DRAFT 3/23/05-4PM
High-Yield Corporate Fund
AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of this 1st day of May, 2005, between
Vanguard Fixed Income Securities Funds, a Delaware statutory trust (the
"Trust"), and Wellington Management Company, LLP (the "Advisor"), a
Massachusetts partnership.
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
High-Yield Corporate Fund (the "Fund"); and
WHEREAS, the Trust retains the Advisor to render investment advisory
services to the Fund under an Investment Advisory Agreement, dated as of May 1,
1996, and continuing for successive twelve month periods until April 30, 2005;
and
WHEREAS, the Trust desires to amend and restate such Investment
Advisory Agreement in certain respects, and the Advisor is willing to render
investment advisory services to the Fund in accordance with such amendments.
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 "Wellington Portfolio"). As of the date of
this Agreement, the Wellington 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 Wellington Portfolio; to continuously review,
supervise, and administer an investment program for the Wellington 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 Wellington
Portfolio, 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
Wellington Portfolio, the Advisor will comply with all applicable statutes,
rules, interpretations by the Securities and Exchange Commission or its staff,
other applicable law, and the written policies established by the Fund's Board
of Trustees and communicated in writing to the Advisor.
4. COMPENSATION OF ADVISOR. For services rendered pursuant to this Agreement,
the Fund shall pay to the Advisor, at the end of each fiscal quarter, a fee that
is calculated by applying the following annual percentage rates to the average
month-end net assets of the Fund, then divide the result by four. For purposes
of the compensation calculation, the average month end net assets of the Fund
are the Fund assets that are managed by the Advisor (including cash that may be
directed to The Vanguard Group, Inc. for cash management purposes) during the
quarter.
Average Net Assets Annual Rates
------------------ ------------
First $1 billion 0.060%
Next $3 billion 0.040%
Next $6 billion 0.030%
Over $10 billion 0.025%
In the event of termination of this Agreement, the fee provided in this
Section 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. 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.
6. COMPLIANCE WITH APPLICABLE LAW AND BOARD REQUIREMENTS. 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 under this Agreement.
9. DURATION; TERMINATION; NOTICES; AMENDMENT. This Agreement will become
effective on the date hereof and shall continue in effect for successive
twelve-month periods, 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 High-Yield Corporate Fund
▇.▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to the Advisor, at:
Wellington Management Company, LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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.
10. 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.
11. 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.
12. 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 Wellington Portfolio.
13. 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.
Wellington Management Company, LLP Vanguard Fixed Income Securities Funds
-------------------------------------- --------------------------------------
Signature Date Signature Date
-------------------------------------- --------------------------------------
Print Name Date Print Name Date