INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of this April 1, 2008, between Vanguard
Horizon Funds, a Delaware statutory trust (the "Trust"), and Acadian Asset
Management LLC (the "Advisor").
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 Global
Equity Fund (the "Fund"); and
WHEREAS, the Trust retained the Advisor to render investment advisory
services to the Fund under an Investment Advisory Agreement, dated as of October
22, 2004, which was amended on July 1, 2006 and April 1, 2007 (collectively, the
"Prior Agreement"); and
WHEREAS, the Trust desires to amend and restate such Investment
Advisory Agreement in certain respects, and the Advisor is willing to render
investment advisory services to the Fund in accordance with such amendments.
NOW THEREFORE, in consideration of the mutual promises and undertakings
set forth in this "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 "Acadian Portfolio"). As of
the date of this Agreement, the Acadian Portfolio will consist of the portion of
the assets of the Fund that the Board of Trustees has determined to assign to
the Advisor, 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 Acadian Portfolio; to
continuously review, supervise, and administer an investment program for the
Acadian 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
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 objectives, 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 Acadian
Portfolio, and is directed to use its best efforts to obtain the best available
price and most favorable execution for such transactions. To the extent
expressly permitted by the written policies and procedures established by the
Board of Trustees, and subject to Section 28(e) of the Securities Exchange Act
of 1934, as amended, any interpretations thereof by the Securities and Exchange
Commission (the "SEC") or its staff, and other applicable law, the Advisor is
permitted, but is not required, to pay a broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if the Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Advisor's overall responsibilities to the accounts
as to which it exercises investment discretion. The execution of such
transactions in conformity with the authority expressly referenced in the
immediately preceding sentence shall not be deemed to represent an unlawful act
or breach of any duty created by this Agreement or otherwise. The Advisor agrees
to use its best efforts to comply with any directed brokerage or other brokerage
arrangements that the Fund communicates to the Advisor in writing. The Fund
acknowledges that directed brokerage may result in the Fund paying higher
commissions than would be the case if the Advisor were able to select brokers
freely. Directed brokerage in many cases limits the Advisor's ability to
negotiate commissions for the Fund and its ability to aggregate orders and may
result in an inability to obtain volume discounts or best execution for the Fund
in some transactions. The Advisor may manage other portfolios and expects that
the Fund and other portfolios it manages will, from time to time, purchase or
sell the same securities. The Advisor may aggregate orders for the purchase or
sale of securities on behalf of the Fund with orders on behalf of other
portfolios the Advisor manages, to the extent consistent with the Advisor's duty
to seek best execution and to ensure the fair and equitable allocations of
aggregated securities. Securities purchased or proceeds of securities sold
through aggregated orders will be allocated to the account of each portfolio
managed by the advisor that bought or sold such securities at the average
execution price. If less than the total of the aggregated orders is executed,
the securities or proceeds will generally be allocated pro rata among the
participating portfolios in proportion to their planned participation in the
aggregated orders. If the securities or proceeds are not allocated pro rata
among the participating portfolios, the Advisor will allocate such securities or
proceeds in a manner that is fair and equitable to all participating portfolios,
and will record the basis of such non-pro rata allocation in writing or in
electronic form and maintain such records in a manner consistent with applicable
recordkeeping requirements under the Investment Company Act of 1940 and the
Investment Advisers Act of 1940. The Advisor will promptly communicate to the
Trust's officers and the Board of Trustees any information relating to the
portfolio transactions the Advisor has directed on behalf of the Acadian
Portfolio as such officers or the Board may reasonably request.
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 investment advisory fee at
the rate specified in Schedule A to this Agreement. The fee will be calculated
based on annual percentage rates applied to the average daily net assets of the
Acadian Portfolio and will be paid to the Advisor quarterly.
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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 partners of the Advisor. The Fund acknowledges
receipt of Part II of the Advisor's Form ADV.
6. COMPLIANCE.
6.1. Compliance with Applicable Law and Board Requirements. The Advisor
agrees to comply with all Applicable Law and all policies, procedures
or reporting requirements that the Board of Trustees of the Trust
reasonably adopts and communicates to the Advisor in writing,
including, without limitation, any such policies, procedures or
reporting requirements relating to soft dollar or directed brokerage
arrangements.
6.2. DISCLOSURE OF COMPLIANCE MATTERS. If the Advisor receives any written
or other communication concerning or constituting a material
Compliance Matter, then the Advisor shall provide the Trust a written
summary of the material facts and circumstances concerning such
material Compliance Matter within five (5) calendar days of the
earlier of the date on which such material Compliance Matter was
received by the Advisor, or the date on which the general counsel's
office of the Advisor obtained actual knowledge of such material
Compliance Matter. The Advisor shall provide the Trust with a written
summary of any material changes in the facts or circumstances
concerning any material Compliance Matter within (5) calendar days of
the occurrence of such changes. The written summary may exclude
information that is specifically prohibited from disclosure to third
parties by a written confidentiality agreement to which the Advisor is
party or by a fiduciary duty of confidentiality applicable to the
Advisor; provided, however, that the written summary shall be written
in a manner that continues to include a summary of the material facts
and circumstances concerning the Compliance Matter.
6.3. CERTAIN DEFINITIONS. "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. "Compliance Matter" means any written or other
communication sent to the Advisor by any foreign, federal or state
agency or regulatory authority or any self-regulatory authority in
connection with any of the following: (i) the Advisor's compliance
with, or failure to comply with, Applicable Law as they relate to the
Advisor's investment management operations; (ii) the business or
affairs of the Advisor or any current or former client of the Advisor
as they relate to the Advisor's investment management operations; or
(iii) compliance by any person other than the Advisor with, or such
person's failure to comply with, Applicable Law as they relate to the
Advisor's investment management operations.
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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
Acadian Portfolio under this Agreement.
9. LIMITATIONS ON CONSULTATIONS. The Advisor is prohibited from consulting
with other advisors of the Fund, except Vanguard, 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 successive
twelve-month periods, only so long as each such continuance specifically 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 affected 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 of the Trust 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 Horizon Funds - Vanguard Global 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:
Acadian Asset Management LLC
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
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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 of the Trust.
As used in this Section 9, 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
relating directly or indirectly to the Fund, the Trust, or Vanguard and shall
not disclose any such information to any person other than the Trust, the Board
of Directors of the Trust, 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, or (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
Directors of the Trust, or Vanguard.
13. PROXY POLICY. The Advisor acknowledges that Vanguard, at the direction
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.
IN WITNESS WHEREOF, the parties hereto have caused this Investment Advisory
Agreement to be executed as of the date first set forth herein.
ACADIAN ASSET MANAGEMENT LLC VANGUARD HORIZON FUNDS
/s/ Xxxx Xxxxxxxx June 18, 2008 /s/ Xxxx X. Xxxxxxx June 23, 2008
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Signature Date Signature Date
Xxxx Xxxxxxxx Xxxx X. Xxxxxxx
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Print Name Print Name
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