PHOENIX EQUITY TRUST
Phoenix Strategic Growth Fund
SUBADVISORY AGREEMENT
March 10, 2008
SCM Advisors, LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: Subadvisory
Agreement
Ladies and Gentlemen:
Phoenix Equity Trust (the "Trust") is an open-end investment
company of the series type registered under the Investment Company
Act of 1940 (the "Act"), and is subject to the rules and
regulations promulgated thereunder. The shares of the Trust are
offered or may be offered in several series, including the Phoenix
Strategic Growth Fund (hereinafter referred to as the "Fund").
Phoenix Investment Counsel, Inc. (the "Adviser") evaluates and
recommends series advisers for the Trust and is responsible for
the day-to-day management of the Fund.
1. Employment as a Subadviser. The Adviser, being duly
authorized, hereby employs SCM Advisors, LLC (the
"Subadviser") as a subadviser to invest and reinvest the
assets of the Fund on the terms and conditions set forth
herein. The services of the Subadviser hereunder are not to
be deemed exclusive; the Subadviser may render services to
others and engage in other activities which do not conflict
in any material manner in the Subadviser's performance
hereunder.
2. Acceptance of Employment; Standard of Performance. The
Subadviser accepts its employment as a subadviser to the
Adviser and agrees to use its best professional judgment to
make investment decisions for the Trust in accordance with
the provisions of this Agreement.
3. Services of Subadviser. The Subadviser shall provide the
services set forth herein and in Schedule A attached hereto
and made a part hereof. In providing management services to
the Fund, the Subadviser shall be subject to the investment
objectives, policies and restrictions of the Trust as they
apply to the Fund and as set forth in the Trust's then
current Prospectus and Statement of Additional Information
(as the same may be modified from time to time) and to the
Trust's Agreement and Declaration of Trust, to the
investment and other restrictions set forth in the Act, the
Securities Act of 1933 and the Internal Revenue Code and the
rules and regulations thereunder, and to the supervision and
control of the Trustees of the Trust (the "Trustees"). The
Subadviser shall not, without the Adviser's prior approval,
effect any transactions which would cause the Trust at the
time of the transaction to be out of compliance with any of
such restrictions or policies.
4. Expenses. The Subadviser shall furnish at its own expense,
or pay the expenses of the Adviser, for the following:
(a) Office facilities, including office space, furniture
and equipment utilized by its employees, in the
fulfillment of Subadviser' s responsibilities
hereunder;
(b) Personnel necessary to perform the functions required
to manage the investment and reinvestment of the
Trust's assets (including those required for
research, statistical and investment work), and to
fulfill the other functions of the Subadviser
hereunder;
(c) Personnel to serve without salaries for the Trust as
officers or agents of the Trust. The Subadviser need
not provide personnel to perform, or pay the
expenses of the Adviser for, services customarily
performed for an open-end management investment
company by its national distributor, custodian,
financial agent, transfer agent, auditors and legal
counsel; and
(d) Compensation and expenses, if any, of the Trustees
who are also full-time employees of the Subadviser.
5. Transaction Procedures. All transactions for the Fund will
be consummated by payment to, or delivery by, the
Custodian(s) from time to time designated by the Trust (the
"Custodian"), or such depositories or agents as may be
designated by the Custodian pursuant to its agreement with
the Trust (the "Custodian Agreement"), of all cash and/or
securities due to or from the Fund. The Subadviser shall not
have possession or custody of such cash and/or securities or
any responsibility or liability with respect to such custody.
The Subadviser shall advise the Custodian and confirm in
writing to the Trust all investment orders for the Fund
placed by it with brokers and dealers at the time and in the
manner set forth in the Custodian Agreement and in Schedule B
hereto (as amended from time to time). The Trust shall issue
to the Custodian such instructions as may be appropriate in
connection with the settlement of any transaction initiated
by the Subadviser. The Trust shall be responsible for all
custodial arrangements and the payment of all custodial
charges and fees, and, upon giving proper instructions to the
Custodian, the Subadviser shall have no responsibility or
liability with respect to custodial arrangements or the acts,
omissions or other conduct of the Custodian.
6. Allocation of Brokerage. The Subadviser shall have
authority and discretion to select brokers and dealers to
execute Fund transactions initiated by the Subadviser, and to
select the markets on or in which the transactions will be
executed.
A. In placing orders for the sale and purchase of
securities for the Fund, the Subadviser's primary
responsibility shall be to seek the best execution of orders
at the most favorable prices. However, this responsibility
shall not obligate the Subadviser to solicit competitive bids
for each transaction or to seek the lowest available
commission cost to the Trust, so long as the Subadviser
reasonably believes that the broker or dealer selected by it
can be expected to obtain "best execution" on the particular
transaction and determines in good faith that the commission
cost is reasonable in relation to the value of the brokerage
and research services (as defined in Section 28(e)(3) of the
Securities Exchange Act of 1934) provided by such broker or
dealer to the Subadviser, viewed in terms of either that
particular transaction or of the Subadviser's overall
responsibilities with respect to its clients, including the
Trust, as to which the Subadviser exercises investment
discretion, notwithstanding that the Trust may not be the
direct or exclusive beneficiary of any such services or that
another broker may be willing to charge the Trust a lower
commission on the particular transaction.
B. Subject to the requirements of paragraph A above, the
Adviser shall have the right to require that transactions
giving rise to brokerage commissions, in an amount to be
agreed upon by the Adviser and the Subadviser, shall be
executed by brokers and dealers that provide brokerage or
research services to the Trust or that will be of value to
the Trust in the management of its assets, which services and
relationship may, but need not, be of direct or exclusive
benefit to the Trust. In addition, subject to paragraph A
above, the applicable Conduct Rules of the National
Association of Securities Dealers, Inc. and other applicable
law, the Trust shall have the right to request that
transactions be executed by brokers and dealers by or through
whom sales of shares of the Trust are made.
C. The Subadviser shall not execute any transactions for
the Trust with a broker or dealer that is an "affiliated
person" (as defined in the Act) of the Trust, the Subadviser
or the Adviser without the prior written approval of the
Trust.
7. Fees for Services. The compensation of the Subadviser for
its services under this Agreement shall be calculated and
paid by the Adviser in accordance with the attached Schedule
C. Pursuant to the Investment Advisory Agreement between the
Trust and the Adviser, the Adviser is solely responsible for
the payment of fees to the Subadviser.
8. Limitation of Liability. The Subadviser shall not be liable
for any action taken, omitted or suffered to be taken by it
in its best professional judgment, in good faith and believed
by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement, or in accordance
with specific directions or instructions from the Trust,
provided, however, that such acts or omissions shall not have
constituted a breach of the investment objectives, policies
and restrictions applicable to the Trust and that such acts
or omissions shall not have resulted from the Subadviser's
willful misfeasance, bad faith or gross negligence, a
violation of the standard of care established by and
applicable to the Subadviser in its actions under this
Agreement or a breach of its duty or of its obligations
hereunder (provided, however, that the foregoing shall not be
construed to protect the Subadviser from liability under the
Act, other federal or state securities laws or common law).
9. Confidentiality. Subject to the duty of the Subadviser to
comply with applicable law, including any demand of any
regulatory or taxing authority having jurisdiction, the
parties hereto shall treat as confidential all information
pertaining to the Fund and the actions of the Subadviser and
the trust in respect thereof.
10. Assignment. This Agreement shall terminate automatically
in the event of its assignment, as that term is defined in
Section 2(a)(4) of the Act. The Subadviser shall notify the
Adviser in writing sufficiently in advance of any proposed
change of control, as termed in Section 2(a)(9) of the Act,
as will enable the Adviser to consider whether an assignment
as defined in Section 2(a)(4) of the Act will occur and to
take the steps it deems necessary.
11. Representations, Warranties and Agreements of the
Subadviser. The Subadviser represents, warrants and agrees
that:
A. It is registered as an "investment adviser" under
the Investment Advisers Act of 1940 ("Advisers Act").
B. It will maintain, keep current and preserve on
behalf of the Trust, in the manner required or permitted
by the Act and the Rules thereunder, the records
identified in Schedule D (as amended from time to time).
The Subadviser agrees that such records are the property
of the Trust, and will be surrendered to the Trust or to
the Adviser as agent of the Trust promptly upon request
of either.
C. It has a written code of ethics complying with the
requirements of Rule 17j-1 under the Act and will
provide the Adviser with a copy of the code of ethics
and evidence of its adoption. Subadviser acknowledges
receipt of the written code of ethics adopted by and on
behalf of the Trust (the "Code of Ethics"). Within 10
days of the end of each calendar quarter while this
Agreement is in effect, a duly authorized compliance
officer of the Subadviser shall certify to the Trust and
to the Adviser that the Subadviser has complied with the
requirements of Rule 17j-1 during the previous calendar
quarter and that there has been no violation of its code
of ethics, or the Code of Ethics, or if such a violation
has occurred, that appropriate action was taken in
response to such violation. The Subadviser shall permit
the Trust and Adviser to examine the reports required to
be made by the Subadviser under Rule 17j-l(c)(1) and
this subparagraph.
D. It has adopted and implemented, and throughout the
term of this Agreement shall maintain in effect and
implement, policies and procedures reasonably designed
to prevent, detect and correct violations by the
Subadviser and its supervised persons, and, to the
extent the activities of the Subadviser in respect to
the Fund could affect the Fund, by the Fund, of "federal
securities laws" (as defined in Rule 38a-1 under the
Act), and that the Subadviser has provided the Fund with
true and complete copies of its policies and procedures
(or summaries thereof) and related information
reasonably requested by the Fund. The Subadviser agrees
to cooperate with periodic reviews by the Fund's
compliance personnel of the Subadviser's policies and
procedures, their operation and implementation and other
compliance matters and to provide to the Fund from time
to time such additional information and certifications
in respect of the Subadviser's policies and procedures,
compliance by the Subadviser with federal securities
laws and related matters and the Fund's compliance
personnel may reasonably request. The Subadviser agrees
to promptly notify the Adviser of any compliance
violations which affect the Designated Series.
E. Reference is hereby made to the Declaration of Trust
establishing the Trust, a copy of which has been
filed with the Secretary of the State of Delaware
and elsewhere as required by law, and to any and all
amendments thereto so filed or hereafter so filed
with the Secretary of the State of Delaware and
elsewhere as required by law. The name Phoenix
Equity Trust Fund refers to the Trustees under said
Declaration of Trust, as Trustees and not
personally, and no Trustee, shareholder, officer
agent or employee of the Trust shall be held to any
personal liability in connection with the affairs of
the Trust; only the trust estate under said
Declaration of Trust is liable. Without limiting
the generality of the foregoing, neither the
Subadviser nor any of its officers, directors,
partners, shareholders or employees shall, under any
circumstances, have recourse or cause or willingly
permit recourse to be had directly or indirectly to
any personal, statutory, or other liability of any
shareholder, Trustee, officer, agent or employee of
the Trust or of any successor of the Trust, whether
such liability now exists or is hereafter incurred
for claims against the trust estate.
12. Amendment. This Agreement may be amended at any time,
but only by written agreement between the Subadviser and
the Adviser, which amendment, other than amendments to
Schedules B and D, is subject to the approval of the
Trustees and the Shareholders of the Trust as and to the
extent required by the Act.
13. Effective Date; Term. This Agreement shall become
effective on the date set forth on the first page of this
Agreement. Unless terminated as hereinafter provided,
this Agreement shall remain in full force and effect
until December 31, 2008, and thereafter only so long as
its continuance has been specifically approved at least
annually by the Trustees in accordance with Section 15(a)
of the Act, and by the majority vote of the disinterested
Trustees in accordance with the requirements of Section
15(c) thereof.
14. Termination. This Agreement may be terminated by either
party, without penalty, immediately upon written notice
to the other party in the event of a breach of any
provision thereof by the party so notified, or
otherwise, upon sixty (60) days' written notice to the
other party, but any such termination shall not affect
the status, obligations or liabilities of either party
hereto to the other party.
15. Applicable Law. To the extent that state law is not
preempted by the provisions of any law of the United
States heretofore or hereafter enacted, as the same may
be amended from time to time, this Agreement shall be
administered, construed and enforced according to the
laws of the State of Delaware.
16. Severability. If any term or condition of this Agreement
shall be invalid or unenforceable to any extent or in any
application, then the remainder of this Agreement shall not
be affected thereby, and each and every term and condition of
this Agreement shall be valid and enforced to the fullest
extent permitted by law.
17. Proxies. The subadviser shall review all proxy solicitation
materials and be responsible for voting and handling all
proxies in relation to the Assets in accordance with such
policies and procedures adopted or approved from time to time
by the Trust. Unless the Adviser or the Trust gives the
Subadviser written instructions to the contrary, the
Subadviser will, in compliance with the proxy voting
procedures of the Trust then in effect, vote or abstain from
voting, all proxies solicited by or with respect to the
issuers of securities in which assets of the Fund may be
invested. The Adviser shall cause the Custodian to forward
promptly to the Subadviser all proxies upon receipt, so as to
afford the Subadviser a reasonable amount of time in which to
determine how to vote such proxies. The Subadviser agrees to
provide the Adviser with quarterly proxy voting reports in
such form as the Adviser may request from time to time.
18. Prohibited Conduct. In providing the services described
in this Agreement, the Subadviser will not consult with any
other investment advisory firm that provides investment
advisory services to any investment company sponsored by
Phoenix Investment Partners, Ltd. Regarding transactions for
the Fund in securities or other assets. The Fund shall
provide the Subadviser with a list of investment companies
sponsored by Phoenix and the Subadviser shall be in breach of
the foregoing provision only if the investment company is
included in such a list provided to the Subadviser prior to
such prohibited action. In addition, the Subadviser shall
not, without the prior written consent of the Fund and the
Adviser, delegate any obligation assumed pursuant to this
Agreement to any affiliated or unaffiliated third party.
[signature page follows]
PHOENIX STRATEGIC EQUITY SERIES FUND
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
PHOENIX INVESTMENT COUNSEL, INC.
By: /s/Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Vice President and Clerk
ACCEPTED:
SCM Advisors, LLC
By: /s/Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
SCHEDULES: A. Subadviser Functions
B. Operational Procedures
C. Fee Schedule
D. Record Keeping Requirements
E. Form of Sub-Certification
SCHEDULE A
SUBADVISER FUNCTIONS
With respect to managing the investment and reinvestment of
the Fund assets, the Subadviser shall provide, at its own expense:
(a) An investment program for the Fund consistent with its
investment objectives based upon the development, review
and adjustment of buy/sell strategies approved from time
to time by the Board of Trustees and Adviser;
(b) Implementation of the investment program for the Fund
based upon the foregoing criteria;
(c) Quarterly reports, in form and substance acceptable to
the Adviser, with respect to: i) compliance with the
Code of Ethics and the Subadviser's code of ethics; ii)
compliance with procedures adopted from time to time by
the Trustees of the Trust relative to securities
eligible for resale under Rule 144A under the Securities
Act of 1933, as amended; iii) diversification of Fund
assets in accordance with the then prevailing prospectus
and statement of additional information pertaining to
the Trust and governing laws; iv) compliance with
governing restrictions relating to the fair valuation of
securities for which market quotations are not readily
available or considered "illiquid" for the purposes of
complying with the Fund limitation on acquisition of
illiquid securities; v) any and all other reports
reasonably requested in accordance with or described in
this Agreement; and, vi) the implementation of the
Fund's investment program, including, without
limitation, analysis of Fund performance;
(d) Attendance by appropriate representatives of the
Subadviser at meetings requested by the Adviser or
Trustees at such time(s) and location(s) as reasonably
requested by the Adviser or Trustees; and
(e) Participation, overall assistance and support in
marketing the Fund, including, without limitation,
meetings with pension fund representatives,
broker/dealers who have a sales agreement with Phoenix
Equity Planning Corporation, and other parties requested
by the Adviser.
8
[Page Break]
SCHEDULE B
OPERATIONAL PROCEDURES
In order to minimize operational problems, it will be necessary
for a flow of information to be supplied to State Street Bank and
Trust Company (the "Custodian"), the custodian for the Trust.
The Subadviser must furnish the Custodian with daily information
as to executed trades, or, if no trades are executed, with a
report to that effect, no later than 5 p.m. (Eastern Standard
time) on the day of the trade (confirmation received from broker).
The necessary information can be sent via facsimile machine to the
Custodian. Information provided to the Custodian shall include the
following:
1. Purchase or sale;
2. Security name;
3. CUSIP number (if applicable);
4. Number of shares and sales price per share;
5. Executing broker;
6. Settlement agent;
7. Trade date;
8. Settlement date;
9. Aggregate commission or if a net trade;
10. Interest purchased or sold from interest bearing security;
11. Other fees;
12. Net proceeds of the transaction;
13. Exchange where trade was executed; and
14. Identified tax lot (if applicable).
When opening accounts with brokers for, and in the name of, the
Trust, the account must be a cash account. No margin accounts are
to be maintained in the name of the Trust. Delivery instructions
are as specified by the Custodian. The Custodian will supply the
Subadviser daily with a cash availability report. This will
normally be done by telex so that the Subadviser will know the
amount available for investment purposes.
[Page Break]
SCHEDULE C
SUBADVISORY FEE
(a) For Services provided to the Trust pursuant to paragraph
3 hereof the Adviser will pay to the Subadviser, a fee, payable in
arrears, at the following annual rates. The fees shall be
prorated for any month during which this Agreement is in effect
for only a portion of the month. In computing the fee to be paid
to the Subadviser, the net asset value of the Trust and each Fund
shall be valued as set forth in the then current registration
statement of the Trust.
(b) The fee to be paid to the Subadviser is: 50% of the
gross advisory fee.
SCHEDULE D
RECORDS TO BE MAINTAINED BY THE SUBADVISER
1. (Rule 3 la-l (b)(5)) A record of each brokerage order, and
all other purchases and sales, given by the Subadviser on
behalf of the Trust for, or in connection with, the purchase
or sale of securities, whether executed or unexecuted. Such
records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any
modifications or cancellations thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf
of the Trust.
2. (Rule 31a-l(b)(9)) A record for each fiscal quarter,
completed within ten (10) days after the end of the quarter,
showing specifically the basis or bases upon which the
allocation of orders for the purchase and sale of Trust
securities to named broker or dealers was effected, and the
division of brokerage commissions or other compensation on
such purchase and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Trust by brokers or
dealers.
(ii) The supplying of services or benefits by brokers or
dealers to:
(a) The Trust,
(b) The Adviser (phoenix Investment Counsel, Inc.)
(c) The Subadviser, and
(d) Any person other than the foregoing.
(iii) Any other consideration other than the
technical qualifications of the brokers and
dealers as such.
B. Shall show the nature of the services or benefits made
available.
C. Shall describe in detail the application of any general
or specific formula or other determinant used in arriving
at such allocation of purchase and sale orders and such
division of brokerage commissions or other compensation.
D. The name of the person responsible for making the
determination of such allocation and such division of
brokerage commissions or other compensation.
3. (Rule 31a-(b)(10)) A record in the form of an appropriate
memorandum identifying the person or persons, committees or
groups authorizing the purchase or sale of series securities.
Where an authorization is made by a committee or group, a
record shall be kept of the names of its members who
participate in the authorization. There shall be retained as
part of this record: any memorandum, recommendation or
instruction supporting or authorizing the purchase or sale of
series securities and such other information as is
appropriate to support the authorization. *
4. (Rule 31a-l(f)) Such accounts, books and other documents as
are required to be maintained by registered investment advisers by
rule adopted under Section 204 of the Investment Advisers Act of
1940, to the extent such records are necessary or appropriate to
record the Subadviser's transactions for the Trust.
* Such information might include: current financial information,
annual and quarterly reports, press releases, reports by analysts
and from brokerage firms (including their recommendation; i.e.,
buy, sell, hold) or any internal reports or subadviser review.
