SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

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

EXCHANGE ACT OF 1934 (AMENDMENT NO. )

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

Check the appropriate box:

/ / Preliminary Proxy Statement / / Confidential, for Use of the Com-
mission Only (as permitted by
Rule 14a-6(e)(2))

/X/Definitive Proxy Statement

/ /Definitive Additional Materials

/ /Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

AMERICAN CAPITAL COMSTOCK FUND, INC. (811-1570)

AMERICAN CAPITAL CORPORATE BOND FUND, INC. (811-2423)

AMERICAN CAPITAL EMERGING GROWTH FUND, INC. (811-2424)

AMERICAN CAPITAL ENTERPRISE FUND, INC. (811-630)

AMERICAN CAPITAL EQUITY INCOME FUND, INC. (811-919)

AMERICAN CAPITAL FEDERAL MORTGAGE TRUST (811-4491)

AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND, INC. (811-8286)

AMERICAN CAPITAL GOVERNMENT SECURITIES, INC. (811-4003)

AMERICAN CAPITAL GOVERNMENT TARGET SERIES (811-6127)

AMERICAN CAPITAL GROWTH AND INCOME FUND, INC. (811-1228)

AMERICAN CAPITAL HARBOR FUND, INC. (811-734)

AMERICAN CAPITAL HIGH YIELD INVESTMENTS, INC. (811-2851)

AMERICAN CAPITAL LIFE INVESTMENT TRUST (811-4424)

AMERICAN CAPITAL MUNICIPAL BOND FUND, INC. (811-2683)

AMERICAN CAPITAL PACE FUND, INC. (811-1792)

AMERICAN CAPITAL REAL ESTATE SECURITIES FUND, INC. (811-8480)

AMERICAN CAPITAL RESERVE FUND, INC. (811-2482)

AMERICAN CAPITAL SMALL CAPITALIZATION FUND, INC. (811-6421)

AMERICAN CAPITAL TAX-EXEMPT TRUST (811-4746)

AMERICAN CAPITAL TEXAS MUNICIPAL SECURITIES, INC. (811-6464)

AMERICAN CAPITAL U.S. GOVERNMENT TRUST FOR INCOME (811-6724)

AMERICAN CAPITAL UTILITIES INCOME FUND, INC. (811-7998)

AMERICAN CAPITAL WORLD PORTFOLIO SERIES, INC. (811-6220)

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

Payment of Filing Fee (Check the appropriate box):

/ / $125 per each Co-Registrant (an aggregate of $2,875 for the Co-Registrants
listed above) per Item 22(a)(2) of Schedule 14A.

/X/ Fee paid previously with preliminary materials.

Dear American Capital Fund Shareholder:

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

The meeting date for your Fund is July 21, 1995. Please sign all proxy cards
and return them in the postage-paid envelope included with this material.

We appreciate your prompt return of your proxy cards.

June 2, 1995

Dear American Capital Fund Shareholder:

As you may know, the merger of American Capital Management & Research, Inc.,
the parent of your Fund(s) investment adviser, into The Van Kampen Merritt
Companies, Inc. was completed in late December 1994 and the combined entity was
renamed Van Kampen American Capital, Inc. As part of our continuing effort to
maximize the merger's benefit to Fund shareholders, we are proposing several
items related to your Fund(s), including board consolidations and business
reorganizations. The attached proxy statement seeks shareholder approval on
these items.

While we encourage you to carefully read the full proxy statement, we have
created a brief question-and-answer section for your convenience.

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

The proposals have been approved by the Directors/Trustees of the Fund(s), who
recommend you vote "FOR APPROVAL" on these proposals. YOUR IMMEDIATE RESPONSE
WILL HELP SAVE ON THE COSTS OF ADDITIONAL SOLICITATIONS. EACH FUND VOTES
SEPARATELY, SO PLEASE SIGN AND RETURN ALL YOUR FUND PROXY FORMS. We look forward
to your participation, and we thank you for your continued confidence in Van
Kampen American Capital.

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

Sincerely,

Don G. Powell,

Chief Executive Officer
4

INFORMATION ABOUT YOUR PROXY STATEMENT

Q. WHY AM I RECEIVING THIS PROXY STATEMENT?

A. Federal securities laws require a vote by Fund shareholders whenever there
are certain changes in a Fund's business or organizational documents.
Among the proposed items your Fund is seeking shareholder approval on are:

- consolidation of the Van Kampen Merritt and American Capital fund boards

- reorganization and conversion of each of the American Capital funds
organized as a Maryland corporation or Massachusetts business trust into
a Delaware business trust.

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

Q. HOW WILL THIS AFFECT MY ACCOUNT?
A. Your Fund's investment objective(s) and shares will not change. You can
expect the same management expertise and high quality shareholder service
you've grown accustomed to.

By consolidating the Van Kampen Merritt and American Capital fund boards,
you will be able to take advantage of additional shareholder privileges
such as exchangeability of shares between Van Kampen Merritt funds and
American Capital funds. Additionally, by reorganizing the funds into
Delaware business trusts, you will benefit from greater protection from
certain liabilities related to the Fund. The reorganization of your Fund
into a Delaware business trust will not affect the investment objective,
investment policies or tax status of your Fund.

Q. WHY DO I NEED TO VOTE?

A. Your vote is needed to ensure that a majority of shareholders is
represented at the shareholder meeting, so that the proposals can be acted
upon. Your immediate response to this proxy will help save on the costs of
any further solicitations for a shareholder vote. We encourage all
shareholders to participate in the affairs of their Fund(s).

Q. HOW DO THE BOARD MEMBERS OF MY FUND SUGGEST THAT I VOTE?

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

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

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

Proxy Tabulator

P.O. Box 9111

Hingham, MA 02043

Q. WHO DO I CALL IF I HAVE QUESTIONS?

A. We will be happy to answer your questions about the proxy solicitation.
Please call us at 1-800-421-5666 between 7:00 a.m. and 7:00 p.m. Central
time, Monday through Friday.

AMERICAN CAPITAL COMSTOCK FUND, INC.
AMERICAN CAPITAL CORPORATE BOND FUND, INC.
AMERICAN CAPITAL EMERGING GROWTH FUND, INC.
AMERICAN CAPITAL ENTERPRISE FUND, INC.
AMERICAN CAPITAL EQUITY INCOME FUND, INC.
AMERICAN CAPITAL FEDERAL MORTGAGE TRUST
AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND, INC.
AMERICAN CAPITAL GOVERNMENT SECURITIES, INC.
AMERICAN CAPITAL GOVERNMENT TARGET SERIES, PORTFOLIO '97
AMERICAN CAPITAL GROWTH AND INCOME FUND, INC.
AMERICAN CAPITAL HARBOR FUND, INC.
AMERICAN CAPITAL HIGH YIELD INVESTMENTS, INC.

AMERICAN CAPITAL LIFE INVESTMENT TRUST, ON BEHALF OF ITS SERIES:

AMERICAN CAPITAL COMMON STOCK PORTFOLIO

AMERICAN CAPITAL DOMESTIC STRATEGIC INCOME PORTFOLIO

AMERICAN CAPITAL MONEY MARKET PORTFOLIO

AMERICAN CAPITAL MULTIPLE STRATEGY PORTFOLIO

AMERICAN CAPITAL GOVERNMENT PORTFOLIO

AMERICAN CAPITAL MUNICIPAL BOND FUND, INC.
AMERICAN CAPITAL PACE FUND, INC.
AMERICAN CAPITAL REAL ESTATE SECURITIES FUND, INC.
AMERICAN CAPITAL RESERVE FUND, INC.
AMERICAN CAPITAL SMALL CAPITALIZATION FUND, INC.

AMERICAN CAPITAL TAX-EXEMPT TRUST, ON BEHALF OF ITS SERIES:

AMERICAN CAPITAL HIGH YIELD MUNICIPAL PORTFOLIO

AMERICAN CAPITAL INSURED MUNICIPAL PORTFOLIO

AMERICAN CAPITAL TEXAS MUNICIPAL SECURITIES, INC.
AMERICAN CAPITAL U.S. GOVERNMENT TRUST FOR INCOME
AMERICAN CAPITAL UTILITIES INCOME FUND, INC.

AMERICAN CAPITAL WORLD PORTFOLIO SERIES, INC., ON BEHALF OF ITS SERIES:

AMERICAN CAPITAL GLOBAL EQUITY FUND

AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND

TRANSCO TOWER
2800 POST OAK BLVD.
HOUSTON, TEXAS 77056
TELEPHONE (800) 421-5666

NOTICE OF JOINT ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 21, 1995

TO THE SHAREHOLDERS OF THE FUNDS LISTED BELOW:

Notice is hereby given to the holders of common stock or shares of beneficial
interest, as the case may be (collectively, the "Shares"), of (1) each of the
following nineteen funds (the "Maryland Funds") organized as Maryland
corporations (the "Maryland Corporations") or series thereof: American Capital
Comstock Fund, Inc.; American Capital Corporate Bond Fund, Inc.; American
Capital Emerging Growth Fund, Inc.; American Capital Enterprise Fund, Inc.;
American Capital Equity Income Fund, Inc.; American Capital Global Managed
Assets Fund, Inc.; American Capital Government Securities, Inc.; American
Capital

Growth and Income Fund, Inc.; American Capital Harbor Fund, Inc.; American
Capital High Yield Investments, Inc.; American Capital Municipal Bond Fund,
Inc.; American Capital Pace Fund, Inc.; American Capital Real Estate Securities
Fund, Inc.; American Capital Reserve Fund, Inc.; American Capital Small
Capitalization Fund, Inc.; American Capital Texas Municipal Securities, Inc.;
American Capital Utilities Income Fund, Inc.; and American Capital Global
Government Securities Fund and American Capital Global Equity Fund, each of
which is a separate series of American Capital World Portfolio Series, Inc.; and
(2) each of the following ten funds (the "Massachusetts Funds") organized as
Massachusetts business trusts (the "Massachusetts Trusts") or series thereof:
American Capital Government Target Series, Portfolio '97; American Capital
Federal Mortgage Trust; American Capital U.S. Government Trust For Income;
American Capital Common Stock Portfolio, American Capital Domestic Strategic
Income Portfolio, American Capital Money Market Portfolio, American Capital
Multiple Strategy Portfolio, American Capital Government Portfolio, each of
which is a separate series of American Capital Life Investment Trust; and
American Capital High Yield Municipal Portfolio and American Capital Insured
Municipal Portfolio, each of which is a separate series of American Capital
Tax-Exempt Trust (the Maryland Funds and the Massachusetts Funds hereinafter
sometimes are referred to collectively as the "AC Funds")(the Maryland
Corporations and the Massachusetts Trusts hereinafter sometimes are referred to
collectively as the "AC Entities"), that a Joint Annual Meeting of the
Shareholders of the Maryland Funds and Massachusetts Funds (the "Meeting") will
be held at the Hyatt Regency Oak Brook, York Room -- Lower Level, 1909 Spring
Road, Oak Brook, Illinois 60521, on Friday, July 21, 1995, at 1:30 p.m., for the
following purposes:

1. For each Massachusetts Fund to approve or disapprove such Massachusetts
Fund's reorganization and conversion to a Delaware business trust (or series
thereof);

2. For each Maryland Fund to approve or disapprove such Maryland Fund's
reorganization and conversion to a Delaware business trust (or series
thereof);

3. For each AC Entity to elect fourteen directors/trustees to serve until
their respective successors are duly elected and qualified;

4. For each AC Entity, to ratify or reject the selection of Price Waterhouse
LLP as independent accountants for its current fiscal year; and

5. To transact such other business as may properly come before the Meeting.

Holders of record of the Shares of each AC Entities at the close of business
on May 26, 1995 are entitled to notice of, and to vote at, the Meeting and any
adjournment thereof.

By order of the Boards of Directors/Trustees

NORI L. GABERT, Secretary
June 2, 1995
8

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

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

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

MANAGEMENT OF EACH RESPECTIVE AC FUND RECOMMENDS THAT YOU CAST YOUR VOTE:

- FOR APPROVAL OF THE REORGANIZATION AND CONVERSION OF EACH MASSACHUSETTS
TRUST INTO A DELAWARE BUSINESS TRUST (OR SERIES THEREOF);

- FOR APPROVAL OF THE REORGANIZATION AND CONVERSION OF EACH MARYLAND
CORPORATION INTO A DELAWARE BUSINESS TRUST (OR SERIES THEREOF);

- IN FAVOR OF THE NOMINEES FOR THE BOARD OF DIRECTORS/ TRUSTEES OF EACH AC
ENTITY LISTED IN THE PROXY STATEMENT; AND

- FOR THE RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE CURRENT FISCAL YEAR OF EACH AC ENTITY.

YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY CARD(S) PROMPTLY
NO MATTER HOW MANY SHARES YOU OWN.
9

PROXY STATEMENT

AMERICAN CAPITAL LIFE INVESTMENT TRUST, ON BEHALF OF ITS SERIES:

AMERICAN CAPITAL COMMON STOCK PORTFOLIO

AMERICAN CAPITAL DOMESTIC STRATEGIC INCOME PORTFOLIO

AMERICAN CAPITAL MONEY MARKET PORTFOLIO

AMERICAN CAPITAL MULTIPLE STRATEGY PORTFOLIO

AMERICAN CAPITAL GOVERNMENT PORTFOLIO

AMERICAN CAPITAL TAX-EXEMPT TRUST, ON BEHALF OF ITS SERIES:

AMERICAN CAPITAL HIGH YIELD MUNICIPAL PORTFOLIO

AMERICAN CAPITAL INSURED MUNICIPAL PORTFOLIO

AMERICAN CAPITAL TEXAS MUNICIPAL SECURITIES, INC.
AMERICAN CAPITAL U.S. GOVERNMENT TRUST FOR INCOME
AMERICAN CAPITAL UTILITIES INCOME FUND, INC.

AMERICAN CAPITAL WORLD PORTFOLIO SERIES, INC., ON BEHALF OF ITS SERIES:

AMERICAN CAPITAL GLOBAL EQUITY FUND

AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND

TRANSCO TOWER
2800 POST OAK BLVD.
HOUSTON, TEXAS 77056
TELEPHONE (800) 421-5666

JOINT ANNUAL MEETING OF SHAREHOLDERS

JULY 21, 1995

This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors or Board of Trustees, as the case may be (collectively, the
"AC Board"), of each of the AC Entities (defined below) of proxies to be voted
at a Joint Annual Meeting of Shareholders of the AC Funds (defined below) (the
"Meeting"), to be held at the Hyatt Regency Oak Brook, York Room -- Lower Level,
1909 Spring Road, Oak Brook, Illinois 60521, on Friday, July 21, 1995, at

1:30 p.m. Any and all adjournments of the Meeting shall be held at the offices
of Van Kampen American Capital, Inc., One Parkview Plaza, Oakbrook Terrace,
Illinois 60181. The approximate mailing date of this Proxy Statement and
accompanying form of proxy is June 2, 1995.

Participating in the Meeting are holders of common stock or shares of
beneficial interest, as the case may be (collectively, the "Shares"), of (1)
each of the following nineteen funds (the "Maryland Funds") organized as
Maryland corporations (the "Maryland Corporations") or series thereof: American
Capital Comstock Fund, Inc. ("Comstock Fund"); American Capital Corporate Bond
Fund, Inc. ("Corporate Bond Fund"); American Capital Emerging Growth Fund, Inc.
("Emerging Growth Fund"); American Capital Enterprise Fund, Inc. ("Enterprise
Fund"); American Capital Equity Income Fund, Inc. ("Equity Income Fund");
American Capital Global Managed Assets Fund, Inc. ("Global Managed Assets
Fund"); American Capital Government Securities, Inc. ("Government Securities");
American Capital Growth and Income Fund, Inc. ("Growth and Income Fund");
American Capital Harbor Fund, Inc. ("Harbor Fund"); American Capital High Yield
Investments, Inc. ("High Yield Investments"); American Capital Municipal Bond
Fund, Inc. ("Municipal Bond Fund"); American Capital Pace Fund, Inc. ("Pace
Fund"); American Capital Real Estate Securities Fund, Inc. ("Real Estate
Securities Fund"); American Capital Reserve Fund, Inc. ("Reserve Fund");
American Capital Small Capitalization Fund, Inc. ("Small Capitalization Fund");
American Capital Texas Municipal Securities, Inc. ("Texas Municipal
Securities"); American Capital Utilities Income Fund, Inc. ("Utilities Income
Fund"); and American Capital Global Government Securities Fund ("Global
Government Fund") and American Capital Global Equity Fund ("Global Equity
Fund"), each of which is a separate series of American Capital World Portfolio
Series, Inc.; and (2) each of the following ten funds (the "Massachusetts
Funds") organized as Massachusetts business trusts (the "Massachusetts Trusts")
or series thereof: American Capital Government Target Series, Portfolio '97
("Government Target '97"); American Capital Federal Mortgage Trust ("Federal
Mortgage Trust"); American Capital U.S. Government Trust For Income ("Government
Trust"); American Capital Common Stock Portfolio ("Common Stock Portfolio"),
American Capital Domestic Strategic Income Portfolio ("Strategic Income
Portfolio"), American Capital Money Market Portfolio ("Money Market Portfolio"),
American Capital Multiple Strategy Portfolio ("Multiple Strategy Portfolio"),
American Capital Government Portfolio ("Government Portfolio"), each of which is
a separate series of American Capital Life Investment Trust; and American
Capital High Yield Municipal Portfolio ("High Yield Portfolio") and American
Capital Insured Municipal Portfolio ("Insured Municipal Portfolio"), each of
which is a separate series of American Capital Tax-Exempt Trust.

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The Maryland Corporations and Massachusetts Trusts sometimes are referred to
herein as the "AC Entities." The Maryland Funds and Massachusetts Funds
sometimes are referred to herein as the "AC Funds."

The Meeting is scheduled as a joint meeting of the shareholders of the
respective AC Funds because the shareholders of each of the AC Funds are
expected to consider and vote on similar matters. The AC Board has determined
that the use of a joint Proxy Statement for the Meeting is in the best interest
of the shareholders of each of the AC Funds. In the event that any shareholder
of any AC Fund present at the Meeting objects to the holding of a joint meeting
and moves for an adjournment of the meeting of such AC Fund to a time
immediately after the Meeting, so that such AC Fund's meeting may be held
separately, the persons named as proxies will vote in favor of such adjournment.
Shareholders of each AC Fund will vote separately with respect to Proposals 1
and 2, and an unfavorable vote on Proposal 1 or 2 by the shareholders of one AC
Fund will not affect the implementation of such a proposal by another AC Fund.
Shareholders of each of the AC Entities will vote separately with respect to
Proposals 3 and 4, and an unfavorable vote on Proposal 3 or 4 by the
shareholders of one AC Entity will not affect the implementation of such a
proposal by another AC Entity.

All properly executed proxies received prior to the Meeting will be voted at
the Meeting in accordance with the instructions marked thereon or otherwise as
provided therein. Abstentions do not constitute votes "for" or "against" and
will be disregarded in determining the "votes cast" on an issue. Broker
non-votes (i.e., proxies from brokers or nominees indicating that such persons
have not received instructions from the beneficial owner or other persons
entitled to vote shares on a particular matter with respect to which the broker
or nominees do not have discretionary power) will be treated the same as
abstentions. A majority of the outstanding Shares entitled to vote on a proposal
must be present in person or by proxy to have a quorum to conduct business at
the Meeting. Abstentions and broker non-votes will be deemed present for quorum
purposes. Unless instructions to the contrary are marked, Shares represented by
a proxy will be voted "FOR" each proposal as to which it is entitled to vote.

The AC Board has fixed the close of business on May 26, 1995, as the record
date (the "Record Date") for the determination of holders of Shares of each AC
Fund entitled to vote at the Meeting. Shareholders of an AC Fund on the Record
Date will be entitled to one vote with respect to each proposal submitted to the
shareholders of such AC Fund for each Share of such AC Fund then held, with no
Share having cumulative voting rights, except that Shares of the Comstock Fund
will have cumulative voting rights with respect to the election of nominees for
the board of directors of the Comstock Fund.

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

PROPOSAL AFFECTED FUNDS
------------------------------------------- ------------------------

1. Reorganization and Conversion to a Delaware Each Massachusetts Fund
Business Trust (or series thereof)
2. Reorganization and Conversion to Delaware Each Maryland Fund
Business Trust (or series thereof)
3. Election of Directors/Trustees Each AC Entity(1)
4. Ratification of Independent Public Each AC Entity(1)
Accountants

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

(1) The shareholders of all the series of an AC Entity will vote together as a
single class of the respective AC Entity on these proposals.

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

At the close of business on May 26, 1995, there were issued and outstanding
Shares of each of the AC Funds set forth below:

CLASS A SHARES CLASS B SHARES CLASS C SHARES TOTAL SHARES
AC FUND NAME OUTSTANDING OUTSTANDING OUTSTANDING OUTSTANDING
- --------------------------- -------------- -------------- -------------- ------------

Comstock Fund.............. 68,659,215 2,224,365 183,917 71,067,497
Corporate Bond Fund........ 24,421,828 2,516,672 507,288 27,445,788
Emerging Growth Fund....... 30,434,232 14,004,794 1,258,270 45,697,296
Enterprise Fund............ 66,742,232 10,018,977 734,071 77,495,280
Equity Income Fund......... 48,187,599 50,350,715 5,261,335 103,799,649
Global Managed Assets
Fund..................... 1,401,366 811,466 167,228 2,380,060
Government Securities...... 255,300,945 27,728,924 2,912,686 285,942,555
Growth and Income Fund..... 18,561,799 2,312,611 383,161 21,257,571
Harbor Fund................ 26,642,461 5,249,854 233,314 32,123,629
High Yield Investments..... 66,387,529 13,817,899 2,241,605 82,447,033
Municipal Bond Fund........ 30,390,881 3,934,303 698,335 35,023,519
Pace Fund.................. 197,752,331 4,548,964 179,203 202,480,498
Real Estate Securities
Fund..................... 681,632 1,172,799 185,785 2,040,216
Reserve Fund............... 393,820,985 4,653,237 1,152,334 399,626,556
Small Capitalization
Fund..................... NA NA NA 13,311,707(1)
Texas Municipal
Securities............... 1,179,577 740,817 133,024 2,053,418
Utilities Income Fund...... 995,123 1,643,151 268,878 2,907,152
Global Government Fund..... 5,805,196 14,890,574 2,255,881 22,951,651

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Global Equity Fund......... 5,043,252 5,640,262 576,713 11,260,227
Government Target '97...... NA NA NA 1,245,057(1)
Federal Mortgage Trust..... 3,528,422 1,275,787 481,561 5,285,770
Government Trust........... 8,630,186 24,702,743 3,617,975 36,950,904
Common Stock Portfolio..... NA NA NA 4,906,380(1)
Strategic Income
Portfolio................ NA NA NA 3,254,449(1)
Money Market Portfolio..... NA NA NA 24,839,561(1)
Multiple Strategy
Portfolio................ NA NA NA 5,265,925(1)
Government Portfolio....... NA NA NA 7,680,445(1)
High Yield Municipal
Portfolio................ 43,262,941 19,020,861 2,355,598 64,639,400
Insured Municipal
Portfolio................ 6,053,790 3,280,753 119,964 9,454,507

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

(1) Shares of this AC Fund are not classified.

The persons who owned beneficially more than 5% of any class of any AC Fund's
outstanding Shares as of May 19, 1995, to the knowledge of management of the AC
Funds, are set forth at Appendix A hereto.

VOTING

The voting requirement for passage of a particular proposal depends on the
nature of the particular proposal.

With respect to Proposal 1, the affirmative vote of a majority of the
outstanding Shares of the respective Massachusetts Fund entitled to vote on such
proposal is required to approve the Reorganization of the Massachusetts Fund.

With respect to Proposal 2, the affirmative vote of a majority of the
outstanding Shares of the respective Maryland Fund entitled to vote on such
proposal is required to approve the Reorganization of the Maryland Fund.

With respect to Proposal 3, the affirmative vote of a plurality of the
outstanding Shares of the respective AC Entity present in person or by proxy and
entitled to vote for directors/trustees is required to elect the nominees.

With respect to Proposal 4, the affirmative vote of a majority of the Shares
of the respective AC Entity present in person or by proxy and entitled to vote
on such proposal is necessary to ratify the selection of the independent public
accountants.

On the matters coming before the Meeting as to which a choice has been
specified by the shareholders by means of the ballot on the proxy, the Shares
will be voted accordingly. The AC Board recommends that you cast your vote:

- FOR APPROVAL of the reorganization and conversion of each Massachusetts
Trust to a Delaware business trust (or series thereof);

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- FOR APPROVAL of the reorganization and conversion of each Maryland
Corporation to a Delaware business trust (or series thereof);

- IN FAVOR of the nominees for the board of directors/trustees of each AC
Entity listed in the Proxy Statement; and

- FOR the ratification of the selection of Price Waterhouse LLP as independent
public accountants for the current fiscal year of each AC Entity.

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

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

- ------------------------------------------------------------------------------
BACKGROUND FOR PROPOSALS 1, 2 AND 3
- ------------------------------------------------------------------------------

On December 20, 1994, The Van Kampen Merritt Companies, Inc. acquired from The
Travelers Inc. all of the outstanding capital stock of American Capital
Management & Research, Inc., the parent company of American Capital Asset
Management, Inc. (such transaction being referred to herein as the
"Acquisition"). In connection with the Acquisition, American Capital Management
& Research, Inc. was merged into The Van Kampen Merritt Companies, Inc. At the
time of the Acquisition, The Van Kampen Merritt Companies, Inc. also was the
parent company of Van Kampen Merritt Investment Advisory Corp. Immediately after
the Acquisition, each of the foregoing surviving entities was renamed. The
following

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table sets forth the old name, the new name and the abbreviated name used in
this Proxy Statement to refer to each such entity:

OLD NAME NEW NAME ABBREVIATED NAME
- ----------------------- ----------------------- -----------------------

The Van Kampen Merritt Van Kampen American Van Kampen
Companies, Inc. Capital, Inc. American Capital
American Capital Asset Van Kampen American AC Adviser
Management, Inc. Capital
Asset Management, Inc.
Van Kampen Merritt Van Kampen American VK Adviser
Investment Advisory Capital
Corp. Investment Advisory
Corp.

The AC Adviser and the VK Adviser currently are each wholly-owned subsidiaries
of Van Kampen American Capital. The AC Adviser serves as investment adviser for
each of the AC Funds and also serves as investment adviser for other open-end
and closed-end investment companies. Ten of the AC Funds are organized as
Massachusetts business trusts (or series thereof), and nineteen of the AC Funds
are organized as Maryland corporations (or series thereof). The AC Board, which
supervises the operations of each of the AC Funds, currently consists of the
same eight members for each AC Fund.

The VK Adviser serves as investment adviser for 20 open-end investment
companies that share a common board of trustees (the "VK Funds") and also acts
as investment adviser for other open-end and closed-end investment companies.
Nineteen of the VK Funds are organized as Massachusetts business trusts (or
subtrusts thereof) and the Van Kampen Merritt Pennsylvania Tax Free Income Fund
(the "VK Pennsylvania Fund") is organized for tax purposes as a Pennsylvania
trust. The Board of Trustees for each of the VK Funds currently consists of the
same seven members (the "VK Board") for each VK Fund.

On February 10, 1995, the AC Board and the VK Board held a joint meeting to
discuss with management ("Management") of the AC Adviser and the VK Adviser the
costs and potential benefits to shareholders of, among other things, (i)
permitting exchangeability of shares between the AC Funds and the VK Funds, (ii)
selecting a common transfer agent to facilitate exchangeability and enhance
shareholder services, (iii) combining certain AC Funds and VK Funds in order to
achieve certain economies of scale and efficiencies, and (iv) consolidating the
AC Board and the VK Board into a combined board of directors (collectively, the
"Consolidation").

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16

The AC Board and the VK Board created a joint committee (the "Joint
Committee") to consider the possible costs and benefits to shareholders
associated with the Consolidation. The Joint Committee met on February 20, 1995
to identify and discuss the possible costs and benefits of the Consolidation to
the shareholders. Following such meeting, the Joint Committee requested certain
additional information from Management with respect to those possible costs and
benefits identified by the Joint Committee.

The AC Board and the VK Board held a joint meeting on March 14, 1995 for the
purpose of, among other things, reviewing the findings of the Joint Committee
and reviewing the additional information requested from Management. At the
meeting, the AC Board and the VK Board each approved in principle certain
elements of the Consolidation, including the combination of the VK Board and the
AC Board, subject to the favorable resolution of certain outstanding
administrative matters with respect to the operation of a combined board and
subject to receiving certain additional information from Management. The AC
Board and the VK Board also considered reorganizing the AC Funds and the VK
Funds (excluding the VK Pennsylvania Fund) in one jurisdiction under
substantially similar charter documents, as part of the Consolidation.

The Joint Committee met again on March 27, 1995 and April 3, 1995 to address
the open administrative matters and to review the additional information
provided by Management. Following discussion of such matters and a review of the
additional information provided by Management, the Joint Committee recommended
to the AC Board that it approve each element of the Consolidation, including (i)
combining the AC Board and the VK Board, and (ii) reorganizing each of the AC
Funds as Delaware business trusts (or series thereof) in order to facilitate
governance of the AC Funds and the VK Funds under uniform organizational
documents following the Consolidation and in order to take advantage of certain
beneficial aspects of Delaware law with respect to business trusts. The Joint
Committee also made analogous recommendations to the VK Board.

The AC Board and the VK Board held a joint meeting on April 6 and 7, 1995 to
review the findings and recommendations of the Joint Committee. The AC Board
unanimously approved each element of the Consolidation on May 11, 1995,
including proposals to combine the AC Board and the VK Board and reorganize each
of the AC Funds as Delaware business trusts (or series thereof). The VK Board
approved each element of the Consolidation with respect to the VK Funds on April
7, 1995. Each of the AC Board and the VK Board also approved submitting such
proposals to the respective shareholders of the AC Funds and the VK Funds to
obtain the requisite shareholder approvals. Proposal 1 of this Proxy Statement
seeks shareholder approval to reorganize each of the AC Funds that are organized
as Massachusetts business trusts (or series thereof) into Delaware business
trusts (or series thereof). Proposal 2 of this Proxy Statement seeks shareholder
approval to

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17

reorganize each of the AC Funds organized as Maryland corporations (or series
thereof) into Delaware business trusts (or series thereof). Proposal 3 of this
Proxy Statement seeks shareholder approval for each of the AC Entities to expand
the number of the trustees or directors, as the case may be, of each AC Board
("the AC Board Members") from eight to fourteen, to re-elect to the AC Board the
incumbent AC Board Members and to elect to the AC Board the six members of the
VK Board who are not affiliated with the VK Adviser or the AC Adviser. The AC
Board has determined that reorganizing each of the AC Funds into Delaware
business trusts (or series thereof) and combining the AC Board and the VK Board
are essential elements of the Consolidation and recommend that shareholders vote
FOR Proposal 1, FOR Proposal 2 and IN FAVOR of each of the nominees named in
Proposal 3.

This Proxy Statement has been prepared and mailed to the shareholders of each
AC Fund to obtain the necessary shareholder approvals for the AC Funds to
complete the Consolidation. A substantially similar proxy statement with respect
to such proposals has been prepared and mailed to the shareholders of each VK
Fund to obtain the necessary shareholder approvals for the VK Funds to complete
the Consolidation. Certain additional proposals not related to the Consolidation
are included in the proxy statements being sent to the shareholders of the VK
Funds, which additional matters are not included in this Proxy Statement.

- ------------------------------------------------------------------------------
PROPOSAL 1: APPROVAL OF THE REORGANIZATION AND
CONVERSION OF EACH MASSACHUSETTS FUND
TO A DELAWARE BUSINESS TRUST (OR SERIES
THEREOF)
- ------------------------------------------------------------------------------

The AC Board has unanimously approved an Agreement and Plan of Reorganization
and Liquidation (a "Plan of Reorganization") substantially in the form attached
hereto as Appendix B with respect to each AC Fund organized as a Massachusetts
Fund. The Plans of Reorganization provide for the reorganization (the
"Reorganization") of each Massachusetts Fund into a Delaware business trust
(each a "Delaware Trust") or a series thereof (the separate series of the
Delaware Trusts and the Delaware Trusts that are not series companies are
referred to hereinafter collectively as the "Delaware Funds"). Each of the VK
Funds (excluding the VK Pennsylvania Fund) also is seeking approval from their
respective shareholders to reorganize as a Delaware fund.

REASONS FOR THE REORGANIZATIONS

The principal purposes of the Reorganizations are to take advantage of certain
beneficial aspects of Delaware law with respect to business trusts and to
facilitate governance of the AC Funds and the VK Funds under substantially
uniform organizational documents following the Consolidation.

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18

Delaware law provides that the shareholders of a Delaware business trust shall
not be subject to liability for obligations of the trust. Under Massachusetts
law, Massachusetts business trust shareholders are potentially liable for
obligations of the Massachusetts business trust. Although the risk of such
liability is remote, the AC Board has determined that Delaware law affords
greater protection against potential shareholder liability. Similarly, Delaware
law provides that, should the Delaware Funds issue multiple series of shares,
each series shall not be liable for the debts of any other series, which
liability is another potential, although remote, risk in the case of a
Massachusetts business trust.

The AC Board believes that the Delaware business trust form of organization
may enable the Delaware Funds to adopt new methods of operations and employ new
technologies that are expected to reduce costs of operation when, and if,
implemented. Delaware law, for example, explicitly authorizes electronic or
telephonic communications between a Delaware Fund and its shareholders. The AC
Board hopes to take advantage of this provision to improve shareholder voting
procedures and to reduce costs. Under Delaware law and the proposed trust
instrument of the Delaware Trusts, the Delaware Funds may be required to have
fewer shareholder meetings, potentially further reducing costs, although neither
Massachusetts business trusts nor Delaware business trusts are required to hold
annual shareholder meetings. Of course, the investment objectives of each
Massachusetts Fund will remain unchanged. In addition, the fundamental
investment restrictions of both the Massachusetts Funds and the Delaware Funds
will remain fundamental, and may be changed only by shareholder vote.

The AC Board and the VK Board also have determined that substantially uniform
organizational documents will facilitate their ability to jointly govern the AC
Funds and the VK Funds in an efficient and timely manner and will enhance the
ability of the AC Funds and the VK Funds to react in a consistent manner when
faced with similar corporate governance issues.

For a more detailed comparison of the Massachusetts Funds' declarations of
trust and the proposed Delaware trust instrument, see "Certain Comparative
Information About Massachusetts Trusts and Delaware Trusts" below.

PROCEDURES FOR REORGANIZATION

In order to accomplish the Reorganizations, each Massachusetts Trust has
organized a corresponding Delaware Trust. Each Delaware Trust was formed as a
Delaware business trust pursuant to an Agreement and Declaration of Trust (the
"Trust Instrument"). Each Massachusetts Trust that has issued one or more series
of shares will cause its corresponding Delaware Trust to create a series (i.e.,
a Delaware Fund) that corresponds to each series (i.e., each Massachusetts Fund)
of the Massachusetts Trust. The investment objectives and policies of each
Delaware Fund are the same as those of its corresponding Massachusetts Fund.

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19

To facilitate the Reorganizations, one share of each class of each Delaware
Fund will be issued to its corresponding Massachusetts Fund. If the Plan of
Reorganization of a Massachusetts Fund is approved by its shareholders, such
approval shall authorize the Massachusetts Fund, as sole shareholder of the
corresponding Delaware Fund, to (i) elect as trustees of the Delaware Trust the
nominees elected as trustees of the corresponding Massachusetts Trust pursuant
to Proposal 3 hereof, (ii) approve or disapprove the selection of the
independent public accountants described in Proposal 4 hereof, (iii) approve an
investment advisory agreement (a "New Advisory Agreement") between the Delaware
Fund and the AC Adviser substantially identical to the investment advisory
agreement currently in effect between the current fund and the AC Adviser, (iv)
approve, if applicable, a new investment sub-advisory agreement (a "New
Sub-Advisory Agreement") between the AC Adviser and the sub-adviser
substantially identical to the investment sub-advisory agreement currently in
effect and (v) approve, if applicable, Rule 12b-1 plans and service agreements
(each a "New 12b-1 Plan" and a "New Service Agreement", respectively) between
the respective Delaware Fund and Van Kampen American Capital Distributors, Inc.
(the "Distributor") substantially identical to the Rule 12b-1 plans and service
agreements currently in effect between the Massachusetts Fund and the
Distributor.

On the effective date of each Reorganization approved by shareholders, each
Massachusetts Fund will transfer all of its assets and liabilities to its
corresponding Delaware Fund in exchange for shares of such Delaware Fund having
an equal net asset value. The Massachusetts Fund will then be liquidated and
each shareholder of the Massachusetts Fund will receive for his or her Shares of
the Massachusetts Fund an equal number of shares of the corresponding Delaware
Fund. A shareholder's investment in the Massachusetts Fund will remain exactly
the same after the Reorganization and the corresponding Delaware Fund will
operate with the same investment objectives, policies and restrictions as the
corresponding Massachusetts Fund had in the past.

If shareholders of a Massachusetts Fund do not approve its Reorganization, the
Massachusetts Fund will continue in business as a Massachusetts business trust
(or series thereof, as applicable). The consummation of the Reorganization of
any one Massachusetts Fund is not contingent upon the consummation of the
Reorganization of any other AC Funds or VK Funds, individually or as a group.

It will not be necessary for holders of certificates of the Massachusetts
Funds to exchange their certificates for new certificates of the corresponding
Delaware Funds following consummation of the Reorganizations. Certificates for
shares of the Massachusetts Funds issued prior to the Reorganizations shall
represent outstanding shares of the corresponding Delaware Funds after the
Reorganizations. New certificates will not be issued by the Delaware Funds after
the Reorganizations to shareholders of the Delaware Funds unless specifically
requested in writing.

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20

Shareholders of the Massachusetts Funds who have not been issued certificates
and whose shares are held in an open account will automatically have those
shares designated similarly as shares of the corresponding Delaware Fund.

Each Reorganization approved by shareholders will become effective at the
later of August 1, 1995 or as soon as practicable following receipt of such
approval, taking into consideration all of the elements of the Consolidation. At
such time as a Reorganization becomes effective, the respective New Advisory
Agreement, New Sub-Advisory Agreement, if applicable, New Rule 12b-1 Plans and
New Service Agreements also will become effective, and will continue thereafter
if approved as required by the Investment Company Act of 1940, as amended (the
"1940 Act").

CERTAIN COMPARATIVE INFORMATION ABOUT MASSACHUSETTS TRUSTS
AND DELAWARE TRUSTS

Summary of the Trust Instrument. Each Delaware Trust has been established
pursuant to a Trust Instrument under the laws of the State of Delaware. The
Trust Instrument of each Delaware Trust created in connection with the
Reorganizations of the AC Funds is identical, except for the name of the
respective Delaware Trust. It currently is anticipated that each AC Fund's name
will be changed to include the phrase "Van Kampen American Capital" concurrent
with its Reorganization. Names of certain AC Funds may also be changed to
differentiate such fund from other funds in the combined fund complex or reflect
other changes deemed appropriate by the AC Board. The investment objectives,
policies and limitations of each Delaware Fund after the Reorganization will be
the same as those of its corresponding Massachusetts Fund. Prior to the
Reorganizations, each Delaware Fund will not have any material assets or
liabilities. During the Reorganization, the Massachusetts Fund will be the sole
shareholder of its corresponding Delaware Fund immediately prior to the
distribution of Delaware Fund shares to Massachusetts Fund shareholders.

As a Delaware business trust, each Delaware Trust's operations will be
governed by its Trust Instrument, its By-Laws and applicable Delaware law rather
than by the Massachusetts Fund's Declaration of Trust, By-Laws and applicable
Massachusetts law. The operations of each Delaware Trust will continue to be
subject to the provisions of the 1940 Act, the rules and regulations of the
Securities and Exchange Commission (the "SEC") thereunder, and applicable state
securities law. The By-Laws of each Delaware Trust would include new provisions
requiring that the chairman of the board be a trustee who is not an interested
person of the AC Adviser or the respective Delaware Trust and that the number of
trustees shall be fourteen, provided that such number shall be reduced over time
until the number of trustees is eight. In addition, a provision would be added
to the By-Laws of each Delaware Trust requiring the affirmative vote of at least
two-thirds of the trustees to amend such new provisions of the By-Laws and to
amend the provisions of such By-Laws relating to: (i) the mandatory retirement
age of the trustees, (ii) nominating

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or electing new trustees, (iii) adopting a retirement plan other than a deferred
compensation plan or (iv) amending the foregoing supermajority provision of the
By-Laws.

Trustees of the Delaware Trusts. Subject to the provisions of the Trust
Instrument, the business of each Delaware Trust is supervised by its trustees.
Except as set forth below, the responsibilities, powers, and fiduciary duties of
the trustees of the Delaware Trusts will be substantially the same as those of
trustees of the Massachusetts Trusts. The Declarations of Trust of the
Massachusetts Trusts permit the AC Board to remove a trustee with or without
cause by action of two-thirds of the trustees. The provisions of the Trust
Instruments of each Delaware Trust would permit the AC Board to remove a trustee
for cause by action of two-thirds of the trustees. The Delaware Trust Instrument
also would require a supermajority vote of 80% of the trustees or the vote of a
majority of the outstanding Shares of the respective Delaware Trust to amend
such removal provision. The trustees of each Delaware Trust would be all of the
incumbent trustees of each current Massachusetts Trust plus, if the respective
Consolidation is approved by shareholders of the respective Massachusetts Trust,
the members of the VK Board nominated below in Proposal 3; provided that such
nominees are elected by shareholders at the Meeting.

Series of Delaware Trusts and Massachusetts Trusts. The Trust Instrument of
each Delaware Trust would permit the trustees thereof to create one or more
series of the Delaware Trust and, with respect to each series, to issue an
unlimited number of full or fractional shares of that series or of one or more
of the classes of shares of that series. The trustees of each Massachusetts
Trust have identical rights under the Massachusetts Declaration of Trust, except
that the Life Investment Trust and Government Target Series do not have the
ability to issue multiple classes of shares. Each share of a series of a
Delaware Trust, like each share of a series of a Massachusetts Trust, represents
an equal proportionate interest with each other share in that series, none
having priority or preference over another.

Delaware Trust Shareholder Liability and Massachusetts Trust Shareholder
Liability. One area of difference between Delaware business trusts and
Massachusetts business trusts is the potential liability of shareholders.
Generally, shareholders of a Delaware business trust are not personally liable
for obligations of the Delaware business trust under Delaware law. The Delaware
Business Trust Act (the "Delaware Act") provides that a shareholder of a
Delaware business trust shall be entitled to the same limitation of liability
extended to shareholders of private, for profit corporations. However, no
similar statutory or other authority limiting business trust shareholder
liability applies in many other states, including Massachusetts. As a result, to
the extent that the Delaware Trust or a shareholder is subject to the
jurisdiction of courts in those states, the courts may not apply Delaware law,
and may thereby subject the Delaware Trust shareholders to liability.

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22

To guard against this risk, the Trust Instrument (i) contains an express
disclaimer of shareholder liability for acts or obligations of the Delaware
Trust and requires that notice of such disclaimer be given in each agreement,
obligation and instrument entered into by the Delaware Trust or its trustees and
(ii) provides for indemnification out of the series or fund property of any
shareholder held personally liable for the obligations of the Delaware Trust.
Thus, the risk of a Delaware Trust shareholder incurring financial loss beyond
his or her investment because of shareholder liability is limited to
circumstances in which (1) a court refused to apply Delaware law, (2) no
contractual limitation of liability was in effect, and (3) the series itself
would be unable to meet its obligations. In light of Delaware law, the nature of
the Delaware Trust's business, and the nature of its assets, the AC Adviser
believes that the risk of personal liability to a Delaware Trust shareholder is
extremely remote.

Shareholders of a Massachusetts business trust may, in certain circumstances,
be held personally liable under Massachusetts law for the obligations of the
Massachusetts Trust. The Massachusetts Declaration of Trust, like the Delaware
Trust Instrument, contains an express disclaimer of shareholder liability and
requires that notice of such disclaimer be given in each agreement entered into
or executed by the Massachusetts Trusts or the trustees. The Massachusetts
Declaration of Trust also provides for indemnification out of the respective
Massachusetts Fund's property. Thus, the AC Board believes the risk of
shareholder liability is also remote for shareholders of Massachusetts business
trusts. Shareholders of a Massachusetts business trust, however, do not benefit
from a statutory limitation of liability that is available to shareholders of a
Delaware business trust.

Liability of Trustees. The Delaware Trust Instrument provides that the
trustees shall not be liable to any person in connection with the assets or
affairs of the Delaware Trust and that a trustee shall not be liable for any
errors of judgement or mistakes of fact or law; but nothing in the Delaware
Trust Instrument protects a trustee against any liability to the Delaware Trust
or its shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. The Massachusetts Declaration of Trust
provides substantially similar protections to trustees of the Massachusetts
Trusts.

Voting Rights of Massachusetts and Delaware Trust Shareholders. Neither
Massachusetts business trusts nor Delaware business trusts are required to hold
annual meetings. The Declaration of Trust of each Massachusetts Trust requires
the affirmative vote of two-thirds of the shares of each series of a
Massachusetts Trust to remove a trustee of such Massachusetts Trust. The Trust
Instrument of a Delaware Trust would require the affirmative vote of a majority
of the shares of each series of a Delaware Trust to remove a trustee. The
Delaware Trust Instrument also would require a supermajority vote of 80% of the
trustees or the

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vote of a majority of the outstanding shares of the respective Delaware Trust to
amend such removal provision. The Declaration of Trust and Trust Instrument
each, in substance, provide that a special meeting of shareholders may be called
by the holders of 10% or more of the shares, in which case the trustees shall
cooperate with such shareholders as required under Section 16(c) of the 1940
Act.

Each Delaware Trust, like its corresponding Massachusetts Trust, will operate
as an open-end management investment company registered with the SEC under the
1940 Act. Shareholders of each Delaware Fund will, therefore, have the power to
vote at special meetings with respect to, among other things, changes in
fundamental investment policies and limitations of their respective Delaware
Fund; ratification of the selection by the trustees of the independent public
accountants for the Delaware Fund; and such additional matters relating to the
Delaware Fund as may be required by law, or which the trustees consider
desirable. If, at any time, less than two-thirds of the trustees holding office
have been elected by shareholders, the trustees then in office will promptly
call a meeting of shareholders of the affected Delaware Trust for the purpose of
electing a board of trustees. Each Massachusetts Trust intends to notify the SEC
that its corresponding Delaware Trust will succeed to the Shares registered by
the Massachusetts Trust under the Securities Act of 1933.

The Delaware Trust Instrument, like the Massachusetts Declaration of Trust,
provides that shareholders shall have the power to vote only with respect to
(i) the election or removal of trustees as provided therein, (ii) the approval
or termination of investment advisory or distribution contracts, (iii) the
termination or reorganization of the Delaware Trust or any series of the
Delaware Trust, (iv) with respect to amendments of the Trust Instrument to the
extent they would adversely affect the rights of shareholders, (v) to the same
extent as the stockholders of a Delaware business corporation as to whether or
not a court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Delaware Trust or
any series or the shareholders thereof, and (vi) with respect to such additional
matters as may be required by law or the trustees may consider desirable. The
Massachusetts Declaration of Trust generally gives shareholders substantially
similar voting rights. Both the Delaware Trust Instrument and the Massachusetts
Declaration of Trust require a majority of shares to establish quorum for a
meeting.

The foregoing is only a summary of certain of the differences between the
Massachusetts Funds, their Declarations of Trust and By-laws and Massachusetts
law and the Trust Instruments of the Delaware Funds, their By-laws and Delaware
law. It is not a complete list of differences. Shareholders should refer to the
provisions of such Declarations of Trust, By-laws and Massachusetts law, and the
Trust Instrument, By-laws and Delaware law directly for a more thorough
comparison. Shareholders on the Record Date may obtain copies of the
organizational

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documents of the AC Funds by calling the telephone number set forth on the first
page of this Proxy Statement.

TEMPORARY AMENDMENT TO INVESTMENT LIMITATIONS

During the period prior to its Reorganization, each Massachusetts Fund will
own the only outstanding share of each class of its corresponding Delaware Fund.
By acquiring a nominal share of each class of its corresponding Delaware Trust,
the Massachusetts Trust can then elect as trustees of such Delaware Trust, the
nominees named in Proposal 3 below, provided that shareholders of the
Massachusetts Trust elect such nominees at the Meeting, approve the New
Investment Advisory Agreement, approve the New Sub-Advisory Agreement, if
applicable, approve the New Distribution Plan and New Service Agreement and
ratify the selection of independent public accountants, in order to comply with
the provisions of the 1940 Act requiring such shareholder approvals.

Certain of the Massachusetts Funds have investment restrictions which require
shareholder approval before they can be changed and which might otherwise
preclude such Massachusetts Fund from completing the Reorganization including,
for example, restrictions which prohibit such Massachusetts Fund from purchasing
any securities (other than tax-exempt obligations issued or guaranteed by the
United States Government or by its agencies or instrumentalities), if, as a
result, more than 5% of the Massachusetts Fund's total assets (taken at current
value) would then be invested in securities of a single issuer or, if, as a
result, such Fund would hold more than 10% of the outstanding voting securities
of an issuer, or a prohibition against making investments for the purpose of
exercising control or participating in management. By approving the
Reorganizations, the shareholders will be authorizing a suspension of any and
all of these restrictions only to the extent necessary to permit the
Reorganizations to take place.

FEDERAL INCOME TAX CONSEQUENCES

It is anticipated that the transactions contemplated by the Plans of
Reorganization will be tax-free. Consummation of each Reorganization is subject
to receipt of an opinion of O'Melveny & Myers, counsel to each Massachusetts
Fund, that, under the Internal Revenue Code of 1986, as amended (the "Code"),
the Reorganization of the respective Massachusetts Fund into a Delaware Fund
pursuant to a Plan of Reorganization will not give rise to the recognition of
income, gain or loss for federal income tax purposes to the Massachusetts Fund,
the Massachusetts Trust or the shareholders of the Massachusetts Fund. A
shareholder's adjusted basis for tax purposes in shares of a Delaware Fund after
the Reorganizations will be the same as his or her adjusted basis for tax
purposes in the shares of the corresponding Massachusetts Fund immediately
before the Reorganizations. Each shareholder should consult his or her own tax
adviser with respect to the state and local tax consequences of the proposed
transaction.

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EXPENSES

The expenses related to the Reorganization of each Massachusetts Fund into a
Delaware Fund will be borne by Van Kampen American Capital and each respective
Massachusetts Fund as set forth under "EXPENSES" below.

RECOMMENDATION OF TRUSTEES

The AC Board has unanimously approved the proposed Reorganization of each
Massachusetts Fund and has determined that participation in such Reorganization
is in the best interests of each Massachusetts Fund and that the interests of
existing shareholders of each Massachusetts Fund will not be diluted as a result
of the Reorganization. THE AC BOARD RECOMMENDS THAT SHAREHOLDERS OF EACH
MASSACHUSETTS FUND VOTE "FOR APPROVAL" OF PROPOSAL 1.

REQUIRED VOTE

In accordance with the Declaration of Trust of each Massachusetts Fund, an
affirmative vote of a majority of the outstanding Shares of the respective
Massachusetts Fund entitled to vote on the proposal is required to approve the
respective Reorganization and subsequent liquidation and dissolution of the
respective Massachusetts Fund.
- ------------------------------------------------------------------------------
PROPOSAL 2: APPROVAL OF REORGANIZATION AND CONVERSION OF EACH MARYLAND FUND TO A
DELAWARE BUSINESS TRUST (OR SERIES THEREOF)
- ------------------------------------------------------------------------------

The AC Board has unanimously approved an Agreement and Plan of Reorganization
and Liquidation (a "Plan of Reorganization") substantially in the form attached
hereto as Appendix C with respect to each AC Fund organized as a Maryland Fund.
The Plans of Reorganization provide for the reorganization (the
"Reorganization") of each Maryland Fund into a Delaware business trust (each a
"Delaware Trust") or a series thereof (the separate series of the Delaware
Trusts and the Delaware Trusts that are not series companies are referred to
hereinafter as "Delaware Funds"). Each of the VK Funds (excluding the VK
Pennsylvania Fund) also is seeking approval from their respective shareholders
to reorganize as Delaware funds.

REASONS FOR THE REORGANIZATIONS

The principal purposes of the Reorganizations are to take advantage of certain
beneficial aspects of Delaware law with respect to business trusts and to
facilitate

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26

governance of the AC Funds and the VK Funds under substantially uniform
organizational documents following the Consolidation.

Delaware law provides that the trustees of a Delaware business trust may
authorize for issuance an unlimited number of shares. Maryland corporate law
provides that the Articles of Incorporation of a Maryland corporation must set
forth the number of shares for issuance. In addition, Delaware law with respect
to business trusts has been specifically drafted to accommodate the unique
corporate governance needs of investment companies and provides that its policy
is to give maximum freedom of contract to the trust instrument of a Delaware
business trust. Maryland corporate law, although it contains many provisions
specifically applicable to investment companies, is less customized for use by
investment companies.

The AC Board believes that the Delaware business trust form of organization
may enable the Delaware Funds to adopt new methods of operation and employ new
technologies that are expected to reduce costs of operation when, and if,
implemented. Delaware law, for example, explicitly authorizes electronic or
telephonic communications between shareholders and the Delaware Funds. The AC
Board hopes to take advantage of this provision to improve shareholder voting
procedures and reduce costs. Under Delaware law and the proposed trust
instruments of the Delaware Trusts, the Delaware Funds may be required to have
fewer shareholder meetings, potentially further reducing costs, although neither
Maryland corporations nor Delaware business trusts are required to hold annual
shareholder meetings. Of course, the investment objectives of each Maryland Fund
will remain unchanged. In addition, the fundamental investment restrictions of
both the Maryland Funds and Delaware Funds will remain fundamental, and may be
changed only by shareholder vote.

The AC Board and the VK Board also have determined that uniform charter
documents will facilitate their ability to jointly govern the AC Funds and the
VK Funds in an efficient and timely manner and will enhance the ability of the
AC Funds and the VK Funds to react in a consistent manner when faced with
similar corporate governance issues.

For a more detailed comparison of the Maryland Fund's articles of
incorporation and the proposed Delaware trust instrument, see "Certain
Comparative Information About Maryland Funds and Delaware Funds" below.

PROCEDURES FOR REORGANIZATION

In order to accomplish the Reorganizations, each Maryland Corporation has
organized a corresponding Delaware Trust. Each Delaware Trust was formed as a
Delaware business trust pursuant to an Agreement and Declaration of Trust (the
"Trust Instrument"). Each Maryland Corporation that has issued one or more
series of shares will cause its corresponding Delaware Trust to create a series
(i.e., a

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Delaware Fund) that corresponds to each series (i.e. each Maryland Fund) of the
Maryland Corporation. The investment objectives and policies of each Delaware
Fund are the same as those of its corresponding Maryland Fund.

To facilitate the Reorganizations, one share of each class of each Delaware
Fund has been issued to its corresponding Maryland Fund. If the Plan of
Reorganization of a Maryland Fund is approved by its shareholders, such approval
shall authorize the Maryland Fund, as sole shareholder of the corresponding
Delaware Fund, to (i) elect as trustees of the Delaware Trust the nominees
elected as directors of the corresponding Maryland Corporation pursuant to
Proposal 3 hereof, (ii) approve or disapprove the selection of the independent
public accountants described in Proposal 4 hereof, (iii) approve an investment
advisory agreement (a "New Advisory Agreement") between the Delaware Fund and
the AC Adviser substantially identical to the investment advisory agreement
currently in effect between the current fund and the AC Adviser (iv) approve, if
applicable, a new investment sub-advisory agreement (a "New Sub-Advisory
Agreement") between the AC Adviser and a sub-adviser substantially identical to
the investment sub-advisory agreement currently in effect, and (v) approve, if
applicable, Rule 12b-1 plans and service agreements (each a "New 12b-1 Plan" and
a "New Service Agreement", respectively) between the respective Delaware Fund
and the Distributor substantially identical to the Rule 12b-1 plans and service
agreements currently in effect between the Maryland Fund and the Distributor.

On the effective date of each Reorganization approved by shareholders, each
Maryland Fund will transfer all of its assets and liabilities to its
corresponding Delaware Fund in exchange for shares of such Delaware Fund having
an equal net asset value. The Maryland Fund will then be liquidated and each
shareholder of the Maryland Fund will receive for his or her Shares an equal
number of full and fractional shares of the corresponding Delaware Fund. A
shareholder's investment in the Maryland Fund will remain exactly the same after
the Reorganization and the corresponding Delaware Fund will operate with the
same investment objectives, policies and restrictions as the corresponding
Maryland Fund had in the past.

If shareholders of a Maryland Fund do not approve its Reorganization, the
Maryland Fund will continue in business as a Maryland corporation (or series
thereof, as applicable.) The consummation of the Reorganization of any one
Maryland Fund is not contingent upon the consummation of the Reorganization of
any other AC Funds or VK Funds, individually or as a group.

It will not be necessary for holders of certificates of the Maryland Funds to
exchange their certificates for new certificates following consummation of the
Reorganizations. Certificates for shares of the Maryland Funds issued prior to
the Reorganizations shall represent outstanding shares of the corresponding
Delaware Funds after the Reorganizations. New certificates will not be issued by
the Delaware Funds after the Reorganizations to shareholders of the Delaware
Funds

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unless specifically requested in writing. Shareholders of the Maryland Funds who
have not been issued certificates and whose shares are held in an open account
will automatically have those shares designated similarly as shares of the
corresponding Delaware Fund.

Each Reorganization approved by shareholders will become effective as soon as
practicable following receipt of such approval, taking into consideration all of
the elements of the Consolidation. At such time as a Reorganization becomes
effective, the respective New Advisory Agreement, New Sub-Advisory Agreement, if
applicable, New 12b-1 Plans and New Service Agreements also will become
effective and will continue thereafter if approved as required by the 1940 Act.

CERTAIN COMPARATIVE INFORMATION ABOUT MARYLAND FUNDS AND DELAWARE FUNDS

Summary of the Trust Instrument. Each Delaware Trust has been established
pursuant to a Trust Instrument under the laws of the State of Delaware. The
Trust Instrument of each Delaware Trust created in connection with the
Reorganizations of the AC Funds is identical, except for the name of the
respective Delaware Trust. It currently is anticipated that each AC Fund's name
will be changed concurrent with its Reorganization to, among other things, (i)
include the phrase "Van Kampen," (ii) differentiate such fund from other funds
in the combined fund complex or (iii) reflect other changes deemed appropriate
by the AC Board. The investment objectives, policies and limitations of each
Delaware Fund after the Reorganization will be the same as those of its
corresponding Maryland Fund. Prior to the Reorganizations, each Delaware Fund
will not have any assets or liabilities. During the Reorganization, the Maryland
Fund will be the sole shareholder of its corresponding Delaware Fund immediately
prior to the distribution of Delaware Fund shares to Maryland Fund shareholders.

As a Delaware business trust, each Delaware Trust's operations will be
governed by its Trust Instrument, its By-Laws and applicable Delaware law rather
than by the Maryland Corporation's Articles of Incorporation, By-Laws and
applicable Maryland law. The operations of each Delaware Trust will continue to
be subject to the provisions of the 1940 Act, the rules and regulations of the
SEC thereunder, and applicable state securities law. The By-Laws of each
Delaware Trust would include new provisions requiring that the chairman of the
board be a trustee who is not an interested person of the AC Adviser or the
respective Delaware Fund and that the number of trustees shall be fourteen,
provided that such number shall be reduced over time until the number of
trustees is eight. In addition, a provision would be added to the By-Laws of
each Delaware Trust requiring the affirmative vote of at least two-thirds of the
trustees to amend such new provisions of the By-Laws and to amend the provisions
of such By-Laws relating to: (i) the mandatory retirement age of the trustees,
(ii) nominating or electing new trustees, (iii) adopting a retirement plan other
than a deferred compensation plan or (iv) amending the foregoing supermajority
provision of the By-Laws.

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Trustees of the Delaware Trusts. Subject to the provisions of the Trust
Instrument, the business of each Delaware Trust is supervised by its trustees.
The responsibilities, powers, and fiduciary duties of the trustees of the
Delaware Trusts will be substantially the same as those of the Directors of the
Maryland corporations. Under Maryland law, a director of the Maryland Funds may
be removed with or without cause only by the affirmative vote of a majority of
Shares entitled to vote for the election of directors. The provisions of the
Trust Instrument would permit the AC Board to remove a trustee for cause by
action of two-thirds of the trustees. The Trust Instrument also would require a
supermajority vote of 80% of the trustees or the vote of a majority of the
outstanding shares of the respective Delaware Trust to amend such removal
provision. The trustees of each Delaware Trust would be all of the incumbent
directors of each current Maryland Corporation plus, if the respective
Consolidation is approved by shareholders of the respective Maryland Fund, the
members of the VK Board set forth below in Proposal 3.

Series of Delaware Trusts and Maryland Corporations. The Trust Instrument of
each Delaware Trust permits the trustees thereof to create one or more series of
the Delaware Trust and, with respect to each series, to issue an unlimited
number of full or fractional shares of that series or of one or more classes of
shares of that series. The directors of each Maryland Corporation have
substantially similar rights under their Articles of Incorporation and Maryland
law, except that they are required to specify a fixed number of shares
authorized for issuance. Each share of a series of a Delaware Trust like each
share of a series of a Maryland corporation, represents an equal proportionate
interest with each other share in that series, none having priority or
preference over another.

Delaware Trust Shareholder Liability and Maryland Corporation Shareholder
Liability. One area of difference between the two forms of organizations is the
potential liability of shareholders. Generally, shareholders of a Delaware
business trust are not personally liable for obligations of the Delaware Trust
under Delaware law. The Delaware Business Trust Act (the Delaware Act) provides
that a shareholder of a Delaware business trust shall be entitled to the same
limitation of liability extended to shareholders of private, for profit
corporations. However, no similar statutory or other authority limiting business
trust shareholder liability applies in many other states. As a result, to the
extent that the Delaware Trust or a shareholder is subject to the jurisdiction
of courts in those states, the courts may not apply Delaware law, and may
thereby subject the Delaware Trust shareholders to liability. To guard against
this risk, the Trust Instrument (i) contains an express disclaimer of
shareholder liability for acts or obligations of the Delaware Trust and requires
that notice of such disclaimer be given in each agreement, obligation and
instrument entered into by the Delaware Trust or its Trustees and (ii) provides
for indemnification out of the series or fund property of any shareholder held
personally liable for the obligations of the Delaware Trust. Thus, the risk of a
Delaware Trust shareholder incurring financial loss beyond his or her investment
because of

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shareholder liability is limited to circumstances in which (1) a court refused
to apply Delaware law, (2) no contractual limitation of liability was in effect,
and (3) the series or fund itself would be unable to meet its obligations. In
light of Delaware law, the nature of the Delaware Trust's business, and the
nature of its assets, the AC Adviser believes that the risk of personal
liability to a Delaware Trust shareholder is extremely remote.

Shareholders of a Maryland corporation currently have no personal liability
for the corporation's acts or obligations, except that a shareholder may be
liable to the extent that: (1) the dividends he receives exceed the amount which
properly could have been paid under Maryland law, (2) the consideration paid to
him by the Maryland corporation for his stock was paid in violation of Maryland
law or (3) he otherwise receives any distribution, payment or release which
exceeds the amount which he could properly receive under Maryland law.

Liability of Trustees. Maryland law provides that in addition to any other
liability imposed by law, the directors may be liable to a Maryland corporation:
(1) for voting or assenting to the declaration of any dividend or other
distribution of assets to shareholders which is contrary to Maryland law, (2)
for voting or assenting to certain distributions of assets to shareholders
during liquidation of the corporation and (3) for voting or assenting to a
repurchase of the shares of a Maryland corporation in violation of Maryland law.
In the event of any litigation against the directors or officers of a Maryland
Fund, Maryland law permits such fund to indemnify a director or officer for
certain expenses and to advance money for such expenses only if he demonstrates
that he acted in good faith and reasonably believed that his conduct was in the
best interest of such fund. In addition, the Articles of Incorporation for each
of Corporate Bond Fund, Enterprise Fund, Equity Income Fund, Global Managed
Assets Fund, High Yield Investments, Municipal Bond Fund, Pace Fund, Real Estate
Securities Fund, Small Capitalization Fund, Texas Municipal Securities and
American Capital World Portfolio Series, Inc. limit the personal liability of
directors and officers to the corporation and its shareholders for monetary
damages, except (i) to the extent that it is proved that the director or officer
actually received an improper benefit or profit in money, property or services;
(ii) to the extent that a judgment or other final adjudication adverse to the
director or officer is entered in a proceeding based on a finding in the
proceeding that the director's or officer's action, or failure to act, was the
result of active and deliberate dishonesty and was material to the cause of
action adjudicated in the proceeding; or (iii) his actions constituted willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. The other Maryland Funds contain no such
provision. The Delaware Trust Instrument provides that the trustees shall not be
liable to any person in connection with the assets or affairs of the Delaware
Trust and that a trustee shall not be liable for any errors of judgement or
mistakes of fact or law; but nothing in the Delaware Trust Instrument protects a
trustee against any liability to the Delaware Trust or its

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shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office.

Voting Rights of Maryland Corporation and Delaware Trust Shareholders. Neither
Maryland corporations nor Delaware business trusts are required to hold annual
meetings. The Articles of Incorporation or By-laws of the Maryland Funds and
Trust Instrument of the Delaware Trusts each, in substance, provide that a
special meeting of shareholders may be called by the holders of 10% or more of
the shares, except that the Articles of Incorporation of each of Comstock Fund,
Corporate Bond Fund, Emerging Growth Fund, Enterprise Fund, Government
Securities, Harbor Fund, Pace Fund, Reserve Fund, Texas Municipal Securities,
and American Capital World Portfolio, Inc. provide that 10 or more holders of
record (who have been holders of record for six months), and who hold in the
aggregate either shares having net asset value of at least $25,000 or at least
1% of the shares, whichever is less, may apply to their respective board of
directors stating that they wish to communicate with shareholders to request a
meeting to remove any director, in which case the board shall either provide the
applicants with a list of the names and addresses of all the respective
shareholders or inform the applicants of the approximate number of shareholders
and the approximate cost of mailing the proposed request to them.

Each Delaware Trust, like its corresponding Maryland Corporation, will operate
as an open-end management investment company registered with the SEC under the
1940 Act. Shareholders of each Delaware Fund will, therefore, have the power to
vote at special meetings with respect to, among other things, changes in
fundamental investment policies and limitations of their respective Delaware
Fund; ratification of the selection by the trustees of the independent public
accountants for the Delaware Fund; and such additional matters relating to the
Delaware Fund as may be required by law, or which the trustees consider
desirable. If, at any time, less than two-thirds of the trustees holding office
have been elected by shareholders, the trustees then in office will promptly
call a meeting of shareholders of the affected Delaware Trust for the purpose of
electing a board of trustees. Each Maryland Corporation intends to notify the
SEC that its corresponding Delaware Trust will succeed to the Shares registered
by the Maryland Corporation under the Securities Act of 1933.

The Trust Instrument provides that shareholders shall have the power to vote
only with respect to (i) the election or removal of Trustees as provided
therein, (ii) the approval or termination of investment advisory agreements or
distribution contracts, (iii) the termination or reorganization of the Trust or
any series of the Trust, (iv) with respect to amendments of the Trust Instrument
to the extent they would adversely affect the rights of shareholders, (v) to the
same extent as the stockholders of a Delaware business corporation as to whether
or not a court action,

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proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Delaware Trust or any series or the
shareholders thereof, and (vi) with respect to such additional matters as may be
required by law, the Trust Instrument, By-Laws or as the trustees may consider
necessary or desirable. The Maryland Articles of Incorporation and Maryland Law
generally give shareholders substantially similar voting rights. Both the
Delaware Trust Instrument and the Maryland Articles of Incorporation require a
majority of shares to establish quorum for a meeting and require at least the
vote of a majority of the shares present in person or by proxy at the meeting to
constitute shareholder action.

Shares of the Comstock Fund have cumulative voting rights, which means that
only with regard to the election of directors, each shareholder of the Comstock
Fund has the right to cast a number of votes equal to the number of Shares owned
multiplied by the number of directors to be elected, and each shareholder may
cast the whole number of votes for one candidate or distribute such votes among
two or more candidates. Under the proposed Delaware Trust Instrument, Shares of
the Comstock Fund would not have cumulative voting rights, which means, with
respect to the election of trustees, each shareholder could cast a number of
votes for each nominee equal to the number of shares owned. As a consequence,
shareholders of the corresponding Delaware Trust holding a majority of its
shares present at a shareholders meeting would be able to elect all of the
trustees of the Comstock Fund following the Reorganization.

Right of Inspection. Maryland law provides that persons who have been
shareholders of record for six months or more and who own at least five percent
of the shares of a Maryland Fund may inspect the books of account and stock
ledger of the Maryland Fund. Delaware Fund shareholders have the same rights to
inspect the records, accounts and books of the Delaware Fund as are permitted
shareholders of a Delaware business corporation. Currently, each shareholder of
a Delaware business corporation is permitted to inspect the records, accounts
and books of a business corporation for any legitimate business purpose.

The foregoing is only a summary of certain of the differences between the
Maryland Funds, their Articles of Incorporation and by-laws and Maryland law and
the Trust Instruments of the Delaware Funds, their By-laws and Delaware law. It
is not a complete list of differences. Shareholders should refer to the
provisions of such Articles of Incorporation, By-laws and Maryland law and the
Trust Instrument, By-laws and Delaware law directly for a more thorough
comparison. Shareholders on the Record Date may obtain copies of the
organizational documents of the AC Funds by calling the telephone number set
forth on the first page of this Proxy Statement.

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TEMPORARY AMENDMENT TO INVESTMENT LIMITATIONS

During the period prior to its Reorganization, each Maryland Fund will own the
only outstanding share of each class of its corresponding Delaware Fund. By
acquiring a nominal share of each class of its corresponding Delaware Fund, the
Maryland Fund can then vote to elect as Trustees of such Delaware Fund the
nominees named in Proposal 3 below, provided that shareholders of the Maryland
Corporation elect such nominees at the Meeting, approve the New Investment
Advisory Agreement, approve the New Sub-Advisory Agreement, if applicable,
approve the New Distribution Plan and New Service Agreement and ratify the
selection of independent public accountants, in order to comply with the
provisions of the 1940 Act requiring such shareholder approvals.

Certain of the Maryland Funds have investment restrictions which require
shareholder approval before they can be changed and which might otherwise
preclude such Maryland Fund from completing the Reorganization including (for
example) restrictions which prohibit such Maryland Fund from purchasing any
securities (other than tax-exempt obligations issued or guaranteed by the United
States Government or by its agencies or instrumentalities), if, as a result,
more than 5% of the Maryland Fund's total assets (taken at current value) would
then be invested in securities of a single issuer or, if, as a result, such Fund
would hold more than 10% of the outstanding voting securities of an issuer, or a
prohibition against making investments for the purpose of exercising control or
participating in management. By approving the Reorganizations, the shareholders
will be authorizing a suspension of any and all of these restrictions only to
the extent necessary to permit the Reorganizations to take place.

FEDERAL INCOME TAX CONSEQUENCES

It is anticipated that the transactions contemplated by the Plans of
Reorganization will be tax-free. Consummation of each Reorganization is subject
to receipt of an opinion of O'Melveny & Myers, counsel to each Maryland Fund,
that, under the Code, the Reorganization of the respective Maryland Fund into a
Delaware Fund pursuant to a Plan of Reorganization will not give rise to the
recognition of income, gain or loss for federal income tax purposes to the
Current Maryland Fund, the Maryland Corporation or the shareholders of the
Maryland Fund. A shareholder's adjusted basis for tax purposes in shares of a
Delaware Fund after the Reorganizations will be the same as his adjusted basis
for tax purposes in the shares of the corresponding Maryland Fund immediately
before the Reorganizations. Each shareholder should consult his or her own tax
adviser with respect to the state and local tax consequences of the proposed
transaction.

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EXPENSES

The expenses related to the Reorganization of each Maryland Fund into a
Delaware Fund will be borne by Van Kampen American Capital and each respective
Maryland Fund as set forth under "EXPENSES" below.

RECOMMENDATION OF DIRECTORS

The AC Board has unanimously approved the proposed Reorganization of each
Maryland Fund and has determined that participation in such Reorganization is in
the best interests of each Maryland Fund and that the interests of existing
shareholders of each Maryland Fund will not be diluted as a result of the
Reorganization. THE AC BOARD RECOMMENDS THAT SHAREHOLDERS OF EACH MARYLAND FUND
VOTE "FOR APPROVAL" OF PROPOSAL 2.

REQUIRED VOTE

In accordance with the Articles of Incorporation of each Maryland Fund, an
affirmative vote of a majority of the outstanding Shares of the respective
Maryland Fund entitled to vote on the proposal is required to approve the
respective Reorganization and subsequent liquidation and dissolution of the
respective Maryland Fund.

- ------------------------------------------------------------------------------
PROPOSAL 3: ELECTION OF DIRECTORS OR TRUSTEES
- ------------------------------------------------------------------------------

At a meeting held on May 11, 1995, the AC Board unanimously approved
increasing the number of trustees for each AC Entity from eight to fourteen and
nominated each of the incumbent trustees or directors, as the case may be, to
stand for re-election and also nominated Messrs. Philip P. Gaughan, R. Craig
Kennedy, Donald C. Miller, Jack E. Nelson, Jerome L. Robinson and Wayne W.
Whalen to fill the new trustee positions. Each of the new nominees currently
serves on the VK Board. The VK Board has also unanimously approved increasing
the number of members of the VK Board from seven to fifteen and nominated each
of its incumbent trustees for re-election and each of the members of the AC
Board to fill the new positions.

The AC Board together with the VK Board evaluated the benefits to shareholders
resulting from the proposed combination of the AC Board and the VK Board. Each
of the AC Board and the VK Board determined that a combined board could more
effectively seek to maximize the benefits of a unified fund complex including:
implementation of exchangeability of shares among the AC Funds and the VK Funds;
positioning the unified fund complex to maximize benefits for marketing; more
effective supervision of the implementation of improved shareholder service
programs across the combined fund complex; combining historical knowledge and
experience of the two-fund complexes; more effective evaluation of potential

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combinations of similar funds thereby achieving economies of scale for
shareholders; and the elimination of overlapping expenses and demands on
Management's attention from two separate boards.

The AC Board also evaluated the costs to shareholders of the AC Funds
resulting from the combination of the AC Board and the VK Board. The principal
cost associated with the combination of the two boards would be the added
expense to each AC Fund of compensating the six additional trustees. In order to
alleviate such additional expense, the trustees approved a reduction in the
compensation per trustee and agreed to an aggregate annual compensation cap with
respect to the combined fund complex of $84,000 per trustee, until December 31,
1996, based upon the current net assets and the current number of Van Kampen
American Capital Funds. In addition, the AC Adviser has agreed to reimburse the
AC Funds through December 31, 1996 for any increase in the aggregate trustees'
compensation over such funds' 1994 fiscal year aggregate compensation. It is
anticipated that by December 31, 1996, reductions in the number of trustees on
the combined board is expected to reduce the aggregate compensation of the
combined board to approximately the current aggregate compensation of the AC
Board.

THE DIRECTORS/TRUSTEES

The following schedule sets forth the initial election of each incumbent
director/trustee of each AC Entity listed below:

- ------------------------------------------------------------------------------
AC ENTITIES -- BEGINNING SERVICE AS A DIRECTOR/TRUSTEE
- ------------------------------------------------------------------------------

AC FUND BRANAGAN CARUSO HILSMAN POWELL REES SHEEHAN SISTO WOODSIDE
- -------------------------------- -------- ------ ------- ------ ---- ------- ----- --------

Comstock........................ 1991 1991 1979 1987 1968 1991 1979 1986
Corporate Bond.................. 1991 1991 1978 1987 1980 1991 1978 1986
Emerging Growth................. 1991 1991 1978 1987 1980 1991 1978 1986
Enterprise...................... 1991 1991 1980 1987 1962 1991 1980 1986
Equity Income................... 1991 1991 1978 1987 1979 1991 1978 1986
Federal Mortgage................ 1991 1991 1985 1987 1985 1991 1985 1986
Global Managed.................. 1993 1993 1993 1993 1993 1993 1993 1993
Government Securities........... 1991 1991 1984 1987 1984 1991 1984 1986
Government Target............... 1991 1991 1990 1990 1990 1991 1990 1990
Growth & Income................. 1991 1991 1969 1987 1979 1991 1973 1986
Harbor.......................... 1991 1991 1979 1987 1962 1991 1979 1986
High Yield...................... 1991 1991 1979 1987 1980 1991 1979 1986
Life Investment Trust
Government Portfolio........... 1991 1991 1985 1987 1985 1991 1985 1986
Common Stock Portfolio......... 1991 1991 1985 1987 1985 1991 1985 1986
Money Market Portfolio......... 1991 1991 1985 1987 1985 1991 1985 1986
Multiple Strategy Portfolio.... 1991 1991 1985 1987 1985 1991 1985 1986
Domestic Income Portfolio...... 1991 1991 1985 1987 1985 1991 1985 1986
Municipal Bond.................. 1991 1991 1979 1987 1980 1991 1979 1986
Pace............................ 1991 1991 1980 1987 1968 1991* 1980 1986
Real Estate..................... 1994 1994 1994 1994 1994 1994 1994 1994
Small Capitalization............ 1993 1993 1993 1993 1993 1993 1993 1993

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AC FUND BRANAGAN CARUSO HILSMAN POWELL REES SHEEHAN SISTO WOODSIDE
- -------------------------------- -------- ------ ------- ------ ---- ------- ----- --------

Tax Exempt Trust
High Yield Portfolio........... 1991 1991 1984 1987 1984 1991 1984 1986
Insured Portfolio.............. 1991 1991 1984 1987 1984 1991 1984 1986
Texas Municipal................. 1991 1991 1991 1991 1991 1991 1991 1991
U.S. Government Trust........... 1992 1992 1992 1992 1992 1992 1992 1992
Utilities Income................ 1993 1993 1993 1993 1993 1993 1993 1993
World Portfolio Series
Global Equity Fund............. 1991 1991 1991 1991 1991 1991 1991 1991
Global Government Fund......... 1991 1991 1991 1991 1991 1991 1991 1991

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

* Mr. Sheehan also served as a director of Pace Fund from 1972 to 1980.

With respect to each AC Fund, fourteen directors/trustees are to be elected at
the Meeting to serve until reaching their designated retirement age or until
their successors are duly elected and qualified. The election of each nominee
requires an affirmative vote of a plurality of the Shares entitled to vote
present at the Meeting in person or by proxy. Shareholders of each AC Entity
will vote together as a single class on the election of nominees for the
respective AC Entity; thus, shareholders of Global Government Fund and Global
Equity Fund will vote together as a single class to elect directors on behalf of
the American Capital World Portfolio Series, Inc., shareholders of the Common
Stock Portfolio, Strategic Income Portfolio, Money Market Portfolio, Multiple
Strategy Portfolio and Government Portfolio will vote together with the other
series of such corporation or trust as a single class to elect trustees of the
American Capital Life Investment Trust, and shareholders of the High Yield
Municipal Portfolio and Insured Municipal Portfolio will vote together as a
single class to elect trustees of the American Capital Tax-Exempt Trust. In
addition, the Comstock Fund's Shares have cumulative voting rights, which means
that each shareholder of the Comstock Fund has the right to cast a number of
votes equal to the number of Shares owned multiplied by the number of directors
to be elected, and each shareholder may cast the whole number of votes for one
candidate or distribute such votes among two or more candidates, as he or she
chooses. Unless otherwise instructed, the proxy holders intend to vote proxies
received by them for the fourteen nominees named below, reserving the right,
however, to cumulate the votes of shareholders of the Comstock Fund and
distribute them among the nominees for the Comstock Fund at the discretion of
the proxy holders. It is the intention of the persons named in the enclosed
proxy to vote the Shares represented by them for the election of the nominees
listed below unless the proxy is marked otherwise.

The proposed Delaware Trust Instrument (as discussed in Proposals 1 and 2)
provides that the combined board of trustees shall consist of not more than
fourteen trustees. In the event a vacancy occurs on the combined board, the
By-Laws of each Delaware Trust provide that the size of the combined board will
be reduced over time until the number of trustees is eight. Thereafter, subject
to the provisions of

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the 1940 Act, the remaining trustees shall appoint a person to fill any vacancy
for the entire unexpired term.

Following the Meeting, the AC Funds do not contemplate holding regular
meetings of shareholders to elect trustees or otherwise. When an investment
company does not hold regular annual meetings, it is the position of the staff
of the SEC and a policy of each AC Fund that holders of record of not less than
two-thirds of the outstanding shares of the investment company may file a
declaration in writing or may vote at a special meeting for the purpose of
removing a board member. The combined board will be required to promptly call a
meeting of shareholders for the purpose of voting upon the question of removal
of any such board member when requested in writing to do so by the record
holders of not less than 10% of the total outstanding shares of such AC Fund. In
addition, the combined board will comply with the requirements of Section 16(c)
of the 1940 Act with respect to communications with shareholders.

Each of the nominees named below has agreed to serve as a director/trustee, as
the case may be, if elected; however, should any nominee become unable or
unwilling to accept nomination or election, the proxies will be voted for one or
more substitute nominees designated by the AC Board.

The following sets forth the names, ages, principal occupations and other
information respecting the nominees:

PRINCIPAL OCCUPATIONS OR
NAME AND AGE EMPLOYMENT IN PAST 5 YEARS
- ---------------------------- ------------------------------------------

J. Miles Branagan........... Co-founder, Chairman, Chief Executive
8212 Morning Dove Road Officer and President of MDT Corporation,
Raleigh, NC 27615 a company which develops manufactures,
Age: 62 markets and services medical and
scientific equipment. A director or
trustee of each of the AC Funds.
Richard E. Caruso........... Founder, Chairman and Chief Executive
Two Randor Station, Suite Officer, Integra Life Sciences
314 Corporation, a firm specializing in life
King of Prussia Road sciences. Trustee of Susquehanna
Radnor, PA 19087 University and First Vice President, The
Age: 52 Baum School of Art; Founder and Director
of Uncommon Individual Foundation, a youth
development foundation. Director of
International Board of Business
Performance Group, London School of
Economics. Formerly, Director of First
Sterling Bank, and Executive Vice
President and a Director of LFC Financial
Corporation, a provider of lease and
project financing. A director or trustee
of each of the AC Funds.

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PRINCIPAL OCCUPATIONS OR
NAME AND AGE EMPLOYMENT IN PAST 5 YEARS
- ---------------------------- ------------------------------------------

Philip P. Gaughan........... Prior to February, 1989, Managing Director
9615 Torresdale Avenue and Manager of Municipal Bond Department,
Philadelphia, PA 19114 W. H. Newbold's Sons & Co. A trustee of
Age: 66 each of the VK Funds.
Roger Hilsman............... Professor of Government and International
251-1 Hamburg Cove Affairs Emeritus, Columbia University. A
Lyme, CT 06371 director or trustee of each of the AC
Age: 75 Funds.
R. Craig Kennedy............ President and Director, German Marshall
1341 E. 50th Street Fund of the United States. Formerly,
Chicago, IL 60615 advisor to the Dennis Trading Group Inc.
Age: 43 Prior to 1992, President and Chief
Executive Officer, Director and member of
the Investment Committee of the Joyce
Foundation, a private foundation. A
trustee of each of the VK Funds.
Donald C. Miller............ Prior to 1992, Director of Royal Group,
415 North Adams Inc., a company in insurance related
Hinsdale, IL 60521 businesses. Formerly Vice Chairman and
Age: 75 Director of Continental Illinois National
Bank and Trust Company of Chicago and
Continental Illinois Corporation. Chairman
of the Board and a trustee of each of the
VK Funds.
Jack E. Nelson.............. President of Nelson Investment Planning
423 Country Club Drive Services, Inc., a financial planning
Winter Park, FL 32789 company and registered investment adviser.
Age: 59 President of Nelson Investment Brokerage
Services Inc., a member of the National
Association of Securities Dealers, Inc.
(NASD) and Securities Investors Protection
Corp. (SIPC) A trustee of each of the VK
Funds.

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39

PRINCIPAL OCCUPATIONS OR
NAME AND AGE EMPLOYMENT IN PAST 5 YEARS
- ---------------------------- ------------------------------------------

Don G. Powell*.............. President, Chief Executive Officer and a
2800 Post Oak Blvd. Director of VK/AC Holding, Inc. and Van
Houston, TX 77056 Kampen American Capital and Chairman,
Age: 55 Chief Executive Officer and a Director of
Van Kampen American Capital Distributors,
Inc., the VK Adviser, the AC Adviser and
Van Kampen American Capital Management,
Inc. Director, President and Chief
Executive Officer of Van Kampen American
Capital Advisers, Inc. and Van Kampen
American Capital Exchange Corp.; Director
and Executive Vice President of Advantage
Capital Corporation, ACCESS Investor
Services, Inc., Van Kampen American
Capital Services, Inc. and Van Kampen
American Capital Trust Company; Director
of McCarthy, Crisanti & Maffei, Inc.;
Director, Trustee or Managing General
Partner of each of the AC Funds and other
open-end investment companies and
closed-end investment companies advised by
the AC Adviser. He is also Chairman of the
Board and a trustee of the Van Kampen
Merritt Series Trust and closed-end
investment companies advised by the VK
Adviser.
David Rees.................. Contributing Columnist and, prior to 1995,
1601 Country Club Drive Senior Editor of Los Angeles Business
Glendale, CA 91208 Journal. A director of Source Capital,
Age: 71 Inc., a closed-end investment company
unaffiliated with Van Kampen American
Capital, a director and the second vice
president of International Institute of
Los Angeles. A director or trustee of each
of the AC Funds.
Jerome L. Robinson.......... President of Robinson Technical Products
115 River Road Corporation, a manufacturer and processor
Edgewater, NJ 07020 of welding alloys, supplies and equipment.
Age: 72 Director of Pacesetter Software, a
software programming company specializing
in white collar productivity. Director of
Panasia Bank. A trustee of each of the VK
Funds.
Lawrence J. Sheehan*........ Of Counsel to and formerly Partner (from
1999 Avenue of the Stars 1969 to 1994) of the law firm of O'Melveny
Suite 700 & Myers, legal counsel to the AC Funds.
Los Angeles, CA 90067 Director, FPA Capital Fund, Inc.; FPA New
Age: 62 Income Fund, Inc.; FPA Perennial Fund,
Inc.; Source Capital, Inc.; and TCW
Convertible Security Fund, Inc. A director
or trustee of each of the AC Funds.

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40

PRINCIPAL OCCUPATIONS OR
NAME AND AGE EMPLOYMENT IN PAST 5 YEARS
- ---------------------------- ------------------------------------------

Fernando Sisto.............. George M. Bond Chaired Professor and,
Stevens Institute prior to 1995, Dean of Graduate School and
of Technology Chairman, Department of Mechanical
Castle Point Station Engineering, Stevens Institute of
Hoboken, NJ 07030 Technology. Director of Dynalysis of
Age: 70 Princeton, a firm engaged in engineering
research. Chairman of the Board and a
director or trustee of each of the AC
Funds.
Wayne W. Whalen*............ Partner in the law firm of Skadden, Arps,
333 West Wacker Drive Slate, Meagher & Flom, legal counsel to
Chicago, IL 60606 the VK Funds. A trustee of each of the VK
Age: 55 Funds. He also is a trustee of the Van
Kampen Merritt Series Trust and closed-end
investment companies advised by the VK
Adviser.
William S. Woodside......... Vice Chairman of the Board of LSG Sky
712 Fifth Avenue Chefs, Inc., a caterer of airline food.
40th Floor Formerly, Director of Primerica
New York, NY 10019 Corporation (currently known as The
Age: 73 Traveler's Inc.). Formerly, Director of
James River Corporation, a producer of
paper products. Trustee, and former
President of Whitney Museum of American
Art. Formerly, Chairman of Institute for
Educational Leadership, Inc., Board of
Visitors, Graduate School of The City
University of New York, Academy of
Political Science. Trustee of Committee
for Economic Development. Director of
Public Education Fund Network, Fund for
New York City Public Education. Trustee of
Barnard College. Member of Dean's Council,
Harvard School of Public Health. Member of
Mental Health Task Force, Carter Center. A
director or trustee of each of the AC
Funds.

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

* Such nominees are "interested persons" (within the meaning of Section 2(a)(19)
of the 1940 Act). Mr. Powell is an interested person of the AC Adviser and
each AC Fund by reason of his position with the AC Adviser. Mr. Sheehan and
Mr. Whalen are interested persons of the AC Adviser and each AC Fund by reason
of their firms having acted as legal counsel to the AC Adviser or an affiliate
thereof.

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41

As of May 19, 1995, certain nominees owned, directly or beneficially, the
number of Class A Shares of each Fund as set forth in the table below. Nominees
who do not own any Shares of the AC Funds have been omitted from the table.
Also, AC Funds which are not owned by any nominees have been omitted from the
table. As of May 19, 1995, no nominee owned any Class B Shares or Class C Shares
of any AC Fund.

- ------------------------------------------------------------------------------
CLASS A SHARES OWNED(1)
- ------------------------------------------------------------------------------

MR. MR. MR. MR. MR. MR.
FUND NAME POWELL BRANAGAN HILSMAN REES SHEEHAN SISTO
- ------------------------------------------ ------ -------- ------- ------ ------- ------

Comstock Fund............................. 56 120 11,159
Corporate Bond Fund....................... 141 197 1,284 1,851
Emerging Growth Fund...................... 23,713 44 1,739 825 2,867
Enterprise Fund........................... 43,768 76 794 12,405 9,050
Equity Income Fund........................ 184 162 875 767
Global Managed Assets Fund................ 387
Government Securities..................... 92 115 829 3,947
Growth and Income Fund.................... 75 6,537 7,599 5,174
Harbor Fund............................... 22,952 65 112 5,534 2,907
High Yield Investments.................... 157 1,232 1,598 11,372
Municipal Bond Fund....................... 19,185 122 281 356
Pace Fund................................. 79 321 3,753
Real Estate Securities Fund............... 1,093
Reserve Fund.............................. 3,931 1,000 1,221 194,092 16,630
Texas Municipal Securities................ 99
Utilities Income Fund..................... 1,032 605
Global Government Fund.................... 111 274 2,852
Global Equity Fund........................ 17,520 100 201 2,728
Government Target '97.....................
Federal Mortgage Trust.................... 80 595
Government Trust.......................... 107
High Yield Municipal Portfolio............ 11,849 8,780 490 40,153 1,305
Insured Municipal Portfolio............... 8,606

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

(1) Aggregate ownership for each AC Fund constitutes less than 1% of the
outstanding Shares of the respective AC Fund.

Mr. Powell owns, or has the opportunity to purchase, an equity interest in
VK/AC Holding, Inc., the parent company of Van Kampen American Capital
Companies, and has entered into an employment contract (for a term of five
years) with Van Kampen American Capital.

Each of the AC Funds currently has an Executive Committee, a Nominating
Committee, an Audit Committee, and a Brokerage Review Committee.

33
42

The Executive Committee, consisting of Messrs. Powell, Sheehan, Sisto and
Hilsman, may act for the board of directors/trustees between board meetings
except where board action is required by law.

The functions of the Nominating Committee are (1) selecting and recommending
to the full board of directors/trustees nominees for election as
directors/trustees and (2) proposing and recommending to the full board of
directors/trustees the terms of compensation for directors. The committee
presently consists of all members of the AC Board except Mr. Powell. The
committee held two meetings during the last fiscal year. The committee is
prepared to review nominations from shareholders to fill directorships in
written communications addressed to the committee at the respective AC Fund's
headquarters, although the committee expects to be able to identify from its own
resources an ample number of qualified candidates.

The Audit Committee makes recommendations to the AC Board concerning the
selection of the AC Funds' independent public accountants, reviews with such
accountants the scope and results of the annual audit and considers any comments
which the accountants may have regarding the Fund's financial statement or books
of account. The committee presently consists of all members of the AC Board
except Mr. Powell. The committee held five meetings during the last fiscal year.

The Brokerage Review Committee monitors the AC Adviser's brokerage practices.
The committee presently consists of all members of the AC Board except Mr.
Powell.

If the consolidation is approved at the Meeting, it is anticipated that the
combined board will have two standing committees: an Audit Committee and a
Brokerage Review Committee. The AC Board anticipates that such Audit Committee
and Brokerage Review Committee will have similar responsibilities as each such
committee had prior to the Reorganizations. It is anticipated that each trustee
not affiliated with the AC Funds or the VK Funds will serve on one of the
committees, but no trustee would serve on more than one committee or receive
additional compensation for serving on a committee.

The AC Board met nineteen times during 1994. During 1994, all
Directors/Trustees attended at least 75% of the aggregate of (1) the total
number of meetings of the AC Board and (2) the total number of meetings held by
all committees of the AC Board on which they served.

The disinterested trustees of each AC Entity are required to select and
nominate disinterested trustees and are prepared to review nominations from
shareholders to fill any vacancies in trusteeships. Nominations from
shareholders should be in writing and addressed to the disinterested
directors/trustees at the respective AC Entity's office. The disinterested
directors/trustees of each AC Entity expect to

34
43

be able to identify from their own resources an ample number of qualified
candidates.

The compensation of directors/trustees who are affiliated persons (as defined
in the 1940 Act) of the AC Adviser, the Distributor or Van Kampen American
Capital is paid by the respective entity. Each of the AC Entities pay
compensation to the non-affiliated directors/trustees. During each AC Fund's
1994 fiscal year, each director/trustee who was not affiliated with the AC
Adviser, Distributor or Van Kampen American Capital received a retainer of
$40,000 and a meeting fee of $1,000 per meeting, plus expenses. Members (other
than Mr. Powell) of the Audit Committee, the Brokerage Review Committee, the
Executive Committee and the Nominating Committee received $1,000 for each
meeting of the respective committee. The chairman of the board received
additional fees at the annual rate of $15,000. Retainers, meeting fees,
chairman's fees and expenses were allocated among the AC Funds based on the
number of AC Funds and on each AC Fund's respective assets. Under each AC Fund's
deferred compensation plan, each trustee who is not affiliated with the AC
Adviser, the Distributor or Van Kampen American Capital can elect to defer
receipt of all or a portion of such trustee's fees earned until such trustee's
retirement. Each trustee of an AC Fund that defers compensation elects to be
credited with an earnings component on amounts deferred equal to the income
earned by the respective AC Fund on its short-term investments or equal to the
total return of the respective AC Fund. The deferred compensation plan is not
funded and obligations thereunder represent general unsecured claims against the
general assets of respective AC Fund.

35
44

The following table provides summary compensation information for each of the
incumbent trustees of each Fund:

1994 COMPENSATION TABLE(1)

PENSION OR
RETIREMENT ESTIMATED TOTAL
BENEFITS ACCRUAL ANNUAL COMPENSATION
AGGREGATE PER FUND BENEFITS FROM THE FUND
COMPENSATION AS PART PER FUND COMPLEX PAID
FROM EACH OF FUND UPON TO
DIRECTOR/TRUSTEE FUND EXPENSES RETIREMENT TRUSTEES(2)(3)
---------------- ------------ ---------------- ---------- -------------

J. Miles Branagan...... (4) 0 0 $64,000
Dr. Richard E.
Caruso............... (4) 0 0 $64,000
Dr. Roger Hilsman...... (4) 0 0 $66,000
David Rees............. (4) 0 0 $64,000
Lawrence J. Sheehan.... (4) 0 0 $67,000
Dr. Fernando Sisto..... (4) 0 0 $72,000
William S. Woodside.... (4) 0 0 $18,000(5)

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

(1) Mr. Powell was an affiliated person of the AC Adviser during fiscal year
1994 and did not receive compensation directly from the AC Funds.

(2) In 1994, the AC Fund Complex consisted of the 29 funds advised by the AC
Adviser that are supervised by the AC Board. The amounts shown in this
column are based on the Aggregate Compensation from the AC Funds during the
calendar year ended December 31, 1994. The AC Adviser also serves as
investment adviser for other open-end and closed-end investment companies;
however, with the exception of Mr. Powell, the trustees are not trustees of
such investment companies.

(3) Includes the following amounts for which the various funds were reimbursed
by the Adviser -- Branagan, $2,000; Caruso, $2,000; Hilsman, $1,000; Rees,
$2,000; Sheehan, $2,000; Woodside, $1,000 (Mr. Woodside was paid $36,000
directly by the AC Adviser as discussed in footnote 5 below).

(4) The Aggregate Compensation from each Fund during its 1994 fiscal year is
shown in Appendix C.

(5) The total compensation paid to Mr. Woodside by the Fund Complex and the AC
Adviser was $54,000. The amount of his compensation that was paid by the AC
Funds is shown above. Prior to October 6, 1994, Mr. Woodside's compensation
was paid directly by the AC Adviser.

If the combination of the AC Board and the VK Board is approved by
shareholders, the AC Funds anticipate certain changes to the compensation of the
trustees. Each trustee of an AC Fund who is not affiliated with the AC Adviser,
the

36
45

Distributor or Van Kampen American Capital will receive an annual retainer of
$35,000 for acting as trustee to all of the AC Funds and a meeting fee of $1,000
per Board meeting of the AC Funds, plus expenses. These retainers, meeting fees
and expenses will be allocated among the AC Funds based on the number of AC
Funds and on each AC Fund's respective assets. No additional fees are proposed
to be paid for committee meetings or to the chairman of the board. The principal
cost associated with the combination of the two boards would be the added
expense of compensating the additional trustees. Each of the proposed additional
trustees is not an affiliated person of the AC Adviser, the Distributor or Van
Kampen American Capital and such persons are eligible for compensation from the
AC Funds. In order to alleviate such additional expense, the trustees approved a
reduction in the compensation per trustee and agreed to an aggregate annual
compensation cap with respect to the combined fund complex of $84,000 per
trustee until December 31, 1996, based upon the current net assets and the
current number of Van Kampen American Capital funds. (except that Mr. Whalen,
who is a trustee of 34 closed-end funds advised by the VK Adviser, would receive
an additional $119,000 for serving as a trustee of such funds). In addition, the
AC Adviser has agreed to reimburse the AC Funds through December 31, 1996 for
any increase in the aggregate trustees' compensation paid by such funds over
their 1994 fiscal year aggregate compensation. It is anticipated that by
December 31, 1996, reductions in the number of trustees on the combined board
will reduce the per fund compensation of the combined board paid by the AC Funds
to approximately the current per fund compensation of the AC Board.

OFFICERS

The following table sets forth certain information concerning the principal
executive officers of the AC Funds (other than information concerning Mr.
Powell, which is set forth above), each of which holds the same office with each
of the AC Funds.

The officers of the AC Funds serve for one year or until their respective
successors are chosen and qualified. The officers of the AC Funds receive no
compensation from the AC Funds, but are also officers of the AC Adviser, the
Distributor or Van Kampen American Capital and receive compensation in such
capacities. Unless otherwise specified, the address for each officer is 2800
Post Oak Boulevard, Houston, Texas 77056.

PRINCIPAL OCCUPATION
NAME, ADDRESS POSITION WITH DURING
AND AGE THE AC FUNDS(1) PAST 5 YEARS
- ----------------------- --------------------- --------------------------

B. Robert Baker........ Vice President Associate Portfolio
Age: 40 Comstock Fund, Manager of the AC Adviser;
American Capital Life formerly, Vice President
Investment Trust -- Portfolio Manager,
Variable Annuity Life
Insurance Company.

37
46

PRINCIPAL OCCUPATION
NAME, ADDRESS POSITION WITH DURING
AND AGE THE AC FUNDS(1) PAST 5 YEARS
- ----------------------- --------------------- --------------------------

Cindee Burkitt......... Vice President Associate Portfolio
Age: 41 American Capital Life Manager of the AC Adviser;
Investment Trust formerly, Senior
Securities Analyst.
Nori L. Gabert......... Vice President and Vice President, Associate
Age: 41 Secretary General Counsel and
Corporate Secretary of the
AC Adviser.
Tanya M. Loden......... Vice President and Vice President and
Age: 35 Controller Controller of most of the
investment companies
advised by the AC Adviser;
formerly Tax
Manager/Assistant
Controller.
Dennis J. McDonnell.... Vice President President, Chief Operating
One Parkview Plaza Officer and a Director of
Oakbrook Terrace, IL the VK Adviser, the AC
60181 Adviser and Van Kampen
Age: 52 American Capital
Management, Inc. Director
of VK/AC Holding, Inc. and
Van Kampen American
Capital. Director of
McCarthy, Crisanti &
Maffei, Inc. and Chairman
and a Director of MCM Asia
Pacific Company, Ltd.
President, Chief Executive
Officer and a trustee of
each of the VK Funds. He
is also President, Chief
Executive Officer and a
trustee of the Van Kampen
Merritt Series Trust and
closed-end investment
companies advised by the
VK Adviser. Prior to
December, 1991, Senior
Vice President of Van
Kampen Merritt Inc.
Curtis W. Morell....... Vice President and Vice President and
Age: 48 Treasurer Treasurer of most of the
investment companies
advised by the AC Adviser.

38
47

PRINCIPAL OCCUPATION
NAME, ADDRESS POSITION WITH DURING
AND AGE THE AC FUNDS(1) PAST 5 YEARS
- ----------------------- --------------------- --------------------------

Ronald A. Nyberg....... Vice President Executive Vice President,
One Parkview Plaza General Counsel and
Oakbrook Terrace Secretary of Van Kampen
Illinois 60181 American Capital;
Age: 41 Executive Vice President
and a Director of the VK
Adviser and the
Distributor. Executive
Vice President of the AC
Adviser. Vice President
and Secretary of
closed-end investment
companies advised by the
VK Adviser. Director of
ICI Mutual Insurance Co.,
a provider of insurance to
members of the Investment
Company Institute. Prior
to March 1990, Secretary
of Van Kampen Merritt
Inc., the VK Adviser and
McCarthy, Crisanti &
Maffei, Inc.
Robert C. Peck, Jr. ... Vice President Senior Vice President and
Age: 48 Director of the AC
Adviser.
John R. Reynoldson..... Vice President Senior Investment Vice
Age: 42 Global Managed Assets President of the AC
Fund, Government Adviser.
Securities,
Government Target
'97, American Capital
Life Investment
Trust, American
Capital World
Portfolio Series,
Inc.
Alan T. Sachtleben..... Vice President Executive Vice President
Age: 53 and Director of the AC
Adviser; Executive Vice
President of VK/AC
Holding, Inc., Van Kampen
American Capital and the
VK Adviser.

39
48

PRINCIPAL OCCUPATION
NAME, ADDRESS POSITION WITH DURING
AND AGE THE AC FUNDS(1) PAST 5 YEARS
- ----------------------- --------------------- --------------------------

Walter W. Stabell, Vice President Associate Portfolio
III.................. American Capital Life Manager of the AC Adviser;
Age: 36 Investment Trust formerly Senior Securities
Analyst of the AC Adviser.
David R. Troth......... Vice President Senior Investment Vice
Age: 61 Corporate Bond Fund, President of the AC
American Capital Life Adviser.
Investment Trust,
Reserve Fund
J. David Wise.......... Vice President and Vice President, Associate
Age: 51 Assistant Secretary General Counsel and
Assistant Corporate
Secretary of the AC
Adviser.
Paul R. Wolkenberg..... Vice President Senior Vice President of
Age: 50 the AC Adviser; President,
Chief Operating Officer
and Director of Van Kampen
American Capital Services,
Inc.; Executive Vice
President, Chief Operating
Officer and Director of
Van Kampen American
Capital Trust Company;
Executive Vice President
and Director of ACCESS
Investor Services, Inc.
James H. Behrmann...... Vice President Vice President --
Age: 52 Harbor Fund Portfolio Manager of the
Adviser.
Ellis S. Bigelow....... Vice President Senior Investment Vice
Age: 41 High Yield President of the Adviser.
Investments
Stephen L. Boyd........ Vice President Senior Investment Vice
Age: 54 Pace Fund President -- Portfolio
Manager of the Adviser.

40
49

PRINCIPAL OCCUPATION
NAME, ADDRESS POSITION WITH DURING
AND AGE THE AC FUNDS(1) PAST 5 YEARS
- ----------------------- --------------------- --------------------------

Mary Jayne Maly........ Vice President Portfolio Manager of the
Age: 39 American Capital Life Adviser; formerly, Senior
Investment Trust, Equity Analyst, Texas
Real Estate Commerce Investment
Securities Fund, Management Company.
Utilities Income Fund
Thomas Copper.......... Vice President Associate Portfolio
Age: 36 Utilities Income Fund Manager of the Adviser;
formerly, Credit Analyst
of the Adviser.
James A. Gilligan...... Vice President Vice President --
Age: 36 Equity Income Fund, Portfolio Manager of the
Growth and Income Adviser.
Fund, American
Capital Life
Investment Trust,
Real Estate
Securities Fund
Wayne D. Godlin........ Vice President Vice President --
Age: 34 American Capital Tax Portfolio Manager of the
Exempt Trust AC Adviser.
Ralph P. Goldsticker... Vice President Vice President/Director,
Age: 43 American Capital Life Equity Research of the AC
Investment Trust, Adviser.
Small Capitalization
Fund
David C. Johnson....... Vice President Vice President --
Age: 42 Municipal Bond Fund Portfolio Manager of the
AC Adviser and the VK
Adviser.
Peter G. Kapourelos.... Vice President Division Manager,
Age: 75 High Yield Advantage Capital
Investments, Equity Corporation.
Income Fund
Gary M. Lewis.......... Vice President Vice President --
Age: 41 American Capital Life Portfolio Manager of the
Investment Trust, AC Adviser.
Emerging Growth Fund

41
50

PRINCIPAL OCCUPATION
NAME, ADDRESS POSITION WITH DURING
AND AGE THE AC FUNDS(1) PAST 5 YEARS
- ----------------------- --------------------- --------------------------

Ted Mundy.............. Vice President Portfolio Manager of the
Age: 34 Federal Mortgage AC Adviser; formerly,
Trust, Government Portfolio Manager, AMR
Trust Investment Services, Inc.
and Trader, Howard, Weil,
Labouisse and Friedrichs.
Jeff D. New............ Vice President Associate Portfolio
Age: 38 Global Managed As- Manager of the AC Adviser.
sets Fund, Enter-
prise Fund, American
Capital Life
Investment Trust,
American Capital
World Portfolio
Series, Inc.
Joseph A. Piraro....... Vice President Vice President --
Age: 46 American Capital Tax Portfolio Manager of the
Exempt Trust, Texas AC Adviser and the VK
Municipal Securities Adviser; formerly employed
by First Chicago Capital
Markets.
Franklin Ruben......... Vice President Portfolio Manager of the
Age: 35 American Capital Tax AC Adviser; formerly
Exempt Trust Securities Analyst of the
AC Adviser.

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

(1) Unless otherwise noted, position listed applies to all AC Funds.

With respect to the AC Funds, as of May 19, 1995, the trustees and officers as
a group owned less than 1% of the outstanding Shares of each AC Fund. At such
date, the "interested persons" of the AC Funds as a group owned an aggregate of
less than 5% of the outstanding Shares of each AC Fund.

SHAREHOLDER APPROVAL

The affirmative vote of a plurality of the outstanding Shares of an AC Entity
present in person or by proxy and entitled to vote for directors/trustees is
required to elect the nominees for such AC Entity. THE BOARD OF EACH AC ENTITY
RECOMMENDS A VOTE "IN FAVOR" OF ALL OF THE NOMINEES.

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51

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

PROPOSAL 4: RATIFICATION OF INDEPENDENT PUBLIC

ACCOUNTANTS
- ------------------------------------------------------------------------------

The board of each AC Entity, including a majority of the directors/trustees
who are not "interested persons" of each AC Entity, have selected the firm of
Price Waterhouse LLP, independent public accountants, to examine the financial
statements for the current fiscal year of each AC Fund. Each AC Entity knows of
no direct or indirect financial interest of such firm in such AC Entity. Such
appointment is subject to ratification or rejection by the shareholders of each
AC Entity with shareholders of each AC Entity voting as a single class. Unless a
contrary specification is made, the accompanying proxy will be voted in favor of
ratifying the selection of such accountants.

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

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

Van Kampen American Capital will initially bear the expense of the
Reorganization of each AC Fund into a Delaware Fund and of preparing, printing
and mailing the enclosed form of proxy, the accompanying Notice, this Proxy
Statement and all other related costs in connection with the solicitation of
proxies with respect to the Consolidation, which shall include reimbursement to
banks, brokers and others for their reasonable expenses in forwarding proxy
solicitation material to the beneficial owners of the Shares of each AC Fund
(the "Proxy Expense"). During the five-year period ending on the fifth
anniversary of the consummation of the Consolidation, if an AC Fund realizes a
benefit resulting from the Consolidation, the AC Fund will reimburse Van Kampen
American Capital in an amount equal to the lesser of (i) the amount of such
benefit or (ii) such AC Fund's pro rata share of the Proxy Expense. In no event
shall the unreimbursed Proxy Expense born by Van Kampen American Capital accrue
interest or bear any other type of carrying charge. No AC Fund shall reimburse
Van Kampen American Capital from any benefit received after the fifth
anniversary of the consummation of the Consolidation.

In order to obtain the necessary quorum at the Meeting, additional
solicitation may be made by mail, telephone, telegraph, facsimile, or personal
interview by representatives of each of the AC Funds, the AC Adviser or Van
Kampen American Capital, or by dealers or their representatives or by Applied
Mailing Systems, a solicitation firm located in Boston, Massachusetts.

43
52

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

As a general matter, each Fund does not hold regular annual meetings of
shareholders. Any shareholder who wishes to submit proposals for consideration
at a meeting of such shareholder's AC Fund should send such proposal to the
respective AC Fund at 2800 Post Oak Boulevard, Houston, Texas 77056. To be
considered for presentation at the meeting, rules promulgated by the SEC require
that, among other things, a shareholder's proposal must be received at the
offices of such AC Fund a reasonable time before a solicitation is made. Timely
submission of a proposal does not necessarily mean that such proposal will be
included.

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

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

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

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

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

NORI L. GABERT, Secretary

June 2, 1995

44
53

APPENDIX A

5% BENEFICIAL SHAREHOLDERS

NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
FUND BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- --------------------- ---------------------------------- -------------------- ----------

Enterprise Fund Variable Investment Plan, 5,377,892 8.05%
P.O. Box 874, Class A
Conshohocken, PA 19428-0874
Government Target Elevator Division 75,331 6.05%
'97* Retirement Benefit Plan,
P.O. Box 0370,
New York, NY 10276-0370
Government Target New York City Hotel 74,479 5.98%
'97* Trades Council and Hotel
Association Pension Fund,
P.O. Box 0370,
New York, NY 10276-0370
Government Target Marble Industry Trust Fund, 102,375 8.22%
'97* P.O. Box 0370,
New York, NY 10276-0370
Government Target TWU-NYC Private Bus 331,630 26.63%
'97* Lines Pension Fund,
P.O. Box 0370,
New York, NY 10276-0370
Life Investment American General Life Insurance 750,498 15.28%
Trust, Common Stock Company,
Portfolio Separate Account D,
P.O. Box 1591,
Houston, TX 77251-1591
Life Investment Nationwide VLI Separate Account of 1,715,285 34.93%
Trust, Common Stock Nationwide Life Insurance Company,
Portfolio P.O. Box 182029,
Columbus, OH 43218-2029
Life Investment Nationwide Variable Account-3, C/O 2,163,451 44.05%
Trust, Common Stock IPO Investments
Portfolio Company 69,
P.O. Box 182029,
Columbus, OH 43218-2029

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

* Amivest Corporation, 767 5th Avenue, 50th Floor, New York, New York 10153,
serves as investment adviser to this shareholder and may also be deemed to
beneficially own these shares.

A-1
54

NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
FUND BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- --------------------- ---------------------------------- -------------------- ----------

Life Investment American General Life Insurance 282,047 5.74%
Trust, Common Stock Company,
Portfolio Separate Account D,
Variety Plus, P.O. Box 1591,
Houston, TX 77251-1591
Life Investment American General Life Insurance 706,649 21.70%
Trust, Strategic Company; Separate Account D, P.O.
Income Portfolio Box 1591, Houston, TX 77251-1591
Life Investment Nationwide VLI Separate Account of 414,818 12.74%
Trust, Strategic Nationwide Life Insurance Company,
Income Portfolio P.O. Box 182029,
Columbus, OH 43218-2029
Life Investment Nationwide Variable Account-3, C/O 2,014,032 61.85%
Trust, Strategic IPO
Income Portfolio Investments Company 69,
P.O. Box 182029,
Columbus, OH 43218-2029
Life Investment Nationwide VLI Separate Account of 6,507,952 84.82%
Trust, Government Nationwide Life Insurance Company,
Portfolio P.O. Box 182029,
Columbus, OH 43218-2029
Life Investment Nationwide Variable Account-3, C/O 1,044,121 13.61%
Trust, Government IPO Investments Company 69,
Portfolio P.O. Box 182029,
Columbus, OH 43218-2029
Life Investment American General Life Insurance 5,475,473 21.84%
Trust, Money Market Company, Separate Account D, P.O.
Portfolio Box 1591, Houston, TX 77251-1591
Life Investment Nationwide VLI Separate Account 10,920,365 43.57%
Trust, Money Market of Nationwide
Portfolio Life Insurance Company,
P.O. Box 182029, Columbus, OH
43218-2029
Life Investment Nationwide Variable 8,586,025 34.25%
Trust, Money Market Account-3, C/O IPO
Portfolio Investments Company 69,
P.O. Box 182029, Columbus, OH
43218-2029

A-2
55

NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
FUND BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- --------------------- ---------------------------------- -------------------- ----------

Life Investment Nationwide VLI Separate Account of 2,054,322 38.77%
Trust, Multiple Nationwide Life Insurance Company,
Strategy Portfolio P.O. Box 182029, Columbus, OH
43218-2029
Life Investment Nationwide Variable 3,000,611 56.63%
Trust, Multiple Account-3, C/O IPO
Strategy Portfolio Investments Company 69,
P.O. Box 182029, Columbus, OH
43218-2029
Real Estate Van Kampen American 65,674 9.84%
Securities Fund Capital Asset Management Inc., Class A
P.O. Box 1411, Houston, TX
77251-1411
Real Estate Van Kampen American Asset 54,544 30.12%
Securities Fund Management, Inc., Class C
P.O. Box 1411,
Houston, TX 77251-1411
Small Capitalization American Capital Pace Fund, Inc. 6,478,966 48.67%
Fund 2800 Post Oak Blvd., Houston, TX
77056
Small Capitalization Common Sense Trust C/O State 6,832,743 51.33%
Fund Street Bank & Trust, P.O. Box
1713, Boston, MA 02105-1713
Utilities Income Fund Van Kampen American Capital 246,872 24.69%
Asset Management, Inc., Class A
P.O. Box 1411,
Houston, TX 77251-1411
Reserve Fund Paul Prusky TR., MFI 21,398,678 5.42%
Partners, 1 Belmont Ave., Class A
Suite 519,
Baia, PA 19004-1608
Texas Municipal Van Kampen American Capital 65,254 5.53%
Securities Asset Management, Inc., Class A
P.O. Box 1411,
Houston, TX 77251-1411
Global Managed Assets Van Kampen American Capital Asset 977,421 69.81%
Fund Management, Inc., Class A
P.O. Box 1411,
Houston, TX 77251-1411

A-3
56

NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
FUND BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- --------------------- ---------------------------------- -------------------- ----------

Global Managed Assets Van Kampen American Capital Asset 53,483 6.56%
Fund Management, Inc., Class B
P.O. Box 1411,
Houston, TX 77251-1411
Global Managed Assets Van Kampen American Capital Asset 53,483 31.73%
Fund Management, Inc., Class C
P.O. Box 1411,
Houston, TX 77251-1411
Emerging Growth Fund Citibank, N.A. 2,031,854 6.69%
Trustee Class A
Travelers, Inc.
401(k) Savings Plan
F15D, 20th Floor
111 Wall Street
New York, NY 10043-1000
Federal Mortgage NY Hotel Trades 194,334 5.49%
Trust* Council Pension Fund Class A
P.O. Box 0370
New York, NY 10276-0370
Real Estate Hines Interest Realty Advisers 52,855 7.92%
Securities Fund Ltd. Partnership Class A
2800 Post Oak Blvd.
Houston, TX 77056-6106
Harbor Fund James F. Johnson Jr. 12,581 5.33%
Beverly G. Johnson Class C
1203 Riveroaks Dr.
Kingston, IN 37763-2357
Pace Fund Lena D. Lambert 8,599 5.14%
Rt. 6 Box 33B Class C
Andalusia, AL 36420-9110
Pace Fund Vincent J. Sokolaski 9,815 5.87%
P.O. Box 3321 Class C
Weehawken, NJ 07087-8154
Reserve Fund Marie Verza 241,219 21.13%
100 Pringle Ave. Class C
Ste. 150
Walnut Creek, CA 94596-3564

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

* Amivest Corporation, 767 5th Avenue, 50th Floor, New York, New York 10153,
serves as investment adviser to this shareholder and may also be deemed to
beneficially own these shares.

A-4
57

NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
FUND BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- --------------------- ---------------------------------- -------------------- ----------

Reserve Fund I.A. Sarris 123,607 10.83%
3515 Loy Lake Rd. Class C
Sherman, TX 75090-2506
Reserve Fund Phyllis Williams 209,484 18.35%
1411 Carrollwood Dr. Class C
Tampa, FL 33618-3705
Reserve Fund William J. McGrath 124,614 10.92%
5891 Kamner Dr. Class C
Clarence Ctr., NY 14032-9736
Reserve Fund Hoyt R. Barnett, Jr. 614,125 6.78%
Publix Super Markets Class B
PSP
P.O. Box 407
Lakeland, FL 33802-0407
Insured Municipal R.T. Kelley 22,104 18.43%
Portfolio P.O. Box 237 Class C
Canadian, TX 79014-0237
Insured Municipal B&C Corporation 18,996 15.84%
Portfolio A. Corporation Class C
4950 Valenty
Cubbuck, ID 83202-1850
Insured Municipal Vernon Maddox & 6,459 5.39%
Portfolio Ruth Maddox Class C
JT Ten
18402 Tomlinson Dr.
Lutz, FL 33549-5458
Insured Municipal Harold J. Ladouceur & 6,233 5.20%
Portfolio Julienne M. Ladouceur Class C
Jt Ten
5604 Wopod Forest Dr.
Tampa, FL 33615-3909

A-5
58

APPENDIX B

FORM OF PLAN OF REORGANIZATION
FOR MASSACHUSETTS FUNDS

AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION

AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION dated as of
, 1995 (the "Agreement") between AMERICAN CAPITAL , a
Massachusetts business trust (the "Fund"), AMERICAN CAPITAL , a
Delaware business trust (the "New Trust") on behalf of its series, and AMERICAN
CAPITAL Fund (the "New Fund").

WHEREAS the Fund is a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and

WHEREAS the Fund is authorized to issue an unlimited number of shares of
beneficial interest, $0.01 par value;

WHEREAS the New Trust was organized pursuant to an Agreement and Declaration
of Trust dated May , 1995, and is presently authorized to establish and
designate separate series thereof which may issue shares of beneficial interest,
without par value, including shares of a series such as the New Fund;

WHEREAS, for good and sufficient business reasons the parties desire to change
the place of organization of the Fund; and

WHEREAS, the parties intend that this transaction (the "Reorganization")
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").

NOW, THEREFORE, in consideration of the mutual promises herein contained, the
parties hereto agree as follows:

1. Plan of Reorganization. The Fund shall, prior to the Effective Time of the
Reorganization, as defined below, transfer all of its business and assets and
assign all of its liabilities to the New Fund, and the New Fund shall acquire
all such business and assets and shall assume all such liabilities of the Fund
in exchange for delivery to the Fund of a number of shares of the New Fund (both
full and fractional) equivalent to the number of shares of the Fund outstanding
immediately prior to the Effective Time of the Reorganization. All debts,
liabilities, obligations and duties of the Fund, to the extent that they exist
at or after the Effective Time of the Reorganization, shall after the Effective
Time of the Reorganization attach to the New Fund and may be enforced against
the New Fund to the same extent as if the same had been incurred by the New
Fund.

B-1
59

2. Liquidation and Dissolution of the Fund. At the Effective Time of the
Reorganization, the Fund will liquidate and the shares of the New Fund (both
full and fractional) received by the Fund will be distributed to the
shareholders of the Fund in exchange for their shares of the Fund, each
shareholder to receive a number of shares of the New Fund equal to the number of
shares of the Fund held by such person. Such liquidation and distribution will
be accompanied by the establishment of an open account on the share records of
the New Fund in the name of each shareholder of the Fund and representing the
respective pro rata number of shares of the New Fund due such shareholder.
Certificates for shares of the Fund issued prior to the Reorganization shall
represent outstanding shares of the New Fund after the Effective Time of the
Reorganization. As soon as practicable after the Effective Time of the
Reorganization, the Fund shall file with the Trust Division of the Secretary of
State of the Commonwealth of Massachusetts (the "Division") a copy of the
resolutions of its Trustees to terminate the Fund, in such form as shall be
satisfactory to the Division, and which resolutions shall include the exact date
of the Fund's termination and shall take, in accordance with Massachusetts law
and any other applicable state law all other steps as shall be necessary and
proper to effect a complete dissolution of the Fund.

3. Issued Shares. Prior to the Effective Time of the Reorganization and after
the Fund has taken the actions authorized by shareholders of the Fund pursuant
to Section 4(f) hereof, the single share of each class of the New Fund
heretofore held by the Fund shall be redeemed and canceled by the New Fund.

4. Conditions Precedent. The obligations of the Fund, the New Trust and the
New Fund to effectuate the Plan of Reorganization and Liquidation hereunder
shall be subject to the satisfaction of each of the following conditions:

(a) Such authority, including "no-action" letters and orders from the
Securities and Exchange Commission (the "Commission") and state securities
commissions as may be necessary to permit the parties to carry out the
transactions contemplated by this Agreement, shall have been received.

(b) One or more post-effective amendments to the Registration Statement of
the Fund on Form N-1A under the Securities Act of 1933 and the 1940 Act,
containing (i) such amendments to such Registration Statement as are
determined by the Board of Trustees of the Fund to be necessary and
appropriate as a result of the Plan of Reorganization and Liquidation and (ii)
the adoption by the New Trust of such Registration Statement as its own, on
behalf of the New Fund, shall have been filed with the Commission and such
post-effective amendment or amendments to the Registration Statement shall
have become effective, and no stop-order suspending the effectiveness of the
Registration Statement shall have been issued, and no proceeding for that
purpose shall have been initiated or threatened by the Commission (and not
withdrawn or terminated).

B-2
60

(c) Each party shall have received an opinion of Skadden, Arps, Slate,
Meagher & Flom that both the New Trust and New Fund are duly formed and
existing under the laws of the State of Delaware and that the shares of the
New Trust to be issued pursuant to the terms of this Agreement have been duly
authorized, and, when issued and delivered as provided in this Agreement, will
have been validly issued, fully paid and nonassessable.

(d) Each party shall have received an opinion of O'Melveny & Myers to the
effect that the reorganization contemplated by this Agreement qualifies as a
"reorganization" under Section 368(a)(1) of the Internal Revenue Code of 1986,
as amended (the "Code"), and each party shall have received an opinion of
O'Melveny & Myers to the effect that each series established pursuant to the
Agreement and Declaration of Trust of the New Trust will be treated as a
separate association taxable as a corporation for federal income tax purposes
which potentially qualifies as a regulated investment company under the Code
to the extent that the New Fund complies with the requirements of Section 851
of the Code.

(e) The shares of the New Fund shall have been duly qualified for offering
to the public in all states of the United States, the Commonwealth of Puerto
Rico and the District of Columbia (except where such qualifications are not
required) so as to permit the transfers contemplated by this Agreement to be
consummated.

(f) A vote approving this Agreement and the reorganization contemplated
hereby shall have been adopted by at least a majority of the outstanding
shares of beneficial interest of the Fund entitled to vote at an annual or
special meeting and the shareholders of the Fund shall have voted at such
meeting to direct the Fund to vote, and the Fund shall have voted, as the sole
shareholder of the New Fund to:

(1) elect the Nominees set forth in the Proxy Statement delivered to the
shareholders of the Fund as Trustees of the New Trust;

(2) approve an Investment Advisory Agreement (the "Advisory Agreement")
between the New Fund and Van Kampen American Capital Asset Management, Inc.;

(3) approve a Plan or Plans of Distribution under Rule 12b-1 with respect
to each class of shares of the New Fund (the "Plans of Distribution"); and

(4) ratify the selection of Price Waterhouse LLP as the New Fund's
independent auditors for the fiscal year ending .

B-3
61

(g) The Trustees of the New Trust shall have taken the following actions at
a meeting duly called for such purposes:

(1) approval of the Advisory Agreement;

(2) approval of an Underwriting Agreement between the New Fund and Van
Kampen American Capital Distributors, Inc.;

(3) approval of the Plans of Distribution;

(4) selection of Price Waterhouse LLP as the New Fund's independent
auditors for the fiscal year ending ;

(5) authorization of the issuance by the New Trust, prior to the Effective
Time of the Reorganization, of one share of each class of the New Fund to
the Fund in consideration for the payment of $ for the purpose of
enabling the Fund to vote on the matters referred to in paragraph (f) in
this Section 4;

(6) submission of the matters referred to in paragraph (f) of this Section
4 to the Fund as the sole shareholder of the New Fund; and

(7) authorization of the issuance by the New Trust of shares of the New
Fund at the Effective Time of the Reorganization in exchange for the assets
of the Fund pursuant to the terms and provisions of this Agreement.

At any time prior to the Effective Time of the Reorganization, any of the
foregoing conditions may be waived by the Board of Trustees of the Fund if, in
the judgment of such Board, such waiver will not have a material adverse effect
on the benefits intended under this Agreement to the shareholders of the Fund.

5. Effective Time of the Reorganization. The exchange of the Fund's business
and assets for shares of the New Fund shall be effective as of 5:00 P.M.,
Delaware Time on , 1995 or at such other time and date as fixed
by the mutual consent of the parties (the "Effective Time of the
Reorganization").

6. Termination. The Trustees of the Fund and the Trustees of the New Trust may
terminate this Agreement and abandon the reorganization contemplated hereby,
notwithstanding approval thereof by the shareholders of the Fund at any time
prior to the Effective Time of the Reorganization, if circumstances should
develop that, in their judgment, make proceeding with this Agreement
inadvisable.

7. Limitation of Liability of the Trustees and Shareholders. Each of the Fund
and the New Trust acknowledge and agree that, pursuant to the Agreement and
Declaration of Trust of both the Fund and the New Trust, shareholders, trustees,
officers, employees or agents of the Trust shall not personally be bound by or
liable under this Agreement, nor shall resort be had to their private property
for the satisfaction of any obligation or claim hereunder.

B-4
62

IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first written above.

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

By: ------------------------------------

Its: ----------------------------------

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

By: ------------------------------------

Its: ----------------------------------

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

By: ------------------------------------

Its: ----------------------------------

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

B-5
63

APPENDIX C

FORM OF PLAN OF REORGANIZATION
FOR MARYLAND CORPORATIONS

AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION

AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION dated as of
, 1995 (the "Agreement") between AMERICAN CAPITAL
, a Maryland corporation (the "New Fund"), AMERICAN CAPITAL
, a Delaware business trust (the "New Trust") on behalf of its series,
and AMERICAN CAPITAL Fund (the "New Fund").

WHEREAS the Fund is a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and

WHEREAS the Fund has authorized capital stock consisting of shares of
common stock, $ par value;

WHEREAS the New Trust was organized pursuant to an Agreement and Declaration
of Trust dated May , 1995, and is presently authorized to establish and
designate separate series thereof which may issue shares of beneficial interest,
with $0.01 par value, including shares of a series such as the New Fund;

WHEREAS, for good and sufficient business reasons the parties desire to change
the place of organization of the Fund; and

NOW, THEREFORE, in consideration of the mutual promise herein contained, the
parties hereto agree as follows:

1. Plan of Reorganization. Prior to the Effective Time of the Reorganization,
as defined below, the Fund and New Trust shall file Articles of Transfer with
respect to the transactions contemplated hereby with the Department of
Assessments and Taxation of the State of Maryland (the "Department"). The Fund
shall, prior to the Effective Time of the Reorganization, transfer all of its
business and assets and assign all of its liabilities to the New Fund, and the
New Fund shall acquire all such business and assets and shall assume all such
liabilities of the Fund in exchange for delivery to the Fund of a number of
shares of the New Fund (both full and fractional) equivalent to the number of
shares of the Fund outstanding immediately prior to the Effective Time of the
Reorganization. All debts, liabilities, obligations and duties of the Fund, to
the extent that they exist at or after the Effective Time of

C-1
64

the Reorganization, shall after the Effective Time of the Reorganization attach
to the New Fund and may be enforced against the New Fund to the same extent as
if the same had been incurred by the New Fund.

2. Liquidation and Dissolution of the Fund. At the Effective Time of the
Reorganization, the Fund will liquidate and the shares of the New Fund (both
full and fractional) received by the Fund will be distributed to the
shareholders of the Fund in exchange for their shares of the Fund, each
shareholder to receive a number of shares of the New Fund equal to the number of
shares of the Fund held by such person. Such liquidation and distribution will
be accompanied by the establishment of an open account on the share records of
the New Fund in the name of each shareholder of the Fund and representing the
respective pro rata number of shares of the New Fund due such shareholder.
Certificates for shares of the Fund issued prior to the Reorganization shall
represent outstanding shares of the New Fund after the Effective Time of the
Reorganization. As soon as practicable after the Effective Time of the
Reorganization, the Fund shall file Articles of Dissolution for record with the
Department and shall take, in accordance with Maryland General Corporation Law
and any other applicable state law, all other steps as shall be necessary and
proper to effect a complete dissolution of the Fund.

4. Conditions Precedent. The obligations of the Fund, the Trust and the New
Fund to effectuate the Plan of Reorganization and Liquidation hereunder shall be
subject to the satisfaction of each of the following conditions:

(b) One or more post-effective amendments to the Registration Statement of
the Fund on Form N-1A under the Securities Act of 1933 and the 1940 Act,
containing (i) such amendments to such Registration Statement as are
determined by the Board of Directors of the Fund to be necessary and
appropriate as a result of the Plan of Reorganization and Liquidation and (ii)
the adoption by the New Trust of such Registration Statement as its own, on
behalf of the New Fund, shall have been filed with the Commission and such
post-effective amendment or amendments to the Registration Statement shall
have become effective, and no stop-order suspending the effectiveness of the
Registration Statement shall have been issued, and no proceeding for that
purpose shall have

C-2
65

been initiated or threatened by the Commission (and not withdrawn or
terminated).

(d) Each party shall have received an opinion of O'Melveny & Myers to the
effect that the reorganization contemplated by this Agreement qualifies as a
"reorganization" under Section 368(a)(1) of the Code, and each party shall
have received an opinion of O'Melveny & Myers to the effect that each series
established pursuant to the Agreement and Declaration of Trust of the New
Trust will be treated as a separate association taxable as a corporation for
federal income tax purposes which potentially qualifies as a regulated
investment company under the Code to the extent that the New Fund complies
with the requirements of Section 851 of the Code.

(f) A vote approving this Agreement and the reorganization contemplated
hereby shall have been adopted by at least a majority of the outstanding
shares of common stock of the Fund entitled to vote at an annual or special
meeting and the shareholders of the Fund shall have voted at such meeting to
direct the Fund to vote, and the Fund shall have voted, as the sole
shareholder of the New Fund to:

(1) elect the Nominees set forth in the Proxy Statement delivered to the
shareholders of the Fund as Trustees of the New Trust;

(2) approve an Investment Advisory Agreement (the "Advisory Agreement")
between the New Fund and Van Kampen American Capital Asset Management, Inc.;

(3) approve a Plan or Plans of Distribution under Rule 12-1 with respect
to each class of shares of the New Fund (the "Plans of Distribution"); and

(4) ratify the selection of Price Waterhouse LLP as the New Fund's
independent auditors for the fiscal year ending .

C-3
66

(g) The Trustees of the New Trust shall have taken the following actions at
a meeting duly called for such purposes:

(1) approval of the Advisory Agreement;

(2) approval of an Underwriting Agreement between the New Fund and Van
Kampen American Capital Distributors, Inc.;

(3) approval of the Plans of Distribution;

(4) selection of Price Waterhouse LLP as the New Fund's independent
auditors for the fiscal year ending ;

(6) submission of the matters referred to in paragraph (f) of this Section
4 to the Fund as the sole shareholder of the New Fund; and

At any time prior to the Effective Time of the Reorganization, any of the
foregoing conditions may be waived by the Board of Directors of the Fund if, in
the judgment of such Board, such waiver will not have a material adverse effect
on the benefits intended under this Agreement to the shareholders of the fund.

5. Effective Time of the Reorganization. The exchange of the Fund's business
and assets for shares of the New Fund shall be effective as of 5:00 P.M.,
Delaware Time on , 1995 or at such other time and date as fixed by
the mutual consent of the parties (the "Effective Time of the Reorganization").

6. Termination. The Directors of the Fund and the Trustees of the New Trust
may terminate this Agreement and abandon the reorganization contemplated hereby,
notwithstanding approval thereof by the shareholders of the Fund at any time
prior to the Effective Time of the Reorganization, if circumstances should
develop that, in their judgment, make proceeding with this Agreement
inadvisable.

7. Limitation of Liability of the Trustees and Shareholders. The Fund
acknowledges and agrees that, pursuant to Article 8, Section 8.1 of the
Agreement and Declaration of Trust of the New Trust dated May , 1995,
shareholders, trustees, officers, employees or agents of the Trust shall not
personally be bound by or liable under this Agreement, nor shall resort be had
to their private property for the satisfaction of any obligation or claim
hereunder.

C-4
67

IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first written above.

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

By: ------------------------------------

Its: ----------------------------------

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

By: ------------------------------------

Its: ----------------------------------

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

By: ------------------------------------

Its: ----------------------------------

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

C-5
68

APPENDIX D

1994 AGGREGATE COMPENSATION FROM EACH AC FUND(1)

The following schedule sets forth certain information regarding compensation
paid to each incumbent trustee by or on behalf of each AC Fund during its
respective 1994 fiscal year. There is no Pension or Retirement Plan in effect
with respect to the trustees of the AC Fund. Information is provided below for
the trustees' Deferred Compensation Plan.

DEFERRED
COMPEN-
SATION
TOTAL FOR
COMPENSATION MOST
AGGREGATE COMPENSATION FROM PAID BY FUND RECENT
EACH AC FUND AND OTHER FISCAL
FOR MOST RECENT FISCAL YEAR(2) PERSONS YEAR
--------------------------------------------------------------------- ------------ ------
FUND NAME BRANAGAN CARUSO HILSMAN REES SHEEHAN SISTO WOODSIDE WOODSIDE(3) CARUSO
- ------------------------------------- -------- ------ ------- ------ ------- ------ ----------- ------------ ------

Comstock Fund........................ 3,510 3,510 3,625 3,510 3,680 4,525 915 3,000 3,400
Corporate Bond Fund.................. 1,605 1,630 1,675 1,605 1,700 2,120 0 1,255 1,580
Emerging Growth Fund................. 3,045 3,100 3,135 3,045 3,190 3,935 0 2,435 2,990
Enterprise Fund...................... 3,265 3,265 3,370 3,265 3,420 4,205 870 2,800 3,165
Equity Income Fund................... 2,210 2,205 2,280 2,210 2,315 2,840 645 1,910 2,135
Global Managed Assets
Fund................................ 800 780 820 800 820 890 300 300 780
Government Securities................ 9,665 9,675 9,980 9,665 10,130 12,440 2,400 8,240 9,375
Growth and Income Fund............... 1,745 1,745 1,805 1,745 1,830 2,240 445 1,490 1,695
Harbor Fund.......................... 2,410 2,415 2,485 2,410 2,525 3,095 610 2,050 2,335
High Yield Investments............... 2,390 2,430 2,470 2,390 2,510 3,085 0 1,910 2,350
Municipal Bond Fund.................. 2,050 2,080 2,125 2,050 2,155 2,660 0 1,650 2,020
Pace Fund............................ 6,885 6,765 7,230 6,765 7,230 9,090 0 5,370 6,765
Real Estate Securities
Fund................................ 800 780 820 800 820 885 300 300 780
Reserve Fund......................... 1,940 1,910 2,040 1,910 2,040 2,560 0 1,520 1,910

CUMULATIVE DEFERRED
COMPENSATION AS OF MOST
RECENT FISCAL YEAR
END(4)
------------------------
FUND NAME SISTO CARUSO REESE SISTO
- ------------------------------------- ----- ------ ------ ------
<
Comstock Fund........................ 2,330 10,266 34,751 14,507
Corporate Bond Fund.................. 1,050 3,669 17,227 6,322
Emerging Growth Fund................. 2,105 5,809 32,377 11,266
Enterprise Fund...................... 2,160 9,515 36,352 13,654
Equity Income Fund................... 1,415 5,296 17,270 7,257
Global Managed Assets
Fund................................ 0 768 0 0
Government Securities................ 6,520 30,195 81,518 38,461
Growth and Income Fund............... 1,160 5,106 18,041 7,356
Harbor Fund.......................... 1,595 6,547 21,181 8,923
High Yield Investments............... 1,605 5,910 28,585 10,891
Municipal Bond Fund.................. 0 4,786 7,466 3,037
Pace Fund............................ 4,785 17,480 58,728 25,499
Real Estate Securities
Fund................................ 0 812 0 0
Reserve Fund......................... 0 4,791 29,858 5,612

(Chart continued on next page)

D-1
69

(Chart continued from previous page)

Small Capitalization Fund............ 335 610 315 335 335 760 295 545 570
Texas Municipal Securities........... 1,250 1,270 1,290 1,250 1,310 1,620 0 1,010 1,230
Utilities Income Fund................ 295 310 280 295 295 370 0 235 280
Global Government Fund............... 1,570 1,545 1,650 1,545 1,650 2,075 0 1,230 1,545
Global Equity Fund................... 1,260 1,240 1,320 1,240 1,320 1,665 0 1,000 1,240
Government Target '97................ 1,220 1,260 1,260 1,220 1,280 1,585 0 1,000 1,220
Federal Mortgage Trust............... 1,410 1,410 1,460 1,410 1,480 1,820 340 1,200 1,370
Government Trust..................... 2,100 2,130 2,175 2,100 2,205 2,725 0 1,700 2,070
Common Stock Portfolio............... 1,355 1,355 1,400 1,355 1,420 1,745 340 1,160 1,315
Strategic Income Portfolio........... 1,260 1,260 1,300 1,260 1,320 1,615 320 1,080 1,220
Money Market Portfolio............... 1,270 1,270 1,310 1,270 1,330 1,635 320 1,090 1,230
Multiple Strategy Portfolio.......... 1,355 1,355 1,400 1,355 1,420 1,735 340 1,160 1,315
Government Portfolio................. 1,380 1,380 1,430 1,380 1,450 1,780 340 1,170 1,340
High Yield Municipal Portfolio....... 2,550 2,550 2,630 2,550 2,670 3,280 690 2,190 2,470
Insured Municipal Portfolio.......... 1,515 1,515 1,565 1,515 1,590 1,940 395 1,290 1,465

CUMULATIVE DEFERRED
COMPENSATION AS OF MOST
RECENT FISCAL YEAR
END(4)
------------------------
FUND NAME SISTO CARUSO REESE SISTO
- ------------------------------------- ----- ------ ------ ------
<
Small Capitalization Fund............ 265 561 0 259
Texas Municipal Securities........... 0 2,410 0 1,301
Utilities Income Fund................ 265 280 0 265
Global Government Fund............... 1,110 3,103 0 2,410
Global Equity Fund................... 905 2,880 0 2,223
Government Target '97................ 0 2,920 0 386
Federal Mortgage Trust............... 960 4,312 5,378 4,236
Government Trust..................... 1,440 2,592 0 2,032
Common Stock Portfolio............... 920 3,917 5,198 3,994
Strategic Income Portfolio........... 850 3,666 3,370 3,634
Money Market Portfolio............... 865 3,740 5,252 3,843
Multiple Strategy Portfolio.......... 915 2,837 4,103 3,717
Government Portfolio................. 925 3,908 5,761 4,027
High Yield Municipal Portfolio....... 0 6,488 0 1,525
Insured Municipal Portfolio.......... 0 4,078 0 1,086

- ---------------
(1) Mr. Powell is an affiliated person of the AC Adviser and does not receive
compensation directly from the AC Funds.
(2) Includes amounts shown under column captioned "Deferred Compensation as of
Most Recent Fiscal Year End".

(3) Prior to October 6, 1994, Mr. Woodside's compensation was paid directly by
the AC Adviser. This column sets forth the total amount of his compensation
that was paid by the AC Funds and by the AC Adviser for each AC Fund's most
recent fiscal year.

(4) Includes interest and profits earned on deferred amounts.

D-2
70

---

---
71

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL COMSTOCK FUND, INC.
PROXY SOLICITED BY THE DIRECTORS

The undersigned holder of common shares of the above referenced fund (the
"Fund"), hereby appoints Ronald A. Nyberg, Don G. Powell, Fernando Sisto and
Nori L. Gabert, and each of them, with full power of substitution and
revocation, as proxies to represent the undersigned at the Meeting of
Shareholders to be held at the Hyatt Regency Oak Brook, York Room - Lower
Level, 1909 Spring Road, Oak Brook, IL 60521, on Friday, July 21, 1995 at 1:30
p.m., and at any and all adjournments thereof (the "Meeting"), and thereat to
vote all common shares of the Fund which the undersigned would be entitled to
vote, with all powers the undersigned would possess if personally present, in
accordance with the instructions specified on the reverse side. The
undersigned hereby acknowledges receipt of the accompanying Notice of Joint
Meeting and Proxy Statement for the Joint Meeting to be held on July 21,1995.

DATE: __________________________,1995
Please sign this proxy in the box below
exactly as your name appears on the books
of the Fund. Joint owners should each
sign personally. Trustees and other
fiduciaries should indicate the capacity in
which they sign, and where more than one
name appears, a majority must sign. If a
corporation, this signature should be that
of an authorized officer who should state
his or her title.

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

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

Please detach at perforation before mailing.
- ------------------------------------------------------------------------------------------------------------------------------------
1. Not Applicable to the Fund.
FOR AGAINST ABSTAIN
2. As to the proposal to approve the Fund's reorganization and
conversion to a Delaware business trust or a series thereof: / / / / / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

J. Miles Branagan, Dr. Richard E. Caruso, Philip P. Gaughan,
Dr. Roger Hilsman, R. Craig Kennedy, Donald C. Miller, Jack E.
Nelson, Don G. Powell, David Rees, Jerome L. Robinson,
Lawrence J. Sheehan, Dr. Fernando Sisto, Wayne W. Whalen, _____________________________________________________
William S. Woodside
_____________________________________________________
INSTRUCTION: To withhold authority to vote for one or more of
the nominees, check FOR ALL EXCEPT and write the nominee's
name(s) on the lines to the right. _____________________________________________________

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL CORPORATE BOND FUND, INC.
PROXY SOLICITED BY THE DIRECTORS

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL EMERGING GROWTH FUND, INC.
PROXY SOLICITED BY THE DIRECTORS

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL ENTERPRISE FUND, INC.
PROXY SOLICITED BY THE DIRECTORS

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL EQUITY INCOME FUND, INC.
PROXY SOLICITED BY THE DIRECTORS

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
AMERICAN CAPITAL FEDERAL MORTGAGE TRUST
PROXY SOLICITED BY THE TRUSTEES

The undersigned holder of shares of beneficial interest of the above referenced
fund (the "Fund"), hereby appoints Ronald A. Nyberg, Don G. Powell, Fernando
Sisto and Nori L. Gabert, and each of them, with full power of substitution and
revocation, as proxies to represent the undersigned at the Meeting of
Shareholders to be held at the Hyatt Regency Oak Brook, York Room - Lower
Level, 1909 Spring Road, Oak Brook, IL 60521, on Friday, July 21, 1995 at 1:30
p.m., and at any and all adjournments thereof (the "Meeting"), and thereat to
vote all shares of beneficial interest of the Fund which the undersigned would
be entitled to vote, with all powers the undersigned would possess if
personally present, in accordance with the instructions specified on the
reverse side. The undersigned hereby acknowledges receipt of the accompanying
Notice of Joint Meeting and Proxy Statement for the Joint Meeting to be held on
July 21, 1995.

DATE:________________________________,1995

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

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

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

Please detach at perforation before mailing.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. As to the proposal to approve the Fund's reorganization and
conversion to a Delaware business trust or a series thereof: / / / / / /

2. Not Applicable to the Fund.
FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen trustees of the Fund to
serve until their respective successors are duly elected
and qualified: / / / / / /

J. Miles Branagan, Dr. Richard E. Caruso, Philip P. Gaughan,
Dr. Roger Hilsman, R. Craig Kennedy, Donald C. Miller, Jack E.
Nelson, Don G. Powell, David Rees, Jerome L. Robinson,
Lawrence J. Sheehan, Dr. Fernando Sisto, Wayne W. Whalen, __________________________________________
William S. Woodside
__________________________________________
INSTRUCTION: To withhold authority to vote for one or more of
the nominees, check FOR ALL EXCEPT and write the nominee's
name(s) on the lines to the right. __________________________________________

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND, INC.
PROXY SOLICITED BY THE DIRECTORS

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL GOVERNMENT SECURITIES, INC.
PROXY SOLICITED BY THE DIRECTORS

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
AMERICAN CAPITAL GOVERNMENT TARGET SERIES, PORTFOLIO '97
A SERIES OF AMERICAN CAPITAL GOVERNMENT TARGET SERIES
PROXY SOLICITED BY THE TRUSTEES

DATE:________________________________,1995

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

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

Please detach at perforation before mailing.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. As to the proposal to approve the Fund's reorganization and
conversion to a Delaware business trust or a series thereof: / / / / / /

J. Miles Branagan, Dr. Richard E. Caruso, Philip P. Gaughan,
Dr. Roger Hilsman, R. Craig Kennedy, Donald C. Miller, Jack E.
Nelson, Don G. Powell, David Rees, Jerome L. Robinson,
Lawrence J. Sheehan, Dr. Fernando Sisto, Wayne W. Whalen, __________________________________________
William S. Woodside
__________________________________________
INSTRUCTION: To withhold authority to vote for one or more of
the nominees, check FOR ALL EXCEPT and write the nominee's
name(s) on the lines to the right. __________________________________________

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL GROWTH AND INCOME FUND, INC.
PROXY SOLICITED BY THE DIRECTORS

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL HARBOR FUND, INC.
PROXY SOLICITED BY THE DIRECTORS

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL HIGH YIELD INVESTMENTS, INC.
PROXY SOLICITED BY THE DIRECTORS

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
AMERICAN CAPITAL COMMON STOCK PORTFOLIO,
A SERIES OF AMERICAN CAPITAL LIFE INVESTMENT TRUST
PROXY SOLICITED BY THE TRUSTEES

DATE:________________________________,1995

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

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

Please detach at perforation before mailing.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. As to the proposal to approve the Fund's reorganization and
conversion to a Delaware business trust or a series thereof: / / / / / /

J. Miles Branagan, Dr. Richard E. Caruso, Philip P. Gaughan,
Dr. Roger Hilsman, R. Craig Kennedy, Donald C. Miller, Jack E.
Nelson, Don G. Powell, David Rees, Jerome L. Robinson,
Lawrence J. Sheehan, Dr. Fernando Sisto, Wayne W. Whalen, __________________________________________
William S. Woodside
__________________________________________
INSTRUCTION: To withhold authority to vote for one or more of
the nominees, check FOR ALL EXCEPT and write the nominee's
name(s) on the lines to the right. __________________________________________

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
AMERICAN CAPITAL DOMESTIC STRATEGIC INCOME PORTFOLIO,
A SERIES OF AMERICAN CAPITAL LIFE INVESTMENT TRUST
PROXY SOLICITED BY THE TRUSTEES

DATE:________________________________,1995

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

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

Please detach at perforation before mailing.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. As to the proposal to approve the Fund's reorganization and
conversion to a Delaware business trust or a series thereof: / / / / / /

J. Miles Branagan, Dr. Richard E. Caruso, Philip P. Gaughan,
Dr. Roger Hilsman, R. Craig Kennedy, Donald C. Miller, Jack E.
Nelson, Don G. Powell, David Rees, Jerome L. Robinson,
Lawrence J. Sheehan, Dr. Fernando Sisto, Wayne W. Whalen, __________________________________________
William S. Woodside
__________________________________________
INSTRUCTION: To withhold authority to vote for one or more of
the nominees, check FOR ALL EXCEPT and write the nominee's
name(s) on the lines to the right. __________________________________________

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
AMERICAN CAPITAL MONEY MARKET PORTFOLIO,
A SERIES OF AMERICAN CAPITAL LIFE INVESTMENT TRUST
PROXY SOLICITED BY THE TRUSTEES

DATE:________________________________,1995

100

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

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

Please detach at perforation before mailing.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. As to the proposal to approve the Fund's reorganization and
conversion to a Delaware business trust or a series thereof: / / / / / /

J. Miles Branagan, Dr. Richard E. Caruso, Philip P. Gaughan,
Dr. Roger Hilsman, R. Craig Kennedy, Donald C. Miller, Jack E.
Nelson, Don G. Powell, David Rees, Jerome L. Robinson,
Lawrence J. Sheehan, Dr. Fernando Sisto, Wayne W. Whalen, __________________________________________
William S. Woodside
__________________________________________
INSTRUCTION: To withhold authority to vote for one or more of
the nominees, check FOR ALL EXCEPT and write the nominee's
name(s) on the lines to the right. __________________________________________

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

101

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
AMERICAN CAPITAL MULTIPLE STRATEGY PORTFOLIO,
A SERIES OF AMERICAN CAPITAL LIFE INVESTMENT TRUST
PROXY SOLICITED BY THE TRUSTEES

DATE:________________________________,1995

102

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

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

Please detach at perforation before mailing.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. As to the proposal to approve the Fund's reorganization and
conversion to a Delaware business trust or a series thereof: / / / / / /

J. Miles Branagan, Dr. Richard E. Caruso, Philip P. Gaughan,
Dr. Roger Hilsman, R. Craig Kennedy, Donald C. Miller, Jack E.
Nelson, Don G. Powell, David Rees, Jerome L. Robinson,
Lawrence J. Sheehan, Dr. Fernando Sisto, Wayne W. Whalen, __________________________________________
William S. Woodside
__________________________________________
INSTRUCTION: To withhold authority to vote for one or more of
the nominees, check FOR ALL EXCEPT and write the nominee's
name(s) on the lines to the right. __________________________________________

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

103

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
AMERICAN CAPITAL GOVERNMENT PORTFOLIO,
A SERIES OF AMERICAN CAPITAL LIFE INVESTMENT TRUST
PROXY SOLICITED BY THE TRUSTEES

DATE:________________________________,1995

104

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

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

Please detach at perforation before mailing.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. As to the proposal to approve the Fund's reorganization and
conversion to a Delaware business trust or a series thereof: / / / / / /

J. Miles Branagan, Dr. Richard E. Caruso, Philip P. Gaughan,
Dr. Roger Hilsman, R. Craig Kennedy, Donald C. Miller, Jack E.
Nelson, Don G. Powell, David Rees, Jerome L. Robinson,
Lawrence J. Sheehan, Dr. Fernando Sisto, Wayne W. Whalen, __________________________________________
William S. Woodside
__________________________________________
INSTRUCTION: To withhold authority to vote for one or more of
the nominees, check FOR ALL EXCEPT and write the nominee's
name(s) on the lines to the right. __________________________________________

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

105

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL MUNICIPAL BOND FUND, INC.
PROXY SOLICITED BY THE DIRECTORS

106

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

107

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL PACE FUND, INC.
PROXY SOLICITED BY THE DIRECTORS

108

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

109

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL REAL ESTATE SECURITIES FUND, INC.
PROXY SOLICITED BY THE DIRECTORS

110

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

111

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL RESERVE FUND, INC.
PROXY SOLICITED BY THE DIRECTORS

112

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

113

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
AMERICAN CAPITAL SMALL CAPITALIZATION FUND, INC.
PROXY SOLICITED BY THE TRUSTEES

DATE:________________________________,1995

114

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

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

Please detach at perforation before mailing.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. As to the proposal to approve the Fund's reorganization and
conversion to a Delaware business trust or a series thereof: / / / / / /

J. Miles Branagan, Dr. Richard E. Caruso, Philip P. Gaughan,
Dr. Roger Hilsman, R. Craig Kennedy, Donald C. Miller, Jack E.
Nelson, Don G. Powell, David Rees, Jerome L. Robinson,
Lawrence J. Sheehan, Dr. Fernando Sisto, Wayne W. Whalen, __________________________________________
William S. Woodside
__________________________________________
INSTRUCTION: To withhold authority to vote for one or more of
the nominees, check FOR ALL EXCEPT and write the nominee's
name(s) on the lines to the right. __________________________________________

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

115

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
AMERICAN CAPITAL HIGH YIELD MUNICIPAL PORTFOLIO,
A SERIES OF AMERICAN CAPITAL TAX-EXEMPT TRUST
PROXY SOLICITED BY THE TRUSTEES

DATE:________________________________,1995

116

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

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

Please detach at perforation before mailing.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. As to the proposal to approve the Fund's reorganization and
conversion to a Delaware business trust or a series thereof: / / / / / /

J. Miles Branagan, Dr. Richard E. Caruso, Philip P. Gaughan,
Dr. Roger Hilsman, R. Craig Kennedy, Donald C. Miller, Jack E.
Nelson, Don G. Powell, David Rees, Jerome L. Robinson,
Lawrence J. Sheehan, Dr. Fernando Sisto, Wayne W. Whalen, __________________________________________
William S. Woodside
__________________________________________
INSTRUCTION: To withhold authority to vote for one or more of
the nominees, check FOR ALL EXCEPT and write the nominee's
name(s) on the lines to the right. __________________________________________

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

117

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
AMERICAN CAPITAL INSURED MUNICIPAL PORTFOLIO,
A SERIES OF AMERICAN CAPITAL TAX-EXEMPT TRUST
PROXY SOLICITED BY THE TRUSTEES

DATE:________________________________,1995

118

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

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

Please detach at perforation before mailing.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. As to the proposal to approve the Fund's reorganization and
conversion to a Delaware business trust or a series thereof: / / / / / /

J. Miles Branagan, Dr. Richard E. Caruso, Philip P. Gaughan,
Dr. Roger Hilsman, R. Craig Kennedy, Donald C. Miller, Jack E.
Nelson, Don G. Powell, David Rees, Jerome L. Robinson,
Lawrence J. Sheehan, Dr. Fernando Sisto, Wayne W. Whalen, __________________________________________
William S. Woodside
__________________________________________
INSTRUCTION: To withhold authority to vote for one or more of
the nominees, check FOR ALL EXCEPT and write the nominee's
name(s) on the lines to the right. __________________________________________

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

119

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL TEXAS MUNICIPAL SECURITIES, INC.
PROXY SOLICITED BY THE DIRECTORS

120

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

121

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
AMERICAN CAPITAL U.S. GOVERNMENT
TRUST FOR INCOME
PROXY SOLICITED BY THE TRUSTEES

DATE:________________________________,1995

122

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

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

Please detach at perforation before mailing.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. As to the proposal to approve the Fund's reorganization and
conversion to a Delaware business trust or a series thereof: / / / / / /

J. Miles Branagan, Dr. Richard E. Caruso, Philip P. Gaughan,
Dr. Roger Hilsman, R. Craig Kennedy, Donald C. Miller, Jack E.
Nelson, Don G. Powell, David Rees, Jerome L. Robinson,
Lawrence J. Sheehan, Dr. Fernando Sisto, Wayne W. Whalen, __________________________________________
William S. Woodside
__________________________________________
INSTRUCTION: To withhold authority to vote for one or more of
the nominees, check FOR ALL EXCEPT and write the nominee's
name(s) on the lines to the right. __________________________________________

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

123

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL UTILITIES INCOME FUND, INC.
PROXY SOLICITED BY THE DIRECTORS

124

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

125

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------

AMERICAN CAPITAL GLOBAL EQUITY FUND,
A SERIES OF AMERICAN CAPITAL WORLD PORTFOLIO SERIES, INC.
PROXY SOLICITED BY THE DIRECTORS

126

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L

127

Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.

Please be sure to sign and date this Proxy.

Please return the proxy card in the enclosed envelope.

Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND,
A SERIES OF AMERICAN CAPITAL WORLD PORTFOLIO SERIES, INC.
PROXY SOLICITED BY THE DIRECTORS

128

Please vote by filling in the appropriate boxes below, as shown, using blue or black ink or dark pencil. Do not use red ink. / /

FOR ALL WITHHOLD FOR ALL EXCEPT
3. Authority to vote to elect fourteen directors of the Fund
to serve until their respective successors are duly elected
and qualified: / / / / / /

FOR AGAINST ABSTAIN
4. As to the proposal to ratify or reject the selection of Price
Waterhouse LLP as independent public accountants for the current
fiscal year of the Fund: / / / / / /

L L L