VANGUARD MANAGED PAYOUT FUNDS
FORM OF SPECIAL SERVICE AGREEMENT
AGREEMENT, made as of this 11th day of December, 2007, between VANGUARD
VALLEY FORGE FUNDS, a Delaware statutory trust (the "Trust"), and THE VANGUARD
GROUP, INC., a Pennsylvania corporation ("Vanguard").
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940 that offers the following
series: o Vanguard Managed Payout Growth Focus Fund o Vanguard Managed Payout
Distribution Focus Fund o Vanguard Managed Payout Growth and Distribution Fund
(each a "Fund");
WHEREAS, each Fund employs a "fund of funds" investment strategy by
investing in other registered investment companies managed or administered by
Vanguard;
WHEREAS, Vanguard provides management, administrative, transfer agency,
dividend disbursing, investment advisory and other services to the Funds and
certain other registered investment companies pursuant to a written agreement,
which agreement may be amended from time to time, the current version being the
Fourth Amended and Restated Funds' Service Agreement, dated June 15, 2001 (the
"Funds' Service Agreement");
WHEREAS, the Trust wishes to retain Vanguard to render to the Funds the
services described in the preceding paragraph on slightly different terms than
provided for in the Funds' Service Agreement, and Vanguard is willing to render
such services on those terms; and
WHEREAS, more than two-thirds of the registered investment companies
that are parties to the Funds' Service Agreement have agreed that Vanguard may
enter this Agreement with the Trust.
NOW, THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. In consideration for the services provided to the Funds by Vanguard
pursuant to the Funds' Service Agreement, Vanguard shall be entitled to receive
from the Funds the out-of-pocket, incremental costs Vanguard incurs in providing
such services.
2. Notwithstanding anything in the Funds' Service Agreement to the
contrary, a Fund:
(a) shall not be obligated or permitted to make a capital contribution or to
acquire shares of Vanguard pursuant to Part I of the Funds' Service
Agreement, except to the extent that the Fund's assets are not invested in
shares of other Vanguard funds;
(b) 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 1 of this Agreement or as otherwise determined by the
Board of Directors of Vanguard pursuant to Section 3.2(A)(4) of the Fund
Services' Agreement; and
(c) may have the expenses the Fund would otherwise bear pursuant to Section 1
of this Agreement and Section 2.1 of the Funds' Service Agreement reduced
or eliminated by the savings that accrue to the benefit of the Vanguard
funds by virtue of the operation of the Fund.
3. Except as provided above, the parties agree that each Fund shall be
subject to all the provisions of the Funds' Service Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth herein.
VANGUARD VALLEY FORGE FUNDS
By
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman and Chief Executive Officer
THE VANGUARD GROUP, INC.
By
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman and Chief Executive Officer