AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
AGREEMENT, made as of this 1st day of June, 2004, 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 over $27.0 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
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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, 2004. 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.
FUNDAMENTAL INVESTORS, INC. CAPITAL RESEARCH AND MANAGEMENT
COMPANY
By:/s/ Xxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxxxxxx
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Xxxx X. Xxxxx Xxxxx X. Xxxxxxxxxx
President Chairman of the Board
By:/s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxx Xxxxxxx X. Xxxxxx
Secretary Vice President and Secretary
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