INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of this 16th day of January 2009, between
VANGUARD FENWAY FUNDS, a Delaware statutory trust (the "Trust"), and XXXXXXXX
ASSOCIATES LLC (the "Advisor"), a Delaware limited liability company.
W I T N E S S E T H
WHEREAS, the Trust is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust offers a series of shares known as VANGUARD GROWTH
EQUITY FUND (the "Fund"); and
WHEREAS, the Trust desires to retain the Advisor to render investment
advisory services to the Fund, and the Advisor is willing to render such
services.
NOW THEREFORE, in consideration of the mutual promises and undertakings
set forth in this agreement (the "Agreement") the Trust and the Advisor hereby
agree as follows:
1. APPOINTMENT OF ADVISOR. The Trust hereby employs the Advisor as
investment advisor, on the terms and conditions set forth herein, for the
portion of the assets of the Fund that the Trust's Board of Trustees (the "Board
of Trustees") determines in its sole discretion to assign to the Advisor from
time to time (referred to in this Agreement as the "Xxxxxxxx Portfolio"), as
communicated to the Advisor on behalf of the Board of Trustees by The Vanguard
Group, Inc. ("Vanguard"). The Board of Trustees may, from time to time, make
additions to, and withdrawals from, the assets of the Fund assigned to the
Advisor. The Advisor accepts such employment and agrees to render the services
herein set forth, for the compensation herein provided.
2. DUTIES OF ADVISOR. The Trust employs the Advisor to manage the
investment and reinvestment of the assets of the Xxxxxxxx Portfolio; to
continuously review, supervise, and administer an investment program for the
Xxxxxxxx Portfolio; to determine in its discretion the securities to be
purchased or sold and the portion of such assets to be held uninvested; to
provide the Fund with all records concerning the activities of the Advisor that
the Fund is required to maintain; and to render regular reports to the Trust's
officers and the Board of Trustees concerning the discharge of the foregoing
responsibilities. The Advisor will discharge the foregoing responsibilities
subject to the supervision and oversight of the Trust's officers and the Board
of Trustees, and in compliance with the objective, policies and limitations set
forth in the Fund's prospectus and Statement of Additional Information, any
additional operating policies or procedures that the Fund communicates to the
Advisor in writing, and applicable laws and regulations. The Advisor agrees to
provide, at its own expense, the office space, furnishings and equipment, and
personnel required by it to perform the services on the terms and for the
compensation provided herein.
3. SECURITIES TRANSACTIONS. The Advisor is authorized to select the
brokers or dealers that will execute purchases and sales of securities for the
Xxxxxxxx Portfolio, and is directed to seek to obtain best execution for such
transactions consistent with Section 28(e) of the Securities Exchange Act of
1934, and subject to written policies and procedures provided to the Advisor.
The Advisor will promptly communicate to the Trust's officers and the Board of
Trustees such information relating to portfolio transactions as they may
reasonably request. The Advisor may cause securities transactions to be executed
concurrently with authorizations to purchase or sell the same securities for
other accounts managed by the Advisor. The executions (of purchases or sales)
shall be allocated equitably among the various accounts that the Advisor manages
(including the Portfolio). Notwithstanding the foregoing
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provisions of this paragraph, the Advisor shall arrange for the execution of
securities transactions for the Xxxxxxxx Portfolio through those brokers or
dealers that, in the Advisor's reasonable judgment, are capable of providing
best execution. Pursuant to the rules promulgated under Section 326 of the USA
PATRIOT ACT, broker-dealers are required to obtain, verify, and record
information that identifies each person who opens an account with them. In
accordance therewith, the Trust acknowledges that broker-dealers whom the
Advisor selects to execute transactions in the Xxxxxxxx Portfolio's account on
the Trust's behalf may seek identifying information about the Trust and/or the
Xxxxxxxx Portfolio and the Trust agrees to provide such information to such
broker-dealers, if requested.
4. COMPENSATION OF ADVISOR. For services to be provided by the Advisor
pursuant to this Agreement, the Fund will pay to the Advisor, and the Advisor
agrees to accept as full compensation therefor, an amount (the "Total Advisory
Fee") equal to a base fee ("Base Fee") plus a performance adjustment amount
("Performance Adjustment"), as specified in Schedule A to this agreement,
payable quarterly in arrears.
5. REPORTS. The Fund and the Advisor agree to furnish to each other current
prospectuses, proxy statements, reports to shareholders, certified copies of
their financial statements, and such other information with regard to their
affairs as each may reasonably request, including, but not limited to,
information about changes in investment officers of the Advisor who are
responsible for managing the Xxxxxxxx Portfolio. The Fund acknowledges receipt
of Part II of the Advisor's Form ADV. The Fund hereby agrees to provide to the
Advisor with reasonable advance notice, in writing, of: (i) any change to the
Fund's investment objectives, policies, and restrictions as stated in the
prospectus; (ii) any change to the Trust's declaration of trust or by-laws that
is material to the services to be provided by the Advisor; or (iii) any material
change in the Trust's compliance procedures. In addition to such notice, the
Fund shall provide to the Advisor a copy of a modified Prospectus and copies of
the revised Trust compliance procedures, as applicable, reflecting such changes.
6. COMPLIANCE. The Advisor agrees to comply with all Applicable Law and
all policies, procedures or reporting requirements that the Board of Trustees
reasonably adopts and communicates to the Advisor in writing, including, without
limitation, any such policies, procedures or reporting requirements relating to
soft dollar or other brokerage arrangements. "Applicable Law" means (i) the
"federal securities laws" as defined in Rule 38a-1(e)(1) under the 1940 Act, as
amended from time to time, and (ii) any and all other laws, rules, and
regulations, whether foreign or domestic, in each case applicable at any time
and from time to time to the investment management operations of the Advisor in
relation to the Xxxxxxxx Portfolio.
7. STATUS OF ADVISOR. The services of the Advisor to the Fund are not
to be deemed exclusive, and the Advisor will be free to render similar services
to others so long as its services to the Fund are not impaired thereby. The
Advisor will be deemed to be an independent contractor and will, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund or the
Trust.
8. LIABILITY OF ADVISOR. No provision of this Agreement will be deemed
to protect the Advisor against any liability to the Fund or its shareholders to
which it might otherwise be subject by reason of any willful misfeasance, bad
faith or gross negligence in the performance of its duties or the reckless
disregard of its obligations with respect to the Advisor's management of the
Xxxxxxxx Portfolio under this Agreement. Notwithstanding the foregoing, neither
the Advisor nor its affiliates shall be liable for any loss or damage arising or
resulting from the acts or omissions of the custodian of the Xxxxxxxx Portfolio,
any broker, financial institution, or any other third party with or through whom
the Advisor arranges or enters into a transaction in respect of the Xxxxxxxx
Portfolio, except to the extent that the Advisor or its affiliate instructed
such broker, financial institution, or third party to take such action or
omission.
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9. LIMITATIONS ON CONSULTATIONS. The Advisor is prohibited from
consulting with other advisors of the Fund concerning transactions for the Fund
in securities or other assets.
10. DURATION; TERMINATION; NOTICES; AMENDMENT. This Agreement will
become effective on the date hereof and will continue in effect for a period of
two years thereafter, and shall continue in effect for successive twelve-month
periods thereafter, only so long as each such continuance is approved at least
annually by the Board of Trustees, including a majority of those Trustees who
are not parties to such Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval. In
addition, the question of continuance of the Agreement may be presented to the
shareholders of the Fund; in such event, such continuance will be effected only
if approved by the affirmative vote of a majority of the outstanding voting
securities of the Fund.
Notwithstanding the foregoing, however, (i) this Agreement may at any
time be terminated without payment of any penalty either by vote of the Board of
Trustees or by vote of a majority of the outstanding voting securities of the
Fund, on thirty days' written notice to the Advisor, (ii) this Agreement will
automatically terminate in the event of its assignment, and (iii) this Agreement
may be terminated by the Advisor on ninety days' written notice to the Fund. Any
notice under this Agreement will be given in writing, addressed and delivered,
or mailed postpaid, to the other party as follows:
If to the Fund, at:
Vanguard Growth Equity Fund
X.X. Xxx 0000
Xxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to the Advisor, at:
Xxxxxxxx Associates LLC
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Managing Director
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to (at the address set forth above):
Attention: Legal Department
Facsimile: (000) 000-0000
This Agreement may be amended by mutual consent, but the consent of the Trust
must be approved (i) by a majority of those members of the Board of Trustees who
are not parties to this Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such amendment, and
(ii) to the extent required by the 1940 Act, by a vote of a majority of the
outstanding voting securities of the Fund.
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As used in this Section 10, the terms "assignment," "interested
persons," and "vote of a majority of the outstanding voting securities" will
have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19), and
Section 2(a)(42) of the 1940 Act.
11. SEVERABILITY. If any provision of this Agreement will be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement will not be affected thereby.
12. CONFIDENTIALITY. The Advisor shall keep confidential any and all
information obtained in connection with the services rendered hereunder and
shall not disclose any such information to any person other than the Trust, the
Board of Trustees, Vanguard, and any director, officer, or employee of the Trust
or Vanguard, except (i) with the prior written consent of the Trust; (ii) as
required by law, regulation, court order, or the rules or regulations of any
self-regulatory organization, governmental body, or official having jurisdiction
over the Advisor; (iii) for information that is publicly available other than
due to disclosure by the Advisor or its affiliates or becomes known to the
Advisor from a source other than the Trust, the Board of Trustees, or Vanguard
without their permission; (iv) to affiliates of the Advisor for the purposes of
legal or regulatory compliance and accounting, strategic planning, or risk
management on a subsidiary or total enterprise level; (v) to the custodian of
the Xxxxxxxx Portfolio with respect to the Xxxxxxxx Portfolio; (vi) to brokers
and dealers that are counterparties to trades for the Xxxxxxxx Portfolio; and
(viii) to third party service providers subject to confidentiality agreements
with the Advisor. Notwithstanding the foregoing, to the extent the investments
for the Xxxxxxxx Portfolio are similar to investments for other clients of the
Advisor, the Advisor may disclose such investments without direct reference to
the Xxxxxxxx Portfolio.
13. PROXY POLICY. The Advisor acknowledges that Vanguard, at the
discretion of the Fund, will vote the shares of all securities that are held by
the Fund.
14. GOVERNING LAW. All questions concerning the validity, meaning, and
effect of this Agreement 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.
15. USE OF ADVISOR'S NAME; USE OF FUND NAME. It is understood that the
name "Xxxxxxxx Associates" or "Xxxxxxxx" and the logo associated with these
names are the valuable property of the Advisor. During the term of this
Agreement, the Fund and Vanguard shall have permission to use the Advisor's name
in the marketing of the Fund, and agree to furnish the Advisor in advance, for
Advisor's review and approval (which is not to be unreasonably withheld) all
prospectuses, proxy statements and reports to shareholders prepared for
distribution to shareholders of the Fund or the public, which refer to the
Advisor in any way. Upon termination of this Agreement, the Fund and Vanguard
shall forthwith cease to use such names (and logo), except that the Fund and
Vanguard may continue to use the name of the Advisor in its registrations
statement/prospectus and other documents to the extent deemed necessary by the
Fund to comply with disclosure obligations under applicable law and regulation.
The Advisor may include the name of the Fund in a representative client list.
16. FORCE MAJEURE. Neither party shall be held responsible for the
nonperformance of any of its obligations under this Agreement by reason of any
cause beyond its control, including, without limitation, work action or strike;
lockout or other labor dispute; flood; war; riot; theft; act of terrorism,
earthquake, or natural disaster; any breakdown or failure of transmission,
communication, or computer facilities; postal or other strikes or similar
industrial action; and the failure of any relevant exchange, clearing house,
and/or broker for any reason to perform its obligations; provided, however, that
each party shall have adequate disaster recovery plans and facilities in place
at all times.
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IN WITNESS WHEREOF, the parties hereto have caused this Investment
Advisory Agreement to be executed as of the date first set forth herein.
XXXXXXXX ASSOCIATES LLC VANGUARD FENWAY FUNDS
/s/Xxxxx Xxxxxx 1/15/09 /s/F. Xxxxxxx XxXxxx 1/14/2009
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Signature Date Signature Date
Xxxxx Xxxxxx F. Xxxxxxx XxXxxx
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