CUSTODY AGREEMENT
This Agreement made this 17th day of May, 2000 between Vanguard Growth Equity
Fund, a series of Vanguard Fenway Funds (herein after called Owner) and FIRST
UNION NATIONAL BANK (hereinafter called Agent).
W I T N E S S E T H
1. APPOINTMENT OF AGENT. Owner hereby appoints Agent as its agent and
custodian, and Agent hereby accepts such appointment and agrees to act as agent
and custodian, on the terms hereinafter specified.
2. CUSTODY OF ASSETS. Agent shall act as custodian of all cash, securities,
evidences of indebtedness and other property, including all income thereon and
proceeds from the sale of maturity thereof (collectively, the Assets), from time
to time delivered to or received by it for Owner. The Assets shall be held in
the appropriate account or accounts as may be established from time to time upon
Owner's written request and shall be segregated at all times (except for cash
and Assets held in book-entry form) from the securities and property of any
other person or entity.
3. ASSETS HELD IN SECURITIES DEPOSITORY OR BOOK-ENTRY SYSTEM. As used
herein, the term `Assets' shall also include all securities held on behalf of
Owner in The Depository Trust Company (DTC) and registered in the account of
Agent or Agent's subagent or subcustodian with DTC or Cede & Co., as its
nominee, and all securities held on behalf of Owner in The Participant Trust
Company (PTC) and registered in the account of Agent or Agent's subagent or
subcustodian in such book-entry system, and all securities held on behalf of
Owner, in the Federal Reserve/Treasury book-entry system and registered in the
account of Agent or Agent's subagent or subcustodian in such book-entry system,
PROVIDED that, in either case, Agent shall provide Owner with the name of any
such subagent or subcustodian promptly following any appointment thereof
hereunder and shall at all times be fully responsible for all actions or
omissions of any such subagent or subcustodian to the same extent as if such
actions or omissions where those of Agent.
4. REGISTRATION OF ASSETS. All Assets which are in registered form shall,
unless Agent is otherwise Instructed (as hereafter defined) in writing, be
registered in accordance with paragraph 3 above or in the name of Agent of
Agent's subagent or subcustodian or nominees thereof, provided that Agent shall
provide Owner with the name of any such subagent or subcustodian or nominee
promptly following any appointment thereof hereunder and shall at all times be
fully responsible for all actions or omissions of any such subagent or
subcustodian or nominee to the same extent s if such actions or omissions were
those of Agent. For purposes of this Agreement, the term Nominees shall refer to
Agent and such other entities or persons in whose name(s) Assets may be
registered in accordance herewith.
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5. REPORTS. Agent shall forward or cause to be forwarded to Owner any
financial reports, proxy statements, tender offers or other materials received
by it with respect to Assets registered in the name of the Nominees. Agent shall
promptly forward or cause to be forwarded to Owner all proxies with respect to
such Assets executed in blank by the appropriate Nominees together with all
pertinent information and documents received by Agent in connection with such
proxies.
6. INCOME OF ASSETS. (a) Agent shall take all steps necessary to collect
the dividends, interest and other income on the Assets and shall credit said
income on payable date to the appropriate account designated by Owner from time
to time in Clearinghouse or Available Funds as determined by the Assets. All
income credited to Owner's account shall be promptly reinvested or distributed
to Owner in accordance with Owner's Instructions given from time to time.
(b) Unless otherwise instructed in writing, Agent shall retain in the
appropriate account of Owner any stock dividends, subscription rights and other
non-cash distributions on the Assets, or the proceeds from the sale of any
distributions. Agent shall notify Owner upon the receipt of any such non-cash
item.
(c) Agent or its Nominee is hereby authorized to sign any declarations,
endorsements, affidavits, certificates of ownership or other documents which may
be required with respect to all coupons, registered interest, dividends or other
income on the Assets.
7. PURCHASES AND SALES OF ASSETS. (a) Agent shall promptly effect purchases
and sales of the Assets in accordance with Owner's Instructions from time to
time and shall take all steps necessary to collect the proceeds of any Assets
which are sold, redeemed or which have matured and shall promptly deposit or
withdraw said proceeds in Clearinghouse or Available Funds as determined by the
Assets in the appropriate account designated by Fund from time to time, PROVIDED
that agent shall not be responsible for the collection of Assets called for
redemption or otherwise payable (other than by reason of sale or other
disposition by Agent) unless notice thereof is published in a national financial
reporting services Agent subscribes, including but not limited to, Financial
Information Services, XX Xxxxxx, or Wall Street Journal or notice is otherwise
received by Agent. Agent shall not be under any duty to advise or recommend any
sales or purchases of Assets for Owner's account.
(b) Agent shall effect the Corporate Actions in accordance with the Owner's
Instructions and shall take all steps necessary to collect the proceeds in Cash
and/or assets resulting from any Corporate Action as long as notice of such
Corporate Action is published in the national reporting services described
above.
(c) Agent shall not be under any duty to advise or recommend any sales, or
purchases of assets or response to Corporate Actions notifications for Owner's
account.
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8. LIMITATION OF LIABILITY; RESPONSIBILITIES.
(a) Agent shall not be liable for any loss or damage suffered by Owner as
the result of any act or omission of any broker or other agent engaged by Owner
in effecting purchases, sales or exchanges of Assets except to the extent of any
liability caused by (I) the negligence, of Agent or its subagent or
subcustodian, or (ii) the failure of Agent or its subagent or subcustodian to
perform any acts required in this Agreement. Agent shall not be liable for loss
or damage caused either directly or indirectly by invasion by a foreign power,
insurrection, riot, war, nuclear disaster, order of civil authority, unrelated
to any act or omission by agent, or subagent or subcustodian, or any causes
beyond its control which cannot be covered by Agent's insurance.
(b) Agent shall not be responsible to file any tax returns or pay any taxes
due in connection with the Assets held hereunder and the income therefrom.
(c) Agent shall be under no obligation to advise the Owner of due or tender
dates for those Assets which have tender options attached to, stamped on, or
incorporated in the Asset itself.
9. STATEMENTS. Agent shall deliver to Owner no less frequently than
monthly, a statement of all accounts maintained hereunder showing all receipts,
disbursements and other transactions affecting the Assets during the preceding
month and a statement of the cost and market value of each of the Assets at the
end of the preceding month. The scope, content and frequency of the statements
required hereunder may be changed from time to time upon the mutual written
agreement of the parties hereto.
10. OTHER ACQUISITIONS. Owner authorizes Agent to act, and Agent agrees
that it shall act for Owner from time to time, in the acceptance of the delivery
from a fiduciary or a donor to the Owner of securities, cash or other property.
Upon delivery to it of securities, cash or other property to be credited to
Owner's account, whether as the result of a purchase or distribution of a
bequest or gift, Agent shall promptly notify Owner and issue to it a receipt
setting forth an accurate description of each item received, together with the
face value thereof in the case of an evidence of indebtedness and the number of
shares in the case of stock.
11. WITHDRAWAL OF ASSETS. (a) Any securities and evidence of indebtedness
included in the Assets may be withdrawn from Agent in accordance with Owner's
Instructions; provided; however that except as provided below, such Instructions
shall direct that the delivery of any such securities and evidences of
indebtedness by Agent shall be made only to (I) a bank or trust company or its
nominee, (ii) a broker or its nominee, (iii) the DTC or its nominee, (iv) the
PTC, or its nominee, (v) The Federal Reserve, or (vi) in the case of commercial
paper, to the obligor upon payment. In the event the Instructions direct the
delivery of Assets to any person or entity other than as set forth above, such
Instructions shall be in writing by the Owner or otherwise be authorized
pursuant to a resolution duly adopted by the Owner and provided to agent in
accordance with paragraph 14(c) below.
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(b) Upon receipt of such Instructions and subject to the terms and
conditions thereof, Agent shall deliver the items specified therein to the
person or entity designated and shall obtain a proper receipt therefor.
(c) In connection with the sale of any Assets, Agent shall make delivery of
such Assets only against payment therefor in federal funds or by certified or
bank cashier's check, PROVIDED that, consistent with customary practice at the
place of delivery, Agent may (I) make delivery for inspection prior to sale at
buyer's location, upon delivery to Agent of a proper receipt therefor, to a
member of a registered national securities exchange or bank or trust company,
and (ii) may accept as payment for such delivered assets an uncertified check of
such an entity. In no event shall Agent be liable hereunder for not delivering
Assets in accordance with Owner's Instructions where such delivery is withheld
by reason of the purchaser's inability or unwillingness to make a payment
therefor in federal funds or by certified or bank cashier's check or as
otherwise provided in this paragraph 11(c).
(d) Any cash included in the Assets may be withdrawn from Agent in
accordance with the Owner's Instructions, provided, however, that subject to a
transfer or other disposition of securities by bookkeeping entry in connection
with Agent's participation (through its agent) in DTC, PTC, or the Federal
Reserve/Treasury book-entry system, Agent shall make payments of cash to, or
from the account of, Owner only (I) upon the purchase of securities or other
Assets and delivery of such securities or other Assets to Agent in proper form
for transfer; (ii) to Owner's account with First Union National Bank or with
such other bank as Owner may designate by written Instructions from time to
time; (iii) for the payment of Agent's expenses and fees authorized with this
Agreement; and (iv) for payments in connection with the conversion, exchange or
surrender of securities included in the Assets. In making any cash payments,
Agent shall receive written Instructions authorized by the Owner.
(e) Agent shall promptly notify the Owner of all withdrawals from or
deliveries to Bank for Owner's account hereunder.
12. ADVANCEMENT OF FUNDS. If at any time the Owner has a negative cash
balance, Agent shall be deemed to have made an advance to Owner in the amount of
such negative cash balance. To secure any such advance, the Owner hereby grants
to Agent a continuing lien upon and security interest in all Investments (as
hereinafter defined) which are (a) held in, evidenced by or identified with the
Account, or (b) otherwise held by Agent in custody for the Owner or held by
Agent or any third party in the name of Agent on behalf of the Owner. As used in
the preceding sentence the term `Investments' means instruments and securities
(whether in certificated, book entry or uncertificated form), deposit accounts,
other investments, however classified under applicable law, and all proceeds of
all of the foregoing. Said lien and security interest is in addition to any
right of setoff which Agent may have.
13. INDEMNITY. With respect to any Assets received by Agent and registered
in the name of Agent or Agent's subagent or subcustodian or nominee or held on
behalf of Owner in DTC, PTC, or the Federal Reserve/Treasury book-entry system,
Agent shall be fully responsible and
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liable for and shall indemnify and hold Owner harmless against any loss, damage
or expense (including attorney's fees and amounts paid with Agent's consent in
settlement of any claim or action) which Owner may sustain resulting from (I)
any act of Agent, its subagent or subcustodian or nominee, or any employee or
other agent of any of them which has not been authorized hereunder, or (ii) any
failure by Agent, or its subagent or subcustodian or nominee to perform any of
its obligations under this Agreement. Except with respect to the extent same may
result, directly or indirectly from any negligent act or omission or willful
misconduct of Agent, its subagent or subcustodian or nominee, or any employee or
other agent of any of them or any failure of Agent or its subagent or
subcustodian or nominee, to perform any of Agent's obligations under this
Agreement, Owner shall indemnify and hold Agent or any subagent, subcustodian or
nominee harmless against any liability, loss, damage or expense (including
attorney's fees and amounts paid, with Owner's consent, in settlement of any
claim or action) with Agent or any subagent, subcustodian or nominee may sustain
resulting from its performance in accordance with this Agreement.
14. INSTRUCTIONS, NOTICES AND AUTHORIZED PERSONS.
(a) As used in this Agreement, the term `Instructions' or `Instructed'
means a request or order given or delivered to Agent by the Owner. Unless
specifically required herein to be in writing, Instructions shall be promptly
confirmed in writing. Failure to provide a written confirmation of oral
Instructions shall not invalidate any such Instructions.
(b) Any notices, confirmations and receipts required hereunder to be
delivered by Agent to Owner, unless otherwise specifically provided, shall be
delivered by Agent to the Owner. The Owner shall certify to Agent, as required,
the names of the persons who, from time to time, shall have been duly appointed
to act as Owner.
(c) Owner will from time to time file with Agent a certified copy of a
corporate resolution or similar document as appropriate authorizing person or
persons to give proper instructions and specifying the class of instructions
that may be given by each person to Agent under this Agreement.
(d) Agent may rely and shall be protected in acting upon any oral or
written (including telegraph and other mechanical) instructions, request, letter
of transmittal, certificate, opinion of counsel, statement, instrument, report,
notice, consent, order, or other paper or document reasonably believed by it to
be genuine and to have been signed forwarded or presented by Owner or designee.
15. AUDIT OF ACCOUNT. Owner, or its designated representative, shall have
at all reasonable times free access to the books and records of Agent relating
to the accounts created b or pursuant to its Agreement for the purpose of audit,
or otherwise, and to the Assets held by Agent hereunder and its records relating
to Agent's or its subagent's or subcustodian's accounts with DTC, PTC and the
Federal Reserve/Treasury book-entry system or otherwise on behalf of Owner for
the purpose of examination.
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16. FEES AND EXPENSES. Agent shall notify Owner of any changes and out-of-
pocket expenses in connection with the performance of its duties hereunder and
Owner shall pay Agent all prior charges and expenses of Agent and its Nominee.
Agent's compensation for its services hereunder shall be charged at the rate
agreed upon in Addendum A. There may not be any change to this Addendum unless
mutually agreed upon in writing by the Owner and the custodian.
17. AMENDMENTS OR TERMINATION. This Agreement contains the entire
understanding between the Owner and the Agent concerning the subject matter of
this Agreement, supersedes all other Custody Agreements of dates previous and
may be amended only in writing signed by both parties. No term or provision of
this Agreement may be modified or waived unless in writing and signed by the
party against whom such waiver or modification is sought to enforce. Either
parties failure to insist at any time upon strict compliance with this Agreement
or with any of the terms hereunder, or any continued course of such conduct on
the part of either party shall in no event constitute or be considered a waiver
by either party of any of its rights hereunder. This Agreement may be terminated
at any time provided such effective time shall be not less than 60 days and not
more than 90 days from the date of written notice of termination.
18. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Pennsylvania.
Accepted:
Attest: Vanguard Growth Equity Fund,
A series of Vanguard Fenway Funds
By: Xxxx Xxxxxx By: /s/ Xxxxxx Xxxxxxx
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Date: May 9, 2000
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FIRST UNION NATIONAL BANK
By: Xxxx Xxxxxx By: /s/ Xxxx Xxxxxx
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Date: May 17, 2000
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