CAPITAL INCOME BUILDER, INC.



                                     BY-LAWS

                            (as amended June 2, 2004)

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                          CAPITAL INCOME BUILDER, INC.

                                     BY-LAWS

                            (as amended June 2, 2004)

                                    I N D E X
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<S>                        <C>                                                                             <C>

Section and Title Page

Article   I.               SHAREHOLDERS

           1.01            Annual Meetings                                                                 1
           1.02            Special Meetings                                                                1
           1.03            Place of Meetings                                                               1
           1.04            Notice of Meetings                                                              1
           1.05            Quorum                                                                          2
           1.06            Votes Required                                                                  2
           1.07            Proxies                                                                         2
           1.08            List of Shareholders                                                            2
           1.09            Voting                                                                          2
           1.10            Action by Shareholders Other than at a Meeting                                  3

Article  II.               BOARD OF DIRECTORS

           2.01            Powers                                                                          3
           2.02            Number of Directors                                                             3
           2.03            Election of Directors                                                           3
           2.04            Regular Meetings                                                                4
           2.05            Special Meetings                                                                4
           2.06            Notice of Meetings                                                              4
           2.07            Quorum                                                                          4
           2.08            Vacancies                                                                       4
           2.09            Compensation and Expenses                                                       5
           2.10            Action by Directors Other than at a Meeting                                     5
           2.11            Committees                                                                      5
           2.12            Holding of Meetings by Conference Telephone Call                                5
           2.13            Founding Director Emeritae(e)                                                   6

Article III.               OFFICERS

           3.01            Executive Officers                                                              6
           3.02            Chairman and Vice Chairman of the Board                                         6
           3.03            President                                                                       7
           3.04            Vice Presidents                                                                 7
           3.05            Secretary and Assistant Secretaries                                             7
           3.06            Treasurer and Assistant Treasurers                                              7


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           3.07            Subordinate Officers                                                            8
           3.08            Removal                                                                         8

Article  IV.               STOCK

           4.01            Certificates                                                                    8
           4.02            Transfers                                                                       8
           4.03            Stock Ledgers                                                                   8
           4.04            Record Dates                                                                    9
           4.05            Replacement Certificates                                                        9

Article   V.               INDEMNIFICATION AND INSURANCE

           5.01            Indemnification                                                                  9
           5.02            Advancement of Expenses                                                        10
           5.03            Insurance                                                                      10
           5.04            General Provisions                                                             11
           5.05            Definitions                                                                    11

Article   VI.              GENERAL PROVISIONS

           6.01            Dividends                                                                      12
           6.02            Checks                                                                         12
           6.03            Fiscal Year                                                                    12
           6.04            Custodian                                                                      12
           6.05            Seal                                                                           13
           6.06            Representation of Shares                                                       13
           6.07            Prohibited Transactions                                                        13
           6.08            Bonds                                                                          13

Article  VII.              AMENDMENT OF BY-LAWS                                                           14

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                                     BY-LAWS

                                       OF

                          CAPITAL INCOME BUILDER, INC.

                            (as amended June 2, 2004)


                                    ARTICLE I

                                  SHAREHOLDERS

     Section 1.01. Annual Meeting.  The annual meeting of shareholders  shall be
held during the 30 days  following the 4th of July, at such date and time as may
be  designated  from time to time by the Board of Directors  for the election of
directors  and  the  transaction  of  any  business  within  the  powers  of the
Corporation, except that the Corporation shall not be required to hold an annual
meeting in any year  other than a year in which the  election  of  directors  is
required to be acted upon by  stockholders  under the Investment  Company Act of
1940. If the Corporation is required under the Investment Company Act of 1940 in
any year to hold a meeting of stockholders  for the election of directors,  such
meeting shall be designated as the annual meeting of stockholders for that year.
Any business of the  Corporation  may be transacted at an annual meeting without
being  specifically  designated  in  the  notice,  except  such  business  as is
specifically  required  by statute or by the  Articles  of  Incorporation  to be
stated in the notice.  Failure to hold an annual meeting at the designated  time
shall not, however, invalidate the corporate existence or affect otherwise valid
corporate acts.

     Section 1.02. Special Meetings.  At any time in the interval between annual
meetings,  special meetings of the shareholders may be called by the Chairman of
the Board or the  President  or by a  majority  of the Board or by  shareholders
entitled to cast 10% in number of votes by vote at a meeting or in writing  with
or without a meeting.

     Section  1.03.  Place of  Meetings.  Meetings of the  shareholders  for the
election of Directors  shall be held at such place either  within or without the
State of Maryland or elsewhere in the United States as shall be designated  from
time to time by the Board of Directors  and stated in the notice of the meeting.
Meetings  of  shareholders  for any other  purpose  may be held at such time and
place,  within the State of Maryland or elsewhere in the United States, as shall
be stated in the notice of the  meeting or in a duly  executed  waiver of notice
thereof.

     Section  1.04.  Notice  of  Meetings.  Not less than ten days nor more than
ninety days before the date of every shareholders'  meeting, the Secretary shall
give to each  shareholder  entitled to vote at such meeting,  written or printed
notice  stating  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 or
purposes for which the meeting is called,  either by mail or by presenting it to
the shareholder  personally or by leaving it at the  shareholder's  residence or
usual place of business. If mailed, such notice shall be deemed to be given when
deposited in the United  States mail  addressed to the  shareholder  at his post
office  address as it appears on the records of the  Corporation,  with  postage
thereon prepaid.  Notwithstanding the foregoing provision, a waiver of notice in
writing,  signed by the person or persons entitled to such notice and filed with
the records of the  meeting,  whether  before or after the holding  thereof,  or
actual  attendance  at the  meeting  in  person  or by  proxy,  shall be  deemed
equivalent  to the  giving  of such  notice  to such  persons.  Any  meeting  of
shareholders,  annual 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 at the meeting.

     Section 1.05. Quorum. At any meeting of shareholders the presence in person
or by proxy of  shareholders  entitled  to cast one third of the  votes  thereat
shall  constitute a quorum;  but this Section  shall not affect any  requirement
under  statute or under the Articles for the vote  necessary for the adoption of
any measure. In the absence of a quorum the shareholders present in person or by
proxy, by majority vote and without notice, 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 called.

     Section 1.06. Votes Required.  A majority of the votes cast at a meeting of
shareholders,  duly called and at which a quorum is present, shall be sufficient
to take or authorize  action upon any matter which may properly  come before the
meeting,  unless more than a majority of votes cast is required by statute or by
the Articles.  Each outstanding  share of stock shall be entitled to one vote on
each matter  submitted  to a vote at a meeting of  shareholders  and  fractional
shares shall be entitled to corresponding fractions of one vote on such matters,
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 1.07. Proxies. A shareholder may vote the shares owned of record by
him either in person or by proxy  executed in writing by the  shareholder  or by
the  shareholder's  duly  authorized  attorney-in-fact.  No proxy shall be valid
after eleven months from its date, unless otherwise provided in the proxy. Every
proxy shall be in writing,  subscribed by the  shareholder or the  shareholder's
duly  authorized  attorney,  and  dated,  but need not be sealed,  witnessed  or
acknowledged.

     Section 1.08.  List of  Shareholders.  At each meeting of  shareholders,  a
full, true and complete list in alphabetical order of all shareholders  entitled
to vote at such  meeting,  certifying  the  number and class or series of shares
held by each, shall be made available by the Secretary.

     Section 1.09.  Voting.  In all elections  for Directors  every  shareholder
shall have the right to vote, in person or by proxy,  the shares owned of record
by the shareholder, for as many persons as there are Directors to be elected and
for whose  election  the  shareholder  has a right to vote.  At all  meetings of
shareholders,  unless the voting is  conducted  by  inspectors,  the proxies and
ballots shall be received,  and all questions  regarding  the  qualification  of
voters and the  validity of proxies and the  acceptance  or  rejection  of votes
shall be decided by the  chairman of the meeting.  If demanded by  shareholders,
present in person or by proxy,  entitled  to cast 10% in number of votes,  or if
ordered by the chairman,  the vote upon any election or question  shall be taken
by ballot.  Upon like  demand or order,  the voting  shall be  conducted  by two
inspectors  in which event the proxies and ballots  shall be  received,  and all
questions  regarding 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.  Inspectors may be elected by the shareholders at their
annual  meeting to serve  until the close of the next  annual  meeting and their
election may be held at the same time as the election of Directors. In case of a
failure to elect  inspectors,  or in case an inspector shall fail to attend,  or
refuse or be unable to serve,  the  shareholders  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.

     Section 1.10.  Action by Shareholders  Other than at a Meeting.  Any action
required or  permitted to be taken at any meeting of  shareholders  may be taken
without a meeting, if a consent in writing, setting forth such action, is signed
by all the  shareholders  entitled to vote on the subject matter thereof and any
other  shareholders  entitled to notice of a meeting of shareholders (but not to
vote  thereat)  have waived in writing any rights which they may have to dissent
from such action,  and such consent and waiver are filed with the records of the
Corporation.


                                   ARTICLE II

                               BOARD OF DIRECTORS

     Section  2.01.  Powers.  The  Board  may  exercise  all the  powers  of the
Corporation,  except  such as are by  statute or the  charter  or these  By-Laws
conferred  upon or reserved to the  shareholders.  The Board shall keep full and
fair accounts of its transactions.

     Section 2.02.  Number of Directors.  The number of Directors  shall be such
number  as  shall  be  fixed  from  time to time  by vote of a  majority  of the
Directors;  provided,  however,  that the number of Directors  shall in no event
exceed  fifteen  nor be reduced to fewer than  three.  The tenure of office of a
Director  shall not be affected by any decrease in the number of Directors  made
by the Board.

     Section  2.03.  Election of  Directors.  Until the first annual  meeting of
shareholders and until  successors or additional  Directors are duly elected and
qualify, the Board shall consist of the persons named as such in the charter. At
the first annual meeting of shareholders and at each annual meeting  thereafter,
the shareholders  shall elect Directors to hold office until the next succeeding
annual  meeting and until their  successors  are  elected  and  qualify.  At any
meeting  of  shareholders,  duly  called and at which a quorum is  present,  the
shareholders  may, by the  affirmative  vote of the holders of a majority of the
votes entitled to be cast thereon,  remove any Director or Directors from office
and may elect a successor or successors to fill any resulting  vacancies for the
unexpired terms of removed Directors.

     Section 2.04. Regular Meetings. After each meeting of shareholders at which
a Board of Directors  shall have been  elected,  the Board so elected shall meet
for the purpose of organization and the transaction of other business. No notice
of such  first  meeting  shall  be  necessary  if  held  immediately  after  the
adjournment,  and at the site,  of such meeting of  shareholders.  Other regular
meetings  of the Board  shall be held  without  notice on such dates and at such
places within or without the State of Maryland as may be designated from time to
time by the Board.

     Section 2.05. Special Meetings. Special meetings of the Board may be called
at any time by the Chairman of the Board,  the President or the Secretary of the
Corporation,  or by a majority of the Board by vote at a meeting,  or in writing
with or without a meeting.  Such special meetings shall be held at such place or
places within or without the State of Maryland as may be designated from time to
time by the Board.  In the absence of such  designation  such meetings  shall be
held at such places as may be designated in the calls.

     Section  2.06.  Notice of  Meetings.  Except as provided  in Section  2.04,
notice  of the  place,  day and  hour of all  meetings  shall  be  given to each
Director  two  days  (or  more)  before  the  meeting,  by  delivering  the same
personally,  or by sending the same by telegraph,  or by leaving the same at the
Director's  residence or usual place of  business,  or, in the  alternative,  by
mailing such notice three days (or more)  before the meeting,  postage  prepaid,
and addressed to the Director at the Director's last known business or residence
post  office  address,  according  to the  records  of the  Corporation.  Unless
required  by these  By-Laws  or by  resolution  of the  Board,  no notice of any
meeting of the Board need state the business to be transacted thereat. No notice
of any meeting of the Board need be given to any Director who attends, or to any
Director  who in  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, 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 at the adjourned meeting.

     Section  2.07.  Quorum.  At all  meetings  of the Board,  a majority of the
entire  Board (but in no event  fewer than two  Directors)  shall  constitute  a
quorum  for the  transaction  of  business.  Except  in  cases in which it is by
statute,  by the charter or by these By-Laws otherwise  provided,  the vote of a
majority of such quorum at a duly  constituted  meeting  shall be  sufficient to
elect and pass any measure. In the absence of a quorum, the Directors present by
majority vote and without notice other than by  announcement  at the meeting 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
noticed.

     Section 2.08.  Vacancies.  Any vacancy  occurring in the Board of Directors
for any cause other than by reason of an increase in the number of Directors may
be filled by a majority  of the  remaining  members  of the Board of  Directors,
although such majority is less than a quorum. Any vacancy occurring by reason of
an increase in the number of Directors  may be filled by action of a majority of
the entire Board of Directors;  provided, in either case, that immediately after
filling such vacancy at least  two-thirds of the Directors  then holding  office
shall  have been  elected  to such  office by the  shareholders  at an annual or
special  meeting  thereof.  If at any time  after the first  annual  meeting  of
shareholders  of the  Corporation  a majority of the  Directors  in office shall
consist  of  Directors  elected  by the Board of  Directors,  a  meeting  of the
shareholders  shall be called  forthwith  for the purpose of electing the entire
Board of  Directors,  and the terms of office  of the  Directors  then in office
shall terminate upon the election and  qualification of such Board of Directors.
A  Director  elected by the Board of  Directors  or the  shareholders  to fill a
vacancy  shall be  elected  to hold  office  until the next  annual  meeting  of
shareholders and until his successor is elected and qualifies.

     Section  2.09.  Compensation  and  Expenses.  Directors  may,  pursuant  to
resolution of the Board, be paid fees for their services, which fees may consist
of an annual fee or retainer  and/or a fixed fee for attendance at meetings.  In
addition,  Directors may in the same manner be reimbursed for expenses  incurred
in connection with their attendance at meetings or otherwise in performing their
duties as Directors.  Members of committees may be allowed like compensation and
reimbursement. Nothing herein contained shall preclude any Director from serving
the Corporation in any other capacity and receiving compensation therefore.

     Section  2.10.  Action by  Directors  Other than at a  Meeting.  Any action
required  or  permitted  to be  taken at any  meeting  of the  Board,  or of any
committee thereof,  may be taken without a meeting, if a written consent to such
action is signed by all members of the Board or of such  committee,  as the case
may be, and such written consent is filed with the minutes of proceedings of the
Board or committee.

     Section 2.11. Committees. The Board may, by resolution passed by a majority
of the entire Board, designate one or more committees, each committee to consist
of two or more of the  Directors.  The Board may designate one or more Directors
as  alternate  members  of  any  committee,   who  may  replace  any  absent  or
disqualified member at any meeting of the committee.  Any such committee, to the
extent  provided in the  resolution  and by law, shall have and may exercise the
powers  of the  Board in the  management  of the  business  and  affairs  of the
Corporation,  provided,  however, that in the absence or disqualification of any
member of such committee or committees, the member or members thereof present at
any  meeting  and  not  disqualified  from  voting,  whether  or not he or  they
constitute  a  quorum,  may  appoint  another  member of the Board to act at the
meeting in the place of any such absent or disqualified  member.  Such committee
or committees  shall have such name or names as may be  determined  from time to
time by  resolution  adopted by the Board.  Each  committee  shall keep  regular
minutes of its meetings and report the same to the Board when required.

     Section  2.12.  Holding of Meetings by  Conference  Telephone  Call. At any
regular  or  special  meeting  of the Board or any  committee  thereof,  members
thereof may  participate  in such  meeting by means of  conference  telephone or
similar communications  equipment by means of which all persons participating in
the  meeting can hear each other.  Participation  in a meeting  pursuant to this
section  shall  constitute  presence in person at such  meeting.


     Section 2.13. Founding Director Emeritae.  The Board of Directors may elect
a Founding  Director  Emeritae,  chosen  from among  persons  who have served as
directors of the Fund, without limit as to number or period of service. The term
of office of any Founding  Director Emeritus shall be as determined by the Board
of Directors.  A Founding Director Emeritae shall be invited,  but not required,
to attend and to speak at  meetings  of the Board of  Directors  and  committees
thereof,  except  for  meetings  or  portions  of  meetings  at which  the Board
determines  attendance shall be limited.  A Founding  Director Emeritae shall be
paid such  compensation  and reimbursed for such expenses as shall be determined
from time to time by the Board of Directors  and may be provided  some or all of
the information and documents relating to the Fund that is provided to the Board
of  Directors  as may be  determined  from time to time by the Board  and/or the
officers of the Fund. A Founding  Director Emeritae shall not be a member of the
Board of Directors and shall have none of the rights, obligations or duties of a
director  including,   without  limitation,   voting  rights.  Unless  otherwise
expressly required by the context, the term "director" or "directors" as used in
these By-Laws does not include a Founding Director Emeritae.


                                   ARTICLE III

                                    OFFICERS

     Section 3.01.  Executive  Officers.  The Board of Directors  shall choose a
President  and may choose a  Chairman  of the Board and a Vice  Chairman  of the
Board from among the Directors, and shall choose a Secretary and a Treasurer who
need not be  Directors.  The Board of  Directors  shall  designate  as principal
executive officer of the Corporation  either the Chairman of the Board, the Vice
Chairman of the Board,  or the  President.  The Board of Directors may choose an
Executive Vice President,  one or more Senior Vice Presidents,  one or more Vice
Presidents,  one  or  more  Assistant  Secretaries  and  one or  more  Assistant
Treasurers,  none  of  whom  need  be  a  Director.  Any  two  or  more  of  the
above-mentioned  offices, except those of President and a Vice President, may be
held by the same person, but no officer shall execute, acknowledge or verify any
instrument  in more than one capacity if such  instrument be required by law, by
the  charter,  by the By-Laws or by  resolution  of the Board of Directors to be
executed by any two or more officers.  Each such officer shall hold office until
his successor shall have been duly chosen and qualified,  or until he shall have
resigned or shall have been removed. Any vacancy in any of the above offices may
be filled for the unexpired portion of the term of the Board of Directors at any
regular or special meeting.

     Section 3.02.  Chairman and Vice 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 shareholders at which he is present.  He shall have and may
exercise such powers as are, from time to time,  assigned to him by the Board of
Directors.  The Vice  Chairman  of the Board,  if one be  elected,  shall,  when
present and in the absence of the Chairman of the Board, preside at all meetings
of the shareholders and Directors, and he shall perform such other duties as may
from  time to time be  assigned  to him by the Board of  Directors  or as may be
required by law.

     Section 3.03. President. In the absence of the Chairman or Vice Chairman of
the Board,  the President shall preside at all meetings of the  shareholders and
of the Board at which the  President is present;  and in general,  shall perform
all duties incident to the office of a president of a Maryland Corporation,  and
such other  duties,  as from time to time,  may be assigned to him by the Board.
Section 3.04. Vice Presidents. The Vice President or Vice Presidents,  including
any Executive or Senior Vice President(s), at the request of the President or in
the President's  absence or during the President's  inability or refusal 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  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,   the  President  may  make  such
determination.  The Vice  President  or Vice  Presidents  shall  have such other
powers  and  perform  such other  duties as may be  assigned  by the Board,  the
Chairman of the Board, or the President.

     Section 3.05. Secretary and Assistant Secretaries. The Secretary shall keep
the  minutes  of the  meetings  of the  shareholders,  of the  Board  and of any
committees,  in books  provided for the purpose;  shall see that all notices are
duly given in accordance  with the provisions of these By-Laws or as required by
law; be custodian of the records of the Corporation; see that the corporate seal
is  affixed  to  all  documents  the  execution  of  which,  on  behalf  of  the
Corporation,  under its seal, is duly authorized, and when so affixed may attest
the  same;  and in  general  perform  all  duties  incident  to the  office of a
secretary  of a Maryland  Corporation,  and such other  duties as,  from time to
time,  may be assigned to him by the Board,  the  Chairman of the Board,  or the
President.

     The  Assistant  Secretary,  or if there be more  than  one,  the  Assistant
Secretaries in the order  determined by the Board, the President or the Chairman
of the Board,  shall,  in the  absence of the  Secretary  or in the event of the
Secretary's  inability  or refusal to act,  perform the duties and  exercise the
powers of the  Secretary and shall perform such other duties and have such other
powers as the Board may from time to time prescribe.

     Section 3.06. Treasurer and Assistant Treasurers.  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 in  accordance  with Section 5.04 of these  By-Laws;  render to the
President,  the Chairman of the Board and to the Board,  whenever requested,  an
account of the financial condition of the Corporation;  and in general,  perform
all the duties  incident to the office of a  treasurer  of a  corporation,  such
other  duties as may be  assigned  to him by the  Board,  the  President  or the
Chairman of the Board.

     The Assistant Treasurer,  or if there shall be more than one, the Assistant
Treasurers in the order  determined by the Board,  the President or the Chairman
of the Board  shall,  in the  absence  of the  Treasurer  or in the event of the
Treasurer's  inability  or refusal to act,  perform the duties and  exercise the
powers of the  Treasurer  and shall  perform  other  duties  and have such other
powers as the Board may from time to time prescribe.

     Section 3.07. Subordinate Officers. The Board may from time to time appoint
such subordinate officers as it may deem desirable. Each such officer shall hold
office for such period and perform  such duties as the Board,  the  President or
the  Chairman  of the Board may  prescribe.  The Board  may,  from time to time,
authorize  any committee or officer to appoint and remove  subordinate  officers
and prescribe the duties thereof.

     Section  3.08.  Removal.  Any  officer or agent of the  Corporation  may be
removed  by the Board  whenever,  in its  judgment,  the best  interests  of the
Corporation will be served thereby,  but such removal shall be without prejudice
to the contractual rights, if any, of the person so removed.


                                   ARTICLE IV

                                      STOCK

     Section  4.01.  Certificates.  Each  shareholder  shall  be  entitled  to a
certificate  or  certificates  which shall  represent  and certify the number of
shares  of stock  owned by him in the  Corporation.  Such  certificate  shall be
signed by the  President,  the  Chairman  of the Board or a Vice  President  and
countersigned by the Secretary or an Assistant  Secretary or the Treasurer or an
Assistant   Treasurer.   The  signatures  may  be  either  manual  or  facsimile
signatures.  No  certificates  shall  be  issued  for  fractional  shares.  Such
certificates  shall  be in such  form,  not  inconsistent  with  law or with the
charter,  as  shall  be  approved  by the  Board.  In case  any  officer  of the
Corporation  who has  signed  any  certificate  ceases to be an  officer  of the
Corporation,  whether  because of death,  resignation or otherwise,  before such
certificate is issued,  the certificate may nevertheless be issued and delivered
by the Corporation as if the officer had not ceased to be such officer as of the
date of its issue.  Certificates  need not be issued except to shareholders  who
request  such  issuance in  writing.  A  certificate  is valid and may be issued
whether or not an officer who signed it is still an officer when it is issued.

     Section  4.02.  Transfers.  The Board of  Directors  shall  have  power and
authority  to make  such  rules  and  regulations  as it may deem  necessary  or
expedient  concerning the issue,  transfer and  registration  of certificates of
stock;  and may appoint  transfer agents and registrars  thereof.  The duties of
transfer agent and registrar, if any, may be combined.

     Section  4.03.  Stock  Ledgers.  A stock ledger,  containing  the names and
addresses of the  shareholders  of the  Corporation  and the number of shares of
each class held by them,  respectively,  shall be kept by the Transfer  Agent of
the  Corporation.  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.

     Section  4.04.  Record  Dates.  The Board is hereby  empowered  to fix,  in
advance,  a date as the record date for the purpose of determining  shareholders
entitled  to  notice  of,  or to  vote  at,  any  meeting  of  shareholders,  or
shareholders  entitled  to  receive  payment  of  any  dividend,  capital  gains
distribution or the allotment of any rights, or in order to make a determination
of shareholders for any other proper purpose. Such date in any case shall be not
more than ninety days, and in case of a meeting of  shareholders,  not less than
ten  days,  prior to the date on which the  particular  action,  requiring  such
determination of shareholders, is to be taken.



<PAGE>



     Section 4.05. Replacement Certificates. The Board of Directors may direct a
new stock  certificate or  certificates to be issued in place of any certificate
or certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed,  upon such  conditions as the Board shall  determine.  When
authorizing  such  issue of a new  certificate  or  certificates,  the  Board of
Directors  may, in it  discretion  and as a condition  precedent to the issuance
thereof,  require the owner of such lost,  stolen or  destroyed  certificate  or
certificates,  or his legal  representative to advertise the same in such manner
as it shall require and/or to give the  Corporation a bond in such sum as it may
direct as indemnity  against any claim that may be made against the  Corporation
with respect to the Certificate alleged to have been lost, stolen or destroyed.


                                    ARTICLE V

                          INDEMNIFICATION AND INSURANCE

     Section 5.01. Indemnification. The Corporation shall promptly indemnify and
hold harmless  each of its  directors  and officers,  and may indemnify and hold
harmless any of its employees and agents,  against any  liabilities  or expenses
(collectively,  "Liability")  actually and reasonably incurred by such person in
any  proceeding  arising out of or in connection  with his or her service to the
Corporation,  to the fullest extent  permitted by the Articles of  Incorporation
and the laws of the  State of  Maryland,  the  Securities  Act of 1933,  and the
Investment  Company Act of 1940,  as now or hereafter in effect,  subject to the
provisions  of  paragraphs  (a) and (b) of  this  Section  5.01.  The  Board  of
Directors   may  take  such   action  as  is   necessary   to  carry  out  these
indemnification  provisions  and is expressly  empowered  to adopt,  approve and
amend from time to time these  By-laws,  resolutions  or contracts  implementing
such provisions or such further indemnification arrangements as may be permitted
by law. No amendment  of these  By-laws  shall limit or  eliminate  the right to
indemnification  provided hereunder with respect to acts or omissions  occurring
prior to such amendment or repeal.

          (a) Special Condition. With respect to Liability to the Corporation or
     its  stockholders,  and  subject to  applicable  state and  federal  law, a
     director or officer shall be indemnified and held harmless pursuant to this
     Section 5.01 against any Liability to the  Corporation or its  stockholders
     unless such Liability  arises by reason of his or her willful  misfeasance,
     bad faith,  gross negligence,  or reckless disregard of the duties involved
     in the  conduct of his or her  office as  defined  in Section  17(h) of the
     Investment Company Act of 1940 ("disabling conduct").

          (b)  Special  Process  Condition.  With  respect to  Liability  to the
     Corporation or its stockholders,  no indemnification shall be made unless a
     determination  has been made by reasonable and fair means that the director
     or  officer  has  not  engaged  in  disabling  conduct.  In  making  such a
     determination,  the Board of Directors  shall act in  conformity  with then
     applicable  law and  administrative  interpretations,  and  shall  afford a
     director  requesting  indemnification  who is not an "interested person" of
     the Corporation,  as defined in Section 2(a)(19) of the Investment  Company
     Act of 1940, as amended,  a rebuttable  presumption  that such director did
     not engage in  disabling  conduct  while acting in his or her capacity as a
     director.

     Section 5.02.  Advancement  of Expenses.  The  Corporation  shall  promptly
advance  funds to its  directors  and  officers,  and may  advance  funds to its
employees  and  agents,  to  cover  expenses  they  incur  with  respect  to any
proceeding   arising  out  of  or  in  connection  with  their  service  to  the
Corporation,  to the fullest extent  permitted by the Articles of  Incorporation
and the laws of the  State of  Maryland,  the  Securities  Act of 1933,  and the
Investment Company Act of 1940, as now or hereafter in effect.

          (a)  Affirmation  of  Conduct.  A request by a director or officer for
     advancement  of funds pursuant to this Section 5.02 shall be accompanied by
     the  director's or officer's  written  affirmation of his or her good faith
     belief  that  he  or  she  met  the  standard  of  conduct   necessary  for
     indemnification,  and such other  statements,  documents or undertakings as
     may be required under applicable law.

          (b) Special  Conditions to  Advancement.  With respect to Liability to
     the Corporation or its  stockholders,  and subject to applicable  state and
     federal  law, a director or officer  shall be entitled to  advancements  of
     expenses  pursuant  to this  Section  5.02  against  any  Liability  to the
     Corporation  or  its  stockholders  if (1)  the  Corporation  has  obtained
     assurances required under applicable law, such as by obtaining insurance or
     receiving collateral provided by the director or officer,  that the advance
     will be repaid if the  director  or  officer  is found to have  engaged  in
     disabling  conduct,  or (2) the  Board  has a  reasonable  belief  that the
     director  or officer has not engaged in  disabling  conduct and  ultimately
     will be entitled to  indemnification.  In forming such a reasonable belief,
     the Board of Directors shall act in conformity with then applicable law and
     administrative  interpretations,  and shall afford a director requesting an
     advance who is not an "interested person" of the Corporation, as defined in
     Section  2(a)(19)  of the  Investment  Company Act of 1940,  as amended,  a
     rebuttable  presumption  that such  director  did not  engage in  disabling
     conduct while acting in his or her capacity as a director.

     Section 5.03.  Insurance.  The  Corporation  shall purchase and maintain in
effect one or more policies of insurance on behalf of its directors and officers
in such amounts and with such coverage as shall be determined  from time to time
by the board of directors,  and may purchase and maintain such insurance for any
of its employees and agents, issued by a reputable insurer or insurers,  against
any expenses  actually and reasonably  incurred by such person in any proceeding
arising out of or in connection with his or her service to the Corporation, with
customary limitations and exceptions,  whether or not the Corporation would have
the power to  indemnify  such  person  against  such  expenses  pursuant to this
Article V.

     Section 5.04. General Provisions.


          (a) Potential  Conflicts;  Non-Exclusive  Rights.  The  provisions for
     indemnification  of, and advancement of expenses to, directors and officers
     of the  Corporation  set forth in this Article V shall be subject to any of
     the related  provisions of the Articles of Incorporation,  and in the event
     of  a  conflict,   the   provisions   contained   within  the  Articles  of
     Incorporation   shall  control;   in  addition,   provisions   relating  to
     indemnification  and  advancement  of expenses  set forth in this Article V
     shall not be deemed  exclusive of any other  contractual or legal rights to
     which a director or officer may otherwise be entitled.

          (b) Continuation of Provisions. The provisions of this Article V shall
     continue  as  to a  person  who  has  ceased  to  provide  service  to  the
     Corporation  and shall inure to the benefit of his or her  spouses,  heirs,
     assigns, devisees, executors,  administrators and legal representatives. No
     amendment of the Articles of  Incorporation  or By-Laws of the  Corporation
     shall  limit  or  eliminate  the  right  of a  person  to  indemnification,
     advancement  of expenses  and  insurance  set forth in this  Article V with
     respect  to  his or her  acts,  omissions  or  service  to the  Corporation
     occurring prior to such amendment.

     Section  5.05.  Definitions.  For purposes of this Article V, the following
terms shall have the following meanings:


               (1) "Disabling conduct" shall be as defined in Section 5.01(a).

               (2) "Expenses"  shall include  without  limitation all judgments,
          penalties,  fines,  amounts  paid or to be paid in  settlement,  ERISA
          excise   taxes,   liabilities,    losses,   interest,    expenses   of
          investigation,  attorneys' fees,  retainers,  court costs,  transcript
          costs,  fees of experts and  witnesses,  expenses of preparing for and
          attending   depositions  and  other   proceedings,   travel  expenses,
          duplicating  costs,  printing and binding  costs,  telephone  charges,
          postage, delivery service fees, and all other costs,  disbursements or
          expenses  of  the  type   customarily   incurred  in  connection  with
          prosecuting,    defending,   preparing   to   prosecute   or   defend,
          investigating, or acting as a witness in a proceeding.

               (3) "Liability" shall be as defined in Section 5.01.

               (4) The term  "proceeding"  shall include without  limitation any
          threatened,  pending or completed  claim,  demand,  threat,  discovery
          request,   request  for  testimony  or  information,   action,   suit,
          arbitration, alternative dispute mechanism, investigation, hearing, or
          other  proceeding,  including  any appeal  from any of the  foregoing,
          whether civil, criminal, administrative or investigative.

               (5) A person's "service to the Corporation" shall include without
          limitation his or her service as a director,  officer, employee, agent
          or  representative  of the Corporation,  and his or her service at the
          request of the Corporation as a director,  officer, employee, agent or
          representative  of another  corporation,  partnership,  joint venture,
          trust, employee benefit plan or other enterprise.


                                   ARTICLE VI

                               GENERAL PROVISIONS

     Section 6.01. Dividends.  Dividends or distributions upon the capital stock
of the  Corporation,  subject  to  provisions  of the  charter,  if any,  may be
declared by the Board of Directors at any regular or special  meeting,  pursuant
to law.  Dividends or distributions may be paid only in cash or in shares of the
capital stock, subject to the provisions of the Articles of Incorporation.

     Before payment of any dividend or  distribution  there may be set aside out
of any funds of the Corporation  available for dividends or  distributions  such
sum or sums as the directors  from time to time, in their  absolute  discretion,
think proper as a reserve or reserves to meet  contingencies,  or for equalizing
dividends or  distributions  or for maintaining any property of the Corporation,
or for such other purpose as the Directors shall think conducive to the interest
of the Corporation,  and the Directors may modify or abolish any such reserve in
the manner in which it was created.

     Section  6.02.  Checks.  All checks or  demands  for money and notes of the
Corporation  shall be signed by such officer or officers or such other person or
persons as the Board may from time to time designate.

     Section  6.03.  Fiscal Year.  The fiscal year of the  Corporation  shall be
fixed by resolution of the Board of Directors.

     Section 6.04.  Custodian.  All securities and cash of the Corporation shall
be  placed  in the  custody  of a bank or  trust  company  ("Custodian")  having
(according  to its last  published  report) not less than  $2,000,000  aggregate
capital,  surplus and undivided profits,  provided such a Custodian can be found
ready and willing to act (or  maintained  in such other manner as is  consistent
with  Section  17(f) of the  Investment  Company  Act of 1940 and the  rules and
regulations promulgated  thereunder.) The Corporation shall enter into a written
contract with the Custodian regarding the powers, duties and compensation of the
Custodian with respect to the cash and securities of the Corporation held by the
Board  of  Directors  of  the  Corporation.   The  Corporation  shall  upon  the
resignation  or  inability  to serve of the  Custodian  use its best  efforts to
obtain a successor custodian;  require that the cash and securities owned by the
Corporation be delivered directly to the successor  custodian;  and in the event
that no successor  custodian can be found,  submit to the  shareholders,  before
permitting delivery of the cash and securities owned by the Corporation to other
than a successor custodian, the question whether or not the Corporation shall be
liquidated or shall function without a custodian.

     Section 6.05.  Seal. The Board of Directors  shall provide a suitable seal,
bearing  the  name of the  Corporation,  which  shall be in the  custody  of the
Secretary.  The Board of Directors may authorize one or more duplicate seals and
provide for the custody thereof.

     Section 6.06.  Representation of Shares.  Any officer of the Corporation is
authorized to vote, represent and exercise of the Corporation any and all rights
incident to any shares of any corporation or other business  enterprise owned by
the Corporation.

     Section  6.07.  Prohibited  Transactions.  No  officer or  director  of the
Corporation  or of its  investment  adviser  shall  deal for or on behalf of the
Corporation  with himself,  as principal or agent,  or with any  corporation  or
partnership in which he has a financial  interest.  This  prohibition  shall not
prevent:  (a) officers or directors of the  Corporation  from having a financial
interest  in the  Corporation,  its  principal  underwriter  or  its  investment
adviser;  (b) the purchase of securities for the portfolio of the Corporation or
the sale of securities owned by the Corporation through a securities dealer, one
or more of whose  partners,  officers or  directors is an officer or director of
the  Corporation,  provided  such  transactions  are handled in the  capacity of
broker only and provided  commissions  charged do not exceed customary brokerage
charges for such service;  or (c) the  employment of legal  counsel,  registrar,
transfer  agent,  dividend  disbursing  agent,  or  custodian  having a partner,
officer or director who is an officer or director of the  Corporation,  provided
only customary  fees are charged for services  rendered to or for the benefit of
the Corporation.

     Section 6.08. 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.  The Board of Directors
shall,  in any event,  require the  Corporation  to provide and  maintain a bond
issued  by  a  reputable  fidelity   insurance  company,   against  larceny  and
embezzlement,  covering  each  officer and employee of the  Corporation  who may
singly,  or jointly  with  others,  have  access to  securities  or funds of the
Corporation, either directly or through authority to draw upon such funds, or to
direct generally the disposition of such securities, such bond or bonds to be in
such reasonable  amount as a majority of the Board of Directors who are not such
officers or employees of the Corporation  shall determine with due consideration
to the  value of the  aggregate  assets  of the  Corporation  to which  any such
officer or employee may have access,  or in any amount or upon such terms as the
Securities and Exchange Commission may prescribe by order, Rule or Regulations.


                                   ARTICLE VII

                              AMENDMENT OF BY-LAWS

     These  By-Laws of the  Corporation  may be  altered,  amended,  added to or
repealed by majority vote of the  shareholders or by majority vote of the entire
Board.