THE PHOENIX EDGE SERIES FUND
SUBADVISORY AGREEMENT
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October 27, 1998
Aberdeen Fund Managers, Inc.
0 Xxxxxxxxx Xxxxx, Xxxxx 0000
Nations Bank Tower
Xxxx Xxxxxxxxxx, XX 00000
RE: SUBADVISORY AGREEMENT
Gentlemen:
The Phoenix Edge Series Fund (the "Trust") 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 Trust are offered or may be offered in several, series,
including the International Series (hereafter referred to as the "Series").
Phoenix Investment Counsel, 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 Aberdeen Fund Managers, Inc. (the "Subadviser") as a subadviser 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 subadviser to the Adviser and agrees to use its best
professional judgment to make investment decisions for the Series 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 Series, the Subadviser shall be
subject to the investment objectives, policies and restrictions of the
Trust as they apply to the Series 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), 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
Series 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 each Series' 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 Series 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 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 Trust all investment orders for the Series 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 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 Trust, 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 Series. 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 Series 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 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,
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 Series 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 defined 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
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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. 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 Massachusetts and elsewhere as
required by law, and to any and all amendments thereto so filed or
hereafter so filed with the Secretary of the Commonwealth of Massachusetts
and elsewhere as required by law. 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; 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, 1999, 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 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 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.
PHOENIX INVESTMENT COUNSEL, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
President
ACCEPTED:
ABERDEEN FUND MANAGERS, INC.
By: /s/ Xxx Xxxxxx
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Xxx Xxxxxx
Chief Executive Officer, Chief Operating
Officer and Vice President
SCHEDULES: A. Subadviser Functions
B. Operational Procedures
C. Fee Schedule
D. Record Keeping Requirements
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SCHEDULE A
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SUBADVISER FUNCTIONS
With respect to managing the investment and reinvestment of the Series
assets, the Subadviser shall provide, at its own expense:
(a) 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;
(b) Implementation of the investment program for the Series 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 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;
(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
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.
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SCHEDULE B
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OPERATIONAL PROCEDURES
In order to minimize operational problems, it will be necessary for a flow of
information to be supplied to Xxxxx Brothers Xxxxxxxx & Co. (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;
l0. 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.
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SCHEDULE C
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SUBADVISORY FEE
For services provided to the Trust pursuant to paragraph 3 hereof, 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 0.375% of the average daily net
assets of the Phoenix International Fund up to $250 million, 0.35% of such value
between $250 million and $500 million, and 0.325% of such value in excess of
$500 million. 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 Series
shall be valued as set forth in the then current registration statement of the
Trust.
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SCHEDULE D
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RECORDS TO BE MAINTAINED BY THE SUBADVISER
l. (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
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-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 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.1
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* Such information might include: current financial information, annual and
quarterly reports, press releases, reports by analysts and from brokerage firms
(including their recommendations; i.e., buy, sell, hold) or any internal reports
or subadviser review.
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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 Trust.
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