Exhibit 5 (gg)
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AND
FIDELITY ADVISOR SERIES I ON BEHALF OF
FIDELITY ADVISOR ASSET ALLOCATION FUND
AGREEMENT made this ___ day of ________, 1998, by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 00 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx (hereinafter called the
"Advisor"); Fidelity Management & Research (Far East) Inc. (hereinafter called
the "Sub-Advisor"); and Fidelity Advisor Series I, a Massachusetts business
trust which may issue one or more series of shares of beneficial interest
(hereinafter called the "Trust") on behalf of Fidelity Advisor Asset Allocation
Fund (hereinafter called the "Portfolio").
WHEREAS the Trust and the Advisor have entered into a Management
Contract on behalf of the Portfolio, pursuant to which the Advisor is to act as
investment manager of the Portfolio; and
WHEREAS the Sub-Advisor and its subsidiaries and other affiliated
persons have personnel in various locations throughout the world and have been
formed in part for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
securities of issuers located in such countries, and providing investment
advisory services in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Trust, the Advisor and the Sub-Advisor agree as
follows:
1. DUTIES: The Advisor may, in its discretion, appoint the Sub-Advisor
to perform one or more of the following services with respect to all or a
portion of the investments of the Portfolio. The services and the portion of the
investments of the Portfolio to be advised or managed by the Sub-Advisor shall
be as agreed upon from time to time by the Advisor and the Sub-Advisor. The
Sub-Advisor shall pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research, statistical and
investment activities.
(a) INVESTMENT ADVICE: If and to the extent requested by the Advisor,
the Sub-Advisor shall provide investment advice to the Portfolio and the
Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the
Portfolio and the Advisor such factual information, research reports and
investment recommendations as the Advisor may reasonably require. Such
information may include written and oral reports and analyses.
(b) INVESTMENT MANAGEMENT: If and to the extent requested by the
Advisor, the Sub-Advisor shall, subject to the supervision of the
Advisor, manage all or a portion of the investments of the Portfolio in
accordance with the investment objective, policies and limitations
provided in the Portfolio's Prospectus or other governing instruments,
as amended from time to time, the Investment Company Act of 1940 (the
"1940 Act") and rules thereunder, as amended from time to time, and such
other limitations as the Trust or Advisor may impose with respect to the
Portfolio by notice to the Sub-Advisor. With respect to the portion of
the investments of the Portfolio under its management, the Sub-Advisor
is authorized to make investment decisions on behalf of the Portfolio
with regard to any stock, bond, other security or investment instrument,
and to place orders for the purchase and sale of such securities through
such broker-dealers as the Sub-Advisor may select. The Sub-Advisor may
also be authorized, but only to the extent such duties are delegated in
writing by the Advisor, to provide additional investment management
services to the Portfolio, including but not limited to services such as
managing foreign currency investments, purchasing and selling or writing
futures and options contracts, borrowing money, or lending securities on
behalf of the Portfolio. All investment management and any other
activities of the Sub-Advisor shall at all times be subject to the
control and direction of the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such
of its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved
by the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.
2. INFORMATION TO BE PROVIDED TO THE TRUST AND THE ADVISOR: The
Sub-Advisor shall furnish such reports, evaluations, information or analyses to
the Trust and the Advisor as the Trust's Board of Trustees or the Advisor may
reasonably request from time to time, or as the Sub-Advisor may deem to be
desirable.
3. BROKERAGE: In connection with the services provided under
subparagraph (b) of paragraph 1 of this Agreement, the Sub-Advisor shall place
all orders for the purchase and sale of portfolio securities for the Portfolio's
account with brokers or dealers selected by the Sub-Advisor, which may include
brokers or dealers affiliated with the Advisor or Sub-Advisor. The Sub-Advisor
shall use its best efforts to seek to execute portfolio transactions at prices
which are advantageous to the Portfolio and at commission rates which are
reasonable in relation to the benefits received. In selecting brokers or dealers
qualified to execute a particular transaction, brokers or dealers may be
selected who also provide brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of l934) to the
Portfolio and/or to the other accounts over which the Sub-Advisor or Advisor
exercise investment discretion. The Sub-Advisor is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if the Sub-Advisor determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer. This determination may be viewed in
terms of either that particular transaction or the overall responsibilities
which the Sub-Advisor has with respect to accounts over which it exercises
investment discretion. The Trustees of the Trust shall periodically review the
commissions paid by the Portfolio to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Portfolio.
4. COMPENSATION: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.
(a) INVESTMENT ADVISORY FEE: For services provided under subparagraph
(a) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Sub-Advisory Fee. The Sub-Advisory Fee shall be
equal to 105% of the Sub-Advisor's costs incurred in connection with
rendering the services referred to in subparagraph (a) of paragraph 1 of
this Agreement. The Sub-Advisory Fee shall not be reduced to reflect
expense reimbursements or fee waivers by the Advisor, if any, in effect
from time to time.
(b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment
Management Fee shall be equal to: (i) 50% of the monthly management fee
rate (including performance adjustments, if any) that the Portfolio is
obligated to pay the Advisor under its Management Contract with the
Advisor, multiplied by: (ii) the fraction equal to the net assets of the
Portfolio as to which the Sub-Advisor shall have provided investment
management services divided by the net assets of the Portfolio for that
month. If in any fiscal year the aggregate expenses of the Portfolio
exceed any applicable expense limitation imposed by any state or federal
securities laws or regulations, and the Advisor waives all or a portion
of its management fee or reimburses the Portfolio for expenses to the
extent required to satisfy such limitation, the Investment Management
Fee paid to the Sub-Advisor will be reduced by 50% of the amount of such
waivers or reimbursements multiplied by the fraction determined in (ii).
If the Sub-Advisor reduces its fees to reflect such waivers or
reimbursements and the Advisor subsequently recovers all or any portion
of such waivers and reimbursements, then the Sub-Advisor shall be
entitled to receive from the Advisor a proportionate share of the amount
recovered. To the extent that waivers and reimbursements by the Advisor
required by such limitations are in excess of the Advisor's management
fee, the Investment Management Fee paid to the Sub-Advisor will be
reduced to zero for that month, but in no event shall the Sub-Advisor be
2
required to reimburse the Advisor for all or a portion of such excess
reimbursements.
(c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same
period, the fees paid to the Sub-Advisor with respect to such
investments shall be calculated exclusively under subparagraph (b) of
this paragraph 4.
5. EXPENSES: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the Portfolio,
which expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in connection
with the purchase or sale of securities and other investment instruments; (iii)
fees and expenses of the Trust's Trustees other than those who are "interested
persons" of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and expenses; (vi)
fees and expenses related to the registration and qualification of the Trust and
the Portfolio's shares for distribution under state and federal securities laws;
(vii) expenses of printing and mailing reports and notices and proxy material to
shareholders of the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy solicitations
therefore; (ix) a pro rata share, based on relative net assets of the Portfolio
and other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for fidelity
and other coverage; (x) its proportionate share of association membership dues;
(xi) expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and supplements
thereto sent to existing shareholders; and (xiii) such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Portfolio is a party and the legal obligation which
the Portfolio may have to indemnify the Trust's Trustees and officers with
respect thereto.
6. INTERESTED PERSONS: It is understood that Trustees, officers, and
shareholders of the Trust are or may be or become interested in the Advisor or
the Sub-Advisor as directors, officers or otherwise and that directors, officers
and stockholders of the Advisor or the Sub-Advisor are or may be or become
similarly interested in the Trust, and that the Advisor or the Sub-Advisor may
be or become interested in the Trust as a shareholder or otherwise.
7. SERVICES TO OTHER COMPANIES OR ACCOUNTS: The services of the
Sub-Advisor to the Advisor are not to be deemed to be exclusive, the Sub-Advisor
being free to render services to others and engage in other activities,
provided, however, that such other services and activities do not, during the
term of this Agreement, interfere, in a material manner, with the Sub-Advisor's
ability to meet all of its obligations hereunder. The Sub-Advisor shall for all
purposes be an independent contractor and not an agent or employee of the
Advisor or the Trust.
8. STANDARD OF CARE: In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder on the
part of the Sub-Advisor, the Sub-Advisor shall not be subject to liability to
the Advisor, the Trust or to any shareholder of the Portfolio for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.
9. DURATION AND TERMINATION OF AGREEMENT; AMENDMENTS:
(a) Subject to prior termination as provided in subparagraph (d) of
this paragraph 9, this Agreement shall continue in force until
July 31, 1999 and indefinitely thereafter, but only so long as
the continuance after such period shall be specifically approved
at least annually by vote of the Trust's Board of Trustees or by
vote of a majority of the outstanding voting securities of the
Portfolio.
(b) This Agreement may be modified by mutual consent of the Advisor,
the Sub-Advisor and the Portfolio subject to the provisions of
Section 15 of the 1940 Act, as modified by or interpreted by any
applicable order or orders of the Securities and Exchange
3
Commission (the "Commission") or any rules or regulations
adopted by, or interpretative releases of, the Commission.
(c) In addition to the requirements of subparagraphs (a) and (b) of
this paragraph 9, the terms of any continuance or modification
of this Agreement must have been approved by the vote of a
majority of those Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such
approval.
(d) Either the Advisor, the Sub-Advisor or the Portfolio may, at any
time on sixty (60) days' prior written notice to the other
parties, terminate this Agreement, without payment of any
penalty, by action of its Board of Trustees or Directors, or
with respect to the Portfolio by vote of a majority of its
outstanding voting securities. This Agreement shall terminate
automatically in the event of its assignment.
10. LIMITATION OF LIABILITY: The Sub-Advisor is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust or other organizational document of the Trust and agrees
that any obligations of the Trust or the Portfolio arising in connection with
this Agreement shall be limited in all cases to the Portfolio and its assets,
and the Sub-Advisor shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Portfolio. Nor shall the Sub-Advisor seek
satisfaction of any such obligation from the Trustees or any individual Trustee.
11. GOVERNING LAW: This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof.
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons," when
used herein, shall have the respective meanings specified in the 1940 Act as now
in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly authorized,
and their respective seals to be hereunto affixed, all as of the date written
above.
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
BY:_____________________________________________________
Title
FIDELITY MANAGEMENT & RESEARCH COMPANY
BY: ___________________________________________
Title
FIDELITY ADVISOR SERIES I ON BEHALF OF
FIDELITY ADVISOR ASSET ALLOCATION FUND
BY: ____________________________________________
Title
4
