vanguard sep–ira adoption · pdf fileor you can call us to order them—or get...

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Vanguard SEP–IRA Adoption Agreement

R207

IMPORTANT INFORMATION ABOUT OPENING A NEW ACCOUNT. Vanguard is required by federal law to obtain from each person who opens an accountcertain personal information—including name, street address, and date of birth among other information—that will be used to verify identity. If youdo not provide us with this information, we will not be able to open the account. If we are unable to verify your identity, Vanguard reserves the rightto close your account or take other steps we deem reasonable.

Print clearly, preferably in capital letters and black ink.This form is to be completed by both employers and employees who want to establish a SEP–IRA at Vanguard.

Most forms, as well as booklets that provide details on our retirement services, can be downloaded from our website at www.vanguard.com/?serviceforms. Or you can call us to order them—or get assistance in filling out this form—at 1-800-205-6189. Return this form and any otherrequired documents in the enclosed postage-paid envelope, or mail to The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110. For overnight delivery, mail to The Vanguard Group, 455 Devon Park Drive, Wayne, PA 19087-1815.

An Important Note About IRA Contribution Maximums

If you are eligible to contribute to an IRA, your personal contributions as an individual and an employee to traditional, Roth, and SEP IRAs combinedcannot exceed certain limits. In 2003 and 2004:

If you are under age 50, you can contribute a total of $3,000 to your IRAs.If you are between ages 50 and 70 1⁄2, you can contribute a total of $3,500 to your IRAs.Beginning in the year you reach age 70 1⁄2, you cannot contribute to traditional or SEP IRAs, but you may be able to contribute up to $3,500 to aRoth IRA.

1. Account Owner Information

If the account owner is not of legal adult age for the state in which he or she resides (18 for most states, 19 in Alabama and Nebraska, and21 in Mississippi), then the account will require a custodian, who must complete Section 2. If this SEP–IRA is being opened for a minor, print the words “a minor” after providing the name in the boxes below.

Name (first, middle initial, last)

Citizenship U.S. Resident NonresidentCitizen Alien Alien Country of Residence (for nonresident alien)

– – – – Applied for.Social Security Number Individual Tax Identification Number Date of application:

(if a resident or nonresident alien)

– –Birth Date (month, day, year)

– – – –Daytime Telephone Number Evening Telephone Number

Street Address or APO/FPO (a P.O. box or rural route number is not acceptable)

–City State Zip

OR

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Account’s Mailing Address if Different From Above (used both as the account’s address of record and for all account mailings)

–City State Zip

2. Custodian Information (Complete this section only if you are opening this SEP–IRA for a minor.)

Name (first, middle initial, last)

Citizenship U.S. Resident NonresidentCitizen Alien Alien Country of Residence (for nonresident alien)

– – – – Applied for.Social Security Number Individual Tax Identification Number Date of application:

(if a resident or nonresident alien)

– –Birth Date (month, day, year)

– – – –Daytime Telephone Number Evening Telephone Number

Street Address or APO/FPO (a P.O. box or rural route number is not acceptable)

–City State Zip

3. Payment Method (Check all that apply; you need to fill out only the sections you check. If you do not provide a tax year whererequested, there will be a delay in the processing of this transaction.)

Tax YearDollar AmountMy Employer Will Send Vanguard a Contribution.

My Employer’s Contribution (Up to 25% of my compensation or Tax Year Dollar Amount$40,000, whichever is less. Make the check payable to Vanguard $ , .Fiduciary Trust Company.)

$ , .

My Individual Contribution (Up to $3,000; $3,500 if you are between ages Tax Year Dollar Amount50 and 70 1⁄2 Make the check payable to Vanguard Fiduciary Trust Company.) $ , .

$ , .

A Check From Assets That Had Been Held in Another IRA (Choose this Dollar Amountoption if you have taken possession of the SEP or traditional IRA assets you had held $ , , .at another institution. In general, you must deposit these assets in an IRA within 60 daysafter receiving them to keep them tax-deferred. Assets not deposited within that time frame—including any taxes that were withheld—not only lose their tax-deferred status, they may be subject to ordinary income and penalty taxes.)

An Asset Transfer (Choose this option if you want Vanguard to initiate a transfer Approximate Dollar Amountof your SEP or traditional IRA from another institution. If you want to transfer assets $ , , .from more than one institution, call us for instructions.)

OR

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You must enclose a copy of a current account statement with this authorization.The amount of time it takes to complete an asset transfer varies greatly from one institution to another. We suggest that you contactyour current institution to find out what the typical time frame is.

Name of the Institution the Asset Transfer Is Coming From

Street Address or Box Number

–City State Zip

– –Telephone Number Name of Contact

Description of Mutual Fund or Certificate of Deposit Assets Being Liquidated and Transferred (Check all that apply.)

Mutual Funds (If you do not check either “All” or “Partial” below, your entire account will be liquidated and transferred to Vanguard.)

Name of Investment

$ , , .Account Number All Dollar Amount

Name of Investment

$ , , .Account Number All Dollar Amount

Certificates of Deposit (If you want to transfer your CD to Vanguard when it matures, we must receive this form at least 14 days,but not more than 30 days, before the maturity date.)

Account Number Maturity Date (month, day, year) Dollar Amount

– – $ , , .– – $ , , .

A Recharacterization (Choose this option if you want to change an employee contribution from one plan type to another—or to recharacterize a Roth conversion—and you want to direct it to a plan type you don’t currently hold at Vanguard. You must alsocomplete and sign a Vanguard Authorization to Recharacterize IRA Assets form. Skip to Section 5.)

OR

OR

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4. Investment Instructions

Most of our funds have a minimum initial IRA investment of $1,000. If you choose any of these funds, you do not have to meet thatminimum. However, some of our funds have a minimum initial IRA investment of $10,000 or $25,000, and you do have to meet thoseminimums.Fund numbers, fund names, and investment minimums can be found in the enclosed Facts on Funds®. (More information on our funds can be found on our website at www.vanguard.com/?funds.)Vanguard charges a custodial fee of $10 a year for each IRA fund account having a balance of less than $5,000. However, we automaticallywaive this fee if you have assets totaling $50,000 or more at Vanguard, in any combination of accounts (whether in IRAs or not, andincluding employer-sponsored plans, brokerage accounts, and annuities).

Percentage ofAssets (if your assets arecoming from your

Vanguard employer or another Dollar AmountFund Number Vanguard Fund Name institution) (if you are sending us a check for the full amount)

% $ , , .

% $ , , .

% $ , , .

Annual Custodial Fee — $ .

% $ , , .

$ Total Remitted to VanguardApproximate Value

001

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5. Beneficiary Designation (If you need more space to list additional beneficiaries, either photocopy this section or provide all theinformation requested—in the same format—on a separate sheet.)

The designations you make on this form will not affect the beneficiary designations of other IRAs you may hold at Vanguard.If you choose an option below that indicates a relationship instead of specific names, the executor or administrator of your estate (or thetrustee if you designate a trust as a beneficiary) will be the one responsible for providing Vanguard with the names of your beneficiaries.If you have ever lived in a community property state while you were married, your spouse at that time may have certain rights to your IRA.We suggest that you consult your attorney for guidance on how your beneficiary designations may be affected by those state laws. Detailed information on these designations can be found on our website at www.vanguard.com/?beneficiary.

■ Primary Beneficiaries (Check all that apply.)

Those you list as primary beneficiaries will inherit your IRA following your death. If you choose more than one primary beneficiary option without indicating percentages, or if the percentages you allocate to yourprimary beneficiaries combined do not total 100%, we will allocate equal percentages totaling 100%.

1. To my spouse who survives me. (The person you’re married to at the time of your death.) %

2. To my descendants who survive me, per stirpes. (Divides the percentage you specify equally among your %children. If a child is deceased, that child’s children, if any, will share your deceased child’s portion equally.)

3. Equally to my grandchildren who survive me. %

4. To the trustee of an existing trust that was created under an agreement known as %

, dated – – .Name of Trust Trust Date (month, day, year)

5. To the trustee of a trust created under my last will. The trust is known as %

or is located at .Name of Trust Section of Will

6. Other (Choose this category to specify by name individuals or charities not covered by the previous options.)

%Name of Individual (first, middle initial, last) or Charity

Relationship – –Spouse Other Individual’s Birth Date (month, day, year)



TOTAL %

I do not want to name beneficiaries at this time. (Important: If you choose this option, your beneficiary will be what is stated as thedefault under the Vanguard Custodial Account Agreement in effect at the time of your death. Skip to the signature section on page 7.)

001

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■ Secondary Beneficiaries (Check all that apply.)

Those you list as secondary beneficiaries will inherit your IRA only if there are no surviving primary beneficiaries at the time of your death. If you choose more than one secondary beneficiary option without indicating percentages, or if the percentages you allocate to your secondary beneficiaries combined do not total 100%, we will allocate equal percentages totaling 100%.

1. To my spouse who survives me. (The person you’re married to at the time of your death.) %

2. To my descendants who survive me, per stirpes. (Divides the percentage you specify equally among your %children. If a child is deceased, that child’s children, if any, will share your deceased child’s portion equally.)

3. Equally to my grandchildren who survive me. %

4. To the trustee of an existing trust that was created under an agreement known as %

, dated – – .Name of Trust Trust Date (month, day, year)

5. To the trustee of a trust created under my last will. The trust is known as %

or is located at .Name of Trust Section of Will

6. Other (Choose this category to specify by name individuals or charities not covered by the previous options.)





TOTAL %

I do not want to name secondary beneficiaries at this time. (Note that if you choose this option and either all of your primarybeneficiaries predecease you or a trust you named is no longer in existence, your beneficiary will be what is stated as the defaultunder the Vanguard Custodial Account Agreement in effect at the time of your death.)

001

6. Signature and Custodian Acceptance—YOU MUST SIGN BELOW

I hereby adopt the Vanguard IRA Custodial Account Agreement that is incorporated herein by reference and that I acknowledge having received and read. I further acknowledge having received and read the Vanguard IRA Disclosure Statement and a prospectus for each Vanguard fund I elected under this agreement. If I am requesting an asset transfer, I authorize the institution that currently holds my assets toliquidate them as directed in Section 3 and transfer them to Vanguard.

If you are requesting an asset transfer, your current financial institution may require you to obtain a signature guarantee (see Section 7). If it does, do not sign below until you are in the presence of an authorized officer.

➤ – –Signature (If the IRA owner is a minor, the custodian identified in Section 2 must sign.) Date (month, day, year)

Vanguard Fiduciary Trust Company

By:_______________________________________________ Title:____________________________________________

7. Signature Guarantee for Individual Investor—IF APPLICABLE

If you are requesting an asset transfer, the institution holding your assets may require you to obtain a signature guarantee before it willrelease them to Vanguard Fiduciary Trust Company. Contact the institution to see if this is the case. If the institution requires a signature guarantee and you do not provide one, your asset transfer cannot be processed.You can obtain a signature guarantee from an authorized member of a bank, broker, or other eligible financial institution. A notary publiccannot provide a signature guarantee.

Signature of Guarantor

Title / Name of Institution

– –Date (month, day, year)

Thank you for your investment!

S I G N A T U R E

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Authorized Officer to Place Stamp Here

Secretary

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Vanguard Authorization and Delivery Instructions to the Custodian

Vanguard AuthorizationVanguard Fiduciary Trust Company hereby represents that it has established for the previously named individual an IRA that qualifies under Section 408 of the Internal Revenue Code and will apply the proceeds of the asset transfer described in this agreement to such IRA upon receipt.

– –Vanguard Fiduciary Trust Company Date (month, day, year)

Delivery InstructionsMake check payable to: And mail to:Vanguard Fiduciary Trust Company, Custodian of [Individual’s Name]’s IRA The Vanguard GroupInclude the employee’s SSN and this reference number on the check: P.O. Box 1110

Valley Forge, PA 19482-1110

© 2003 The Vanguard Group, Inc. All rights reserved. R207 1003

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Print clearly, preferably in capital letters and black ink.This form can be used to allocate only employer contributions.If you need more space to list additional employees, either photocopy this form or provide the information requested in Section 3—in the sameformat—on a separate sheet.

Most forms, as well as booklets that provide details on our retirement services, can be downloaded from our website atwww.vanguard.com/?serviceforms. Or you can call us to order them—or get assistance in filling out this form—at 1-800-205-6189. Return this form and any other required documents in the enclosed postage-paid envelope, or mail to The Vanguard Group, P.O. Box 1110, Valley Forge, PA 19482-1110. For overnight delivery, mail to The Vanguard Group, 455 Devon Park Drive, Wayne, PA 19087-1815.

1. Employer Information

Name of Company

– –Telephone Number Name of Contact

2. Contribution Year (If you do not provide a year at right, we will credit your contributions to the current year.)

3. Contribution Allocation

To ensure proper account crediting, be sure to obtain from your employees the fund number and account number information requested below before you send us this contribution form.Employees who do not have a Vanguard IRA must complete and send to us a Vanguard SEP–IRA Adoption Agreement to establish an account before you send us this contribution form. Your simply filling in the names of new or newly eligible employees belowdoes not, and cannot, open an IRA for an employee.

Name of Employee Fund Number Account Number Contribution Amount

$

$

$

$

$

$

$

$

$

$

$

$

Contribution Subtotal, page 1 $

Contribution Subtotal, page 2 $

TOTAL CONTRIBUTION REMITTED TO VANGUARD $(If you are sending a check, make it payable to Vanguard Fiduciary Trust Company.)

Vanguard® SEP–IRA Employer Contribution Form

R208

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2© 2002 The Vanguard Group, Inc. All rights reserved. R208 122001

Name of Employee Fund Number Account Number Contribution Amount

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

Contribution Subtotal, page 2 $4. Signature of Employer

➤ – –Signature Date (month, day, year)

Thank you for your investment!

S I G N A T U R E

OMB No. 1545-0499Simplified Employee Pension—IndividualRetirement Accounts Contribution Agreement

Form 5305-SEP(Rev. March 2002) Do not file

with the InternalRevenue Service

Department of the TreasuryInternal Revenue Service (Under section 408(k) of the Internal Revenue Code)

makes the following agreement under section 408(k) of theInternal Revenue Code and the instructions to this form.(Name of employer)

The employer agrees to provide discretionary contributions in each calendar year to the individual retirement account or individualretirement annuity (IRA) of all employees who are at least years old (not to exceed 21 years old) and have performedservices for the employer in at least years (not to exceed 3 years) of the immediately preceding 5 years. This simplifiedemployee pension (SEP) includes does not include employees covered under a collective bargaining agreement,

includes does not include certain nonresident aliens, and includes does not include employees whose totalcompensation during the year is less than $450*.

The employer agrees that contributions made on behalf of each eligible employee will be:A. Based only on the first $200,000* of compensation.B. The same percentage of compensation for every employee.C. Limited annually to the smaller of $40,000* or 25% of compensation.D. Paid to the employee’s IRA trustee, custodian, or insurance company (for an annuity contract).

Name and titleEmployer’s signature and date

Section references are to the InternalRevenue Code unless otherwise noted.

When not to use Form 5305-SEP. Do notuse this form if you:

1. Currently maintain any other qualifiedretirement plan. This does not prevent youfrom maintaining another SEP.

Contribution limits. You may make anannual contribution of up to 25% of theemployee’s compensation or $40,000*,whichever is less. Compensation, for thispurpose, does not include employercontributions to the SEP or the employee’scompensation in excess of $200,000*. If youalso maintain a salary reduction SEP,contributions to the two SEPs together maynot exceed the smaller of $40,000* or 25% ofcompensation for any employee.

2. Have any eligible employees for whomIRAs have not been established.

3. Use the services of leased employees(described in section 414(n)).

4. Are a member of an affiliated servicegroup (described in section 414(m)), acontrolled group of corporations (described insection 414(b)), or trades or businesses undercommon control (described in sections 414(c)and 414(o)), unless all eligible employees ofall the members of such groups, trades, orbusinesses participate in the SEP.

Purpose of Form

Eligible employees. All eligible employeesmust be allowed to participate in the SEP. Aneligible employee is any employee who: (1) isat least 21 years old, and (2) has performed“service” for you in at least 3 of theimmediately preceding 5 years. You canestablish less restrictive eligibilityrequirements, but not more restrictive ones.

Simplified employee pension. A SEP is awritten arrangement (a plan) that provides youwith an easy way to make contributionstoward your employees’ retirement income.Under a SEP, you can contribute to anemployee’s traditional individual retirementaccount or annuity (traditional IRA). You makecontributions directly to an IRA set up by orfor each employee with a bank, insurancecompany, or other qualified financialinstitution. When using Form 5305-SEP toestablish a SEP, the IRA must be a Modeltraditional IRA established on an IRS form ora master or prototype traditional IRA forwhich the IRS has issued a favorable opinionletter. You may not make SEP contributionsto a Roth IRA or a SIMPLE IRA. Making theagreement on Form 5305-SEP does notestablish an employer IRA described insection 408(c).

* For 2003 and later years, this amount is subject to annual cost-of-living adjustments. The IRS announces the increase, if any, in a news release, in the Internal RevenueBulletin, and on the IRS Web Site at www.irs.gov.

Cat. No. 11825J Form 5305-SEP (Rev. 3-2002)

Article I—Eligibility Requirements (check applicable boxes—see instructions)

Article II—SEP Requirements (see instructions)

Instructions

Instructions to the Employer

Service is any work performed for you forany period of time, however short. If you area member of an affiliated service group, acontrolled group of corporations, or trades orbusinesses under common control, serviceincludes any work performed for any periodof time for any other member of such group,trades, or businesses.Excludable employees. The followingemployees do not have to be covered by theSEP: (1) employees covered by a collective

Form 5305-SEP (Model SEP) is used by anemployer to make an agreement to providebenefits to all eligible employees under asimplified employee pension (SEP) describedin section 408(k).

5. Will not pay the cost of the SEPcontributions. Do not use Form 5305-SEP fora SEP that provides for elective employeecontributions even if the contributions aremade under a salary reduction agreement.Use Form 5305A-SEP, or a nonmodel SEP.Note: SEPs permitting elective deferralscannot be established after 1996.

If this SEP is intended to meet thetop-heavy minimum contribution rules ofsection 416, but it does not cover all youremployees who participate in your salaryreduction SEP, then you must make minimumcontributions to IRAs established on behalf ofthose employees.Deducting contributions. You may deductcontributions to a SEP subject to the limits ofsection 404(h). This SEP is maintained on acalendar year basis and contributions to theSEP are deductible for your tax year with or

Contributions cannot discriminate in favorof highly compensated employees. Also, youmay not integrate your SEP contributionswith, or offset them by, contributions madeunder the Federal Insurance Contributions Act(FICA).

You are not required to make contributionsevery year, but when you do, you mustcontribute to the SEP-IRAs of all eligibleemployees who actually performed servicesduring the year of the contribution. Thisincludes eligible employees who die or quitworking before the contribution is made.

you and their union, (2) nonresident alienemployees who did not earn U.S. sourceincome from you, and (3) employees whoreceived less than $450* in compensationduring the year.

For more information on SEPs and IRAs,see Pub. 560, Retirement Plans for SmallBusiness (SEP, SIMPLE, and Qualified Plans),and Pub. 590, Individual RetirementArrangements (IRAs).

Do not file Form 5305-SEP with the IRS.Instead, keep it with your records.

For Paperwork Reduction Act Notice, see page 2.

bargaining agreement whose retirementbenefits were bargained for in good faith by

Form 5305-SEP (Rev. 3-2002)

Tax treatment of contributions. Employercontributions to your SEP-IRA are excludedfrom your income unless there arecontributions in excess of the applicable limit.Employer contributions within these limits willnot be included on your Form W-2.

Completing the agreement. This agreementis considered adopted when:

Employee contributions. You may makeregular IRA contributions to an IRA. However,the amount you can deduct may be reducedor eliminated because, as a participant in aSEP, you are covered by an employerretirement plan.

Information for the EmployeeThe information below explains what a SEPis, how contributions are made, and how totreat your employer’s contributions for taxpurposes. For more information, see Pub.590.

SEP participation. If your employer does notrequire you to participate in a SEP as acondition of employment, and you elect notto participate, all other employees of youremployer may be prohibited fromparticipating. If one or more eligibleemployees do not participate and theemployer tries to establish a SEP for theremaining employees, it could cause adversetax consequences for the participatingemployees.

1. The law that relates to your IRA.2. The tax consequences of various options

concerning your IRA.3. Participation eligibility rules, and rules on

the deductibility of retirement savings.

Simplified employee pension. A SEP is awritten arrangement (a plan) that allows anemployer to make contributions toward yourretirement. Contributions are made to atraditional individual retirementaccount/annuity (traditional IRA).Contributions must be made to either aModel traditional IRA executed on an IRSform or a master or prototype traditional IRAfor which the IRS has issued a favorableopinion letter.

4. Situations and procedures for revokingyour IRA, including the name, address, andtelephone number of the person designatedto receive notice of revocation. Thisinformation must be clearly displayed at thebeginning of the disclosure statement.

Your employer will provide you with a copyof the agreement containing participationrules and a description of how employercontributions may be made to your IRA. Youremployer must also provide you with a copyof the completed Form 5305-SEP and ayearly statement showing any contributions toyour IRA.

SEP-IRA amounts—rollover or transfer toanother IRA. You can withdraw or receivefunds from your SEP-IRA if, within 60 days ofreceipt, you place those funds in the same oranother IRA. This is called a “rollover” andcan be done without penalty only once in any1-year period. However, there are norestrictions on the number of times you maymake “transfers” if you arrange to have thesefunds transferred between the trustees or thecustodians so that you never havepossession of the funds.

5. A discussion of the penalties that maybe assessed because of prohibited activitiesconcerning your IRA.

All amounts contributed to your IRA byyour employer belong to you even after youstop working for that employer.

6. Financial disclosure that provides thefollowing information:

a. Projects value growth rates of your IRAunder various contribution and retirementschedules, or describes the method ofdetermining annual earnings and charges thatmay be assessed.

An employer is not required to make SEPcontributions. If a contribution is made,however, it must be allocated to all eligibleemployees according to the SEP agreement.The Model SEP (Form 5305-SEP) specifiesthat the contribution for each eligibleemployee will be the same percentage ofcompensation (excluding compensationgreater than $200,000*) for all employees.

b. Describes whether, and for when, thegrowth projections are guaranteed, or astatement of the earnings rate and the termson which the projections are based.

Withdrawals. You may withdraw youremployer’s contribution at any time, but anyamount withdrawn is includible in yourincome unless rolled over. Also, if withdrawals

c. States the sales commission for eachyear expressed as a percentage of $1,000.

Contribution limits. Your employer willdetermine the amount to be contributed toyour IRA each year. However, the amount forany year is limited to the smaller of $40,000*or 25% of your compensation for that year.Compensation does not include any amountthat is contributed by your employer to yourIRA under the SEP. Your employer is notrequired to make contributions every year orto maintain a particular level of contributions.

An employer may not adopt this IRS ModelSEP if the employer maintains anotherqualified retirement plan. This does notprevent your employer from adopting this IRSModel SEP and also maintaining an IRSModel Salary Reduction SEP or other SEP.However, if you work for several employers,you may be covered by a SEP of oneemployer and a different SEP or pension orprofit-sharing plan of another employer.

● IRAs have been established for all youreligible employees;● You have completed all blanks on theagreement form without modification; and● You have given all your eligible employeesthe following information:

Employers who have established a SEPusing Form 5305-SEP and have furnishedeach eligible employee with a copy of thecompleted Form 5305-SEP and provided theother documents and disclosures describedin Instructions to the Employer andInformation for the Employee, are notrequired to file the annual information returns,Forms 5500 or 5500-EZ for the SEP.However, under Title I of the EmployeeRetirement Income Security Act of 1974(ERISA), this relief from the annual reportingrequirements may not be available to anemployer who selects, recommends, orinfluences its employees to choose IRAs intowhich contributions will be made under theSEP, if those IRAs are subject to provisionsthat impose any limits on a participant’sability to withdraw funds (other thanrestrictions imposed by the Code that applyto all IRAs). For additional information onTitle I requirements, see the Department ofLabor regulation at 29 CFR 2520.104-48.

In addition, the financial institution mustprovide you with a financial statement eachyear. You may want to keep these statementsto evaluate your IRA’s investmentperformance.

Excess SEP contributions. Contributionsexceeding the yearly limitations may bewithdrawn without penalty by the due date(plus extensions) for filing your tax return(normally April 15), but are includible in yourgross income. Excess contributions left inyour SEP-IRA after that time may haveadverse tax consequences. Withdrawals ofthose contributions may be taxed aspremature withdrawals.

1. A copy of Form 5305-SEP.2. A statement that traditional IRAs other

than the traditional IRAs into which employerSEP contributions will be made may providedifferent rates of return and different termsconcerning, among other things, transfers andwithdrawals of funds from the IRAs.

3. A statement that, in addition to theinformation provided to an employee at thetime the employee becomes eligible toparticipate, the administrator of the SEP mustfurnish each participant within 30 days of theeffective date of any amendment to the SEP,a copy of the amendment and a writtenexplanation of its effects.

4. A statement that the administrator willgive written notification to each participant ofany employer contributions made under theSEP to that participant’s IRA by the later ofJanuary 31 of the year following the year forwhich a contribution is made or 30 days afterthe contribution is made.

Financial institution requirements. Thefinancial institution where your IRA ismaintained must provide you with adisclosure statement that contains thefollowing information in plain, nontechnicallanguage:

within which the calendar year ends.Contributions made for a particular tax yearmust be made by the due date of yourincome tax return (including extensions) forthat tax year.

Paperwork Reduction Act Notice. You arenot required to provide the informationrequested on a form that is subject to thePaperwork Reduction Act unless the formdisplays a valid OMB control number. Booksor records relating to a form or its instructionsmust be retained as long as their contentsmay become material in the administration ofany Internal Revenue law. Generally, taxreturns and return information are confidential,as required by section 6103.

Recordkeeping 1 hr., 40 min.

If you have comments concerning theaccuracy of these time estimates orsuggestions for making this form simpler, wewould be happy to hear from you. You canwrite to the Tax Forms Committee, WesternArea Distribution Center, Rancho Cordova, CA95743-0001. Do not send this form to thisaddress. Instead, keep it with your records.

Learning about thelaw or the form 1 hr., 35 min.Preparing the form 1 hr., 41 min.

The time needed to complete this form willvary depending on individual circumstances.The estimated average time is:

occur before you reach age 591⁄2, you may besubject to a tax on early withdrawal.

The Vanguard® Traditional IRA, SEP–IRA, and Roth IRA

Disclosure Statement, Custodial Account Agreement,and Securities Account Agreement

Changes to the IRA Rules

Regulatory changes and the Economic Growth and Tax Relief Reconciliation Act of 2001 have changed many of the rules that govern IRAs. This booklet (TheVanguard Traditional IRA, SEP–IRA, and Roth IRA Disclosure Statement, Custodial Account Agreement, and Securities Account Agreement) has been revised forthese changes. Here’s a brief overview of the changes:

• Higher maximum IRA contributions. For 2001, the maximum contribution was $2,000. For 2002 and 2003, the maximum increased to $3,000. (As before, themost you can contribute to an IRA is 100% of earned income if that amount is less than the maximum contribution of $3,000.) The maximum contribution willincrease in future years.

• “Catch-up” IRA contributions for people 50 and over by December 31 of the year for which they are contributing. Beginning in 2002, people whoare 50 or over can contribute an extra $500 to their IRAs. Therefore, a person who was 50 or over in 2002 can contribute a total of $3,500 for 2002—that is, thenew maximum contribution of $3,000 plus a catch-up contribution of $500. Both the maximum contribution and the catch-up contribution amounts will increasein future years.

• Consolidating distributions from employer plans in IRAs. Beginning in 2002, distributions from most types of retirement plans (including 401(k) plans,pension and profit-sharing plans, 403(b) plans, and 457 plans) can be rolled over into an IRA. Also, after-tax contributions to an employer plan may now berolled over into an IRA.

• Changes in required minimum distributions (RMDs). The method for calculating RMDs (which apply to owners of traditional IRAs who have reached age701⁄2) has been simplified. In most cases, IRA owners can now take smaller RMDs from their IRAs.

If you have any questions about the changes to the IRA rules, call us at 1-800-205-6189 on business days from 8 a.m. to 8 p.m. or on Saturdays from 9 a.m. to1 p.m., Eastern time.

V A N G U A R D® R E T I R E M E N T R E S O U R C E C E N T E R

Contents

Vanguard Traditional and Roth IRA Disclosure Statement

Section I—Revocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Section II—Establishment of Your Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Section III—Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Section IV—Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Section V—Rollover Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Section VI—Conversions From a Traditional IRA to a Roth IRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Section VII—Taxation of Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Section VIII—Methods of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Section IX—Simplified Employee Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Section X—Income Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Section XI—Prohibited Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Section XII—Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Vanguard Traditional and Roth IRA Custodial Account Agreement

Article I—Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Article II—Contributions to Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Article III—Investment of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Article IV—Distribution of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Article V—Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Article VI—Reporting, Disclosure, and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Article VII—Amendment, Termination, and Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Article VIII—Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Vanguard Brokerage Services® Securities Account Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

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T H E V A N G U A R D G R O U P

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IntroductionThis Disclosure Statement describes the general requirements and features ofboth a traditional and a Roth IRA, as well as the specific features of the VanguardTraditional and Roth IRA Custodial Account Agreement. This DisclosureStatement is provided in accordance with Internal Revenue Service (IRS)regulations. (Where the requirements for a traditional and a Roth IRA are thesame, this Disclosure Statement refers to both types of accounts as an “IRA.”)

Section I

Revocation

You may revoke your Vanguard IRA® at any time within seven days after it is established by mailing or delivering a written notice of revocation to TheVanguard Group, P.O. Box 2600, Valley Forge, PA 19482-2600. Any notice ofrevocation will be deemed mailed on the date of postmark (or if sent bycertified or registered mail, the date of certification or registration) if it isdeposited in the U.S. Postal Service in an envelope or other appropriatewrapper, first-class postage prepaid, properly addressed. Upon revocation, you will be entitled to a full refund of your entire IRA contribution withoutadjustment for administrative expenses, sales commissions (if any), orfluctuations in market value. If you have any questions concerning your right of revocation, please call 1-800-205-6189 during normal business hours.

Section II

Establishment of Your Account

A. Statutory Requirements

An IRA is a trust or custodial account established for the exclusive benefit ofyou and your beneficiaries. The Internal Revenue Code of 1986, as amended,provides for several types of IRAs, including a “traditional” IRA and a “Roth”IRA. You must clearly designate on the forms establishing your IRA that youraccount is either a traditional IRA or a Roth IRA. An IRA must be created by awritten document that meets all of the following requirements:

1. Bank trustee or custodian. An IRA must be established with a qualifiedtrustee or custodian, such as Vanguard Fiduciary Trust Company, which is abank or other person approved by the IRS. You cannot be your own trusteeor custodian.

2. Cash contributions up to annual contribution limit. All contributions toyour IRA, excluding rollover or conversion contributions as described inSections V and VI, must be made in cash. The total amount of contributions,other than rollover or conversion contributions as described in Sections Vand VI, for any taxable year to your traditional and Roth IRAs may notexceed the contribution limit in effect for such taxable year as described inSection III[A].

3. Nonforfeitability. The balance of your IRA account must be fully vestedand nonforfeitable at all times.

4. Prohibitions against life insurance and commingling. No part of yourIRA assets may be invested in life insurance contracts, nor may your IRAassets be commingled with other property except in a common trust fund orcommon investment fund.

5. Distribution rules. Your IRA must comply with certain minimumdistribution requirements, which are described in Section VIII. (No age 701⁄2distribution requirements apply for Roth IRAs.)

B. Tax Consequences of Traditional IRA

In general, the federal income tax consequences of establishing a traditionalIRA are the following:

1. Tax-deferred earnings. Earnings and gains on your traditional IRAcontributions will not be subject to federal income taxes until they areactually distributed.

2. Deductible contributions. You may be permitted to make contributions toyour traditional IRA that are deductible for federal income tax purposes inan amount up to the lesser of the contribution limit in effect for such yearor 100% of your current-year compensation. You are permitted to makedeductible traditional IRA contributions if neither you nor your spouse is anactive participant in an employer-maintained retirement plan, or if youradjusted gross income for the taxable year does not exceed certain dollarlimits. To the extent that your traditional IRA contributions are notdeductible, they may be treated as “nondeductible contributions” that mustbe reported on your federal income tax return. See Section III[D] for moreinformation.

3. Taxable distributions. Distributions from your traditional IRA willgenerally be taxable as ordinary income in the year of receipt, with theexception that if you have made any nondeductible contributions or after-tax rollover contributions to your traditional IRA, part of your traditional IRAdistributions may be treated as a nontaxable return of your nondeductibletraditional IRA contributions or after-tax rollover contributions. Anydistributions you receive from your traditional IRA prior to age 591⁄2 may besubject to an additional 10% tax (although exceptions may apply—seeSection VII[C]). You must start receiving certain minimum distributions fromyour traditional IRA beginning by April 1 of the year following the year inwhich you attain age 701⁄2 (see Section VIII[B]).

4. Tax-free rollovers. You may be eligible to make a rollover contribution toyour traditional IRA of cash or other assets you receive from anotherindividual retirement plan or employer-maintained retirement plan. Inaddition, you may be eligible to roll over the taxable amount you withdrawfrom your traditional IRA to another individual retirement plan or anemployer-maintained retirement plan. See Sections V and VI for moreinformation.

5. State taxes. The state tax consequences of your traditional IRA will varyfrom state to state. You are strongly encouraged to consult a tax adviser todetermine the state tax consequences of establishing a traditional IRA.

Vanguard Traditional and Roth IRA Disclosure Statement

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C. Tax Consequences of Roth IRA

In general, the federal income tax consequences of establishing a Roth IRA arethe following:

1. Tax-deferred earnings. Earnings on contributions to a Roth IRA willaccumulate on a tax-deferred basis and may ultimately be tax-free if theearnings are part of a “qualified distribution.” (A “qualified distribution” isgenerally a distribution made to you after age 591⁄2 and after you have heldyour Roth IRA account at least five years [see paragraph 3, below].)

2. Nondeductible contributions. Contributions to a Roth IRA are notdeductible for federal income tax purposes.

3. “Qualified” distributions are completely tax-free. A distribution froma Roth IRA will be tax-free for federal income tax purposes as long as it is a“qualified distribution.” A qualified distribution is a distribution from a RothIRA: (1) made after a five-year holding period, and (2) made after age 591⁄2,due to death or disability, or for the first $10,000 of “qualified first-timehome purchase expenses.” See Section VII[B] for more details.

4. “Nonqualified” distributions are tax- and penalty-free return ofcontributions first; taxable earnings last. Any distribution that is not aqualified distribution (for example, a distribution taken before you hold yourRoth IRA for five years) is first considered a tax- and penalty-freedistribution of your contributions to your Roth IRA. Once an amountequaling the cumulative contributions to your Roth IRA has been recoveredtax-free, all further distributions that are not qualified distributions will besubject to both ordinary income tax and possibly an additional 10% penaltytax (if you are under age 591⁄2). See Section VII[B] for more details.

5. Tax-free Roth IRA-to-Roth IRA rollovers. You may be eligible to make arollover contribution to your Roth IRA of cash or other assets you receivefrom another Roth IRA. In addition, you may be eligible to roll over theamount you withdraw from your Roth IRA to another Roth IRA. See SectionV for more details.

6. Traditional IRA-to-Roth IRA conversions. If you have adjusted grossincome for a year of $100,000 or less (on a single or joint filing basis) andyou are not a married individual filing a separate tax return, you may rollover or “convert” a traditional IRA into a Roth IRA.

You will owe tax in the year of the conversion on the amount converted tothe Roth IRA (less any nondeductible contributions that you would haverecovered had you simply received the conversion amount as a traditionalIRA distribution). However, you will not owe a 10% early withdrawalpenalty tax on the conversion amount. For purposes of qualifying for tax-free distributions from your Roth IRA, there is a separate five-year holdingperiod for the amounts attributable to each year you make a “conversion”from a traditional IRA to a Roth IRA.

7. State taxes. The state tax consequences of your Roth IRA will vary fromstate to state. You are strongly encouraged to consult a tax adviser todetermine the state tax consequences of establishing a Roth IRA.

Section III

Contributions

A. Amount and Timing of Traditional and Roth IRA Contributions

Maximum annual contributions to all IRAs. The total amount ofcontributions to all of your IRAs (both traditional and Roth IRAs) for any taxableyear (excluding any rollover or conversion contributions as described in SectionsV and VI) may not exceed the lesser of the contribution limit in effect for suchtaxable year as described below or 100% of your compensation for the taxableyear. If you reach age 50 before the close of the tax year for which you aremaking a contribution, your annual contribution limit is increased by $500 fortaxable years beginning in 2002 through 2005, and $1,000 for any taxable yearbeginning in 2006 or thereafter as described below. In addition, the maximumcontribution permitted under a Roth IRA is phased out to $0 for individualsearning above a certain level of adjusted gross income (see Section III[C]).

The annual IRA contribution limits for 2002 and later years are shown below.

Year Maximum Annual Contribution Maximum Annual ContributionIndividuals Under Age 50 Individuals Age 50 or Older

2002 $3,000 $3,500

2003 $3,000 $3,500

2004 $3,000 $3,500

2005 $4,000 $4,500

2006 $4,000 $5,000

2007 $4,000 $5,000

2008 $5,000 $6,000

For years after 2008, the contribution limit will be periodically indexed forinflation in $500 increments.

Definition of compensation. For purposes of the IRA contribution limits,your compensation includes all wages, salaries, tips, professional fees,bonuses, and other amounts you receive for providing personal services, andany earned income from self-employment. It does not include earnings andprofits from property such as dividends, interest, or capital gains, or amountsreceived as a pension or annuity, or as deferred compensation. Yourcompensation includes any taxable alimony or separate maintenancepayments you may receive under a decree of divorce or separate maintenance.

IRA for your spouse. If both you and your spouse earn compensation for ataxable year, you may each make contributions to a traditional or Roth IRA up tothe lesser of the contribution limit in effect for such taxable year or 100% of yourcompensation for the taxable year, although your Roth IRA contribution limit maybe phased out based on your adjusted gross income for the year (see SectionIII[C]). In addition, under a special rule for spousal IRAs (explained in Section III[E]),contributions of up to the contribution limit in effect for such taxable year may bemade to either a traditional IRA or, subject to the adjusted gross income phase-out discussed in Section III[C], a Roth IRA of a spouse, regardless of the incomelevel of the spouse, provided the married couple files a joint tax return and hastotal compensation at least equal to their combined IRA contributions.

Contributions in cash. All contributions to your traditional or Roth IRA (otherthan rollover contributions as described in Section V) must be made in cash,check, or by electronic transfer. If you wish to use shares of a previouslyestablished Vanguard fund account for your annual IRA contribution, you mustfirst redeem the amount of shares you wish to invest, and then use the cashproceeds as your IRA contribution.

Contributions up to the date your return is due (April 15). You may makecontributions to your traditional or Roth IRA for a taxable year at any timeduring the year, either periodically or in a lump sum, or in the next year, up tothe due date for filing your federal income tax return for the taxable year, notincluding extensions. For taxpayers who file on a calendar-year basis, thelatest date for any year is April 15 of the following year. If you do not informthe Custodian of the year for which an IRA contribution is made, the Custodianwill assume that the contribution is made for the year in which it is received.

Only Roth IRA contributions permitted after age 701⁄2. If you areotherwise eligible, you are permitted to make Roth IRA contributions evenafter you have attained age 701⁄2. You are not permitted to make traditionalIRA contributions (either deductible or nondeductible) after you have attainedage 701⁄2 (other than rollover contributions as described in Section V).

Maximum contributions not required. You do not have to contribute toyour traditional or Roth IRA every year, nor are you required to make themaximum contribution for any year. However, if you decide in any year not to make the maximum IRA contribution, you may not make up the missedcontribution amount in later years. Under the Vanguard Traditional and RothIRA, there is a minimum initial contribution required when you establish youraccount, as described in Section XII[D].

Custodial or trustee fees. Custodial or trustee fees that are billed separatelyand paid by you in connection with your IRA may be separately deductible onyour federal income tax return as ordinary and necessary business expenses(subject to the 2% adjusted gross income limit for miscellaneous deductions).The separate payment of your IRA custodial or trustee fees will not serve tolimit the maximum amount of contributions you are otherwise eligible to maketo your IRA. Under the Vanguard Traditional and Roth IRA, you are provided theopportunity to pay separately your annual custodial or trustee fee, asexplained in Section XII[E].

B. Traditional IRA: Deductible Contributions

Contributions to your traditional IRA may be deductible in whole or in part forfederal income tax purposes, as determined by the rules summarized below.Remember that contributions to a Roth IRA are not deductible for federalincome tax purposes. You should contact your tax adviser to determine thedeductibility of IRA contributions for state income tax purposes.

Fully deductible contributions if you do not participate in an employerplan. If neither you nor your spouse is an active participant in an employer-maintained retirement plan, your annual traditional IRA contributions up to thelesser of the contribution limit in effect for the taxable year (as described inSection III[A]) or 100% of current-year compensation are generally fullydeductible (regardless of your level of adjusted gross income).

Phase-out of deduction if you participate in an employer plan. If youare an active participant in an employer-maintained retirement plan for ataxable year, your traditional IRA deduction is phased out as your adjustedgross income approaches the upper limits of the applicable “phase-out range.”The phase-out ranges for joint and single filers for 2002 and later years areshown in the next column.

Formula for deduction phase-out for active participants. As stated, if youare an active participant in an employer-maintained retirement plan for a taxableyear, your traditional IRA deduction limit for the year is phased out as youradjusted gross income exceeds the applicable adjusted gross income thresholdfor the tax year. This phase-out is accomplished as follows: Your maximumtraditional IRA deduction is reduced by an amount, rounded down to the nearest$10, that bears the same ratio to the maximum deductible amount as your“excess” adjusted gross income for the taxable year—i.e., for 2003, if you aremarried and file a joint return, your adjusted gross income over $60,000, or over$40,000 if you are single—bears to $10,000. (For joint filers, this figureincreases to $20,000 for the year 2007 and later.)

Example: In 2003, a single individual under age 50 has adjusted grossincome in the amount of $44,000 and is an active participant in anemployer-maintained retirement plan. The individual may make traditionalIRA contributions for the taxable year that are deductible for federal incometax purposes in the amount of $1,800 (assuming he or she has at least$1,800 of compensation)—determined as follows:

2003 maximum traditional IRA deduction......$ 3,000

Excess adjusted gross income........................$44,000 – $40,000 = $4,000

Reduction in traditional IRA deduction ..........$ 3,000 x $ 4,000 = $1,200

$10,000

Resulting traditional IRA deduction limit .......$ 3,000 – $ 1,200 = $1,800

If this individual makes $1,800 of deductible traditional IRA contributions forthe year, he or she may also make nondeductible IRA contributions to atraditional IRA or a Roth IRA in the amount of $1,200, resulting in total IRAcontributions of $3,000 for the year. If the individual in the example above wasage 50 or older, his maximum deduction of $3,500 for 2003 would be reducedby $1,400, resulting in a deduction limit of $2,100).

Deduction limit for spouse. If you are married and file a joint return, andneither you nor your spouse is an active participant in an employer-maintainedretirement plan, the traditional IRA contributions for each spouse for thetaxable year will be fully deductible regardless of the level of your combinedadjusted gross income.

If you are married and file a joint return and both you and your spouse areactive participants in employer-maintained retirement plans, the traditionalIRA deduction limit for each spouse for the taxable year is phased out as yourcombined adjusted gross income exceeds the applicable threshold (see thephase-out ranges above). For example, for 2003 the traditional IRA deductionlimit for each spouse for the taxable year is phased out as your combinedadjusted gross income exceeds $60,000.

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Joint Filers Single FilersYear Phase-Out Range Year Phase-Out Range

2002 $54,000 to $64,000 2002 $34,000 to $44,000

2003 $60,000 to $70,000 2003 $40,000 to $50,000

2004 $65,000 to $75,000 2004 $45,000 to $55,000

2005 $70,000 to $80,000 2005 and after $50,000 to $60,000

2006 $75,000 to $85,000

2007 and after $80,000 to $100,000

Example: In 2003, a married couple filing a joint return has combinedadjusted gross income of $65,000. If both spouses are active participants in employer-maintained retirement plans and both are under age 50, thetraditional IRA deduction limit for each spouse for the year would be $1,500(assuming each spouse has at least $1,500 of compensation). If eachspouse makes $1,500 of deductible traditional IRA contributions for theyear, each spouse may also be permitted to make nondeductible IRAcontributions to a traditional IRA or a Roth IRA in the amount of $1,500,resulting in total IRA contributions of $3,000 per spouse and a combinedtotal of $6,000 for the year.

If you are married and file a joint return and you are an active participant in anemployer-maintained retirement plan, but your spouse is not, a higher adjustedgross income phase-out will apply for your spouse’s (but not your) deductionlimit. The traditional IRA deduction limit for your spouse, who is not an activeparticipant, is phased out if your combined adjusted gross income for the taxableyear falls between $150,000 and $160,000, while the deduction limit for you—the active participant in an employer-maintained plan—is phased out as yourcombined adjusted gross income for the tax year exceeds the applicablethreshold provided in the chart on the previous page (e.g., $60,000 for 2003).

Example: A married couple filing a joint return has combined adjustedgross income of $100,000 for the 2003 tax year. If one spouse is an activeparticipant in an employer-maintained retirement plan and the other spouseis not, the spouse that is an active participant may not make a deductiblecontribution to an IRA for the taxable year, since the combined adjustedgross income exceeds $70,000 (the upper limit of the phase-out range for2003). The spouse that is not an active participant in an employer-maintained retirement plan may make a fully deductible IRA contribution forthe tax year, since the couple’s adjusted gross income is below $150,000.

Special rules for married couples filing separate returns. If you are amarried individual filing a separate return and you or your spouse is an activeparticipant in an employer-maintained retirement plan, the deduction for yourtraditional IRA contributions will be phased out as your adjusted gross incomefor the taxable year increases from $0 to $10,000. For example, a marriedindividual (under age 50) filing separately who participates in an employer planand who has adjusted gross income of $6,000 would have a traditional IRAdeduction limit of $1,200 for 2003. However, if you and your spouse did notlive together at any time during the taxable year, your filing status will beconsidered to be single for traditional IRA deduction purposes, and yourtraditional IRA deduction limit will be determined without regard to whetheryour spouse is an active participant in an employer retirement plan.

Active participant defined. For purposes of the traditional IRA deduction limits,you are considered an active participant in an employer-maintained retirementplan for a taxable year if you participate in a qualified pension, profit-sharing,stock bonus, or annuity plan (including a Keogh or 401(k) plan), a tax-shelteredannuity plan under Section 403(b) of Internal Revenue Code, a simplifiedemployee pension (SEP) plan, or a government plan (but not an eligible deferredcompensation plan under Section 457(b) of the Code) during any part of the planyear ending with or within the taxable year. The determination of whether youare an active participant in an employer-maintained retirement plan is madewithout regard to whether your rights under the plan are nonforfeitable or vested.Under a defined contribution plan, you are generally considered an activeparticipant if any employer contribution or forfeiture is allocated to your accountduring the taxable year. Under a defined benefit plan, you are considered anactive participant if you are not excluded by the plan’s eligibility requirements

during any part of the plan year ending with or within your taxable year. However,if you have not satisfied the plan’s minimum age or service conditions required forparticipation, you are not considered an active participant in the plan. The FormW-2 you receive from your employer each year should indicate whether you arean active participant in an employer-maintained retirement plan.

Adjusted gross income. For purposes of the traditional IRA deduction limits,your adjusted gross income is calculated by taking into account any taxableSocial Security benefits and taxable IRA distributions you may receive for theyear. However, your adjusted gross income is not reduced by any deductibletraditional IRA contributions you may make for the taxable year, employer-provided adoption assistance that is otherwise not taxable, or proceeds of U.S.Savings Bonds used for higher education expenses that are otherwise nottaxable.

Minimum deduction limit of $200. There is a special rule providing that ifyour adjusted gross income for any taxable year is within the “phase-outrange,” your traditional IRA deduction limit is never less than $200. In 2003,for example, if you were a married individual (under age 50) with adjustedgross income of $69,500 and an active participant in an employer plan, yourtraditional IRA deduction limit for the taxable year would be $200 (eventhough under the formula above your traditional IRA deduction limit wouldotherwise be $150).

C. Roth IRA: Maximum Annual Contribution

The maximum contribution permitted under a Roth IRA (excluding any rolloveror conversion contributions as described in Sections V and VI) is generally thelesser of the contribution limit in effect for the taxable year as described inSection III[A] or 100% of your compensation for the taxable year (less anyamount you also contribute to a traditional IRA). Furthermore, your Roth IRAcontribution maximum is phased out as your adjusted gross incomeapproaches the upper limits of the applicable “phase-out range.” Theapplicable phase-out ranges are as follows:

• If you are single—your phase-out range is adjusted gross income ofbetween $95,000 and $110,000.

• If you are married filing jointly—your phase-out range is adjusted grossincome of between $150,000 and $160,000.

• If you are married filing separately—your phase-out range is adjusted grossincome of between $0 and $10,000. However, if you and your spouse didnot live together at any time during the taxable year, your filing status willbe considered to be single for Roth IRA contribution purposes.

Formula for contribution phase-out. As your adjusted gross incomeapproaches the upper limit of the phase-out ranges described immediatelyabove, your Roth IRA contribution limit for the year is phased out to $0. Thisphase-out is accomplished as follows: Your maximum Roth IRA contribution isreduced by an amount, rounded down to the nearest $10, that bears the sameratio to the maximum IRA contribution limit in effect for the taxable year asyour “excess” adjusted gross income for the taxable year—i.e., for 2003, youradjusted gross income over $95,000 if you are single, or over $150,000 if youare married filing a joint return—bears to $15,000 ($10,000 in the case of ajoint return or a married individual filing a separate return).

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Example: A married couple filing a joint return has combined adjustedgross income in the amount of $156,000. Each spouse is under age 50. Eachspouse may make Roth IRA contributions for the taxable year in the amountof $1,200 (assuming each spouse has at least $1,200 of compensation),determined as follows:

2003 maximum Roth IRA contribution ........$ 3,000

Excess adjusted gross income.....................$156,000 – $150,000 = $6,000

Reduction in Roth IRA deduction ................$ 3,000 x $ 6,000 = $1,800

$ 10,000

Resulting Roth IRA contribution limit..........$ 3,000 – $ 1,800 = $1,200

If each individual makes $1,200 of Roth IRA contributions for the year, eachindividual may also make nondeductible IRA contributions to a traditionalIRA—or deductible contributions if neither the individual nor his or her spouseis an active participant in an employer-maintained retirement plan (see SectionIII[B])—in the amount of $1,800 (assuming each spouse has an additional$1,800 of compensation, for total compensation for each spouse of at least$3,000), resulting in total IRA contributions of $3,000 for the year.

Adjusted gross income (AGI) for Roth IRA contribution phase-outpurposes. For purposes of the Roth IRA contribution phase-out, your adjustedgross income is determined as it is for determining the traditional IRAdeduction limit for active participants (see Section III[B]), except that youradjusted gross income is reduced by (1) any deductible traditional IRAcontributions you may make for the taxable year, and (2) any amount includedin gross income as a result of a traditional IRA to Roth IRA “conversion”discussed in Section VI.

Minimum contribution limit of $200. There is a special rule providing that ifyour adjusted gross income for Roth IRA contribution phase-out purposes iswithin the “phase-out range,” your Roth IRA contribution limit is never lessthan $200. In 2003, for example, if you are a married individual (under age 50)with adjusted gross income for Roth IRA contribution phase-out purposes of$159,500, your Roth IRA contribution limit for the taxable year would be $200(even though under the formula above your Roth IRA contribution limit wouldotherwise be $150).

D. Traditional IRA: Nondeductible Contributions

You may wish to make “nondeductible contributions” to your traditional IRA tothe extent that you are not eligible to make either deductible traditional IRAcontributions or Roth IRA contributions (or if you do not wish to make deductibletraditional IRA contributions). Remember, however, that the total amount ofdeductible and nondeductible contributions to all of your traditional and RothIRAs for any taxable year may not exceed the lesser of the contribution limit ineffect for the taxable year or 100% of your compensation for the year.

Tax advantage of nondeductible contributions. The primary tax benefitassociated with nondeductible contributions to a traditional IRA is that theearnings and gains on these contributions will not be subject to federalincome tax until they are actually distributed to you.

Election to treat deductible contributions as nondeductiblecontributions. You are permitted to elect to treat your traditional IRAcontributions, which would otherwise be deductible for any taxable year, asnondeductible contributions. You may wish to make such an election, forexample, if you have no taxable income for the year after taking into accountother deductions or tax credits, and you are not eligible for a Roth IRAcontribution.

Designation of nondeductible contributions. Your designation oftraditional IRA contributions as nondeductible contributions for a taxable yearis to be made by filing Form 8606, Nondeductible IRAs and Coverdell ESAs,with your federal income tax return for the taxable year. Nondeductibletraditional IRA contributions for a taxable year may be made at any timeduring the taxable year, or in the next year, up to the due date for filing yourfederal income tax return for the taxable year, not including extensions. If youfile an amended return, you may change your designation of your traditionalIRA contributions from deductible contributions to nondeductible contributionsor vice versa (although such a change may result in an increased or differenttax liability).

E. Spousal IRAs

If your spouse has little or no income (e.g., your spouse is a homemaker whodoes not work outside the home), your spouse may still be eligible to establishand contribute to an IRA under a special rule for spousal IRAs. To qualify forthis rule, you and your spouse must file a joint return for the taxable year.

IRA contributions up to limit in effect. Under the special rule for spousalIRAs, contributions may be made to your spouse’s traditional or Roth IRA forany taxable year in an amount up to the lesser of: (1) the contribution limit ineffect for the taxable year, or (2) the combined compensation of you and yourspouse for the taxable year, less the amount of any contributions you made toyour IRA for the taxable year.

Deductibility of contributions for spouse. The deductibility ofcontributions to a traditional IRA for a spouse is generally determined by therules discussed in Section III[B]. Thus, for example, if neither you nor yourspouse is an active participant in an employer-maintained retirement plan,contributions to a spousal traditional IRA are fully deductible. However, if yourspouse is an active participant in an employer-maintained retirement plan,your spouse’s IRA deduction limit for the taxable year is phased out as yourcombined adjusted gross income for the tax year exceeds the applicablethreshold provided in the chart in Section III[B] (e.g., $60,000 for 2003).

If you participate in an employer-maintained retirement plan and your spousedoes not, the spousal deduction limit is reduced by an amount that bears thesame ratio to the contribution limit in effect for the taxable year as yourcombined adjusted gross income over $150,000 bears to $10,000. Thus, forexample, the deduction for contributions to a spousal traditional IRA would beeliminated if your combined adjusted gross income exceeds $160,000(although nondeductible traditional IRA contributions of up to the contributionlimit in effect for the taxable year could still be made).

Contributions after age 701⁄2 to traditional IRAs. You may makecontributions to a traditional IRA for your spouse even after you reach age 701⁄2provided your spouse has not yet attained age 701⁄2. However, you may notmake contributions to a traditional IRA for your spouse (other than rollovercontributions described in Section V) for the year your spouse reaches age701⁄2. Distributions from the account do not have to begin until April 1 of thecalendar year following the calendar year in which the spouse for whom theaccount is maintained reaches age 701⁄2. With the exception of thecontribution limitations, all rules that apply to a traditional IRA generally applyto the traditional IRA for a spouse.

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Roth IRA contributions for spouse. The amount of permitted contributions toa spousal Roth IRA is generally determined by the rules discussed in SectionIII[C]. Thus, if you are married filing a joint tax return, the spousal Roth IRAcontribution limit in effect for the taxable year is reduced by an amount thatbears the same ratio to the contribution limit in effect as your combinedadjusted gross income over $150,000 bears to $10,000. For example, thecontributions to a spousal Roth IRA would be eliminated if your combinedadjusted gross income exceeds $160,000 (although nondeductible traditional IRAcontributions of up to the contribution limit in effect for the taxable year couldstill be made). Keep in mind that Roth IRA contributions on behalf of a spousemay be made regardless of whether you or your spouse is over age 701⁄2.

F. Return of IRA Contributions

Withdrawal of IRA contributions by the date your return is due. If youmake a contribution to your IRA for a taxable year, you may withdraw thecontribution amount and the earnings thereon at any time prior to the due datefor filing your federal income tax return, including extensions, for the taxableyear for which the contribution was made, or such later date as authorized bythe IRS. If this is done, the return of the contribution will not be includible inyour gross income as an IRA distribution. However, the earnings on thecontribution will be taxable income in the year for which the contribution wasmade and may possibly be subject to the 10% tax on early distributions if youare under age 591⁄2 (see Section VII[C]).

G. Recharacterization of IRA Contributions

You may elect to recharacterize all or part of a regular contribution orconversion contribution (i.e., treat a contribution made to one IRA (the “FirstIRA”) as made to a different type of IRA (the “Second IRA”)). You may wish torecharacterize a contribution because, for example, you realize you were noteligible to make the IRA contribution or for tax planning reasons. For example,you may wish to recharacterize a contribution to a Roth IRA into a contributionto a traditional IRA because you decide that you want the tax deductionavailable for a traditional IRA contribution. You may wish to recharacterize aconversion contribution back to a traditional IRA because you realize that yourAGI will exceed $100,000 (see Section VI).

A recharacterization is accomplished by requesting, in a form and manneracceptable to the Custodian, a trustee-to-trustee transfer of the contributionmade to the First IRA, adjusted for gains and losses, to the Second IRA. Therecharacterized amount is treated as having been originally contributed to theSecond IRA on the same date and (in the case of a regular contribution) for thesame taxable year that the contribution was made to the First IRA. Therecharacterization is permissible only if the contribution could have been madeoriginally to the Second IRA. The recharacterization must be accomplished bythe due date (including extensions) of your federal income tax return for theyear for which the original contribution was made, or such later date asauthorized by the IRS.

You can recharacterize a Roth IRA conversion contribution back to a traditionalIRA and then reconvert the recharacterized amount to a Roth IRA again,subject to certain timing restrictions (see Section VI[B]).

H. Excess Contributions to Traditional or Roth IRA

Generally, an excess contribution is the amount of any contributions to yourtraditional or Roth IRA (other than a proper rollover or conversion contributionas described in Sections V and VI) for a taxable year that exceeds your IRAcontribution limit for the taxable year. An excise tax equal to 6% of theamount of any excess contribution will be assessed for the year for which theexcess contribution is made and for each subsequent year until the excessamount is eliminated.

Return of excess contribution by the date your return is due. If youmake an excess contribution to your IRA for a taxable year, you may withdrawthe contribution and the earnings thereon prior to the due date for filing yourfederal income tax return, including extensions, or such later date as may beauthorized by the IRS. If this withdrawal is made, the return of the contributionwill not be subject to the 6% excise tax on excess contributions (assuming thecontribution is not deducted on your return).

Return of excess contribution after tax return due date. If you make anexcess contribution to your IRA for a taxable year and you withdraw theexcess contribution after the due date for filing your federal income tax return(including extensions), the returned excess contribution will not be includiblein your gross income as an IRA distribution (subject to possible prematuredistribution penalties) if (1) your total IRA contributions for the year did notexceed the contribution limit in effect for the taxable year, and (2) you did notdeduct the excess contribution on your return (or if the deduction you claimedwas disallowed by the IRS). However, you must pay the 6% excise tax on theexcess contribution for each taxable year that it was still in your IRA at theend of the year. Under this procedure, you are not required to withdraw anyearnings attributable to the excess contribution.

Applying excess contribution to subsequent year. You may alsoeliminate an excess contribution from your IRA in a subsequent year by notcontributing the maximum amount for that year and applying the excesscontribution to the subsequent year’s contribution. You may be entitled to adeduction for the amount of the excess contribution that is applied in thesubsequent year provided you did not previously deduct the excesscontribution (or if the deduction you claimed was disallowed by the IRS).However, if you incorrectly deducted an excess contribution in a closed taxableyear (i.e., one for which the period to assess a deficiency has expired), theamount of the excess contribution cannot be deducted again in the subsequentyear in which it is applied.

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Section IV

Transfers

This section discusses options for carrying out a trustee-to-trustee assettransfer of your existing IRA to another IRA of the same type (e.g., a transferfrom traditional IRA to traditional IRA). For a discussion of recharacterizations ofcontributions to a different type of IRA, rollover options, and the option to“convert” your traditional IRA to a Roth IRA, see Sections III[G], V, and VI,respectively.

A. Tax-Free Transfer From Existing IRA to Vanguard IRA

In order to give you greater investment flexibility, you are permitted to transferIRA assets directly from one trustee or custodian to another on a tax-free basis.If you already have an IRA with another trustee or custodian, you may authorizea direct transfer of your IRA assets to a Vanguard IRA without paying taxes,subject to the rules and restrictions of your existing account. Transfers are onlypermitted between the same type of IRA plans (i.e., from a traditional IRA totraditional IRA or from a Roth IRA to Roth IRA). You may make such a transfer asoften as you wish. Of course, such a transfer of assets is not tax-deductible. Ifyou wish to authorize the Custodian to arrange a direct transfer of assets fromthe trustee or custodian of your existing IRA to a Vanguard IRA, please completeVanguard’s IRA Asset Transfer Authorization form.

B. Tax-Free Transfer From Vanguard IRA

If you so direct in a form and manner acceptable to the Custodian, the Custodianwill transfer all or any portion of the assets held in your Vanguard IRA directly tothe trustee or custodian of another IRA established on your behalf, provided thetrustee or custodian certifies that it will accept the direct transfer of assets andwill deposit the transferred assets in the same type of IRA established on yourbehalf. Transfers are only permitted between the same type of IRA plans (i.e.,from a traditional IRA to traditional IRA or from a Roth IRA to Roth IRA).

C. Transfer Incident to Divorce

All or any portion of your IRA assets may be transferred to a separate IRA forthe benefit of your former spouse pursuant to a divorce decree or writteninstrument incident to divorce. The transfer will not result in a taxableincrease for you or your former spouse. After the transfer, your former spousewill be considered the Owner of the IRA mentioned for his or her benefit.

Section V

Rollover Contribution

A. Tax-Free Rollovers in General

A rollover contribution is a contribution to your IRA of cash or other assets youreceive as a distribution from another IRA or, in the case of a traditional IRA,an employer retirement plan. A rollover transaction is tax-free, in that theamounts received as a distribution and properly rolled over to your IRA will notbe currently taxable in the year of receipt. Of course, a rollover contribution toyour IRA is not tax-deductible.

B. Rollover From Existing IRA to Vanguard IRA

If you receive a distribution of assets from an existing IRA, you may make arollover contribution of all or part of the assets you receive tax-free to aVanguard IRA. Except in the case of a “conversion” from a traditional IRA to aRoth IRA, rollovers are only permitted between the same type of IRA plans (i.e.,from a traditional IRA to traditional IRA or from a Roth IRA to Roth IRA). Therollover must be completed within 60 days after you receive the distribution fromyour existing IRA. You are limited to one such tax-free rollover every 12 months(beginning on the date you receive the IRA distribution, not on the date youmake the rollover contribution). Recharacterizations are not taken into accountfor purposes of this distribution. You may not roll over any minimum distributionamounts you are required to receive from your traditional IRA upon attaining age701⁄2 (see Section VIII[B]).

Note: A tax-free transfer of funds as described in Section IV[A] is not arollover (since you do not actually receive any distribution from your IRA).Rather it is a direct transfer of your IRA funds from one trustee or custodianto another that is not affected by the 12-month waiting period applicable toIRA rollovers.

If your distribution consists of property other than cash, you must roll over toyour new IRA the same property you received from your old IRA. If you wish tomake a rollover contribution of property other than cash to your Vanguard IRA,you must obtain the prior approval of the Custodian.

C. From Employer Retirement Plan to Vanguard Traditional IRA

Eligible rollover distribution from employer’s retirement plan totraditional IRA. If you will be entitled to receive an “eligible rolloverdistribution” from an employer’s qualified retirement plan (such as a 401(k),pension, profit-sharing, or stock bonus plan), a 457(b) plan maintained by agovernmental employer (governmental 457 plan), or a Section 403(b) accountor annuity, you may make a tax-free rollover contribution of the distribution to a Vanguard traditional IRA. (Note that you are not permitted to roll overdirectly from an employer’s plan into a Roth IRA.) An “eligible rolloverdistribution” generally includes any distribution or withdrawal from anemployer’s qualified retirement plan, governmental 457 plan, or Section 403(b) account or annuity other than:

(1) A distribution that is part of a series of periodic payments over aspecified period of ten years or more, or over your life (or life expectancy),or over the joint lives (or joint life and last survivor expectancy) of you andyour designated beneficiary;

(2) Any portion of a distribution that represents a required minimumdistribution to you after age 701⁄2; or

(3) A hardship distribution.

After-tax contributions. If a portion of your eligible rollover distribution froman employer’s plan represents a return of after-tax contributions, you may rollover your after-tax contributions to a traditional IRA. If you elect to roll overafter-tax contributions to a traditional IRA, it is your responsibility to keeptrack of these after-tax rollover amounts and to report such rollover amounts inaccordance with IRS guidelines. Once you roll after-tax amounts into atraditional IRA, those amounts cannot later be rolled into an employer plan.

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Direct rollover option. If you will be entitled to receive an eligible rolloverdistribution from an employer’s qualified retirement plan, governmental 457plan, or Section 403(b) account or annuity, you may elect to have the plan rollover all or any part of your distribution directly to your Vanguard traditional IRAas a tax-free rollover contribution on your behalf. If you elect this directrollover option, no federal income taxes will be withheld on your distributionto the extent it is transferred directly to your Vanguard traditional IRA. Theplan administrator of your employer’s plan or Section 403(b) account or annuitymust give you an explanation of your direct rollover option and the other taxrules affecting your eligible rollover distribution. If you wish to make a directrollover from your employer’s plan or Section 403(b) account or annuity to yourVanguard traditional IRA, you may contact Vanguard at 1-800-205-6189 forfurther information.

Payment option; 20% withholding. If you elect to have an eligible rolloverdistribution from an employer’s qualified retirement plan paid directly to you,your distribution will be subject to 20% federal income tax withholding. You willstill have the option of making a tax-free rollover contribution of your eligiblerollover distribution to a Vanguard traditional IRA within 60 days of receipt ofyour distribution. You may roll over any amount up to 100% of your eligiblerollover distribution (including an amount equal to the 20% that was withheld bycoming up with additional money to make up for the withheld amount).

Rollover of property. If you receive an eligible rollover distribution from anemployer retirement plan that consists of property other than cash, you may bepermitted to roll over the property received to your traditional IRA. As analternative, you may sell the property received and roll over the cash proceedsto your traditional IRA, in which case no gain or loss will be recognized on thesale if the entire proceeds are rolled over. If you wish to make an in-kindrollover contribution of property other than cash to your Vanguard traditionalIRA, you must obtain the prior approval of the Custodian.

Rollover by surviving spouse. A surviving spouse of a deceased employeemay be permitted to make a tax-free rollover contribution to a traditional IRAof all or any portion of an eligible rollover distribution from an employerretirement plan upon the employee’s death.

Rollover pursuant to divorce or similar proceedings. If you are eligibleto receive an eligible rollover distribution from an employer’s qualifiedretirement plan pursuant to a “qualified domestic relations order” (within themeaning of Section 414(p) of the Internal Revenue Code) resulting from divorceor similar proceedings, you may have all or part of the distribution rolled overto your traditional IRA on a tax-free basis.

Separate traditional IRA account for certain rollovers from qualifiedplans. If you were born before January 1, 1936, and you receive an eligiblerollover distribution from an employer’s qualified retirement plan, you mayprefer to roll over the distribution into a separate traditional IRA (frequentlycalled a “rollover” or “conduit” IRA) to which no annual IRA contributions aremade. In this manner, if you later roll over the assets to a new employer’squalified retirement plan you preserve any special tax treatment, such as ten-year averaging, that may be available on lump-sum distributions from thequalified plan.

D. Rollovers From a Vanguard IRA

If you withdraw assets from your Vanguard IRA, you may roll over on a tax-freebasis all or any portion of the assets you receive within 60 days of receipt toanother IRA of the same type. You are limited to one such tax-free rollover every12 months. You may also roll over on a tax-free basis all or part of the taxableportion of the assets you receive from your Vanguard traditional IRA within 60days of receipt to an “eligible employer plan” that accepts such rollovers. Aneligible employer plan includes a qualified plan (such as a 401(k), profit-sharing,or pension plan), a governmental 457 plan, and a 403(b) plan. If any portion of adistribution from your traditional IRA represents a return of nondeductiblecontributions or after-tax rollover contributions, such portion cannot be rolledover into an eligible employer plan. You cannot roll over any minimumdistribution amount you are required to receive from a Vanguard traditional IRA(see Section VIII[B]). You should seek competent tax advice concerning IRArollovers to employer retirement plans.

Section VI

Conversions From a Traditional IRA to a Roth IRA

A. Traditional IRA to Roth IRA Conversion: General Rules

If your adjusted gross income (for both single and joint filers) for the tax year is$100,000 or less and you are not a married individual filing a separate tax return,you are eligible to convert all or part of your traditional IRA into a Roth IRA. Ifyou are age 701⁄2 or older, you must satisfy your required minimum distributionfor the tax year prior to making a conversion contribution for such year. Fortaxable years beginning after December 31, 2004, your required minimumdistribution amount is not taken into account when determining if your adjustedgross income is $100,000 or less. (For conversion purposes, your adjusted grossincome is not increased by the taxable income resulting from the conversion.)The conversion will be treated as a taxable distribution from your traditional IRAand a subsequent conversion contribution to a Roth IRA. Distributions from yourtraditional IRA will be includible in your gross income in the year of thedistribution (except for the portion of the distribution that represents a tax-freereturn of your nondeductible contributions or after-tax rollover contributions) butwill not be subject to the 10% additional tax on early distributions, regardless ofwhether you are under age 591⁄2.

B. Recharacterization

An amount that is converted from a traditional IRA to a Roth IRA may berecharacterized back to a traditional IRA. You may wish to do this if you realizethat your adjusted gross income for the year will exceed $100,000 (see SectionIII[G]). An amount that is recharacterized back to a traditional IRA may not bereconverted to a Roth IRA prior to January 1 of the taxable year following thetaxable year of the conversion, or 30 days from the date of therecharacterization, whichever is later.

C. Conversions of SEPs and SIMPLE Accounts

Accounts held in a SEP–IRA or a SIMPLE IRA may be converted to a Roth IRA.However, a conversion of a SIMPLE IRA is permissible only after the expirationof the initial two-year holding period. (See your SIMPLE IRA materials for moredetails.)

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Section VII

Taxation of Distributions

A. Traditional IRA: Tax Treatment of Distributions

In general, distributions from your traditional IRA are included in your grossincome in the year of receipt. Exceptions to this rule include any distributionthat is properly rolled over to another IRA or employer retirement plan asdescribed in Section V, or any return or transfer of an IRA contribution asdescribed in Sections III[F], [G], and [H] and Section IV. In addition, distributionsfrom a traditional IRA that contains “nondeductible contributions” (see SectionIII[D]) or after-tax rollover contributions (see Section V[C]) are treated partly asa nontaxable return of the nondeductible traditional IRA contributions or after-tax rollover contributions, and partly as a taxable distribution of traditional IRAearnings and any deductible IRA contributions, as explained below.

Ordinary income taxation. Distributions from your traditional IRA that areincluded in gross income will be taxed as ordinary income. Traditional IRAdistributions are not eligible for the special tax treatment accorded to certainlump-sum distributions from qualified retirement plans, such as forwardaveraging taxation.

Distribution of nondeductible traditional IRA contributions. To theextent any distribution from your traditional IRA represents a return of yournondeductible contributions (see Section III[D]) or after-tax rollovercontributions, the distribution will be treated as a tax-free return of basis. Ifyou withdraw an amount from a traditional IRA during a taxable year and youhave previously made nondeductible contributions or after-tax rollovercontributions to a traditional IRA, then the amount excluded from income forthe taxable year is the portion of the amount withdrawn that bears the sameratio to the amount withdrawn as your aggregate nondeductible traditionalIRA contributions and after-tax rollover contributions bear to the aggregatebalance of all your traditional IRAs as of the end of the year, plus the amountof the withdrawal. For these purposes, all traditional IRAs maintained on yourbehalf, including traditional rollover IRAs and SEPs, are required to beaggregated, and all distributions in a given year are treated as onedistribution.

Example: An individual withdraws a total amount of $3,000 from severaltraditional IRAs during a taxable year. At the end of the taxable year, theaggregate balance of all traditional IRAs maintained by the individual is$21,000, and the aggregate amount of nondeductible contributions notpreviously withdrawn by the individual is $4,000. The amount of theindividual’s $3,000 traditional IRA withdrawal excludible from income is$500 (or $4,000 ÷ $24,000 x $3,000), and the remaining $2,500 is taxable.

Distributions rolled into an eligible employer plan. The maximumamount of a traditional IRA distribution that you can roll over into an eligibleretirement plan (other than an IRA) cannot exceed the portion of yourtraditional IRA distribution that would otherwise be taxable (without regard tothe rollover). The portion of a distribution from your traditional IRA thatrepresents a return of after-tax rollover contributions or nondeductiblecontributions is not eligible to be rolled over into an employer plan. If you rollover all or a portion of a distribution from a traditional IRA into an eligibleemployer plan (such as a 401(k) plan, governmental 457 plan, or 403(b) plan),the formula described above for determining the taxable and nontaxableportion of a distribution will not apply. Instead, the portion of the distributionthat is rolled over to an eligible employer plan (other than an IRA) is attributable

first to amounts other than after-tax rollovers and nondeductible contributions.Therefore, you may roll over a distribution from your traditional IRA to the extentthe amount distributed does not exceed the taxable amount (e.g., deductiblecontributions and earnings) of all of your IRAs. You may wish to consult your taxadviser before rolling over a distribution into an eligible employer plan.

Note: If you roll over a portion of a traditional IRA distribution to an eligibleemployer plan, the formula used to determine the taxable portion of anywithdrawal you receive during or subsequent to the year of the rollovermust be adjusted in accordance with IRS guidelines.

B. Roth IRA: Tax Treatment of Distributions

Ordering rules. Distributions from your Roth IRA are treated as made in thefollowing order:

(1) From regular contributions;

(2) From conversion contributions on a first-in, first-out basis; and

(3) From earnings.

For this purpose, all distributions for each year are considered together, and allof your Roth IRA accounts are treated as one account. For example, if youmake a regular contribution in 2003 of $1,000 to any Roth IRA and aconversion contribution in 2003 of $10,000 to any Roth IRA (and you have noother amounts in any Roth IRA), a distribution in 2004 will first be consideredfrom the regular contribution amount (up to $1,000).

Tax-free “qualified distributions.” Distributions from your Roth IRA that are“qualified distributions” are not included in your gross income and are generallynot subject to the additional 10% penalty tax on early distributions. A qualifieddistribution from your Roth IRA is a distribution that is both (1) made after a five-year holding period (see details on next page) and (2) described by any one of thefollowing:

(1) Made on or after the date you reach age 591⁄2;

(2) Made to your designated beneficiary after your death;

(3) Made because of your permanent disability; or

(4) A “qualified first-time homebuyer” distribution (subject to a $10,000lifetime limit). Qualified first-time homebuyer distributions are distributionsused to pay for certain acquisition costs (including the cost of acquiring,constructing, or reconstructing a residence, and reasonable settlement,financing, or other closing costs) of a principal residence for a first-timehomebuyer, including you, your spouse, or any children, grandchildren, orancestors of you or your spouse. Such distribution must be used within 120days after it is received. You are considered a first-time homebuyer if you(and, if married, your spouse) have not owned a principal residence duringthe two-year period ending on the date of acquisition.

Nonqualified distributions first considered tax-free return ofcontributions. If a Roth IRA distribution is not a “qualified distribution” asjust described, the distribution will be treated for tax purposes as first a tax-free return of your Roth IRA contributions (see “ordering rules” above). To theextent a nonqualified distribution, when added to all of your previous Roth IRAdistributions (whether qualified or nonqualified), is attributable to earnings(see “ordering rules”), it will be fully taxable.

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Example: An individual establishes a Roth IRA and contributes $3,000 for2003, with no additional Roth IRA contributions in later years. In 2006, theindividual takes a $1,000 nonqualified distribution from the Roth IRA. Theentire $1,000 distribution will be completely tax-free because it is treatedfirst as a tax-free return of the individual’s contributions (see “orderingrules”).

In 2007, the individual takes another $2,500 nonqualified distribution fromthe Roth IRA. Of the distribution, $2,000 will be tax-free, with the remaining$500 earnings portion fully taxable. This is because $500 is the amount bywhich this $2,500 distribution, when added to the $1,000 of previousdistributions, exceeded the aggregate $3,000 of aggregate Roth IRAcontributions ($2,500 + $1,000 – $3,000 = $500).

Five-year holding period for Roth IRA distributions. In order for your RothIRA distributions to be “qualified distributions,” you must have held your RothIRA for at least five years prior to the distribution. This five-year holding periodis generally measured by counting five years beginning with the earlier of thefirst year for which your first regular Roth IRA contribution relates (notnecessarily the year in which your first regular Roth IRA contribution is made)or the first year in which you made a conversion contribution.

Example: On April 1, 2004, an individual establishes a Roth IRA by makinga contribution for the 2003 tax year (remember, IRA contributions may bemade for a year up to the due date for filing your federal income tax returnfor that taxable year—generally the following April 15). In this case, thefive-year holding requirement will be satisfied for any distribution made onor after January 1, 2008, from any of the individual’s Roth IRA accounts. Ifthe distribution is also described on the previous page (i.e., after 591⁄2, afterdeath, etc.), it will be considered a “qualified distribution.”

Separate five-year holding period for traditional IRA-to-Roth IRAconversions. A separate five-year holding period applies with respect to theportion of a distribution that is properly allocable to a traditional IRA-to-RothIRA conversion. For this portion of a distribution, the five-year period startswith the year in which the conversion contribution was made (which may belater than the year for which your first Roth IRA contribution was made). Eventhough the distribution of amounts attributable to the conversion may not besubject to income tax, they are subject to a 10% penalty tax if made duringthe five-year holding period (see Section VII[C]).

Example: In 2003, an individual makes a 2003 annual Roth IRAcontribution of $2,000. In 2004, the individual makes a $10,000 traditionalIRA-to-Roth IRA conversion. Even though the five-year holding period wouldgenerally be satisfied for Roth IRA distributions taken on or after January 1,2008, the portion attributable to the conversion contribution (i.e., the$10,000 conversion) will not satisfy the five-year holding requirement untilJanuary 1, 2009.

C. Additional 10% Tax on Early Distributions From Traditional IRAs and Roth IRAs

Your IRA is intended to provide you with retirement income. For this reason, the law generally imposes a nondeductible additional tax if you receive adistribution from either your traditional IRA or Roth IRA, unless certainexceptions apply. This additional tax is equal to 10% of the taxable amount ofthe distribution and is in addition to the ordinary income tax on the distribution.(Thus, the 10% penalty tax does not apply to the tax-free portion of anydistributions you receive from your IRAs.) The additional tax may also apply ifyou are deemed to receive a distribution from your IRA before age 591⁄2 as aresult of borrowing from your IRA or pledging your IRA as security for a loan, as

described in Section XI. The law also imposes a tax equal to 10% of anydistribution from a Roth IRA attributable to conversion contributions within theseparate five-year holding period for conversion amounts.

The additional 10% tax will not be imposed, however, on the following typesof distributions from your traditional or Roth IRA:

• Distributions after you reach age 591⁄2.

• Distributions attributable to your total and permanent disability.

• Distributions made to your designated beneficiary after your death.

• Distributions that are part of a series of substantially equal periodicpayments (not less frequently than annually) made for your life or lifeexpectancy, or for the joint lives or life expectancies of you and yourbeneficiary.

• Distributions you receive to the extent such distributions do not exceed theamount of your deductible medical expenses for the taxable year (i.e.,medical expenses in excess of 7.5% of your adjusted gross income).

• Distributions you receive following termination of employment to the extent such distributions do not exceed the amount of medical insurancepremiums you paid for yourself, spouse, and dependents for the taxableyear, provided that you have received at least 12 consecutive weeks ofunemployment compensation during the current or prior taxable year.

• Distributions to pay for qualified higher education expenses. Qualifiedhigher education expenses include tuition, fees, books, supplies,equipment, and room and board required for enrollment or attendance for you, your spouse, your children, or your grandchildren at an eligiblepost-secondary educational institution.

• Distributions up to $10,000 used to pay for acquisition costs (including the costof acquiring, constructing, or reconstructing) of a principal residence for a first-time homebuyer, including you, your spouse, or any children, grandchildren, orancestors of you or your spouse. Such distribution must be used within 120days after it is received. You are considered a first-time homebuyer if you (and,if married, your spouse) have not owned a principal residence during the two-year period ending on the date of acquisition. The aggregate amount ofdistributions you may take under this first-time homebuyer exception for theyear of the distribution and all prior years is $10,000.

• Distributions made on account of an IRS levy.

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Section VIII

Methods of Distribution

A. Distributions in General

Under either a Vanguard traditional IRA or Roth IRA, you may elect to have allor a portion of your account distributed in one or a combination of thefollowing ways:

(1) A partial payment.

(2) A lump-sum payment.

(3) Monthly, quarterly, semiannual or annual installment payments over aperiod not extending beyond your life expectancy or the joint and lastsurvivor life expectancy of you and your designated beneficiary.

The method of distribution you select for your traditional IRA must comply withthe minimum distribution requirements described in Section VIII[B]. You mayrequest a distribution from your Vanguard IRA in a form and manneracceptable to the Custodian.

Distributions in cash or in kind. Distributions from the Vanguard IRA willgenerally be made in cash, unless you notify the Custodian in writing that youwish to have a designated portion of your IRA assets distributed in kind.However, any assets in your Vanguard IRA that cannot be sold by theCustodian for cash in the ordinary course of business shall automatically bedistributed to you in kind.

B. Traditional IRA: Age 701⁄2 Minimum Distributions

Commencement of distribution at age 701⁄2. You must begin receivingdistributions from your traditional IRA no later than April 1 of the calendar yearfollowing the calendar year in which you attain age 701⁄2. No age 701⁄2distribution requirements apply for Roth IRAs.

Minimum amount required to be distributed. The minimum amount requiredto be distributed from your traditional IRA for each calendar year, beginning withthe year in which you attain age 701⁄2, is determined by dividing the entireamount in your account as of December 31 of the preceding calendar year by theapplicable distribution period. In most cases, the applicable distribution period isdetermined using the IRS’s Uniform Lifetime Table. However, if your spouse isyour sole beneficiary for the entire year, the applicable distribution period is thelonger of the distribution period determined using the Uniform Lifetime Table, orthe joint life expectancy of you and your spouse determined using the Joint Lifeand Last Survivor Table. See IRS Publication 590, Individual RetirementArrangements (IRAs), for more details including the life expectancy tables usedto calculate required minimum distribution amounts. You must receive therequired minimum distribution amount from your traditional IRA for the calendaryear in which you attain age 701⁄2 by April 1 of the following year. You mustreceive the required minimum distribution amount from your traditional IRA foreach calendar year thereafter by December 31 of that year.

Penalty tax on insufficient distributions. A 50% excise tax may be imposedif the amount actually distributed from your traditional IRA beginning after youattain age 701⁄2 is less than the minimum amount required to be distributed. The50% tax is imposed on the difference between the amount actually distributedfrom your traditional IRA and the amount required to be distributed. This penaltytax may be waived in certain cases provided you can establish to thesatisfaction of the IRS that the deficit in the amount distributed was due toreasonable error and you are taking steps to remedy the problem.

C. Distribution Upon Death for Traditional IRAs and Roth IRAs

If you die prior to the complete distribution of your account, the remainingbalance in your Vanguard IRA (either traditional or Roth IRA) will be distributed toyour designated beneficiary, upon request in a form and manner acceptable to theCustodian, over a period selected by your beneficiary subject to the requirementsstated below. In general, distributions your beneficiary receives from your IRAthat are included in gross income will be taxed as ordinary income.

General rule for Roth IRAs and where required distributions had notbegun from traditional IRAs. For all Roth IRAs and for traditional IRAs wherea required distribution of your account had not commenced prior to your death,the general rule is that the balance of your Vanguard IRA must be distributed to your designated beneficiary over his or her life expectancy starting byDecember 31 of the calendar year following the year of your death, or if yoursole beneficiary is your surviving spouse, by the later of December 31 of thecalendar year following the year of your death or December 31 of the calendaryear in which you would have attained age 701⁄2. Instead of applying thegeneral rule described above, your beneficiary may elect to apply the “five-yearrule,” under which your beneficiary must distribute the entire balance of youraccount by December 31 of the calendar year that contains the fifth anniversaryof your death. If you do not have a beneficiary, or your beneficiary is not anindividual (your estate or a charity, for example), distributions must generally bemade in accordance with the five-year rule. However, if your beneficiary is atrust and the trust meets certain requirements, the beneficiaries of the trustmay be treated as designated beneficiaries for the purpose of determining theapplicable distribution period. See IRS Publication 590 or consult your taxadviser for more information on the special trust rules.

Where age 701⁄2 minimum distributions from traditional IRA hadalready begun. If required minimum distributions from your traditional IRAhad already commenced prior to your death, the balance of your Vanguardtraditional IRA must be distributed to your designated beneficiary over his orher life expectancy, or if longer, over your remaining life expectancy, startingby December 31 of the calendar year following the year of your death. If youdo not have a beneficiary, or your beneficiary is not an individual, distributionsmust be made over your remaining life expectancy. If your beneficiary is a trustand the trust meets certain requirements, the beneficiaries of the trust may betreated as designated beneficiaries for the purpose of determining theapplicable distribution period. See IRS Publication 590 or consult a tax adviserfor more information about the special trust rules. For these purposes,minimum distributions are considered to have begun prior to your death only ifdistributions were made on or after April 1 of the calendar year following thecalendar year in which you attained age 701⁄2.

Exception where surviving spouse is sole beneficiary. An exception to thepreceding two rules is that if the sole beneficiary of your Vanguard IRA is yoursurviving spouse, your spouse may elect to treat your Vanguard IRA as his or herown IRA. Your surviving spouse may elect to treat your Vanguard IRA as his orher own IRA either by making contributions to the IRA (including a rollovercontribution) or by not taking required minimum distributions from the IRA as theIRA beneficiary in accordance with the rules summarized in this Section VIII[C].In the case of a traditional IRA, if your surviving spouse makes the election totreat your Vanguard IRA as his or her own IRA, your spouse would be required tosatisfy any minimum distribution requirements as the traditional IRA owner inaccordance with the rules summarized in Section VIII[B].

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Designation of beneficiary. Under a Vanguard IRA, you may designate oneor more individuals or entities (such as a trust) as your beneficiary. You mayalso select other beneficiary designations deemed acceptable by theCustodian. You will initially designate your beneficiary by completing theAdoption Agreement for the Vanguard IRA. You may subsequently change orrevoke your beneficiary designation at any time by notifying the Custodian in aform and manner acceptable to the Custodian. If you fail to designate abeneficiary or if your designated beneficiary (or each of your designatedbeneficiaries) predeceases you, your beneficiary will be your estate.

D. Federal Estate and Gift Taxation

Gift tax consequences. Your designation of a beneficiary (or beneficiaries)to receive distributions from your IRA upon your death will not be considered atransfer of property for federal gift tax purposes.

Estate tax consequences. Generally, amounts remaining in your IRA afteryour death will be included in your gross estate for federal estate taxpurposes. You are encouraged to consult with a financial planner or taxadviser when considering the estate tax consequences of your IRA assets.

E. Income Tax Withholding

The Internal Revenue Code requires the withholding of federal income tax ondistributions from a traditional IRA unless the recipient affirmatively elects notto have withholding apply. The amount of federal income tax required to bewithheld on any payment under the Vanguard traditional IRA will generallyequal 10% of the amount of the distributions. Upon a request for a distributionunder the Vanguard traditional IRA, the Custodian will notify the recipient ofhis or her right to elect not to have withholding apply (or to revoke any priorelection). State income tax may be withheld from your IRA distributions, ifapplicable.

Section IX

Simplified Employee Pension

A simplified employee pension, or “SEP,” is a special traditional IRA plan thatpermits employers to make deductible contributions to the separate traditionalIRAs established for their employees. If your employer has adopted a SEP, youremployer may make deductible SEP contributions directly to your Vanguardtraditional IRA each year in an amount up to the lesser of $40,000 or 25% ofyour current-year compensation.

Exclusion from gross income. The amount of SEP contributions made byyour employer to your traditional IRA will be excludible from your gross incomeprovided it does not exceed the $40,000/25% of compensation limit. Inaddition, you may make your own annual contributions to either yourtraditional or Roth IRA each year up to the lesser of the contribution limit ineffect for the taxable year or 100% of current-year compensation.

Determination of compensation. For purposes of the 25% of compensationlimit that applies to SEP contributions, you may take into account only theamount of your current-year compensation from the employer making the SEPcontribution. In addition, you may not include the amount of the SEPcontribution in the determination of your compensation. The maximum amountof compensation that may be taken into account on behalf of any SEPparticipant is subject to an indexed limit ($200,000 for 2002).

Self-employed individuals. Any sole proprietor or partnership may beeligible to establish a SEP and make deductible SEP contributions to theseparate traditional IRAs established by the sole proprietor or partners (as wellas to the traditional IRAs of any common-law employees). In the case of aself-employed individual, the term “compensation” includes the individual’searned income from self-employment, reduced by the amount of deductibleretirement plan contributions.

Contributions after age 701⁄2. SEP contributions may be made to your IRA byyour employer even after you have attained age 701⁄2.

Elective deferrals. Prior to January 1, 1997, certain employers werepermitted to establish a salary reduction SEP under which employees couldmake elective deferrals—or “pre-tax” salary reduction contributions—up toan indexed dollar limit each year. However, employers can no longer establishsalary reduction SEPs after December 31, 1996 (although salary reductionSEPs in existence before January 1, 1997, can continue to receivecontributions and cover new employees).

Section X

Income Tax Returns

If you are eligible to make deductible contributions to your traditional IRA, youmay claim your deduction for traditional IRA contributions on your federalincome tax return (Form 1040 or Form 1040A) even if you do not itemizedeductions. Each year, the Custodian will send you IRS Form 5498, showingyour preceding-year IRA contributions. If you make nondeductible contributionsto your traditional IRA for a taxable year, or if you receive any distributionsfrom your IRA during a taxable year that includes nondeductible contributions,you will be required to provide certain information concerning thesetransactions on Form 8606, to be included with your federal income tax returnfor the taxable year. If you make after-tax rollover contributions to yourtraditional IRA, you should report such contributions in accordance with IRSguidelines.

Penalty taxes. If one or more of the following situations occur, you may berequired to file Form 5329, Additional Taxes on Qualified Plans (Including IRAs)and Other Tax-Favored Accounts, with the IRS:

(1) Payment of a 6% excise tax because of an excess contribution.

(2) Payment of a 10% additional tax because of an early distribution beforeage 591⁄2.

(3) Payment of a 50% excise tax because of an insufficient distribution fromyour IRA after age 701⁄2.

Form 5329 need not be filed if the only activity in your IRA for the year consistedof proper (i.e., nonpenalized) contributions and distributions. If Form 5329 mustbe filed, it should be attached to your federal income tax return or should befiled separately if you are not required to file a federal income tax return.

Distributions. When you receive distributions from your Vanguard IRA, theCustodian will send you the required tax form (Form 1099-R).

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Section XI

Prohibited Transactions

Generally, a prohibited transaction is any improper use of your IRA. Examplesof prohibited transactions include borrowing money from your account orselling property to the account.

Effect on IRA. Generally, if you engage in a prohibited transaction, your IRAwill lose its tax-exempt status, and you will be required to include the entirevalue of the account in your gross income. If your account is disqualifiedbefore you reach age 591⁄2, you may also be required to pay the 10% additionaltax on early distributions referred to in Section VII[C].

Pledging your IRA as security. Pledging your IRA as security for a loan willcause the portion pledged to be treated as a distribution to you, includible ingross income and subject to the 10% additional tax on early distributions ifyou are under age 591⁄2.

Investment in collectibles. If your IRA is invested in collectibles, theamount invested will be considered a distribution to you in the year ofinvestment. For this reason, the Vanguard IRA specifically precludesinvestments in collectibles, which include artworks, rugs, antiques, metals,gems, stamps, coins (but not gold, silver, and platinum coins issued by theUnited States or gold, silver, platinum, or palladium bullion), alcoholicbeverages, and certain other tangible personal property.

Section XII

Other Information

A. The Custodian

The Custodian of your Vanguard IRA is Vanguard Fiduciary Trust Company, a trustcompany incorporated under Pennsylvania banking laws. Vanguard FiduciaryTrust Company is a wholly owned subsidiary of The Vanguard Group, Inc., ofValley Forge, Pennsylvania. The Vanguard Group will perform certainadministrative services in connection with the Vanguard IRA, for which TheVanguard Group may be reimbursed at cost by Vanguard Fiduciary TrustCompany.

B. Amendments

The Custodian is specifically authorized to make any amendments to theVanguard IRA necessary to comply with the applicable provisions of theInternal Revenue Code and any other such amendments as the Custodiandeems appropriate. The Custodian will inform you of any such amendments.

C. Vanguard IRA Investments

Your Vanguard IRA may be invested in shares of the mutual funds offered byThe Vanguard Group, Inc. (the “Vanguard funds”), or in other types ofinvestments that the Custodian may permit to be available investments underthe Vanguard IRA from time to time. If you choose to use Vanguard BrokerageServices for your Vanguard IRA, you may invest your IRA assets in publiclytraded stocks, bonds, or options (i.e., covered calls and hedge/puts).

Directed investments. Your Vanguard IRA will be invested and reinvestedsolely in accordance with your directions (or, following your death, thedirections of your designated beneficiary). You may change your investmentdirections at any time by notifying the Custodian in writing or by telephone.

Reinvestment of earnings. All dividends and capital gains received onshares of a Vanguard fund held in your Vanguard IRA that are permitted to bereinvested in additional shares of the Vanguard fund shall, in the absence ofinvestment directions by you to the contrary, be automatically reinvested inadditional shares of the Vanguard fund. Otherwise, any distribution of earningsreceived with respect to assets held in your account shall be reinvested solelyin accordance with investment directions furnished by you.

Growth in value. The growth in value of your Vanguard IRA will depend onthe investment decisions made by you and is neither guaranteed nor projected.

D. Vanguard IRA Minimums

Minimum contributions. Under the Vanguard Traditional and Roth IRA, theminimum initial contribution is generally $1,000 for each Vanguard fundportfolio account established for your IRA. However, certain Vanguard fundsmay require higher minimum contributions as set forth in their prospectuses.

E. Custodial Fees and Other Expenses

Vanguard may charge reasonable custodial fees with respect to theestablishment and maintenance of your Vanguard IRA at any time during thecalendar year. If this fee applies, Vanguard will provide you with theopportunity to pay the fee annually by separate check. If you do not choose topay your annual custodial fee by separate check, the Custodian will redeemsufficient shares from your account to pay the fee.

F. Vanguard Fund Information

For complete information about the advisory fees and other expenses as wellas the method of calculating the price per share for each Vanguard fund youmay select for your Vanguard IRA, you should read the fund’s prospectus. Youmay choose to use Vanguard Brokerage Services to invest your Vanguard IRAdirectly in stocks, bonds, or options. A schedule of the brokerage commissionsto be charged under Vanguard Brokerage Services will be furnished to youwhen you establish your account.

G. IRS Approval

The form of your Vanguard IRA has been approved by the IRS. IRS approval isa determination only as to the form and does not represent a determination ofthe merits of the Vanguard IRA. You may obtain further information withrespect to your IRA from any district office of the IRS.

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15


Vanguard Traditional and Roth IRA Custodial Account Agreement

IntroductionBy executing the Adoption Agreement, the Investor hereby establishes atraditional individual retirement account (Traditional IRA) as described inSection 408(a) of the Code or a Roth individual retirement account (Roth IRA)as described in Section 408A of the Code in order to provide for retirement orfor the support of his or her Beneficiary after death.

Article I

Definitions

The following terms when used herein with initial capital letters shall bedefined as follows:

1.1 Account means the custodial account established by the Investor towhich contributions may be made in accordance with the terms andconditions of this Agreement. All assets of the Account shall be held bythe Custodian for the exclusive benefit of the Investor or, following his orher death, the Beneficiary.

1.2 Adopted Person means a person adopted through the legal process ofthe United States and/or any state, commonwealth, or possession of theUnited States. An Adopted Person shall be considered to be thedescendant or issue of the adopting person.

1.3 Adoption Agreement means the agreement executed by the Investor inwhich the Investor designated the Account as a Traditional IRA or a Roth IRAfor purposes of adopting the Agreement. The Adoption Agreement shall beconsidered an integral part of the Agreement as if set forth fully herein.

1.4 Agreement means the Vanguard Traditional and Roth IRA CustodialAccount Agreement as set forth herein, including the provisions set forthin the Adoption Agreement and any Beneficiary designation filed withand acceptable to the Custodian, as each such document may beamended from time to time.

1.5 Authorized Party means the executor, administrator, or personalrepresentative of the Investor’s estate, the trustee of a trust Beneficiary,or any other person deemed appropriate by the Custodian to act on behalfof the Investor’s Account after the Investor’s death.

1.6 Beneficiary means the persons or entities designated in accordancewith Article 4.4 to receive any undistributed amount credited to theAccount at the time of the Investor’s death.

1.7 Children means descendants in the first generation below the individual,including those born within or without of wedlock, and those legallyadopted by the individual. This term excludes stepchildren and fosterchildren.

1.8 Code means the Internal Revenue Code of 1986, as amended from timeto time, or any successor statute.

1.9 Conversion Contribution means amounts rolled over, transferred, orconsidered transferred from a non-Roth IRA to a Roth IRA. A non-RothIRA is an individual retirement account or annuity described in CodeSection 408(a) or 408(b), other than a Roth IRA.

1.10 Custodian means Vanguard Fiduciary Trust Company, a trust companyincorporated under Pennsylvania banking laws, or any successor thereto.

1.11 Descendants means all descendants of all generations of an individual.

1.12 Grandchildren means descendants in the second generation below theindividual, including those born within or without of wedlock, and thoselegally adopted by Children of the Investor. This term excludesstepchildren and foster children.

1.13 Investor means the individual who has adopted the Agreement byexecuting the Adoption Agreement. (This term does not include aBeneficiary who opens an account after the Investor’s death.)

1.14 Issue means all descendants of all generations of an individual.

1.15 Per Stirpes means a way of dividing the Account as follows: The Accountshall be divided into as many equal shares as there are survivingdescendants in the generation nearest to the decedent that contains atleast one surviving descendant and deceased descendants in the samegeneration who left surviving descendants, if any. The share of eachdeceased descendant who leaves surviving descendants is divided in thesame manner, with the subdivision repeating until the property is fullyallocated among surviving descendants. A descendant who dies before thedecedent and who leaves no surviving descendants is disregarded.

1.16 Roth IRA means an individual retirement account as described in Section408A of the Code.

1.17 SEP Contribution means a contribution on behalf of the Investor by hisor her employer under a simplified employee pension as described inSection 408(k) of the Code.

1.18 Spouse means, for purposes of entitlement to distribution of the Accountat the Investor’s death, the person to whom the Investor was married atthe time of the Investor’s death in accordance with the law of the state ofthe Investor’s domicile. If Investor is not married at the time of theInvestor’s death, any designation of a spouse by relationship to theInvestor shall be deemed to have lapsed, and any designation of a spouseby name shall be deemed to have survived divorce.

1.19 Successor Beneficiary means the persons or entities designated inaccordance with Article 4.4 to receive any undistributed amount creditedto the Account at the time of the Beneficiary’s death.

1.20 Traditional IRA means an individual retirement account or annuity asdescribed in Section 408(a) of the Code.

1.21 Vanguard means The Vanguard Group, Inc., a Pennsylvania corporation,or any successor thereto.

1.22 Vanguard Funds means one or more of the regulated investmentcompanies or mutual funds that are members of The Vanguard Group, and that the Custodian permits to be available investments under thisAgreement.

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Article II

Contributions to Account

2.1 General Limitations. Contributions may be made by or on behalf of theInvestor to the Account for any taxable year subject to the limitations set forthbelow.

(a) Regular contributions. Except in the case of a rollover contribution to a Traditional IRA (as permitted under Code Sections 402(c), 402(e)(6),403(a)(4), 403(b)(8), 403(b)(10), 408(d)(3) and 457(e)(16)), an employerSEP contribution as described in Code Section 408(k), a qualifiedrollover contribution to a Roth IRA as described in Code Section408A(e), or a recharacterized contribution described in Code Section408A(d)(6), all contributions to the Account by or on behalf of theInvestor shall be made in cash, and the total of such contributions to all of the Investor’s IRAs shall not exceed the lesser of the Investor’scompensation (as defined in Article 2.6) or the applicable amountdefined in (b) below.

(b) Applicable amount. The applicable amount is determined under (i) or (ii) below.

(i) If the Investor is under age 50, the applicable amount is $3,000 forany taxable year beginning in 2002 through 2004, $4,000 for anytaxable year beginning in 2005 through 2007, and $5,000 for anytaxable year beginning in 2008 and years thereafter.

(ii) If the Investor is age 50 or will reach the age of 50 before the endof the tax year, the applicable amount is $3,500 for any taxable yearbeginning in 2002 through 2004, $4,500 for any taxable yearbeginning in 2005, $5,000 for any taxable year beginning in 2006through 2007, and $6,000 for any taxable year beginning in 2008and years thereafter.

(iii) After 2008, the limits in (b)(i) and (ii) above will be adjusted by theSecretary of the Treasury for cost-of-living increases under CodeSection 219(b)(5)(C). Such adjustments will be in multiples of $500.

(c) Income limits for Roth IRA contributions. If (i) and/or (ii) belowapply, the maximum regular contribution that can be made to all of theInvestor’s Roth IRAs for a taxable year is the smaller of the amountdetermined under (i) or (ii).

(i) Regular Roth contributions. The maximum regular contributionthat can be made to all of an Investor’s Roth IRAs for the taxableyear is gradually reduced to $0 between certain levels of modifiedadjusted gross income (modified AGI), as defined in Article 2.7below. For a single Investor (or head of household) the maximumannual contribution is phased out between modified AGI of $95,000and $110,000; for a married Investor who files jointly (or qualifyingwidower), between modified AGI of $150,000 and $160,000; and fora married Investor who files separately, between modified AGI of$0 and $10,000. If the Investor’s modified AGI is in the phase-outrange, the maximum regular Roth IRA contribution for the taxableyear is rounded up to the next multiple of $10 and is not reducedbelow $200.

(ii) Contributions to both Roth and Traditional IRAs. If the Investormakes contributions to both Roth IRAs and Traditional IRAs for ataxable year, the maximum regular contributions that can be madeto all of the Investor’s Roth IRAs for that taxable year is reduced bythe regular contributions made to the Investor’s non-Roth IRAs forthe taxable year.

(d) Conversion contributions. The Custodian may accept, in a form andmanner acceptable to the Custodian, a conversion contribution asdefined in Article 1.9. The Investor may not make a conversioncontribution if, for the year of the distribution from the non-Roth IRA, (i)the Investor is married and files a separate return, (ii) the Investor is notmarried and has modified AGI in excess of $100,000, or (iii) the Investoris married and together the Investor and the Investor’s spouse havemodified AGI in excess of $100,000. For purposes of the precedingsentence, a husband and wife are not treated as married for a taxableyear if they have lived apart at all times during the taxable year and fileseparate returns for the taxable year.

2.2 Recharacterization. A regular contribution to one type of IRA can berecharacterized pursuant to the rules in Section 1.408A-5 of the Income TaxRegulations as a regular contribution to another type of IRA. A regularcontribution to a non-Roth IRA that is recharacterized to a Roth IRA is subjectto the limits in Article 2.1(c) above.

2.3 Rollover Contributions. The Custodian may accept rollovercontributions within the meaning of Sections 402(c), 403(a)(4), 403(b)(8),403(b)(10), 408(d)(3), 457(e)(16), or 408A(e) of the Code that consist of cash orof such other assets that are acceptable to the Custodian and that arepermissible investments under Section 408(a) of the Code. Before making arollover contribution, the Investor shall provide any information the Custodianmay require, in a form and manner acceptable to the Custodian. The Custodianshall be under no obligation to accept any rollover contribution consisting ofassets other than cash. The Investor shall have the sole responsibility fordetermining whether any contribution to the Account qualifies as a rollovercontribution.

2.4 SEP Contributions. SEP Contributions may be made to a Traditional IRAon behalf of the Investor by his or her employer for any taxable year in anamount not to exceed the amount provided in Section 408(j) of the Code or anysuccessor statutory provision thereto for such taxable year. Before making anySEP Contribution, the Investor shall execute such forms as the Custodian mayrequire to certify that the Investor is covered under a simplified employeepension (as described in Section 408(k) of the Code) established by his or heremployer and to provide other information as the Custodian may reasonablyrequest. The Investor shall have the sole responsibility for determiningwhether any contribution to the Account qualifies as a SEP Contribution.

2.5 SIMPLE Contributions. No contributions will be accepted under aSIMPLE IRA plan established by any employer pursuant to Code Section408(p). Also, no transfer or rollover of funds attributable to contributions madeby a particular employer under its SIMPLE IRA plan will be accepted from aSIMPLE IRA, that is, an IRA used in conjunction with a SIMPLE IRA plan, priorto the end of the two-year period beginning on the date the individual firstparticipated in that employer’s SIMPLE IRA plan.

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2.6 Compensation. For purposes of 2.1 above, compensation is defined aswages, salaries, professional fees, or other amounts derived from or receivedfor personal services actually rendered (including, but not limited tocommission-paid salespersons, compensation for services on the basis of apercentage of profits, commissions on insurance premiums, tips, and bonuses)and includes earned income, as defined in Section 401(c)(2) (reduced by thededuction the self-employed individual takes for contributions made to a self-employed retirement plan). For purposes of this definition, Section 401(c)(2)shall be applied as if the term trade or business for purposes of Section 1402of the Code included service described in Subsection (c)(6). Compensation doesnot include amounts derived from or received as earnings or profits fromproperty (including but not limited to interest and dividends) or amounts notincludible in gross income. Compensation also does not include any amountreceived as a pension or annuity or as deferred compensation. The term“compensation” shall include any amount includible in the individual’s grossincome under Code Section 71 with respect to a divorce or separationinstrument described in Subparagraph (A) of Code Section 71(b)(2). In the caseof a married individual filing a joint return, the greater compensation of his orher spouse is treated as his or her own compensation, but only to the extentthat such spouse’s compensation is not being used for purposes of the spousemaking a contribution to a Roth IRA or a deductible contribution to atraditional IRA.

2.7 Modified Adjusted Gross Income (Modified AGI). For purposes ofArticles 2.1(c) and (d) above, an Investor’s modified AGI for a taxable year isdefined in Code Section 408A(c)(3)(C)(i) and does not include any amountincluded in gross income as a result of a conversion. For taxable yearsbeginning after December 31, 2004, any amount included in the Investor’sgross income by reason of a required minimum distribution shall not be takeninto account in determining the Investor’s modified AGI for purposes of aConversion Contribution (as described in Article 2.1(d) above).

2.8 Timing of Contributions. For purposes of Article 2.1, any contribution tothe Account by the Investor shall be deemed to have been made on the lastday of the preceding taxable year if the contribution is made on account ofsuch taxable year and is made not later than the date prescribed by law forfiling the Investor’s federal income tax return for such taxable year (notincluding any extensions thereof). The Investor shall have the soleresponsibility for determining whether any contribution to the Account isdeductible for federal income tax purposes.

2.9 Responsibility of Custodian and Vanguard. Neither the Custodian norVanguard shall have any responsibility for determining whether anycontribution by or on behalf of the Investor to the Account qualifies as arollover contribution or SEP Contribution, or whether any contribution to theAccount is deductible by the Investor for federal income tax purposes.

Article III

Investment of Account

3.1 Investment of Contributions. The Custodian shall invest and reinvestall contributions to the Account in accordance with the investment directionsof the Investor as set forth in the Adoption Agreement or in any subsequentinvestment directions furnished by the Investor pursuant to Article 3.2. If theCustodian receives any contribution to the Account with respect to which theInvestor has not furnished investment directions, the Custodian may hold orreturn all or a portion of the contribution uninvested without liability for loss ofincome or appreciation pending receipt of proper investment directions.

3.2 Investment Directions; Available Investments. The Investor or,following his or her death, the Beneficiary shall be permitted at all times todirect, or retain an agent, investment adviser, or manager to direct, theCustodian as to the investment or reinvestment of the assets of the Account.All such investment directions shall be made in a form or manner acceptableto the Custodian. Assets of the Account may be invested in shares of one ormore of the Vanguard Funds or in other investments that are eligible foracquisition under Section 408(a) or 408A of the Code and that the Custodianpermits to be available investments under this Agreement. All investments ofthe Account shall be registered in the name of the Custodian or its nominee,or shall be retained unregistered or in a form permitting transfer by delivery,provided that the books and records of the Custodian shall at all times showsuch investments to be part of the Account.

3.3 Prohibitions Concerning Life Insurance, Collectibles, andCommingling. Notwithstanding any provision of this Agreement to thecontrary, no assets of the Account will be invested in life insurance contractsor in collectibles (within the meaning of Section 408(m) of the Code), nor willassets of the Account be commingled with other property except in a commontrust fund or common investment fund (within the meaning of Section 408(a)(5)of the Code).

3.4 Responsibility of Custodian and Vanguard.

(a) Investments in general. In making any investment or reinvestmentof the assets of the Account, the Custodian shall be fully entitled torely on the investment directions furnished to it by the Investor orBeneficiary in accordance with the terms and conditions of thisAgreement, and shall be under no duty to make any inquiry orinvestigation with respect thereto. The Investor hereby acknowledgesthat neither the Custodian nor Vanguard undertakes to render anyinvestment advice in connection with this Agreement, and that theassets of the Account are to be invested, reinvested, and controlledexclusively by the Investor or, following his or her death, theBeneficiary in accordance with the terms and conditions of thisAgreement.

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(b) Vanguard Fund shares. The Custodian shall be responsible fordelivering to the Investor or, following his or her death, theBeneficiary, all shareholder notices, reports, and proxies relating toVanguard Fund shares held in the Account. The Custodian shall voteany such shares at shareholder meetings of the Vanguard Funds inaccordance with instructions received from the Investor orBeneficiary. By establishing (or by having established) the Account,the Investor hereby directs the Custodian to vote any Vanguard Fundshares held in the Account for which no timely voting instructions arereceived in proportionately the same manner as shares timely votedby such Fund’s other shareholders. By directing that assets of theAccount be invested in a Vanguard Fund, the Investor or Beneficiaryshall be deemed to have acknowledged receipt of the currentprospectus for such Vanguard Fund.

Article IV

Distribution of Account

4.1 General Requirements.

(a) Notwithstanding any provision of this Agreement to the contrary, thedistribution of the Investor’s interest in the Account shall be made inaccordance with the requirements of Code Section 408(a)(6) (asmodified by Section 408A(c)(5) for Roth IRAs), and the regulationsthereunder, the provisions of which are incorporated herein byreference. The Custodian shall distribute the balance of the Accountto the Investor or, after his or her death, the Beneficiary, at such timesand in such manner as the Investor or Beneficiary shall direct, subjectto the requirements set forth below.

(b) Method of distribution. The Investor, or after his or her death, theBeneficiary, may elect to have all or any portion of the Accountdistributed in one or a combination of the following ways:

(1) A partial payment.

(2) A lump-sum payment.

(3) Monthly, quarterly, semiannual or annual installment paymentsprovided that the method of distribution satisfies the minimumdistribution requirements of Article 4.2.

The Investor’s or Beneficiary’s request must be made in a form andmanner acceptable to the Custodian. The Investor or Beneficiary maychange his or her designated method of distribution upon propernotification to the Custodian.

(c) Distribution in kind. All distributions from the Account shall bemade in cash, with the exception that the Investor or Beneficiary mayelect to have all or any portion of the distribution made in kind, inwhich case the Custodian shall transfer such specific assets as theInvestor or Beneficiary may direct into the name of the Investor orBeneficiary, and with the further exception that any assets held in theAccount, which cannot be sold by the Custodian for cash in theordinary course of business for purposes of making distributions fromthe Account, shall be distributed to the Investor or Beneficiary in kind.

4.2 Lifetime Minimum Distribution Requirements

(a) Traditional IRA.

(i) Required beginning date. The entire value of the account ofthe Investor for whose benefit the Account is maintained mustcommence to be distributed no later than the first day of Aprilfollowing the calendar year in which the Investor attains age 701⁄2(the Investor’s “required beginning date”) over the life of theInvestor or the lives of the Investor and his or her designatedBeneficiary.

(ii) Annual minimum amount. The amount to be distributed eachyear, beginning with the calendar year in which the Investorattains age 701⁄2 and continuing through the year of death, maynot be less than the amount determined by dividing the value ofthe IRA (as determined under Article 4.3(c)) as of the end of thepreceding year by the distribution period in the Uniform LifetimeTable in Q&A-2 of Section 1.401(a)(9)-9 of the Income TaxRegulations, using the Investor’s age as of his or her birthday inthe year. However, if the Investor’s sole designated Beneficiary ishis or her surviving spouse and such spouse is more than tenyears younger than the Investor, then the distribution period isdetermined under the Joint and Last Survivor Table in Q&A-3 ofSection 1.401(a)(9)-9 of the Income Tax Regulations, using theages as of the Investor’s and spouse’s birthdays in the year.

(iii) Timing of minimum distributions. The required minimumdistribution for the year the Investor attains age 701⁄2 can bemade as late as April 1 of the following year. The requiredminimum distribution for any other year must be distributed nolater than December 31 of that calendar year.

(iv) Aggregation of IRAs. The Investor may satisfy the distributionrequirements under Section 408(a)(6) of the Code by receiving adistribution from one IRA that is equal to the amount required tosatisfy the minimum distribution requirements for two or moreIRAs in accordance with Q&A-9 of Section 1.408-8 of the IncomeTax Regulations.

(b) Roth IRA. No amount is required to be distributed from a Roth IRAprior to the death of the Investor for whom the account was originallyestablished.

4.3 Distributions Upon Death: Traditional and Roth IRAs. In the eventthe Investor dies prior to the complete distribution of the Account, theremaining balance of the Account will be distributed to the Beneficiary at suchtime and in such manner as the Beneficiary shall direct, in a form and manneracceptable to the Custodian, subject to the following rules:

(a) Traditional IRAs where Investor dies before requiredbeginning date and all Roth IRAs. For traditional IRAs where theInvestor dies before his or her required beginning date and for allRoth IRAs, the Investor’s interest must be distributed at least asrapidly as follows:

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(i) If the designated Beneficiary is someone other than the Investor’ssurviving Spouse, the entire interest must be distributed, startingby December 31 of the calendar year following the calendar yearof the Investor’s death, over the remaining life expectancy of thedesignated Beneficiary, with such life expectancy determinedusing the age of the Beneficiary as of his or her birthday in theyear following the year of the Investor’s death, or, if elected, inaccordance with paragraph (a)(iii) below.

(ii) If the Investor’s sole designated Beneficiary is the Investor’ssurviving Spouse, the entire interest must be distributed, startingby December 31 of the calendar year following the calendar yearof the Investor’s death (or by the end of the calendar year theInvestor would have attained age 701⁄2, if later), over suchSpouse’s life, or, if elected, in accordance with paragraph (a)(iii)below. If the surviving Spouse dies before distributions arerequired to begin, the remaining interest must be distributed,starting by December 31 of the calendar year following thecalendar year of the Spouse’s death, over the Spouse’sdesignated Beneficiary’s remaining life expectancy determinedusing such Beneficiary’s age as of his or her birthday in the yearfollowing the death of the Spouse, or, if elected, will bedistributed in accordance with paragraph (a)(iii) below. If thesurviving Spouse dies after distributions are required to begin,any remaining interest will be distributed over the Spouse’sremaining life expectancy determined using the Spouse’s age asof his or her birthday in the year of the Spouse’s death.

(iii) If there is no designated Beneficiary, or if applicable by operationof paragraph (a)(i) or (a)(ii) above, the remaining interest must bedistributed by the end of the calendar year containing the fifthanniversary of the Investor’s death (or of the Spouse’s death in thecase of the surviving Spouse’s death before distributions arerequired to begin under paragraph (a)(ii) above).

(iv) The amount that must be distributed under paragraphs (a)(i) or (ii)above is the amount determined by dividing the value of the IRAas of the end of the preceding year by the remaining lifeexpectancy specified in such paragraph. Life expectancy isdetermined using the Single Life Table in Q&A-1 of Section1.401(a)(9)-9 of the Income Tax Regulations. If distributions arebeing made to a surviving Spouse as the sole designatedBeneficiary, such Spouse’s remaining life expectancy for a year isthe number in the Single Life Table corresponding to such Spouse’sage in the year. In all other cases, remaining life expectancy for ayear is the number in the Single Life Table corresponding to theBeneficiary’s age in the year specified in paragraph (a)(i) or (ii) andreduced by one for each subsequent year.

(b) Traditional IRAs where Investor dies on or after requiredbeginning date. If the Investor dies on or after the requiredbeginning date, the remaining portion of his or her interest in theTraditional IRA must be distributed at least as rapidly as follows:

(i) If the designated Beneficiary is someone other than theInvestor’s surviving Spouse, the remaining interest must bedistributed over the remaining life expectancy of the designatedBeneficiary, with such life expectancy determined using theBeneficiary’s age as of his or her birthday in the year followingthe year of the Investor’s death, or over the period described inparagraph (b)(iii) below if longer.

(ii) If the Investor’s sole designated Beneficiary is the Investor’ssurviving Spouse, the remaining interest will be distributed oversuch Spouse’s life or over the period described in paragraph(b)(iii) below if longer. Any interest remaining after such Spouse’sdeath will be distributed over such Spouse’s remaining lifeexpectancy determined using the Spouse’s age as of his or herbirthday in the year of the Spouse’s death, or, if the distributionsare being made over the period described in paragraph (b)(iii)below, over such period.

(iii) If there is no designated Beneficiary or if applicable by operationof paragraph (b)(i) or (b)(ii) above, the remaining interest will bedistributed over the Investor’s remaining life expectancydetermined in the year of the Investor’s death.

(iv) The amount to be distributed each year under paragraph (b)(i), (ii),or (iii), beginning with the calendar year following the calendaryear of the Investor’s death, is the amount determined by dividingthe value of the IRA as of the end of the preceding year by theremaining life expectancy specified in such paragraph. Lifeexpectancy is determined using the Single Life Table in Q&A-1 ofSection 1.401(a)(9)-9 of the Income Tax Regulations. Ifdistributions are being made to a surviving Spouse as the soledesignated Beneficiary, such Spouse’s remaining life expectancyfor a year is the number in the Single Life Table corresponding tosuch Spouse’s age in the year. In all other cases, remaining lifeexpectancy for a year is the number in the Single Life Tablecorresponding to the Beneficiary’s or Investor’s age in the yearspecified in paragraph (b)(i), (ii), or (iii) and reduced by one foreach subsequent year.

(c) Value of IRA. The “value” of the IRA includes the amount of anyoutstanding rollover, transfer, and recharacterization under Q&As-7and -8 of Section 1.408-8 of the Income Tax Regulations.

(d) Designated Beneficiary for minimum distribution purposes.The “designated Beneficiary” for purposes of determining thedistribution period for required minimum distributions after theInvestor’s death is determined in accordance with section 1.401(a)(9)-4 of the Income Tax Regulations. In general, the Investor’s designatedBeneficiary for required minimum distribution purposes is determinedbased on the Beneficiaries designated as of the date of the Investor’sdeath who remain Beneficiaries as of September 30 of the calendaryear following the Investor’s death.

(e) Spousal election. If the sole designated Beneficiary is the Investor’ssurviving Spouse, the Spouse may elect to treat the IRA as his or herown. This election will be deemed to have been made if suchsurviving Spouse makes a contribution to the IRA or fails to takerequired distributions as a Beneficiary.

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4.4 Designation of Beneficiary.

(a) General rules. The Investor may designate from time to time anyperson or persons, entities, such as a trust, or other recipientacceptable to the Custodian as his or her primary or contingentBeneficiaries. To be entitled to receive any undistributed amountscredited to the Account at the Investor’s death, any person or personsdesignated as a Beneficiary must be alive and any entity designatedas a Beneficiary must be in existence at the time of the Investor’sdeath. If the Investor has designated more than one primaryBeneficiary, the Beneficiaries shall be entitled to receive anyundistributed amount credited to the Account at the time of theInvestor’s death in the proportions indicated by the Investor. In theevent that the Investor has not indicated the proportions to whichmultiple Beneficiaries may be entitled or has indicated percentagesthat do not exactly equal 100%, payment will be made to the survivingBeneficiaries in equal shares. Except as described in the nextsentence, if any primary Beneficiary has not survived the Investor, that Beneficiary’s share of the Investor’s Account will be dividedproportionately among the surviving primary Beneficiaries.Notwithstanding anything to the contrary in this paragraph 4.4(a), ifthe Investor has indicated that any Beneficiary designation is made ona Per Stirpes basis and the deceased primary Beneficiary has survivingIssue, the share of the deceased primary Beneficiary shall be dividedinto equal shares for each such surviving Issue. In the event that thereare no surviving primary Beneficiaries at the time of the Investor’sdeath, the contingent Beneficiaries shall be entitled to receive anyundistributed amount credited to the Account at the time of theInvestor’s death and shall succeed to the rights of a primaryBeneficiary in accordance with this Agreement. If multiple contingentBeneficiaries become entitled to any amounts credited to the Account,distribution shall be made in the same manner as if the Beneficiarieswere multiple primary Beneficiaries. If no Beneficiary designation is ineffect, or if there are no surviving Beneficiaries, at the time of theInvestor’s death, the Beneficiary shall be the Investor’s estate.

Any Beneficiary designation by the Investor shall be made in a formand manner prescribed by or acceptable to the Custodian and shall beeffective only when received by the Custodian during the Investor’slifetime. The Investor may change or revoke his or her Beneficiarydesignation at any time prior to his or her death by making a newBeneficiary designation with the Custodian. Any designation of aSpouse by name shall be deemed to have survived divorce.

(b) Minors. If upon the death of the Investor a Beneficiary known to theCustodian to be a minor is entitled to receive any undistributed assetsof the Account, the Custodian may, in its absolute discretion, transferassets to an inherited Account for the benefit of the minor Beneficiarycontrolled by a parent of such Beneficiary, the guardian, conservator,or other legal representative of such Beneficiary, a custodianappointed under a Uniform Gift to Minors Act, Uniform Transfer toMinors Act, or similar act, or any person having control or custody ofsuch person.

(c) Marital trusts. The Investor or, as permitted by law, the spousalBeneficiary following the death of the Investor, may designate asBeneficiary a trust for the benefit of the surviving Spouse intended tosatisfy the conditions of Sections 2056(b) (pertaining to qualifiedterminable interest property trusts or “QTIP” trusts) or 2056A(pertaining to qualified domestic trusts or “QDOT” trusts) of the Code(collectively, referred to as “Marital Trusts.”) To the extent such QTIPor QDOT trust is a Beneficiary of the Account, the followingprovisions shall apply until the earlier of the death of the survivingSpouse or the termination of the Account: (1) all of the income of theAccount shall be payable to the Marital Trust or directly to thesurviving Spouse, at the direction of the trustee of the Marital Trust,at least annually or at such more frequent intervals as may bedirected by the trustee of the Marital Trust; and (2) no person, otherthan the surviving Spouse, shall have the right to assign any part ofthe Account to any person other than the Marital Trust or thesurviving Spouse.

(d) Rights of primary Beneficiaries upon Investor’s death. Inaddition to rights otherwise conferred upon Beneficiaries under thisAgreement, all individual Beneficiaries shall be entitled to designateSuccessor Beneficiaries of their inherited Account. Any SuccessorBeneficiary designation by the Beneficiary shall be made inaccordance with the provisions of paragraph (a) above. If aBeneficiary dies after the Investor but prior to receipt of the entireinterest in the Account and has Successor Beneficiaries, theSuccessor Beneficiaries shall succeed to the rights of the Beneficiary.If a Beneficiary dies after the Investor but prior to receipt of the entireinterest in the Account and no Successor Beneficiary designation is ineffect at the time of the Beneficiary’s death, the beneficiary shall bethe Beneficiary’s estate. Upon instruction to the Custodian, eachmultiple Beneficiary may receive his, her, or its interest as a separateaccount, within the meaning of Regulation Section 1.401(a)(9)-8, Q&A-3, to the extent permissible by law. The trustee of a trustBeneficiary shall exercise the rights of such trust Beneficiary.

4.5 Responsibility of Custodian and Vanguard

(a) Identification of Beneficiaries. The Custodian shall not beresponsible for determining the identity or interest of any Beneficiarydesignated by relationship to the Investor. The Custodian is fullyentitled to rely on any representations made by the Authorized Partywith respect to the identity of the Beneficiaries of the Account, andshall be under no duty to make any inquiry or investigation thereto.The Investor agrees that the Custodian and Vanguard shall have noliability for, and shall be fully indemnified against, any cost or damagethey incur in connection with their good faith reliance upon suchrepresentations.

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(b) Distributions. In making any distribution from the Account, theCustodian shall be fully entitled to rely upon the directions of theInvestor or, following his or her death, the Beneficiary, and shall beunder no duty to make any inquiry or investigation with respectthereto. The Custodian shall not have any responsibility to make anydistribution, including a required minimum distribution, until itreceives such directions in form and manner acceptable to Custodian.Neither the Custodian nor Vanguard shall have any responsibility forthe timing, propriety, or tax consequences of any distribution from theAccount, which matters shall be the exclusive responsibility of theInvestor or Beneficiary, as the case may be.

(c) Further obligations. The Custodian shall not be responsible for:

(1) The interpretation of any formula clause or trust provisioncontained in any Beneficiary designation filed with the Custodian,

(2) The determination of the legal effect of any disclaimer orrenunciation made by any Beneficiary to the Account, or

(3) The enforcement of any legal obligation, including tax obligations,of the Investor or any Beneficiary.

The mere acceptance of any Beneficiary designation submitted by anInvestor shall not limit the Custodian’s rights or increase itsresponsibilities under this Agreement and under law. The Custodianis fully entitled to rely on any instructions or representations made bythe Beneficiary or the Authorized Party with respect to any of theresponsibilities identified in this Article 4.5(c). The Investor agreesthat the Custodian and Vanguard shall have no liability for, and shallbe fully indemnified against, any cost or damage they incur inconnection with their good-faith reliance upon such representations.

(d) Additional information. The Custodian reserves the right to requestsuch additional information and documentation from the Investor, theBeneficiary, or the Authorized Party as the Custodian deems may beneeded in respect of establishment, maintenance, and distribution ofthe Account.

Article V

Transfers

5.1 Transfers to Account. Assets held on behalf of the Investor in anotherindividual retirement account may be transferred by the trustee or custodianthereof directly to the Custodian, in a form or manner acceptable to theCustodian, to be held in the Account on behalf of the Investor under thisAgreement. In the event of a transfer made after the Investor’s death, thetransfers are generally only permitted between the same type of IRA plans(e.g., Traditional IRA to Traditional IRA). In accepting any such direct transfer ofassets, the Custodian assumes no responsibility for the tax consequences ofthe transfer, the responsibility for which rests solely with the Investor.

5.2 Transfers From Account. If so directed by the Investor in a form ormanner acceptable to the Custodian, the Custodian shall transfer assets heldin the Account directly to the trustee or custodian of another individualretirement account established on behalf of the Investor. Transfers aregenerally only permitted between the same types of IRA plans (e.g., TraditionalIRA to Traditional IRA). In making any such direct transfer of assets, theCustodian assumes no responsibility for the tax consequences of the transfer,the responsibility for which rests solely with the Investor.

5.3 Transfers Incident to Divorce. All or any portion of the Investor’sinterest in the Account may be transferred to a former spouse pursuant to adivorce decree or written instrument incident to divorce as provided in Section408(d)(6) of the Code, in which event the transferred portion of the Accountshall be held as a separate individual retirement account for the benefit ofsuch spouse in accordance with the terms and conditions of this Agreement.

Article VI

Reporting, Disclosure, and Fees

6.1 Information by Investor. The Investor shall furnish the Custodian withall information as may be necessary for the Custodian to prepare any reportsrequired pursuant to Section 408(i) of the Code and the regulations thereunder.

6.2 Annual Reports by Custodian. The Custodian shall render an annualreport to the Investor, on or before January 31 of each calendar year,containing all information with respect to the preceding calendar year as isrequired to be furnished pursuant to Section 408(i) of the Code and theregulations thereunder and such information concerning required minimumdistributions as is prescribed by the Commissioner of Internal Revenue. Inaddition, the Custodian shall submit all other reports to the IRS and theInvestor (or, following his or her death, the Beneficiary) as may be prescribedby the IRS.

6.3 Fees and Expenses. The Custodian shall be entitled to such reasonablefees with respect to the establishment and maintenance of the Account as areestablished by it from time to time, and to reimbursement for all reasonableexpenses incurred by it in the management of the Account. The Custodian maychange its fees payable under this Agreement at any time upon notice to theInvestor. The Custodian’s fees shall be charged to the Account unless paiddirectly by the Investor at such time and in such manner as the Custodian mayprescribe. The Custodian shall be entitled to reimbursement for costs,including attorney’s fees and other expenses, related to the Account.

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Article VII

Amendment, Termination, and Assignment

7.1 Amendment. The Custodian is authorized to amend the Agreement inany respect and at any time (including retroactively) to comply with theapplicable provisions of the Code and the regulations thereunder. TheCustodian is also authorized to amend this Agreement to reflect any otherchanges to the terms of this Agreement that the Custodian deems appropriate.Any such amendment to the Agreement shall be deemed effective upon thedelivery of notice of the amendment to the Investor (or following the Investor’sdeath, the Beneficiary). The Investor (or following the Investor’s death, theBeneficiary) shall be deemed to consent to any such amendment if he or shefails to object thereto by notifying the Custodian, in a form and manneracceptable to the Custodian, within 30 calendar days from the date the noticeis delivered, to terminate the Agreement.

7.2 Resignation or Removal of Custodian. The Custodian may resign atany time upon 30 days written notice to the Investor (or, following theInvestor’s death, the Beneficiary), which notice may be waived by the Investor(or, following the Investor’s death, the Beneficiary), and may be removed by theInvestor (or, following the Investor’s death, the Beneficiary) at any time upon30 days written notice to the Custodian (which notice may be waived by theCustodian). Upon such resignation or removal, the Investor shall appoint asuccessor custodian under this Agreement. The successor custodian shall be abank or other person qualified to serve as trustee of an individual retirementaccount under Section 408(a)(2) of the Code. Upon receipt by the Custodian ofwritten acceptance of such appointment by the successor custodian, theCustodian shall transfer to the successor custodian the assets of the Accountand all necessary records pertaining thereto, after reserving such reasonableamount as it deems necessary for payment of its fees and expenses. If within30 days after the Custodian’s resignation or removal, or such longer time asthe Custodian may agree to, the Investor (or, following the Investor’s death, theBeneficiary) has not appointed a successor custodian, the Custodian mayterminate this Agreement in accordance with Article 7.3.

7.3 Termination. The Investor may at any time terminate this Agreement bydelivering to the Custodian a written notice of termination. The Custodian mayterminate this Agreement in the event the Investor (or, following the Investor’sdeath, the Beneficiary) fails to appoint a successor custodian undercircumstances described in Article 7.2. Upon termination of the Agreement,the assets in the Account shall be distributed to the Investor in a lump-sumpayment of cash or in kind.

7.4 Assignment of Agreement. The Custodian reserves the right to assignand/or delegate any and all of its rights and obligations under this Agreementto an affiliate of the Custodian without the prior approval of the Investor orBeneficiary.

Article VIII

Miscellaneous

8.1 Exclusive Benefit; Nonforfeitability. The Account is established forthe exclusive benefit of the Investor or, following his or her death, theBeneficiary. The interest of the Investor (or, following the Investor’s death, theBeneficiary) in the balance of the Account shall at all times be nonforfeitable.

8.2 Prohibition Against Assignment of Account. Except as mayotherwise be provided in Article 5.3, no interest, right, or claim in or to anypart of the Account or any payment therefrom shall be assignable,transferable, or subject to sale, mortgage, pledge, hypothecation,commutation, anticipation, garnishment, attachment, execution, or levy of anykind, and the Custodian shall not recognize any attempt to effect any of thepreceding, except to the extent required by law.

8.3 Prohibited Transactions. The Investor (or, following the Investor’sdeath, the Beneficiary) shall not engage in any transaction with respect to theAccount that is prohibited under Section 4975 of the Code and which, underSection 408(e)(2) of the Code, would cause the Account to no longer qualify asan individual retirement account.

8.4 Governing Law. This Agreement shall be governed, administered, andenforced according to the laws of the Commonwealth of Pennsylvania, exceptto the extent preempted by federal law.

8.5 Agreement Controls. In the event of any discrepancy between thisAgreement and any other document or instrument filed with Vanguard inrespect of the Account, the terms of this Agreement shall control. Except withrespect to Article 4.5(c), the terms of any Beneficiary designation accepted bythe Custodian shall control over the terms of this printed Agreement to theextent of any inconsistency.

8.6 Simultaneous Death. In the event that the order of the deaths of theInvestor and any primary Beneficiary cannot be determined or are deemed tohave occurred simultaneously under the law of the state of Investor’s domicile,the survivor shall be that person who is determined to survive in accordancewith the law of the state of Investor’s domicile at the time of Investor’s death.

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Vanguard Brokerage Services Securities Account Agreement

In consideration of your accepting and introducing or carrying the requestedaccount (the “account”) in my name or for me for the purchase or sale ofsecurities and other property, I hereby agree with you, and any successor orassign, as follows:

Any reference to “I/my/us” or gender shall include all signers of new accountapplications for nonretirement and retirement accounts.

Any reference to the term “you and your” shall include any firm that may, as aClearing Broker or Introducing Broker, carry or service in any way this account.This Agreement and its terms and conditions shall inure to the benefit of suchfirm(s).

I hereby authorize and instruct you to accept from me any and all orders andinstructions for and concerning the said account in regard to the following:

(a) The purchase or sale of securities and option contracts.

(b) The payment of money.

(c) The registration and delivery of securities.

(d) Any other action with respect to this account.

Payment of money may be made from time to time by delivering or sending toany one of us a check made payable in accordance with the registration of theaccount.

Confirmations, notices, statements of account, and communications of every kindwith reference to said account may be sent or given by you to any one of us.

In the event that you shall receive conflicting or inconsistent instructions fromme/my agent, you may follow any of such instructions at your will, or you mayrefrain from executing any of such instructions until they shall have beenreconciled in writing to your satisfaction, all without liability therefore to you.

We will give you immediate notice in writing of the death of any one of us.The estate of any one of us who shall have died shall be liable, and thesurvivor or survivors shall continue to be liable, jointly and severally, for anyexisting debit balance or loss in the account, or which you may later sustain,by reason of the completion of transactions initiated prior to the receipt by youof written notice of the death of any one of us, or incurred in the liquidation ofthe account.

This Agreement shall inure to the benefit of your successors and assigns and shall remain in effect until an authorized member of your firm shallacknowledge in writing the receipt of a written statement from me that I wishto terminate the account, at which time the party giving such notice will notbe bound for any further transactions made for the account thereafter.However, he or she shall remain bound for all prior transactions and for allfurther deliveries to any of us of any assets in the account and allcommunications regarding the account.

1. Rules and Regulations—All transactions are subject to applicablelaws and to the constitution, rules, regulations, customs, and usages ofthe exchange or market and its clearing house where they are executedby you and your agents. No provision of this Agreement shall be waived,altered, modified, or amended unless in writing and signed by anauthorized officer of your organization.

2. Definition—Under this Agreement, “securities and other property”includes, but is not limited to, money, securities of every kind and nature,and all contracts, investments, and options relating thereto, whether forpresent or future delivery.

3. Accounts Carried as Clearing Broker—If my account is being carriedby a Clearing Broker by arrangement with another broker through whosecourtesy my account has been introduced, then until receipt by theClearing Broker from me of written notice to the contrary, the ClearingBroker may accept from such other broker without inquiry or investigation(a) orders for the purchase or sale in said account of securities and otherproperty on margin or otherwise, and (b) any other instructions concerningsaid account. The Clearing Broker shall not be responsible or liable forany acts or omissions of any unaffiliated Introducing Broker or itsemployees.

4. Liens and Provisions in the Event of Failure to Pay or Deliver—Whenever I do not, on or before the settlement date, pay in full for anysecurity purchased for my account, or deliver any security sold for suchaccount, you are authorized (subject to the provisions of any applicablestatute, rule, or regulation):

(a) Whenever there is any existing or forthcoming indebtedness to youon my part, all orders, securities, and other property now or hereafterheld, carried, or maintained by you in your possession and control forany purpose, in or for any of the accounts in my name now orhereafter opened, including any accounts in which I may have aninterest, shall be subject to a lien for the discharge of all myindebtedness and other obligations to you in any of the said accountswhenever you consider such a transfer necessary for your protection.In enforcing your lien, you shall have the discretion to determinewhich securities and property are to be sold and which contracts ororders are to be closed or canceled, all without liability therefore toyou;

(b) Until payment or delivery is made in full, to pledge, repledge,hypothecate, or rehypothecate, without notice, any or all securitiesthat you may hold for me (either individually or jointly with others),separately or in common with other securities or any other property,for the sum then due or for a greater or lesser sum and, withretaining in your possession and control for delivery, a like amount ofsimilar securities; and/or

(c) To sell any or all securities that you may hold in any account in whichI have an interest, or to buy in any or all securities required to makedelivery for my account, or to cancel any or all outstanding orders orcommitments for my account.

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The reasonable costs and expenses of collection of the debit balance andany unpaid deficiency in my accounts with you, including attorneys’ feesincurred and payable or paid by you, shall be payable to you by mepromptly upon demand.

5. Cancellation Provisions—You are authorized in your discretion, shouldyou for any reason whatsoever deem it necessary for your protection,without notice, to cancel any outstanding orders to close out my account,in whole or in part, or to close out any position made on my behalf. If thisis an individual account only, you, in your discretion, are authorized totake the same actions enumerated in the previous sentence in the event Ishould die.

6. Communications—Communications may be sent to the mailing addresson file with you, or to such other address I may thereafter give in writing,and all communications so sent, whether written by mail, telegraph, orotherwise, shall be deemed to be given to me personally. The informationset forth on all documents sent to me by you will be deemed conclusiveunless objected to by me within ten (10) days of its being provided.

7. Liability—You shall not be liable in connection with the entering,execution, handling, selling, or purchasing of securities or orders for myaccount except for gross negligence or willful misconduct on your part,nor shall you be liable for loss caused directly or indirectly by governmentrestrictions, exchange or market rulings, suspension of trading, war,strikes, failure of the mails or other communication systems, mechanicalor electronic failure, failure of third parties to follow instructions, or otherconditions beyond your control. Further, you shall not be responsible toprovide me at any time with information concerning cash/stock dividends,stock splits, mandatory corporate actions, or any other information,advice, guidance, or recommendation with respect to an order by me topurchase or sell securities.

8. Jurisdiction—This Agreement and all transactions made in my accountshall be governed by the laws of the State of New York (regardless of thechoice of law rules thereof).

9. Amendment—Except as herein otherwise expressly provided, noprovision of this Agreement shall in any respect be waived, altered,modified, or amended unless such waiver, alteration, modification, oramendment be committed to writing and signed by an officer of yours.

10. Representation—I represent that I have attained the age of majorityunder the laws of the state in which I reside, and if I am an employee ofany exchange, or of any corporation that any exchange controls, or of amember of any firm registered on any exchange, or of a bank, trustcompany, insurance company, or any corporation, firm, or individualengaged in the business of dealing in securities either as broker orprincipal, that I will abide by the rules of the regulatory agencies and yourpolicies. If at any future time I become so employed, I will notify youpromptly. No one other than I has or will have an interest in my accountexcept as I shall advise you in writing.

11. Severability—If any provision or condition of this Agreement shall beheld to be invalid or unenforceable by any court or regulatory or self-regulatory agency or body, such invalidity or unenforceability shall attachonly to such provision or condition. The validity of the remainingprovisions and conditions shall not be affected thereby, and thisAgreement shall be valid and enforceable as if any such invalid orunenforceable provision or condition were not contained herein.

12. Order Entry Provisions—I acknowledge that all orders must be enteredverbally with one of your Orders Associates; through VBS® AutoBroker®,the automated telephone investment service; or through the Internettrading system, and that written orders will not be accepted. Iacknowledge responsibility for the confidentiality and use of the accountnumber assigned to me for all securities and other transactions initiatedthrough these means. Any orders communicated to VBS through thesemeans will be considered to have been sent by me. I also agree to notifyVBS immediately if I become aware of:

(a) Unauthorized use, theft, or loss of the account number assigned to myVBS account.

(b) Receipt of confirmation of an order that I did not place.

(c) Failure to receive an accurate written confirmation of an order or itsexecution.

13. Restricted Securities—I agree not to sell restricted securities exceptin compliance with applicable laws and regulations.

14. Clearing Broker—VBS clears its securities business on a fully disclosedbasis through Pershing LLC, member of the New York Stock Exchange,Inc. I understand my account will be carried in accordance with thiswritten agreement.

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15. ARBITRATION DISCLOSURES

• Arbitration is final and binding on the parties.

• The parties are waiving their right to seek remedies in court, including the right to a jury trial.

• Prearbitration discovery is generally more limited than and different from court proceedings.

• The arbitrators’ award is not required to include factual findings or legal reasoning, and any party’s right to appeal or to seek modification of rulings by the arbitrators is strictly limited.

• The panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry.

16. AGREEMENT TO ARBITRATE CONTROVERSIES

It is agreed that any controversy between or among the undersigned, Pershing, and Introducing Firm, or any of them, arising out of Pershing’s or Introducing Firm’s business or this Agreement, shall be submitted to arbitration before the New York Stock Exchange, Inc., or, ifthe transaction took place on another exchange, then to that exchange or the NASD Regulation Inc., as the undersigned may elect and in accordancewith the rules obtaining of the selected organization. Arbitration must be commenced by service upon the other party of a written demand forarbitration or a written notice of intention to arbitrate, therein electing the arbitration tribunal. In the event the undersigned does not make suchelection within five (5) days of such demand or notice, then the undersigned authorizes Pershing or the Introducing Firm to do so on behalf of theundersigned. No person shall bring a putative or certified class action to arbitration, nor seek to enforce any predispute arbitration agreement againstany person who has initiated in court a putative class action; or who is a member of a putative class who has not opted out of the class with respectto any claims encompassed by the putative class action until: (i) the class certification is denied; (ii) the class is decertified; or (iii) the customer isexcluded from the class by the court. Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any rights under thisagreement except to the extent stated herein.

17. The laws of the State of New York shall govern.

This Agreement and its enforcement shall be governed by the laws of the State of New York without giving effect to its conflicts of laws provisions.

AutoBroker, The Vanguard Group, Vanguard, Vanguard Brokerage Services, Vanguard IRA, VBS, and the ship logo are trademarks of The Vanguard Group, Inc. All other marks are the exclusive property of their respective owners.

World Wide Webwww.vanguard.com

Toll-Free Information1-800-205-6189

Retirement Resource CenterPost Office Box 2600Valley Forge, PA 19482-2600

© 2003 The Vanguard Group, Inc.All rights reserved.

VIDSNC 042003

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