AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 1st day of
April, 2004 is made and entered into by and between AMERICAN FUNDS INSURANCE
SERIES, a Massachusetts business trust, (hereinafter called the "Trust"), and
CAPITAL RESEARCH AND MANAGEMENT COMPANY, a Delaware corporation, (hereinafter
called the "Adviser"). The parties agree as follows:
1.
The Trust hereby employs the Adviser to furnish advice to the
Trust with respect to the investment and reinvestment of the assets of the
Trust. The Adviser hereby accepts such employment and agrees to render the
services and to assume the obligation 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 Trust and to determine what securities or other property shall be purchased
or sold by the Trust, giving due consideration to the policies of the Trust as
expressed in the Trust's Declaration of Trust, By-Laws, Registration Statement
under the Investment Company Act of 1940, as amended (the "1940 Act"),
Registration Statement under the Securities Act of 1933, as amended (the "1933
Act"), and Prospectus as in use from time to time, as well as to the factors
affecting the Trust's status as a regulated investment company under the
Internal Revenue Code of 1986, as amended.
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 Trustees, shall endeavor as the primary
objective to obtain the most favorable prices and execution of orders. Subject
to such primary objective, the Adviser may place order with broker-dealer firms
which have sold shares of the Trust 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 6 hereof.
3.
3
The Adviser (a) shall furnish to the Trust the services of
qualified personnel to (i) manage the investments of the Trust, (ii) perform the
executive and related administrative functions of the Trust and (iii) if desired
by the Trust, serve as Trustees of the Trust, in all cases without additional
compensation of such persons by the Trust; (b) pay the expenses of all persons
whose services are to be furnished by the Adviser under this Section; (c)
provide office space, furniture, small office equipment, and telephone
facilities and utilities, all of which may be the same as occupied or used by
the Adviser; and (d) provide general purpose forms, supplies, stationery, and
postage used at the offices of the Fund relating to the services to be furnished
by the Adviser hereunder.
4.
Except to the extent expressly assumed by the Adviser herein,
and subject to an expense fee agreement described in Section 7 below, the Trust
shall pay all costs and expenses in connection with its operations. Without
limiting the generality of the foregoing, such costs and expenses shall include
the following: compensation paid to the Trustees who are not affiliated persons
of the Adviser, fees and expenses of the transfer agent, dividend disbursing
agent, legal counsel and independent public accounts, and custodian, including
charges of such custodian for the preparation and maintenance of the books of
account and records of the Trust and the daily determination of the Trust's net
asset value per share costs of designing, printing, and mailing reports,
prospectuses, proxy statements and notices to shareholders; fees and expenses of
sale (including registration and qualification), issuance (including costs of
any share certificates) and redemption of shares; association dues; interest;
and taxes.
5.
The Adviser agrees to pay the expenses incurred in connection
with the organization of the Trust, its qualification to do business as a
foreign corporation in the State of California, and its registration as an
investment company under the 1940 Act, and all fees and expenses including fees
of legal counsel to the Trust, which would otherwise be required to be paid by
the Trust pursuant to Section 4 which are incurred by the Trust prior to the
effective date of its Registration Statement, except for the costs of any share
certificates and transfer agent fees and costs.
6.
The Trust shall pay to the Adviser on or before the tenth
(10th) day of each month, as compensation for the services rendered by the
Adviser during the preceding month, an amount to be computed by applying to the
total net asset value of each Fund at the annual rates of:
Global Discovery Fund: 0.58% on the first $500 million of net
assets, plus 0.48% on net assets from $500 million to $1.0
billion, plus 0.44% on net assets in excess of $1.0 billion;
Global Growth Fund: 0.69% on the first $600 million of net
assets, plus 0.59% on net assets from $600 million to $1.2
billion, plus 0.53% on net assets from $1.2 billion to $2.0
billion, plus 0.50% on net assets from $2.0 billion to $3.0
billion, plus 0.48% on net assets in excess of $3.0 billion;
Global Small Capitalization Fund: 0.80% on the first $600
million of net assets, plus 0.74% on net assets from $600
million to $1.0 billion, plus 0.70% on net assets from $1.0
billion to $2 billion, plus 0.67% on net assets over $2.0
billion;
Growth Fund: 0.50% on the first $600 million of net assets,
plus 0.45% on net assets from $600 million to $1.0 billion,
plus 0.42% on net assets from $1.0 billion to $2.0 billion,
plus 0.37% on net assets from $2.0 billion to $3.0 billion,
plus 0.35% on net assets from $3.0 billion to $5.0 billion,
plus 0.33% from $5.0 billion to $8.0 billion, plus 0.315% on
net assets from $8.0 billion to $13 billion, plus 0.30% on net
assets from $13 billion to $21 billion, plus 0.29% on net
assets from $21 billion to $27 billion, plus 0.285% on net
assets in excess of $27 billion;
6
International Fund: 0.69% on the first $500 million of net
assets, plus 0.59% on net assets from $500 million to $1.0
billion, plus 0.53% on net assets from $1.0 billion to $1.5
billion, plus 0.50% on net assets from $1.5 billion to $2.5
billion, plus 0.48% on net assets from $2.5 billion to $4.0
billion, plus 0.47% on net assets from $4.0 billion to $6.5
billion, plus 0.46% on net assets from $6.5 billion to $10.5
billion, plus 0.45% on net assets from $10.5 billion to $17
billion, plus 0.44% on net assets from $17 billion to $21
billion, plus 0.43% on net assets in excess of $21 billion;
New World Fund: 0.85% on the first $500 million of net assets,
plus 0.77% on net assets from $500 million to $1.0 billion,
plus 0.71% on net assets in excess of $1.0 billion;
Blue Chip Income and Growth Fund: 0.50% on the first $600
million of net assets, plus 0.45% on net assets from $600
million to $1.5 billion, plus 0.40% on net assets from $1.5
billion to $2.5 billion, plus 0.38% on net assets from $2.5
billion to $4.0 billion, plus 0.37% on net assets in excess of
$4.0 billion;
Growth-Income Fund: 0.50% on the first $600 million of net
assets, plus 0.45% on net assets from $600 million to $1.5
billion, plus 0.40% on net assets from $1.5 billion to $2.5
billion, plus 0.32% on net assets from $2.5 billion to $4.0
billion, plus 0.285% on net assets from $4.0 billion to $6.5
billion, plus 0.256% on net assets from $6.5 billion to $10.5
billion, plus 0.242% on net assets from $10.5 billion to $13
billion, plus 0.235% on net assets from $13 billion to $17
billion, plus 0.23% on net assets in excess of $17 billion;
Asset Allocation Fund: 0.50% on the first $600 million of net
assets, plus 0.42% on net assets from $600 million to $1.2
billion, plus 0.36% on net assets from $1.2 billion to $2.0
billion, plus 0.32% on net assets from $2.0 billion to $3.0
billion, plus 0.28% on net assets from $3.0 billion to $5.0
billion, plus 0.26% on net assets over $5.0 billion;
Bond Fund: 0.48% on the first $600 million of net assets, plus
0.44% on net assets from $600 million to $1.0 billion, plus
0.40% on net assets from $1.0 billion to $2.0 billion, plus
0.38% on net assets from $2.0 billion to $3.0 billion, plus
0.36% on net assets in excess of $3.0 billion;
High-Income Bond Fund: 0.50% on the first $600 million of net
assets, plus 0.46% on net assets from $600 million to $1.0
billion, plus 0.44% on net assets from $1.0 billion to $2.0
billion, plus 0.36% on net assets in excess of $2.0 billion;
U.S. Government Securities Fund: 0.46% on the first $600
million of net assets, plus 0.40% on net assets from $600
million to $1.0 billion, plus 0.36% on net assets from $1.0
billion to $2.0 billion, plus 0.34% on net assets in excess of
$2.0 billion; and
Cash Management Fund: 0.32% on all assets.
The advisory fee shall be accrued daily based on the number of
days per year. The net asset value of the Trust shall be determined in the
manner set forth in the Declaration of Trust and prospectus of the Trust as of
the close of the New York Stock Exchange on each day on which said Exchange is
open, and in the case of Saturdays, Sundays, and other 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 the fee for the period from the beginning of the month in
which termination occurs to the date of termination shall be prorated according
to the proportion which such period bears to the full month of the Trust.
7.
The advisory fee will be reduced to the extent that the annual
ordinary net operating expenses of each Fund, except the International Fund,
exceed 1 1/2% of the first $30,000,000 of the average month-end total net assets
of each Fund and 1% of the average month-end total net assets in excess thereof.
For the International Fund, the advisory fee will be reduced to the extent that
the Fund's annual ordinary net operating expenses exceed 1 1/2% of its average
month-end total net assets. Expenses which are not subject to this limitation
are interest, taxes, and extraordinary items such as litigation. Expenditures,
including costs incurred in connection with the purchase or sale of portfolio
securities, which are capitalized in accordance with generally accepted
accounting principles applicable to investment companies, are accounted for as
capital items and not as expenses.
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, nor to prohibit affiliates of the Adviser from engaging in such
business or in other related or unrelated businesses.
9.
The Adviser shall have no liability to the Trust, or its
shareholders or creditors, 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 Trust 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 December 31, 2004. It may thereafter be renewed from year to year
thereafter by mutual consent, provided that such renewal shall be specifically
approved at least annual by (i) the Trustees or by the vote of a majority (as
defined in the 0000 Xxx) of the outstanding voting securities of the Trust, and
(ii) a majority of those Trustees 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.
11.
The obligations of the Trust under this Agreement are not
binding upon any of the Trustees, officers, employees, agents or shareholders of
the Trust individually, but bind only the Trust Estate. The Adviser agrees to
look solely to the assets of the Trust for the satisfaction of any liability of
the Trust in respect of this Agreement and will not seek recourse against such
Trustees, officers, employees, agents or shareholders, or any of them, or any of
their personal assets for such satisfaction.
12.
This Agreement may be terminated at any time, without payment
of any penalty, by the Trustees or by the vote of a majority (as defined in the
0000 Xxx) of the outstanding voting securities of the Trust, on sixty (60) days'
written notice to the Adviser, or by the adviser on like notice to the Trust.
This Agreement 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.
AMERICAN FUNDS INSURANCE SERIES
By
------------------------------------------------------------
Xxxxx X. Xxxxxx, Chairman of the Board
By
------------------------------------------------------------
Xxxx X. Xxxxxx, Secretary
CAPITAL RESEARCH AND MANAGEMENT COMPANY
By
------------------------------------------------------------
Xxxx X. Xxxxx, Xx., Executive Vice President
By
------------------------------------------------------------
Xxxxxxx X. Xxxxxx, Secretary
