AMENDMENT
to the
INVESTMENT ADVISORY AGREEMENT
between
VANGUARD EQUITY INCOME FUND,
and
WELLINGTON MANAGEMENT COMPANY, LLP
This Amendment ("Amendment") supplements, forms part of, and is subject
in all respects to, that certain Investment Advisory Agreement ("Advisory
Agreement"), dated January 1, 2000, between Vanguard Equity Income Fund
("Fund"), a series of Vanguard Fenway Funds, a Delaware business trust
("Trust"), and Wellington Management Company, LLP, a Massachusetts limited
liability partnership ("Wellington"). This Amendment is effective as of
September 21, 2005.
WITNESSETH:
WHEREAS, Wellington renders investment advisory services to certain
assets of the Fund which the Board of Trustees of the Trust determines from time
to time to assign to Wellington (the "Wellington Portfolio");
WHEREAS, effective September 21, 2005, the Board of Trustees
reallocated the portion of the Fund's assets that were managed by Xxxx & Xxxxx &
Co., Inc. ("Xxxxx") to the Fund's two other investment advisers, including a
reallocation of approximately $400 million ("Reallocated Assets") to Wellington
as of such date;
WHEREAS, the quarterly Basic Fee payments calculated as described in
the Advisory Agreement for the quarter ended September 30, 2005 will include the
transfer of the Reallocated Assets to the Wellington Portfolio as of September
21, 2005, and therefore will result in an artificially high payment to
Wellington for the quarter ended September 30, 2005; and
WHEREAS, in order to ensure that the Basic Fee and the Performance
Adjustment for the Wellington Portfolio for the quarter ended September 30, 2005
is calculated on a fair and equitable basis in accordance with the intentions of
the Fund and Wellington, the parties have agree to a pro-rated fee arrangement
as described below for the quarter ended September 30, 2005.
NOW, THEREFORE, intending to be legally bound hereto, the Fund and
Wellington hereby agree as follows:
1. Definitions. All capitalized terms not otherwise defined herein shall have
the meaning given to them in the Advisory Agreement.
2. Basic Fee for the Period from July 1, 2005 through September 20, 2005. For
purposes of calculating the Basic Fee payable to Wellington for the period from
July 1, 2005 through September 20, 2005, the parties agree that the Fund will
pay to Wellington a Basic Fee calculated by applying a quarterly rate, based on
the annual percentage rates specified in Section 4 of the Advisory Agreement, to
the average net assets of the Wellington Portfolio on the following days: July
31, 2005, August 31, 2005 and September 20, 2005 (which is the day before the
Reallocated Assets were transferred to the Wellington Portfolio). The result
shall then be multiplied by 0.891 (a factor representing 82 of the 92 days in
the fiscal quarter ended September 30, 2005).
3. Basic Fee for the Period from September 21, 2005 through September 30, 2005.
For purposes of calculating the Basic Fee payable to Wellington for the period
from September 21, 2005 through September 30, 2005, the parties agree that the
Fund will pay to Wellington a Basic Fee calculated by applying a quarterly rate,
based on the annual percentage rates specified in Section 4 of the Advisory
Agreement, to the average net assets of the Wellington Portfolio on September
30, 2005 (which is the last day of the fiscal quarter ended September 30, 2005).
The result shall then be multiplied by 0.109 (a factor representing 10 of 92
days in the fiscal quarter ended September 30, 2005).
4. Combined Basic Fee. The Basic Fee amounts calculated under paragraphs 2 and 3
above shall be added together to form a single Basic Fee payable to Wellington
for the fiscal quarter ended September 30, 2005 (the "Combined Basic Fee").
5. Performance Adjustment. The Performance Adjustment (if any) for the fiscal
quarter ended September 30, 2005 shall be calculated based on the Combined Basic
Fee (rather than based on the Basic Fee) pursuant to Sections 4 and 4.1 of the
Advisory Agreement as amended by this Amendment.
6. Governing Law. All questions concerning the validity, meaning, and effect of
the Advisory Agreement or this Amendment shall be determined in accordance with
the laws (without giving effect to the conflict-of-law principles thereof) of
the State of Delaware applicable to contracts made and to be performed in that
state.
7. Continuance of Terms and Conditions. Except as specifically amended hereby,
all of the terms and conditions of the Advisory Agreement are unaffected and
shall continue to be in full force and effect and shall be binding upon the
parties in accordance with their terms.
8. Counterparts. This Amendment may be signed in two or more counterparts. Each
counterpart will constitute an original but all the counterparts together will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment by their
duly authorized officers as of the effective date hereof.
VANGUARD EQUITY INCOME FUND, WELLINGTON MANAGEMENT COMPANY, LLP
A SERIES OF VANGUARD FENWAY FUNDS
By: Xxxx X. Xxxxxxx /S/ BY: Xxxxxxxx X. Xxxxx /S/
Name: Xxxx X. Xxxxxxx Name: Xxxxxxxx X. Xxxxx
Title:Chairman and Chief Executive Officer Title: Sr. Vice President
