SHAREHOLDER SERVICES AGREEMENT
AGREEMENT, made as of this 14th day of May, 2004, between VANGUARD CMT
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, as amended, and as a transfer agent under the
Securities Exchange Act of 1934, as amended;
WHEREAS, Vanguard provides management, administrative, transfer agency,
dividend disbursing, investment advisory and other services to registered
investment companies and others; and
WHEREAS, the Trust and Vanguard desire that Vanguard serve as transfer
agent to the Trust and each of its series;
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 then-current
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.
(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.
2
4. COMPENSATION OF VANGUARD. Each of the Funds agrees to pay to
Vanguard, within 10 days after the last business day of each month or at such
other time as agreed to by the Fund and Vanguard, the actual costs incurred by
Vanguard in providing the services required of it under this Agreement for each
monthly period, or for such other period as is agreed upon, during which the
Fund is party to this Agreement. The actual costs incurred by Vanguard in
providing the services required of it under this Agreement to a Fund shall mean
the direct and indirect expenses of Vanguard's providing transfer agency
services to such Fund, based on a summary of the time spent by each Vanguard
employee who works directly on the affairs of such Fund, computed as a
percentage of the total time spent by such employee on the affairs of other
Vanguard clients.
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 as of
the date hereof 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.
3
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this Shareholder Services Agreement as of
the day and year first above written.
VANGUARD CMT FUNDS
By: /S/ XXXXXXXXXXX X. XXXXXXXX
Xxxxxxxxxxx X. Xxxxxxxx
Assistant Secretary
THE VANGUARD GROUP, INC.
By: /S/ XXXXXXX X. XXXXX
Xxxxxxx X. Xxxxx
Assistant Secretary
4
EXHIBIT A
SERIES OF VANGUARD CMT FUNDS
The following series of Vanguard CMT Funds are subject to the Agreement:
Vanguard Market Liquidity Fund
Vanguard Municipal Cash Management Fund
