SHAREHOLDER SERVICES AGREEMENT
AGREEMENT, made as of this 31st day of May, 2001, between VANGUARD
INSTITUTIONAL INDEX FUNDS, a Delaware business trust (the "Trust"), and THE
VANGUARD GROUP, INC., a Pennsylvania Corporation ("Vanguard").
WHEREAS, the Trust is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act");
WHEREAS, Vanguard is registered as an investment adviser under the
Investment Advisers Act of 1940 and as a transfer agent under the Securities
Exchange Act of 1934;
WHEREAS, Vanguard provides management, administrative, transfer agency,
dividend disbursing, investment advisory and other services to registered
investment companies and others;
WHEREAS, Vanguard has served as investment adviser, administrator, and
transfer agent to the Trust and its series known as Vanguard Institutional Index
Fund ("VIIF") under a Service and Advisory Agreement dated April 16, 1991, as
amended on May 16, 1997 (the "Prior Agreement");
WHEREAS, the Trust and Vanguard wish to provide for the continuation of
Vanguard's services to the Trust and VIIF on substantially the same terms and
conditions as provided in the Prior Agreement;
WHEREAS, the Trust and Vanguard further wish to provide for the appointment
of Vanguard as investment adviser, administrator, and transfer agent to a new
series of the Trust, to be known as Vanguard Institutional Total Stock Market
Index Fund ("VITSMIF"), and to such additional series as the Trust may from time
to time offer; and
WHEREAS, the Trust and Vanguard wish to accomplish the foregoing objectives
by replacing the Prior Agreement with this Agreement concerning transfer agency
services and a separate Management Agreement concerning investment advisory and
administrative services;
NOW, THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. APPOINTMENT OF VANGUARD. The Trust hereby appoints Vanguard to act as
transfer agent for each series of the Trust listed in Exhibit A to this
Agreement (each a "Fund," collectively the "Funds"), as it may from time to time
be amended ("Exhibit A"). Vanguard accepts such appointment and agrees to
provide services to the Funds on the terms set forth in this Agreement and
Exhibit A.
2. DUTIES OF VANGUARD AS TRANSFER AGENT. As transfer agent, it will be
Vanguard's responsibility to provide each Fund with the Basic Services and
Special Services described in sub- paragraphs (a) and (b) of this section.
Vanguard's provision of such services will be subject to the supervision and
control of each Fund's officers and Board of Trustees, and in compliance with
the objectives, policies, and limitations set forth in each Fund's registration
statement, Declaration of
Trust, By-laws, and any additional operating policies or procedures that the
Fund communicates to Vanguard in writing, and any applicable laws and
regulations.
(a) BASIC SERVICES. Basic Services to be provided by Vanguard will
include:
(i) Maintaining records on behalf of each Fund's registered shareholders
and furnishing to each Fund all information regarding such records as
may be required by law or reasonably requested by the Fund's officers;
(ii) Processing all orders for the purchase, redemption, exchange, transfer
or conversion of each Fund's registered shares in accordance with that
Fund's current registration statement and compliance policies;
(iii)Issuing quarterly account statements to registered shareholders of
each Fund, as well as confirmation statements in connection with
purchase, redemption, exchange, transfer, and conversion transactions;
(iv) Acknowledging all correspondence from registered shareholders, and
providing such other shareholder correspondence and portfolio
investment reviews as may from time to time be mutually agreed upon;
(v) Preparing, filing with the Internal Revenue Service, and mailing to
registered shareholders of each Fund such returns for reporting
payments of dividends and distributions as are required by applicable
law;
(vi) Withholding from any dividends or distributions paid to registered
shareholders of each Fund such amounts as may be required by
applicable tax laws, rules, or regulations;
(vii)Mailing proxy materials, shareholder reports and other materials to
registered shareholders of each Fund;
(viii)Providing tabulation and reporting services in connection with any
shareholder votes; and
(ix) Acting as dividend disbursing agent for each Fund, and, as such,
arranging for the appropriate crediting and handling of all dividend
and capital gains payments to registered shareholders.
(b) SPECIAL SERVICES. Special Services to be provided by Vanguard will
consist of certain services unique to institutional plan accounts,
including trustee services, plan participant education services, plan
participant telephone services, plan participant recordkeeping (VISTA)
services, and ancillary services that may be common for shareholders
of this type.
3. RESPONSIBILITY FOR EXPENSES. Vanguard will provide, at its own expense,
the office space, furnishings and equipment and the personnel required by it to
perform its responsibilities under this Agreement.
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(a) Other Expenses of Vanguard. Vanguard will also be responsible for
bearing the expense of any services contracted for the Trust or the
Funds directly from parties other than Vanguard in connection with
this Agreement
(b) Expenses of the Trust and the Funds. The Trust and the Funds will be
responsible for the following expenses: (i) fees payable to Vanguard
under this Agreement or a separate Management Agreement; and (ii)
expenses payable by the Trust and the Funds under a separate
Management Agreement.
4. COMPENSATION OF VANGUARD. For the services to be rendered by Vanguard as
provided in this Agreement, each Fund will pay to Vanguard, at the end of each
month, fees calculated by applying a monthly rate, based on the annual
percentage rates specified in Exhibit A, to the average daily net assets of the
pertinent share class of the Fund for the applicable month.
5. REPORTS. The Trust and Vanguard 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. Vanguard agrees to comply with all policies, procedures or
reporting requirements that the Board of Trustees of the Trust reasonably adopts
and communicates to Vanguard in writing.
7. STATUS OF VANGUARD. The services of Vanguard to the Trust and the Funds
are not to be deemed exclusive, and Vanguard will be free to render similar
services to others so long as its services to the Trust and the Funds are not
impaired thereby. Vanguard 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 Trust or the Funds in any way or otherwise be deemed an
agent of the Trust or the Funds.
8. LIABILITY OF VANGUARD. No provision of this Agreement will be deemed to
protect Vanguard against any liability to the Trust, the Funds, or their
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 AND TERMINATION. This Agreement will become effective on May
31, 2001 and will continue in effect thereafter until terminated by the Trust or
Vanguard upon sixty days written notice to the other party; provided, however,
that this Agreement may be terminated with respect to one or more Funds without
interruption to services provided to the other Funds under this Agreement.
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. 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 thereunder) of the
Commonwealth of Pennsylvania applicable to contracts made and to be performed in
that state.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed this 31st day of May, 2001
ATTEST: VANGUARD INSTITUTIONAL INDEX FUNDS
By /s Xxxxxxx X. Xxxxxx By /s Xxxx X. Xxxxxxx
Chairman and Chief Executive Officer
ATTEST: THE VANGUARD GROUP, INC.
By /s Xxxxxxx X. Xxxxxx By /s Xxxx X. Xxxxxxx
Chairman and Chief Executive Officer
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EXHIBIT A
to
Shareholder Services Agreement
Dated May 31, 2001
Fund/Share Class Annual Percentage Rate
---------------- ----------------------
Vanguard Institutional Index Fund
o Institutional Shares - for Basic Services & Special Services 0.03%
o Institutional Plus Shares - for Basic Services, only 0.005%
Vanguard Institutional Total Stock Market Index Fund
o Institutional Shares - for Basic Services & Special Services 0.04%
o Institutional Plus Shares - for Basic Services, only 0.005%
ACKNOWLEDGED AND AGREED:
ATTEST: VANGUARD INSTITUTIONAL INDEX FUNDS
By /s Xxxxxxx X. Xxxxxx By /s Xxxx X. Xxxxxxx 5/31/2001
Chairman and Chief Executive Officer Date
ATTEST: THE VANGUARD GROUP, INC.
By /s Xxxxxxx X. Xxxxxx By /s Xxxx X. Xxxxxxx 5/31/2001
Chairman and Chief Executive Officer Date
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EXHIBIT A
to
Shareholder Services Agreement
Amended October 1, 2001
Fund/Share Class Annual Percentage Rate
---------------- ----------------------
Vanguard Institutional Index Fund
o Institutional Shares - for Basic Services & Special Services 0.03%
o Institutional Plus Shares - for Basic Services, only 0.005%
Vanguard Institutional Total Bond Market Index Fund
o Institutional Shares - for Basic Services & Special Services 0.03%
Vanguard Institutional Total Stock Market Index Fund
o Institutional Shares - for Basic Services & Special Services 0.04%
o Institutional Plus Shares - for Basic Services, only 0.005%
ACKNOWLEDGED AND AGREED:
ATTEST: VANGUARD INSTITUTIONAL INDEX FUNDS
By /s Xxxxx X. Xxxxxxxx By /s Xxxx X. Xxxxxxx
Chairman and Chief Executive Officer
Date October 1, 2001
ATTEST: THE VANGUARD GROUP, INC.
By /s Xxxxx X. Xxxxxxxx By /s Xxxx X. Xxxxxxx
Chairman and Chief Executive Officer
Date October 1, 2001
