Van Kampen Market Commentary: Auction Preferred Discussion February 15, 2008

Van Kampen is providing this commentary for our closed-end shareholders and prospective shareholders in order to address recent events in the preferred share auction rate market. Over the past several days, the preferred share market has experienced a number of failed auctions across the industry and this has raised a number of questions and concerns on the part of our shareholders.

What is a Failed Auction?
In an auction preferred share (“APS”) auction, buyers and sellers of APS exchange their shares based on the lowest bid or dividend rate that is acceptable to a sufficient number of potential buyers in order to match the number of sellers. When the auction clears, that rate becomes the interest rate for the APS for the dividend period following the auction – be it 7 days, 28 days or some other period. When the bid rate needed to clear the auction would be higher than the Fund’s pre-determined “maximum rate,” the auction is said to fail, and the rate resets at the maximum rate until the next scheduled auction for that security. In those circumstances, the auction does not clear and existing holders of APS who wanted to sell their shares generally are not able to sell in that particular auction and instead must hold their shares until the next auction. Van Kampen closed-end funds have experienced a number of such failed auctions over the past several days.

What are the Consequences of a Failed Auction?
In a failed auction, existing holders of APS who may have wanted to sell their shares generally are not able to do so and instead have to hold them until they can sell them in the next auction that clears. The closed-end fund pays a higher rate of interest to the existing holders of the APS. This rate of interest, sometimes referred to as the “maximum rate,” is set at the maximum rate of interest required to be paid on the APS at a given time calculated pursuant to a predetermined formula set forth in the Fund’s original prospectus and documents that govern the operation of the APS. Currently, for the Van Kampen funds that have experienced failed auctions, this “maximum rate” has only varied slightly from the auction market determined rate in recent successful auctions.

Is a Failed Auction a Default by the Fund?
A failed auction is not a default or a credit event. Holders of APS continued to be paid on their investment. The fund continues to pay the interest rate on the APS at the “maximum rate.” All of the Van Kampen funds are required to maintain certain specified asset coverage with respect to the APS (at least 200%) and all of the funds remain in compliance with such asset coverage requirements. Additionally, the Van Kampen funds continue to maintain the AAA rating on their respective APS.

Why Have the Auctions Failed Now?
In normal market and credit environments, a number of broker-dealers participating in the auctions have assisted in creating an orderly market by committing their own capital, that is, standing in to purchase APS at the bid rate below the maximum rate if there are insufficient buyers to clear the auction. Because of the recent turmoil in the credit markets, many of these same broker-dealers are less willing to commit their own capital to purchase the APS and take them onto their balance sheets.

What Does This Mean For the Common Shareholders?
When an auction fails, generally a higher rate of interest becomes the effective rate for the dividend period following the auction. This means the fund’s cost of leverage (borrowing costs) are increased and these costs are borne by the common shareholders. As a result, the income available to the common shareholders declines and over time this may affect the dividends payable to the common shareholders. Under current market conditions, Van Kampen continues to believe that earnings generated by each fund’s assets continue to exceed the costs of the APS leverage and that leveraging the funds with APS continues to be appropriate and beneficial to the common shareholders.

What Options Are Available to the Preferred Holders After a Failed Auction?
Holders of APS can possibly sell their securities in the secondary market outside of the auction to another buyer or broker-dealer or continue to hold the APS through subsequent auctions until an auction clears. Van Kampen is continuing to monitor the situation in the auction markets on a daily basis and is engaged with other market participants in trying to find ways to restore liquidity to the APS market.