion Mortgage Opportunity Fund,
Inc. and Equitable Real Estate Hyperion High Yield Commercial
Mortgage Fund, Inc. (1995-1997); Financial Consultant for
Synetic Inc., a manufacturer of porous plastic materials for
health care uses (1989-1994); President, WW Acquisition
Corp. (1989-1990); Senior Executive Vice President and Chief
Operating Officer of The Equitable Life Assurance Society of
the United States ("The Equitable") (1986-1988); Director of
The Equitable and Chairman of Equitable Investment
Corporation, a holding company for The Equitable's investment
oriented subsidiaries (1983-1988); Chairman and Chief
Executive Officer of EQUICOR-Equitable HCA Corporation
(1987-1988).
Age 66 February 1993 6,000

</TABLE>

<TABLE>
<S> <C> <C> <C> <C>
Shares of Common
Stock
Beneficially Owned
Directly or
Name and Office Principal Occupation During Past Five Years, Indirectly, on
with the Trust Other Directorships and Age Director Since Dec. 31, 1998(**)
-------------- --------------------------- -------------- -----------------

Robert F. Birch
Director, Member of the Audit Chairman and President, New America High Income Fund
Committee (1992-Present). Formerly, Director and Strategic Planning
Consultant, Dewe Rogerson, Inc. Ltd. (1994-1998). Chairman
of the Board and Co-Founder, The China Business Group, Inc.
(1996-Present). Formerly, Chairman and Chief Executive
Officer, Memtek Corporation (1990-1991); Associated with
Finn Wishengrad Warnke & Gayton, a consulting firm
specializing in work-outs of financially distressed
companies (1988-1989); President and Chief Executive
Officer, Gardner and Preston Moss, Inc. (1969-1987).
Age 62 December 1998 -

Class I Directors to serve until 2001 Annual Meeting of Stockholders:

Rodman L. Drake
Director, Member of the Audit President, Continuation Investments Group Inc.
Committee (1997-Present). Director and/or Trustee of several
investment companies advised by Hyperion Capital Management,
Inc. (1989-Present). Formerly, Co-Chairman of KMR Power
Corporation (1993-1997); President, Mandrake Group
(1993-1997); Managing Director and Chief Executive Officer
of Cresap (1980-1990). Trustee of Excelsior Funds
(1994-Present). Director, Parsons Brinckerhoff, Inc.
(1995-Present) and Parsons Brinckerhoff Energy Systems, Inc.
(1995-Present), and Latin American Growth Fund Inc.
(1994-Present).
Age 56 February 1993 204

Patricia A. Sloan*
Director, Secretary Managing Director of Ranieri & Co., Inc. (1988-Present).
Secretary, Director and/or Trustee of several investment
companies advised by Hyperion Capital Management, Inc. or by
its affiliates (1989-Present). Director of Bank United
Corp., the parent of Bank United (formerly Bank United of
Texas FSB) (1988-Present). Formerly Director of the
Financial Institutions Group of Salomon Brothers Inc
(1972-1988).
Age 55 February 1993 300

</TABLE>

Class III Directors to serve until 2000 Annual Meeting of Stockholders:

Harry E. Petersen, Jr.
Director, Member of the Audit Director and/or Trustee of several investment companies
Committee advised by Hyperion Capital Management, Inc. or by its
affiliates (1992-Present). Senior Advisor to Cornerstone
Equity Advisors, Inc. (1998-Present). Formerly, Senior
Advisor to Potomac Babson Inc. (1995-1998). Formerly,
Director of Equitable Real Estate Hyperion Mortgage
Opportunity Fund, Inc. and Equitable Real Estate Hyperion
High Yield Commercial Mortgage Fund, Inc. (1995-1997);
Director of Lexington Corporate Properties, Inc.
(1993-1997); Consultant to Advisers Capital Management, Inc.
(1992-1995); Consultant on public and private pension funds
(1991-1993); President of Lepercq Realty Advisors
(1988-1990). Member of Advisory Council of Polytechnic
University.
Age 74 February 1993 200

Lewis S. Ranieri*
Director Chairman and Chief Executive Officer of Ranieri & Co., Inc.
(since 1988); in addition, President of LSR Hyperion Corp.,
a general partner of the limited partnership that is the
general partner of Hyperion Partners L.P. ("Hyperion
Partners") (since 1988). Director and Vice Chairman of the
Board of Hyperion Capital Management, Inc. (since December
1998); Director and Chairman of the Board of Hyperion
Capital Management, Inc. (1989-November 1998); Chairman of
the Board (1989-December 1998) and/or Director (since 1989)
of several investment companies advised by Hyperion Capital
Management, Inc. or by its affiliates; Director of Lend
Lease Hyperion Mortgage Opportunity Fund, Inc. (formerly
Equitable Real Estate Hyperion Mortgage Opportunity Fund,
Inc.) and Lend Lease Hyperion High Yield Commercial Mortgage
Fund, Inc. (formerly Equitable Real Estate Hyperion High
Yield Commercial Mortgage Fund, Inc.) (since 1995);
Director and Chairman of Bank United Corp., and Director of
Bank United; Director and President of Hyperion Funding
1993 Corp., the general partner of the limited partnership
that is the general partner of Hyperion 1993 Fund L.P.; and
also Chairman and President of various other direct and
indirect subsidiaries of Hyperion Partners (since 1989).
Formerly Vice Chairman of Salomon Brothers Inc (until
1987).
Age 52 February 1993 -

</TABLE>

Kenneth C. Weiss*
Director Director and/or Trustee of several investment companies
advised by Hyperion Capital Management, Inc. or by its
affiliate (1992-Present) and former President and Chief
Executive Officer of Hyperion Capital Management, Inc.
(February 1992-December 1998). Former Chairman of the
Board, and/or officer of several investment companies
advised by Hyperion Capital Management, Inc. or by its
affiliates (February 1992-December 1998). Formerly, Director
and President of Lend Lease Hyperion Mortgage Opportunity
Fund, Inc. and Lend Lease Hyperion High Yield Commercial
Mortgage Fund, Inc. and their Investment Advisor
(1995-December 1998). Formerly Director of First Boston
Asset Management (1988-February 1992). Director of The
First Boston Corporation (until 1988).
Age 46 February 1993 14,962

* Interested persons as defined in the Investment Company Act of 1940, as
amended (the "1940 Act"), because of affiliations with Hyperion Capital
Management, Inc., the Trust's Investment Advisor.
** The holdings of no director or nominee represented more than 1% of the
outstanding shares of the Trust.
# On July 21, 1998, the Board of Directors elected Mr. Carter to fill the
vacancy created by the resignation of Garth Marston, who resigned on
June 10, 1998.

</TABLE>

Officers of the Trust. The officers of the Trust are chosen each
year at the first meeting of the Board of Directors of the Trust following the
Annual Meeting of Stockholders, to hold office at the discretion of the Board of
Directors until the meeting of the Board following the next Annual Meeting of
Stockholders and until their successors are chosen and qualified. The Board of
Directors has elected six officers of the Trust. Except where dates of service
are noted, all officers listed below served as such throughout the 1998 fiscal
year. The following sets forth information concerning each officer of the Trust
who served during all or part of the last fiscal year of the Trust:

Name and
Principal Occupation Office Age Officer Since

Andrew M. Carter Chairman 58 December 1998
See information under "ELECTION OF DIRECTORS."

Kenneth C. Weiss Chairman 46 February 1993- December
See information under "ELECTION OF DIRECTORS." 1998

Clifford E. Lai President/ 45 June 1997
President (since December 1998) and Chief Investment Officer, Hyperion Capital Senior Vice (April 1993-June 1997)
Management, Inc. (March 1993-Present). President of several investment President
companies advised by Hyperion Capital Management, Inc. or by its affiliates
(1993-Present). Formerly Managing Director and Chief Investment Strategist
for Fixed Income, First Boston Asset Management (1989-1993); Vice President,
Morgan Stanley & Co. (1987-1989).

Patricia A. Botta Vice President 41 March 1997
Director of Hyperion Capital Management, Inc. (1989-Present). Formerly with the
Davco Group (1988-1989) and with Salomon Brothers Inc (1986-1988).

John H. Dolan Vice President 45 March 1998
Chief Investment Strategist of Hyperion Capital Management (1998-Present).
Formerly, Managing Director at Bankers Trust (1995-1997); Managing Director of
Salomon Brothers, Inc (1987-1995); Manager of mortgage-backed securities desk at
Citibank (1979-1987).

Patricia A. Sloan Secretary 55 February 1993
See information under "ELECTION OF DIRECTORS."

Thomas F. Doodian Treasurer 39 February 1998
Chief Operating Officer (since December 1998) and Director of Finance and
Operations, Hyperion Capital Management, Inc. (July 1995-November 1998).
Treasurer of several investment companies advised by Hyperion Capital
Management, Inc. (February 1998-Present). Formerly, Vice President in Mortgage
Backed Trading at Mabon Securities Corporation (1994-1995); fixed income
analyst, trader, and Vice President and Controller at Credit Suisse First Boston
(1984-1994).

</TABLE>

Security Ownership of Certain Beneficial Owners at December 31, 1998

- ------------------- -------------------------------------------- ------------------------------- -------------------- --------------
Title of Name and Address of Amount and Nature of
Class Beneficial Owner Beneficial Ownership Percent of Class Source
- ------------------- -------------------------------------------- ------------------------------- -------------------- --------------
Common Tattersall Advisory Group 2,173,000 shares 12.70% 13 (G)
Stock 6802 Paragon Place, Suite 200
Richmond, Virginia 23230
- ------------------- -------------------------------------------- ------------------------------- -------------------- --------------
- ------------------- -------------------------------------------- ------------------------------- -------------------- --------------
Common Karpus Investment Management 1,527,000 shares 8.93% 13 (G)
Stock 5 Tobey Village Office Park
Pittsford, NY 14534
- ------------------- -------------------------------------------- ------------------------------- -------------------- --------------
</TABLE>

At December 31, 1998, directors and officers of the Trust as a group
owned beneficially less than 1% of the outstanding shares of the Trust. No
person, other than those listed above, to the knowledge of management, owned
beneficially more than 5% of the Trust's outstanding shares at that date. The
business address of the Trust, its officers and directors is One Liberty Plaza,
New York, New York 10006-1404.

Interested Persons. Mr. Ranieri serves as a Director and Vice Chairman
of the Board of the Advisor. Mr. Carter serves as the Chairman and Chief
Executive Officer of the Advisor. Mr. Weiss formerly served as a Director,
President and Chief Executive Officer of the Advisor. Ms. Sloan is a special
limited partner of Hyperion Ventures, the sole general partner of Hyperion
Partners L.P., of which the Advisor is a wholly-owned subsidiary. As a result of
their service with the Advisor and certain affiliations with the Advisor as
described below, the Trust considers Messrs. Ranieri, Carter, Weiss and Ms.
Sloan to be "interested persons" of the Trust within the meaning of Section
2(a)(19) of the 1940 Act.

Committees and Board of Directors' Meetings. The Trust has a standing
Audit Committee presently consisting of Messrs. Walsh, Drake, Petersen, and
Birch, all of whom are members of the Board of Directors and are currently
non-interested persons of the Trust. The principal functions of the Trust's
Audit Committee are to recommend to the Board the appointment of the Trust's
accountants, to review with the accountants the scope and anticipated costs of
their audit and to receive and consider a report from the accountants concerning
their conduct of the audit, including any comments or recommendations they might
want to make in that connection. During the last fiscal year of the Trust, the
full Board of Directors met five times, and the Audit Committee met one time.
All of the members of the Audit Committee attended the Audit Committee meeting
and all of the directors attended at least 75% of the aggregate of the Board
meetings and the Audit Committee meeting. The Trust has no nominating,
compensation or similar committees.

Compensation of Directors and Executive Officers. No remuneration was
paid by the Trust to persons who were directors, officers or employees of
Hyperion Capital Management, Inc. or any affiliate thereof for their services as
directors or officers of the Trust. Each director of the Trust, other than those
who are officers or employees of Hyperion Capital Management, Inc. or any
affiliate thereof, is entitled to receive a fee of $7,500 per year plus $1,000
for each Board of Directors' meeting attended. Members of the Audit Committee
receive $750 for each Audit Committee meeting attended, other than meetings held
on days when there is also a directors' meeting.

Directors' Compensation Table For The Twelve Month Period Ended 12/31/98

Directors' Total Directors' Compensation
Compensation from the Trust and the Fund
From the Trust Complex
Robert F. Birch...................... $2,875 $11,500
Andrew M. Carter**................... $2,875 $11,500
Rodman L. Drake...................... $11,500 $46,000
Garth Marston*....................... $8,625 $34,500
Harry E. Petersen, Jr................ $11,500 $46,000
Leo M. Walsh, Jr. ................... $11,500 $46,000
------- -------
$48,875 $195,500
======= ========
</TABLE>

*Mr. Marston resigned as Director of the Trust on June 10, 1998, and currently
serves as a Director Emeritus. Pursuant to the Director Emeritus Plan adopted by
the Board of Directors, a Director Emeritus receives compensation from the Trust
at a rate equal to one-half of the compensation paid to directors.
** Compensation represents that paid to Mr. Carter as a disinterested director
prior to his change in status as an interested director on November 20, 1998. No
compensation was paid by the Trust or Fund complex subsequent to the change in
status.

Required Vote

Election of the listed nominees for director requires the affirmative
vote of the holders of a majority of the shares of Common Stock of the Trust
present or represented by proxy at the Annual Meeting.

PROPOSAL 2: RATIFICATION OR REJECTION OF
SELECTION OF INDEPENDENT ACCOUNTANTS

The Board of Directors of the Trust will consider, and it is expected
that they will recommend, the selection of PricewaterhouseCoopers LLP as
independent accountants of the Trust for the fiscal year ending December 31,
1999 at a meeting scheduled to be held on March 9, 1999. The appointment of
accountants is approved annually by the Audit Committee of the Board of
Directors and is subsequently submitted to the stockholders for ratification or
rejection. The Trust has been advised by PricewaterhouseCoopers LLP that at
December 31, 1998 neither that firm nor any of its partners had any direct or
material indirect financial interest in the Trust. A representative of
PricewaterhouseCoopers LLP will be at the meeting to answer questions concerning
the Trust's financial statements and will have an opportunity to make a
statement if he or she chooses to do so.

Required Vote

Ratification of the selection of PricewaterhouseCoopers LLP as
independent accountants of the Trust requires the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock of the Trust
present or represented by proxy at the Annual Meeting.

ADDITIONAL INFORMATION

Investment Advisor

The Trust has engaged Hyperion Capital Management, Inc. (the
"Advisor"), to provide professional investment management for the Trust pursuant
to an Advisory Agreement dated February 17, 1993. The Advisor is a Delaware
corporation which was organized in February 1989. The Advisor is a registered
investment advisor under the Investment Advisers Act of 1940, as amended. The
business address of the Advisor and its officers and directors is One Liberty
Plaza, New York, New York 10006-1404. The Trust has also engaged Hyperion
Capital Management, Inc. as the Trust's administrator. The administrator's
address is the same as that of the Advisor.

The Advisor is a subsidiary of Hyperion Partners L.P., a Delaware
limited partnership ("Hyperion Partners"). The sole general partner of Hyperion
Partners is Hyperion Ventures L.P., a Delaware limited partnership ("Hyperion
Ventures"). Corporations owned principally by Lewis S. Ranieri, Salvatore A.
Ranieri and Scott A. Shay are the general partners of Hyperion Ventures. Lewis
S. Ranieri, a former Vice Chairman of Salomon Brothers Inc ("Salomon Brothers"),
is a Vice Chairman of the Board of the Advisor and director of the Trust.
Messrs. Salvatore Ranieri and Shay are directors of the Advisor, but have no
other positions with either the Advisor or the Trust. Messrs. Salvatore Ranieri
and Shay are principally engaged in the management of the affairs of Hyperion
Ventures and its affiliated entities. Mr. Carter is the Chairman and Chief
Executive Officer of the Advisor and Chairman of the Trust. Since January 1,
1990, Patricia A. Sloan, Secretary of the Trust, has been a special limited
partner of Hyperion Ventures and, since July 1993, she has been a limited
partner of Hyperion Partners. Mr. Lai, the President of the Trust and the
Advisor, may be entitled, in addition to receiving a salary from the Advisor, to
receive a bonus based upon a portion of the Advisor's profits, including any
profit from a sale of the Advisor. Ms. Botta and Mr. Dolan, Vice Presidents of
the Trust, and Mr. Doodian, Treasurer of the Trust, are also employees of the
Advisor. The business address of Hyperion Partners and Hyperion Ventures is 50
Charles Lindbergh Boulevard, Suite 500, Uniondale, New York 11553.

The Advisor provides advisory services to several other registered
investment companies and one offshore fund, all of which invest primarily in
mortgage-backed securities. Its management includes several individuals with
extensive experience in creating, evaluating and investing in Mortgage-Backed
Securities, Derivative Mortgage-Backed Securities and Asset-Backed Securities,
and in using hedging techniques. Lewis S. Ranieri, Vice Chairman of the Advisor
and Director of the Trust, was instrumental in the development of the secondary
mortgage-backed securities market and the creation and development of secondary
markets for conventional mortgage loans, CMOs and other mortgage-related
securities. While at Salomon Brothers, Mr. Ranieri directed that firm's
activities in the mortgage, real estate and government guaranteed areas.
Clifford E. Lai, President and Chief Investment Officer of the Advisor and
President of the Trust, was formerly Managing Director and Chief Investment
Strategist for Fixed Income for First Boston Asset Management Corporation.

Investment Advisory Agreement

On March 10, 1998, the Board of Directors of the Trust, including those
persons identified as interested persons and a majority of the directors who are
not parties to the Advisory Agreement or interested persons (as such term is
defined in the 1940 Act) of any such party (the "Disinterested Directors"),
approved extension of the Advisory Agreement through March 31, 1999. At the time
of the Board's approval of the latest extension of the Advisory Agreement,
Messrs. Lewis Ranieri, Weiss and Ms. Sloan were interested persons of the Trust.
The Advisory Agreement was last submitted to a vote of the Stockholders of the
Trust at the Annual Meeting of the Stockholders of the Trust held on May 23,
1995. At that meeting, the Stockholders approved the continuance of the revised
Advisory Agreement. The Advisory Agreement provides that it will continue from
year to year, but only so long as such continuation is specifically approved at
least annually by both (1) the vote of a majority of the Board of Directors or
the vote of a majority of the outstanding voting securities of the Trust (as
provided in the 1940 Act) and (2) by the vote of a majority of the Disinterested
Directors cast in person at a meeting called for the purpose of voting on such
approval. The Advisory Agreement may be terminated at any time without the
payment of any penalty, upon the vote of a majority of the Board of Directors or
a majority of the outstanding voting securities of the Trust or by the Advisor,
on 60 days' written notice by either party to the other. The Agreement will
terminate automatically in the event of its assignment (as such term is defined
in the 1940 Act and the rules thereunder). The Board of Directors will consider
continuance of the Advisory Agreement until March 31, 2000 at a meeting
scheduled for March 9, 1999.

Pursuant to the Advisory Agreement, the Trust has retained the Advisor
to manage the investment of the Trust's assets and to provide such investment
research, advice and supervision, in conformity with the Trust's investment
objective and policies, as may be necessary for the operations of the Trust.

The Advisory Agreement provides, among other things, that the Advisor
will bear all expenses of its employees and overhead incurred in connection with
its duties under the Advisory Agreement, and will pay all salaries of the
Trust's directors and officers who are affiliated persons (as such term is
defined in the 1940 Act) of the Advisor. The Advisory Agreement provides that
the Trust shall pay to the Advisor a monthly fee for its services which is equal
to .65% per annum of the Trust's average weekly net assets, which, for purposes
of determining the Advisor's fee, shall be the average weekly value of the total
assets of the Trust, minus the sum of accrued liabilities (including accrued
expenses) of the Trust and any declared but unpaid dividends on the Common
Shares and any Preferred Shares (if such shares are issued in the future) and
any accumulated dividends on any Preferred Shares (but without deducting the
aggregate liquidation value of any Preferred Shares). Investment advisory fees
paid by the Trust to the Advisor during the last fiscal year of the Trust
amounted to $1,091,963.

Administration Agreement

The Trust has entered into an Administration Agreement with Hyperion
Capital Management, Inc. (the "Administrator"). The Administrator performs
administrative services necessary for the operation of the Trust, including
maintaining certain books and records of the Trust, and preparing reports and
other documents required by federal, state, and other applicable laws and
regulations, and provides the Trust with administrative office facilities. For
these services, the Trust pays a monthly fee at an annual rate of 0.17% of the
first $100 million of the Trust's average weekly net assets, 0.145% of the next
$150 million and 0.12% of any amounts above $250 million. The Advisor, in its
capacity as Administrator, has entered into a Sub-Administration with Investors
Capital Services, Inc., to which the Advisor delegates certain of its
administrative responsibilities. For these services, the Advisor pays out of its
own assets the fee to be paid to the Sub-Administrator, computed at the average
rate of 0.075% per annum of the first $650 million of the Trust's average weekly
net assets and 0.005% of any amounts above $650 million. For the twelve month
period ended December 31, 1998, the Administrator earned $268,592 in
Administration fees. In addition, the Administrator has entered into
Administration Agreements with the other investment companies listed below,
generally under the same fee structure as noted above. The only exception is the
fee structure for services rendered to The Hyperion Total Return Fund, Inc.,
which stipulates a fee paid monthly at an annual rate of 0.20% of its average
weekly assets.

Investment Companies Managed by Hyperion
Capital Management, Inc.

In addition to acting as advisor to the Trust, Hyperion Capital
Management, Inc. acts as investment advisor to the following other investment
companies at the indicated annual compensation.

Investment Advisory Fee Approximate Net Assets at
December 31, 1998
(in Millions)
The Hyperion Total Return Fund, Inc.* 0.65% of the Fund's average weekly
net assets $235,886
0.50% of the Trust's average weekly
Hyperion 1999 Term Trust, Inc. net assets $450,442
Hyperion 2002 Term Trust, Inc. 0.50% of the Trust's average weekly
net assets $278,061
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*The Advisor and The Hyperion Total Return Fund, Inc. (the "Fund") have entered
into a sub-advisory agreement with Pacholder Associates, Inc., an Ohio
corporation organized in 1983, to serve as an investment sub-advisor with
respect to a portion of this Fund's assets.

Brokerage Commissions

The Trust paid an aggregate of $3,034 in futures commissions during the
last fiscal year, all of which were paid to entities that are not affiliated
with the Trust or the Advisor.

The Advisor has discretion to select brokers and dealers to execute
portfolio transactions initiated by the Advisor and to select the markets in
which such transactions are to be executed. The Advisory Agreement provides, in
substance, that in executing portfolio transactions and selecting brokers or
dealers, the primary responsibility of the Advisor is to seek the best
combination of net price and execution for the Trust. It is expected that
securities will ordinarily be purchased in primary markets, and that in
assessing the best net price and execution available to the Trust, the Advisor
will consider all factors they deem relevant, including the price, dealer
spread, the size, type and difficulty of the transaction involved, the firm's
general execution and operation facilities and the firm's risk in positioning
the securities involved. Transactions in foreign securities markets may involve
the payment of fixed brokerage commissions, which are generally higher than
those in the United States.

In selecting brokers or dealers to execute particular transactions and
in evaluating the best net price and execution available, the Advisor is
authorized to consider "brokerage and research services" (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934). The Advisor is
also authorized to cause the Trust to pay to a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
transaction which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction. The Advisor must
determine in good faith, however, that such commission was reasonable in
relation to the value of the brokerage and research services provided, viewed in
terms of that particular transaction or in terms of all the accounts over which
the Advisor exercises investment discretion. Research services furnished by
brokers through whom the Trust effects securities transactions may be used by
the Advisor in servicing all of the accounts for which investment discretion is
exercised by the Advisor, and not all such services may be used by the Advisor
in connection with the Trust.

Compliance With Section 16 Reporting
Requirements

Section 16(a) of the Securities Exchange Act of 1934 requires the
Trust's officers and directors and persons who own more than ten percent of a
registered class of the Trust's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. Officers, directors and greater than ten-percent
shareholders are required by SEC regulations to furnish the Trust with copies of
all Section 16(a) forms they file.

Based solely on its review of the copies of such forms received by the
Trust and written representations from certain reporting persons that all
applicable filing requirements for such persons had been complied with, the
Trust believes that, during the fiscal year ended December 31, 1998, all filing
requirements applicable to the Trust's officers, directors, and greater than
ten-percent beneficial owners were complied with.

OTHER BUSINESS

The Board of Directors of the Trust does not know of any other matter
which may come before the meeting. If any other matter properly comes before the
meeting, it is the intention of the persons named in the proxy to vote the
proxies in accordance with their judgment on that matter.

PROPOSALS TO BE SUBMITTED BY STOCKHOLDERS

All proposals by stockholders of the Trust that are intended to be
presented at the Trust's next Annual Meeting of Stockholders to be held in 2000
must be received by the Trust for inclusion in the Trust's proxy statement and
proxy relating to that meeting no later than September 27, 1999.

EXPENSES OF PROXY SOLICITATION

The cost of preparing, assembling and mailing material in connection
with this solicitation of proxies will be borne by the Trust. In addition to the
use of the mails, proxies may be solicited personally by regular employees of
the Trust, Hyperion Capital Management, Inc., or Corporate Investor
Communications Inc., paid solicitors for the Trust, or by telephone or
telegraph. The anticipated cost of solicitation by the paid solicitors will be
nominal. The Trust's agreement with Corporate Investor Communications, Inc.
provides that such paid solicitors will perform a broker search and deliver
proxies in return for the payment of their fee plus the expenses associated with
this proxy solicitation. Brokerage houses, banks and other fiduciaries will be
requested to forward proxy solicitation material to their principals to obtain
authorization for the execution of proxies, and they will be reimbursed by the
Trust for out-of-pocket expenses incurred in this connection.

February 26, 1999

HYPERION 2005 INVESTMENT GRADE OPPORTUNITY
TERM TRUST, INC.
PROXY SOLICITED ON BEHALF OF THE DIRECTORS

The undersigned hereby appoints Lewis S. Ranieri and Clifford E. Lai,
and each of them, attorneys and proxies for the undersigned, with full power of
substitution and revocation to represent the undersigned and to vote on behalf
of the undersigned all shares of Hyperion 2005 Investment Grade Opportunity Term
Trust, Inc. (the "Trust") which the undersigned is entitled to vote at the
Annual Meeting of Stockholders of the Trust to be held at The Millenium Hilton,
55 Church Street (next to the World Trade Center), New York, New York 10007, on
Tuesday, April 20, 1999 at 9:00 a.m., and at any adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Meeting and
accompanying Proxy Statement and hereby instructs said attorneys and proxies to
vote said shares as indicated hereon. In their discretion, the proxies are
authorized to vote upon such other business as may properly come before the
Meeting. A majority of the proxies present and acting at the Meeting in person
or by substitute (or, if only one shall be so present, then that one) shall have
and may exercise all of the power of authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.

NOTE: Please sign exactly as your name appears on the Proxy. If joint
owners, EITHER may sign this Proxy. When signing as attorney, executor,
administrator, trustee, guardian or corporate officer, please give full title.

Date , 1999

Signature(s), (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE

I PLAN DO NOT PLAN TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS ON April 20,1999

Please indicate your vote by an "X" in the appropriate box below. This
Proxy, if properly executed, will be voted in the manner directed by the
stockholder. If no direction is made, this Proxy will be voted FOR election of
the nominees as Directors in Proposal 1 and FOR Proposal 2. Please refer to the
Proxy Statement for a discussion of the Proposals.

1. ELECTION OF DIRECTORS: FOR all nominees listed (except WITHHOLD authority to vote for all
as marked to the contrary below) nominees

Class II:
Robert F. Birch
Andrew M. Carter
Leo M. Walsh, Jr.

</TABLE>

(Instruction: To withhold authority to vote for any individual nominee(s),
write the name(s) of the nominee(s) on the line below.)

2. Ratification or rejection of the
selection of independent accountants
(a vote "FOR" is a vote for ratification) FOR AGAINST ABSTAIN

PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.