FORM OF AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
FORM
OF
AGREEMENT,
made as
of this 1st day of September, 2006, 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
over $44.0 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, 2007. 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
|
|
By:
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By:
|
|
Xxxx
X. Xxxxx
|
Xxxxx
X.
Xxxxxxxxxx
|
|
President
|
Chairman
of
the Board
|
|
By:
|
By:
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|
Xxxxxxx
X.
Xxxx
|
Xxxxxxx
X.
Xxxxxx
|
|
Secretary
|
Vice
President and Secretary
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