EXHIBIT D
INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 1st day of November 1998, is
made and entered into by and between THE BOND FUND OF AMERICA, INC., a Maryland
corporation, (hereinafter called the "Fund"), and CAPITAL RESEARCH AND
MANAGEMENT COMPANY, a Delaware corporation, (hereinafter called the "Investment
Adviser"). The parties agree as follows:
W I T N E S S E T H
The Fund is an open-end diversified investment company of the management type,
registered under the Investment Company Act of 1940 (the "1940 Act"). 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 Fund 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 and other assets
shall be purchased or sold by the Fund.
2. The Investment 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 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 Fund. The
Investment Adviser shall also, at its expense, provide the Fund with necessary
office space (which may be in the offices of the Investment Adviser); all
necessary office equipment and utilities; and general purpose forms, supplies,
and postage used at the offices of the Fund.
3. The Fund 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, stock transfer and dividend disbursing fees and
expenses; distribution expenses pursuant to a plan under rule 12b-1 of the 1940
Act; costs of the designing and of printing and mailing to its shareholders
reports, prospectuses, proxy statements, and notices to its shareholders;
taxes; expenses of the issuance, sale, redemption, or repurchase of shares of
the Fund (including registration and qualification expenses); legal and
auditing fees and expenses; compensation, fees, and expenses paid to directors;
association dues; and costs of any share certificates, stationery and forms
prepared exclusively for the Fund.
4. The Fund 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, the sum of the following amounts:
(a) 0.3% per annum of the first $60 million of the Fund's average daily net
assets during the month, plus 0.21% per annum of such assets in excess of $60
million but not exceeding $1 billion, plus 0.18% per annum of such assets in
excess of $1 billion but not exceeding $3 billion, plus 0.16% per annum of such
assets in excess of $3 billion but not exceeding $6 billion, plus 0.15% per
annum of such assets in excess of $6 billion but not exceeding $10 billion,
plus 0.14% per annum of such assets in excess of $10 billion ("Net Asset
Portion"), plus
(b) 2.25% of the first $8,333,333 of the Fund's monthly gross investment
income for the preceding month, plus 2% of such income in excess of $8,333,333
of the Fund's gross investment income for the preceding month ("Investment
Income Portion").
The Net Asset Portion shall be accrued daily at 1/365th of the applicable
annual rate set forth above. The net assets of the Fund shall be determined in
the manner and on the dates set forth in the prospectus of the Fund, and on
days on which the net assets are not determined, shall be as of the last
preceding day on which the net assets shall have been determined.
The Investment Income Portion shall be accrued daily and "gross investment
income" for this purpose shall include amortization of original issue and
market discount and bond premium as defined for federal income tax purposes but
shall not include net gains from the sale of securities.
For the purposes hereof, the net assets of the Fund shall be
determined in the manner set forth in the Articles of Incorporation and
prospectus of the Fund. The advisory fee shall be payable for the period
commencing on the date on which operations of the Fund begin and ending on the
date of termination hereof and shall be prorated for any fraction of a month at
the termination of such period.
5. The Investment Adviser agrees to reduce the fee payable to it under
this Agreement (a) by the amount by which ordinary operating expenses of the
Fund for any fiscal year of the Fund, excluding interest, taxes and
extraordinary expenses such as litigation, shall exceed the greater of (i) one
percent (1%) of the average month-end net assets of the Fund for such fiscal
year or (ii) ten percent (10%) of the Fund's gross investment income, and (b)
by any additional amount necessary to assure that such ordinary operating
expenses of the Fund in any year after such reduction, do not exceed the lesser
of (i) one and one-half percent (1-1/2%) of the first $30 million of average
month-end assets of the Fund, plus one percent (1%) of the average month-end
net assets in excess thereof or (ii) twenty-five percent (25%) of the Fund's
gross investment income. 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 Investment 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 publication of the Fund's Annual
Report as a reduction of the fees previously paid during the fiscal year.
6. This agreement may be terminated at any time, without payment of any
penalty, by the Directors of the Fund or by vote of a majority (within the
meaning of the 0000 Xxx) of the outstanding voting securities of the Fund, on
sixty (60) days' written notice to the Investment Adviser, or by the Investment
Adviser on like notice to the Fund. Unless sooner terminated in accordance
with this provision, this agreement shall continue until October 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 the Board of
Directors of the Fund, or by vote of a majority (within the meaning of the 0000
Xxx) of the outstanding voting securities of the Fund. In either event, it
must be approved by a majority of those Directors 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.
7. This agreement shall not be assignable by either party hereto, and
in the event of assignment (within the meaning of the 0000 Xxx) by the
Investment Adviser shall automatically be terminated forthwith. The term
"assignment" shall have the meaning defined in the 1940 Act.
8. 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.
9. The Investment Adviser shall not be liable to the Fund 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.
10. It is understood that the name "American Funds" or any derivative thereof
or logo associated with that name is the valuable property of the Investment
Adviser and its affiliates, and that the Fund shall have the right to use such
name (or derivative or logo) only so long as this Agreement shall continue in
effect. Upon termination of this Agreement the Fund shall forthwith cease to
use such name (or derivative or logo).
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their duly authorized officers.
THE BOND FUND OF AMERICA, INC. CAPITAL RESEARCH
AND MANAGEMENT COMPANY
By /s/ Xxxx X. Xxxxx, Xx. By /s/ Xxxxx X. Xxxxxxxxxx
Xxxx X. Xxxxx, Xx., Chairman Xxxxx X. Xxxxxxxxxx, President
By /s/ Xxxxx X. Xxxxxxxx By /s/ Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx, Secretary Xxxxxxx X. Xxxxxx, Secretary
