EX-3 5 agreement.htm EXHIBIT 2 TO 40-17G

AGREEMENT

 

Made as of this 9th day of December, 2004, by and among VANGUARD WELLINGTON FUND, VANGUARD WINDSOR FUNDS, VANGUARD WORLD FUNDS, VANGUARD EXPLORER FUND, VANGUARD MORGAN GROWTH FUND, VANGUARD WELLESLEY INCOME FUND, VANGUARD FIXED INCOME SECURITIES FUNDS, VANGUARD MONEY MARKET FUND, VANGUARD MUNICIPAL BOND FUNDS, VANGUARD STAR FUND, VANGUARD CHESTER FUNDS, VANGUARD INDEX FUNDS, VANGUARD TRUSTEES EQUITY FUNDS, VANGUARD SPECIALIZED FUNDS, VANGUARD CALIFORNIA TAX-FREE FUNDS, VANGUARD NEW YORK TAX-FREE FUNDS, VANGUARD PENNSYLVANIA TAX-FREE FUND, VANGUARD OHIO TAX-FREE FUNDS, VANGUARD FLORIDA TAX-FREE FUNDS, VANGUARD CONVERTIBLE SECURITIES FUND, VANGUARD QUANTITATIVE FUNDS, VANGUARD BOND INDEX FUNDS, VANGUARD FENWAY FUNDS, VANGUARD NEW JERSEY TAX- FREE FUNDS, VANGUARD ADMIRAL FUNDS, VANGUARD MALVERN FUNDS, VANGUARD VARIABLE INSURANCE FUNDS, VANGUARD BALANCED INDEX FUND, VANGUARD INSTITUTIONAL INDEX FUND, VANGUARD INTERNATIONAL EQUITY INDEX FUNDS, VANGUARD TAX-MANAGED FUNDS, VANGUARD WHITEHALL FUNDS, VANGUARD TREASURY FUND, VANGUARD HORIZON FUNDS, AND VANGUARD MASSACHUSETTS TAX-EXEMPT FUNDS, VANGUARD CMT FUNDS (hereinafter collectively referred to as the "Funds") and THE VANGUARD GROUP, INC., VANGUARD ADVISERS, INC., AND VANGUARD MARKETING CORPORATION (hereinafter collectively referred to as "Vanguard").

 

THIS AGREEMENT is entered into under the following circumstances:

WHEREAS, Section 17(g) of the Investment Company Act of 1940 ("the Act") provides that the Securities and Exchange Commission ("SEC") is authorized to require that the officers and employees of registered management investment companies who, either singly or jointly with others, may have access to the Funds'

assets, be bonded against larceny and embezzlement, and the SEC has promulgated such rules and regulations ("Rule 17g- 1"); and

 

WHEREAS, the Funds and Vanguard are named as joint insureds under the terms of a bond or policy of insurance with total coverage of $400,000,000 which insures against larceny and embezzlement by officers and employees (the "Joint Insured Bond"); and

 

WHEREAS, a majority of the Board of Trustees of the Funds (the "Board"), who are not "interested persons" as defined by Section 2(a)(19) of the Act, have given due consideration to all factors relevant to the form, amount and apportionment of recoveries and premium on the Joint Insured Bond, and the Board has approved the term and amount of the Joint Insured Bond, the portion of the premium payable by each party, and the manner in which recovery on the Joint Insured Bond, if any, shall be shared by and among the parties as set forth below in this Agreement; and

 

WHEREAS, the Funds and Vanguard now desire to enter into this Agreement as required by Rule 17g-1(f) of the Act to establish the manner in which recovery on the Joint Insured Bond, if any, shall be shared.

 

NOW, THEREFORE, IT IS HEREBY AGREED by and among the parties as

follows:

 

1.

ALLOCATION OF PREMIUMS  

 

The annual premium shall be allocated among the Vanguard Funds, based on relative net assets, in accordance with a Board-approved methodology, and expensed monthly over the term of the Joint Insured Bond.

 

2.

ALLOCATION OF RECOVERIES

A.           In the event of a separate loss or losses under the Joint Insured Bond, the party suffering a loss or losses shall be entitled to be indemnified up to the full amount of the Joint Insured Bond.

B.           If more than one party is damaged in a single loss or occurrence for which recovery is received under the Joint Insured Bond, each such party shall receive that

 

portion of the recovery which represents the loss sustained by that party, unless the recovery is inadequate to fully indemnify each party sustaining a loss.

 

C.          If the recovery is inadequate to fully indemnify each party sustaining a loss, the recovery shall be allocated among the parties as follows:

(i) Each party sustaining a loss shall be allocated an amount

equal to the lesser of its actual loss or at least equal to the amount which it would have

received had it provided and maintained a single insured bond with the minimum coverage

as set forth in Exhibit A as attached.

(ii) The remaining portion of the recovery shall be allocated to each

party sustaining a loss not fully indemnified by the allocation under subparagraph (i)

above, in ratio of the premium paid by each such party to the premium paid by all parties.

 

3.

BOND COVERAGE REOUIRED

Each party has determined the minimum amount of fidelity bond coverage deemed appropriate to be maintained. This amount is set forth in Exhibit A and each Fund represents and warrants to each of the other parties that the minimum amount of coverage required by Rule 17g-1(d)(1) as of November 30, 2004, is not more than reflected in Exhibit A. Each Fund further agrees that its minimum coverage shall not be less than the minimum coverage required by Rule 17g-1(d)(1).

4.           This Agreement shall apply to the present fidelity bond coverage and any- renewal or replacement thereof and shall continue until terminated by any party that provides 60 days' written notice to the other parties.

5.           Any dispute arising under this Agreement shall be submitted to arbitration under the Rules of the American Arbitration Association and the decision rendered therein shall be final and binding upon the parties hereto.

 

IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed as of the date aforesaid.

 

 

VANGUARD WELLINGTON FUND

VANGUARD WINDSOR FUNDS

VANGUARD WORLD FUNDS

VANGUARD EXPLORER FUND

VANGUARD MORGAN GROWTH FUND

VANGUARD WELLESLEY INCOME FUND

VANGUARD FIXED INCOME SECURITIES FUNDS

VANGUARD MONEY MARKET FUND

VANGUARD MUNICIPAL BOND FUNDS

VANGUARD STAR FUND

VANGUARD INDEX FUNDS

VANGUARD TRUSTEES EQUITY FUNDS

VANGUARD SPECIALIZED FUNDS

VANGUARD CHESTER FUNDS

VANGUARD CALIFORNIA TAX-FREE FUNDS

VANGUARD NEW YORK TAX-FREE FUNDS

VANGUARD PENNSYLVANIA TAX-FREE FUNDS

VANGUARD CONVERTIBLE SECURITIES FUND

VANGUARD QUANTITATIVE FUNDS

VANGUARD BOND INDEX FUNDS

VANGUARD FENWAY FUNDS

VANGUARD BALANCED INDEX FUND

VANGUARD FLORIDA TAX-FREE FUND

VANGUARD ADMIRAL FUNDS

VANGUARD NEW JERSEY TAX-FREE FUNDS

VANGUARD MALVERN FUNDS

VANGUARD OHIO TAX-FREE FUNDS

VANGUARD VARIABLE INSURANCE FUNDS

VANGUARD INSTITUTIONAL INDEX FUND

VANGUARD INTERNATIONAL EQUITY INDEX FUNDS

VANGUARD TAX-MANAGED FUNDS

 

 

VANGUARD HORIZON FUNDS

VANGUARD WHITEHALL FUNDS

VANGUARD TREASURY FUND

VANGUARD MASSACHUSETTS TAX-EXEMPT FUNDS

VANGUARD CMT FUNDS

 

 

BY

/s/ R. Gregory Barton

 

R. Gregory Barton, Secretary

 

 

 

 

Attest:

/s/ Christopher A. Wightman

 

Christopher A. Wightman,

 

Assistant Secretary

 

 

 

 

 

THE VANGUARD GROUP, INC.

On behalf of itself and its affiliates and subsidiaries

 

 

BY

/s/ R. Gregory Barton

 

R. Gregory Barton

 

Managing Director and Secretary

 

 

 

 

Attest:

/s/ Matthew J Kogan

 

Matthew J Kogan,

 

Assistant Secretary

 

 

 

 

 

 

 

 

 

 

EXHIBIT A

 

Rule 179-1

Minimum Bond Requirements

11/30/2004

(000 omitted)

 

 

 

Portfolio

Fund

Portfolio

Fund

 

Fund/Portfolio Name

Net Assets

Net Assets

Bond Req.

Bond Req.

 

 

 

 

 

 

Admiral Funds

 

13,508,688

0

2,500

 

Adm. Treasury MMF

13,508,688

 

2,500

0

 

Balanced Index Fund

7,068,036

7,068,036

2,500

2,500

Bond Index Funds

 

39,654,946

0

2,500

 

Intermediate-Term

4,473,454

 

2,500

0

 

Long-Term Bond

1,240,044

 

1,250

0

 

Short-Term Bond

5,205,680

 

2,500

0

 

Total Bond Market

28,735,768

 

2,500

0

Calif. Tax-Free Funds

 

9,356,035

0

2,500

 

CA Intermediate-Term

2,582,531

 

1,900

0

 

CA Long-Term

2,015,722

 

1,700

0

 

CA Tax-Ex Money Mkt.

4,757,782

 

2,500

0

Convert. Securities Fund

958,550

958,550

1,000

1,000

Explorer Fund

9,056,027

9,056,027

2,500

2,500

Fenway Funds

 

4,485,066

0

2,500

 

Equity Income Fund

3,704,853

 

2,300

0

 

Growth Equity Fund

780,213

 

1,000

0

Fixed Income Funds

 

81,772,468

0

2,500

 

GNMA Fund

24,004,000

 

2,500

0

 

High-Yield Corporate

9,500,600

 

2,500

0

 

Inflation-Protected

7,351,300

 

2,500

0

 

Inter-Term Corporate

4,558,340

 

2,500

0

 

Inter-Term Treasury

3,808,130

 

2,300

0

 

Long-Term Corporate

4,767,500

 

2,500

0

 

Long-Term Treasury

2,832,600

 

1,900

0

 

Short-Term Corporate

18,254,260

 

2,500

0

 

Short-Term Federal

3,182,040

 

2,100

0

 

Short-Term Treasury

3,513,698

 

2,300

0

Florida Tax-Free Funds

 

1,136,723

0

1,250

 

FL Long-Term Tax-Ex

1,136,723

 

1,250

0

Horizon Funds

 

12,878,023

0

2,500

 

Capital Opportunity

8,267,762

 

2,500

0

 

Global Equity Fund

1,143,299

 

1,250

0

 

Strategic Equity Fund

3,466,962

 

2,100

0

Vanguard Index Funds

 

204,263,907

0

2,500

 

500 Index Fund

103,351,406

 

2,500

0

 

Consumer Disc. Index Fund

21,061

 

250

 

 

Extended Mkt. Index

8,776,924

 

2,500

0

 

Growth Index Fund

9,946,257

 

2,500

0

 

Information Tech Index Fund

18,500

 

225

 

 

Mid-Cap Index

7,970,288

 

2,500

0

 

Small-Cap Index

9,103,321

 

2,500

0

 

Small-Cap Growth

1,441,683

 

1,250

0

 

 

Small-Cap Value

2,942,852

 

1,900

0

 

Total Stock Market

54,816,422

 

2,500

0

 

Value Index Fund

5,518,255

 

2,500

0

 

Vngd Cons. Staples Fund

22,299

 

250

 

 

Vngd Energy Index Fund

32,997

 

300

 

 

Vngd Financials Index Fund

21,924

 

250

 

 

Vngd Hlth Care Index Fund

54,510

 

400

 

 

Vngd Industrials Index Fund

21,428

 

250

 

 

Vngd Large-Cap Index Fund

99,807

 

450

 

 

Vngd Materials Index Fund

24,252

 

250

 

 

Vngd Telecommunications

32,016

 

300

 

 

Vngd Utilities Index Fund

47,705

 

350

 

Institutional Index Funds

 

48,702,155

0

2,500

 

Institutional Index

33,209,347

 

2,500

0

 

Institutional Index PLUS

13,099,313

 

2,500

 

 

Institutional Total Bond

1,146,687

 

1,250

0

 

Inst. Total Stock Mkt.

793,264

 

1,000

0

 

Inst. Total Stock Mkt. PLUS

453,544

 

750

 

Internat'l Equity Index

 

18,509,655

0

2,500

 

Emerging Mkts.Stock

3,165,211

 

2,100

0

 

European Stock Index

10,455,907

 

2,500

0

 

Pacific Stock Index

4,888,537

 

2,500

0

Malvern Funds

 

11,489,223

0

2,500

 

Asset Allocation Fund

10,179,157

 

2,500

0

 

Capital Value Fund

434,561

 

750

0

 

U.S. Value Fund

875,505

 

1,000

0

Massachusetts Tax-Ex

449,935

449,935

750

750

Money Market Reserve

 

53,807,161

0

2,500

 

Federal MMF

5,496,461

 

2,500

 

 

Prime MMF

48,310,700

 

2,500

 

Morgan Growth Fund

4,947,797

4,947,797

2,500

2,500

Municipal Bond Funds

 

47,970,322

0

2,500

 

High-Yield Tax-Ex

4,359,230,

 

2,500

0

 

Insured Long-Term

2,910,952

 

1,900

0

 

Intermediate-Term

11,938,617

 

2,500

0

 

Limited-Term Tax-ex

6,896,385

 

2,500

0

 

Long-Term Tax-ex

1,910,065

 

1,500

0

 

Short-Term Tax-ex

4,596,041

 

2,500

0

 

Tax-ex MoneyMkt.

15,359,032

 

2,500

0

New Jersey Tax-Free

 

3,594,365

0

2,300

 

NJ Long-Term Tax-ex

1,520,725

 

1,500

0

 

NJ Tax-ex MMF

2,073,640

 

1,700

0

New York Tax-Free

 

4,433,262

0

2,500

 

NY Long-Term Tax-ex

2,139,288

 

1,700

0

 

NY Tax-ex MMF

2,293,974

 

1,700

0

Ohio Tax-Free

 

1,290,964

0

 

 

OH Long-Term Tax-ex

498,954

 

750

0

 

OH Tax-ex MMF

792,010

 

1,000

0

Pennsylvania Tax-Free

 

4,929,526

0

2,500

 

PA Long-Term Tax-ex

2,271,016

 

1,700

0

 

PA Tax-ex MMF

2,658,510

 

1,900

0

PRIMECAP Fund

26,301,209

26,301,209

2,500

2,500

 

Quantitative Funds

 

7,004,394

0

2,500

 

Growth and Income

7,004,394

 

2,500

0

Specialized Funds

 

34,496,397

0

2,500

 

Energy Fund

5,300,448

 

2,500

0

 

Health Care Fund

21,544,655

 

2,500

0

 

Precious Metals Fund

885,440

 

1,000

0

 

RElT Index Fund

5,824,223

 

2,500

0

 

Dividend Growth Fund

941,631

 

1,000

0

STAR Funds

 

38,431,631

0

2,500

 

Dev.Markets Index

1,117,174

 

1,250

0

 

Instit.Dev.Mkt. Index

1,040,132

 

1,250

0

 

LifeStrategy Conserv

3,569,311

 

2,300

0

 

LifeStrategy Growth

5,828,094

 

2,500

0

 

LifeStrategy Income

1,637,162

 

1,500

0

 

LifeStrategy ModGrow

6,818,191

 

2,500

0

 

STAR Fund

10,435,146

 

2,500

0

 

Total Int'l Stock Index

7,986,421

 

2,500

0

Tax-Managed Funds

 

8,268,794

0

2,500

 

Tax-Mgd. Balanced

549,068

 

900

0

 

Tax-Mgd. Cap App

2,997,722

 

1,900

0

 

Tax-Mgd. Growth/lnc.

2,547,100

 

1,900

0

 

Tax-Mgd. International

913,946

 

1,000

0

 

Tax-Mgd. Small-Cap

1,260,958

 

1,250

0

Treasury Money Mkt

4,626,188

4,626,188

2,500

2,500

Trustees’ Equity Fund

 

2,463,239

0

1,700

 

International Value

2,463,239

 

1,700

0

Variable Insurance Fund

 

8,183,118

0

2,500

 

Balanced Port.

997,253

 

1,000

0

 

Diversified Value

392,398

 

750

0

 

Equity Income

424,570

 

750

0

 

Equity Index

1,603,963

 

1,500

0

 

Growth Portfolio

357,671

 

750

0

 

High-Yield Bond

272,600

 

750

0

 

International Port.

498,077

 

750

0

 

Mid-Cap Index

497,768

 

750

0

 

Money Mkt. Portfolio

847,237

 

1,000

0

 

RElT Index

385,415

 

750

0

 

ST Corporate

417,014

 

750

0

 

Small Co. Growth

717,339

 

900

0

 

Total Bond Index

615,205

 

900

0

 

Total Stock Market

0

 

0

0

 

Small Cap Index

0

 

0

0

 

Capital Growth

156,608

 

600

0

Wellesley Fund

10,665,709

10,665,709

2,500

2,500

Wellington Fund

32,895,323

32,895,323

2,500

2,500

Whitehall Funds

 

4,306,615

0

2,500

 

International Explorer

1,729,284

 

1,500

0

 

Mid-Cap Growth

466,383

 

750

0

 

Selected Value

2,110,948

 

1,700

0

Windsor Funds

 

53,318,916

0

2,500

 

Windsor Fund

20,197,110

 

2,500

0

 

Windsor II Fund

33,121,806

 

2,500

0

 

 

World Funds

 

15,700,854

0

2,500

 

Calvert Social Index

326,000

 

750

0

 

International Growth

9,141,361

 

2,500

0

 

U.S. Growth

6,233,493

 

2,500

0

 

 

 

 

 

 

 

TOTALS

830,925,221

830,925,221

205,275

79,500