INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of this 19th day of February, 2008, between
Vanguard World Funds, a Delaware statutory trust (the "Trust"), and M&G
Investment Management Limited, a corporation organized under the laws of England
and authorized and regulated by the Financial Services Authority of the United
Kingdom (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
International Growth 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 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 "M&G 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 M&G Portfolio; to continuously
review, supervise, and administer an investment program for the M&G Portfolio;
to determine in its discretion the securities and other investments, 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 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 and other
investments for the M&G Portfolio as permitted by the Fund's Registration
Statement, and is directed to use its best efforts to obtain best execution for
such transactions. In selecting brokers or dealers to execute trades for the M&G
Portfolio, the Advisor will comply with all applicable statutes, rules,
interpretations by the U.S. Securities and Exchange Commission or its staff,
other applicable law, and the written policies and procedures established by the
Board of Trustees and communicated to the Advisor in writing.
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
consisting of a base fee plus a performance adjustment (together, the "adjusted
fee"), at the rates 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 managers of the Advisor who are
responsible for managing the M&G Portfolio. The Fund acknowledges receipt of
Part II of the Advisor's Form ADV.
The Fund agrees to furnish to the Advisor all Fund prospectuses, statements of
additional information, proxy statements, and reports to shareholders which
refer in any way to the Advisor or the M&G Portfolio. The Fund also agrees
similarly to furnish to the Advisor any sales literature or other material
prepared for distribution to shareholders of the Fund or the public in the event
that they contain references to the Advisor or the M&G Portfolio that materially
depart from language that appears in the Fund's prospectus or shareholder
reports, or that has not been previously reviewed by the Advisor. In the event
of termination of this Agreement, the Fund will, on written request of the
Advisor, forthwith delete any reference to the Advisor from any Fund materials.
The Advisor agrees that it will notify the Fund prior to any change of "control"
of the Advisor. As used in this Section 5, the term "control" will have the
meaning set forth in Section 2(a)(9) of the 1940 Act.
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.
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. In the absence of (i) misfeasance and
negligence, on the part of the Advisor in performance of its obligations and
duties hereunder or (ii) a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services (in which case any award of
damages shall be limited to the period and the amount set forth in Section
36(b)(3) of the 1940 Act), the Advisor and its officers, directors, employees,
and shareholders shall not be subject to any liability whatsoever to the Fund,
or to the shareholders of the Fund, and the Fund shall indemnify such persons
for any error of judgment, mistake of law or any other act or omission in the
course of, or connected with, rendering services hereunder including, without
limitation, for any losses which may be sustained in connection with the
purchase, holding, redemption, or sale of any security or other investment on
behalf of the M&G Portfolio. Federal and state securities laws impose
liabilities under certain circumstances on persons who act in good faith, and
therefore nothing herein shall in any way constitute a waiver or limitation of
any rights which the Fund may have under such laws.
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 investments.
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 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 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 International Growth 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:
M&G Investment Management Limited
Xxxxxxxx Xxxxxxxx Xxxx
Xxxxxx, XX0X OHH, England
Attention: Xxxxxxxx Xxxx
Telephone: 00-000-000-0000
Facsimile: 00-000-000-0000
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.
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
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 Trustees, Vanguard, and any trustee, 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 Trustees, 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.
M&G Investment Management Limited Vanguard World Funds
/s/Xxxxxx Xxxxxxxxxxx 19/2/2008 /s/Xxxx X. Xxxxxxx 2/14/2008
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Signature Date Signature Date
Xxxxxx Xxxxxxxxxxx Xxxx. X. Xxxxxxx
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