Exhibit Ex-99.d(1)
The Japan Fund, Inc.
Xxx Xxxxxxx Xxxxxx Xxxxx
Xxxx, Xx 00000
October 7, 2002
Fidelity Management & Research Company
00 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
INVESTMENT ADVISORY AGREEMENT
Ladies and Gentlemen:
The Japan Fund, Inc. (the "Corporation") has been established as a
Maryland corporation to engage in the business of an investment company.
Pursuant to the Corporation's Articles of Incorporation, as amended from
time-to-time (the "Articles"), the Board of Directors may divide the
corporation's shares of capital stock, par value $.33 1/3 per share (the
"Shares") into separate series, or funds. Series may be abolished and dissolved,
and additional series established, from time to time by action of the Directors.
The Corporation, on behalf of the Fund, has selected you (also referred to
as the "Investment Adviser") to act as the investment adviser of the Fund to
render portfolio management services in the manner and on the terms set forth in
this Agreement. Accordingly, the Corporation on behalf of the Fund agrees with
you as follows:
1. DELIVERY OF DOCUMENTS. The Corporation engages in the business of investing
and reinvesting the assets of the Fund in the manner and in accordance with the
investment objectives, policies and restrictions specified in the currently
effective Prospectus (the "Prospectus") and Statement of Additional Information
(the "SAI") relating to the Fund included in the Corporation's Registration
Statement on Form N-1A, as amended from time to time (the "Registration
Statement"), filed by the Corporation under the Investment Company Act of 1940,
as amended (the "1940 Act"), and the Securities Act of 1933, as amended. Copies
of the documents referred to in the preceding sentence have been furnished to
you by the Corporation. The Corporation has also furnished you with copies
properly certified or authenticated of each of the following additional
documents related to the Corporation and the Fund:
(a) The Articles dated January 10, 1992, as amended to date.
(b) By-Laws of the Corporation as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Directors of the Corporation and the shareholders
of the Fund selecting you as investment adviser and approving the form of
this Agreement.
The Corporation will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any, to the
foregoing, including the Prospectus, the SAI and the Registration Statement.
2. PORTFOLIO MANAGEMENT SERVICES. As investment adviser of the assets of the
Fund, you shall provide continuing portfolio management of the assets of the
Fund and use your best efforts to ensure the Fund conforms to the investment
objectives, policies and restrictions set forth in the Prospectus and SAI; the
applicable provisions of the 1940 Act and the Internal Revenue Code of 1986, as
amended (the "Code"), relating to regulated investment companies and all rules
and regulations thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to policies and
instructions adopted by the Corporation's Board of Directors. In connection
therewith, you shall use reasonable efforts to manage the Fund so that it will
qualify as a regulated investment company under Subchapter M of the Code and
regulations issued thereunder. The Fund shall have the benefit of the investment
analysis and research, the review of current economic conditions and trends and
the consideration of long-range investment policy generally available to your
investment advisory clients. In managing the Fund in accordance with the
requirements set forth in this section 2, you shall be entitled to receive and
act upon advice of counsel to the Corporation or counsel to you. You shall also
make available to the Corporation promptly upon request all of the Fund's
investment records and ledgers that you are required to maintain as investment
adviser as are necessary to assist the Corporation in complying with the
requirements of the 1940 Act and other applicable laws. To the extent required
by law, you shall cooperate with the Fund or such designated agent in assisting
it to furnish to regulatory authorities having the requisite authority any
information or reports in connection with the services provided pursuant to this
Agreement which may be requested in order to ascertain whether the operations of
the Corporation are being conducted in a manner consistent with applicable laws
and regulations.
You shall determine the securities, instruments, investments, currencies,
repurchase agreements, futures, options and other contracts relating to
investments to be purchased, sold or entered into by the Fund and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with Fund policies
as expressed in the Registration Statement. You shall determine what portion of
the Fund's portfolio shall be invested in securities and other assets and what
portion, if any, should be held uninvested.
You shall place all orders for the purchase and sale of portfolio
securities for the Fund's account with brokers or dealers selected by you, which
may include brokers or dealers affiliated with you. You shall use your best
efforts to seek to execute portfolio transactions at prices that are
advantageous to the Fund 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 Act of 1934, as amended) to the Fund and/or the other
accounts over which you or your affiliates exercise investment discretion. You
are authorized to pay a broker dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Fund which
is in excess of the amount of commission another broker dealer would have
charged for effecting that transaction if you determine 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 you and your affiliates have
with respect to accounts over which they exercise investment discretion. The
Directors of the Fund shall periodically review commissions paid by the Fund to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Fund.
You shall furnish to the administrator of the Fund ("Administrator") or
the Corporation's Board of Directors periodic reports on the investment
performance of the Fund and on the performance of your obligations pursuant to
this Agreement on a monthly, quarterly or annual basis as requested by the
Board. Upon the request of the Corporation, the Investment Adviser shall provide
reasonable assistance in connection with the determination of the fair value of
securities in the Fund for which market quotations are not readily available,
and the parties to this Agreement agree the Investment Adviser shall not bear
responsibility or liability for the determination or accuracy of the valuation
of any portfolio securities and other assets of the Fund.
3. ADMINISTRATIVE SERVICES. You shall not be responsible for furnishing office
space and facilities to the Fund and you shall not be responsible for rendering
to the Corporation administrative services on behalf of the Fund including, but
not limited to, preparing reports and notices to Fund shareholders, supervising,
negotiating contractual arrangements with, to the extent appropriate, and
monitoring the performance of, accounting agents, custodians, depositories,
transfer agents and pricing agents, accountants, attorneys, printers,
underwriters, brokers and dealers, insurers and other persons in any capacity
deemed to be necessary or desirable to Fund operations; preparing and making
filings with the Securities and Exchange Commission (the "SEC") and other
regulatory and self-regulatory organizations, including, but not limited to,
preliminary and definitive proxy materials, post-effective amendments to the
Registration Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of proxies by the
Fund's transfer agent; assisting in the preparation and filing of the Fund's
federal, state and local tax returns; preparing and filing the Fund's federal
excise tax return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the valuation of
portfolio securities and the calculation of net asset value; monitoring the
registration of Shares of the Fund under applicable federal and state securities
laws; maintaining or causing to be maintained for the Fund all books, records
and reports and any other information required under the 1940 Act, except to the
extent that such books, records and reports and other information are required
to be maintained by the investment adviser of a registered investment company
under the 1940 Act or the Investment Advisers Act of 1940, as amended; assisting
in establishing the accounting policies of the Fund; assisting in the resolution
of accounting issues that may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel and the Fund's
other agents as necessary in connection therewith; establishing and monitoring
the Fund's operating expense budgets; reviewing the Fund's bills; processing the
payment of bills that have been approved by an authorized person; assisting the
Fund in determining the amount of dividends and distributions available to be
paid by the Fund to its shareholders, preparing and arranging for the printing
of dividend notices to shareholders, and providing the transfer and dividend
paying agent, the custodian, and the accounting agent with such information as
is required for such parties to effect the payment of dividends and
distributions; and otherwise assisting the Corporation in the conduct of the
Fund's business.
4. ALLOCATION OF CHARGES AND EXPENSES. During the term of this Agreement, you
will pay all expenses incurred by you in connection with your portfolio
management duties set forth in Section 2 of this Agreement.
You shall not be required to pay any expenses of the Fund. In particular,
but without limiting the generality of the foregoing, you shall not be
responsible for the following expenses of the Fund: organization expenses of the
Fund (including out-of-pocket expenses, but not including your overhead or
employee costs); fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained
by the Fund's custodian or other agents of the Corporation; telephone, telex,
facsimile, postage and other communications expenses; taxes and governmental
fees; fees, dues and expenses incurred by the Fund in connection with membership
in investment company trade organizations; fees and expenses of the Fund's
accounting agent, custodians, subcustodians, transfer agents, dividend
disbursing agents and registrars; payment for portfolio pricing or valuation
services to pricing agents, accountants, bankers and other specialists, if any;
expenses of preparing share certificates and other expenses in connection with
the issuance, offering, distribution, sale, redemption or repurchase of
securities issued by the Fund; expenses relating to investor and public
relations; expenses and fees of registering or qualifying Shares of the Fund for
sale; interest charges, bond premiums and other insurance expense; freight,
insurance and other charges in connection with the shipment of the Fund's
portfolio securities; the compensation and all expenses (specifically including
travel expenses relating to Corporation business) of Directors, officers and
employees of the Corporation who are not affiliated persons of you; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
of the Fund; expenses of printing and distributing reports, notices and
dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Directors and officers of the Corporation; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Directors and officers of the Corporation who are directors,
officers or employees of you to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Corporation or any
committees thereof or advisors thereto held outside of Boston, Massachusetts or
New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund.
5. INVESTMENT ADVISORY FEE. For all services to be rendered, payments to be made
and costs to be assumed by you as provided in section 2 hereof, the Corporation
on behalf of the Fund shall pay you in United States Dollars on the last day of
each month the unpaid balance of a fee equal to the excess of 1/12 of 0.60 of 1
percent of the average daily net assets as defined below of the Fund for such
month; provided that, for any calendar month during which the average of such
values exceeds $200 million, the fee payable for that month based on the portion
of the average of such values in excess of $200 million shall be 1/12 of 0.55 of
1 percent of such portion; and provided that, for any calendar month during
which the average of such values exceeds $400 million, the fee payable for that
month based on the portion of the average of such values in excess of $400
million shall be 1/12 of 0.50 of 1 percent of such portion.
The "average daily net assets" of the Fund shall mean the average of the
values placed on the Fund's net assets as of 4:00 p.m. (New York time) on each
day on which the net asset value of the Fund is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines
the value of its net assets as of some other time on each business day, as of
such time. The value of the net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Articles and the Registration
Statement. If the determination of net asset value does not take place for any
particular day, then for the purposes of this section 5, the value of the net
assets of the Fund as last determined shall be deemed to be the value of its net
assets as of 4:00 p.m. (New York time), or as of such other time as the value of
the net assets of the Fund's portfolio may be lawfully determined on that day.
If the Fund determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that day shall be
deemed to be the sole determination thereof on that day for the purposes of this
section 5.
6. AVOIDANCE OF INCONSISTENT POSITION; SERVICES NOT EXCLUSIVE. You or your agent
shall arrange for the placing of all orders for the purchase and sale of
portfolio securities and other investments for the Fund's account with brokers
or dealers selected by you in accordance with Fund policies as expressed in this
Agreement and the Registration Statement. If any occasion should arise in which
you give any advice to
clients of yours concerning the Shares of the Fund, you shall act solely as
investment counsel for such clients and not in any way on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed
to be exclusive and it is understood that you may render investment advice,
management and services to others. In acting under this Agreement, you shall be
an independent contractor and not an agent of the Corporation.
Whenever the Fund and one or more other accounts or investment companies
advised by you have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with procedures believed
by you to be equitable to each entity. Similarly, opportunities to sell
securities shall be allocated in a manner believed by you to be equitable. The
Fund recognizes that in some cases this procedure may adversely affect the size
of the position that may be acquired or disposed of for the Fund.
7. REVIEW OF FUND DOCUMENTS. During the term of this Agreement, the Corporation,
the Fund or the Administrator shall furnish to you at your principal office all
prospectuses, proxy statements, reports to shareholders, sales literature, or
other material prepared for distribution to shareholders of the Fund or the
public, which refer to you in any way, prior to the use thereof, and the
Corporation, the Administrator or any other person shall not use any such
materials if you reasonably object in writing five (5) days (or such other time
as may be mutually agreed, which would include longer time periods for review of
the Fund's Prospectus and Registration Statement) after receipt thereof. The
Corporation shall ensure that materials prepared by employees or agents of the
Fund that refer to you in any way are consistent with those materials previously
approved by you as referenced in the preceding sentence.
8. USE OF THE INVESTMENT ADVISER'S NAME. The parties agree that the name of the
Investment Adviser, the names of any affiliates of the Investment Adviser and
any derivative or logo or trademark, or trade name or service xxxx are the
valuable property of the Investment Adviser and its affiliates. The Corporation,
the Fund and agents of the Corporation and Fund shall have the right to use such
names(s) derivatives, logos, trademarks or service marks or trade names only
with the prior written approval of the Investment Adviser, which approval shall
not be unreasonably held or delayed so long as this Agreement is in effect. For
purposes of this Agreement, prior written approval will be waived provided that
the materials bearing the derivatives, logos, trademarks or service marks or
trade names have been submitted for review in accordance with the terms of
section 7 hereof. Upon termination of the Agreement, the Corporation shall
forthwith cease to use such name(s), derivatives, logos, trademarks or service
marks or trade names.
9. CONFIDENTIALITY. The Corporation acknowledges that the securities holdings of
the Fund constitute information of value to the Investment Adviser, and agrees:
(1) not to use for any purpose, other than for the Corporation or its agents to
supervise or monitor the Investment Adviser, the holdings or other
trading-related information of the Fund; and (2) not to disclose the Fund's
holdings, except: (a) as required by applicable law or regulation; (b) as
required by state or federal regulatory authorities; (c) to the Board of
Directors of the Fund, counsel to the Board, counsel to the Fund, the
Administrator, the independent accountants and any other agent of the
Corporation or Fund on a need-to-know basis; or (d) as otherwise agreed to by
the parties in writing. Further, the Corporation agrees that information
supplied by the Investment Adviser, including approved lists, internal
procedures, compliance procedures and any board materials is valuable to the
Investment Adviser, and the Corporation agrees not to disclose any of the
information contained in such materials, except (i) as required by applicable
law or regulation; (ii) as required by state or federal regulatory authorities;
(iii) to the Board of Directors of the Fund, counsel to the Board, counsel to
the Fund, the Administrator, the independent accountants and any other agent of
the Corporation or Fund on a need-to-know basis; or (iv) as otherwise agreed to
by the parties hereto in writing.
10. INSURANCE. The Investment Adviser, the Corporation and the Fund each agree
to maintain errors and omissions or professional liability insurance coverage in
an amount that is reasonable in light of the nature and scope of its respective
business activities.
11. LIMITATION OF LIABILITY OF INVESTMENT ADVISER. As an inducement to your
undertaking to render services pursuant to this Agreement, the Corporation
agrees that you shall not be liable under this Agreement for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect you against any
liability to the Corporation, the Fund or its shareholders to which you would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties, or by reason of your reckless
disregard of your obligations and duties hereunder. Any person, even though also
employed by you, who may be or become an employee of and paid by the Fund shall
be deemed, when acting within the scope of his or her employment by the Fund, to
be acting in such employment solely for the Fund and not as your employee or
agent. You will not be responsible or liable for the acts or omissions of any
person who is not your employee or agent.
12. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall remain in
force for a period of two years from the date hereof and shall continue in force
from year to year thereafter, but only so long as such continuance is
specifically approved at least annually (a) by the vote of a majority of the
Directors who are not parties to this Agreement or interested persons of any
party to this Agreement, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Directors of the Corporation, or by the
vote of a majority of the outstanding voting securities of the Fund. The
aforesaid requirement that continuance of this Agreement be "specifically
approved at least annually" shall be construed in a manner consistent with the
1940 Act and the rules and regulations thereunder and any applicable SEC
interpretative release or exemptive order.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Corporation's Board of Directors on 60
calendar days' written notice to you, or by you on 60 days' written notice to
the Corporation. This Agreement shall terminate automatically in the event of
its assignment.
13. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable interpretative release or SEC
exemptive order therefrom.
14. MISCELLANEOUS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"affiliated person," "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject, however,
to such exemptions as may be granted by the SEC by any rule, regulation or
order.
This Agreement shall be construed in accordance with the laws of the State
of Maryland, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, or in a
manner which would cause the Fund to fail to comply with the requirements of
Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the Corporation on behalf of the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Corporation, whereupon this letter shall become a binding
contract effective as of the date of this Agreement.
Yours very truly,
THE JAPAN FUND, INC.
By: /S/XXXX X. XXXXX
----------------
Name: Xxxx X. Xxxxx
Title: Vice President & Secretary
The foregoing Agreement is hereby accepted as of the date hereof.
FIDELITY MANAGEMENT & RESEARCH COMPANY
By: /S/XX XXXXXX
------------
Name: XX Xxxxxx
Title: Vice President
