INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of this 6th day of May, 2008, between
VANGUARD TRUSTEES' EQUITY FUND, a Delaware statutory trust (the "Trust"), and
EDINBURGH PARTNERS LIMITED (the "Advisor"), a private limited company 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
INTERNATIONAL VALUE 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 "Edinburgh Portfolio"), as
communicated to the Advisor on behalf of the Board of Trustees by The Vanguard
Group, Inc. ("Vanguard"). Vanguard may give prior written notice to the Advisor
from time to time, of 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 Edinburgh Portfolio; to
continuously review, supervise, and administer an investment program for the
Edinburgh 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 obligations of the
Advisor to the Trust under this Agreement will not be breached as a result of
changes in the price or value of assets of the Edinburgh Portfolio brought about
solely through movements in the market. 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
Edinburgh Portfolio, and shall have full power and authority to buy, sell,
retain, exchange or otherwise deal in securities and cash forming part of the
Edinburgh Portfolio and to effect transactions on any markets, negotiate and
execute any counterparty and account opening documentation, take all routine or
day to day decisions and otherwise act as the Advisor judges appropriate in
relation to the management of the Edinburgh Portfolio. The Advisor 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 Edinburgh Portfolio, the
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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. In accordance with the rules of the
Financial Services Authority, the Advisor has established policies relating to
(inter alia) (i) the execution of orders and decisions to deal on behalf of
clients, and (ii) the management of actual or potential conflicts of interest
which affect the Advisor's business. Copies of these policies are contained in
the Advisor's terms of business ("Terms of Business"), which is attached as
Schedule B to this Agreement.
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 with
such 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 Edinburgh Portfolio and, in
the case of the Fund, copies of financial statements. The Advisor will
continuously have access to publicly filed electronic copies of the Fund's
current prospectuses, proxy statements, and reports to shareholders.
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 Edinburgh Portfolio.
7. STATUS OF ADVISOR. The services of the Advisor provided to the Trust
in relation 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. The Advisor accepts liability for loss to the
Fund where such loss arises directly from 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.
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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, (iii) this Agreement may
be terminated by the Advisor on ninety days' written notice to the Fund and (iv)
this Agreement may be terminated by either party at any time if the Advisor
ceases to be authorized to perform the services to be provided to the Trust
under this Agreement. 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 Value Fund
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to the Advisor, at:
Edinburgh Partners Limited
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Attention: The Company Secretary
Telephone: ▇▇▇▇ ▇▇▇ ▇▇▇▇
Facsimile: 0131 270 3801
This Agreement may be amended in writing 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.
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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
and for purposes of this Agreement the Advisor has classified the Trust as a
Professional Client (as defined in the FSA Rules) based on the information known
to the Advisor at the time of entering into this Agreement. 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 FSA Rules, 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.
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
Edinburgh Portfolio and may require the Advisor, at the discretion of the Trust,
to dispose of certain securities previously purchased for the Edinburgh
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 Edinburgh 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 Edinburgh 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Investment
Advisory Agreement to be executed as of the date first set forth herein.
EDINBURGH PARTNERS LIMITED VANGUARD TRUSTEES' EQUITY FUND
/s/ ▇. ▇▇▇▇▇ May 6, 2008 /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ May 6, 2008
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Signature Date Signature Date
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