INVESTMENT ADVISORY AGREEMENT



     THIS AGREEMENT is made as of this 23rd day of May, 2005,  between  VANGUARD

WHITEHALL  FUNDS, a Delaware  statutory trust (the "Trust"),  and DONALD SMITH &

CO., INC.(the "Advisor"), a Delaware corporation.



                               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  SELECTED

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 "DSCO Portfolio").  As of the

date of this  Agreement,  the DSCO  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 DSCO Portfolio; to continuously

review,  supervise, and administer an investment program for the DSCO 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 DSCO

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

DSCO  Portfolio,  the Advisor will comply with all applicable  statutes,  rules,

interpretations  by the Securities and Exchange  Commission or its staff,  other

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