Form of AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
Form
of
AGREEMENT,
made as
of this 1st day of September, 2007, by and between FUNDAMENTAL INVESTORS,
INC.,
a Maryland corporation (the "Fund"), and CAPITAL RESEARCH AND MANAGEMENT
COMPANY, a Delaware corporation (the "Adviser").
1. The
Fund hereby employs the Adviser to furnish advice to the Fund with respect
to
the investment and reinvestment of the assets of the Fund. The
Adviser hereby accepts such employment and agrees to render the services
and to
assume the obligations to the extent herein set forth, for the compensation
herein provided. The Adviser shall, for all purposes herein, be
deemed an independent contractor and not an agent of the Fund.
2. The
Adviser agrees to provide supervision of the portfolio of the Fund and
to
determine what securities or other property shall be purchased or sold
by the
Fund, giving due consideration to the policies of the Fund as expressed
in the
Fund's Articles of Incorporation, By-Laws, Registration Statement under
the
Investment Company Act of 1940 (the "1940 Act"), Registration Statement
under
the Securities Act of 1933, and prospectus as in use from time to time,
as well
as to the factors affecting the Fund's status as a regulated investment
company
under the Internal Revenue Code.
The
Adviser shall
provide adequate facilities and qualified personnel for the placement
of orders
for the purchase, or other acquisition, and sale, or other disposition,
of
portfolio securities for the Fund. With respect to such transactions,
the Adviser, subject to such directions as may be furnished from time
to time by
the Board of Directors of the Fund, shall endeavor as the primary objective
to
obtain the most favorable prices and executions of orders. Subject to
such primary objective, the Adviser may place orders with brokerage firms
which
have sold shares of the Fund or which furnish statistical and other information
to the Adviser, taking into account the value and quality of the brokerage
services of such broker-dealers, including the availability and quality
of such
statistical and other information. Receipt by the Adviser of any such
statistical and other information and services shall not be deemed to
give rise
to any requirement for abatement of the advisory fee payable pursuant
to Section
5.
3. The
Adviser shall furnish the services of persons to perform the executive,
administrative, clerical, and bookkeeping functions of the Fund, including
the
daily determination of net asset value and offering price per
share. The Adviser shall pay the compensation and travel expenses of
all such persons, and they shall serve without additional compensation
from the
Fund. The Adviser shall also, at its expense, provide the Fund with
suitable office space (which may be in the offices of the Adviser); all
necessary small office equipment and utilities; and general purpose accounting
forms, supplies, and postage used at the offices of the Fund.
4. The
Fund shall pay all its expenses not assumed by the 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
and
redemption of shares of the Fund (including stock certificates, registration
and
qualification fees and expenses); legal and auditing expenses; compensation,
fees, and expenses paid to directors; association dues; costs of stationery
and
forms prepared exclusively for the Fund; and costs of assembling and
storing
shareholder account data.
5. The
Fund shall pay to the Investment Adviser on or before the tenth day of
each
month, as compensation for the services rendered by the Investment Adviser
during the preceding month, a fee ("Investment Advisory fee") calculated
at the
lower of the annual rates of:
.39%
on the first
$800 million of net assets
.336%
on net assets
from $800 million to $1.8 billion
.30%
on net assets
from $1.8 billion to $3.0 billion
.276%
on net assets
exceeding $3.0 billion
or
.39%
on the first
$1 billion of net assets
.336%
on net assets
from $1.0 billion to $2.0 billion
.30%
on net assets
from $2.0 billion to $3.0 billion
.276%
on net assets
from $3.0 billion to $5.0 billion
.27%
on net assets
from $5.0 billion to $8.0 billion
.258%
on net assets
from $8.0 billion to $13.0 billion
.252%
on net assets
from $13.0 billion to $17.0 billion
.250%
on net assets
from $17.0 billion to $21.0 billion
.245%
on net assets
from $21.0 billion to $27.0 billion
.240%
on net assets
from $27.0 billion to $34.0 billion
.237%
on net assets
from $34.0 billion to $44.0 billion
.234%
on net assets
from $44.0 billion to $55.0 billion
.232%
on net assets
over $55.0 billion
The
Investment
Advisory fee shall be computed and accrued daily based on the actual
number of
days per year. The net assets of the Fund shall be determined in the
manner set forth in the Articles of Incorporation and prospectus of the
Fund.
Upon
any
termination of this Agreement on a day other than the last day of the
month in
which termination occurs, the fee for such month of termination shall
be the
amount accrued up to the time of termination.
6. The
Adviser agrees to reduce the fee payable to it under this Agreement by
the
amount by which the ordinary operating expenses of the Fund for any fiscal
year
of the Fund, excluding interest, taxes and extraordinary expenses, shall
exceed
one percent of the average net assets of the Fund determined pursuant
to Section
5. Costs incurred in connection with the purchase or sale of
portfolio securities, including brokerage fees and commissions, which
are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, shall be accounted for as capital
items and
not as expenses. Proper accruals shall be made by the Fund for any
projected reduction hereunder and corresponding amounts shall be withheld
from
the fees paid by the Fund to the Adviser. Any additional reduction
computed at the end of the fiscal year shall be deducted from the fee
for the
last month of such fiscal year, and any excess shall be paid to the Fund
immediately after the fiscal year end, and in any event prior to the
publication
of the Fund's annual report, as a reduction of the fees previously paid
during
the fiscal year.
7. The
expense limitation described in Section 6 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
6 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.
8. Nothing
contained in this Agreement shall be construed to prohibit the Adviser
from
performing investment advisory, management, or distribution services
for other
investment companies and other persons or companies, or to prohibit affiliates
of the Adviser from engaging in such businesses or in other related or
unrelated
businesses.
9. The
Adviser agrees that neither it nor any of its officers or directors will
take
any long or short position in the capital stock of the Fund, except that
it or
they may purchase shares of such capital stock for investment at the
price at
which such shares are available to the public at the moment of
purchase.
10. The
Adviser shall have no liability to the Fund, or its shareholders, for
any error
of judgment, mistake of law, or for any loss arising out of any investment,
or
for any other act or omission in the performance of its obligations to
the Fund
not involving willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties hereunder.
11. This
Agreement shall continue in effect until the close of business on
August 31, 2008. It may thereafter be renewed from year to year by
mutual consent, provided that such renewal shall be specifically approved
at
least annually by (i) the Board of Directors of the Fund, or by the vote
of a
majority of the outstanding shares of the Fund, and (ii) a majority of
those
directors who are not parties to this Agreement or interested persons
(as
defined in the 0000 Xxx) 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 a
writing
signed by both parties hereto.
12. This
Agreement may be terminated at any time, without payment of any penalty,
by the
Board of Directors of the Fund or by the vote of a majority of the outstanding
shares of the Fund, on sixty days' written notice to the Adviser, or
by the Adviser on like notice to the Fund. This Agreement may not be
amended, transferred, assigned, sold, or in any manner hypothecated or
pledged,
without the affirmative vote or written consent of the holders of a majority
of
the outstanding shares of the Fund, and it shall automatically terminate
in the
event of its assignment (as defined in the 1940 Act).
IN
WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed in duplicate
originals by their officers thereunto duly authorized as of the day and
year
first above written.
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FUNDAMENTAL
INVESTORS, INC.
|
CAPITAL
RESEARCH AND MANAGEMENT
COMPANY
|
||
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By:
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___________________________
Xxxx
X.
Xxxxx
President
|
By:
|
___________________________
Xxxxx
X.
Xxxxxxxxxx, Chairman
|
|
By:
|
___________________________
Xxxxxxx
X.
Xxxx
Secretary
|
By:
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___________________________
Xxxxxxx
X.
Xxxxxx
Vice
President and Secretary
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