THE AMERICAN FUNDS TAX-EXEMPT SERIES I

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**INVESTMENTADVISORY AND SERVICE AGREEMENT**

 

 

THISinvestment advisory and service AGREEMENT, dated and effective as of the 1st day of August, 2014, is made and entered intoby and between THE AMERICAN FUNDS TAX-EXEMPT SERIES I, a Delaware statutory trust, (the “Trust”), and CAPITAL RESEARCHAND MANAGEMENT COMPANY, a Delaware corporation (the “Investment Adviser”).

 

 

W I T N E S S E T H

 

 

The Trust is an open-enddiversified investment company of the management type, registered under the Investment Company Act of 1940, as amended (the “1940Act”) that consists of a series of funds set forth on Exhibit A (each a “Fund” and collectively, the “Funds”)and may offer additional series in the future. The Investment Adviser is registered under the Investment Advisers Act of 1940,as amended, and is engaged in the business of providing investment advisory and related services to the Trust and to other investmentcompanies.

 

NOW, THEREFORE, in considerationof the premises and the mutual undertaking of the parties, it is covenanted and agreed as follows:

 

1.	The Trust hereby employsthe Investment Adviser to provide investment advisory and fund administration services to the Trust, as set forth herein. The InvestmentAdviser hereby accepts such employment and agrees to render the services to the extent herein set forth, for the compensation hereinprovided. The Investment Adviser shall, for all purposes herein, be deemed an independent contractor and not an agent of the Trust.

 

2.	(a)	The InvestmentAdviser shall provide general management services to the Trust, including overall supervisory responsibility for the general managementand investment of each Fund’s assets, giving due consideration to the policies of each Fund as expressed in the Trust’sagreement and declaration of trust, by-laws, registration statement under the 1940 Act and registration statement under the SecuritiesAct of 1933, as amended (the “1933 Act”), as well as to the factors affecting each Fund’s status as a regulatedinvestment company under the Internal Revenue Code of 1986, as amended.

 

	(b)	The InvestmentAdviser may delegate its investment management responsibilities under paragraph 2(a), or any portion thereof, to one or more entitiesthat are direct or indirect subsidiaries of the Investment Adviser or at least majority owned subsidiaries of The Capital GroupCompanies, Inc. and registered as investment advisers under the Investment Advisers Act of 1940 (each a “Subsidiary”),pursuant to an agreement between the Investment Adviser and the Subsidiary (the “Subsidiary Agreement”). The SubsidiaryAgreement with any Subsidiary to which the Investment Adviser proposes to delegate its investment management responsibilities mustbe approved by the Trust’s Board of Trustees, including a majority of the Trustees who are not parties to this Agreementnor

interested persons of any such party withinthe meaning of the 1940 Act (“Independent Trustees”). Any delegation of duties pursuant to this paragraph shall complywith all applicable provisions of Section 15 of the 1940 Act, except to the extent permitted by any exemptive order of the Securitiesand Exchange Commission (“SEC”), or similar relief.

 

	(c)	The InvestmentAdviser will, subject to the review and approval of the Board of Trustees of the Trust: (i) set each Fund’s overall investmentstrategies; (ii) except to the extent delegated to one or more Subsidiaries, have full investment discretion for each Fund andmake all determinations with respect to the investment of each Fund’s assets, the purchase and sale of portfolio securitieswith those assets, and any steps that may be necessary to implement any investment decisions; (iii) evaluate, select and recommendSubsidiaries to manage all or a part of each Fund’s assets; (iv) when appropriate, allocate and reallocate each Fund’sassets among multiple Subsidiaries; (v) monitor and evaluate the performance of Subsidiaries; and (vi) implement proceduresreasonably designed to ensure that the Subsidiaries comply with each Fund’s investment objective, policies and restrictions.The Investment Adviser shall be solely responsible for paying the fees of any Subsidiary.

 

	(d)	Any SubsidiaryAgreement may provide that the Subsidiary, subject to the control and supervision of the Trust’s Board of Trustees and theInvestment Adviser, shall have full investment discretion for each Fund and shall make all determinations with respect to (i) theinvestment of each Fund’s assets assigned to the Subsidiary; (ii) the purchase and sale of portfolio securities with thoseassets, and (iii) any steps that may be necessary to implement an investment decision. The Investment Adviser shall periodicallyevaluate the continued advisability of retaining any Subsidiary and shall make recommendations to the Trust’s Board of Trustees,as needed.

 

	(e)	The InvestmentAdviser shall furnish the services of persons to perform the executive, administrative, clerical, and recordkeeping functions ofthe Trust, including the daily determination of net asset value per share. The Investment Adviser shall pay the compensation andtravel expenses of all such persons, and they shall serve without any additional compensation from the Trust. The Investment Advisershall also, at its expense, provide the Trust 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 Trust.

 

	(f)	The InvestmentAdviser shall maintain (and cause each Subsidiary to maintain) all books and records with respect to each Fund’s investmentmanagement activities that are required to be maintained pursuant to the 1940 Act and the rules thereunder, as well as any otherapplicable legal requirements. The Investment Adviser acknowledges and agrees that all such records are the property of the Trust,and it shall maintain and preserve such records in accordance with applicable law and provide such records promptly to the Trustupon request.

 

	(g)	The InvestmentAdviser shall prepare and submit and/or cause a Subsidiary to prepare and submit to the Trust all data on the performance of itsduties as investment adviser for required filings with governmental agencies or for the preparation of reports to the Board ofTrustees or the shareholders of each Fund.

 

	(h)	The InvestmentAdviser shall furnish and/or cause a Subsidiary to prepare and submit from time to time such other appropriate information as maybe reasonably requested by the Trust.

 

3.	Each Fund shall payall its expenses not assumed by the Investment Adviser as provided herein. Such expenses shall include, but shall not be limitedto, expenses incurred in connection with the organization of each Fund, its qualification to do business in the State of California,and its registration as an investment company under the 1940 Act; custodian, stock transfer and dividend disbursing fees and expenses;service and distribution expenses pursuant to a plan adopted in accordance with Rule 12b-1 under the 1940 Act; expenses incurredfor shareholder servicing, recordkeeping, transactional services, tax and informational returns and fund and shareholder communications;costs of designing and of printing and mailing to its shareholders reports, prospectuses, proxy statements, and notices to itsshareholders; taxes; expenses of the issuance, sale, redemption, or repurchase of shares of each Fund (including registration andqualification expenses); legal and auditing fees and expenses; compensation, fees, and expenses paid to Independent Trustees; associationdues; and costs of any share certificates, stationery and forms prepared exclusively for the Trust or each Fund.

 

4.	(a)	Each Fund shallpay to the Investment Adviser on or before the tenth (10th) day of each month, as compensation for the services rendered by theInvestment Adviser during the preceding month a fee calculated at the annual rate of:

 

0.300% on first $60 millionof net assets,

plus 0.210% onnet assets over $60 million but not to exceed $1 billion,

	plus 0.180% on net assetsover $1 billion, plus

 

	3.000% of the first $3,333,333of monthly gross income and

	2.500% of monthly grossincome over $3,333,333.

 

	(b)	Such fee shallbe accrued daily and the daily rate shall be computed based on the actual number of days per year. For the purposes hereof, thenet assets of each Fund shall be determined in the manner set forth in the agreement and declaration of trust and registrationstatement of the Trust. The income portion shall be accrued daily and “gross income” for this purpose shall be determinedin the same manner as gross income is determined for and reported in financial statements and shall not include gains or lossesfrom the sale of securities. The advisory fee shall be payable for the period commencing on the date on which operations of eachFund begin and ending on the date of termination hereof and shall be prorated for any fraction of a month at the beginning or thetermination of such period.

 

5.	This Agreement may beterminated, with respect to a Fund, at any time, without payment of any penalty, by the Trustees of the Trust or by vote of a majority(within the meaning of the 1940 Act) of the outstanding voting securities of such Fund, on sixty (60) days’ written noticeto the Investment Adviser, or by the Investment Adviser on like notice to the Trust or such Fund. Unless sooner terminated in accordancewith this provision, this Agreement shall continue until July 31, 2015. It may thereafter be renewed from year to year by mutualconsent, provided that such renewal shall be specifically approved at least annually by the Board of Trustees of the Trust, orby vote of a majority (within the meaning of the 1940

Act) of the outstanding voting securities ofsuch Fund. In either event, any such renewal must be approved by a majority of the Independent Trustees at a meeting called forthe purpose of voting on such approval.

 

6.	This Agreement shallnot be assignable by either party hereto, and in the event of assignment (within the meaning of the 1940 Act) by the InvestmentAdviser shall automatically be terminated forthwith.

 

7.	Nothing contained inthis Agreement shall be construed to prohibit the Investment Adviser from performing investment advisory, management, or distributionservices for other investment companies and other persons or companies, nor to prohibit affiliates of the Investment Adviser fromengaging in such businesses or in other related or unrelated businesses.

 

8.	The Investment Advisershall not be liable to the Trust or its shareholders for any error of judgment, for any mistake of law, for any loss arising outof any investment or for any act, or omission not involving willful misfeasance, bad faith, gross negligence, or reckless disregardof its obligations and duties hereunder.

 

9.	The obligations of theTrust 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’s estate. The Investment Adviser agrees to look solely to the assets of the Trust or each Fund forthe satisfaction of any liability in respect of the Trust or each Fund under this Agreement and will not seek recourse againstsuch Trustees, officers, employees, agents or shareholders, or any of them, or any of their personal assets for such satisfaction.

 

10.	The Trust acknowledgesand agrees that the names, “American Funds” and “Capital” or any derivatives thereof or logo associatedwith those names are the valuable property of the Investment Adviser and its affiliates, and that the Trust shall have the rightto use such names (or derivatives or logos) only so long as this Agreement shall continue in effect. Upon termination of this Agreementthe Trust shall forthwith cease to use such names (or derivatives or logos).

 

 

 

 

 

 

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