Exhibit d(45)
FORM OF
SUB-ADVISORY AGREEMENT
between
FIDELITY INVESTMENTS JAPAN LIMITED
and
FIDELITY INTERNATIONAL INVESTMENT ADVISORS
AGREEMENT made this ___ day of ____, 200_, by and between Fidelity
International Investment Advisors, a Bermuda company with principal
offices at Pembroke Hall, 00 Xxxx Xxxx, Xxxxxxxx, XX 00, Xxxxxxx
(hereinafter called the "Sub-Advisor"), and Fidelity Investments Japan
Limited, a Japanese company with principal offices at 0-0-0 Xxxxxxxx,
Xxxx-xx, Xxxxx 000-0000, Xxxxx (hereinafter called the "Japan
Sub-Advisor").
WHEREAS, Fidelity Management & Research Company, a Massachusetts
corporation (hereinafter called the "Advisor"), has entered into a
Management Contract with Variable Insurance Products Fund III, a
Massachusetts business trust which may issue one or more series of
shares of beneficial interest (hereinafter called the "Trust"), on
behalf of Japan Portfolio (hereinafter called the "Portfolio"),
pursuant to which the Advisor has agreed 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 Japan Sub-Advisor has personnel in Japan 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 Japan and the Far East;
NOW, THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the Sub-Advisor and the Japan
Sub-Advisor agree as follows:
1. DUTIES: The Sub-Advisor may, in its discretion, appoint the
Japan 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 to be advised or managed by the Japan Sub-Advisor shall be
as agreed upon from time to time by the Sub-Advisor and the Japan
Sub-Advisor. The Japan Sub-Advisor shall pay the salaries and fees of
all personnel of the Japan 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 Japan 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 Sub-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 Japan Sub-Advisor shall, subject to the supervision
of the Sub-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 the Advisor may
impose with respect to the Portfolio by notice to the Japan
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Japan 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 Japan Sub-Advisor may select. The Japan
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 Japan
Sub-Advisor shall at all times be subject to the control and direction
of the Sub-Advisor, the Advisor and the Trust's Board of Trustees.
(c) SUBSIDIARIES AND AFFILIATES: The Japan 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
Japan 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
Japan Sub-Advisor shall furnish such reports, evaluations, information
or analyses to the Trust, the Advisor and the Sub-Advisor as the
Trust's Board of Trustees, the Advisor or the Sub-Advisor may
reasonably request from time to time, or as the Japan 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 Japan
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 Japan Sub-Advisor, which may include brokers
or dealers affiliated with the Advisor, the Sub-Advisor or the Japan
Sub-Advisor. The Japan 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
Japan Sub-Advisor, the Sub-Advisor or the Advisor exercise investment
discretion. The Japan 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 Japan 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 Japan Sub-Advisor, the Sub-Advisor or the
Advisor have with respect to accounts over which they exercise
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 Sub-Advisor shall compensate the Japan
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 Japan
Sub-Advisor a monthly sub-advisory fee (the "Japan Sub-Advisory Fee").
The Japan Sub-Advisory Fee shall be equal to 105% of the Japan
Sub-Advisor's costs incurred in connection with rendering the services
referred to in subparagraph 1(a) of this Agreement. The Japan
Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Sub-Advisor or 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 Sub-Advisor
agrees to pay the Japan Sub-Advisor a monthly investment management
fee (the "Japan Investment Management Fee"). The Japan Investment
Management Fee shall be equal to a percentage of the monthly average
net assets of the Portfolio managed by the Japan 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 Japan 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 - $200 million 0.30 %
$200 million - $500 million 0.25 %
over $500 million 0.20 %
, provided that in no event shall the Japan 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 Japan Sub-Advisor
on behalf of the Sub-Advisor pursuant to a sub-advisory arrangement
where a fee cap is being applied to reduce the Japan 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 Japan 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 Japan 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 Japan
Sub-Advisor hereunder, by the Sub-Advisor under the Sub-Advisor
Agreement, 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 Japan Sub-Advisor, 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 therefor; (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, the Sub-Advisor or the Japan Sub-Advisor as directors,
officers or otherwise and that directors, officers and stockholders of
the Sub-Advisor or the Japan Sub-Advisor are or may be or become
similarly interested in the Trust, and that the Sub-Advisor, the
Advisor or the Japan 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
Japan Sub-Advisor to the Sub-Advisor are not to be deemed to be
exclusive, the Japan 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 Japan
Sub-Advisor's ability to meet all of its obligations hereunder. The
Japan Sub-Advisor shall for all purposes be an independent contractor
and not an agent or employee of the Advisor, the Sub-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 Japan Sub-Advisor, the Japan Sub-Advisor
shall not be subject to liability to the Sub-Advisor, 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, 200_ 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, the Japan 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 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, the Japan 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 Japan 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 Japan
Sub-Advisor shall not seek satisfaction of any such obligation from
the shareholders or any shareholder of the Portfolio. Nor shall the
Japan 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, all as of the date written above.
[SIGNATURE LINES OMITTED]
