Exhibit 5.7
Form of Subadvisory Agreement
THE PHOENIX EDGE SERIES FUND
SUBADVISORY AGREEMENT
---------------------
November 19, 1997
Duff & Xxxxxx Investment Management Co.
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx
RE: Subadvisory Agreement
Gentlemen:
The Phoenix Edge Series Fund (the "Fund") is a diversified 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 Fund are offered or may be offered in several series,
including the Real Estate Securities Series (the "Series").
Phoenix Realty Securities, Inc. (the "Adviser") evaluates and recommends series
advisers for the Series and is responsible for the day-to-day management of the
Series.
1. Employment as a Subadviser. The Adviser, being duly authorized, hereby
employs Duff & Xxxxxx Investment Management Co. (the "Subadviser") as a
discretionary series adviser to invest and reinvest the assets of the
Series 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 discretionary series adviser of the Series and agrees
to use its best professional judgment to make investment decisions for the
Series in accordance with the provisions of this Agreement and as set forth
in Schedule D attached hereto and made a part hereof.
3. Services of Subadviser. In providing management services to the Series, the
Subadviser shall be subject to the investment objectives, policies and
restrictions of the Fund as they apply to the Series and as set forth in
the Fund's then current Prospectus and Statement of Additional Information
(as
2
the same may be modified from time to time and provided to the Subadviser
by Adviser), and to the investment restrictions set forth in the Act and
the Rules thereunder, to the supervision and control of the Trustees of the
Fund (the "Trustees"), and to instructions from the Adviser. The Subadviser
shall not, without the Fund's prior approval, effect any transactions which
would cause the Series at the time of the transaction to be out of
compliance with any of such restrictions or policies.
4. Transaction Procedures. All series transactions for the Series will be
consummated by payment to, or delivery by, the Custodian(s) from time to
time designated by the Fund (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 Series. 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 Fund all investment orders for the
Series placed by it with brokers and dealers at the time and in the manner
set forth in Schedule A hereto (as amended from time to time). The Fund
shall issue to the Custodian such instructions as may be appropriate in
connection with the settlement of any transaction initiated by the
Subadviser. The Fund 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 act, omissions
or other conduct of the Custodian.
5. Allocation of Brokerage. The Subadviser shall have authority and discretion
to select brokers and dealers to execute Series 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 Series 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 Fund, so long as the Subadviser reasonably believes that the broker
or dealer selected by it can be expected to obtain a "best execution"
market price 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
3
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 Fund, as to which the Subadviser
exercises investment discretion, notwithstanding that the Fund may not be
the direct or exclusive beneficiary of any such services or that another
broker may be willing to charge the Fund 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 Fund or that will be of value to the Fund in
the management of its assets, which services and relationship may, but need
not, be of direct benefit to the Series. In addition, subject to paragraph
A above and the applicable Conduct Rules of the National Association of
Securities Dealers, Inc., the Fund shall have the right to request that
series transactions be executed by brokers and dealers by or through whom
sales of shares of the Fund are made.
C. The Subadviser shall not execute any Series transactions for the
Series with a broker or dealer that is an "affiliated person" (as defined
in the Act) of the Fund, the Subadviser or the Adviser without the prior
written approval of the Fund. The Fund will provide the Subadviser with a
list of brokers and dealers that are "affiliated persons" of the Fund or
Adviser.
6. Proxies. The Fund, 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 Series may be invested. At the request of the Fund, the
Subadviser shall provide the Fund with its recommendations as to the voting
of particular proxies.
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 Fund 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
4
powers conferred upon it by this Agreement, or in accordance with specific
directions or instructions from the Fund, provided, however, that such acts
or omissions shall not have constituted a breach of the investment
objectives, policies and restrictions applicable to the Series 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).
9. Confidentiality. Subject to the duty of the Subadviser and the Fund 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 Series and the actions of
the Subadviser and the Fund 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 Fund in writing sufficiently in advance of any
proposed change of control, as defined in Section 2(a)(9) of the Act, as
will enable the Fund to consider whether an assignment as defined in
Section 2(a)(4) of the Act will occur, and to take the steps necessary to
enter into a new contract with the Subadviser.
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
Fund, in the manner required or permitted by the Act and the Rules
thereunder, the records identified in Schedule B (as Schedule B may
be amended from time to time). The Subadviser agrees that such
records are the property of the Fund, and will be surrendered to the
Fund or to Adviser as agent of the Fund promptly upon request of
either.
C. It has or shall adopt a written code of ethics complying with the
requirements of Rule 17j-l under the Act and will provide the Fund
and Adviser with a copy of the code of ethics and evidence of its
adoption.
5
Subadviser acknowledges receipt of the written code of ethics
adopted by and on behalf of the Fund (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 Fund and to Adviser that the
Subadviser has complied with the requirements of Rule 17j-l 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 Fund and Adviser to
examine the reports required to be made by the Subadviser under Rule
17j-l(c)(1) and this subparagraph.
D. Reference is hereby made to the Declaration of Trust dated
February 18, 1986 establishing the Fund, a copy of which has been
filed with the Secretary of the Commonwealth of 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 Fund shall be held to any personal liability in
connection with the affairs of the Fund; 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 Fund or of any successor of the Fund, 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 among the Subadviser, the Adviser and the Fund, which amendment,
other than amendments to Schedules A, B, and D, is subject to the approval
of the Trustees and the Shareholders of the Fund 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, and shall continue in effect
until the
6
first meeting of the shareholders of the Series, and, if its renewal is
approved at that meeting in the manner required by the Act, shall continue
in effect 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 Investment Company 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 any party, without
penalty, immediately upon written notice to the other parties in the event
of a breach of any provision thereof by a party so notified, or otherwise
upon thirty (30) days' written notice to the other parties, but any such
termination shall not affect the status, obligations or liabilities of any
party hereto to the other parties.
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
Commonwealth of Massachusetts.
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
7
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.
THE PHOENIX EDGE SERIES FUND
By: /s/ Xxxxxx X. XxXxxxxxxx
------------------------------
Xxxxxx X. XxXxxxxxxx
President
PHOENIX REALTY SECURITIES, INC.
By: /s/ Xxxxxxx Xxxxx
------------------------------
Xxxxxxx Xxxxx
President
ACCEPTED:
DUFF & XXXXXX INVESTMENT
MANAGEMENT CO.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Xxxxxxx X. Xxxxx
Vice President
SCHEDULES: A. Operational Procedures
B. Record Keeping Requirements
C. Fee Schedule
D. Subadviser Functions
SCHEDULE A
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 Fund.
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 Fund, the
account must be a cash account. No margin accounts are to be maintained in the
name of the Fund. 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.
SCHEDULE B
RECORDS TO BE MAINTAINED BY THE SUBADVISER
1. (Rule 31a-1(b)(5)) A record of each brokerage order, and all other series
purchases and sales, given by the Subadviser on behalf of the Fund 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 Fund.
2. (Rule 31a-1(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
series securities to named brokers 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 Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) The Fund,
(b) The Adviser (Phoenix Realty Securities, 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-1(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 Fund.
------------------------------------
*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.
SCHEDULE C
SUBADVISORY FEE
(a) For services provided to the Fund, the Adviser will pay to the
Subadviser, on or before the 10th day of each month, a fee, payable in arrears,
at the annual rate of 0.45% of the average daily net asset values of the Series
up to $1 billion; 0.35% of such values from $1 billion to $2 billion; and 0.30%
of such values in excess of $2 billion. 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 Fund
and each Series shall be valued as set forth in the then current registration
statement of the Fund.
SCHEDULE D
SUBADVISER FUNCTIONS
With respect to managing the investment and reinvestment of the Series'
assets, the Subadviser shall provide, at its own expense:
(a) Investment research, advice and analysis, including, without
limitation, initial and ongoing i) assessment of national, regional
and specific real estate markets and real estate related equities, and
ii) detailed analysis of real estate investment trust assets
considered for purchase and held by the Series with respect to inter
alia local market conditions, fair market value, overall property
condition, insurance converages and deductibles, tenant composition
and vacancies, compliance matters relating to zoning, handicap
accessibility, environmental, and other applicable codes, and such
other matters as the Adviser shall from time to time request;
(b) An investment program for the Series 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;
(c) Implementation of the investment program for the Series based upon the
foregoing criteria;
(d) 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 Fund relative to securities
eligible for resale under Rule 144A under the Securities Act of 1933,
as amended; iii) diversification of Series assets in accordance with
the then prevailing prospectus and statement of additional information
pertaining to the Series 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 Series' 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 Series' investment
program, including, without limitation, analysis of Series
performance;
(e) 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
(f) Participation, overall assistance and support in marketing the Series,
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.
