Exhibit No. Ex-99.d(7)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY INTERNATIONAL INVESTMENT ADVISORS (U.K.) LIMITED
AND
FIDELITY INTERNATIONAL INVESTMENT ADVISORS
AGREEMENT made this 7th day of October 2002 by and between Fidelity
International Investment Advisors (U.K.) Limited, 00-00 Xxxxx Xxxx, Xxxxxx,
Xxxxxxx (hereinafter called the "U.K. Sub-Advisor") and Fidelity International
Investment Advisors, a Bermuda company with principal offices at Pembroke Hall,
Pembroke, Bermuda (hereinafter called the "Sub-Advisor").
WHEREAS Fidelity Management & Research Company, a Massachusetts
corporation (hereinafter called the "Advisor"), has entered into an Advisory
Agreement with The Japan Fund, Inc., (hereinafter called the "Portfolio")
pursuant to which the Advisor is to act as investment advisor to the Portfolio,
and
WHEREAS, the Sub-Advisor has entered into a Sub-Advisory Agreement with
the Advisor (the "Sub-Advisory Agreement") pursuant to which the Sub-Advisor,
directly or through certain of its subsidiaries or other affiliated persons,
shall provide investment advice or investment management and order execution
services to the Portfolio, and
WHEREAS the U.K. Sub-Advisor has personnel in Western Europe and has
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 outside of North America, principally in the U.K.
and Europe.
NOW THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Sub-Advisor and the U.K. Sub-Advisor agree as
follows:
1. Duties: The Sub-Advisor may, in its discretion, appoint the U.K.
Sub-Advisor to perform one or more of the following services with respect to all
or a portion of the investments of the Portfolio, in connection with the
Sub-Advisor's duties under the Sub-Advisory Agreement. The services and the
portion of the investments of the Portfolio advised or managed by the U.K.
Sub-Advisor shall be as agreed upon from time to time by the Sub-Advisor and the
U.K. Sub-Advisor. The U.K. Sub-Advisor shall pay the salaries and fees of all
personnel of the U.K. 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
Sub-Advisor, the U.K. Sub-Advisor shall provide investment advice to the
Sub-Advisor with respect to all or a portion of the investments of the
Portfolio, and in connection with such advice shall furnish the Sub-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
Sub-Advisor, the U.K. Sub-Advisor shall 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 Portfolio or the Advisor may impose with respect
to the Portfolio by notice to the U.K. Sub-Advisor. With respect to the portion
of the investments of the Portfolio under its management, the U.K. 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 brokerdealers
as the U.K. Sub-Advisor may select. The U.K. Sub-Advisor may also be authorized,
but only to the extent such duties are delegated in writing by the Sub-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 U.K. Sub-Advisor shall at all times be subject to
the control and direction of the Sub-Advisor, the Advisor and the Portfolio's
Board of Directors.
2. Information to be Provided to the Portfolio and the Advisor: The U.K.
Sub-Advisor shall furnish such reports, evaluations, information or analyses to
the Portfolio, the Advisor, and the Sub-Advisor as the Portfolio's Board of
Directors, the Advisor or the Sub-Advisor may reasonably request from time to
time, or as the U.K. 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 U.K. 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 U.K. Sub-Advisor, which may
include brokers or dealers affiliated with the Advisor, Sub-Advisor or U.K.
Sub-Advisor. The U.K. 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 1934) to the Portfolio and/or to the other accounts over which the U.K.
Sub-Advisor, the Sub-Advisor or Advisor exercise investment discretion. The U.K.
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 U.K. 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 U.K.
Sub-Advisor, the Sub-Advisor or the Advisor have with respect to accounts over
which they exercise investment discretion. The Directors of the Portfolio 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 Sub-Advisor shall compensate the U.K. Sub-Advisor on
the following basis for the services to be furnished hereunder.
(a) SUB-ADVISORY FEE: For services provided under subparagraph (a) of
paragraph 1 of this Agreement, the Sub-Advisor agrees to pay the U.K.
Sub-Advisor a monthly sub-advisory fee (the "U.K. Sub-Advisory Fee"). The U.K.
Sub-Advisory Fee shall be equal to 110% of the U.K. Sub-Advisor's costs incurred
in connection with rendering the services referred to in subparagraph (a) of
paragraph 1 of this Agreement. The U.K. Sub-Advisory Fee shall not be reduced to
reflect expense reimbursements or fee waivers by the Sub-Advisor or 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 Sub-Advisor agrees to pay the U.K.
Sub-Advisor a monthly investment management fee (the "UK Investment Management
Fee"). The UK Investment Management Fee shall be equal to a percentage of the
monthly average net assets of the Portfolio managed by the U.K. Sub-Advisor
pursuant to subparagraph 1(b) of this Agreement, calculated on a cumulative
basis based upon a monthly average of the aggregate of all net assets managed by
the U.K. Sub-Advisor on behalf of the Sub-Advisor pursuant to sub-advisory
arrangements ("Average Group Assets") in accordance with the following fee
schedule:
ANNUALIZED FEE RATE
AVERAGE GROUP ASSETS (FOR EACH LEVEL)
-------------------- ----------------
$0 - $500 million 0.30 %
$500 million - $1 billion 0.25 %
over $1 billion 0.20 %
provided that in no event shall the UK Investment Management Fee exceed 50% of
the sub-advisory fees received by the Sub-Advisor in respect of the Portfolio
from the Advisor pursuant to the Sub-Advisory Agreement, and provided further
that, for purposes of calculating the fee rates set forth above, any assets
managed by the U.K. Sub-Advisor on behalf of the Sub-Advisor pursuant to a
sub-advisory arrangement where a fee cap is being applied to reduce the U.K.
Sub-Advisor's fee to less than the rates set forth above shall be excluded from
Average Group Assets.
(c) PROVISION OF MULTIPLE SERVICES: If the U.K. 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
U.K. 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 U.K. Sub-Advisor
hereunder, by the Sub-Advisor under the Sub-Advisory Agreement or by the Advisor
under the Advisory Agreement with the Portfolio.
6. Interested Persons: It is understood that the Directors, officers, and
shareholders of the Portfolio are or may be or become interested in the Advisor,
the Sub-Advisor or the U.K. Sub-Advisor as directors, officers or otherwise and
that directors, officers and stockholders of the Advisor, the Sub-Advisor or the
U.K. Sub-Advisor are or may be or become similarly interested in the Portfolio,
and that the Advisor, the Sub-Advisor or the U.K. Sub-Advisor may be or become
interested in the Portfolio as a shareholder or otherwise.
7. Services to Other Companies or Accounts: The Services of the U.K.
Sub-Advisor to the Sub-Advisor are not to be deemed to be exclusive, the U.K.
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
U.K. Sub-Advisor's ability to meet all of its obligations hereunder. The U.K.
Sub-Advisor shall for all purposes be an independent contractor and not an agent
or employee of the Advisor, the Sub-Advisor or the Portfolio.
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 U.K. Sub-Advisor, the U.K. Sub-Advisor shall not be subject to
liability to the Sub-Advisor, the Advisor, the Portfolio 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 October 7, 2004
and indefinitely thereafter, but only so long as the continuance after such
period shall be specifically approved at least annually by vote of the
Portfolio's Board of Directors 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 U.K.
Subadvisor and the Sub-Advisor 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 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 Directors of the
Portfolio 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, the U.K. 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 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. 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 INTERNATIONAL
INVESTMENT ADVISORS
(U.K.) LIMITED
--------------------------
By:
Title:
FIDELITY INTERNATIONAL
INVESTMENT ADVISORS
--------------------------
By:
Title:
