AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND INC, NSAR-B, 1995-02-28

AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND INC
NSAR-B, 1995-02-28

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SIGNATURE TANYA LODEN
TITLE CONTROLLER

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<CIK> 0000917547
<NAME> AC GLOBAL MANAGED - A
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> MAY-16-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 20243
<INVESTMENTS-AT-VALUE> 19846
<RECEIVABLES> 515
<ASSETS-OTHER> 68
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 20429
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<OTHER-ITEMS-LIABILITIES> 216
<TOTAL-LIABILITIES> 277
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<SHARES-COMMON-PRIOR> 0
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<ACCUMULATED-NET-GAINS> (127)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (422)
<NET-ASSETS> 20152
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<INTEREST-INCOME> 364
<OTHER-INCOME> 0
<EXPENSES-NET> 321
<NET-INVESTMENT-INCOME> 112
<REALIZED-GAINS-CURRENT> (70)
<APPREC-INCREASE-CURRENT> (422)
<NET-CHANGE-FROM-OPS> (381)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 83
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 34
<NUMBER-OF-SHARES-SOLD> 1262
<NUMBER-OF-SHARES-REDEEMED> 19
<SHARES-REINVESTED> 13
<NET-CHANGE-IN-ASSETS> 20051
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 322
<AVERAGE-NET-ASSETS> 10100
<PER-SHARE-NAV-BEGIN> 9.44
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> (0.247)
<PER-SHARE-DIVIDEND> 0.075
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0.027
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<EXPENSE-RATIO> 2.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>expense ratio is annualized
</FN>

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<CIK> 0000917547
<NAME> AC GLOBAL MANAGED - B
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> MAY-16-1994
<PERIOD-END> DEC-31-1994
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<DISTRIBUTIONS-OF-INCOME> 19
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 22
<NUMBER-OF-SHARES-SOLD> 853
<NUMBER-OF-SHARES-REDEEMED> 54
<SHARES-REINVESTED> 4
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 4600
<PER-SHARE-NAV-BEGIN> 9.44
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> (0.207)
<PER-SHARE-DIVIDEND> 0.046
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0.027
<PER-SHARE-NAV-END> 9.17
<EXPENSE-RATIO> 3.92
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>expense ratio is annualized
</FN>

</TABLE>

<ARTICLE> 6
<CIK> 0000917547
<NAME> AC GLOBAL MANAGED - C
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> MAY-16-1994
<PERIOD-END> DEC-31-1994
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<SHARES-COMMON-PRIOR> 0
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<PER-SHARE-NAV-BEGIN> 9.44
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>expense ratio is annualized
</FN>

</TABLE>

[DESCRIPTION] Price Waterhouse LLP
<PAGE> 1
[PRICE WATERHOUSE LLP LETTERHEAD]

February 17, 1995

To the Board of Directors and Management of the
American Capital Global Managed Assets Fund, Inc.

In planning and performing our audit of the financial statements of the
American Capital Global Managed Assets Fund, Inc. (the Fund) for the period
from May 16, 1994 through December 31, 1994, we considered its internal control
structure, including procedures for safeguarding securities, in order to
determine our auditing procedures for the purposes of expressing our opinion on
the financial statements and to comply with the requirements of Form N-SAR, and
not to provide assurance on the internal control structure.

The management of the Fund is responsible for establishing and maintaining an
internal control structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and
related costs of internal control structure policies and procedures. Two of the
objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are appropriately
safeguarded against loss from unauthorized use or disposition and that
transactions are executed in accordance with management's authorization and
recorded properly to permit preparation of financial statements in conformity
with generally accepted accounting principles.

Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it
may become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.

Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce
to a relatively low level the risk that errors or irregularities in amounts
that would be material in relation to the financial statements being audited
may occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions.

<PAGE> 2
February 17, 1995
Page 2

However, we noted no matters involving the internal control structure,
including procedures for safeguarding securities, that we consider to be
material weaknesses as defined above as of December 31, 1994.

This report is intended solely for the information and use of the Directors and
management of the Fund and the Securities and Exchange Commission and should
not be used for any other purpose.

PRICE WATERHOUSE LLP

<PAGE> 3
[PRICE WATERHOUSE LLP LETTERHEAD]

February 17, 1995

To the Board of Directors and Management of the
American Capital Global Managed Assets Fund, Inc.

We have examined the accompanying description of the specific control
objectives and the control procedures that achieve those objectives of the
American Capital Global Managed Assets Fund Inc. (the "Fund") relating to that
segment of its system for allocating the results of operations of the Fund to
separate classes of shares and calculating the respective net asset values and
dividends and distributions (the "Multiple Class System") as of December 31,
1994. Our examination included procedures to obtain reasonable assurance about
whether (1) the accompanying description presents fairly, in all material
respects, the aspects of the Fund's policies and procedures that may be
relevant to understanding the internal control structure relating to the
Multiple Class System and review, (2) the control structure policies and
procedures included in the description were suitably designed to achieve the
control objectives specified in the description, if those policies and
procedures were complied with satisfactorily, and (3) such policies and
procedures had been placed in operation as of December 31, 1994. The control
objectives were specified by management of the Fund. Our examination was
performed in accordance with standards established by the American Institute of
Certified Public Accountants and included those procedures we considered
necessary in the circumstances to obtain a reasonable basis for rendering
our opinion.

In our opinion, the accompanying description of the Multiple Class System
presents fairly, in all material respects, the relevant aspects of the Fund's
policies and procedures that had been placed in operation as of December 31,
1994. Also, in our opinion, the policies and procedures, as described, are
suitably designed to provide reasonable assurance that the specified control
objectives would be achieved if the described policies and procedures were
complied with satifactorily.

In addition to the procedures we considered necessary to render our opinion
as expressed in the previous paragraph, we applied tests to specific policies
and procedures in the Multiple Class System as listed in the Appendix (Price
Waterhouse LLP Tests of Operating Effectiveness) to obtain evidence about the
effectiveness of such policies and procedures in meeting the control objective
during the period from May 16, 1994 through December 31, 1994. The specific
policies and procedures and the nature, timing, extent, and results of the
tests are listed in the

<PAGE> 4

February 17, 1995
Page 2

Appendix of this report. In our opinion, the policies and procedures that were
tested were operating with sufficient effectiveness to provide reasonable, but
not absolute, assurance that the control objectives specified were achieved
during the period indicated.

The description of specific policies and procedures of the Fund's Multiple
Class System is as of December 31, 1994, and information about tests of the
operating effectiveness of specified policies and procedures covered the period
from May 16, 1994 to December 31, 1994. Any projection of such information to
the future is subject to the risk that, because of change, the description may
no longer portray the system in existence. The potential effectiveness of
specific policies and procedures from the Fund's system under review is subject
to inherent limitations and, accordingly, errors or irregularities may occur
and not be detected. Furthermore, the projection of any conclusions, based on
our findings, to future periods is subject to the risk that changes may alter
the validity of such conclusions.

The report is intended solely for the information and use of the Directors and
management of the Fund and the Securities and Exchange Commission and should
not be used for any other purpose.

Price Waterhouse LLP

[DESCRIPTION] Global Managed Assets By-Laws
<PAGE> 1

AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND, INC.

BY-LAWS

(As amended December 1, 1994)

ARTICLE I.

STOCKHOLDERS

SECTION 1.01. Annual Meetings. The Corporation is not
required to hold an annual meeting of its stockholders in any year in which the
election of directors is not required to be acted upon under the Investment
Company Act of 1940. If the Corporation is required by the Investment Company
Act of 1940 to hold a meeting of stockholders to elect directors, such meeting
shall be held at a date and time set by the Board of Directors in accordance
with the Investment Company Act of 1940 and no later than 120 days after the
occurrence of the event requiring the meeting. Any stockholders' meeting held
in accordance with the preceding sentence shall for all purposes constitute the
annual meeting of stockholders for the fiscal year of the Corporation in which
the meeting is held. Except as the charter or statute provides otherwise, any
business may be considered at an annual meeting without the purpose of the
meeting having been specified in the notice. Failure to hold an annual meeting
does not invalidate the Corporation's existence or affect any otherwise valid
corporate acts.

SECTION 1.02. Special Meetings. At any time in the interval
between annual meetings, a special meeting of stockholders may be called by the
Chairman of the Board or the President or by a majority of the Board of
Directors by vote at a meeting or in writing (addressed to the Secretary of the
Corporation) with or without a meeting. The Secretary of the Corporation shall
call a special meeting of stockholders on the written request of stockholders
entitled to cast at least ten percent of all the votes entitled to be cast at
the meeting. A request for a special meeting shall state the purpose of the
meeting and the matters proposed to be acted on at it. The Secretary shall
inform the stockholders who make the request of the reasonably estimated costs
of preparing and mailing a notice of the meeting and, on payment of these costs
to the Corporation, notify each stockholder entitled to notice of the meeting.
Unless requested by stockholders entitled to cast a majority of all the votes
entitled to be cast at the meeting, a special meeting need not be called to
consider any matter which is substantially the same as a matter voted on at any
special meeting of stockholders held in the preceding 12 months.

SECTION 1.03. Place of Meetings. Meetings of stockholders
shall be held at such place in the United States as is set from time to time by
the Board of Directors.

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SECTION 1.04. Notice of Meetings; Waiver of Notice. Not less
than ten nor more than 90 days before each stockholders' meeting, the Secretary
shall give written notice of the meeting to each stockholder entitled to vote
at the meeting and each other stockholder entitled to notice of the meeting.
The notice shall state the time and place of the meeting and, if the meeting is
a special meeting or notice of the purpose is required by statute, the purpose
of the meeting. Notice is given to a stockholder when it is personally
delivered to him, left at his residence or usual place of business, or mailed
to him at his address as it appears on the records of the Corporation.
Notwithstanding the foregoing provisions, each person who is entitled to notice
waives notice if he before or after the meeting signs a waiver of the notice
which is filed with the records of stockholders' meetings, or is present at the
meeting in person or by proxy.

SECTION 1.05. Quorum; Voting. Unless statute or the charter
provides otherwise, at a meeting of stockholders the presence in person or by
proxy of stockholders entitled to cast a majority of all the votes entitled to
be cast at the meeting constitutes a quorum, and a majority of all the votes
cast at a meeting at which a quorum is present is sufficient to approve any
matter which properly comes before the meeting, except that a plurality of all
the votes cast at a meeting at which a quorum is present is sufficient to elect
a director.

SECTION 1.06. Adjournments. Whether or not a quorum is
present, a meeting of stockholders convened on the date for which it was called
may be adjourned from time to time without further notice by a majority vote of
the stockholders present in person or by proxy to a date not more than 120 days
after the original record date. Any business which might have been transacted
at the meeting as originally notified may be deferred and transacted at any
such adjourned meeting at which a quorum shall be present.

SECTION 1.07. General Right to Vote; Proxies. Unless the
Charter provides for a greater or lesser number of votes per share or
limits or denies voting rights, each outstanding share of stock, regardless
of class, is entitled to one vote on each matter submitted to a vote at a
meeting of stockholders. In all elections for directors, each share of stock
may be voted for as many individuals as there are directors to be elected and
for whose election the share is entitled to be voted. A stockholder may vote
the stock the stockholder owns of record either in person or by proxy. A
stockholder may sign a writing authorizing another person to act as proxy.
Signing may be accomplished by the stockholder or the stockholder's authorized
agent signing the writing or causing the stockholder's signature to be affixed
to the writing by any reasonable means, including facsimile signature. A
stockholder may authorize another person to act as proxy by transmitting, or
authorizing the transmission of, a telegram, cablegram, datagram, or other
means of electronic transmission to the person authorized to act as proxy or to
a proxy solicitation firm, proxy support service organization, or other person
authorized by the person who will act as proxy to receive the transmission.
Unless a proxy provides otherwise, it is not valid more than 11 months after
its date. A proxy is revocable by a stockholder at any time without condition
or qualification unless the proxy states that it is irrevocable and the proxy
is coupled with

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an interest. A proxy may be made irrevocable for so long as it is coupled with
an interest. The interest with which a proxy may be coupled includes an
interest in the stock to be voted under the proxy or another general interest
in the Corporation or its assets or liabilities.

SECTION 1.08. List of Stockholders. At each meeting of
stockholders, a full, true and complete list of all stockholders entitled to
vote at such meeting, showing the number and class or series of shares held by
each and certified by the transfer agent for such class or series or by the
Secretary, shall be furnished by the Secretary.

SECTION 1.09. Conduct of Business and Voting. At all
meetings of stockholders, unless the voting is conducted by inspectors, the
proxies and ballots shall be received, and all questions touching the
qualification of voters and the validity of proxies, the acceptance or
rejection of votes and procedures for the conduct of business not otherwise
specified by these By-Laws, the charter or law, shall be decided or determined
by the chairman of the meeting. If demanded by stockholders, present in person
or by proxy, entitled to cast ten percent in number of votes entitled to be
cast, or if ordered by the chairman, the vote upon any election or question
shall be taken by ballot and, upon like demand or order, the voting shall be
conducted by one or more inspectors, in which event the proxies and ballots
shall be received, and all questions touching the qualification of voters and
the validity of proxies and the acceptance or rejection of votes shall be
decided, by such inspectors. Unless so demanded or ordered, no vote need be by
ballot and voting need not be conducted by inspectors. The stockholders at any
meeting may choose an inspector or inspectors to act at such meeting, and in
default of such election the chairman of the meeting may appoint an inspector
or inspectors. No candidate for election as a director at a meeting shall
serve as an inspector thereat.

SECTION 1.10. Informal Action by Stockholders. Any action
required or permitted to be taken at a meeting of stockholders may be taken
without a meeting if there is filed with the records of stockholders' meetings
an unanimous written consent which sets forth the action and is signed by each
stockholder entitled to vote on the matter and a written waiver of any right to
dissent signed by each stockholder entitled to notice of the meeting but not
entitled to vote at it.

ARTICLE II.

BOARD OF DIRECTORS

SECTION 2.01. Function of Directors. The business and
affairs of the Corporation shall be managed under the direction of its Board of
Directors. All powers of the Corporation may be exercised by or under
authority of the Board of Directors, except as conferred on or reserved to the
stockholders by statute or by the charter or By-Laws. It shall be the duty of
the Board of Directors to ensure that the purchase, sale, retention and
disposal of portfolio securities and the other investment practices of the
Corporation are at

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all times consistent with the investment policies and restrictions of the
Corporation and the Investment Company Act of 1940. The Board, however, may
delegate the duty of management of the assets and the administration of the
day-to-day operations of the Corporation to one or more entities or individuals
pursuant to a written contract or contracts which have obtained the approvals,
including the approval of renewals thereof, required by the Investment Company
Act of 1940.

SECTION 2.02. Number of Directors. The Corporation shall
have at least three directors; provided that, if there is no stock outstanding,
the number of directors may be less than three but not less than one, and, if
there is stock outstanding and so long as there are fewer than three
stockholders, the number of directors may be less than three but not less than
the number of stockholders. The Corporation shall have the number of directors
provided in its charter until changed as herein provided. A majority of the
entire Board of Directors may alter the number of directors set by the charter
to not exceed 25 nor less than the minimum number then permitted herein, but
the action may not affect the tenure of office of any director.

SECTION 2.03. Election and Tenure of Directors. At each
annual meeting, the stockholders shall elect directors to hold office until the
next annual meeting and until their successors are elected and qualify;
provided, however, that through June 30, 1995 the term of office of each
director shall end at the time such director reaches the age of 76 1/2 or 73
1/2 for persons first elected on or after January 1, 1986 as a director of any
open end investment company managed by American Capital Asset Management, Inc.
and that on and after July 1, 1995 the term of office of each director shall
end at the time such director reaches the age of 76 1/2 or 72 1/2 for persons
first elected on or after January 1, 1986 as a director of any open end
investment company managed by American Capital Asset Management, Inc.

SECTION 2.04. Removal of Directors. Unless statute or the
charter provides otherwise, the stockholders may remove any director, with or
without cause, by the affirmative vote of a majority of all the votes entitled
to be cast for the election of directors.

SECTION 2.05. Vacancy on Board. The stockholders may elect a
successor to fill a vacancy on the Board of Directors which results from the
removal of a director by the stockholders. A director elected by the
stockholders to fill a vacancy which results from the removal of a director
serves for the balance of the term of the removed director. Unless otherwise
provided by statute or the charter, a majority of the remaining directors,
whether or not sufficient to constitute a quorum, may fill a vacancy on the
Board of Directors which results from any cause except an increase in the
number of directors and a majority of the entire Board of Directors may fill a
vacancy which results from an increase in the number of directors. A director
elected by the Board of Directors to fill a vacancy serves until the next
annual meeting of stockholders and until his successor is elected and
qualifies.

SECTION 2.06. Regular Meetings. After each meeting of stockholders at

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which directors shall have been elected, the Board of Directors shall meet as
soon as practicable for the purpose of organization and the transaction of
other business. In the event that no other time and place are specified by
resolution of the Board, the President or Chairman with notice in accordance
with Section 2.08, the Board of Directors shall meet immediately following the
close of, and at the place of, such stockholders' meeting. Any other regular
meeting of the Board of Directors shall be held on such date and at any place
as may be designated from time to time by the Board of Directors.

SECTION 2.07. Special Meetings. Special meetings of the
Board of Directors may be called at any time by the Chairman of the Board or
the President or by a majority of the Board of Directors by vote at a meeting,
or in writing with our without a meeting. A special meeting of the Board of
Directors shall be held on such date and at any place as may be designated from
time to time by the Board of Directors. In the absence of designation such
meeting shall be held at such place as may be designated in the call.

SECTION 2.08. Notice of Meetings; Waiver of Notice. Except
as provided in Section 2.06, the Secretary shall give notice to each director
of each regular and special meeting of the Board of Directors. The notice
shall state the time and place of the meeting. Notice is given to a director
when it is delivered personally to him, left at his residence or usual place of
business, or sent by telegraph, facsimile transmission or telephone, at least
24 hours before the time of the meeting or, in the alternative, by mail to his
address as it shall appear on the records of the Corporation at least 72 hours
before the time of the meeting. Unless statute, the By-Laws or a resolution of
the Board of Directors provides otherwise, the notice need not state the
business to be transacted at or the purposes of any regular or special meeting
of the Board of Directors. No notice of any meeting of the Board of Directors
need be given to any director who attends, or to any director who, in a writing
executed and filed with the records of the meeting either before or after the
holding thereof, waives such notice. Any meeting of the Board of Directors,
regular or special, may adjourn from time to time to reconvene at the same or
some other place, and no notice need be given of any such adjourned meeting
other than by announcement.

SECTION 2.09. Action by Directors. Unless statute or the
charter or the By-Laws requires a greater proportion, the action of a majority
of the directors present at a meeting at which a quorum is present is action of
the Board of Directors. A majority of the entire Board of Directors shall
constitute a quorum for the transaction of business. In the absence of a
quorum, the directors present by majority vote and without notice other than by
announcement may adjourn the meeting from time to time until a quorum shall
attend. At any such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting as
originally notified. Unless otherwise provided by statute or regulation, any
action required or permitted to be taken at a meeting of the Board of Directors
may be taken without a meeting, if an unanimous written consent which sets
forth the action is signed by each member of the Board and filed with the
minutes of proceedings of the Board.

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SECTION 2.10. Telephone Meetings. Members of the Board of
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting
can hear each other at the same time. Unless provided otherwise by statute or
regulation, participation in a meeting by these means constitutes presence in
person at the meeting.

SECTION 2.11. Compensation. By resolution of the Board of
Directors a fixed sum and expenses, if any, for attendance at each regular or
special meeting of the Board of Directors or of committees thereof, and other
compensation for their services as such or on committees of the Board of
Directors, may be paid to directors. A director who serves the Corporation in
any other capacity also may receive compensation for such other services,
pursuant to a resolution of the Board of Directors.

ARTICLE III.

COMMITTEES

SECTION 3.01. Committees. The Board of Directors may appoint
from among its members an Executive Committee and other committees composed of
two or more directors and delegate to these committees any of the powers of the
Board of Directors, except the power to declare dividends or other
distributions on stock, elect directors, issue stock other than as provided in
the next sentence, recommend to the stockholders any action which requires
stockholder approval, amend the By-Laws, or approve any merger or share
exchange which does not require stockholder approval. If the Board of
Directors has given general authorization for the issuance of stock, a
committee of the Board, in accordance with a general formula or method
specified by the Board by resolution or by adoption of a stock option or other
plan, may fix the terms of stock subject to classification or reclassification
and the terms on which any stock may be issued, including all terms and
conditions required or permitted to be established or authorized by the Board
of Directors.

SECTION 3.02. Committee Procedure. Each committee may fix
rules of procedure for its business. A majority of the members of a committee
shall constitute a quorum for the transaction of business and the action of a
majority of those present at a meeting at which a quorum is present shall be
action of the committee. The members of a committee present at any meeting,
whether or not they constitute a quorum, may appoint a director to act in the
place of an absent member. Any action required or permitted to be taken at a
meeting of a committee may be taken without a meeting, if an unanimous written
consent which sets forth the action is signed by each member of the committee
and filed with the minutes of the committee. The members of a committee may
conduct any meeting thereof by telephone in accordance with the provisions of
Section 2.10.

SECTION 3.03. Emergency. In the event of a state of
disaster of sufficient

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severity to prevent the conduct and management of the affairs and business of
the Corporation by its directors and officers as contemplated by the charter
and these By-Laws, any two or more available members of the then incumbent
Executive Committee shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Corporation in
accordance with the provisions of Section 3.01. In the event of the
unavailability, at such time, of a minimum of two members of the then incumbent
Executive Committee, the available directors shall elect an Executive Committee
composed of any two members of the Board of Directors, whether or not they be
officers of the Corporation, which two members shall constitute the Executive
Committee for the full conduct and management of the affairs of the Corporation
in accordance with the foregoing provisions of this Section. This Section
shall be subject to implementation by resolution of the Board of Directors
passed from time to time for that purpose, and any provisions of the By-Laws
(other than this Section) and any resolutions which are contrary to the
provisions of this Section or to the provisions of any such implementing
resolutions shall be suspended until it shall be determined by any interim
Executive Committee acting under this Section that it shall be to the advantage
of the Corporation to resume the conduct and management of its affairs and
business under all the other provisions of these By-Laws.

ARTICLE IV.

OFFICERS

SECTION 4.01. Executive and Other Officers. The Corporation
shall have a President, a Secretary and a Treasurer. It may also have a
Chairman of the Board. The Board of Directors shall designate who shall serve
as chief executive officer, who shall have general supervision of the business
and affairs of the Corporation, and may designate a chief operating officer,
who shall have supervision of the operations of the Corporation. In the
absence of any designation the President, shall serve as chief executive
officer. The Corporation may also have one or more Vice-Presidents, assistant
officers and subordinate officers as may be established by the Board of
Directors. A person may hold more than one office in the Corporation except
that no person may serve concurrently as both President and Vice-President of
the Corporation. The other officers may be directors.

SECTION 4.02. Chairman of the Board. The Chairman of the
Board, if one be elected, shall preside at all meetings of the Board of
Directors and of the stockholders at which he shall be present; and, in
general, he shall perform all such duties as are from time to time assigned to
him by the Board of Directors. The Chairman of the Board shall be a director.
The Chairman of the Board, if one be elected, shall not be an officer of the
corporation unless expressly designated as an officer by the Board of
Directors; the Chairman shall be an executive officer if also expressly
designated as the chief executive officer of the Corporation.

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SECTION 4.03. President. Unless otherwise provided by
resolution of the Board of Directors, the President, in the absence of the
Chairman of the Board, shall preside at all meetings of the Board of Directors
and of the stockholders at which he shall be present. Unless otherwise
specified by the Board of Directors, the President shall be the chief operating
officer of the Corporation and perform the duties customarily performed by
chief operating officers. He may sign and execute, in the name of the
Corporation, all authorized deeds, mortgages, bonds, contracts or other
instruments, except in cases in which the signing and execution thereof shall
have been expressly delegated to some other officer or agent of the
Corporation. In general, he shall perform all duties usually performed by a
president of a corporation and such other duties as are from time to time
assigned to him by the Board of Directors or the chief executive officer of the
Corporation.

SECTION 4.04. Vice-President. The Vice-President or
Vice-Presidents, at the request of the chief executive officer or the
President, or in the President's absence or during his inability to act, shall
perform the duties and exercise the functions of the President, and when so
acting shall have the powers of the President. If there be more than one
Vice-President, the Board of Directors may determine which one or more of the
Vice-Presidents shall perform any of such duties or exercise any of such
functions, or if such determination is not made by the Board of Directors, the
chief executive officer or the President may make such determination; otherwise
any of the Vice-Presidents may perform any of such duties or exercise any of
such functions. The Vice-President or Vice-Presidents shall have such other
powers and perform such other duties, and have such additional descriptive
designations in their titles (if any), as are from time to time assigned to
them by the Board of Directors, the chief executive officer, or the President.

SECTION 4.05. Secretary. The Secretary shall keep the
minutes of the meetings of the stockholders, of the Board of Directors and of
any committees, in books provided for that purpose; he shall see that all
notices are duly given in accordance with the provisions of the By-Laws or as
required by law; he shall be custodian of the records of the Corporation; he
may witness any document on behalf of the Corporation, the execution of which
is duly authorized, see that the corporate seal is affixed where such document
is required or desired to be under its seal, and, when so affixed, may attest
the same; and, in general, he shall perform all duties incident to the office
of a secretary of a corporation, and such other duties as are from time to time
assigned to him by the Board of Directors, the chief executive officer, or the
President.

SECTION 4.06. Treasurer. The Treasurer shall have charge of
and be responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit, or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust
companies or other depositories as shall, from time to time, be selected by the
Board of Directors; he shall render to the President and to the Board of
Directors, whenever requested, an account of the financial condition of the
Corporation; and, in general, he shall perform all the duties incident to the
office of a treasurer of a corporation, and such other duties as are from time
to time assigned to him

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by the Board of Directors, the chief executive officer, or the President.

SECTION 4.07. Assistant and Subordinate Officers. The
assistant and subordinate officers of the Corporation are all officers below
the office of Vice-President, Secretary or Treasurer. The assistant or
subordinate officers shall have such duties as are from time to time assigned
to them by the Board of Directors, the chief executive officer, or the
President.

SECTION 4.08. Election, Tenure and Removal of Officers. The
Board of Directors shall elect the officers of the Corporation. The Board of
Directors may from time to time authorize any committee or officer to appoint
assistant and subordinate officers. Election or appointment of an officer,
employee or agent shall not of itself create contract rights. All officers
shall be appointed to hold their offices, respectively, during the pleasure of
the Board. The Board of Directors (or, as to any assistant or subordinate
officer, any committee or officer authorized by the Board) may remove an
officer at any time. The removal of an officer does not prejudice any of his
contract rights. The Board of Directors (or, as to any assistant or
subordinate officer, any committee or officer authorized by the Board) may fill
a vacancy which occurs in any office for the unexpired portion of the term.

SECTION 4.09. Compensation. The Board of Directors shall
have power to fix the salaries and other compensation and remuneration, of
whatever kind, of all officers of the Corporation. It may authorize any
committee or officer, upon whom the power of appointing assistant and
subordinate officers may have been conferred, to fix the salaries, compensation
and remuneration of such assistant and subordinate officers.

ARTICLE V.

INDEMNIFICATION

SECTION 5.01. Indemnification of Directors and Officers. The
Corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than a proceeding by or in the right of the Corporation in which such person
shall have been adjudged to be liable to the Corporation), by reason of being
or having been a director or officer of the Corporation, or serving or having
served at the request of the Corporation as a director, officer, partner,
trustee, employee or agent of another entity in which the Corporation has a
interest as a shareholder, creditor or otherwise (a "Covered Person"), against
all liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and reasonable expenses
(including attorney's fees) actually incurred by the Covered Person in
connection with such action, suit or proceeding, except (i) liability in
connection with any proceeding in which it is determined that (A) the act or
omission of the Covered Person was material to the matter giving rise to the
proceeding, and was committed in bad faith or was the result

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of active and deliberate dishonesty, or (B) the Covered Person actually
received an improper personal benefit in money, property or services, or (C) in
the case of any criminal proceeding, the Covered Person had reasonable cause to
believe that the act or omission was unlawful and (ii) liability to the
Corporation or its security holders to which the Covered Person 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 (any or
all of the conduct referred to in clauses (i) and (ii) being hereinafter
referred to as "Disabling Conduct").

SECTION 5.02. Procedure For Indemnification. Any
indemnification under this By-law shall (unless ordered by a court) be made by
the Corporation only as authorized for a specific proceeding by (i) a final
decision on the merits by a court or other body before whom the proceeding was
brought that the Covered Person to be indemnified was not liable by reason of
Disabling Conduct, (ii) dismissal of the proceeding against the Covered Person
for insufficiency of evidence of any Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, by a majority of a quorum of
the directors who are neither "interested persons" of the Corporation as
defined in the 40 Act nor parties to the proceeding ("disinterested, non-party
directors"), or an independent legal counsel in a written opinion, that the
Covered Person was not liable by reason of Disabling Conduct. The termination
of any proceeding by judgment, order or settlement shall not create a
presumption that the Covered Person did not meet the required standard of
conduct; the termination of any proceeding by conviction, or a plea of nolo
contendere or its equivalent, or an entry of an order of probation prior to
judgment, shall create a rebuttable presumption that the Covered Person did not
meet the required standard of conduct. Any determination pursuant to this
Section 5.02 shall not prevent recovery from any Covered Person of any amount
paid to him in accordance with this By-Law as indemnification if such Covered
Person is subsequently adjudicated by a court of competent jurisdiction to be
liable by reason of Disabling Conduct.

SECTION 5.03. Advance Payment of Expenses. Reasonable
expenses (including attorney's fees) incurred by a Covered Person may be paid
or reimbursed by the Corporation in advance of the final disposition of an
action, suit or proceeding upon receipt by the Corporation of (i) a written
affirmation by the Covered Person of his good faith belief that the standard of
conduct necessary for indemnification under this By-Law has been met and (ii) a
written undertaking by or on behalf of the Covered Person to repay the amount
if it is ultimately determined that such standard of conduct has not been met,
so long as either (A) the Covered Person has provided a security for his
undertaking, (B) the Corporation is insured against losses arising by reason of
any lawful advances, or (C) a majority of a quorum of the disinterested,
non-party directors, or an independent legal counsel in a written opinion, has
determined, based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the Covered Person
ultimately will be found entitled to indemnification.

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SECTION 5.04. Exclusivity, Etc. The indemnification and
advance of expenses provided by this By-Law shall not be deemed exclusive of
any other rights to which a Covered Person seeking indemnification or advance
of expenses may be entitled under any law (common or statutory), or any
agreement, vote of stockholders or disinterested directors, or other provision
that is consistent with law, both as to action in an official capacity and as
to action in another capacity while holding office or while employed by or
acting as agent for the Corporation, shall continue in respect of all events
occurring while the Covered Person was a director or officer after such Covered
Person has ceased to be a director or officer, and shall inure to the benefit
of the estate, heirs, executors and administrators of such Covered person. All
rights to indemnification and advance of expenses under the Charter and
hereunder shall be deemed to be a contract between the Corporation and each
director or officer of the Corporation who serves or served in such capacity at
any time while this By-Law is in effect. Nothing herein shall prevent the
amendment of this By-Law, provided that no such amendment shall diminish the
rights of any Covered Person hereunder with respect to events occurring or
claims made before its adoption or as to claims made after its adoption in
respect of events occurring before its adoption. Any repeal or modification of
this By-Law shall not in any way diminish any rights to indemnification or
advance of expenses of a Covered Person or the obligations of the Corporation
arising hereunder with respect to events occurring, or claims made, while this
By-Law or any provision hereof is in force.

SECTION 5.05. Insurance. The Corporation may purchase and
maintain insurance on behalf of any Covered Person against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such; provided, however, that the Corporation shall not
purchase insurance to indemnify any Covered Person against liability for
Disabling Conduct.

SECTION 5.06. Severability: Definitions. The invalidity or
unenforceability of any provision of this Article V shall not affect the
validity or enforceability of any other provision hereof. The phrase "this
By-Law" in this Article V means this Article V in its entirety.

ARTICLE VI.

STOCK

SECTION 6.01. Certificates for Stock. If the Board of
Directors authorizes the issue of a class or series of stock with certificates,
each holder of shares of that class or series, upon written request therefor in
accordance with such procedures as may be established by the Board from time to
time, is entitled to certificates which represent and

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certify the shares of that class or series he holds in the Corporation. Each
stock certificate shall include on its face the name of the Corporation, the
name of the stockholder or other person to whom it is issued, and the class or
series of stock and number of shares it represents. It shall be in such form,
not inconsistent with law or with the charter, as shall be approved by the
Board of Directors or any officer of officers designated for such purpose by
resolution of the Board of Directors. Each stock certificate shall be signed
by the Chairman of the Board, the President, or a Vice-President, and
countersigned by the Secretary, an Assistant Secretary, the Treasurer, or an
Assistant Treasurer. Each certificate may be sealed with the actual corporate
seal or a facsimile of it or in any other form and the signatures may be either
manual or facsimile signatures. A certificate is valid and may be issued
whether or not an officer who signed it is still an officer when it is issued.
The Board of Directors may authorize the issue of some or all of the shares of
any or all classes or series without certificates. Such authorization shall
not affect shares already represented by certificates until they are
surrendered to the Corporation. At the time of issue or transfer of shares
without certificates the Corporation shall send each stockholder a written
statement of the information required by the Maryland General Corporation Law.

SECTION 6.02. Transfers. The Board of Directors shall have
power and authority to make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of shares of stock; and may
appoint transfer agents and registrars thereof. The duties of transfer agent
and registrar may be combined.

SECTION 6.03. Record Date and Closing of Transfer Books. The
Board of Directors may set a record date or direct that the stock transfer
books be closed for a stated period for the purpose of making any proper
determination with respect to stockholders, including which stockholders are
entitled to notice of a meeting, vote at a meeting, receive a dividend, or be
allotted other rights. The record date may not be prior to the close of
business on the day the record date is fixed nor, subject to Section 1.06, more
than 90 days before the date on which the action requiring the determination
will be taken; the transfer books may not be closed for a period longer than 20
days; and, in the case of a meeting of stockholders, the record date or the
closing of the transfer books shall be at least ten days before the date of the
meeting.

SECTION 6.04. Stock Ledger. The Corporation shall maintain a
stock ledger which contains the name and address of each stockholder and the
number of shares of stock of each class or series which the stockholder holds.
The stock ledger may be in written form or in any other form which can be
converted within a reasonable time into written form for visual inspection.
The original or a duplicate of the stock ledger shall be kept at the offices of
a transfer agent for the particular class or series of stock, or, if none, at
the principal office in the State of Maryland or the principal executive
offices of the Corporation.

SECTION 6.05. Certification of Beneficial Owners. The Board
of Directors may adopt by resolution a procedure by which a stockholder of the
Corporation may certify in writing to the Corporation that any shares of stock
registered in the name of the

12
<PAGE> 13
stockholder are held for the account of a specified person other than the
stockholder. The resolution shall set forth the class of stockholders who may
certify, the purpose for which the certification may be made, the form of
certification and the information to be contained in it, if the certification
is with respect to a record date or closing of the stock transfer books, the
time after the record date or closing of the stock transfer books within which
the certification must be received by the Corporation, and any other provisions
with respect to the procedure which the Board considers necessary or desirable.
On receipt of a certification which complies with the procedure adopted by the
Board in accordance with this Section, the person specified in the
certification is, for the purpose set forth in the certification, the holder of
record of the specified stock in place of the stockholder who makes the
certification.

SECTION 6.06. Lost Stock Certificates. The Board of
Directors of the Corporation may determine the conditions for issuing a new
stock certificate in place of one which is alleged to have been lost, stolen or
destroyed, including the requirement that the owner furnish a bond as indemnity
against any claim that may be made against the Corporation in respect of the
lost, stolen or destroyed certificate, or the Board of Directors may delegate
such power to any officer or officers of the Corporation. In their discretion,
the Board of Directors or such officer or officers may refuse to issue such new
certificate save upon the order of some court having jurisdiction in the
premises.

ARTICLE VII.

FINANCE

SECTION 7.01. Checks, Drafts, Etc. All checks, drafts and
orders for the payment of money, notes and other evidences of indebtedness,
issued in the name of the Corporation, shall, unless otherwise provided by
resolution of the Board of Directors, be signed by the President, a
Vice-President or an Assistant Vice-President and countersigned by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary.

SECTION 7.02. Annual Statement of Affairs. The President or
chief accounting officer shall prepare annually a full and correct statement of
the affairs of the Corporation, to include a statement of net assets and a
financial statement of operations for the preceding fiscal year. The statement
of affairs shall be placed on file at the Corporation's principal office within
120 days after the end of the fiscal year.

SECTION 7.03. Fiscal Year. The fiscal year of the
Corporation shall be the twelve-calendar-month period ending November 30 in
each year, unless otherwise provided by the Board of Directors.

SECTION 7.04. Dividends. If declared by the Board of
Directors at any meeting thereof, the Corporation may pay dividends on its
shares in cash, property, or in

13
<PAGE> 14
shares of the capital stock of the Corporation, unless such dividend is
contrary to law or to a restriction contained in the charter of the
Corporation.

SECTION 7.05. Net Asset Value. Except in the event of
emergency conditions or as otherwise permitted by the Investment Company Act of
1940, the net asset value per share of each class or series of stock shall be
determined no less frequently than once daily, Monday through Friday, at such
time or times as the Board of Directors sets at least annually. In valuing
portfolio investments for the determination of the net asset value per share of
any class or series, securities for which market quotations are readily
available shall be valued at prices which, in the opinion of the Board of
Directors or the person designated by the Board of Directors to make the
determination, most nearly represent the current market value of such
securities, and other securities and assets shall be valued on the basis of
their fair value as determined by or pursuant to the direction of the Board of
Directors, which in the case of debt obligations, commercial paper and
repurchase agreements may, but need not, be on the basis of yields for
securities of comparable maturity, quality and type, or on the basis of
amortized cost.

SECTION 7.06. Employment of Custodian. The Corporation shall
place and maintain its securities and similar investments in the custody of one
or more custodians meeting the requirements of the Investment Company Act of
1940 or may serve as its own custodian but only in accordance with such rules
and regulations or orders as the Securities and Exchange Commission may from
time to time prescribe for the protection of investors. Securities held by a
custodian may be registered in the name of the Corporation, including the
designation of the particular class or series to which such assets belong, or
any such custodian, or the nominee of either of them. Subject to such rules,
regulations, and orders as the Commission may adopt as necessary or appropriate
for the protection of investors, the Corporation or any custodian, with the
consent of the Corporation, may deposit all or any part of the securities owned
by the Corporation in a system for the central handling of securities, pursuant
to which system all securities of a particular class or series of any issuer
deposited within the system are treated as fungible and may be transferred or
pledged by bookkeeping entry without physical delivery of such securities.

ARTICLE VIII.

SUNDRY PROVISIONS

SECTION 8.01. Books and Records. The Corporation shall keep
correct and complete books and records of its accounts and transactions and
minutes of the proceedings of its stockholders and Board of Directors and of
any executive or other committee when exercising any of the powers of the Board
of Directors. The books and records of a Corporation may be in written form or
in any other form which can be converted within a reasonable time into written
form for visual inspection. Minutes shall be recorded in written form but may
be maintained in the form of a reproduction. The original or a certified copy

14
<PAGE> 15
of these By-Laws shall be kept at the principal office of the Corporation.

SECTION 8.02. Corporate Seal. The Board of Directors shall
provide a suitable seal, bearing the name of the Corporation, which shall be in
the charge of the Secretary. The Board of Directors may authorize one or more
duplicate seals and provide for the custody thereof. If the Corporation is
required to place its corporate seal to a document, it is sufficient to meet
the requirement of any law, rule or regulation relating to a corporate seal to
place the word "Seal" adjacent to the signature of the person authorized to
sign the document on behalf of the Corporation.

SECTION 8.03. Bonds. The Board of Directors may require any
officer, agent or employee of the Corporation to give a bond to the
Corporation, conditioned upon the faithful discharge of his duties, with one or
more sureties and in such amount as may be satisfactory to the Board of
Directors.

SECTION 8.04. Voting Shares in Other Corporations. Shares of
other corporations or associations, registered in the name of the Corporation,
may be voted by the President, a Vice-President, or a proxy appointed by either
of them. The Board of Directors, however, may by resolution appoint some other
person to vote such shares, in which case such person shall be entitled to vote
such shares upon the production of a certified copy of such resolution.

SECTION 8.05. Mail. Any notice or other document which is
required by these By-Laws to be mailed shall be deposited in the United States
mails, postage prepaid.

SECTION 8.06. Execution of Documents. A person who holds
more than one office in the Corporation may not act in more than one capacity
to execute, acknowledge or verify an instrument required by law to be executed,
acknowledged or verified by more than one officer.

SECTION 8.07. Amendments. Subject to the special provisions
of Section 2.02, (i) any and all provisions of these By-Laws may be altered or
repealed and new by-laws may be adopted at any annual meeting of the
stockholders, or at any special meeting called for that purpose, and (ii) the
Board of Directors shall have the power, at any regular or special meeting
thereof, to make and adopt new by-laws, or to amend, alter or repeal any of the
By-Laws of the Corporation.

* * *

[DESCRIPTION] Multiple Class Funds
<PAGE> 1

AMERICAN CAPITAL MUTUAL FUNDS

MULTIPLE CLASS FUNDS

SECTION I

DESCRIPTION OF THE ALTERNATE PURCHASE PLANS

Mutual Funds that adopt a multiple class of share structure are required to
maintain records that account for each class of shares of the fund. Shares
which are subject to contingent deferred sales load (CDSL) versus paying only a
front-end sales load (FESL) are charged with a higher distribution fee (12b-1
fee) on a daily basis. Since the 12b-1 fees charged will be higher for CDSL
shares and multiple classes of shares exist, separate Net Asset Values (NAV)
and dividend/distributions must be calculated for each class of shares.

NAV CALCULATIONS

Income: Income of the Fund (all classes combined) will be allocated to the
individual classes based on the relative adjusted net assets of each class or
the relative value of adjusted dividend qualifying shares of each class (the
net assets at the beginning of the day after reflecting the prior day's capital
share transactions) as appropriate, depending on the type of fund.

Expenses: Expenses of the Fund not specific to one or more classes will be
allocated to all classes based on the adjusted net assets of each class or the
relative value of adjusted dividend qualifying shares of each class. Expenses
attributable to a particular class will be charged only to that class. Expenses
attributable to a particular class may include the following:

o Rule 12b-1 fees

o Transfer agent cost

UNREALIZED APPRECIATION/DEPRECIATION AND REALIZED GAINS/LOSSES

The change in the market value of investments will be allocated each day based
on the relative adjusted net assets of each class or the relative value of
adjusted dividend qualifying shares of each class as appropriate, depending on
the type of fund. Realized gains and losses will be allocated to the classes on
the same basis.

DIVIDEND/DISTRIBUTIONS PAID TO SHAREHOLDERS

The amount of dividends and distribution of gains paid to shareholders of each
class will be determined by the dividend/distribution calculation methodology
described below. The actual amounts paid to each class will be used to
calculate the net asset value of each class.

<PAGE> 2
PRICING WORKSHEET

The Multiple Shares NAV Worksheet (Exhibit III) will be used in the daily net
asset value calculation. Utilizing data reviewed by the fund accountant, the
computer system generates the above worksheet for the total fund and each
respective class.

For non-daily dividend funds, the class allocation is based on the relative
adjusted net assets of each class. The allocation is derived by taking prior
day's net assets plus the actual dollars booked from prior day capital stock
activity for each class compared to the total fund. For daily dividend funds,
the class allocation is based on the relative value of adjusted dividend
qualifying shares of each class. The allocation is derived by using dividend
shares times prior day's NAV compared to the fund total.

This class allocation is used to allocate income, non-class-specific expenses,
and realized and unrealized gains and losses. Class specific expenses and
dividend/distributions are applied to the apprpriate class. This determines the
net assets for the current day which is divided by outstanding shares for the
NAV per share for each class.

DIVIDEND/DISTRIBUTIONS CALCULATION METHODOLOGY

The amount available for dividends, or the projected amount available, will be
based on the combined undistributed net investment income of the Fund. The per
share dividend rates for each class will differ by approximately the expense
rate differential, based on average daily NAV, between the classes of shares
for the applicable period, i.e. daily, monthly, etc.

The maximum distribution rate per share for net realized gains will be
determined by dividing the total fund shares outstanding on the ex-dividend
date into the undistributed net realized gains of the fund (all classes
combined) for the applicable period.

SECTION II

SPECIFIED CONTROL OBJECTIVES

The following are the specific control objectives of the system of internal
accounting control relating to the allocation of income and expenses and the
calculation of net asset values and dividend distribution amounts for the
multiple classes of shares contemplated above:

1. That the expenses attributable to a particular class are properly recorded
for that class.

2. That income, other operating expenses, and realized and unrealized gains
and losses are allocated properly to each class as described in Section I.

3. That capital share transactions, including dividends and distributions,
are properly allocated as described in Section I.

4. That net asset value is properly calculated as described in Section I.

- 2 -

<PAGE> 3

SECTION III

POLICIES AND PROCEDURES TO ACHIEVE SPECIFIED CONTROL OBJECTIVES

The following procedures are designed to account for the various classes of
shares in each fund. From time to time, policies and procedures may be revised
to improve or enhance operations and maintain adherence to specified control
objectives.

1. On a daily basis, the fund accountant completes the "Daily Net Asset
Reconciliation and NAV Proof" (proof sheet) on Exhibit II.
2. Using the proof sheet, the fund accountant reviews the allocation of daily
income and expenses and realized and unrealized gains and losses of each
class.
3. The fund accountant verifies the shares outstanding on the proof sheet to
the amounts supplied by the Transfer Agent.
4. On a daily basis, the fund supervisor reviews the allocations and the net
asset value calculation. On a test basis, the supervisor verifies the
amounts entered by the fund accountant on the proof sheet by agreeing the
amounts entered to source documents and reviewing for reasonableness. The
supervisor initials the worksheet to evidence this review.
5. On a monthly basis, the fund supervisor reviews the monthly financial
statement including the calculations of all income and expense items.
6. For periodic distributions (monthly, quarterly or annually, as applicable),
the calculation is performed by the fund accountant according to the
methodology described in Section I. The calculation is verified by a
supervisor by agreeing the amounts to the source documents. This review is
documented by the supervisor's initials on the calculation.

SECTION IV

FINANCIAL STATEMENT DISCLOSURE FOR FUNDS WITH MULTIPLE CLASSES OF SHARES

Portfolio of Investments

o Will be shown in accordance with standard reporting practices.

Statement of Assets and Liabilities

o Assets and liabilities will be disclosed on a combined basis.
o Net asset value and offering price per share data will be presented for
each class.
o The composition of net assets (Summary of Shareholders Equity) will be
presented on a combined basis, but will include a description of each class
(par, outstanding shares, etc.).

Statement of Operations

o A standard reporting format will be used.

-3-
<PAGE> 4
Statement of Changes in Net Assets

o A standard reporting format will be used with separate disclosure of
dividends and capital gain distributions to shareholders and dollar value
of capital share transactions for each class.

Financial Highlights

o A standard reporting format will be used and the per share data and ratios
will be shown for each class (portfolio turnover which will be shown in
total).

Notes to Financial Statements

The notes to the financial statements will include the following additional
disclosures in the footnotes:

o Description of each class of shares and the related class-specific
expenses.
o Information on the 12b-1 fee arrangements for each class.
o Capital shares transactions for each class for the most recent period and
the prior year.

-4-

[DESCRIPTION] Daily Net Asset Reconciliation And NAV Proof
<PAGE> 1
Exhibit II

DAILY NET ASSET RECONCILIATION AND NAV PROOF Page 1

FUND: ________________ DATE: _________________

DAILY NAV PROOF
<TABLE>
<CAPTION>
________________________________________________________________________________

Line Activity CLASS A CLASS B CLASS C TOTAL FUND
________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Current Shares Outstanding _______ ________ _______ _________
1 Prior Day's NAV (4 decimals) _______ ________ _______ _________

PER SHARE IMPACT ON NAV
CAPITAL SHARE TRANSACTIONS

2 Capital Share Transactions _______ ________ _______ _________
(from Page 3) _______ ________ _______ _________

NET INVESTMENT INCOME

3 Today's Net Investment Income* $_______ $________ $_______
*(from R707 Cost-P)

4 Net Investment Income _______ ________ _______ _________
_______ ________ _______ _________
EX-DIVIDEND/DISTRIBUTION

5 Income Dividend (from Page 3) (_______) (________) (_______) (_________)
(_______) (________) (_______) (_________)

Capital Gain Distribution
per class (_______) (________) (_______) (_________)
(_______) (________) (_______) (_________)
MARKET VALUE ACTION

7 Per Class Allocation
(9 DECIMALS FROM R707) _______ ________ _______

8 Total impact (line 23 x
line 7) $_______ $________ $_______

9 Per Share Effect of Market
Change _______ ________ _______ _________
_______ ________ _______ _________

10 Calculated Price Per Share _______ ________ _______ _________
(SUM OF LNES 1,2,4,5,6,&9)

11 System Generated Price (_______) (________) (_______) (_________)

12 Difference should not exceed
.0002 _______ ________ _______ _________
_______ ________ _______ _________
MARKET VALUE ACTION
13 R403 Current Market Value of
all Investments _______

14 R403 Today's Mark-to Market
on Futures _______

15 P/D R403 Prior Day's Market Value (________)

16 R314 Today's Discount Earned (________)

17 R314 Today's Accretion of OID (________)

18 R314 Today's Amortization of
Premium ________

19 R309 Investments purchased - at c (________)

20 R309 Investments sold - at proceeds ________

21 R810 P I K / I O Adjustments (________)

R309 Adjusting Marks on Futures
Trades ________

Subtotal (_______)

23 Change in Market Value _______
_______
</TABLE>

<PAGE> 2
Exhibit II

DAILY NET ASSET RECONCILIATION AND NAV PROOF Page 1

FUND: ______________________________ DATE: _______________
DAILY NET ASSET RECONCILIATION

<TABLE>
<CAPTION>
________________________________________________________________________________________________________________
G/L PRIOR Percentage
Line Report Activity ACCT DAY Amount of change
________________________________________________________________________________________________________________

<S> <C> <C> <C> <C> <C> <C>
DAILY ACCRUALS

INCOME

1 R303 Dividend Income CP05 _______________ _______________ ___________%
2 R810 Bond Interest Income Non-taxable CP10 _______________ _______________ ___________%
3 R810 Bond Interest Income Taxable CP13 _______________ _______________ ___________%
4 R810 Short-term Interest Income Non-taxable CP16 _______________ _______________ ___________%
5 R810 Short-term Interest Income Taxable CP19 _______________ _______________ ___________%
6 R314 Acquisition Discount Earned CP31 _______________ _______________ ___________%
7 R314 Accretion of OID - Taxable CP34 _______________ _______________ ___________%
8 R314 Accretion of OID - Non-taxable CP35 _______________ _______________ ___________%
9 R314 Amortization of Premium - Taxable CP37 (_______________) (_______________) ___________%
10 R314 Amortization of Premium - Non-taxable CP38 (_______________) (_______________) ___________%
11 Other Income CP45 _______________ _______________ ___________%
12 Interim Income Adjustments CP46 _______________ _______________ ___________
13 GROSS INVESTMENT INCOME _______________
_______________
EXPENSES
14 Operating Expense Accrual CP5095 (_______________)
15 12-b 1 Expense Accrual CP53/CP54B/CP54C +\-_______________
Direct Expense Payments +/-_______________
16 NET INVESTMENT INCOME TODAY _______________
_______________
To Page 1, line 3 TF
To Page 2, Line 18
NET ASSETS AT COST RECONCILIATION

17 R701 Prior Day's Net Assets at Cost _______________
18 Today's Net Investment Income (Line 16, page 2) _______________
19 Today's Total Net Share Activity (Line 6, page 3) _______________
20 R302 Today's Net Gain/Loss (excl. Futures) _______________
21 R309 Mark-to-Market on Futures _______________
22 R810 PIK/IO Adjustments _________________________ (_______________)
23 Today's Distributions (Line 31, page 3 or amounts from
Line 5 & 6, page 1) (_______________)
24 Below Adjustments *_______________
25 R701 TODAY'S NET ASSETS AT COST _______________
_______________
(Pre-priced)
* DETAIL OF ADJUSTMENTS
$ ____________________________
$ ____________________________
$ ____________________________
$ ____________________________

</TABLE>

<PAGE> 3
EXHIBIT II

DAILY NET ASSET RECONCILIATION AND NAV PROOF Page 3

FUND: ______________________________ DATE: ________________

<TABLE>
<CAPTION>
___________________________________________________________________________________________________________________
Line Report Activity Amount
___________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Current Shares Outstanding

CAPITAL SHARE TRANSACTIONS-IMPACT ON NAV

CLASS A CLASS B CLASS C
1 S/R Today's Net Dollars to Fund ________________ ________________ ________________
2 Est. Today's Net Est. Dollars ________________ ________________ ________________
3 P/D Reverse P/D Net Est. Dollars ________________ ________________ ________________
4 Reinvestment Dollars to Fund ________________ ________________ ________________
5 Today's Dollar Impact = ________________ = ________________ = ________________
6 TODAY'S TOTAL DOLLAR IMPACT +A+B+C = ________________

7 S/R Today's Net Shares to Fund ________________ ________________ ________________
8 Est. Today's Net Est. Shares ________________ ________________ ________________
9 P/D Reverse P/D Net Est. Shares ________________ ________________ ________________
10 Reinvestment Shares to Fund ________________ ________________ ________________
11 Today's Share Impact per ( = ________________ = ________________ = ________________
12 Prior Day's NAV x ________________ x ________________ x ________________
13 = (________________) = (________________) = (________________)
15 Change in Capital Shares (L5 - L13) ________________ = ________________ = ________________
________________ ________________ ________________
PER SHARE EFFECT ** ________________ ________________ ________________
________________ ________________ ________________
17 +A+B+C = ________________
18 **IF ANSWER EXCEEDS +/- .0005 NOTIFY SUPERVISOR PER SHARE TF ________________
________________
Equalization Factor ________________ ________________ ________________
CLASS A CLASS B CLASS C
19 S/R Current Shares Outstanding ________________ ________________ ________________
20 Est. Share Estimates - Sales ________________ ________________ ________________
21 Est. Share Est - Redemptions (________________) (________________) (________________)
22 Est. Share Est - Reinvestments ________________ ________________ ________________
23 Adj Shares Outstanding GL Total = ________________ ________________ ________________
24 S/R Unsettled Sales CS80A (________________)CS80B(________________)CS80C(________________)
25 S/R Unsettled Redemptions CS90A ________________ CS90B ________________ CS90C ________________
26 Current Distribution Shares GL Total________________ ________________ ________________
TOTAL OUTSTANDING SHARES A+B+C ______________________________
______________________________
DIVIDENDS AND DISTRIBUTIONS
27 S/R T/A Reported Amount ________________ ________________ ________________
28 P/D Estimate Div ________________ ________________ ________________
29 Tie-in Adjustment Needed ________________ ________________ ________________

30 Current Day's Total Dividend ** ________________ ________________ ________________
________________ ________________ ________________
** Line 23 or 26 x Line 31
31 Dividend Rate ________________ ________________ ________________

</TABLE>

<PAGE> 4
EXHIBIT II

DAILY NET ASSET RECONCILIATION AND NAV PROOF Page

FUND:__________________________________________ DATE: _______________

PAR/SHARES AND COST RECONCILIATION

<S> <C> <C> <C> <C> <C> <C>
Line Report Activity Long Positions Short Positions
Par/Shares Cost Par/Shares Cost
1 P/D R104 Prior Day's Total Par/Shares & Cost +_____________ _____________ +_____________ _____________

2 Trade Tkts Purchases - L/T Inv. +_____________ _____________ +_____________ _____________

3 Trade Tkts Purchases - S/T Inv. +_____________ _____________ +_____________ _____________

4 Trade Tkts Opening Contracts +_____________ _____________ +_____________ _____________

5 R302 Sales -_____________ _____________ -_____________ _____________

6 P/D R104 Maturities -_____________ _____________ -_____________ _____________

7 R302 Closing Contracts -_____________ _____________ -_____________ _____________

8 R104 Current Day's Total Par/Shares & Cost =_____________ _____________ =_____________ _____________

9 R301/04/05 Capital Change Impact +_____________ _____________ _____________ _____________

10 Corrct Tkts Correcting Adjustments +/-_____________ _____________ +/-_____________ _____________

11 R104 Rev Revised Par/Shares & Cost =_____________ _____________ =_____________ _____________

12 R104 Subtract Futures Par & Cost -_____________ _____________ -_____________ _____________

13 Total Par & Cost =_____________ _____________ =_____________ _____________
_____________ _____________ _____________ _____________

G/L Acct G/L Acct

GENERAL LEDGER COST RECONCILIATION
12 R701 Investments at Cost/Written Options AS10 +_____________ LS10 +_____________

13 R701 Short-term Investments (cost) AS70 +_____________

14 R701 Short Securities _____________ _____________ LS20 +_____________

16 Total Reconciled Cost Above (Line 13) =_____________ =_____________
_____________ _____________

17 Proof of R403 Par/Shares _____________
_____________

Prepared by __________________________________________________ Reviewer's initials: ________________________

</TABLE>

[DESCRIPTION] Multiple Shares NAV Worksheet
<PAGE> 1
EXHIBIT III

AMERICAN CAPITAL
REPORT # R707
NAV-P MULTIPLE SHARES NAV WORKSHEET - PERIODIC DIVIDEND FUND
FOR THE PERIOD 10/12/93 THROUGH 10/13/93

REPORT IDENTIFIER NAV-P

NAV WORKSHEET FOR TOTAL FUND
- ----------------------------
NET ASSETS - PRIOR DAY
CAPITAL STOCK ACTIVITY AS OF PRIOR DAY
ADJUSTED NET ASSETS
CLASS ALLOCATION ON ADJUSTED NET ASSETS

NET INVESTMENT INCOME:
GROSS INVESTMENT INCOME

EXPENSES:
DISTRIBUTION FEES
SERVICE FEES
OTHER EXPENSES
NET ADJUSTMENT TO EXPENSES
NET EXPENSES
NET INVESTMENT INCOME
UNDISTRIBUTED INCOME - PRIOR DAY
INCOME AVAILABLE FOR DISTRIBUTION
INCOME AVAILABLE PER SHARE

DIVIDENDS DECLARED
GAINS DISTRIBUTIONS DECLARED

GAINS/LOSSES - ALLOCATED ON ADJUSTED NET ASSETS:
NET REALIZED GAINS/LOSSES
NET UNREALIZED GAINS/LOSSES

INCREASE/DECREASE IN NET ASSETS

NET ASSETS - CURRENT DAY

CAPITAL SHARES OUTSTANDING CURRENT DAY

FOR STATISTICAL USE ONLY
------------------------
NAV PER SHARE:
UNROUNDED
ROUNDED

PRIOR DAY NAV - ROUNDED
CHANGE IN NAV (CENTS)

NET ASSETS FOR TOTAL FUND PER NAV WORKSHEET
NET ASSETS FOR TOTAL FUND PER R403
DIFFERENCE

<PAGE> 2
EXHIBIT III

AMERICAN CAPITAL
REPORT # R707
NAV-P MULTIPLE SHARES NAV WORKSHEET - PERIODIC DIVIDEND FUND
FOR THE PERIOD 10/12/93 THROUGH 10/13/93

NAV WORKSHEET FOR CLASS A SHARES
- --------------------------------
NET ASSETS - PRIOR DAY
CAPITAL STOCK ACTIVITY AS OF PRIOR DAY
ADJUSTED NET ASSETS
CLASS ALLOCATION ON ADJUSTED NET ASSETS

NET INVESTMENT INCOME:
GROSS INVESTMENT INCOME

EXPENSES:
SERVICE FEES
OTHER EXPENSES
NET ADJUSTMENT TO CLASS A EXPENSES
NET EXPENSES
NET INVESTMENT INCOME
UNDISTRIBUTED INCOME - PRIOR DAY
INCOME AVAILABLE FOR DISTRIBUTION
INCOME AVAILABLE PER SHARE

DIVIDENDS DECLARED
GAINS DISTRIBUTIONS DECLARED

GAINS/LOSSES - ALLOCATED ON ADJUSTED NET ASSETS:
NET REALIZED GAINS/LOSSES
NET UNREALIZED GAINS/LOSSES

INCREASE/DECREASE IN NET ASSETS

NET ASSETS - CURRENT DAY

CAPITAL SHARES OUTSTANDING CURRENT DAY

NAV PER SHARE:
UNROUNDED
ROUNDED

PRIOR DAY NAV - ROUNDED
CHANGE IN NAV (CENTS)

CLASS A FRONT-END LOAD FACTOR (1 - LOAD)
MAXIMUM OFFERING PRICE (CLASS A)

NET ASSETS FOR CLASS A PER NAV WORKSHEET
NET ASSETS FOR CLASS A PER R403
DIFFERENCE

<PAGE> 3
EXHIBIT III

AMERICAN CAPITAL
REPORT # R707
NAV-P MULTIPLE SHARES NAV WORKSHEET - PERIODIC DIVIDEND FUND
FOR THE PERIOD 10/12/93 THROUGH 10/13/93

NAV WORKSHEET FOR CLASS B SHARES
- --------------------------------
NET ASSETS - PRIOR DAY
CAPITAL STOCK ACTIVITY AS OF PRIOR DAY
ADJUSTED NET ASSETS
CLASS ALLOCATION ON ADJUSTED NET ASSETS

NET INVESTMENT INCOME:
GROSS INVESTMENT INCOME

EXPENSES:
DISTRIBUTION FEES
SERVICE FEES
OTHER EXPENSES
NET EXPENSES
NET INVESTMENT INCOME
UNDISTRIBUTED INCOME - PRIOR DAY
INCOME AVAILABLE FOR DISTRIBUTION
INCOME AVAILABLE PER SHARE

DIVIDENDS DECLARED
GAINS DISTRIBUTIONS DECLARED

GAINS/LOSSES - ALLOCATED ON ADJUSTED NET ASSETS:
NET REALIZED GAINS/LOSSES
NET UNREALIZED GAINS/LOSSES

INCREASE/DECREASE IN NET ASSETS

NET ASSETS - CURRENT DAY

CAPITAL SHARES OUTSTANDING CURRENT DAY

NAV PER SHARE:
UNROUNDED
ROUNDED

PRIOR DAY NAV - ROUNDED
CHANGE IN NAV (CENTS)

CLASS B FRONT-END LOAD FACTOR (1 - LOAD)
MAXIMUM OFFERING PRICE (CLASS B)

NET ASSETS FOR CLASS B PER NAV WORKSHEET
NET ASSETS FOR CLASS B PER R403
DIFFERENCE

<PAGE> 4
EXHIBIT III

AMERICAN CAPITAL
REPORT # R707
NAV-P MULTIPLE SHARES NAV WORKSHEET - PERIODIC DIVIDEND FUND
FOR THE PERIOD 10/12/93 THROUGH 10/13/93

NAV WORKSHEET FOR CLASS C SHARES
- --------------------------------
NET ASSETS - PRIOR DAY
CAPITAL STOCK ACTIVITY AS OF PRIOR DAY
ADJUSTED NET ASSETS
CLASS ALLOCATION ON ADJUSTED NET ASSETS

NET INVESTMENT INCOME:
GROSS INVESTMENT INCOME

EXPENSES:
DISTRIBUTION FEES
SERVICE FEES
OTHER EXPENSES
NET EXPENSES
NET INVESTMENT INCOME
UNDISTRIBUTED INCOME - PRIOR DAY
INCOME AVAILABLE FOR DISTRIBUTION
INCOME AVAILABLE PER SHARE

DIVIDENDS DECLARED
GAINS DISTRIBUTIONS DECLARED

GAINS/LOSSES - ALLOCATED ON ADJUSTED NET ASSETS:
NET REALIZED GAINS/LOSSES
NET UNREALIZED GAINS/LOSSES

INCREASE/DECREASE IN NET ASSETS

NET ASSETS - CURRENT DAY

CAPITAL SHARES OUTSTANDING CURRENT DAY

NAV PER SHARE:
UNROUNDED
ROUNDED

PRIOR DAY NAV - ROUNDED
CHANGE IN NAV (CENTS)

CLASS C FRONT-END LOAD FACTOR (1 - LOAD)
MAXIMUM OFFERING PRICE (CLASS C)

NET ASSETS FOR CLASS C PER NAV WORKSHEET
NET ASSETS FOR CLASS C PER R403
DIFFERENCE

[DESCRIPTION] N-SAR Item 77C
<PAGE> 1

N-SAR ITEM 77C

a) A Special Meeting of Shareholders was held on December 16, 1994.

b) Inapplicable

c) The following was voted on at the meeting:

1) Approval of a new investment advisory agreement between the Registrant
and American Capital Asset Management, Inc. to take effect upon the
closing of the proposed acquisition of American Capital Management &
Research, Inc. by The Van Kampen Merritt Companies, Inc.

For 1,568,390.723 Against 5,896.436

2) Approval of a new investment sub-advisory agreement between the
Registrant and American Capital Asset Management, Inc. to take effect
upon the closing of the proposed acquisition of American Capital
Management & Research, Inc. by the Van Kampen Merritt Companies, Inc.

For 1,566,040.070 Against 36,642.752

d) Inapplicable

[DESCRIPTION] Exhibit 77 O
<PAGE> 1

EXHIBIT 77 0

AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND, INC.

Underwritings Pursuant to Rule 10f-3

<TABLE>
<S> <C> <C>
1. Name of Issuer: Doubletree Corporation
Securities Acquired from: Montgomery Securities
Syndicate Members: (See Attached Appendix 1)
Principal Amount in Offering: 3,000,000
Principal Amount Purchased: 100
Price Per Share: $13.000
Purchase Date: 07/01/94

1. Name of Issuer: Indosat ADS
Securities Acquired from: Merrill Lynch & Co.
Syndicate Members: (See Attached Appendix 2)
Principal Amount in Offering: 11,255,435
Principal Amount Purchased: 600
Price Per Share: $32.05
Purchase Date: 10/17/94
</TABLE>

<PAGE> 2

Appendix 1

DOUBLETREE CORPORATION

<TABLE>
<S> <C>
Montgomery Securities . . . . . . . . . . . . . . . . . . . . . .
Wertheim Schroder & Co. Incorporated . . . . . . . . . . . . . .
Alex. Brown & Sons Incorporated . . . . . . . . . . . . . . . . .
Dean Witter Reynolds Inc. . . . . . . . . . . . . . . . . . . . .
Dillon, Read & Co. Inc. . . . . . . . . . . . . . . . . . . . . .
Donaldson, Lufkin & Jenrette Securities Corporation . . . . . . .
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . . . .
Lehman Brothers Inc. . . . . . . . . . . . . . . . . . . . . . .
Natwest Securities Corporation . . . . . . . . . . . . . . . . .
Oppenheimer & Co., Inc. . . . . . . . . . . . . . . . . . . . . .
Prudential Securities Incorporated . . . . . . . . . . . . . . .
Salomon Brothers Inc . . . . . . . . . . . . . . . . . . . . . .
Smith Barney Shearson Inc. . . . . . . . . . . . . . . . . . . .
Arnhold and S. Bleichroeder, Inc. . . . . . . . . . . . . . . . .
J.C. Bradford & Co. . . . . . . . . . . . . . . . . . . . . . . .
McDonald & Company Securities, Inc. . . . . . . . . . . . . . . .
Morgan, Keegan & Company, Inc. . . . . . . . . . . . . . . . . .
Rauscher Pierce Refsnes, Inc. . . . . . . . . . . . . . . . . . .
Raymond James & Associates, Inc. . . . . . . . . . . . . . . . .
Sutro & Co. Incorporated . . . . . . . . . . . . . . . . . . . .
Robert W. Baird & Co. Incorporated . . . . . . . . . . . . . . .
The Chicago Corporation . . . . . . . . . . . . . . . . . . . . .
Crowell, Weedon & Co. . . . . . . . . . . . . . . . . . . . . . .
Equitable Securities Corporation . . . . . . . . . . . . . . . .
Fahnestock & Co., Inc. . . . . . . . . . . . . . . . . . . . . .
First Albany Corporation . . . . . . . . . . . . . . . . . . . .
Ladenburg, Thalmann & Co., Inc. . . . . . . . . . . . . . . . . .
ScotiaMcLeod (USA) Inc. . . . . . . . . . . . . . . . . . . . . .
Van Kasper & Company . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
<PAGE> 3
Appendix 2

(INDOSAT LOGO)

U.S. UNDERWRITER

<TABLE>
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated . . . . . . .
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . . . .
Lehman Brothers Inc. . . . . . . . . . . . . . . . . . . . . . .
J.P. Morgan Securities Inc. . . . . . . . . . . . . . . . . . . .
Morgan Stanley & Co. Incorporated . . . . . . . . . . . . . . . .
Salomon Brothers Inc . . . . . . . . . . . . . . . . . . . . . .
Smith Barney Inc. . . . . . . . . . . . . . . . . . . . . . . . .
Bear, Stearns & Co. Inc. . . . . . . . . . . . . . . . . . . . .
Alex. Brown & Sons Incorporated . . . . . . . . . . . . . . . . .
CS First Boston Corporation . . . . . . . . . . . . . . . . . . .
Dean Witter Reynolds Inc. . . . . . . . . . . . . . . . . . . . .
Donaldson, Lufkin & Jenrette Securities Corporation . . . . . . .
Lazard Freres & Co. . . . . . . . . . . . . . . . . . . . . . . .
Paine Webber Incorporated . . . . . . . . . . . . . . . . . . . .
Prudential Securities Incorporated . . . . . . . . . . . . . . .
Arnhold and S. Bleichroeder, Inc. . . . . . . . . . . . . . . . .
Robert W. Baird & Co. Incorporated . . . . . . . . . . . . . . .
J.C. Bradford & Co. . . . . . . . . . . . . . . . . . . . . . . .
Cowen & Company . . . . . . . . . . . . . . . . . . . . . . . . .
Janney Montgomery Scott Inc. . . . . . . . . . . . . . . . . . .
Edward D. Jones & Co. . . . . . . . . . . . . . . . . . . . . . .
C.J. Lawrence/Deutsche Bank Securities Corporation . . . . . . .
Legg Mason Wood Walker, Incorporated . . . . . . . . . . . . . .
Raymond James & Associates, Inc. . . . . . . . . . . . . . . . .
The Robinson-Humphrey Company, Inc. . . . . . . . . . . . . . . .
Wheat, First Securities, Inc. . . . . . . . . . . . . . . . . . .
</TABLE>

[DESCRIPTION] Investment Advisory Agreement
<PAGE> 1

INVESTMENT ADVISORY AGREEMENT

AGREEMENT (herein so called) made this 20th day of December, 1994, by and
between AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND, INC., a Maryland
corporation (referred to as the "FUND"), and AMERICAN CAPITAL ASSET MANAGEMENT,
INC., a Delaware corporation (hereinafter referred to as the "ADVISER").

The FUND and the ADVISER agree as follows:

1. Services Rendered and Expenses Paid by ADVISER

The ADVISER, subject to the control, direction and supervision of the FUND's
Directors and in conformity with applicable laws, the FUND's Articles of
Incorporation ("Articles of Incorporation"), By-laws, registration statements,
prospectus and stated investment objectives, policies and restrictions, shall:

a. manage the investment and reinvestment of the FUND's assets including, by
way of illustration, the evaluation of pertinent economic, statistical,
financial and other data, determination of the industries and companies to be
represented in the FUND's portfolio, and formulation and implementation of
investment programs;

b. maintain a trading desk and place all orders for the purchase and sale of
portfolio investments for the FUND's account with brokers or dealers selected
by the ADVISER;

c. conduct and manage the day-to-day operations of the FUND including, by way
of illustration, the preparation of registration statements, prospectuses,
reports, proxy solicitation materials and amendments thereto, the furnishing of
routine legal services except for services provided by outside counsel to the
FUND selected by the Directors, and the supervision of the FUND's Treasurer and
the personnel working under his direction; and

d. furnish to the FUND office space, facilities, equipment and personnel
adequate to provide the services described in paragraphs a., b., and c. above
and pay the compensation of each FUND director and FUND officer who is an
affiliated person of the ADVISER, except the compensation of the FUND's
Treasurer and related expenses as provided below.

In performing the services described in paragraph b. above, the ADVISER shall
use its best efforts to obtain for the FUND the most favorable price and
execution available and shall maintain records adequate to demonstrate
compliance with this requirement. Subject to prior authorization by the FUND's
Directors of appropriate policies and procedures, the ADVISER may, to the
extent authorized by law, cause the FUND to pay a broker or dealer that
provides brokerage and research services to the ADVISER an amount of

<PAGE> 2
commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction. In the event of such authorization and to the extent
authorized by law, the ADVISER shall not be deemed to have acted unlawfully or
to have breached any duty created by this Agreement or otherwise solely by
reason of such action.

Except as otherwise agreed, or as otherwise provided herein, the FUND shall
pay, or arrange for others to pay, all its expenses other than those expressly
stated to be payable by the ADVISER hereunder, which expenses payable by the
FUND shall include (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase and sale of portfolio investments; (iii)
compensation of its directors and officers other than those who are affiliated
persons of the ADVISER; (iv) compensation of its Treasurer, compensation of
personnel working under the Treasurer's direction, and expenses of office
space, facilities, and equipment used by the Treasurer and such personnel in
the performance of their normal duties for the FUND which consist of
maintenance of the accounts, books and other documents which constitute the
record forming the basis for the FUND's financial statements, preparation of
such financial statements and other FUND documents and reports of a financial
nature required by federal and state laws, and participation in the production
of the FUND's registration statement, prospectuses, proxy solicitation
materials and reports to shareholders; (v) fees of outside counsel to and of
independent accountants of the FUND selected by the Directors; (vi) custodian,
registrar and shareholder service agent fees and expense; (vii) expenses
related to the repurchase or redemption of its shares including expenses
related to a program of periodic repurchases or redemptions; (viii) expenses
related to the issuance of its shares against payment therefor by or on behalf
of the subscribers thereto; (ix) fees and related expenses of registering and
qualifying the FUND and its shares for distribution under state and federal
securities laws; (x) expenses of printing and mailing of registration
statements, prospectuses, reports, notices and proxy solicitation materials of
the FUND; (xi) all other expenses incidental to holding meetings of the FUND's
stockholders including proxy solicitations therefor; (xii) expenses for
servicing shareholder accounts; (xiii) insurance premiums for fidelity coverage
and errors and omissions insurance; (xiv) dues for the FUND's membership in
trade associations approved by the Directors; and (xv) such nonrecurring
expenses as may arise, including those associated with actions, suits or
proceedings to which the FUND is a party and the legal obligation which the
FUND may have to indemnify its officers and directors with respect thereto. To
the extent that any of the foregoing expenses are allocated between the FUND
and any other party, such allocations shall be pursuant to methods approved by
the Directors.

2. Role of ADVISER

2
<PAGE> 3
The ADVISER, and any person controlled by or under common control with the
ADVISER, shall be free to render similar services to others and engage in other
activities, so long as the services rendered to the FUND are not impaired.

Except as otherwise required by the Investment Company Act of 1940 (the "1940
Act"), any of the shareholders, directors, officers and employees of the FUND
may be a stockholder, trustee, director, officer or employee of, or be
otherwise interested in, the ADVISER, and in any person controlled by or under
common control with the ADVISER, and the ADVISER, and any person controlled by
or under common control with the ADVISER, may have an interest in the FUND.

Except as otherwise agreed, in the absence of willful misfeasance, bad faith,
negligence or reckless disregard of obligations or duties hereunder on the part
of the ADVISER, the ADVISER shall not be subject to liability to the FUND, or
to any shareholder of the FUND, for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.

3. Compensation Payable to ADVISER

The FUND shall pay to the ADVISER, as compensation for the services rendered,
facilities furnished and expenses paid by the ADVISER, a monthly fee at the
annual rate of 1.00% of the FUND's average daily net assets.

Average daily net assets shall be determined by taking the average of the net
assets for each business day during a given calendar month calculated in the
manner provided in the FUND's Articles of Incorporation. Such fee shall be
payable for each calendar month as soon as practicable after the end of that
month.

The fees payable to the ADVISER by the FUND pursuant to this Section 3 shall be
reduced by any commissions, tender solicitation and other fees, brokerage or
similar payments received by the ADVISER, or any other direct or indirect
majority owned subsidiary of American Capital Management & Research, Inc., or
its successor, in connection with the purchase and sale of portfolio
investments of the FUND, less any direct expenses incurred by such person, in
connection with obtaining such commissions, fees, brokerage or similar
payments. The ADVISER shall use its best efforts to recapture all available
tender offer solicitation fees and exchange offer fees in connection with the
FUND's portfolio transactions and shall advise the Directors of any other
commissions, fees, brokerage or similar payments which may be possible for the
ADVISER or any other direct or indirect majority owned subsidiary of American
Capital Management & Research, Inc., or its successor, to receive in connection
with the FUND's portfolio transactions or other arrangements which may benefit
the FUND.

3
<PAGE> 4
In the event that the ordinary business expenses of the FUND for any fiscal
year should exceed the most restrictive expense limitation applicable in the
states where the FUND's shares are qualified for sale, the compensation due the
ADVISER for such fiscal year shall be reduced by the amount of such excess. The
ADVISER's compensation shall be so reduced by a reduction or a refund thereof,
at the time such compensation is payable after the end of each calendar month
during such fiscal year of the FUND, and if such amount should exceed such
monthly compensation, the ADVISER shall pay the FUND an amount sufficient to
make up the deficiency, subject to readjustment during the FUND's fiscal year.
For purposes of this paragraph, all ordinary business expenses of the FUND
shall include the investment advisory fee and other operating expenses paid by
the FUND except (i) for interest and taxes; (ii) brokerage commissions; (iii)
as a result of litigation in connection with a suit involving a claim for
recovery by the FUND; (iv) as a result of litigation involving a defense
against a liability asserted against the FUND, provided that, if the ADVISER
made the decision or took the actions which resulted in such claim, it acted in
good faith without negligence or misconduct; (v) any indemnification paid by
the FUND to its officers and directors and the ADVISER in accordance with
applicable state and federal laws as a result of such litigation; and (vi)
amounts paid to American Capital Marketing, Inc., the distributor of the FUND's
shares, in connection with a distribution plan adopted by the FUND's Directors
pursuant to Rule 12b-1 under the Investment Company Act of 1940.

If the ADVISER shall serve for less than the whole of any month, the foregoing
compensation shall be prorated.

4. Duration of Agreement

This Agreement shall have an initial term of 2 years from the date hereof, and
shall continue in force from year to year thereafter, but only so long as such
continuance is approved at least annually by the vote of a majority of the
FUND's Directors who are not parties to this Agreement or interested persons of
any such parties, cast in person at a meeting called for the purpose of voting
on such approval, and by a vote of a majority of the FUND's Directors or a
majority of the FUND's outstanding voting securities.

This Agreement shall terminate automatically in the event of its assignment.
The Agreement may be terminated at any time by the FUND's Directors, by vote of
a majority of the FUND's outstanding voting securities, or by the ADVISER, on
60 days' written notice, or upon such shorter notice as may be mutually agreed
upon. Such termination shall be without payment of any penalty.

5. Miscellaneous Provisions

For the purposes of this Agreement, the terms "affiliated person,"

4
<PAGE> 5
"assignment," "interested person," and "majority of the outstanding voting
securities" shall have their respective meanings defined in the 1940 Act and
the Rules and Regulations thereunder, subject, however, to such exemptions as
may be granted to either the ADVISER or the FUND by the Securities and Exchange
Commission (the "Commission"), or such interpretive positions as may be taken
by the Commission or its staff, under the 1940 Act, and the term "brokerage and
research services" shall have the meaning given in the Securities Exchange Act
of 1934 and the Rules and Regulations thereunder.

The parties hereto each have caused this Agreement to be signed in duplicate on
its behalf by its duly authorized officer on the above date.

AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND, INC.

/s/ CURTIS W. MORELL
By: _____________________________________

Curtis W. Morell
Name: __________________________________

Vice President
Its: ___________________________________

AMERICAN CAPITAL ASSET MANAGEMENT, INC.

/s/ NORI L. GABERT
By: _____________________________________

Nori L. Gabert
Name: __________________________________

Vice President
Its: ___________________________________

5
<PAGE> 6

INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN
AMERICAN CAPITAL ASSET MANAGEMENT, INC.
and
JOHN GOVETT & CO. LIMITED

THIS AGREEMENT is made as of this 20th day of December, 1994 by and between
JOHN GOVETT & CO. LIMITED ("JOHN GOVETT") of Shackleton House, 4 Battle Bridge
Lane, London SE1 2HR, England, and AMERICAN CAPITAL ASSET MANAGEMENT, INC.
("ACAM") of 2800 Post Oak Boulevard, Houston, Texas 77056.

WHEREAS, ACAM has heretofore sponsored and acts as Investment Adviser to
American Capital Global Managed Assets Fund, Inc. (the "Fund"); and

WHEREAS, JOHN GOVETT has available a staff of experienced investment personnel
and facilities for providing investment sub-advisory services applicable to
that portion of the investment portfolio invested in non-U.S. securities; and

WHEREAS, ACAM represents that it is a non-private investor with regard to the
Investment Management Regulatory Organization Limited ("IMRO") rules.

WHEREAS, JOHN GOVETT is a member of IMRO, a self-regulating organization
recognized under the Financial Services Act 1986 of the United Kingdom and is
willing to provide ACAM with investment advisory services on the terms and
conditions hereinafter set forth; and

WHEREAS, ACAM and JOHN GOVETT (jointly referred to as "the Advisers") desire to
enter into an agreement for JOHN GOVETT to provide sub-advisory services to the
Fund and to ACAM with respect to the Fund's non-U.S. investments.

NOW THEREFORE it is mutually agreed:

1. Investment Sub-Advisory Services

1.1 Investment Advice

a) Subject to the overall policies, control, direction and review of the
Fund's Board of Directors, JOHN GOVETT shall keep under review the non-U.S.
investments of the Fund and continuously furnish to the Fund and to ACAM (1)
investment advice primarily for investments in securities for which the
principal trading market(s) are in non-U.S. countries; (2) economic,
statistical and research information and advice, including advice on the
allocation of investments among countries, relating only to such portion of the
Fund's assets as the Advisers shall from time to time designate ("Non-U.S.
Securities"), generally with respect to securities

<PAGE> 7
issued outside the United States and Canada; (3) recommendations as to the
voting of proxies solicited by or with respect to Non-U.S. Securities; and (4)
an investment program with respect to Non-U.S. Securities and recommendations
as to what securities shall be purchased, sold or exchanged, and what portion,
if any, of the Non-U.S. Securities shall be held in money market instruments.

b) The Advisers are responsible for the allocation of the Fund's assets among
the various securities markets of the world. The Advisers will determine at
least quarterly the percentage of the assets that shall be allocated to each of
the Advisers (the "Asset Allocation"). The Asset Allocation will specify the
percentage and nature of the assets of the Fund allocated to each of the
Advisers for management on the effective date of the determination and will
apply to cash inflows or outflows and income and expense accruals thereafter
until such time as the Asset Allocation is redetermined. Each of the Advisers
will be responsible for the allocation of assets among the securities markets
within the area for which it is responsible. If the Advisers cannot agree on an
Asset Allocation, the Board shall make the final determination since the Board
retains in all events the control and management of the business and affairs of
the Fund.

c) Unless otherwise instructed by ACAM or the Board, and subject to the
provisions of this Agreement and to any guidelines or limitations specified
from time to time by ACAM or by the Board, JOHN GOVETT shall determine the
Non-U.S. Securities to be purchased and sold by the Fund and shall place
orders for the purchase, sale or exchange of Non-U.S. Securities for the
Fund's accounts with brokers or dealers and to that end JOHN GOVETT is
authorized by the Board to give instructions to the Custodian and any
Sub-Custodian of the Fund as to deliveries of such Non-U.S. Securities,
transfers of currencies and payments of cash for the account of the Fund.

d) In performing these services, JOHN GOVETT shall adhere to the Fund's
investment objectives, restrictions and limitations as contained in its
Prospectus, Statement of Additional Information, or Charter and shall comply
with all statutory and regulatory restrictions, limitations and requirements
applicable to the activity of the Fund.

e) Unless otherwise instructed by ACAM or the Board, and subject to the
provisions of this Agreement and to any guidelines or limitations specified
from time to time by ACAM or by the Board, JOHN GOVETT shall have executed and
performed on behalf of and at the expense of the Fund:

i) Purchases, sales, exchanges, conversions, and placement or orders for
execution, and

ii) Reporting of all transactions to ACAM and to other entities as

2
<PAGE> 8
directed by ACAM or by the Board.

f) JOHN GOVETT shall provide the Board at least quarterly, in advance of the
regular meetings of the Board, a report of its activities hereunder on behalf
of the Fund and its proposed strategy for the next quarter, all in such form
and detail as requested by the Board. JOHN GOVETT shall also make an investment
officer available to attend such meetings of the Board as the Board may
reasonably request.

1.2 Restriction of JOHN GOVETT's Powers

(a) JOHN GOVETT shall not commit the Fund to any extent beyond the amount of
the cash and securities placed by the Fund under the control of the JOHN
GOVETT.

(b) In carrying out its duties hereunder JOHN GOVETT shall comply with all
reasonable instruction of the Fund or ACAM in connection therewith. Such
instructions may be given by letter, telex, telefax or telephone confirmed by
telex, by the Board or by any other person authorized by a resolution of the
Board provided a certified copy of such resolution has been supplied to JOHN
GOVETT.

(c) All securities, cash, and other assets of the Fund shall be placed and
maintained in the care of a member bank of the Federal Reserve System of the
United States approved by the Board as custodian and one or more "Eligible
Foreign Custodians" (as defined in Rule 17f-5 under the Investment Company Act
of 1940 (the "1940 Act")) approved by the Board as sub-custodians.

(d) Persons authorized by resolution of the Board shall have the right to
inspect and copy contracts, notes, vouchers, and copies of entries in books or
electronic recording media relating to the Fund's transactions at the
registered office of JOHN GOVETT at any time during normal business hours. Such
records, in relation to each transaction effected by JOHN GOVETT on behalf of
the Fund shall be maintained by JOHN GOVETT for a period of seven years from
the date of such transaction.

1.3 Purchase and Sale of Securities

In performing the services described above, JOHN GOVETT shall use its best
efforts to obtain for the Fund the most favorable price and execution
available. Subject to prior authorization of appropriate policies and
procedures by the Board, JOHN GOVETT may, to the extent authorized by law,
cause the Fund to pay a broker or dealer who provides brokerage and research
services an amount of commission for effecting the Fund's investment
transaction in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction, in recognition of the
brokerage and research services provided by the broker or dealer.

3
<PAGE> 9
To the extent authorized by law, JOHN GOVETT shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of such action.

1.4 Custodian

JOHN GOVETT shall not act as Custodian for the securities or any other assets
of the Fund. All such assets shall be held by the Custodian or Sub-Custodian
appointed by the Board.

2. Duties of ACAM

2.1 Provision of Information

ACAM shall advise JOHN GOVETT from time to time with respect to the Fund of its
investment objectives and of any changes or modifications thereto, as well as
any specific investment restrictions or limitations by sending to JOHN GOVETT a
copy of each registration statement relating to the Fund as filed with the
Securities and Exchange Commission. As requested by JOHN GOVETT, ACAM shall
furnish such information to JOHN GOVETT as to holdings, purchases, and sales of
the securities under its management as will reasonably enable JOHN GOVETT to
furnish its investment advice under this Agreement.

2.2 Compensation to JOHN GOVETT

The fee for the services provided under this Agreement will be determined as
follows:

(a) An amount for each month (or such other valuation period as may be
mutually agreed upon) equivalent, on an annual basis, to 50% of the
compensation actually received by ACAM pursuant to the investment advisory fee
schedule set forth in the Investment Advisory Agreement between the Fund and
ACAM taking into account any waiver or return to the Fund of any or all of such
advisory fee by ACAM (with any such return of fees to be treated as if not
actually received). The value of the assets of the Fund shall be computed as of
the close of business on the last day of each valuation period for the Fund,
using the average of all the daily determinations of the net value of the
assets of the Fund.

(b) The foregoing fee shall be paid in cash by ACAM to JOHN GOVETT within five
(5) business days after the last day of the valuation period.

3. Miscellaneous

3.1 Activities of JOHN GOVETT

The services of JOHN GOVETT as Sub-Adviser to ACAM under this

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Agreement are not to be deemed exclusive, JOHN GOVETT and its affiliates being
free to render services to others. It is understood that shareholders,
directors, officers and employees of JOHN GOVETT may become interested in the
Fund or ACAM as a shareholder, trustee, officer, partner or otherwise.

3.2 Services to Other Clients

ACAM acknowledges that JOHN GOVETT may have investment responsibilities, or
render investment advice to, or perform other investment advisory services for,
other individuals or entities, ("Clients"). Subject to the provisions of this
paragraph, ACAM agrees that JOHN GOVETT may give advice or exercise investment
responsibility and take such other action with respect to such Clients which
may differ from advice given or the timing or nature of action taken with
respect to the Fund, provided that JOHN GOVETT acts in good faith, and
provided, further, that it is JOHN GOVETT policy to allocate, within its
reasonable discretion, investment opportunities to the Fund over a period of
time on a fair and equitable basis relative to the Clients, taking into account
the investment objectives and policies of the Fund and any specific investment
restrictions applicable thereto. ACAM acknowledges that one or more of the
Clients may at any time hold, acquire, increase, decrease, dispose of or
otherwise deal with positions in investments in which the Fund may have an
interest from time to time, whether in transactions which may involve the Fund
or otherwise. JOHN GOVETT shall have no obligation to acquire for the Fund a
position in any investment which any Client may acquire, and ACAM shall have no
first refusal, coinvestment or other rights in respect of any such investment,
either for the Fund or otherwise.

3.3 Best Efforts

It is understood and agreed that in furnishing the investment advice and other
services as herein provided, JOHN GOVETT shall use its best professional
judgment to recommend actions which will provide favorable results for the
Fund. JOHN GOVETT shall not be liable to the Fund or to any shareholder of the
Fund to any greater degree than ACAM.

3.4 Indemnity for Taxes

a) Notwithstanding any other provision of this Agreement, ACAM shall indemnify
and save JOHN GOVETT and each of its affiliates, officers, directors and
employees (each an "Indemnified Party") harmless from, against, for and in
respect of all taxes imposed by the United Kingdom on ACAM or the Fund, in
relation to the matters contemplated by this Agreement in the event that any
such tax is assessed or charged on an Indemnified Party as a branch or agent of
ACAM or the Fund.

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b) ACAM will not be liable under this indemnification provision with respect
to any liabilities incurred by reason of an Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the Fund.

c) ACAM will not be liable under this indemnification provision with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified ACAM in writing within a reasonable time after the summons
or other first legal process giving information of the nature of the claim
shall have been served upon such Indemnified Party (or after such Indemnified
Party shall have received notice of such service on any designated agent). In
case any such action is brought against the Indemnified Parties, ACAM will be
entitled to participate, at its own expense, in the defense thereof. ACAM also
will be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from ACAM to such party of ACAM's
election to assume the defense thereof, the Indemnified Party will bear the
fees and expenses of any additional counsel retained by it, and ACAM will not
be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the
defense thereof.

3.5 Duration of Agreement

a) This Agreement, unless terminated pursuant to paragraph b or c below, shall
have an initial term of two years, and thereafter shall continue in effect from
year to year, provided its continued applicability is specifically approved at
least annually by the Board or by a vote of the holders of a majority of the
outstanding shares of the Fund. In addition, such continuation shall be
approved by vote of a majority of the Directors who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. As used in this paragraph,
the term "interested person" shall have the same meaning as set forth in the
1940 Act.

b) This Agreement may be terminated by sixty (60) days' written notice by
either ACAM or JOHN GOVETT to the other party. The Agreement may also be
terminated at any time, without the payment of any penalty, by the Fund (by
vote of the Board or, by the vote of a majority of the outstanding voting
securities of such Fund), on sixty (60) days' written notice to both ACAM and
JOHN GOVETT. This Agreement shall automatically terminate in the event of the
termination of the investment advisory agreement between ACAM and the Fund.

c) This Agreement shall terminate in the event of its assignment. The term
"assignment" for this purpose shall have the same meaning

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set forth in Section 2(a)(4) of the 1940 Act.

d) Termination shall be without prejudice to the completion of any
transactions which JOHN GOVETT shall have committed to on behalf of the Fund
prior to the time of termination. JOHN GOVETT shall not effect and the Fund
shall not be entitled to instruct JOHN GOVETT to effect any further
transactions on behalf of the Fund subsequent to the time termination takes
effect.

e) This Agreement shall terminate forthwith by notice in writing on the
happening of any of the following events:

i) if ACAM or JOHN GOVETT shall go into liquidation (except a voluntary
liquidation for the purpose of and followed by a bona fide reconstruction or
amalgamation upon terms previously approved in writing by the party not in
liquidation) or if a receiver or receiver and manager of any of the assets of
any of them is appointed; or

ii) if either of the parties hereto shall commit any breach of the provisions
hereof and shall not have remedied such breach within 30 days after the service
of notice by the party not in breach on the other requiring the same to be
remedied.

f) On the termination of this Agreement and completion of all matters referred
to in the foregoing paragraph (d) JOHN GOVETT shall deliver or cause to be
delivered to the Fund copies of all documents, records and books of the Fund
required to be maintained pursuant to Rules 31a-1 or 31a-2 of the 1940 Act
which are in JOHN GOVETT's possession, power or control and which are valid and
in force at the date of termination.

3.6 Notices

Any notice, request, instruction, or other document to be given under this
Agreement by any party hereto to the other parties shall be in writing and
delivered personally or sent by mail or telecopy (with a hard copy to follow),

If to JOHN GOVETT, to:

Shackleton House
4 Battle Bridge Lane
London SE1 2HR
England
attn: The Hon. Kevin Pakenham

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with a copy to:

650 California Street
28th Floor
San Francisco, CA 94108
telecopy: (415) 249-0554
attn: Michael J. Mayer

and a copy to:

650 California Street
28th Floor
San Francisco, CA 94108
telecopy: (415) 249-0553
attn: Robert A. Cornman, Esq.

and a copy to:

Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, CA 94104
telecopy: (415) 772-6268
attn: Mitchell E. Nichter, Esq.

If to ACAM, to:

2800 Post Oak Blvd.
Houston, TX 77056
telecopy: (713) 993-4300
attn: Don Powell

with a copy to:

2800 Post Oak Blvd.
Houston, TX 77056
telecopy: (713) 993-4317
attn: Nori L. Gabert, Esq.

or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agent for notices hereunder). Any notice that is
addressed and mailed in the manner herein provided shall be presumed to have
been duly given to the party to which it is addressed, on the date three (3)
days after mailing, and in the case of delivery by telecopy, on the date the
hard copy is received.

3.7 IMRO Rules

As a member of IMRO and in light of IMRO Rules, the Sub-Adviser

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<PAGE> 14
places on record that it regards this Agreement as not necessitating any
ancillary agreement with the Fund or ACAM on the grounds that, within meanings
of the IMRO Rules (a) the Fund is an open-ended investment company and a
business investor, (b) ACAM is a professional investor and (c) the subject
matter of this Agreement is a scheme management activity.

3.8 Choice of Law

This Agreement shall be construed according to, and the rights and liabilities
of the parties hereto shall be governed by, the laws of the United States and
the State of California.

IN WITNESS WHEREOF, the Agreement has been executed as of the date first above
given.

JOHN GOVETT & CO. LIMITED

Kevin Pakenham
By:_____________________________________

The Honorable K.J.T. Pakenham
Name: _________________________________

Chief Executive
Its: __________________________________

AMERICAN CAPITAL ASSET MANAGEMENT, INC.

Nori L. Gabert
By: ____________________________________

Nori L. Gabert
Name: _________________________________

Vice President
Its: __________________________________