Schedule 14A Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the
Securities and Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Preliminary Additional Materials
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6 (e) (2) )
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.149-11 ( c) or Section 240.14

Morgan Stanley High Income Advantage Trust III
Morgan Stanley Municipal Income Opportunities Trust II
Morgan Stanley Insured Municipal Securities
Morgan Stanley Insured California Municipal Securities
----------------------------------------
(Name of Registrant as Specified in its Charter)

LouAnne D. McInnis
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (check the appropriate box):

[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(j) (4) and 0-11.

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

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:

Set forth the amount on which the filing fee is calculated and state how it was determined.

4) Proposed maximum aggregate value of transaction:

5) Fee previously paid:

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

1) Amount Previously paid:

2) Form, Schedule or Registration Statement No.:

3) Filing Party:

4) Date Filed:

14A joint 6.02 number 1

MORGAN STANLEY HIGH INCOME ADVANTAGE TRUST III
MORGAN STANLEY MUNICIPAL INCOME OPPORTUNITIES TRUST II
MORGAN STANLEY INSURED MUNICIPAL SECURITIES
MORGAN STANLEY INSURED CALIFORNIA MUNICIPAL SECURITIES

NOTICE OF ANNUAL MEETINGS OF SHAREHOLDERS

TO BE HELD JUNE 19, 2002

Annual Meetings of Shareholders ("Meeting(s)") of MORGAN STANLEY HIGH
INCOME ADVANTAGE TRUST III, MORGAN STANLEY MUNICIPAL INCOME OPPORTUNITIES TRUST
II, MORGAN STANLEY INSURED MUNICIPAL SECURITIES and MORGAN STANLEY INSURED
CALIFORNIA MUNICIPAL SECURITIES (individually, a "Fund" and, collectively, the
"Funds"), unincorporated business trusts organized under the laws of the
Commonwealth of Massachusetts, will be held jointly in the Conference Room, 2nd
Floor, Harborside Financial Center, Plaza Two, Jersey City, New Jersey 07311,
on June 19, 2002 at 9:00 a.m., New York City time, for the following purposes:

1. For MORGAN STANLEY HIGH INCOME ADVANTAGE TRUST III, MORGAN STANLEY
MUNICIPAL INCOME OPPORTUNITIES TRUST II, MORGAN STANLEY INSURED MUNICIPAL
SECURITIES and MORGAN STANLEY INSURED CALIFORNIA MUNICIPAL SECURITIES, to
elect three (3) Trustees to serve until the year 2005 Annual Meeting of
each Fund; or in each case, until their successors shall have been elected
and qualified; and

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

Shareholders of record of each Fund as of the close of business on April
25, 2002 are entitled to notice of and to vote at the Meeting. If you cannot be
present in person, your management would greatly appreciate your filling in,
signing and returning the enclosed proxy promptly in the envelope provided for
that purpose. Alternatively, if you are eligible to vote telephonically by
touchtone telephone or electronically on the Internet (as discussed in the
enclosed Proxy Statement) you may do so in lieu of attending the Meeting in
person.

In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the Meeting of
any Fund, the persons named as proxies may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of the holders of a majority of the
applicable Fund's shares present in person or by proxy at the Meeting. The
persons named as proxies will vote in favor of such adjournment those proxies
which have been received by the date of the Meeting.

BARRY FINK
Secretary

May 8, 2002
New York, New York

- --------------------------------------------------------------------------------
IMPORTANT

YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP LETTERS TO
ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU ARE UNABLE TO
BE PRESENT IN PERSON, PLEASE FILL IN, SIGN AND RETURN THE ENCLOSED PROXY IN
ORDER THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE MEETING. THE
ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. CERTAIN
SHAREHOLDERS WILL BE ABLE TO VOTE TELEPHONICALLY BY TOUCHTONE TELEPHONE OR
ELECTRONICALLY ON THE INTERNET BY FOLLOWING INSTRUCTIONS CONTAINED ON THEIR
PROXY CARDS OR ON THE ENCLOSED VOTING INFORMATION CARD.
- --------------------------------------------------------------------------------

C/O MORGAN STANLEY TRUST
HARBORSIDE FINANCIAL CENTER, PLAZA TWO
JERSEY CITY, NEW JERSEY 07311

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

JOINT PROXY STATEMENT

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

ANNUAL MEETINGS OF SHAREHOLDERS

JUNE 19, 2002

This statement is furnished in connection with the solicitation of proxies
by the Boards of Trustees (the "Board(s)") of MORGAN STANLEY HIGH INCOME
ADVANTAGE TRUST III ("YLH"), MORGAN STANLEY MUNICIPAL INCOME OPPORTUNITIES
TRUST II ("OIB"), MORGAN STANLEY INSURED MUNICIPAL SECURITIES ("IMS") and
MORGAN STANLEY INSURED CALIFORNIA MUNICIPAL SECURITIES ("ICS") (individually, a
"Fund" and, collectively, the "Funds") for use at the Annual Meetings of
Shareholders of the Funds to be held jointly on June 19, 2002 (the
"Meeting(s)"), and at any adjournments thereof. The first mailing of this Proxy
Statement is expected to be made on or about May 9, 2002.

If the enclosed form of proxy is properly executed and returned in time to
be voted at the Meetings, the proxies named therein will vote the shares
("Shares") represented by the proxy in accordance with the instructions marked
thereon. Unmarked proxies will be voted for each of the nominees for election
as Trustee to be elected by shareholders with respect to each Fund set forth in
the attached Notice of Annual Meetings of Shareholders. A proxy may be revoked
at any time prior to its exercise by any of the following: written notice of
revocation to the Secretary of the Funds, execution and delivery of a later
dated proxy to the Secretary of the Funds (whether by mail or, as discussed
below, by touchtone telephone or the Internet) (if returned and received in
time to be voted), or attendance and voting at the Meetings. Attendance at the
Meetings will not in and of itself revoke a proxy.

Shareholders of record ("Shareholders") of each Fund as of the close of
business on April 25, 2002, the record date for the determination of
Shareholders entitled to notice of and to vote at the Meetings (the "Record
Date"), are entitled to one vote for each share held and a fractional vote for
a fractional share. On the Record Date, there were 12,826,206 shares of
beneficial interest of YLH, 18,225,147 shares of beneficial interest of OIB,
7,858,992 shares of beneficial interest of IMS and 3,943,325 shares of
beneficial interest of ICS outstanding, all with $0.01 par value. No person was
known to own as much as 5% of the outstanding shares of any of the Funds on
that date. The percentage ownership of shares of each Fund changes from time to
time depending on purchases and sales by Shareholders and the total number of
shares outstanding.

The cost of soliciting proxies for the Meeting of each Fund, consisting
principally of printing and mailing expenses, will be borne by each respective
Fund. The solicitation of proxies will be by mail, which may be supplemented by
solicitation by mail, telephone or otherwise through Trustees, officers of the
Funds, or officers and regular employees of Morgan Stanley Investment Advisors
Inc. ("Morgan Stanley Investment Advisors"

or the "Investment Manager"), Morgan Stanley Trust ("Morgan Stanley Trust" or
the "Transfer Agent"), Morgan Stanley Services Company Inc. ("Morgan Stanley
Services") and/or Morgan Stanley DW Inc. ("Morgan Stanley DW"), without special
compensation therefor. In addition, each Fund may employ Alamo Direct Mail
Services Inc. ("Alamo") as proxy solicitor, the cost of which is not expected
to exceed $3,000 for each Fund and will be borne by each respective Fund. In
the event it appears that the required number of votes to achieve quorum is not
received, each Fund may utilize D.F. King & Co., Inc. ("D.F. King") to obtain
the necessary votes to achieve quorum at a cost of approximately $3,000 to each
Fund plus expenses as outlined below.

Shareholders will be able to vote their shares by touchtone telephone or
by Internet by following the instructions on the proxy card or on the Voting
Information Card accompanying this Proxy Statement. To vote by Internet or
telephone, Shareholders can access the website or call the toll-free number
listed on the proxy card or noted in the enclosed voting instructions.
Shareholders will need the "control number" that appears on the proxy card.

In certain instances, D.F. King, Alamo and Morgan Stanley Trust may call
Shareholders to ask if they would be willing to have their votes recorded by
telephone. The telephone voting procedure is designed to authenticate
Shareholders' identities, to allow Shareholders to authorize the voting of
their shares in accordance with their instructions and to confirm that their
instructions have been recorded properly. No recommendation will be made as to
how a Shareholder should vote on any Proposal other than to refer to the
recommendations of the Board. The Funds have been advised by counsel that these
procedures are consistent with the requirements of applicable law. Shareholders
voting by telephone in this manner will be asked for their social security
number or other identifying information and will be given an opportunity to
authorize proxies to vote their shares in accordance with their instructions.
To ensure that the Shareholders' instructions have been recorded correctly they
will receive a confirmation of their instructions in the mail. A special
toll-free number set forth in the confirmation will be available in case the
information contained in the confirmation is incorrect. Although a
Shareholder's vote may be taken by telephone, each Shareholder will receive a
copy of this Proxy Statement and may vote by mail using the enclosed proxy card
or by touchtone telephone or the Internet as set forth above. The last proxy
vote received in time to be voted, whether by proxy card, touchtone telephone
or Internet, will be the last vote that is counted and will revoke all previous
votes by the Shareholder. With respect to the solicitation of a telephonic vote
by D.F. King, approximate additional expenses may include $6.00 per telephone
vote transacted, $3.25 per outbound or inbound telephone contact and costs
relating to obtaining Shareholders' telephone numbers and providing additional
materials upon shareholder request, which would be borne by each Fund. With
respect to telephone calls by Alamo, expenses would be approximately $1.00 per
outbound telephone contact.

(1) ELECTION OF TRUSTEES FOR EACH FUND

The number of Trustees of each Fund has been fixed by the Trustees,
pursuant to each Fund's Declaration of Trust, at nine. There are presently nine
Trustees for each Fund. At the Meetings, the following nominees are to be
elected to each Fund's Board of Trustees to serve for the following terms, in
accordance with each Fund's Declaration of Trust, as set forth below:

YLH, OIB -- IMS, ICS --
Until the year 2005 Annual Meeting Until the year 2005 Annual Meeting
- ------------------------------------ -----------------------------------
Edwin J. Garn Michael Bozic
Michael E. Nugent Charles A. Fiumefreddo
Philip J. Purcell James F. Higgins

Six of the current nine Trustees (Michael Bozic, Edwin J. Garn, Wayne E.
Hedien, Manuel H. Johnson, Michael E. Nugent and John L. Schroeder) are
"Independent Trustees," that is, Trustees who are not "interested persons" of
the Funds, as that term is defined in the Investment Company Act of 1940, as
amended (the "1940 Act"). The other three current Trustees, Charles A.
Fiumefreddo, James F. Higgins and Philip J. Purcell, are "interested persons"
(as that term is defined in the 1940 Act) of the Funds and Morgan Stanley
Investment Advisors and thus, are not Independent Trustees (the "Interested
Trustees"). The nominees for election as Trustee have been proposed by the
Trustees now serving, or, in the case of the nominees for positions as
Independent Trustees, by the Independent Trustees now serving. All of the
members of the Boards have been elected previously by the Shareholders of the
Funds.

The nominees of the Board for election as Trustee of each Fund are listed
below. It is the intention of the persons named in the enclosed form of proxy,
unless instructed by proxy to withhold authority to vote for the nominees, to
vote all validly executed proxies for the election of these nominees: for YLH
and OIB--Edwin J. Garn, Michael E. Nugent and Philip J. Purcell; for IMS and
ICS-- Michael Bozic, Charles A. Fiumefreddo and James F. Higgins. Should any of
the nominees become unable or unwilling to accept nomination or election, the
persons named in the proxy will exercise their voting power in favor of such
person as the Boards may recommend or, in the case of an Independent Trustee
nominee, as the Independent Trustees of each Fund may recommend. All of the
nominees have consented to being named in this Proxy Statement and to serve if
elected. The Funds know of no reason why any of the said nominees would be
unable or unwilling to accept nomination or election. With respect to each
Fund, the election of each Trustee requires the approval of a majority of the
shares of the Fund represented and entitled to vote at the Meeting.

Pursuant to the provisions of the Declaration of Trust of each Fund, in
certain cases as amended, the Trustees are divided into three separate classes,
each class having a term of three years. The term of office of one of each of
the three classes will expire each year.

The Board of each Fund previously determined that any nominee for election
as Trustee for each Fund will stand for election as Trustee and serve as
Trustee in one of the three classes of Trustees as follows: Class I--Messrs.
Bozic, Fiumefreddo and Higgins; Class II--Messrs. Hedien, Johnson and
Schroeder; and Class III--Messrs. Garn, Nugent and Purcell. Any nominee will,
if elected, serve a term of up to approximately three years running for the
period assigned to that class and terminating at the date of the Annual Meeting
of Shareholders so designated by the Boards, or any adjournments thereof. In
accordance with the above, the Trustees in Class III for YLH and OIB and the
Trustees in Class I for IMS and ICS are standing for election and will, if
elected, serve until the year 2005 Annual Meetings for each Fund as set forth
above, or until their successors shall have been elected and qualified. As a
consequence of this method of election, the replacement of a majority of each
of the Boards could be delayed for up to two years.

The table below sets forth the following information regarding the
nominees for election as Trustee, and each of the other Trustees, (both the
Independent Trustees and the Interested Trustees), as well as the executive
officers of the Funds: business occupations during the last five years, age,
term of office and length of time served as of April 25, 2002, positions with
the Funds, number of portfolios in the Fund Complex (defined below) overseen by
each Trustee or nominee Trustee, and other directorships or trusteeships held by
each Trustee in companies which file periodic reports with the Securities and
Exchange Commission, including the 95 investment companies, including the Funds,
for which Morgan Stanley Investment Advisors serves as investment manager or
investment advisor (referred to herein as the "Morgan Stanley Funds") and the 2
investment companies, TCW/DW Term Trust 2002 and TCW/DW Term Trust 2003, for
which Morgan Stanley Investment Advisors' wholly-owned subsidiary, Morgan
Stanley Services, serves as manager and TCW Investment Management Company serves
as investment adviser (referred to herein as the "TCW/DW Term Trusts").

INDEPENDENT TRUSTEES

POSITION(S) LENGTH OF
NAME, AGE AND ADDRESS OF HELD WITH TIME
INDEPENDENT TRUSTEE FUNDS SERVED*
- ---------------------------- ------------- ---------------

Michael Bozic (61) Trustee Trustee since
c/o Mayer, Brown, Rowe & April 1994
Maw
Counsel to the Independent
Trustees
1675 Broadway
New York, NY

Edwin J. Garn (69) Trustee Trustee since
c/o Summit Ventures LLC January 1993
1 Utah Center
201 S. Main Street
Salt Lake City, UT

Wayne E. Hedien (68) Trustee Trustee since
c/o Mayer, Brown, Rowe & September
Maw 1997
Counsel to the Independent
Trustees
1675 Broadway
New York, NY

Dr. Manuel H. Johnson (53) Trustee Trustee since
c/o Johnson Smick July 1991
International, Inc.
1133 Connecticut Avenue,
N.W.
Washington, D.C.

NUMBER OF
PORTFOLIOS IN
FUND
COMPLEX
NAME, AGE AND ADDRESS OF PRINCIPAL OCCUPATION(S) DURING OVERSEEN OTHER DIRECTORSHIPS HELD
INDEPENDENT TRUSTEE PAST 5 YEARS BY TRUSTEE BY TRUSTEE
- ---------------------------- --------------------------------------- -------------- ---------------------------

Michael Bozic (61) Retired; Director or Trustee of the 129 Director of Weirton Steel
c/o Mayer, Brown, Rowe & Morgan Stanley Funds and the Corporation.
Maw TCW/DW Term Trusts; formerly Vice
Counsel to the Independent Chairman of Kmart Corporation
Trustees (December 1998-October 2000),
1675 Broadway Chairman and Chief Executive Officer
New York, NY of Levitz Furniture Corporation
(November 1995-November 1998) and
President and Chief Executive Officer
of Hills Department Stores (May
1991-July 1995); formerly variously
Chairman, Chief Executive Officer,
President and Chief Operating Officer
(1987-1991) of the Sears Merchandise
Group of Sears, Roebuck & Co.

Edwin J. Garn (69) Director or Trustee of the Morgan 129 Director of Franklin
c/o Summit Ventures LLC Stanley Funds and the TCW/DW Covey (time management
1 Utah Center Term Trusts; formerly United States systems), BMW Bank of
201 S. Main Street Senator (R-Utah)(1974-1992) and North America, Inc.
Salt Lake City, UT Chairman, Senate Banking Committee (industrial loan
(1980-1986); formerly Mayor of Salt corporation), United
Lake City, Utah (1971-1974); formerly Space Alliance (joint
Astronaut, Space Shuttle Discovery venture between Lockheed
(April 12-19, 1985); Vice Chairman, Martin and the Boeing
Huntsman Corporation (chemical Company) and Nuskin
company); member of the Utah Asia Pacific (multilevel
Regional Advisory Board of Pacific marketing); member of the
Corp. board of various civic and
charitable organizations.

Wayne E. Hedien (68) Retired; Director or Trustee of the 129 Director of The PMI
c/o Mayer, Brown, Rowe & Morgan Stanley Funds and the Group Inc. (private
Maw TCW/DW Term Trusts; formerly mortgage insurance);
Counsel to the Independent associated with the Allstate Trustee and Vice
Trustees Companies (1966-1994), most recently Chairman of The Field
1675 Broadway as Chairman of The Allstate Museum of Natural
New York, NY Corporation (March 1993-December History; director of
1994) and Chairman and Chief various other business and
Executive Officer of its wholly-owned charitable organizations.
subsidiary, Allstate Insurance
Company (July 1989-December 1994).

Dr. Manuel H. Johnson (53) Chairman of the Audit Committee 129 Director of NVR, Inc.
c/o Johnson Smick and Director or Trustee of the (home construction);
International, Inc. Morgan Stanley Funds and the Chairman and Trustee of
1133 Connecticut Avenue, TCW/DW Term Trusts; Senior the Financial Accounting
N.W. Partner, Johnson Smick International, Foundation (oversight
Washington, D.C. Inc., a consulting firm; Co-Chairman organization of the
and a founder of the Group of Seven Financial Accounting
Council (G7C), an international Standards Board).
economic commission; formerly Vice
Chairman of the Board of Governors
of the Federal Reserve System and
Assistant Secretary of the U.S.
Treasury.

- ----------
* This is the date the Trustee began serving the Morgan Stanley Funds.

POSITION(S) LENGTH OF
NAME, AGE AND ADDRESS OF HELD WITH TIME
INDEPENDENT TRUSTEE FUNDS SERVED*
- ---------------------------- ------------- ---------------

Michael E. Nugent (65) Trustee Trustee since
c/o Triumph Capital, L.P. July 1991
237 Park Avenue
New York, NY

John L. Schroeder (71) Trustee Trustee since
c/o Mayer, Brown, Rowe & April 1994
Maw
Counsel to the Independent
Trustees
1675 Broadway
New York, NY

Michael E. Nugent (65) Chairman of the Insurance Committee 207 Director of various
c/o Triumph Capital, L.P. and Director or Trustee of the business organizations.
237 Park Avenue Morgan Stanley Funds and the
New York, NY TCW/DW Term Trusts;
director/trustee of various investment
companies managed by Morgan
Stanley Investment Management Inc.
and Morgan Stanley Investments LP
(since July 2001); General Partner,
Triumph Capital, L.P., a private
investment partnership; formerly Vice
President, Bankers Trust Company
and BT Capital Corporation
(1984-1988).

John L. Schroeder (71) Retired; Chairman of the Derivatives 129 Director of Citizens
c/o Mayer, Brown, Rowe & Committee and Director or Trustee of Communications Company
Maw the Morgan Stanley Funds and the (telecommunications
Counsel to the Independent TCW/DW Term Trusts; formerly company).
Trustees Executive Vice President and Chief
1675 Broadway Investment Officer of the Home
New York, NY Insurance Company (August
1991-September 1995).

INTERESTED TRUSTEES

POSITION(S) LENGTH OF
NAME, AGE AND ADDRESS OF HELD WITH TIME
MANAGEMENT TRUSTEE FUNDS SERVED*
- ------------------------------ ------------- ---------------

Charles A. Fiumefreddo (68) Chairman, Trustee since
c/o Morgan Stanley Trust Director or July 1991
Harborside Financial Center, Trustee
Plaza Two, and Chief
Jersey City, NJ Executive
Officer

James F. Higgins (54) Trustee Trustee since
c/o Morgan Stanley Trust June 2000
Harborside Financial Center,
Plaza Two,
Jersey City, NJ

NUMBER OF
PORTFOLIOS IN
FUND
COMPLEX
NAME, AGE AND ADDRESS OF PRINCIPAL OCCUPATION(S) DURING OVERSEEN OTHER DIRECTORSHIPS HELD
MANAGEMENT TRUSTEE PAST 5 YEARS BY TRUSTEE BY TRUSTEE
- ------------------------------ ---------------------------------------- -------------- -------------------------

Charles A. Fiumefreddo (68) Chairman, Director or Trustee and 129 None
c/o Morgan Stanley Trust Chief Executive Officer of the
Harborside Financial Center, Morgan Stanley Funds and the
Plaza Two, TCW/DW Term Trusts; formerly
Jersey City, NJ Chairman, Chief Executive Officer
and Director of the Investment
Manager, the Distributor and Morgan
Stanley Services, Executive Vice
President and Director of Morgan
Stanley DW, Chairman and Director
of the Transfer Agent and Director
and/or officer of various Morgan
Stanley subsidiaries (until June 1998).

James F. Higgins (54) Director or Trustee of the Morgan 129 None
c/o Morgan Stanley Trust Stanley Funds and the TCW/DW
Harborside Financial Center, Term Trusts (since June 2000); Senior
Plaza Two, Advisor of Morgan Stanley (since
Jersey City, NJ August 2000); Director of the
Distributor and Dean Witter Realty
Inc.; previously President and Chief
Operating Officer of the Private
Client Group of Morgan Stanley (May
1999-August 2000), President and
Chief Operating Officer of Individual
Securities of Morgan Stanley
(February 1997-May 1999).

- ----------
* This is the date the Trustee began serving the Morgan Stanley Funds.

POSITION(S) LENGTH OF
NAME, AGE AND ADDRESS OF HELD WITH TIME
MANAGEMENT TRUSTEE FUNDS SERVED*
- -------------------------- ------------- ---------------

Philip J. Purcell (58) Trustee Trustee since
1585 Broadway April 1994
New York, NY

NUMBER OF
PORTFOLIOS IN
FUND
COMPLEX
NAME, AGE AND ADDRESS OF PRINCIPAL OCCUPATION(S) DURING OVERSEEN OTHER DIRECTORSHIPS HELD
MANAGEMENT TRUSTEE PAST 5 YEARS BY TRUSTEE BY TRUSTEE
- -------------------------- -------------------------------------- -------------- -------------------------

Philip J. Purcell (58) Director or Trustee of the Morgan 129 Director of American
1585 Broadway Stanley Funds and the TCW/DW Airlines, Inc. and its
New York, NY Term Trusts; Chairman of the Board parent company, AMR
of Directors and Chief Executive Corporation.
Officer of Morgan Stanley and
Morgan Stanley DW; Director of the
Distributor; Chairman of the Board of
Directors and Chief Executive Officer
of Novus Credit Services Inc.;
Director and/or officer of various
Morgan Stanley subsidiaries.

OFFICERS OF THE FUNDS

POSITION(S)
NAME, AGE AND ADDRESS OF HELD WITH LENGTH OF
EXECUTIVE OFFICER FUNDS TIME SERVED
- ----------------------------- ------------------- ------------------------

Mitchell M. Merin (48) President President since May
1221 Avenue of the Americas 1999
New York, NY

Barry Fink (47) Vice President, Vice President,
1221 Avenue of the Americas Secretary and Secretary and General
New York, NY General Counsel Counsel since
February 1997

James F. Willison (58) Vice President of Since Inception of the
1221 Avenue of the Americas OIB, IMS and ICS Fund
New York, NY

Joseph R. Arcieri (53) Vice President of Since January 2002
1221 Avenue of the Americas IMS and ICS
New York, NY

Robert W. Wimmel (37) Vice President of Since January 2002
1 Parkview Plaza IMS
Oakbrook Terrace, IL

John R. Reynoldson (49) Vice President of Since January 2002
1 Parkview Plaza ICS
Oakbrook Terrace, IL

Stephen F. Esser (37) Vice President of Since January 2001
One Tower Bridge YLH
West Conshohocken, PA

Gordon W. Loery (41) Vice President of Since January 2001
One Tower Bridge YLH
West Conshohocken, PA

NAME, AGE AND ADDRESS OF
EXECUTIVE OFFICER PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- ----------------------------- --------------------------------------------------------------

Mitchell M. Merin (48) President and Chief Operating Officer of Morgan Stanley
1221 Avenue of the Americas Investment Management (since December 1998); President,
New York, NY Director (since April 1997) and Chief Executive Officer
(since June 1998) of the Investment Manager and Morgan
Stanley Services; Chairman, Chief Executive Officer and
Director of the Distributor (since June 1998); Chairman and
Chief Executive Officer (since June 1998) and Director (since
January 1998) of the Transfer Agent; Director of various
Morgan Stanley subsidiaries; President of the Morgan Stanley
Funds and TCW/DW Term Trusts (since May 1999); Trustee
of various Van Kampen investment companies (since
December 1999); previously Chief Strategic Officer of the
Investment Manager and Morgan Stanley Services and
Executive Vice President of the Distributor (April 1997-June
1998), Vice President of the Morgan Stanley Funds (May
1997-April 1999), and Executive Vice President of Morgan
Stanley.

Barry Fink (47) General Counsel (since May 2000) and Managing Director
1221 Avenue of the Americas (since December 2000) of Morgan Stanley Investment
New York, NY Management; Managing Director (since December 2000), and
Secretary and General Counsel (since February 1997) and
Director (since July 1998) of the Investment Manager and
Morgan Stanley Services; Assistant Secretary of Morgan
Stanley DW; Vice President, Secretary and General Counsel
of the Morgan Stanley Funds and TCW/DW Term Trusts
(since February 1997); Vice President and Secretary of the
Distributor; previously, Senior Vice President, Assistant
Secretary and Assistant General Counsel of the Investment
Manager and Morgan Stanley Services.

James F. Willison (58) Managing Director and Portfolio Manager of the Investment
1221 Avenue of the Americas Manager and/or its investment management affiliates for over
New York, NY 5 years.

Joseph R. Arcieri (53) Executive Director and Portfolio Manager of the Investment
1221 Avenue of the Americas Manager and/or its investment management affiliates for over
New York, NY 5 years.

Robert W. Wimmel (37) Vice President and Portfolio Manager of the Investment
1 Parkview Plaza Manager and/or its investment management affiliates for over
Oakbrook Terrace, IL 5 years.

John R. Reynoldson (49) Executive Director and Portfolio Manager of the Investment
1 Parkview Plaza Manager and/or its investment management affiliates for over
Oakbrook Terrace, IL 5 years.

Stephen F. Esser (37) Managing Director and Portfolio Manager of the Investment
One Tower Bridge Manager and its investment management affiliates for over 5
West Conshohocken, PA years.

Gordon W. Loery (41) Executive Director and Portfolio Manager of the Investment
One Tower Bridge Manager and its investment management affiliates for over 5
West Conshohocken, PA years.

- ----------
* This is the date the Trustee began serving the Morgan Stanley Funds.

POSITION(S)
NAME, AGE AND ADDRESS OF HELD WITH LENGTH OF
EXECUTIVE OFFICER FUNDS TIME SERVED
- ------------------------------ ------------------- -----------------------

Deanna L. Loughnane (35) Vice President of Since January 2001
One Tower Bridge YLH
West Conshohocken, PA

Julie Morrone (39) Vice President of Since July 1999
1221 Avenue of the Americas OIB
New York, NY

Wayne Godlin (41) Vice President of Since October 2001
1 Parkview Plaza OIB
Oakbrook Terrace, IL

Thomas F. Caloia (56) Treasurer Treasurer of the Fund
c/o Morgan Stanley Trust Complex since April,
Harborside Financial Center, 1989
Plaza Two,
Jersey City, NJ

NAME, AGE AND ADDRESS OF
EXECUTIVE OFFICER PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- ------------------------------ -------------------------------------------------------------

Deanna L. Loughnane (35) Executive Director and Portfolio Manager of the Investment
One Tower Bridge Manager and its investment management affiliates since 1997;
West Conshohocken, PA previously Vice President and Corporate Bond Analyst for
Putnam Investments (1993-1997).

Julie Morrone (39) Vice President and Portfolio Manager of the Investment
1221 Avenue of the Americas Manager for over 5 years.
New York, NY

Wayne Godlin (41) Executive Director and Portfolio Manager of the Investment
1 Parkview Plaza Manager and/or its investment management affiliates for over
Oakbrook Terrace, IL 5 years.

Thomas F. Caloia (56) First Vice President and Assistant Treasurer of the
c/o Morgan Stanley Trust Investment Manager, the Distributor and Morgan Stanley
Harborside Financial Center, Services; Treasurer of the Morgan Stanley Funds.
Plaza Two,
Jersey City, NJ

For each Trustee, the dollar range of equity securities beneficially owned
by the Trustee is shown below.

AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN
ALL REGISTERED INVESTMENT COMPANIES OVERSEEN
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUNDS BY TRUSTEE IN FAMILY OF INVESTMENT COMPANIES
NAME OF TRUSTEE (AS OF DECEMBER 31, 2001) (AS OF DECEMBER 31, 2001)
- ------------------------ ------------------------------------------------ -----------------------------------------------

Michael Bozic none over $100,000
Edwin J. Garn none over $100,000
Wayne E. Hedien none over $100,000
Dr. Manuel H. Johnson none over $100,000
Michael E. Nugent none over $100,000
John L. Schroeder none over $100,000
Charles A. Fiumefreddo none over $100,000
James F. Higgins none over $100,000
Philip J. Purcell none over $100,000

As to each Independent Trustee and his immediate family members, no person
owned beneficially or of record securities in an investment advisor or
principal underwriter of the Funds, or a person (other than a registered
investment company) directly or indirectly controlling, controlled by or under
common control with an investment advisor or principal underwriter of the
Funds.

Ronald E. Robison, Managing Director, Chief Administrative Officer and
Director of the Investment Manager and Morgan Stanley Services and Chief
Executive Officer and Director of the Transfer Agent, Joseph J. McAlinden,
Managing Director and Chief Investment Officer of the Investment Manager and
Director of the Transfer Agent are Vice Presidents of the Funds.

In addition, A. Thomas Smith III, Managing Director and General Counsel of
the Investment Manager and Morgan Stanley Services, is a Vice President and
Assistant Secretary of the Funds, and Lou Anne D. McInnis, Carsten Otto and
Ruth Rossi, Executive Directors and Assistant General Counsels of the
Investment Manager and Morgan Stanley Services, Marilyn K. Cranney, First Vice
President and Assistant General Counsel of the Investment Manager and Morgan
Stanley Services, and Natasha Kassian and George Silfen, Vice Presidents and
Assistant General Counsels of the Investment Manager and Morgan Stanley
Services, are Assistant Secretaries of the Funds.

THE BOARD OF TRUSTEES, THE INDEPENDENT TRUSTEES, AND THE COMMITTEES

The Board currently consists of nine (9) Trustees. These same individuals
also serve as directors or trustees for all of the Morgan Stanley Funds, and
are referred to in this section as Trustees. As of the date of this Proxy

Statement, there are a total of 97 Morgan Stanley Funds, comprised of 129
portfolios. As of March 31, 2002, the Morgan Stanley Funds had total net assets
of approximately $135 billion and more than six million shareholders.

Six Trustees (67% of the total number) have no affiliation or business
connection with Morgan Stanley Investment Advisors or any of its affiliated
persons and do not own stock or other securities issued by Morgan Stanley
Investment Advisors' parent company, Morgan Stanley. These are the
"disinterested" or "independent" Trustees.

Law and regulation establish both general guidelines and specific duties
for the Independent Trustees. The Morgan Stanley Funds seek as Independent
Trustees individuals of distinction and experience in business and finance,
government service or academia; these are people whose advice and counsel are
in demand by others and for whom there is often competition. To accept a
position on the Funds' Boards, such individuals may reject other attractive
assignments because the Funds make substantial demands on their time. All of
the Independent Trustees, serve as members of the Audit Committee. In addition,
three of the Trustees, including two Independent Trustees, serve as members of
the Derivatives Committee and the Insurance Committee. The Funds do not have
any nominating or compensation committees.

The Independent Trustees are charged with recommending to the full Board
approval of management, advisory and administration contracts, and distribution
and underwriting agreements; continually reviewing Fund performance; checking
on the pricing of portfolio securities, brokerage commissions, transfer agent
costs and performance, and trading among Funds in the same complex; and
approving fidelity bond and related insurance coverage and allocations, as well
as other matters that arise from time to time.

The Audit Committee is charged with recommending to the full Board the
engagement or discharge of the Funds' independent auditors; directing
investigations into matters within the scope of the independent auditors'
duties, including the power to retain outside specialists; reviewing with the
independent auditors the audit plan and results of the auditing engagement;
approving professional services provided by the independent auditors and other
accounting firms prior to the performance of such services; reviewing the
independence of the independent auditors; considering the range of audit and
non-audit fees; reviewing the adequacy of the Funds' system of internal
controls; and preparing and submitting Committee meeting minutes to the full
Board. All of the members of the Audit Committee are independent as defined in
the New York Stock Exchange corporate governance standards for audit
committees.

The Board of each Fund has formed a Derivatives Committee to approve
parameters for and monitor the activities of the Fund with respect to derivative
investments, if any, made by the Fund. The Derivatives Committee currently
consists of Messrs. Schroeder Fiumefreddo and Johnson. Finally, the Board of
each Fund has formed an Insurance Committee to review and monitor the insurance
coverage maintained by the Fund. The Insurance Committee currently consists of
Messrs. Nugent Fiumefreddo and Hedien.

The following chart sets forth the number of meetings of the Board, the
Audit Committee, the Independent Trustees, the Derivatives Committee and the
Insurance Committee of each Fund during its most recent fiscal year. No Trustee
attended fewer than 75% of the meetings of the Board, the Audit Committee, the
Independent Trustees, the Derivatives Committee or the Insurance Committee held
while he served in such positions.

NUMBER OF BOARD AND COMMITTEE MEETINGS HELD DURING LAST FISCAL YEAR

BOARD OF INDEPENDENT AUDIT DERIVATIVES
FISCAL TRUSTEES TRUSTEES COMMITTEE COMMITTEE INSURANCE
NAME OF FUND YEAR-END MEETINGS MEETINGS MEETINGS MEETINGS COMMITTEE
- -------------- ---------- ---------- ------------- ----------- ------------ ----------

YLH .......... 01/31/02 5 9 11 4 1
OIB .......... 02/28/02 4 9 12 3 2
IMS .......... 10/31/01 4 9 11 4 1
ICS .......... 10/31/01 4 9 11 4 1

AUDIT COMMITTEE REPORT

The Board of Trustees of each Fund has adopted a formal written charter
for the Audit Committee which sets forth the Audit Committee's
responsibilities. A copy of the Audit Committee charter is attached to this
Proxy Statement as Exhibit A.

The Audit Committee of each Fund has reviewed and discussed the financial
statements of each Fund with management as well as with Deloitte & Touche LLP,
the independent auditors for each Fund. In the course of its discussions, the
Audit Committee also discussed with Deloitte & Touche LLP any relevant matters
required to be discussed under the Statement on Auditing Standards No. 61.
Based on this review, the Audit Committee recommended to the Board of Trustees
of each Fund that each Fund's audited financial statements be included in each
Fund's Annual Report to Shareholders for the most recent fiscal year for filing
with the Securities and Exchange Commission. The Audit Committee has received
the written disclosures and the letter from Deloitte & Touche LLP required
under Independence Standards Board No. 1 and has discussed with the independent
auditors their independence.

The Audit Committee

Manuel H. Johnson
(Chairman)
Michael Bozic
Edwin J. Garn
Wayne E. Hedien
Michael E. Nugent
John L. Schroeder

ADVANTAGES OF HAVING SAME INDIVIDUALS AS INDEPENDENT TRUSTEES FOR ALL MORGAN
STANLEY FUNDS

The Independent Trustees and the Funds' management believe that having the
same Independent Trustees for each of the Morgan Stanley Funds avoids the
duplication of effort that would arise from having different groups of
individuals serving as Independent Trustees for each of the Funds or even of
sub-groups of Funds. They believe that having the same individuals serve as
Independent Trustees of all the Funds tends to increase their knowledge and
expertise regarding matters which affect the Fund Complex generally and
enhances their ability to negotiate on behalf of each Fund with the Fund's
service providers. This arrangement also precludes the possibility of separate
groups of Independent Trustees arriving at conflicting decisions regarding
operations and management of the Funds and avoids the cost and confusion that
would likely ensue. Finally, having the same Independent Trustees serve on all
Fund Boards enhances the ability of each Fund to obtain, at modest cost to each
separate Fund, the services of Independent Trustees of the caliber, experience
and business acumen of the individuals who serve as Independent Trustees of the
Morgan Stanley Funds.

SHARE OWNERSHIP BY TRUSTEES

The Trustees have adopted a policy pursuant to which each Trustee and/or
his or her spouse is required to invest at least $25,000 in any of the Funds in
the Morgan Stanley Fund Complex on whose boards the Trustee

serves. In addition, the policy contemplates that the Trustees will, over time,
increase their aggregate investment in the Funds above the $25,000 minimum
requirement. The Trustees may allocate their investments among specific Funds
in any manner they determine is appropriate based on their individual
investment objectives. As of the date of this Proxy Statement, each Trustee is
in compliance with the policy. Any future Trustee will be given a one year
period following his or her election within which to comply with the foregoing.
As of March 31, 2002, the total value of the investments by the Trustees and/or
their spouses in shares of the Morgan Stanley Funds was approximately $57.4
million.

As of the Record Date for these Meetings, the aggregate number of shares
of each Fund owned by the respective Fund's officers and Trustees as a group
was less than 1 percent of each Fund's outstanding shares.

COMPENSATION OF INDEPENDENT TRUSTEES

Each Fund pays each Independent Trustee an annual fee of $800 plus a per
meeting fee of $50 for meetings of the Board of Trustees, the Independent
Trustees or committees of the Board attended by the Trustee (each Fund pays the
Chairman of the Audit Committee an additional annual fee of $750 and the
Chairmen of the Derivatives and Insurance Committees additional annual fees of
$500). If a Board meeting and a meeting of the Independent Trustees or a
Committee meeting (except an Audit Committee meeting), or a meeting of the
Independent Trustees and/or more than one Committee meeting (except an Audit
Committee meeting), take place on a single day, the Trustees are paid a single
meeting fee by each Fund. Each Fund also reimburses such Trustees for travel
and other out-of-pocket expenses incurred by them in connection with attending
such meetings. Trustees and officers of the Fund who are or have been employed
by Morgan Stanley Investment Advisors or an affiliated company receive no
compensation or expense reimbursement from the Fund for their services as
Trustee.

As of the date of this Proxy Statement, 52 of the Morgan Stanley Funds,
including OIB and IMS represented in this Proxy Statement, have adopted a
retirement program under which an Independent Trustee who retires after serving
for at least five years (or such lesser period as may be determined by the
Board) as an Independent Director or Trustee of any Morgan Stanley Fund that
has adopted the retirement program (each such Fund referred to as an "Adopting
Fund" and each such Trustee referred to as an "Eligible Trustee") is entitled
to retirement payments upon reaching the eligible retirement age (normally,
after attaining age 72). Annual payments are based upon length of service.
Currently, upon retirement, each Eligible Trustee is entitled to receive from
each Adopting Fund, commencing as of his or her retirement date and continuing
for the remainder of his or her life, an annual retirement benefit (the
"Regular Benefit") equal to 30.22% of his or her Eligible Compensation plus
0.5036667% of such Eligible Compensation for each full month of service as an
Independent Director or Trustee of any Adopting Fund in excess of five years up
to a maximum of 60.44% after ten years of service. The foregoing percentages
may be changed by the Board. "Eligible Compensation" is one-fifth of the total
compensation earned by such Eligible Trustee for service to the Adopting Fund
in the five year period prior to the date of the Eligible Trustee's retirement.
An Eligible Trustee may elect alternate payments of his or her retirement
benefits based upon the combined life expectancy of such Eligible Trustee and
his or her spouse on the date of such Eligible Trustee's retirement. The amount
estimated to be payable under this method, through the remainder of the later
of the lives of such Eligible Trustee and spouse, will be the actuarial
equivalent of the Regular Benefit. In addition, the Eligible Trustee may elect
that the surviving spouse's periodic payment of benefits will be equal to a
lower percentage of the periodic amount when both spouses were alive. Benefits
under the retirement plan are accrued as expenses on the books of the Adopting
Funds. Such benefits are not secured or funded by the Adopting Funds.

The following tables illustrate the compensation paid to each Fund's
Independent Trustees by each Fund represented in this Proxy Statement for its
last fiscal year, and the retirement benefits accrued to the

Independent Trustees of OIB and IMS by those Funds for their respective last
fiscal years and the estimated retirement benefits for the Independent Trustees
of OIB and IMS, to commence upon their retirement, as of the end of those
Funds' respective last fiscal year.

MORGAN STANLEY HIGH INCOME ADVANTAGE TRUST III (YLH)

NAME OF INDEPENDENT TRUSTEE AGGREGATE COMPENSATION FROM THE FUND
- -------------------------------- -------------------------------------

Michael Bozic .................. $1,650
Edwin J. Garn .................. 1,650
Wayne E. Hedien ................ 1,650
Dr. Manuel H. Johnson .......... 2,400
Michael E. Nugent .............. 2,150
John L. Schroeder .............. 2,150

MORGAN STANLEY MUNICIPAL INCOME OPPORTUNITIES TRUST II (OIB)

FUND COMPENSATION AND ESTIMATED RETIREMENT BENEFITS
---------------------------------------------------
ESTIMATED
RETIREMENT ANNUAL
AGGREGATE BENEFIT BENEFITS
COMPENSATION ACCRUED AS UPON
NAME OF INDEPENDENT TRUSTEE FROM THE FUND FUND EXPENSES RETIREMENT(1)
- ------------------------------- --------------- --------------- --------------

Michael Bozic ................. $1,600 $ 395 $ 937
Edwin J. Garn ................. 1,600 607 944
Wayne E. Hedien ............... 1,600 747 801
Dr. Manuel H. Johnson ......... 2,350 396 1,390
Michael E. Nugent ............. 2,100 686 1,239
John L. Schroeder ............. 2,100 1,205 969

- ----------
(1) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in the discussion
of the retirement program above.

MORGAN STANLEY INSURED MUNICIPAL SECURITIES (IMS)

Michael Bozic ................. $1,600 $ 468 $ 907
Edwin J. Garn ................. 1,600 1,049 909
Wayne E. Hedien ............... 1,600 741 771
Dr. Manuel H. Johnson ......... 2,350 461 1,360
Michael E. Nugent ............. 2,100 943 1,209
John L. Schroeder ............. 2,100 1,760 955

- ----------
(1) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in the discussion
of the retirement program above.

MORGAN STANLEY INSURED CALIFORNIA MUNICIPAL SECURITIES (ICS)

NAME OF INDEPENDENT TRUSTEE AGGREGATE COMPENSATION FROM THE FUND
- -------------------------------- -------------------------------------

Michael Bozic .................. $1,600
Edwin J. Garn .................. 1,600
Wayne E. Hedien ................ 1,600
Dr. Manuel H. Johnson .......... 2,350
Michael E. Nugent .............. 2,100
John L. Schroeder .............. 2,100

The following table illustrates the compensation paid to the Independent
Trustees of the Funds for the calendar year ended December 31, 2001 for
services to the 97 registered Morgan Stanley Funds (consisting of 129
portfolios) that were in operation at December 31, 2001. None of the Fund's
Independent Trustees received compensation from any other funds in the Fund
Complex except for Mr. Nugent who received compensation for service as
Director/Trustee to 16 other registered funds (consisting of 78 portfolios) in
the Fund Complex.

CASH COMPENSATION FROM MORGAN STANLEY FUNDS

TOTAL CASH
COMPENSATION
FOR SERVICES TO
97 MORGAN STANLEY
FUNDS AND OTHER
FUNDS IN THE
NAME OF INDEPENDENT TRUSTEE FUND COMPLEX
- ------------------------------- ------------------

Michael Bozic ................. $150,150
Edwin J. Garn ................. 150,150
Wayne E. Hedien ............... 150,100
Dr. Manuel H. Johnson ......... 219,900
Michael E. Nugent ............. 228,362
John L. Schroeder ............. 196,650

The following table illustrates the retirement benefits accrued to the
Independent Trustees of the Funds by the 52 Morgan Stanley Funds (including OIB
and IMS represented in this Proxy Statement) for the calendar year ended
December 31, 2001, and the estimated retirement benefits for the Independent
Trustees, to commence upon their retirement, from the 52 Morgan Stanley Funds as
of December 31, 2001. For the calendar year ended December 31, 2001, no
retirement benefits accrued to the Independent Trustees from any other funds in
the Fund Complex.

RETIREMENT BENEFITS FROM ALL MORGAN STANLEY FUNDS

ESTIMATED ESTIMATED ANNUAL
CREDIT YEARS ESTIMATED RETIREMENT BENEFITS BENEFITS UPON
OF SERVICE PERCENTAGE ACCRUED AS RETIREMENT FROM
AT RETIREMENT OF ELIGIBLE EXPENSES BY ALL ADOPTING
NAME OF INDEPENDENT TRUSTEE (MAXIMUM 10) COMPENSATION ALL ADOPTING FUNDS FUNDS(1)
- ------------------------------- --------------- -------------- --------------------- -----------------

Michael Bozic ................. 10 60.44% $21,395 $48,443
Edwin J. Garn ................. 10 60.44 33,443 49,121
Wayne E. Hedien ............... 9 51.37 44,952 41,437
Dr. Manuel H. Johnson ......... 10 60.44 22,022 72,014
Michael E. Nugent ............. 10 60.44 38,472 64,157
John L. Schroeder ............. 8 50.37 68,342 50,640

- ----------
(1) Based on current levels of compensation. Amount of annual benefits also
varies depending on the Trustee's elections described in the discussion
of the retirement program above.

THE BOARD OF TRUSTEES OF EACH FUND UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE ELECTION OF EACH OF THE TRUSTEES NOMINATED FOR
ELECTION.

THE INVESTMENT MANAGER OR INVESTMENT ADVISOR

Morgan Stanley Investment Advisors Inc. currently serves as each Fund's
investment manager or investment advisor pursuant to an investment management
agreement or investment advisory agreement. Morgan Stanley Investment Advisors
maintains its offices at 1221 Avenue of the Americas, New York, New York 10020.
Morgan Stanley Investment Advisors, formerly known as Morgan Stanley Dean
Witter Advisors Inc., adopted its current name on June 18, 2001. Morgan Stanley
Investment Advisors is a wholly-owned subsidiary of Morgan Stanley, a
preeminent global securities firm that maintains leading market positions in
each of its three primary businesses--securities, asset management and credit
services.

The Principal Executive Officer and Directors of Morgan Stanley Investment
Advisors are Mitchell M. Merin, President and Chief Executive Officer, Ronald
E. Robison, Managing Director and Chief Administrative Officer and Barry Fink,
Managing Director, Secretary and General Counsel. The principal occupations of
Messrs. Merin, Robison and Fink are described under the section "Election of
Trustees." The business address of the Executive Officer and other Directors is
1221 Avenue of the Americas, New York, New York 10020.

Morgan Stanley has its offices at 1585 Broadway, New York, New York 10036.
There are various lawsuits pending against Morgan Stanley involving material
amounts which, in the opinion of its management, will be resolved with no
material effect on the consolidated financial position of the company.

Morgan Stanley Investment Advisors and its wholly-owned subsidiary, Morgan
Stanley Services, serve in various investment management, advisory, management
and administrative capacities to investment companies and pension plans and
other institutional and individual investors. Morgan Stanley Services, pursuant
to an Administration Agreement with OIB, serves as the Administrator of OIB.
The address of Morgan Stanley Services is that of Morgan Stanley Investment
Advisors set forth above.

FEES PAID TO INDEPENDENT AUDITORS

AUDIT FEES PAID BY THE FUNDS

The fees for professional services rendered by Deloitte & Touche LLP in
connection with the annual audit and review of financial statements of YLH,
OIB, IMS and ICS for their respective fiscal years were $25,000, $26,000,
$25,000 and $25,000 respectively.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION

There were no professional services rendered by Deloitte & Touche LLP to
the Funds, the investment advisor, or to affiliated entities that provided
services to the Funds during their most recent fiscal years ended, relating to
financial information systems design and implementation.

ALL OTHER FEES

The aggregate fees for professional services rendered by Deloitte & Touche
LLP for other non-audit services provided to the Funds, the investment advisor
and to affiliated entities that provided services to the Funds amounted to
approximately approximately $7.7 million, of which approximately $1 million
related to fees for alteration services such as comfort letters and consents
related to SEC and other registration statements, agreed upon procedures and
consultation on accounting standards and approximately $6.7 million related to
fees for services such as tax and regulatory consultation, tax return
preparation, compliance and improving business and operational processes.

The Audit Committee of each of the Funds considered whether Deloitte &
Touche LLP's provision of non-audit services is compatible with maintaining
their independence.

ADDITIONAL INFORMATION

In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal for any Fund is not obtained at the
Meeting of any Fund, the persons named as proxies may propose one or more
adjournments of the Meeting of the applicable Fund to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of the holders of a majority of the applicable Fund's shares present in person
or by proxy at the Meeting. The persons named as proxies will vote in favor of
such adjournment those proxies which have been received by the date of the
Meeting.

Abstentions and, if applicable, broker "non-votes" will not count as votes
in favor of any proposal, and broker "non-votes" will not be deemed to be
present at the Meeting of any Fund for purposes of determining whether a
particular proposal to be voted upon has been approved. Broker "non-votes" are
shares held in street name for which the broker indicates that instructions
have not been received from the beneficial owners or other persons entitled to
vote and for which the broker does not have discretionary voting authority.

SHAREHOLDER PROPOSALS

Proposals of security holders intended to be presented at the next Annual
Meeting of Shareholders of each respective Fund must be received by no later
than January 7, 2003 for each Fund for inclusion in the proxy statement for
each respective Fund's next Annual Meeting. The mere submission of a proposal
does not guarantee its inclusion in the proxy materials or its presentation at
the meeting. Certain rules under the federal securities laws must be met.

REPORTS TO SHAREHOLDERS

EACH FUND'S MOST RECENT ANNUAL REPORT HAS BEEN SENT PREVIOUSLY TO
SHAREHOLDERS AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST FROM NINA WESSEL AT
MORGAN STANLEY TRUST, HARBORSIDE FINANCIAL CENTER, PLAZA TWO, JERSEY CITY, NEW
JERSEY 07311 (TELEPHONE 1-800-869-NEWS) (TOLL-FREE).

INTEREST OF CERTAIN PERSONS

Morgan Stanley, Morgan Stanley Investment Advisors, Morgan Stanley DW,
Morgan Stanley Services, and certain of their respective Directors, Officers,
and employees, including persons who are Trustees or Officers of the Funds, may
be deemed to have an interest in certain of the proposals described in this
Proxy Statement to the extent that certain of such companies and their
affiliates have contractual and other arrangements, described elsewhere in this
Proxy Statement, pursuant to which they are paid fees by the Funds, and certain
of those individuals are compensated for performing services relating to the
Funds and may also own shares of Morgan Stanley. Such companies and persons may
thus be deemed to derive benefits from the approvals by Shareholders of such
proposals.

OTHER BUSINESS

The management of the Funds knows of no other matters which may be
presented at the Meetings. However, if any matters not now known properly come
before the Meetings, it is the intention of the persons named in the enclosed
form of proxy, or their substitutes to vote all shares that they are entitled
to vote on any such matter, utilizing such proxy in accordance with their best
judgment on such matters.

By Order of the Board of Trustees

BARRY FINK
Secretary

APPENDIX A

CHARTER OF THE
AUDIT COMMITTEE
OF THE
MORGAN STANLEY FUNDS

The Board of Directors/Trustees (the "Board") of each fund advised or
managed by Morgan Stanley Investment Advisors Inc. or Morgan Stanley Services
Company Inc. (each, a "Fund," collectively, the "Funds") has adopted and
approved this charter for the audit committee of each Fund (the "Audit
Committee").

1. Structure and Membership Requirements:

1.01 The Audit Committee shall consist of at least three "independent"
directors/trustees. "Independent" shall have the meaning ascribed to it
in New York Stock Exchange Listed Company Standard 303.01(2) and (3).

1.02 Each member of the Audit Committee shall not be an "interested person"
of the Funds, as that term is defined in Section 2(a)(19) of the
Investment Company Act of 1940.

1.03 Each member of the Audit Committee shall be "financially literate," as
such term is interpreted by the Fund's Board in its business judgment,
or must become financially literate within a reasonable period of time
after his or her appointment to the Audit Committee.

1.04 At least one member of the Audit Committee must have accounting or
related financial management expertise, as such qualification is
interpreted by the Fund's Board in its business judgment.

2. Meetings:

2.01 The Audit Committee shall meet at least twice each calendar year.

3. Duties and Powers:

3.01 Each Fund's outside auditor is ultimately accountable to the Audit
Committee and to the Board. The Audit Committee, subject to the Board's
approval and oversight, has the authority and responsibility, to
select, evaluate and, where appropriate, replace the outside auditor.
To the extent required by law, this includes nominating the selected
outside auditor to be considered for approval or ratification by
shareholders at their next annual meeting.

3.02 The Audit Committee shall approve the scope of professional services
to be provided to the Funds by the outside auditor.

3.03 The Audit Committee shall review with the outside auditor the audit
plan and results of the auditing engagement.

3.04 The Audit Committee shall review the independence of the outside
auditor, including:

(a) ensuring that the outside auditor submits to the Audit Committee,
at least annually, a letter delineating all relationships between the
auditor and the Funds;

(b) engaging in a dialogue with the outside auditor with respect to any
disclosed relationships or services that may impact the objectivity and
independence of the outside auditor; and

A-1

(c) recommending the Board take action in response to the outside
auditor's report of any of the relationships discussed in (b) above, to
the extent necessary and appropriate for the Audit Committee to satisfy
itself of the outside auditor's independence.

3.05 The Audit Committee shall oversee any other aspects of the Funds'
audit process as it deems necessary and appropriate.

3.06 The Audit Committee is empowered to review the Funds' system of
internal controls.

3.07 The Audit Committee shall have the resources and authority as it deems
appropriate to discharge its responsibilities, including the authority
to retain special counsel and other experts or consultants at the
expense of the appropriate Fund(s).

4. Review of Charter:

4.01 The Audit Committee shall review and assess the adequacy of this
charter annually.

4.02 Any changes to the charter must be recommended by the Audit Committee
and approved by the Board.

A-2

MORGAN STANLEY HIGH INCOME ADVANTAGE TRUST III

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned hereby appoints Ronald E. Robison, Barry Fink, and Joseph J.
McAlinden, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Annual Meeting of Shareholders of
Morgan Stanley High Income Advantage Trust III on June 19, 2002, at 9:00 a.m.,
New York City time, and at any adjournment thereof, on the proposal set forth
in the Notice of Meeting dated May 8, 2002 as follows:

(Continued on reverse side)

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE TRUSTEES SET FORTH ON THE REVERSE HEREOF AND AS RECOMMENDED BY
THE BOARD OF TRUSTEES.

IMPORTANT--THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.

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

PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK [X]

TO VOTE BY MAIL, PLEASE COMPLETE AND RETURN THIS CARD
YOU ALSO MAY VOTE A PROXY BY TOUCH-TONE PHONE OR BY INTERNET
(SEE ENCLOSED VOTING INFORMATION CARD FOR FURTHER INSTRUCTIONS)

TO VOTE A PROXY BY PHONE, call Toll-Free: 1-800-597-7836

TO VOTE A PROXY BY INTERNET, visit our Website: https://vote.proxy-direct.com

FOR ALL
FOR WITHHOLD EXCEPT

Election of three (3) Trustees: [ ] [ ] [ ]

01. Edwin J. Garn, 02. Michael E. Nugent

03. Philip J. Purcell

IF YOU WISH TO WITHHOLD AUTHORITY FOR ANY PARTICULAR NOMINEE, MARK THE
"FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME.

Please make sure to sign and date this Proxy using black or blue ink.

Date
-----------------------------

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

- --------------------------------------------------------------------------------
Shareholder sign in the box above

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

- --------------------------------------------------------------------------------
Co-Owner (if any) sign in the box above

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

PLEASE FOLD AND DETACH AT PERFORATION ALONG DOTTED LINES

MORGAN STANLEY
HIGH INCOME ADVANTAGE TRUST III

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

IMPORTANT

USE ONE OF THESE THREE EASY WAYS TO VOTE YOUR PROXY

1. BY MAIL. PLEASE DATE, SIGN AND RETURN THE ABOVE PROXY CARD IN THE ENCLOSED
POSTAGE PAID ENVELOPE.

2. BY INTERNET. HAVE YOUR PROXY CARD AT HAND. GO TO THE "VOTE YOUR PROXY HERE"
LINK ON THE WEBSITE HTTPS://VOTE.PROXY-DIRECT.COM, ENTER YOUR 14-DIGIT
CONTROL NUMBER LOCATED ON THE PROXY CARD AND FOLLOW THE SIMPLE
INSTRUCTIONS.

3. BY TELEPHONE. HAVE YOUR PROXY CARD AT HAND. CALL 1-800-597-7836 ON A
TOUCH-TONE PHONE. ENTER YOUR 14-DIGIT CONTROL NUMBER LOCATED ON THE PROXY
CARD AND FOLLOW THE SIMPLE RECORDED INSTRUCTIONS.

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

PRX 00096

MORGAN STANLEY MUNICIPAL INCOME OPPORTUNITIES TRUST II

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned hereby appoints Ronald E. Robison, Barry Fink, and Joseph J.
McAlinden, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Annual Meeting of Shareholders of
Morgan Stanley Municipal Income Opportunities Trust II on June 19, 2002, at
9:00 a.m., New York City time, and at any adjournment thereof, on the proposals
set forth in the Notice of Meeting dated May 8, 2002 as follows:

(Continued on reverse side)

IMPORTANT--THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.

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

PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK [X]

TO VOTE BY MAIL, PLEASE COMPLETE AND RETURN THIS CARD
YOU ALSO MAY VOTE A PROXY BY TOUCH-TONE PHONE OR BY INTERNET
(SEE ENCLOSED VOTING INFORMATION CARD FOR FURTHER INSTRUCTIONS)

TO VOTE A PROXY BY PHONE, call Toll-Free: 1-800-597-7836

TO VOTE A PROXY BY INTERNET, visit our Website: https://vote.proxy-direct.com

FOR ALL
FOR WITHHOLD EXCEPT

Election of three (3) Trustees: [ ] [ ] [ ]

01. Edwin J. Garn, 02. Michael E. Nugent,

03. Philip J. Purcell

IF YOU WISH TO WITHHOLD AUTHORITY FOR ANY PARTICULAR NOMINEE, MARK THE
"FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME.

Please make sure to sign and date this Proxy using black or blue ink.

Date
-----------------------------

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

- --------------------------------------------------------------------------------
Shareholder sign in the box above

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

- --------------------------------------------------------------------------------
Co-Owner (if any) sign in the box above

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

PLEASE FOLD AND DETACH AT PERFORATION ALONG DOTTED LINES

MORGAN STANLEY
MUNICIPAL INCOME OPPORTUNITIES TRUST II

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

IMPORTANT

USE ONE OF THESE THREE EASY WAYS TO VOTE YOUR PROXY

1. BY MAIL. PLEASE DATE, SIGN AND RETURN THE ABOVE PROXY CARD IN THE ENCLOSED
POSTAGE PAID ENVELOPE.

3. BY TELEPHONE. HAVE YOUR PROXY CARD AT HAND. CALL 1-800-597-7836 ON A
TOUCH-TONE PHONE. ENTER YOUR 14-DIGIT CONTROL NUMBER LOCATED ON THE PROXY
CARD AND FOLLOW THE SIMPLE RECORDED INSTRUCTIONS.

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

PRX 00128

MORGAN STANLEY INSURED CALIFORNIA MUNICIPAL SECURITIES

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned hereby appoints Ronald E. Robison, Barry Fink, and Joseph J.
McAlinden, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Annual Meeting of Shareholders of
Morgan Stanley Insured California Municipal Securities on June 19, 2002, at
9:00 a.m., New York City time, and at any adjournment thereof, on the proposals
set forth in the Notice of Meeting dated May 8, 2002 as follows:

(Continued on reverse side)

IMPORTANT--THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.

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

PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK [X]

TO VOTE BY MAIL, PLEASE COMPLETE AND RETURN THIS CARD
YOU ALSO MAY VOTE A PROXY BY TOUCH-TONE PHONE OR BY INTERNET
(SEE ENCLOSED VOTING INFORMATION CARD FOR FURTHER INSTRUCTIONS)

TO VOTE A PROXY BY PHONE, call Toll-Free: 1-800-597-7836

TO VOTE A PROXY BY INTERNET, visit our Website: https://vote.proxy-direct.com

FOR ALL
FOR WITHHOLD EXCEPT

Election of three (3) Trustees: [ ] [ ] [ ]

01. Michael Bozic, 02. Charles A. Fiumefreddo,

03. James F. Higgins

IF YOU WISH TO WITHHOLD AUTHORITY FOR ANY PARTICULAR NOMINEE, MARK THE
"FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME.

Please make sure to sign and date this Proxy using black or blue ink.

Date
-----------------------------

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

- --------------------------------------------------------------------------------
Shareholder sign in the box above

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

- --------------------------------------------------------------------------------
Co-Owner (if any) sign in the box above

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

PLEASE FOLD AND DETACH AT PERFORATION ALONG DOTTED LINES

MORGAN STANLEY
INSURED CALIFORNIA MUNICIPAL SECURITIES

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

IMPORTANT

USE ONE OF THESE THREE EASY WAYS TO VOTE YOUR PROXY

1. BY MAIL. PLEASE DATE, SIGN AND RETURN THE ABOVE PROXY CARD IN THE ENCLOSED
POSTAGE PAID ENVELOPE.

3. BY TELEPHONE. HAVE YOUR PROXY CARD AT HAND. CALL 1-800-597-7836 ON A
TOUCH-TONE PHONE. ENTER YOUR 14-DIGIT CONTROL NUMBER LOCATED ON THE PROXY
CARD AND FOLLOW THE SIMPLE RECORDED INSTRUCTIONS.

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

PRX 00039

MORGAN STANLEY INSURED MUNICIPAL SECURITIES

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES

The undersigned hereby appoints Ronald E. Robison, Barry Fink, and Joseph J.
McAlinden, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Annual Meeting of Shareholders of
Morgan Stanley Insured Municipal Securities on June 19, 2002, at 9:00 a.m., New
York City time, and at any adjournment thereof, on the proposals set forth in
the Notice of Meeting dated May 8, 2002 as follows:

(Continued on reverse side)

IMPORTANT--THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.

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

PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK [X]

TO VOTE BY MAIL, PLEASE COMPLETE AND RETURN THIS CARD
YOU ALSO MAY VOTE A PROXY BY TOUCH-TONE PHONE OR BY INTERNET
(SEE ENCLOSED VOTING INFORMATION CARD FOR FURTHER INSTRUCTIONS)

TO VOTE A PROXY BY PHONE, call Toll-Free: 1-800-597-7836

TO VOTE A PROXY BY INTERNET, visit our Website: https://vote.proxy-direct.com

FOR ALL
FOR WITHHOLD EXCEPT

Election of three (3) Trustees: [ ] [ ] [ ]

01. Michael Bozic, 02. Charles A. Fiumefreddo,

03. James F. Higgins

IF YOU WISH TO WITHHOLD AUTHORITY FOR ANY PARTICULAR NOMINEE, MARK THE
"FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NOMINEE'S NAME.

Please make sure to sign and date this Proxy using black or blue ink.

Date
-----------------------------

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

- --------------------------------------------------------------------------------
Shareholder sign in the box above

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

- --------------------------------------------------------------------------------
Co-Owner (if any) sign in the box above

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

PLEASE FOLD AND DETACH AT PERFORATION ALONG DOTTED LINES

MORGAN STANLEY
INSURED MUNICIPAL SECURITIES

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

IMPORTANT

USE ONE OF THESE THREE EASY WAYS TO VOTE YOUR PROXY

1. BY MAIL. PLEASE DATE, SIGN AND RETURN THE ABOVE PROXY CARD IN THE ENCLOSED
POSTAGE PAID ENVELOPE.

2. BY INTERNET. HAVE YOUR PROXY CARD AT HAND. GO TO
HTTPS://VOTE.PROXY-DIRECT.COM ON THE WEBSITE. ENTER YOUR 14-DIGIT CONTROL
NUMBER LOCATED ON THE PROXY CARD AND FOLLOW THE SIMPLE INSTRUCTIONS.

3. BY TELEPHONE. HAVE YOUR PROXY CARD AT HAND. CALL 1-800-597-7836 ON A
TOUCH-TONE PHONE. ENTER YOUR 14-DIGIT CONTROL NUMBER LOCATED ON THE PROXY
CARD AND FOLLOW THE SIMPLE RECORDED INSTRUCTIONS.

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

PRX 00038