SPECIAL SERVICE AGREEMENT
AGREEMENT, made as of this 1st day of August, 2008, by and
between VANGUARD STAR FUNDS, a Delaware statutory trust (the "Trust") on behalf
of its series VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND (the "Fund") and THE
VANGUARD GROUP, INC., a Pennsylvania corporation ("Vanguard").
WHEREAS, Vanguard provides management, administrative, transfer agency,
dividend disbursing, and other services to the Fund pursuant to a Special
Servicing Agreement dated March 1, 1985 (the "STAR Service Agreement");
WHEREAS, Vanguard provides at-cost investment advisory, distribution,
and other services to Vanguard member funds pursuant to the Funds' Service
Agreement dated June 15, 2001, as amended from time to time ("Funds' Service
Agreement");
WHEREAS, the Fund employs a fund of funds investment strategy by
investing in other Vanguard funds and also invests directly in securities as
permitted by Rule 12d1-2 under the Investment Company Act of 1940, as amended
("1940 Act");
WHEREAS, the Trust wishes to retain Vanguard to render investment
advisory and administrative services associated with direct investment in
securities, and Vanguard is willing to render such services on these terms;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Advisory services. The Trust hereby appoints Vanguard as
investment advisor ("Advisor") to the Fund. Vanguard accepts such appointment
and agrees to provide investment advisory services to the Fund on the terms set
forth in this Agreement.
2. Duties of Vanguard as Advisor. The Trust employs the Advisor to
manage the investment and reinvestment of the Fund's assets; to continuously
review, supervise, and administer an investment program for the Fund; to
determine in its discretion the securities to be purchased or sold and the
portion of 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 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.
3. Securities transactions. The Advisor is authorized to select the
brokers or dealers that will execute purchases and sales of securities for the
Fund, and is directed to seek to obtain the best available price and most
favorable execution for such transactions. Vanguard will
promptly communicate to the Trust's officers and Board of Trustees such
information relating to portfolio transactions as they may reasonably request.
4. Duties of Vanguard as Administrator. In addition to services that
Vanguard provides as administrator under the STAR Service Agreement, Vanguard
also shall provide services associated with the Fund's direct investment in
securities including, but not limited to, services of custodian and depository
banks; services of independent accountants; services contracted for the Trust
or the Fund from parties other than Vanguard; and all other administrative
services arising out of the Fund's operations.
5. Compensation. In consideration for the investment advisory and
administrative services provided to the Fund by Vanguard, Vanguard shall be
entitled to receive from the Trust, on behalf of the Fund, the out-of-pocket,
incremental costs Vanguard incurs in providing such services.
6. Responsibility for Expenses. Vanguard will provide, at its own
expense, the office space, furnishings and equipment and personnel required by
it to perform its responsibilities as investment advisor and administrator. The
Fund shall not be allocated, or obligated to pay, any portion of the expenses of
Vanguard pursuant to Section 3.2 of the Funds' Service Agreement, except as set
forth in Section 5 of this Agreement or as otherwise determined by the Board of
Directors of Vanguard pursuant to Section 3.2(A)(4) of the Funds' Service
Agreement.
7. Compliance. The Advisor agrees to comply with Applicable Law and
all policies, procedures, and reporting requirements that the Board of Trustees
reasonably adopts and communicates to the Advisor in writing. "Applicable Law"
means (i) the "federal securities laws" as defined in Rule 38a-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.
8. Duration and Termination. This Agreement will become effective on
the date first written above and will continue in effect for a period of two
years thereafter, and shall continue in effect thereafter only so long as such
continuance is approved at least annually by the vote of the Trust's 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
approval. 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 60 days' written notice to Vanguard, (ii) this Agreement will
automatically terminate in the event of its assignment, and (iii) this Agreement
may be terminated by Vanguard on 90 days' written notice to the Fund. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth herein.
VANGUARD STAR FUNDS
By _/s/Xxxx X. Brennan_________________
Xxxx X. Xxxxxxx
Chairman and Chief Executive Officer
THE VANGUARD GROUP, INC.
By _/s/Xxxx X. Brennan_________________
Xxxx X. Xxxxxxx
Chairman and Chief Executive Officer
