January 15, 1999
Capital Research and Management Company
000 Xxxxx Xxxx Xxxxxx, 00xx 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 Intermediate Bond Fund of America
(the "Trust"), 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 Trust 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 Trust'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 Trust's transactions in such investments, PROVIDED
THAT:
(a) CRMC, as Foreign Custody Manager, determines that the Trust'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 Trust's assets;
(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 Trust 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 Trust'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 Trust'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 Trust will be adequately protected against the risk of
loss of assets held in accordance with such contract;
(ii) that the Trust'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 Trust's assets will be freely
transferable without the payment of money or value other than for safe custody
or administration;
(iv) that adequate records will be maintained identifying the assets as
belonging to the Trust or as being held by a third party for the benefit of the
Trust;
(v) that the Trust's independent public accountants will be given access to
those records or confirmation of the contents of those records; and
(vi) that the Trust will receive periodic reports with respect to the
safekeeping of the Trust's assets, including, but not limited to, notification
of any transfer to or from the Trust's account or a third party account
containing assets held for the benefit of the Trust.
(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 Trust 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 Trust's assets with a particular
custodian under paragraph (a) above, and the contract governing the Trust's
arrangements under paragraph (b) above.
(2) If an arrangement no longer meets the requirements of paragraph (c), the
Trust must withdraw its assets from the custodian as soon as reasonably
practicable.
CRMC, as Foreign Custody Manager, will provide written reports notifying the
Trust's Board of Trustees of the placement of the Trust's assets with a
particular custodian and of any material change in the Trust'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 Trust's non-U.S.
custody arrangements.
CRMC, in performing the responsibilities delegated to it as the Trust's
Foreign Custody Manager, will exercise reasonable care, prudence and diligence
such as a person having responsibility for the safekeeping of the Trust's
assets would exercise.
This Agreement (and the appointment of CRMC as the Trust's Foreign Custody
Manager) may be terminated at any time, without payment or any penalty, by the
Board of Trustees of the Trust or by vote of a majority (within the meaning of
the 1940 Act) of the outstanding voting securities of the Trust, on sixty (60)
days' written notice to CRMC, or by CRMC on like notice to the Trust.
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's estate. CRMC agrees to look solely to
the assets of the Trust for the satisfaction of any liability in respect of the
Trust under 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.
Very truly yours,
INTERMEDIATE BOND FUND OF AMERICA
By: /s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx, 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
