Exhibit D
INVESTMENT ADVISORY AND SERVICE AGREEMENT
AGREEMENT, made as of this 1st day of September, 1998, 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 over $13.0 billion
The Investment Advisory fee shall be accrued daily on the basis of the number
of calendar days in each year, by computing the net asset value of the Fund, in
the manner provided by its Articles of Incorporation, as at the close of the
New York Stock Exchange on each day on which said Exchange is open, and in the
case of days on which said Exchange shall not be open, as at the close of the
last preceding day on which said Exchange shall have been open.
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. 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.
8. 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.
9. 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.
10. This Agreement shall continue in effect until the close of business on
August 31, 1999. 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 ▇▇▇▇ ▇▇▇) 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.
11. 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: By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.,
Chairman of the Board Executive Vice President
By: By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary Secretary
