Exhibit No. Ex-99.d(5)
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
AGREEMENT made this 7th day of October, 2002 by and between Fidelity
Management & Research Company, a Massachusetts corporation with principal
offices at 00 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx (hereinafter called the
"Advisor") and Fidelity Management & Research (Far East) Inc. (hereinafter
called the "Sub-Advisor").
WHEREAS The Japan Fund, Inc. and the Advisor have entered into a Advisory
Agreement pursuant to which the Advisor is to act as investment advisor 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 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
Portfolio 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 Portfolio's Board of Directors.
(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 Portfolio to the
extent required pursuant to the 1940 Act and rules thereunder.
2. Information to be Provided to the Portfolio and the Advisor: The Sub-Advisor
shall furnish such reports, evaluations, information or analyses to the
Portfolio and the Advisor as the Portfolio's Board of Directors 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 1934) 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 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 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 fee rate (including performance adjustments, if
any) that the Portfolio is obligated to pay the Advisor under its Advisory
Agreement 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 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 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 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 Advisory Agreement with the Portfolio.
6. Interested Persons: It is understood that Directors, officers, and
shareholders of the Portfolio 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 Portfolio, and that the Advisor or the
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 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
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 Sub-Advisor, the Sub-Advisor shall not be subject to liability to 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 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 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 or the Sub-Advisor 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 MANAGEMENT & RESEARCH COMPANY
--------------------------
By: XX Xxxxxx
Title: Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
(Far East) INC.
--------------------------
By: XX Xxxxxx
Title: Treasurer
