EXHIBIT 5.7
FORM OF SUBADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT
The Phoenix Edge Series Fund
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________________________ 1997
X.X. Xxxxxx Investment Management Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sir or Madam:
The Phoenix Edge Series Fund (the "Trust") a diversified open-end
investment company of the series type registered under the Investment Company
Act of 1940, as amended (the "Act") and a business trust organized under the
laws of the Commonwealth of Massachusetts, and Phoenix Investment Counsel, Inc.,
a Massachusetts corporation (the "Adviser"), hereby agree with X.X. Xxxxxx
Investment Management Inc., a Delaware corporation (the "Sub-Adviser") as
follows:
1. INVESTMENT DESCRIPTION: APPOINTMENT. The Trust desires to employ the
capital of the Trust's Research Enhanced Index Series (the "Fund") by investing
and reinvesting in investments of the kind and in accordance with the
limitations specified in its Declaration of Trust, as amended to date (the
"Trust Declaration"), and in the prospectus (the "Prospectus") and the statement
of additional information (the "Statement") filed with the Securities and
Exchange Commission as part of the Trust's Registration Statement on Form N-IA,
as amended from time to time, and in such manner and to such extent as from time
to time may be approved by the Trust's Board of Trustees (the "Board"). Copies
of the Prospectus, the Statement and the Trust Declaration, each as currently in
effect, have been delivered to the Sub-Adviser. The Trust agrees, on an ongoing
basis, to provide to the Sub-Adviser as promptly as practicable copies of all
amendments and supplements to the Prospectus and the Statement and amendments to
the Trust Declaration. The Trust desires to engage and hereby appoints the
Sub-Adviser to act as a discretionary investment sub-adviser to the Fund. The
Sub-Adviser accepts the appointment and agrees to furnish the services described
herein for the compensation set forth below.
2. SERVICES AS INVESTMENT SUB-ADVISER GUIDELINES AND ADVICE. Subject to
the supervision of the Trust's Board and of the Adviser, the Sub-Adviser will
(a) manage the Fund's assets in accordance with the Fund's investment
objective(s) and policies stated in the Prospectus, Statement, Trust Declaration
and Act, but subject to the Guidelines (as such term is defined below); (b) make
investment decisions for the Fund; (c) place purchase and sale orders for
portfolio transactions for the Fund; and (d) employ professional portfolio
managers and securities analysts to provide research services to the Fund. In
providing these
services, the Sub-Adviser will conduct a continual program of investment,
evaluation and, if appropriate, sale and reinvestment of the Fund's assets.
The Adviser agrees on an on-going basis to provide or cause to be provided to
the Sub-Adviser guidelines, to be revised as provided below (the "Guidelines"),
setting forth limitations, by dollar amount or percentage of net assets, on the
types of securities in which the Fund is permitted to invest or investment
activities in which the Fund is permitted to engage. Among other matters, the
Guidelines shall set forth clearly the limitations imposed upon the Fund as a
result of relevant diversification requirements under state and federal law
pertaining to insurance products, including, without limitation, the provisions
of Section 817(h) of the Internal Revenue Code of 1986, as amended (the "Code").
The Guidelines shall remain in effect until 12:00 p.m. on the third business day
following actual receipt by the Sub-Adviser of a written notice, denominated
clearly as such, setting forth revised Guidelines. The Adviser agrees to cause
to be delivered to a person designated in writing for such purpose by the
Sub-Adviser each day, by __p.m., New York time, a written report dated the date
of its delivery (the "Report") with respect to the Funds' compliance for its
current fiscal year with the short-three test set forth in Section 851(b) (3) of
the Code (the "short-three test"). The Report shall include in chart form the
Fund's gross income (within the meaning of Section 851 of the Code) from the
beginning of the current fiscal year to the date of the Report and its
cumulative income and gains described in Section 851(b) (3) of the Code for such
period. If the Report is not timely delivered, the Sub-Adviser shall be
permitted to rely on the most recent Report delivered to it. The Trust and the
Adviser agree that the Sub-Adviser may rely on the Guidelines and the Report
without independent verification of their accuracy.
3. 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 in writing, of all cash and/or securities due to
or from the Fund. The Sub-Adviser shall not have possession or custody of such
cash and/or securities or any responsibility or liability with respect to such
custody. The Sub-Adviser shall advise the Custodian and confirm in writing to
the Trust all investment orders for the Fund placed by it with brokers and
dealers. The Trust shall issue to the Custodian such instructions as may be
appropriate in connection with the settlement of any transaction initiated by
the Sub-Adviser. 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 Sub-Adviser shall have no responsibility or
liability with respect to custodial arrangements or the act, omissions or other
conduct of the Custodian.
4. BROKERAGE. In selecting brokers or dealers to execute transactions
on behalf of the Fund, the Sub-Adviser will seek the best overall terms
available. In assessing the best overall terms available for any transaction,
the Sub-Adviser will consider factors it deems relevant, including, without
limitation, the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer and the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis. In selecting brokers or dealers to
execute a particular transaction, and in evaluating the best overall terms
available, the Sub-Adviser is authorized to consider the brokerage and research
services (within the meaning of Section 28(e) of the Securities Exchange Act of
1934, as amended) provided to the Fund and/or other accounts over which the
Sub-Adviser or its affiliates exercise investment discretion. Subject to
governing law, the Trust shall have the right to request that Fund transactions
be executed by brokers and dealers by or through whom sales of Phoenix
investment/insurance products are made.
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5. INFORMATION PROVIDED TO THE TRUST. The Sub-Adviser will keep the
Trust and the Adviser informed of developments materially affecting the Fund,
and will, on its own initiative, furnish the Trust and the Adviser from time to
time with whatever information the Sub-Adviser believes is appropriate for this
purpose.
6. STANDARD OF CARE. The Sub-Adviser shall exercise its best judgment
in rendering the services described in paragraphs 2, 3 and 4 above. The
Sub-Adviser shall not be liable for any error of judgment or mistake of law or
for any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement
(each such act or omission shall be referred to as "Disqualifying Conduct"). The
Sub-Adviser shall not be deemed to have engaged in Disqualifying Conduct if it
complies with the Guidelines and acts in reliance on the Report, and the
Sub-Adviser's failure to act in accordance therewith shall not constitute
evidence that it engaged in Disqualifying Conduct.
7. PROXIES. The Trust, or the Adviser as its authorized agent, will
vote all proxies solicited by or with respect to the issuers of securities in
which assets of the Fund may be invested. At the request of the Trust, the
Sub-Adviser shall provide the Trust with its recommendations as to the voting of
particular proxies.
8. COMPENSATION. In consideration of the services rendered pursuant to
this Agreement, the Adviser will pay the Sub-Adviser on or before the 10th day
of each month a fee for the previous month at the annual rates set forth in
Schedule A hereto of each of the Fund's average daily net assets. The fee for
the period from the [date the initial public sale of the Fund's shares
commences] to the end of the month during which such sale shall have been
commenced shall be prorated according to the proportion that such period bears
to the full monthly period. Upon any termination of this Agreement before the
end of a month, the fee for such part of that month shall be prorated according
to the proportion that such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement. For the purpose of
determining fees payable to the Sub-Adviser, the value of the Fund's net assets
shall be computed at the times and in the manner specified in the Prospectus
and/or the Statement.
9. EXPENSES. The Sub-Adviser will bear all of its expenses in
connection with the performance of its services under this Agreement. All other
expenses to be incurred in the operation of the Fund will be borne by the Trust,
except to the extent specifically assumed by the Sub-Adviser. The expenses to be
borne by the Trust include, without limitation, the following: organizational
costs, taxes, interest, brokerage fees and commissions, Trustee's fees,
Securities and Exchange Commission fees and state Blue Sky qualification fees,
advisory fees, charges of custodians, transfer and dividend disbursing agents'
fees, certain insurance premiums, industry association fees, outside auditing
and legal expenses, costs of independent pricing services, costs of maintaining
existence, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing stockholders, costs of stockholders' reports
and meetings, and any extraordinary expenses.
10. SERVICES TO OTHER COMPANIES OR ACCOUNTS. The Trust understands that
the Sub-Adviser now acts, will continue to act and may act in the future as
investment adviser to fiduciary and other
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managed accounts and as investment adviser to other investment companies, and
the Trust has no objection to the Sub-Adviser so acting, provided that whenever
the Fund and one or more other accounts or investment companies advised by the
Sub-Adviser have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a methodology believed
to be equitable to each entity. The Sub-Adviser agrees to allocate similarly
opportunities to sell securities. The Trust recognizes that, in some cases, this
procedure may limit the size of the position that may be acquired or sold for
the Fund. In addition, the Trust understands that the persons employed by the
Sub-Adviser to assist in the performance of the Sub-Adviser's duties hereunder
will not devote their full time to such service and nothing contained herein
shall be deemed to limit or restrict the right of the Sub-Adviser of any
affiliate of the Sub-Adviser to engage in and devote time and attention to other
business or to render services of whatever kind or nature. To the extent
permitted by law, the Sub-Adviser may bunch or aggregate its orders for the Fund
with orders of its other clients, provided that no other clients whose orders
are aggregated with orders of the Fund shall receive an effective purchase price
lower, or an effective sale price higher, than the Fund with respect to such
aggregate orders.
11. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the Act, the Sub-Adviser hereby agrees that all records which it
maintains for the Fund are the property of the Trust and further agrees to
surrender promptly to the Trust copies of any of such records upon the Fund's or
the Adviser's request. The Sub-Adviser further agrees to preserve for the
periods prescribed by Rule 3 1a-2 under the Act the records relating to its
activities hereunder required to be maintained by Rule 31a-1 under the Act and
to preserve the records relating to its activities hereunder required by Rule
204-2 under the Investment Advisers Act of 1940, as amended, for the period
specified in said Rules.
12. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE SUB-ADVISER. The
Sub-Adviser 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 Fund,
in the manner required or permitted by the Act and the Rules
thereunder, the records identified hereunder. The Sub-Adviser agrees
that such records are the property of the Trust, and will be
surrendered to the Trust or to Adviser as agent of the Trust promptly
upon request of either.
C. It has or shall adopt a written code of ethics complying with the
requirements of Rule 17j-1 under the Act and will provide the Trust and
Adviser with a copy of the code of ethics and evidence of its adoption.
Sub-Adviser 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 Sub-Adviser shall certify to
the Fund and to Adviser that the Sub-Adviser 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 Sub-Adviser shall permit
the Trust and Adviser to examine the reports requiring to be made by
the Sub-Adviser under Rule 17j-1(c)(1) and this subparagraph.
D. Reference is hereby made to the Declaration of Trust dated
February 18, 1986, establishing the Trust, a copy of which has been
filed with the Secretary of the Commonwealth of
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Massachusetts and elsewhere as required by law, and to any and all amendments
thereto so filed with the Secretary of the Commonwealth of Massachusetts and
elsewhere as required by law, and to any and all amendments thereto so filed or
hereafter filed. The name The Phoenix Edge Series 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. Without limiting
the generality of the foregoing, neither the Sub-Adviser 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, policyholder, certificateholder, trustee, officer, agent or
employee of the Trust or of any successor thereof, whether such liability now
exists or is hereafter incurred for claims against the trust estate.
13. TERM OF AGREEMENT. This Agreement shall become effective as of
________ 1997 and shall continue until ________ 1999, and thereafter shall
continue automatically for successive annual periods ending on ___________ of
each year, provided such continuance is specifically approved at least annually
by (i) the Trust's Board or (ii) a vote of "majority" (as defined in the Act) of
the Fund's outstanding voting securities, provided that in either event the
continuance also is approved by a majority of the Trust's Board who are not
"interested persons" (as defined in the Act) of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, on 30 days' written
notice, by the Adviser, by the Trust's Board, by vote of holders of a majority
of the Fund's shares or by the Sub-Adviser, and will terminate five business
days after the Sub-Adviser receives written notice of the termination of the
advisory agreement between the Trust and the Adviser. This Agreement also will
terminate automatically in the event of its assignment (as defined in the Act).
14. INDEMNIFICATION. The Adviser agrees to indemnify and hold harmless
the Sub-Adviser from and against any and all claims, losses, liabilities or
damages (including reasonable attorneys' fees and other related expenses),
howsoever arising, from or in connection with this Agreement or the performance
by the Sub-Adviser of its duties hereunder; provided, however, that nothing
contained herein shall require that the Sub-Adviser be indemnified for
Disqualifying Conduct.
15. DISCLOSURE. Neither the Trust nor the Adviser shall, without the
prior written consent of the Sub-Adviser, make representations regarding or
reference to the Sub-Adviser or any affiliates in any disclosure document,
advertisement, sales literature or other promotional materials.
16. MISCELLANEOUS. All notices provided for by this Agreement shall be
in writing and shall be deemed given when received, against appropriate receipt,
by ______________ in the case of the Sub-nAdviser, ____________ in the case of
the Adviser, and the Fund's Secretary in the case of the Fund, or such other
person as a xxxxx shall designate by notice to the other parties. No provision
of this Agreement may be changed, waived, discharged or terminated orally, but
only by an instrument of writing signed by the party against which enforcement
of the change, waiver, discharge or termination is sought. This Agreement
constitutes the entire agreement among the parties hereto and supersedes any
prior agreement among the parties relating to the subject matter hereof. The
paragraph headings of this Agreement are for convenience of reference and do not
constitute a part hereof. This Agreement shall be governed in accordance with
the internal laws of the Commonwealth of Massachusetts, without giving effect to
principles of conflict of laws.
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If the foregoing accurately sets forth our agreement, kindly indicate
your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
THE PHOENIX EDGE SERIES FUND
By:___________________________________
Name:_________________________________
Title:________________________________
PHOENIX INVESTMENT COUNSEL, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
Accepted:
X.X. Xxxxxx Investment Management Inc.
By:_____________________________
Name: __________________________
Title: _________________________
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SCHEDULE A
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FEE
(AS A PERCENTAGE OF AVERAGE
DAILY NET ASSETS OF THE FUND)
SUB-ADVISER FUND(S) -----------------------------
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X.X Xxxxxx Investment Research Enhanced Index .25%- first $100 Million
Management Inc. .20%- excess of $100 Million
