INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of this 1st day of February, 2006, between
Vanguard Whitehall Funds, a Delaware statutory trust (the "Trust"), and
Chartwell Investment Partners (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 Mid-Cap
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 "Chartwell Portfolio"). As of the date of
this Agreement, the Chartwell 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 Chartwell Portfolio; to continuously review,
supervise, and administer an investment program for the Chartwell 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
Chartwell 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 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 Chartwell 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 therefore, 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 month-end net assets of the
Chartwell Portfolio and will be paid to the Advisor quarterly.
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. 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. "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. 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
Chartwell 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 a period of two
years thereafter, and shall continue in effect for successive twelve-month
periods thereafter, only so long as this Agreement is approved at least annually
by votes of the Trust's Board of 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 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 Whitehall Funds
X.X. Xxx 0000
Xxxxxx Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to the Advisor, at:
Chartwell Investment Partners
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxx Xxxxxx
Telephone: 000-000-0000
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 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
Trustees 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 Trustees of the Trust,
or Vanguard.
13. Proxy Policy. The Advisor acknowledges that Vanguard will vote the shares of
all securities that are held by the Fund unless other mutually acceptable
arrangements are made with the Advisor with respect to the Chartwell Portfolio.
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.
Chartwell Investment Partners Vanguard Whitehall Funds
/S/ Xxxxxxx X. Xxxxxx /S/Xxxx X. Xxxxxxx
1/26/2006 1/25/2006
