INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated the 1st day of February, 1995 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
0.375% on net assets over $6.5 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. 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, 1995. 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.
9. 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.
10. 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.
11. 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.
12. 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
Xxxxxx X. Xxxxxxxx, Chairman
By
Xxxx X. Xxxxxx, Secretary
CAPITAL RESEARCH AND MANAGEMENT COMPANY
By
Xxxxx X. Xxxxxxxxxx, President
By
Xxxxxxx X. Xxxxxx, Secretary
