AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS
AGREEMENT, dated the 1st day of December, 2000 is made and entered into by
and
between THE NEW ECONOMY FUND, a Massachusetts business trust, (hereinafter
called the "Trust"), and CAPITAL RESEARCH AND MANAGEMENT COMPANY, a Delaware
corporation, (hereinafter called the "Investment Adviser").
W
I T N E S S E T
H
The
Trust is an
open-end diversified investment company of the management type, registered
under
the Investment Company Act of 1940. The Investment Adviser is
registered under the Investment Advisers Act of 1940 and is engaged in the
business of providing investment advisory and related services to the Trust
and
to other investment companies.
NOW
THEREFORE, in
consideration of the premises and the mutual undertaking of the parties, it
is
covenanted and agreed as follows:
1.The
Investment
Adviser shall determine what securities shall be purchased or sold by the
Trust.
2.The
Investment
Adviser shall furnish the services of persons to perform the executive,
administrative, clerical, and bookkeeping functions of the Trust, including
the
daily determination of net asset value and offering price per
share. The Investment Adviser shall pay the compensation and travel
expenses of all such persons, and they shall serve without any additional
compensation from the Trust. The Investment Adviser shall also, at
its expense, provide the Trust with suitable office space (which may be in
the
offices of the Investment Adviser); all necessary small office equipment and
utilities; and general purpose accounting forms, supplies, and postage used
at
the offices of the Trust.
3.The
Trust shall
pay all its expenses not assumed by the Investment Adviser as provided
herein. Such expenses shall include, but shall not be limited to,
custodian, registrar, stock transfer and dividend disbursing fees and expenses;
costs of the designing, printing and mailing of reports, prospectuses, proxy
statements, and notices to its shareholders; taxes; expenses of the issuance,
sale, or repurchase of shares of the Trust (including registration and
qualification expenses); legal and auditing fees and expenses; compensation,
fees, and expenses paid to trustees; association dues; and costs of stationery
and forms prepared exclusively for the Trust.
4.The
Investment
Adviser agrees to pay the expenses incurred in connection with the organization
of the Trust, its qualification to do business as a foreign corporation in
the
State of California, and its registration as an investment company under the
1940 Act, and all fees and expenses including fees of legal counsel to the
Trust, which would otherwise be required to be paid by the Trust pursuant to
Section 3 which are incurred by the Trust prior to the effective date of its
Registration Statement, except for the costs of any share certificates and
transfer agent fees and costs.
5.The
Trust shall
pay to the Investment Adviser on or before the tenth (10th) day of each month,
as compensation for the services rendered by the Investment Adviser during
the
preceding month, a fee calculated at the lower of the annual rates
of:
0.60%
on the first
$300 million of net assets
0.48%
on net assets
from $300 million to $750 million
0.45%
on net assets
from $750 million to $1.25 billion
0.42%
on net assets
over $1.25 billion
or
0.58%
on the first
$500 million of net assets
0.48%
on net assets
from $500 million to $1 billion
0.44%
on net assets
from $1 billion to $1.5 billion
0.41%
on net assets
from $1.5 billion to $2.5 billion
0.39%
on net assets
from $2.5 billion to $4 billion
0.38%
on net assets
from $4 billion to $6.5 billion
0.37%
on net assets
from $6.5 billion to $10.5 billion
0.365%
on net
assets from $10.5 billion to $13 billion
0.36%
on net assets
from $13 billion to $17 billion
0.355%
on net
assets from $17 billion to $21 billion
0.35%
on net assets
from $21billion to $27 billion
0.345%
on net
assets over $27 billion
Such
fee shall be
computed and accrued daily at one three-hundredth-sixty-fifth (1/365th) of
the
applicable rates set forth above.
For
the purposes
hereof, the total net assets of the Trust shall be determined in the manner
set
forth in the Declaration of Trust and Prospectus of the Trust. The
advisory fee shall be payable for the period commencing on the effective date
of
the agreement and ending on the date of termination hereof and shall be prorated
for any fraction of a month at the termination of such period.
6.For
the purposes
hereof, the total net asset value of the Trust shall be determined in the manner
set forth in the Declaration of Trust, as amended.
7.The
Investment
Adviser agrees that in the event the expenses of the Trust (with the exclusion
of interest, taxes, brokerage costs, distribution expenses and extraordinary
expenses such as litigation and acquisitions) for any fiscal year ending on
a
date on which the Investment Advisory and Service Agreement is in effect, exceed
the expense limitations applicable to the Trust imposed by state securities
laws
or any regulations thereunder, it will reduce its fee by the extent of such
excess and, if required pursuant to any such laws or regulations, will reimburse
the Trust in the amount of such excess.
8.The
expense
limitation described in Section 7 shall apply only to Class A shares issued
by
the Fund and shall not apply to any other class(es) of shares the Fund may
issue
in the future. Any new class(es) of shares issued by the Fund will
not be subject to an expense limitation. However, notwithstanding the
foregoing, to the extent the Investment Adviser is required to reduce its
management fee pursuant to provisions contained in Section 5 due to the expenses
of the Class A shares exceeding the stated limit, the Investment Adviser will
either (i) reduce its management fee similarly for other classes of shares,
or (ii) reimburse the Fund for other expenses to the extent necessary to result
in an expense reduction only for Class A shares of the Fund.
9.This
agreement
may be terminated at any time, without payment of any penalty, by the Board
of
Trustees of the Trust or by vote of a majority (within the meaning of the
Investment Company Act of l940) of the outstanding voting securities of the
Trust, on sixty (60) days' written notice to the Investment Adviser, or by
the
Investment Adviser on like notice to the Trust. Unless sooner
terminated in accordance with this provision, this agreement shall continue
until November 30, 2001. It may thereafter be renewed from year
to year by mutual consent; provided that such renewal shall be specifically
approved at least annually by the Board of Trustees of the Trust, or by vote
of
a majority (within the meaning of the Investment Company Act of l940) of the
outstanding voting securities of the Trust. In either event, it must
be approved by a majority of those trustees who are not parties to such
agreement nor interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. Such mutual
consent to renewal shall not be deemed to have been given unless evidenced
by
writing signed by both parties.
10.This
agreement
shall not be assignable by either party hereto, and in the event of assignment
(within the meaning of the Investment Company Act of 1940) by the Investment
Adviser shall automatically be terminated forthwith. The term
"assignment" shall have the meaning defined in the Investment Company Act of
l940.
11.Nothing
contained in this Agreement shall be construed to prohibit the Investment
Adviser from performing investment advisory, management, or distribution
services for other investment companies and other persons or companies, nor
to
prohibit affiliates of the Investment Adviser from engaging in such business
or
in other related or unrelated businesses.
12.The
Investment
Adviser shall not be liable to the Trust or its stockholders for any error
of
judgment, act, or omission not involving willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations and duties
hereunder.
13. The
obligations of
the Trust under this Agreement are not binding upon any of the Trustees,
officers, employees, agents or shareholders of the Trust individually, but
bind
only the Trust Estate. The Investment Adviser agrees to look solely
to the assets of the Trust for the satisfaction of any liability of the Trust
in
respect of this Agreement and will not seek recourse against such Trustees,
officers, employees, agents or shareholders or any of them, or any of their
personal assets for such satisfaction.
IN
WITNESS WHEREOF,
the parties hereto have caused this instrument to be executed in duplicate
original by their duly authorized officers.
THE
NEW ECONOMY
FUND
By
/s/
Xxxxxx
Xxxxxxxx
Xxxxxx
Xxxxxxxx, Chairman
By /s/
Xxxx X. Xxxxxx
Xxxx
X. Xxxxxx, Secretary
CAPITAL
RESEARCH
AND
MANAGEMENT
COMPANY
By /s/
Xxxxx X.
Xxxxxxxxxx
Xxxxx
X. Xxxxxxxxxx, President
By /s/
Xxxxxxx X.
Xxxxxx
Xxxxxxx
X. Xxxxxx, Secretary
