INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS
AGREEMENT,
dated and effective as of the 1st day of January, 2007 is made and entered
into
by and between AMERICAN FUNDS INSURANCE SERIES, a Massachusetts business trust,
(hereinafter called the “Trust”), on behalf of its Global Discovery Fund, Global
Growth Fund, Global Small Capitalization Fund, Growth Fund, International Fund,
New World Fund, Blue Chip Income and Growth Fund, Global Growth and Income
Fund,
Growth-Income Fund, Asset Allocation Fund, Bond Fund, Global Bond Fund,
High-Income Bond Fund, U.S. Government/AAA-Rated Securities Fund and Cash
Management Fund, (hereinafter called the “Funds”), 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 Funds. 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 Trust.
2.
The
Adviser agrees
to provide supervision of the portfolios of the Funds and to determine what
securities or other property shall be purchased or sold by the Funds, 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 Funds’ status as
regulated investment companies 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 Funds. 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.
The
Adviser (a)
shall furnish to the Trust the services of qualified personnel to (i) manage
the
investments of the Funds, (ii) perform the executive and related administrative
functions of the Trust with respect to the Funds 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 Trust 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 $2.0
billion, plus 0.67% on net assets from $2.0 billion to $3.0 billion; plus 0.65
on net assets in excess of $3.0 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;
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 from $1.0 billion to $1.5 billion;
plus 0.66 on net assets in excess of $1.5 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;
Global
Growth
and Income Fund: 0.69% on all assets;
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 from $17
billion to
$21 billion, plus 0.225% on net assets from $21 billion to $27 billion; plus
0.222% on net assets in excess of $27 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 from $5.0
billion
to $8.0 billion, plus 0.250% on net assets over $8.0
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;
Global
Bond
Fund: 0.57% on all assets;
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 0.42% 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 Funds 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 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,
2007. 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 with respect to any Fund, 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 Fund, 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.
On
behalf of the
Global Discovery Fund, Global Growth Fund, Global Small Capitalization Fund,
Growth Fund, International Fund, New World Fund, Blue Chip Income and Growth
Fund, Global Growth and Income Fund, Growth-Income Fund, Asset Allocation Fund,
Bond Fund, Global Bond Fund, U.S. Government/AAA-Rated Securities
Fund, High-Income Bond Fund and Cash Management Fund
By
Xxxxx
X. Xxxxxx,
Vice Chairman of the Board
By
Xxxx
X. Xxxxxx,
Secretary
CAPITAL
RESEARCH
AND MANAGEMENT COMPANY
By
Xxxx
X. Xxxxx, Xx.,
Vice Chairman
By
Xxxxxxx
X. Xxxxxx,
Secretary
