AMERICAN CAPITAL TEXAS MUNICIPAL SECURITIES INC
497, 1995-05-03
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                        SUPPLEMENT, DATED MAY 1, 1995 TO
             AMERICAN CAPITAL TEXAS MUNICIPAL SECURITIES FUND, INC.
                                   PROSPECTUS
 
     1. Effective today, the Distributor has increased the ongoing payments to
broker-dealers and other Service Organizations with respect to Class C shares.
The Distributor will now pay broker-dealers and other Service Organizations
ongoing commissions and transaction fees of up to 0.75% of the average daily net
assets of the Fund's Class C shares for the second through tenth year after
purchase for Class C shares sold on or after May 1, 1995. Broker-dealers and
other Service Organizations will still be paid ongoing commissions and
transaction fees for the second through tenth year after purchase of up to 0.65%
for Class C shares sold before May 1, 1995.
 
     2. The first two paragraphs of "Shareholder Services -- Shareholder
Services Applicable to all Classes -- Exchange Privilege" are amended to read in
their entirety as follows:
 
          EXCHANGE PRIVILEGE. Shares of the Fund or of any Participating Fund
     (listed herein under "Purchase of Shares -- Class A Shares -- Volume
     Discounts") other than Government Target, may be exchanged for shares of
     the same class of any other fund without sales charge, provided that shares
     of Corporate Bond, Federal Mortgage, Global Managed, Government Trust, High
     Yield, Municipal Bond, Real Estate, Tax-Exempt, Texas Municipal, Utilities,
     and the American Capital Global Government Securities Fund of World
     Portfolio are subject to a 30-day holding period requirement. Shares of
     Government Target may be exchanged for Class A shares of the Fund without
     sales charge. Class A shares of Reserve that were not acquired in exchange
     for Class B or Class C shares of a Participating Fund may be exchanged for
     Class A shares of the Fund upon payment of the excess, if any, of the sales
     charge rate applicable to the shares being acquired over the sales charge
     rate previously paid. Shares of Reserve acquired through an exchange of
     Class B or Class C shares may be exchanged only for the same class of
     shares of a Participating Fund without incurring a contingent deferred
     sales charge. Exchanges may only be made for funds that are eligible for
     sale in the shareholder's state of residence. The Fund is only available
     for sale in Arkansas, Louisiana, New Mexico, Oklahoma and Texas. All other
     Participating Funds are available for sale in all 50 states. Shares of any
     Participating Fund or Reserve may be exchanged for shares of any other
     Participating Fund if shares of that Participating Fund are available for
     sale; however, during periods of suspension of sales, shares of a
     Participating Fund may be available for sale only to existing shareholders
     of the Participating Fund. Additional Funds may be added from time to time
     as a Participating Fund.
 
          Class B and Class C shareholders of the Fund have the ability to
     exchange their shares ("original shares") for the same class of shares of
     any other American Capital fund that offers such class of shares ("new
     shares") in an amount equal to the aggregate net asset value of the
     original shares, without the payment of any contingent deferred sales
     charge otherwise due upon redemption of the original shares. For purposes
     of computing the contingent deferred sales charge payable upon a
     disposition of the new shares, the holding period for the original shares
     is
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     added to the holding period of the new shares. Class B and Class C
     shareholders would remain subject to the contingent deferred sales charge
     imposed by the original fund upon their redemption from the American
     Capital complex of funds. The contingent deferred sales charge is based on
     the holding period requirements of the original fund.
 
     3. Effective today, the dividend procedures for the Fund have been changed
so that all shares earn daily dividends through the day such shares are
processed for payment on redemption rather than through the day before such
shares are processed for payment.
 
     4. The following should be added under the section entitled "Purchase of
Shares -- General":
 
          Compensation may include payment for travel expenses, including
     lodging, incurred in connection with trips taken by registered
     representatives and members of their families to locations within or
     outside of the United States for meetings or seminars of a business nature.


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