<PAGE> PAGE 1
000 A000000 04/30/95
000 C000000 0000879636
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0.a
000 J000000 A
001 A000000 AMERICAN CAPITAL SMALL CAPITALIZATION FUND
001 B000000 811-06421
001 C000000 7139930500
002 A000000 2800 POST OAK BLVD.
002 B000000 HOUSTON
002 C000000 TX
002 D010000 77056
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 N
007 B000000 0
007 C010100 1
007 C010200 2
007 C010300 3
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
008 A000001 VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT
008 B000001 A
008 C000001 801-1669
008 D010001 HOUSTON
008 D020001 TX
008 D030001 77056
012 A000001 ACCESS INVESTOR SERVICES, INC.
012 B000001 84-01621
012 C010001 KANSAS CITY
012 C020001 MO
012 C030001 64141
012 C040001 9256
013 A000001 PRICE WATERHOUSE LLP
013 B010001 HOUSTON
013 B020001 TX
013 B030001 77002
014 A000001 SMITH BARNEY SHEARSON,INC
014 B000001 8-07059
014 A000002 THE ROBINSON-HUMPHREY CO., INC.
<PAGE> PAGE 2
014 B000002 8-27190
015 A000001 STATE STREET BANK & TRUST CO.
015 B000001 C
015 C010001 BOSTON
015 C020001 MA
015 C030001 02110
015 E010001 X
018 000000 Y
019 A000000 Y
019 B000000 34
019 C000000 ACFHOUSTON
020 A000001 SALOMON BROTHERS,INC.
020 B000001 13-3082694
020 C000001 58
020 A000002 FIRST BOSTON CORP.
020 B000002 13-5659485
020 C000002 14
020 C000003 0
020 C000004 0
020 C000005 0
020 C000006 0
020 C000007 0
020 C000008 0
020 C000009 0
020 C000010 0
021 000000 72
022 A000001 SALOMON BROTHERS, INC.
022 B000001 13-3082694
022 C000001 171015
022 D000001 252
022 A000002 LEHMAN BROTHERS, INC.
022 B000002 13-2518466
022 C000002 63027
022 D000002 0
022 A000003 SBC CAPITAL MARKETS, INC.
022 B000003 --------
022 C000003 59940
022 D000003 0
022 A000004 STATE STREET BANK & TRUST CO.
022 B000004 04-1867445
022 C000004 54555
022 D000004 0
022 A000005 FIRST BOSTON CORP.
022 B000005 13-5659485
022 C000005 2383
022 D000005 1526
022 A000006 MORGAN STANLEY & CO., INC.
022 B000006 13-2655998
022 C000006 1016
022 D000006 0
022 A000007 HERZOG,HEINE, GEDULD, INC.
<PAGE> PAGE 3
022 B000007 13-1054436
022 C000007 0
022 D000007 88
022 A000008 BEAR STEARNS & CO., INC.
022 B000008 13-3299429
022 C000008 0
022 D000008 84
022 C000009 0
022 D000009 0
022 C000010 0
022 D000010 0
023 C000000 351936
023 D000000 1950
024 000000 Y
025 A000001 SBC CAPITAL MARKETS, INC.
025 B000001 -------
025 C000001 D
025 D000001 2045
025 A000002 ALEX BROWN & SONS, INC.
025 B000002 52-0256630
025 C000002 E
025 D000002 606
025 D000003 0
025 D000004 0
025 D000005 0
025 D000006 0
025 D000007 0
025 D000008 0
026 A000000 Y
026 B000000 Y
026 C000000 Y
026 D000000 Y
026 E000000 N
026 F000000 N
026 G010000 N
026 G020000 N
026 H000000 N
027 000000 Y
028 A010000 0
028 A020000 0
028 A030000 0
028 A040000 0
028 B010000 19126
028 B020000 501
028 B030000 0
028 B040000 0
028 C010000 59986
028 C020000 0
028 C030000 0
028 C040000 0
028 D010000 400
<PAGE> PAGE 4
028 D020000 0
028 D030000 0
028 D040000 0
028 E010000 25955
028 E020000 0
028 E030000 0
028 E040000 0
028 F010000 185
028 F020000 0
028 F030000 0
028 F040000 0
028 G010000 105652
028 G020000 501
028 G030000 0
028 G040000 0
028 H000000 0
029 000000 N
030 A000000 0
030 B000000 0.00
030 C000000 0.00
031 A000000 0
031 B000000 0
032 000000 0
033 000000 0
034 000000 N
035 000000 0
036 B000000 0
037 000000 N
038 000000 0
039 000000 N
040 000000 N
041 000000 N
042 A000000 0
042 B000000 0
042 C000000 0
042 D000000 0
042 E000000 0
042 F000000 0
042 G000000 0
042 H000000 0
043 000000 0
044 000000 0
045 000000 Y
046 000000 N
047 000000 N
048 000000 0.000
048 A010000 0
048 A020000 0.000
048 B010000 0
048 B020000 0.000
048 C010000 0
<PAGE> PAGE 5
048 C020000 0.000
048 D010000 0
048 D020000 0.000
048 E010000 0
048 E020000 0.000
048 F010000 0
048 F020000 0.000
048 G010000 0
048 G020000 0.000
048 H010000 0
048 H020000 0.000
048 I010000 0
048 I020000 0.000
048 J010000 0
048 J020000 0.000
048 K010000 0
048 K020000 0.000
049 000000 N
050 000000 N
051 000000 N
052 000000 N
053 A000000 N
054 A000000 Y
054 B000000 N
054 C000000 Y
054 D000000 N
054 E000000 N
054 F000000 N
054 G000000 N
054 H000000 Y
054 I000000 N
054 J000000 Y
054 K000000 N
054 L000000 N
054 M000000 Y
054 N000000 N
054 O000000 Y
055 A000000 N
055 B000000 N
056 000000 N
057 000000 N
058 B000000 N
059 000000 Y
060 A000000 Y
060 B000000 Y
061 000000 0
062 A000000 N
062 B000000 0.0
062 C000000 0.0
062 D000000 0.0
062 E000000 0.0
<PAGE> PAGE 6
062 F000000 0.0
062 G000000 0.0
062 H000000 0.0
062 I000000 0.0
062 J000000 0.0
062 K000000 0.0
062 L000000 0.0
062 M000000 0.0
062 N000000 0.0
062 O000000 0.0
062 P000000 0.0
062 Q000000 0.0
062 R000000 0.0
063 A000000 0
063 B000000 0.0
066 A000000 Y
066 B000000 Y
066 C000000 N
066 D000000 N
066 E000000 N
066 F000000 N
066 G000000 N
067 000000 N
068 A000000 N
068 B000000 N
069 000000 N
070 A010000 Y
070 A020000 Y
070 B010000 N
070 B020000 N
070 C010000 N
070 C020000 N
070 D010000 N
070 D020000 N
070 E010000 Y
070 E020000 N
070 F010000 Y
070 F020000 N
070 G010000 N
070 G020000 N
070 H010000 N
070 H020000 N
070 I010000 N
070 I020000 N
070 J010000 N
070 J020000 N
070 K010000 Y
070 K020000 N
070 L010000 Y
070 L020000 N
070 M010000 N
<PAGE> PAGE 7
070 M020000 N
070 N010000 Y
070 N020000 N
070 O010000 Y
070 O020000 N
070 P010000 Y
070 P020000 Y
070 Q010000 N
070 Q020000 N
070 R010000 N
070 R020000 N
071 A000000 129946
071 B000000 27968
071 C000000 91321
071 D000000 31
072 A000000 6
072 B000000 89
072 C000000 762
072 D000000 0
072 E000000 0
072 F000000 0
072 G000000 0
072 H000000 0
072 I000000 9
072 J000000 0
072 K000000 0
072 L000000 0
072 M000000 5
072 N000000 37
072 O000000 0
072 P000000 0
072 Q000000 12
072 R000000 13
072 S000000 3
072 T000000 0
072 U000000 6
072 V000000 0
072 W000000 0
072 X000000 85
072 Y000000 0
072 Z000000 766
072AA000000 1675
072BB000000 2865
072CC010000 10865
072CC020000 0
072DD010000 501
072DD020000 0
072EE000000 0
073 A010000 0.0800
073 A020000 0.0000
073 B000000 0.0000
<PAGE> PAGE 8
073 C000000 0.0000
074 A000000 3
074 B000000 2045
074 C000000 0
074 D000000 0
074 E000000 38
074 F000000 131565
074 G000000 0
074 H000000 0
074 I000000 0
074 J000000 3504
074 K000000 0
074 L000000 161
074 M000000 45
074 N000000 137361
074 O000000 548
074 P000000 3
074 Q000000 0
074 R010000 0
074 R020000 0
074 R030000 0
074 R040000 58
074 S000000 0
074 T000000 136752
074 U010000 13312
074 U020000 0
074 V010000 10.27
074 V020000 0.00
074 W000000 0.0000
074 X000000 3
074 Y000000 0
075 A000000 0
075 B000000 93476
076 000000 0.00
077 A000000 Y
077 B000000 N
077 C000000 Y
077 D000000 N
077 E000000 N
077 F000000 N
077 G000000 N
077 H000000 N
077 I000000 N
077 J000000 N
077 K000000 N
077 L000000 N
077 M000000 N
077 N000000 N
077 O000000 N
077 P000000 N
077 Q010000 Y
<PAGE> PAGE 9
077 Q020000 N
077 Q030000 N
078 000000 N
080 C000000 0
081 B000000 0
082 B000000 0
083 B000000 0
084 B000000 0
086 A010000 0
086 A020000 0
086 B010000 0
086 B020000 0
086 C010000 0
086 C020000 0
086 D010000 0
086 D020000 0
086 E010000 0
086 E020000 0
086 F010000 0
086 F020000 0
SIGNATURE TONYA LODEN
TITLE CONTROLLER
<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 2,104,129.794 Against - 0 -
d) Inapplicable
<PAGE> 1
AMERICAN CAPITAL SMALL CAPITALIZATION FUND, INC.
BY-LAWS
(As amended March 3, 1995)
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.
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
1
<PAGE> 2
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 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.
2
<PAGE> 3
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 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.
3
<PAGE> 4
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, 1996 the term of office of each
director shall end at the time such director reaches the age of 76 1/2 or 74
1/2 for persons first elected on or after January 1, 1986 as a director of any
open end investment company managed by Van Kampen American Capital Asset
Management, Inc. and that on and after July 1, 1996 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 Van Kampen 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 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.
4
<PAGE> 5
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.
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
5
<PAGE> 6
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 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
6
<PAGE> 7
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.
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
7
<PAGE> 8
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 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.
8
<PAGE> 9
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 each of its directors and officers, whether serving
the Corporation or at its request any other entity in which the Corporation has
an 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
expenses, including fees of legal counsel, reasonably incurred or paid by such
a Covered Person in connection with any action, suit or other proceeding,
whether civil or criminal, before any court of administrative or legislative
body, in which the Covered Person may be or may have been involved as a party
or otherwise or with which the Covered Person may be or may have been
threatened, while in office or thereafter, by reason of being or having been a
director or officer of the Corporation, except with respect to any matter as to
which there has been a final adjudication that the Covered Person (i) did not
act in good faith in the reasonable belief that his action was in or not
opposed to the best interests of the Corporation, or (ii) was liable to the
Corporation or its security holders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office. Expenses, including fees of legal counsel, but
excluding amounts paid in satisfaction of judgments, in compromise, or as fines
or penalties, so incurred by any such Covered Person may be paid from time to
time by the Corporation in advance of a final disposition of any such action,
suit or proceeding upon receipt of an undertaking by or on behalf of the
Covered Person to repay the advance unless it is ultimately determined that he
is entitled to indemnification hereunder, so long as either (i) the Covered
Person shall have provided a security for his undertaking, (ii) the Corporation
shall be insured against losses arising by reason of any lawful advances, or
(iii) a majority of a quorum of the directors who are neither "interested
persons" of the Corporation as defined in the Investment Company Act of 1940
nor parties to the proceeding ("disinterested, non-party directors"), or an
independent legal counsel in a written opinion, shall have determined, based on
a review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that such Covered Person ultimately will be
found entitled to indemnification under this By-Law. Any such determination or
opinion shall not prevent recovery from any Covered Person of any amount paid
to him in accordance with this By-Law if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation or to be liable to the Corporation or its
security holders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his office.
9
<PAGE> 10
SECTION 5.02. Compromise Payment. As to any matter disposed of
(whether by a compromise payment, pursuant to a consent decree or otherwise)
without a final decision on the merits by a court or by any other body before
whom the proceeding was brought, indemnification shall be provided only if a
majority of a quorum of the disinterested, non-party directors, or an
independent legal counsel in a written opinion, shall have reasonably
determined, based upon a review of the facts, that the Covered Person acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation and was not liable to the Corporation or
its security holders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
SECTION 5.03. Exclusivity, Etc. The indemnification and advance
of expenses provided by the charter and these By-Laws shall not be deemed
exclusive of any other rights to which a 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 his 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 a person was a director or officer after such person has ceased
to be a director or officer, and shall inure to the benefit of the estate,
heirs, executors and administrators of such 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 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 such director
or officer 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 5.04. Severability: Definitions. The invalidity or
unenforceability of any provision of this Article V shall not effect 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 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
10
<PAGE> 11
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 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
11
<PAGE> 12
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 October 31 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 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
12
<PAGE> 13
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
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"
13
<PAGE> 14
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.
* * *
14
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000879636
<NAME> AC SMALL CAPITALIZATION,FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> APR-30-1995
<INVESTMENTS-AT-COST> 122,828,474
<INVESTMENTS-AT-VALUE> 133,647,468
<RECEIVABLES> 3,665,575
<ASSETS-OTHER> 45,449
<OTHER-ITEMS-ASSETS> 2,803
<TOTAL-ASSETS> 137,361,295
<PAYABLE-FOR-SECURITIES> 548,270
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 60,710
<TOTAL-LIABILITIES> 608,980
<SENIOR-EQUITY> 133,117
<PAID-IN-CAPITAL-COMMON> 127,242,308
<SHARES-COMMON-STOCK> 13,311,707
<SHARES-COMMON-PRIOR> 2,104,130
<ACCUMULATED-NII-CURRENT> 597,495
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,039,599)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,818,994
<NET-ASSETS> 136,752,315
<DIVIDEND-INCOME> 762,326
<INTEREST-INCOME> 88,813
<OTHER-INCOME> 0
<EXPENSES-NET> 85,570
<NET-INVESTMENT-INCOME> 765,569
<REALIZED-GAINS-CURRENT> (1,189,983)
<APPREC-INCREASE-CURRENT> 10,865,211
<NET-CHANGE-FROM-OPS> 10,440,797
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 501,439
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,153,426
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 54,151
<NET-CHANGE-IN-ASSETS> 116,092,783
<ACCUMULATED-NII-PRIOR> 333,365
<ACCUMULATED-GAINS-PRIOR> (849,616)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 85,570
<AVERAGE-NET-ASSETS> 93,476,023
<PER-SHARE-NAV-BEGIN> 9.82
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> .45
<PER-SHARE-DIVIDEND> .08
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.27
<EXPENSE-RATIO> .18
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>EXPENSE RATIO IS ANNUALIZED
</FN>
</TABLE>
