Exhibit No. Ex-99.d(2)
SUB-ADVISORY AGREEMENT
BETWEEN
FMR CO., INC.
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
AGREEMENT made this 7th day of October, 2002, by and between FMR Co.,
Inc., a Massachusetts corporation with principal offices at ▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ (hereinafter called the "Sub-Advisor") and
Fidelity Management & Research Company, a Massachusetts corporation with
principal offices at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ (hereinafter
called the "Advisor").
WHEREAS the Advisor has entered into a Management Contract with The Japan
Fund, Inc. (hereinafter called the "Portfolio"), pursuant to which the Advisor
is to act as investment manager and advisor to the Portfolio, and
WHEREAS the Sub-Advisor was formed for the purpose of providing investment
management of equity and high income funds and advising generally with respect
to equity and high income instruments.
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the Advisor and the Sub-Advisor agree as follows:
1. (a) The Sub-Advisor shall, subject to the supervision of the Advisor, direct
the investments of all or such portion of the Portfolio's assets as the Advisor
shall designate in accordance with the investment objective, policies and
limitations as provided in the Portfolio's Prospectus or other governing
instruments, as amended from time to time, the Investment Company Act of 1940
and rules thereunder, as amended from time to time (the "1940 Act"), and such
other limitations as the Portfolio may impose by notice in writing to the
Advisor or Sub-Advisor. The Sub-Advisor shall also furnish for the use of the
Portfolio office space and all necessary office facilities, equipment and
personnel for servicing the investments of the Portfolio; and 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. The
Sub-Advisor is authorized, in its discretion and without prior consultation with
the Portfolio or the Advisor, to buy, sell, lend and otherwise trade in any
stocks, bonds and other securities and investment instruments on behalf of the
Portfolio. The investment policies and all other actions of the Portfolio are
and shall at all times be subject to the control and direction of the
Portfolio's Board of Directors.
(b) The Sub-Advisor shall also furnish such reports, evaluations,
information or analyses to the Portfolio and the Advisor as the Portfolio's
Board of Directors may request from time to time or as the Sub-Advisor may deem
to be desirable. The Sub-Advisor shall make recommendations to the Portfolio's
Board of Directors with respect to Portfolio policies, and shall carry out such
policies as are adopted by the Directors. The Sub-Advisor shall, subject to
review by the Board of Directors, furnish such other
services as the Sub-Advisor shall from time to time determine to be necessary or
useful to perform its obligations under this Agreement and which are not
otherwise furnished by the Advisor.
(c) 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 the other accounts
over which the Sub-Advisor, Advisor or their affiliates 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 and its affiliates 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.
2. As compensation for the services to be furnished by the Sub-Advisor
hereunder, the Advisor agrees to pay the Sub-Advisor a monthly fee equal to 50%
of the fee (including performance adjustments, if any) that the Portfolio is
obligated to pay the Advisor under the Portfolio's Advisory Agreement with the
Advisor in respect of that portion of the Portfolio's assets managed by the
Sub-Advisor during such month. Such fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from time to
time.
3. 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 as a shareholder or otherwise.
4. It is understood that the Portfolio will pay all 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.
5. 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 with respect to
rendering investment advice hereunder. The Sub-Advisor shall for all purposes be
an independent contractor and not an agent or employee of the Advisor or the
Portfolio.
6. 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.
7. (a) Subject to prior termination as provided in sub-paragraph (d) of this
paragraph 7, 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 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 interpretive releases
of, the Commission.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 7, the terms of any continuance or modification of the Agreement must
have been approved by the vote of a majority of those Directors of the Portfolio
who are not parties to such 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 Directors,
or by vote of a majority of its outstanding voting securities. This Agreement
shall terminate automatically upon the termination of the Management Contract
between the Portfolio and the Advisor. This Agreement shall terminate
automatically in the event of its assignment.
8. 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 Investment
Company Act of 1940 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.
FMR CO., INC.
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By: ▇▇ ▇▇▇▇▇▇
Title: Treasurer
FIDELITY MANAGEMENT &
RESEARCH COMPANY
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By: ▇▇ ▇▇▇▇▇▇
Title: Vice President