1
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of this 7th day of April, 2008, between
Vanguard Horizon Funds, a Delaware statutory trust (the "Trust"), and Xxxxxxx
Xxxxxxx Overseas Limited (the "Advisor"), a corporation organized under the laws
of Scotland, United Kingdom.
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 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 "Xxxxxxx Xxxxxxx 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 Xxxxxxx Xxxxxxx Portfolio; to
continuously review, supervise, and administer an investment program for the
Xxxxxxx Xxxxxxx 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
Xxxxxxx Xxxxxxx 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. In selecting brokers or dealers to execute trades for the Xxxxxxx
Xxxxxxx 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 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 officers of the Advisor who are
responsible for managing the Xxxxxxx Xxxxxxx Portfolio.
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 Xxxxxxx Xxxxxxx 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 negligence in the performance of its duties or the reckless disregard
of its obligations 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 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 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 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:
Xxxxxxx Xxxxxxx Overseas Limited
Xxxxxx Square
0 Xxxxxxxxx Xxx
Xxxxxxxxx, Xxxxxxxx, XX0 0XX
Xxxxxx Xxxxxxx
Attention: Xxxx Xxxxxxxx
Telephone: 011- 44 - 000 000 0000
Facsimile: 011- 44 - 131 275 3975
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 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. Miscellaneous. The services provided under this Agreement are
provided on the basis that the Trust qualifies as a per se professional client.
The Trust can request a different categorization, namely opting for "retail
client" status. Each categorization brings with it differing levels of client
protection under the Financial Services Authority Rules, based on the perceived
level of sophistication as a client. Treatment as a retail client would result
in a higher degree of regulatory protection than that provided to a professional
client. The Trust agrees to be treated as a professional client in respect of
the investment management services provided under this Agreement.
In accordance with relevant MiFID guidelines, the Advisor will not be obliged to
assess the suitability of the Trust's proposed strategy as set forth 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 Trust acknowledges that it
should not deal in investments unless it understands the nature and extent of
its exposure to risk. .
The Trust confirms that it has received from the Advisor:
(a) a copy of Part II of the Advisor's Form ADV;
(b) a copy of the Advisor's notice entitled "Nature of
Investments and Risk Disclosures Notice," dated
December 2007, which includes a general description
of the nature and risks of investments which may be
held in the Xxxxxxx Xxxxxxx Portfolio;
(c) a copy of the Advisor's policy regarding its trading
arrangements (the version current at the date of this
Agreement being entitled "Xxxxxxx Xxxxxxx Trading
Procedures and Control Processes 2008"), including
details of the goods and services that relate to the
execution of trades and those which relate to the
provision of research; and
(d) a copy of the Advisor's Order Execution Policy, dated
July 3, 2007. The Trust confirms that it has read,
understood, and agrees to the Order Execution Policy
and in particular that, for instruments admitted to
trading on a regulated market or multilateral trading
facility ("MTF"), it consents to the Advisor
arranging for the execution of an order in such
instruments outside a regulated market or MTF.
For the avoidance of doubt, the Trust and any professional tax adviser of the
Trust or the Fund remain responsible for the management of the Trust's affairs
for tax purposes. The Advisor acknowledges and confirms that the Trust is
subject to regulatory and other requirements that may, consistent with Sections
2 and 6 of this Agreement, restrict what securities the Advisor can hold in the
Xxxxxxx Xxxxxxx Portfolio and may require the Advisor, at the discretion of the
Trust, to dispose of certain securities previously purchased for the Xxxxxxx
Xxxxxxx Portfolio. The Trust acknowledges and confirms that the Advisor is
otherwise under no obligation to take into account tax issues when managing
assets attributable to the Xxxxxxx Xxxxxxx Portfolio and the Advisor may
otherwise use its complete discretion when deciding on when to buy and sell
securities and is under no obligation to report to the Trust on the tax
consequences of buying or selling assets in the Xxxxxxx Xxxxxxx Portfolio.
15. 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.
Xxxxxxx Xxxxxxx Overseas Limited Vanguard Global Equity Fund
/s/Xxxxxx X. Xxxxxxxx 04/04/2008 /s/Xxxx X. Xxxxxxx 04/02/2008
------------------------------- --------- --------------------------- ---------
Signature Date Signature Date
Xxxxxx X. Xxxxxxxx Xxxx X. Xxxxxxx
---------------------------- ---------------------------
Print Name Print Name
