January 15, 1999
Capital Research and Management Company
000 Xxxxx Xxxx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxxxxx, XX 00000
RE: DELEGATION OF RESPONSIBILITIES UNDER RULE 17F-5
Dear Mesdames/Sirs:
This Agreement confirms, and sets forth the responsibilities of the parties in
connection with, the appointment of Capital Research and Management Company
("CRMC") as the Foreign Custody Manager of The Investment Company of America
(the "Company"), in accordance with rule 17f-5, as amended, under the
Investment Company Act of 1940 (the "1940 Act"). CRMC hereby accepts such
appointment as of the date first written above. All capitalized terms used
herein and not otherwise defined have the meanings assigned in rule 17f-5.
The Company may, from time to time and in accordance with this Agreement,
place or maintain in the care of an Eligible Foreign Custodian, any of the
Company's investments (including non-U.S. currencies) for which the primary
market is outside the United States, and such cash and cash equivalents as are
reasonably necessary to effect the Company's transactions in such investments,
PROVIDED THAT:
(a) CRMC, as Foreign Custody Manager, determines that the Company's assets will
be subject to reasonable care, based on the standards applicable to custodians
in the relevant market, if maintained with the custodian, after considering all
factors relevant to the safekeeping of such assets, including, without
limitation:
(1) the custodian's practices, procedures, and internal controls, including,
but not limited to, the physical protections available for certificated
securities (if applicable), the method of keeping custodial records, and the
security and data protection practices;
(2) whether the custodian has the requisite financial strength to provide
reasonable care for the Company's assets;
Capital Research and Management Company
January 15, 1999
Page
(3) the custodian's general reputation and standing and, in the case of a
securities depository, the depository's operating history and number of
participants; and
(4) whether the Company will have jurisdiction over and be able to enforce
judgments against the custodian, such as by virtue of the existence of any
offices of the custodian in the U.S. or the custodian's consent to service of
process in the U.S.
(b) Each of the Company's non-U.S. custody arrangements are governed by a
written contract (or, in the case of a Securities Depository, by such a
contract, by the rules or established practices or procedures of the
depository, or by any combination of the foregoing) that CRMC, as Foreign
Custody Manager, has determined will provide reasonable care for the Company's
assets based on the standards set forth in paragraph (a) above.
(1) Such contract shall include provisions that provide:
(i) for indemnification or insurance arrangements (or any combination of the
foregoing) such that the Company will be adequately protected against the risk
of loss of assets held in accordance with such contract;
(ii) that the Company's assets will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of the custodian or its
creditors except a claim of payment for their safe custody or administration
or, in the case of cash deposits, liens or rights in favor of creditors of the
custodian arising under bankruptcy, insolvency, or similar laws;
(iii) that beneficial ownership for the Company's assets will be freely
transferable without the payment of money or value other than for safe custody
or administration;
Capital Research and Management Company
January 15, 1999
Page
(iv) that adequate records will be maintained identifying the assets as
belonging to the Company or as being held by a third party for the benefit of
the Company;
(v) that the Company's independent public accountants will be given access to
those records or confirmation of the contents of those records; and
(vi) that the Company will receive periodic reports with respect to the
safekeeping of the Company's assets, including, but not limited to,
notification of any transfer to or from the Company's account or a third party
account containing assets held for the benefit of the Company.
(2) Such contract may contain, in lieu of any or all of the provisions
specified in subparagraph (1) above, such other provisions that CRMC, as
Foreign Custody Manager, determines will provide, in their entirety, the same
or a greater level of care and protection for Company assets as the specified
provisions, in their entirety.
(c) (1) CRMC, as Foreign Custody Manager, will have established a system to
monitor the appropriateness of maintaining the Company's assets with a
particular custodian under paragraph (a) above, and the contract governing the
Company's arrangements under paragraph (b) above.
(2) If an arrangement no longer meets the requirements of paragraph (c), the
Company must withdraw its assets from the custodian as soon as reasonably
practicable.
CRMC, as Foreign Custody Manager, will provide written reports notifying the
Company's Board of Directors of the placement of the Company's assets with a
particular custodian and of any material change in the Company's arrangements,
with the reports to be provided to the Board at such times as the Board deems
reasonable and appropriate based on the circumstances of the Company's non-U.S.
custody arrangements.
CRMC, in performing the responsibilities delegated to it as the Company's
Foreign Custody Manager, will exercise reasonable care, prudence and diligence
such as a person having responsibility for the safekeeping of the Company's
assets would exercise.
Capital Research and Management Company
January 15, 1999
Page
This Agreement (and the appointment of CRMC as the Company's Foreign Custody
Manager) may be terminated at any time, without payment or any penalty, by the
Board of Directors of the Company or by vote of a majority (within the meaning
of the 1940 Act) of the outstanding voting securities of the Company, on sixty
(60) days' written notice to CRMC, or by CRMC on like notice to the Company.
The obligations of the Company under this Agreement are not binding upon any
of the Directors, officers, employees, agents or shareholders of the Company
individually, but bind only the Company's estate. CRMC agrees to look solely
to the assets of the Company for the satisfaction of any liability in respect
of the Company under this Agreement and will not seek recourse against such
Directors, officers, employees, agents or shareholders, or any of them, or any
of their personal assets for such satisfaction.
Very truly yours,
THE INVESTMENT COMPANY
OF AMERICA
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, Secretary
ACCEPTED AND AGREED as of the date first written above:
CAPITAL RESEARCH AND
MANAGEMENT COMPANY
By: /s/ Xxxx X. Xxxxx, Xx.
Xxxx X. Xxxxx, Xx.
Executive Vice President
