-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OkTdJ3wOHPVAG8zhvpNRQ3GoSSwqsHiX8sNG4fBBwjbprRDQmdVBhcIvaSxXw7tD P3zRyYCaGDXx9PY0Hvj0xQ== 0000932471-99-000518.txt : 19991217 0000932471-99-000518.hdr.sgml : 19991217 ACCESSION NUMBER: 0000932471-99-000518 CONFORMED SUBMISSION TYPE: NSAR-B PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19991031 FILED AS OF DATE: 19991216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VANGUARD/WINDSOR FUNDS INC CENTRAL INDEX KEY: 0000107606 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 510082711 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: NSAR-B SEC ACT: SEC FILE NUMBER: 811-00834 FILM NUMBER: 99775632 BUSINESS ADDRESS: STREET 1: PO BOX 2600 STREET 2: V37 CITY: VALLEY FORGE STATE: PA ZIP: 19482 BUSINESS PHONE: 6106696289 MAIL ADDRESS: STREET 1: PO BOX 2600 STREET 2: V37 CITY: VALLEY FORGE STATE: PA ZIP: 19482 FORMER COMPANY: FORMER CONFORMED NAME: WINDSOR FUNDS INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: WINDSOR FUNDS DATE OF NAME CHANGE: 19851031 FORMER COMPANY: FORMER CONFORMED NAME: WINDSOR FUND INC DATE OF NAME CHANGE: 19850424 NSAR-B 1 N-SAR (6.1) PAGE 1 000 B000000 10/31/1999 000 C000000 0000107606 000 D000000 N 000 E000000 NF 000 F000000 Y 000 G000000 N 000 H000000 N 000 I000000 6.1 000 J000000 U 001 A000000 VANGUARD WINDSOR FUNDS 001 B000000 811-834 001 C000000 6106691000 002 A000000 100 VANGUARD BOULEVARD 002 B000000 MALVERN 002 C000000 PA 002 D010000 19355 003 000000 N 004 000000 N 005 000000 N 006 000000 N 007 A000000 Y 007 B000000 2 007 C010100 1 007 C020100 VANGUARD WINDSOR FUND 007 C030100 N 007 C010200 2 007 C020200 VANGUARD WINDSOR II FUND 007 C030200 N 007 C010300 3 007 C010400 4 007 C010500 5 007 C010600 6 007 C010700 7 007 C010800 8 007 C010900 9 007 C011000 10 010 A00AA01 THE VANGUARD GROUP, INC. 010 B00AA01 801-11953 010 C01AA01 MALVERN 010 C02AA01 PA 010 C03AA01 19355 012 A00AA01 THE VANGUARD GROUP, INC. 012 B00AA01 84-772 012 C01AA01 MALVERN 012 C02AA01 PA 012 C03AA01 19355 013 A00AA01 PRICEWATERHOUSECOOPERS LLP 013 B01AA01 PHILADELPHIA 013 B02AA01 PA 013 B03AA01 19103 015 A00AA01 STATE STREET BANK AND TRUST COMPANY PAGE 2 015 B00AA01 C 015 C01AA01 BOSTON 015 C02AA01 MA 015 C03AA01 02110 015 E01AA01 X 018 00AA00 Y 019 A00AA00 Y 019 B00AA00 103 019 C00AA00 VANGUARDGR 020 A000001 FRANK RUSSELL SECURITIES, INC. 020 B000001 91-0604934 020 C000001 7340 020 A000002 GOLDMAN SACHS & CO. 020 B000002 13-5108880 020 C000002 2911 020 A000003 SALOMON SMITH BARNEY HOLDINGS INC. 020 B000003 11-2418191 020 C000003 2031 020 A000004 LEHMAN BROTHERS INC. 020 B000004 13-2518466 020 C000004 1892 020 A000005 DONALDSON,LUFKIN & JENRETTE SECURITIES CORP. 020 B000005 13-2741729 020 C000005 1756 020 A000006 FRANCIS P. MAGLIO 020 B000006 22-2854776 020 C000006 1665 020 A000007 BRIDGE TRADING CO. 020 B000007 43-1450530 020 C000007 1497 020 A000008 MERRILL LYNCH PIERCE FENNER & SMITH 020 B000008 13-5674085 020 C000008 1398 020 A000009 CREDIT SUISSE FIRST BOSTON CORP. 020 B000009 13-5659485 020 C000009 1360 020 A000010 INVESTMENT TECHNOLOGY GROUP, INC. 020 B000010 95-4339939 020 C000010 1015 021 000000 40683 022 A000001 THE VANGUARD GROUP, INC./POOLED CASH ACCT. 022 B000001 23-1945930 022 C000001 12894915 022 D000001 12723572 022 A000002 LEHMAN BROTHERS INC. 022 B000002 13-2518466 022 C000002 6357038 022 D000002 155313 022 A000003 CREDIT SUISSE FIRST BOSTON CORP. 022 B000003 13-5659485 022 C000003 4547270 PAGE 3 022 D000003 54815 022 A000004 J.P. MORGAN SECURITIES INC. 022 B000004 13-3224016 022 C000004 952139 022 D000004 42695 022 A000005 JEFFERIES & CO., INC. 022 B000005 95-2622900 022 C000005 360914 022 D000005 346788 022 A000006 BANKERS TRUST CORP. 022 C000006 0 022 D000006 484837 022 A000007 DONALDSON, LUFKIN & JENRETTE SECURITIES CORP. 022 B000007 13-2741729 022 C000007 196850 022 D000007 233620 022 A000008 MORGAN STANLEY & CO., INC. 022 B000008 13-2655998 022 C000008 281150 022 D000008 45731 022 A000009 HSBC SECURITIES, INC. 022 B000009 13-2650272 022 C000009 298328 022 D000009 0 022 A000010 FIRST CHICAGO CAPITAL MARKETS, INC. 022 B000010 36-3595942 022 C000010 286235 022 D000010 0 023 C000000 28816079 023 D000000 14771402 026 A000000 N 026 B000000 N 026 C000000 N 026 D000000 Y 026 E000000 N 026 F000000 N 026 G010000 N 026 G020000 Y 026 H000000 N 027 000000 Y 029 00AA00 N 030 A00AA00 0 030 B00AA00 0.00 030 C00AA00 0.00 031 A00AA00 0 031 B00AA00 0 032 00AA00 0 033 00AA00 0 034 00AA00 N 035 00AA00 0 036 B00AA00 0 PAGE 4 037 00AA00 N 038 00AA00 0 039 00AA00 N 040 00AA00 N 055 A00AA00 N 055 B00AA00 N 056 00AA00 Y 057 00AA00 N 062 A00AA00 N 062 B00AA00 0.0 062 C00AA00 0.0 062 D00AA00 0.0 062 E00AA00 0.0 062 F00AA00 0.0 062 G00AA00 0.0 062 H00AA00 0.0 062 I00AA00 0.0 062 J00AA00 0.0 062 K00AA00 0.0 062 L00AA00 0.0 062 M00AA00 0.0 062 N00AA00 0.0 062 O00AA00 0.0 062 P00AA00 0.0 062 Q00AA00 0.0 062 R00AA00 0.0 063 A00AA00 0 063 B00AA00 0.0 066 A00AA00 Y 066 B00AA00 N 066 C00AA00 N 066 D00AA00 N 066 E00AA00 Y 066 F00AA00 N 066 G00AA00 N 067 00AA00 N 068 A00AA00 N 068 B00AA00 N 069 00AA00 N 077 A000000 Y 077 B000000 Y 077 Q010000 Y 078 000000 N 080 A00AA00 ICI MUTUAL INSURANCE COMPANY 080 C00AA00 350000 081 A00AA00 Y 081 B00AA00 183 082 A00AA00 N 082 B00AA00 0 083 A00AA00 N 083 B00AA00 0 PAGE 5 084 A00AA00 N 084 B00AA00 0 085 A00AA00 Y 085 B00AA00 N 086 A010000 0 086 A020000 0 086 B010000 0 086 B020000 0 086 C010000 0 086 C020000 0 086 D010000 0 086 D020000 0 086 E010000 0 086 E020000 0 086 F010000 0 086 F020000 0 008 A000101 WELLINGTON MANAGEMENT COMPANY 008 B000101 A 008 C000101 801-11908 008 D010101 BOSTON 008 D020101 MA 008 D030101 02109 008 A000102 SANFORD C. BERNSTEIN 008 B000102 A 008 C000102 801-10488 008 D010102 NEW YORK 008 D020102 NY 008 D030102 10153 024 000100 N 025 A000101 DELETE 025 D000101 0 025 A000102 DELETE 025 D000102 0 025 A000103 DELETE 025 D000103 0 025 D000104 0 025 D000105 0 025 D000106 0 025 D000107 0 025 D000108 0 028 A010100 110528 028 A020100 0 028 A030100 0 028 A040100 332528 028 B010100 162047 028 B020100 105522 028 B030100 0 028 B040100 182041 028 C010100 146285 028 C020100 0 028 C030100 0 PAGE 6 028 C040100 203038 028 D010100 116287 028 D020100 0 028 D030100 0 028 D040100 188464 028 E010100 225431 028 E020100 0 028 E030100 0 028 E040100 646157 028 F010100 82604 028 F020100 0 028 F030100 0 028 F040100 236018 028 G010100 843182 028 G020100 105522 028 G030100 0 028 G040100 1788246 028 H000100 0 042 A000100 0 042 B000100 0 042 C000100 0 042 D000100 0 042 E000100 0 042 F000100 0 042 G000100 0 042 H000100 0 043 000100 0 044 000100 0 045 000100 Y 046 000100 Y 047 000100 N 048 000100 0.000 048 A010100 0 048 A020100 0.000 048 B010100 0 048 B020100 0.000 048 C010100 0 048 C020100 0.000 048 D010100 0 048 D020100 0.000 048 E010100 0 048 E020100 0.000 048 F010100 0 048 F020100 0.000 048 G010100 0 048 G020100 0.000 048 H010100 0 048 H020100 0.000 048 I010100 0 048 I020100 0.000 048 J010100 0 PAGE 7 048 J020100 0.000 048 K010100 0 048 K020100 0.000 049 000100 N 050 000100 N 051 000100 Y 052 000100 N 053 A000100 Y 053 B000100 Y 053 C000100 N 054 A000100 N 054 B000100 N 054 C000100 N 054 D000100 N 054 E000100 N 054 F000100 N 054 G000100 N 054 H000100 N 054 I000100 N 054 J000100 N 054 K000100 N 054 L000100 N 054 M000100 Y 054 N000100 N 054 O000100 N 058 A000100 N 059 000100 Y 060 A000100 Y 060 B000100 Y 061 000100 3000 070 A010100 Y 070 A020100 Y 070 B010100 Y 070 B020100 N 070 C010100 N 070 C020100 N 070 D010100 Y 070 D020100 N 070 E010100 N 070 E020100 N 070 F010100 Y 070 F020100 Y 070 G010100 Y 070 G020100 N 070 H010100 Y 070 H020100 N 070 I010100 N 070 I020100 N 070 J010100 Y 070 J020100 Y 070 K010100 Y PAGE 8 070 K020100 N 070 L010100 Y 070 L020100 Y 070 M010100 N 070 M020100 N 070 N010100 Y 070 N020100 Y 070 O010100 Y 070 O020100 N 070 P010100 Y 070 P020100 Y 070 Q010100 N 070 Q020100 N 070 R010100 N 070 R020100 N 071 A000100 9799245 071 B000100 13843338 071 C000100 17506682 071 D000100 56 072 A000100 12 072 B000100 15017 072 C000100 309153 072 D000100 0 072 E000100 1232 072 F000100 7983 072 G000100 18715 072 H000100 0 072 I000100 20082 072 J000100 498 072 K000100 0 072 L000100 408 072 M000100 27 072 N000100 0 072 O000100 0 072 P000100 0 072 Q000100 0 072 R000100 23 072 S000100 0 072 T000100 2519 072 U000100 0 072 V000100 0 072 W000100 0 072 X000100 50255 072 Y000100 2460 072 Z000100 277607 072AA000100 3199612 072BB000100 1259081 072CC010100 42819 072CC020100 0 072DD010100 255285 072DD020100 0 PAGE 9 072EE000100 1341486 073 A010100 0.2400 073 A020100 0.0000 073 B000100 1.2300 073 C000100 0.0000 074 A000100 1227 074 B000100 338395 074 C000100 14790 074 D000100 0 074 E000100 186755 074 F000100 16272406 074 G000100 0 074 H000100 0 074 I000100 3551 074 J000100 180998 074 K000100 0 074 L000100 32487 074 M000100 0 074 N000100 17030609 074 O000100 112517 074 P000100 9016 074 Q000100 0 074 R010100 0 074 R020100 0 074 R030100 0 074 R040100 85354 074 S000100 0 074 T000100 16823722 074 U010100 994989 074 U020100 0 074 V010100 16.91 074 V020100 0.00 074 W000100 0.0000 074 X000100 464439 074 Y000100 14790 075 A000100 0 075 B000100 17809538 076 000100 0.00 008 A000201 BARROW, HANLEY, MEWHINNEY & STRAUSS, INC. 008 B000201 A 008 C000201 801-14861 008 D010201 DALLAS 008 D020201 TX 008 D030201 75201 008 A000202 EQUINOX CAPITAL MANAGEMENT, INC. 008 B000202 A 008 C000202 801-34524 008 D010202 NEW YORK 008 D020202 NY 008 D030202 10022 008 A000203 TUKMAN CAPITAL MANAGEMENT, INC. PAGE 10 008 B000203 A 008 C000203 801-15279 008 D010203 LARKSPUR 008 D020203 CA 008 D030203 94939 024 000200 Y 025 A000201 MERRILL LYNCH & CO., INC. 025 B000201 13-5674085 025 C000201 E 025 D000201 15724 025 A000202 DELETE 025 D000202 0 025 A000203 DELETE 025 D000203 0 025 A000204 DELETE 025 D000204 0 025 A000205 DELETE 025 D000205 0 025 D000206 0 025 D000207 0 025 D000208 0 028 A010200 535420 028 A020200 42 028 A030200 0 028 A040200 357979 028 B010200 446848 028 B020200 302635 028 B030200 0 028 B040200 399240 028 C010200 459567 028 C020200 0 028 C030200 0 028 C040200 508840 028 D010200 425710 028 D020200 1 028 D030200 0 028 D040200 475505 028 E010200 408431 028 E020200 1 028 E030200 0 028 E040200 504747 028 F010200 292090 028 F020200 0 028 F030200 0 028 F040200 733255 028 G010200 2568066 028 G020200 302679 028 G030200 0 028 G040200 2979566 028 H000200 0 045 000200 Y PAGE 11 046 000200 Y 047 000200 N 048 000200 0.000 048 A010200 0 048 A020200 0.000 048 B010200 0 048 B020200 0.000 048 C010200 0 048 C020200 0.000 048 D010200 0 048 D020200 0.000 048 E010200 0 048 E020200 0.000 048 F010200 0 048 F020200 0.000 048 G010200 0 048 G020200 0.000 048 H010200 0 048 H020200 0.000 048 I010200 0 048 I020200 0.000 048 J010200 0 048 J020200 0.000 048 K010200 0 048 K020200 0.000 049 000200 N 050 000200 N 051 000200 Y 052 000200 N 053 A000200 N 054 A000200 N 054 B000200 N 054 C000200 N 054 D000200 N 054 E000200 N 054 F000200 N 054 G000200 N 054 H000200 N 054 I000200 N 054 J000200 N 054 K000200 N 054 L000200 N 054 M000200 Y 054 N000200 N 054 O000200 N 058 A000200 N 059 000200 Y 060 A000200 Y 060 B000200 Y 061 000200 3000 070 A010200 Y PAGE 12 070 A020200 Y 070 B010200 Y 070 B020200 N 070 C010200 N 070 C020200 N 070 D010200 Y 070 D020200 N 070 E010200 N 070 E020200 N 070 F010200 Y 070 F020200 Y 070 G010200 Y 070 G020200 N 070 H010200 Y 070 H020200 N 070 I010200 N 070 I020200 N 070 J010200 Y 070 J020200 N 070 K010200 Y 070 K020200 N 070 L010200 Y 070 L020200 Y 070 M010200 N 070 M020200 N 070 N010200 Y 070 N020200 Y 070 O010200 Y 070 O020200 N 070 P010200 Y 070 P020200 Y 070 Q010200 N 070 Q020200 N 070 R010200 N 070 R020200 N 071 A000200 8073231 071 B000200 7658527 071 C000200 29951741 071 D000200 26 072 A000200 12 072 B000200 111896 072 C000200 676050 072 D000200 0 072 E000200 161 072 F000200 37572 072 G000200 38200 072 H000200 0 072 I000200 38219 072 J000200 74 072 K000200 0 072 L000200 732 PAGE 13 072 M000200 49 072 N000200 0 072 O000200 0 072 P000200 0 072 Q000200 0 072 R000200 27 072 S000200 0 072 T000200 5283 072 U000200 0 072 V000200 0 072 W000200 0 072 X000200 120156 072 Y000200 2051 072 Z000200 670002 072AA000200 2907431 072BB000200 307416 072CC010200 0 072CC020200 1931112 072DD010200 741695 072DD020200 0 072EE000200 2559664 073 A010200 0.7400 073 A020200 0.0000 073 B000200 2.6700 073 C000200 0.0000 074 A000200 0 074 B000200 2173032 074 C000200 81033 074 D000200 0 074 E000200 0 074 F000200 28369219 074 G000200 0 074 H000200 0 074 I000200 6582 074 J000200 34303 074 K000200 0 074 L000200 84803 074 M000200 0 074 N000200 30748972 074 O000200 85483 074 P000200 13044 074 Q000200 0 074 R010200 0 074 R020200 0 074 R030200 0 074 R040200 109616 074 S000200 0 074 T000200 30540829 074 U010200 1051864 074 U020200 0 074 V010200 29.03 PAGE 14 074 V020200 0.00 074 W000200 0.0000 074 X000200 1001867 074 Y000200 81003 075 A000200 0 075 B000200 32187906 076 000200 0.00 SIGNATURE SUSAN A. TRONEL TITLE MANAGER EX-27 2
6 0000107606 VANGUARD WINDSOR FUNDS 01 VANGUARD WINDSOR FUND 1000 US 12-MOS OCT-31-1999 NOV-01-1998 OCT-31-1999 1 14749227 16812346 213485 4778 0 17030609 112517 0 94370 206887 0 12801594 994989 1123024 93521 0 1859220 0 2069387 16823722 309153 15017 1232 47795 277607 1940531 42819 2260957 0 255285 1341486 0 82191 311166 100940 (1531676) 71199 1342104 0 0 7983 0 50255 17809538 16.34 0.27 1.77 0.24 1.23 0 16.91 0.28
EX-27 3
6 0000107606 VANGUARD WINDSOR FUNDS 02 VANGUARD WINDSOR II FUND 1000 US 12-MOS OCT-31-1999 NOV-01-1998 OCT-31-1999 1 25214794 30623284 119106 6582 0 30748972 85483 0 122660 208143 0 22391512 1051864 953895 223131 0 2498602 0 5427584 30540829 676050 111896 161 118105 670002 2600015 (1931112) 1338905 0 741695 2559664 0 198010 209049 109009 902168 294824 2458251 0 0 37572 0 120156 32187906 31.07 0.64 0.73 0.74 2.67 0 29.03 0.37
EX-99 4 To the Shareholders and Trustees of Vanguard Windsor Funds In planning and performing our audit of the financial statements of Vanguard Windsor Funds (the "Fund") for the year ended October 31, 1999, we considered its internal control, including control activities for safeguarding securities, in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and to comply with the requirements of Form N-SAR, not to provide assurance on internal control. The management of the Fund is responsible for establishing and maintaining internal control. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. Generally, controls that are relevant to an audit pertain to the entity's objective of preparing financial statements for external purposes that are fairly presented in conformity with generally accepted accounting principles. Those controls include the safeguarding of assets against unauthorized acquisition, use or disposition. Because of inherent limitations in internal control, errors or fraud may occur and not be detected. Also, projection of any evaluation of internal control to future periods is subject to the risk that it may become inadequate because of changes in conditions or that the effectiveness of the design and operation may deteriorate. Our consideration of internal control would not necessarily disclose all matters in internal control that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. However, we noted no matters involving internal control and its operation, including controls for safeguarding securities, that we consider to be material weaknesses as defined above as of October 31, 1999. This report is intended solely for the information and use of management and the Board of Trustees of the Fund and the Securities and Exchange Commission and is not intended to be and should not be used by anyone other than these specified parties. November 30, 1999 EX-99 5 INVESTMENT ADVISORY AGREEMENT AGREEMENT, made as of this __ day of _____, 1999, between VANGUARD WINDSOR FUNDS, a Delaware business trust (the "Company"), and Sanford C. Bernstein & Co., Inc., a New York corporation ("Adviser"). WHEREAS, the Company is an open-end, diversified management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"); WHEREAS, the Company offers a series of shares known as Vanguard Windsor Fund (the "Fund"); and WHEREAS, the Company desires to retain Adviser to render investment advisory services to certain assets of the Fund which the Board of Trustees of the Company determines to assign to Adviser (referred to in this Agreement as the "Bernstein Portfolio"), and Adviser is willing to render such services; NOW, THEREFORE, this Agreement W I T N E S S E T H that in consideration of the premises and mutual promises hereinafter set forth, the parties hereto agree as follows: 1. Appointment of Adviser. The Company hereby employs Adviser as investment adviser, on the terms and conditions set forth herein, for the assets of the Fund which the Board of Trustees determines to assign to Adviser. The Board of Trustees may, from time to time, make additions to, and withdrawals from, the assets of the Fund assigned to Adviser. Adviser accepts such employment and agrees to render the services herein set forth, for the compensation herein provided. 2. Duties of Adviser. The Company employs Adviser to manage the investment and reinvestment of the assets of the Bernstein Portfolio, to continuously review, supervise and administer an investment program for such assets of the Fund, to determine in its discretion the securities to be purchased or sold and the portion of such assets to be held uninvested, to provide the Fund with all records concerning the activities of Adviser that the Fund is required to maintain, and to render regular reports to the Fund's officers and Board of Trustees concerning the discharge of the foregoing responsibilities. Adviser will discharge the foregoing responsibilities subject to the control of the officers and the Board of Trustees of the Company, and in compliance with the objectives, policies and limitations set forth in the Fund's prospectus and applicable laws and regulations. Adviser agrees to provide, at its own expense, the office space, furnishings and equipment and the personnel required by it to perform the services on the terms and for the compensation provided herein. 3. Securities Transactions. Adviser is authorized to select the brokers or dealers that will execute the purchases and sales of securities for the Bernstein Portfolio, and is directed to use its best efforts to obtain the best available price and most favorable execution, except as prescribed herein. Subject to policies established by the Board of Trustees of the Company, Adviser may also be authorized to effect individual securities transactions at commission rates in excess of the minimum commission rates available, if Adviser determines in good faith that such amount of commission was reasonable in relation to the value of the brokerage or research services provided by such broker or dealer, viewed in terms of either that particular transaction or overall responsibilities of Adviser with respect to its portion of the Fund. The execution of such transactions will not be deemed to represent an unlawful act or breach of any duty created by this Agreement or otherwise. Adviser will promptly communicate to the officers and Trustees of the Company such information relating to portfolio transactions as they may reasonably request. 4. Compensation of Adviser. For the services to be rendered by Adviser as provided in this Agreement, the Fund will pay to Adviser at the end of each of the Fund's fiscal quarters, a Basic Fee calculated by applying a quarterly rate, based on the following annual percentage rates, to the average month-end net assets of the Bernstein Portfolio for the quarter: .15% on the first $1 billion of net assets; .14% on the next $2 billion of net assets; .12% on the next $2 billion of net assets; .10% on net assets in excess of $5 billion. Subject to the transition rule described in Section 4.1 of this Agreement, the Basic Fee, as provided above, will be increased or decreased by the amount of a Performance Fee Adjustment ("Adjustment"). The Adjustment will calculated as a percentage of the Basic Fee and will change proportionately with the investment performance of the Fund relative to the investment performance of the Russell 1000 Value Index (the "Index") for the thirty-six month period ending with the applicable quarter. The Adjustment apply as follows: Cumulative 36-Month Performance of Bernstein Portfolio Performance Fee Adjustment Versus the Index as a Percentage of Basic Fee* Trails by more than 9% - 50% Trails by 0 to 9% Linear decrease from 0 to -50% Exceeds by 0 to 9% Linear increase from 0 to +50% Exceeds by more than 9% +50% ___________________________ *The Adjustment represents a percentage increase or decrease to the Basic Fee payable to the Adviser for the quarter. 4.1. Transition Rule for Calculating Adviser's Compensation. The Performance Fee Adjustment will not be fully operable until June 1, 2002. Until that time, the following transition rules will apply: (a) June 1, 1999 through May 31, 2000. The Adviser's compensation will be the Basic Fee. No Performance Fee Adjustment will apply during this period. (b) June 1, 2000 through May 31, 2002. Beginning June 1, 2000, the Performance Fee Adjustment will take effect on a progressive basis with regards to the number of months elapsed between June, 1999 and the quarter for which the Adviser's fee is being computed. During this period, the Performance Fee Adjustment that has been determined under Section will be multiplied by a fraction. The fraction will equal the number of months elapsed since June 1, 1999 divided by thirty-six. (c) On and After June 1, 2002. Beginning June 1, 2002, the Performance Fee Adjustment will be fully operable. 4.2. Other Special Rules Relating to Adviser's Compensation. The following special rules will also apply to the Adviser's compensation: (a) Bernstein Portfolio Performance. The investment performance of the Bernstein Portfolio for any period, expressed as a percentage of the "Bernstein Portfolio unit value" at the beginning of such period, will be the sum of: (i) the change in the Bernstein Portfolio unit value during such period; (ii) the unit value of the Fund's cash distributions from the Bernstein Portfolio's net investment income and realized net capital gains (whether long-term or short-term) having an ex-dividend date occurring within such period; and (iii) the unit value of capital gains taxes paid or accrued during such period by the Fund for undistributed realized long-term capital gains realized from the Bernstein Portfolio. For this purpose, the unit value of distributions per share of realized capital gains, of dividends per share paid from investment income and of capital gains taxes per share reinvested in the Bernstein Portfolio at the unit value in effect at the close of business on the record date for the payment of such distributions and dividends and the date on which provision is made for such taxes, after giving effect to such distributions, dividends and taxes. (b) "Bernstein Portfolio Unit Value." The "Bernstein Portfolio unit value" will be determined by dividing the total net assets of the Bernstein Portfolio by a given number of units. The number of units in the Bernstein Portfolio initially will equal to the total shares outstanding of the Fund on June 1, 1999. Subsequently, as assets are added to or withdrawn from the Bernstein Portfolio, the number of units of the Bernstein Portfolio will be adjusted based on the unit value of the Bernstein Portfolio on the day such changes are executed. (c) Index Performance. The investment record of the Index for any period, expressed as a percentage of the Index at the beginning of such period, will be the sum of: (i) the change in the level of the Index during such period, and (ii) the value, computed consistently with the Index of cash distributions having an ex-dividend date occurring within such period made by companies whose securities comprise the Index. For this purpose, cash distributions on the securities which comprise the Index will be treated as reinvested in the Index at least as frequently as the end of each calendar quarter following the payment of the dividend. (d) Effect of Termination. In the event of termination of this Agreement, the fees provided in Sections 4 and 4.1 will be computed on the basis of the period ending on the last business day on which this Agreement is in effect, subject to a pro rata adjustment based on the number of days elapsed in the current fiscal quarter as a percentage of the total number of days in such quarter. 5. Reports. The Company and Adviser agree to furnish to each other with 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. Status of Adviser. The services of Adviser to the Fund are not to be deemed exclusive, and Adviser will be free to render similar services to others so long as its services to the Fund are not impaired thereby. Adviser 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 Company or the Fund in any way or otherwise be deemed an agent of the Company or the Fund. 7. Liability of Adviser. No provision of this Agreement will be deemed to protect Adviser against any liability to the Company, the Fund 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. 8. Duration and Termination. This Agreement will become effective on June 1, 1999, and will continue in effect until May 31, 2001, and thereafter, only so long as such continuance is approved at least annually by votes of the Company's Board of Trustees who are not parties to such Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval. In addition, the question of continuance of the Agreement may be presented to the shareholders of the Fund; in such event, such continuance will be effected only if approved by the affirmative vote of a majority of the outstanding voting securities of the Fund. Provided, however, that (i) this Agreement may at any time be terminated without payment of any penalty either by vote of the Board of Trustees of the Company or by vote of a majority of the outstanding voting securities of the Fund, on sixty days' written notice to Adviser, (ii) this Agreement will automatically terminate in the event of its assignment, and (iii) this Agreement may be terminated by Adviser on ninety days' written notice to the Company. Any notice under this Agreement will be given in writing, addressed and delivered, or mailed postpaid, to the other party at any office of such party. As used in this Section 8, the terms "assignment," "interested persons," a "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 Investment Company Act of 1940. 9. 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. 10. Proxy Policy. With regard to the solicitation of shareholder votes, the Fund will vote the shares of all securities held by the Fund. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed this ___ day of _______, 1999. ATTEST: VANGUARD WINDSOR FUNDS By _________________ By _________________ Secretary Chairman, CEO and President ATTEST: SANFORD C. BERNSTEIN & CO., INC. By ____________________ By_____________ 7 26340-1 3/29/1999 -----END PRIVACY-ENHANCED MESSAGE-----