Execution Copy
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of this 1st day of May, 2005, by and between VANGUARD FIXED
INCOME SECURITIES FUNDS, a Delaware Statutory Trust (the "Trust") and WELLINGTON
MANAGEMENT COMPANY, LLP, a Massachusetts Partnership (the "Advisor").
WHEREAS, the Fund is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended, offering
several diversified investment portfolios, each having its own objectives and
policies; and WHEREAS, the Trust desires to retain the Advisor to render
investment advisory services to the Vanguard GNMA Fund, a series of the Trust
(the "Fund"), and the Advisor is willing to render such services; NOW THEREFORE,
in consideration of mutual covenants herein contained, the parties hereto agree
as follows:
1. APPOINTMENT OF ADVISOR. The Trust hereby appoints the Advisor to act as
investment advisor to the Fund, for the period and on the terms set forth in
this Agreement. The Advisor accepts such appointment 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 Fund and to continuously
review, supervise and administer the investment program of the Fund, to
determine in its discretion the securities to be purchased or sold and the
portion of the Fund's assets to be held uninvested, to provide the Fund with
records concerning the Advisor's activities which the Fund is required to
maintain, and to render regular reports to the Fund's officers and Board of
Trustees concerning the Advisor's discharge of the foregoing responsibilities.
The Advisor shall discharge the foregoing responsibilities subject to the
control of the officers and the Board of Trustees of the Fund, and in compliance
with the objectives, policies and limitations for the Fund set forth in the
Fund's prospectus and applicable laws and regulations. The Advisor accepts such
employment and agrees to render the services and to provide, at its own expense,
the office space, furnishings and equipment and the personnel required by it to
perform the services on the terms
and for the compensation provided herein.
3. PORTFOLIO TRANSACTIONS. The Advisor is authorized to select the brokers
or dealers that will execute the purchases and sales of securities for the Fund
and is directed to use its best efforts to obtain the best available price and
most favorable execution, except as prescribed herein. Subject to policies
established by the Board of Trustees, the Advisor may also be authorized to
effect individual securities transactions at
commission rates in excess of the minimum commission rates available, if the
Advisor determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage or research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Advisor's overall responsibilities with respect to the Fund and the other funds
in the same fund group. The execution of such transactions shall not be deemed
to represent an unlawful act or breach of any duty created by this Agreement or
otherwise. The Advisor will promptly communicate to the officers and Trustees of
the Fund such information relating to portfolio transactions as they may
reasonably request.
4. COMPENSATION OF THE ADVISOR. For the services to be rendered by the
Advisor as provided in this Agreement, the Fund shall pay to the Advisor at the
end of the Fund's fiscal quarters, a fee calculated by applying a quarterly
rate, based on the following annual percentage rates, to the total average
month-end net assets of the Fund for the quarter: 0.020% on the first $3 billion
of net assets of the Fund 0.010% on the next $3 billion of net assets of the
Fund 0.008% on the assets of the Fund over $6 billion In the event of
termination of this Agreement, the fee provided in this paragraph shall be
computed on the basis of the period ending on the last business day on which
this Agreement is in effect subject to a pro rata adjustment based on the number
of days elapsed in the current fiscal quarter as a percentage of the total
number of days in such quarter.
5. OTHER SERVICES. At the request of the Fund, the Advisor in its
discretion may make available to the Fund (or to The Vanguard Group, Inc. its
Service Company) office facilities, equipment, personnel and other services.
Such office facilities, equipment, personnel and services shall be provided for
or rendered by the Advisor and billed to the Fund at the Advisor's cost.
6. 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, including changes in
Partners of the Advisor, with regard to their affairs as each may reasonably
request.
7. STATUS OF ADVISOR. The services of the Advisor to the Fund are not to be
deemed exclusive, and the Advisor shall be free to render similar services to
others so long as its services to the Fund are not impaired thereby. The Advisor
shall be deemed to be an independent contractor and shall, 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.
8. LIABILITY OF ADVISER. No provision of this Agreement shall be deemed to
protect the Advisor against any liability to the Fund or its shareholders to
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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 under this Agreement.
9. PERMISSIBLE INTERESTS. Subject to and in accordance with the charters of
the Fund and the Advisor, respectively, directors, agents and shareholders of
the Fund are or may be interested in the Advisor (or any successor thereof) as
directors, officers or partners, or otherwise; directors, officers, agents and
partners of the Advisor are or may be interested in the Fund as directors,
officers, shareholders or otherwise; and the Advisor (or any successor) is or
may be interested in the Fund as a shareholder or otherwise; and that the effect
of any such interrelationships shall be governed by said charters and provisions
of the Investment Company Act of 1940.
10. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall continue until April 30, 2006, and thereafter, for
periods of one year so long as such continuance is specifically approved at
least annually by vote of the Fund's Board of Trustees, including the vote of a
majority of the 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 approval. In addition, the question of continuance of the
Agreement may be presented to the shareholders of the Fund; in such event, such
continuance shall be effected only if approved by the affirmative vote of a
majority of the outstanding voting securities of the Fund.
This Agreement may be terminated by any Fund at any time, without the
payment of any penalty, by vote of a majority of the entire Board of Trustees of
the Fund or by vote of a majority of the outstanding voting securities of the
Fund on 60 days' written notice to the Advisor, or by the Advisor at any time,
without the payment of any penalty, on 90 day's written notice to the Fund. This
Agreement will automatically and immediately terminate in the event of its
assignment. Any notice under this Agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party at any office of such
party.
As used in this Section 10, the terms "assignment", "interested persons", a
"vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in Section 2(a)(4), Section 2(a)(l9) and Section
2(a)(42) of the Investment Company Act of 1940.
11. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. 12. PROXY POLICY. With regard to the
solicitation of shareholder votes, the Fund shall vote the shares of all
portfolio securities held by the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of this 1st day of May, 2005.
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Wellington Management Company, LLP Vanguard Fixed IncomeSecurities Funds
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Signature Date Signature Date
/s/Xxxxxxxx Xxxxxx 4/29/05 /s/R. Xxxxxxx Xxxxxx 04/27/2006
Print Name Date Print Name Date
Xxxxxxxx Xxxxxx 4/29/05 R. Xxxxxxx Xxxxxx 04/27/2006
VANGUARD GNMA FUND
INVESTMENT ADVISORY AGREEMENT ADDENDUM
EFFECTIVE MAY 1, 2006
This Addendum amends section 4 of the Investment Advisory Agreement dated May 1,
2005 between Vanguard Fixed Income Securities Funds (the "Trust") and Wellington
Management Company, LLP ("Wellington Management," or the "Advisor") for the
management of Vanguard GNMA Fund (the "Fund"), a series of the Trust, as
follows:
A. AMENDMENT
4. COMPENSATION OF ADVISOR. For the services to be rendered by the Advisor as
provided in this Agreement, the Fund shall pay to the Advisor at the end of the
Fund's fiscal quarters, a fee calculated by applying a quarterly rate, based on
the following annual percentage rates, to the total average daily net assets of
the Fund for the quarter:
In the event of termination of this Agreement, the fee provided in this Section
for the period beginning on the first day of the then-current fiscal quarter and
ending on the last business day on which this Agreement is in effect (the "Short
Quarter") shall be calculated by applying the foregoing annual percentage rates
to the average daily net assets of the Fund during the Short Quarter, dividing
the result by four, and multiplying that figure by a ratio equal to the number
of days in the Short Quarter divided by the total number of days in the full
quarter.
B. MISCELLANEOUS
Except as specifically amended hereby, all of the terms and conditions of the
Investment Advisory Agreement are unaffected and shall continue to be in full
force and effect and shall be binding upon the parties in accordance with its
terms.
WELLINGTON MANAGEMENT COMPANY, LLP VANGUARD FIXED INCOME SECURITIES FUNDS
Xxxxxx Xxxxxx 6/14/06 Xxxx X. Xxxxxxx 6/5/06
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Signature Date Signature Date
XXXXXX XXXXXX XXXX X. XXXXXXX
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Print Name Print Name
