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

AGREEMENT

 

Made this as of this 1st day of June, 1995, by and among VANGUARD/WELLINGTON FUND, INC., VANGUARD/WINDSOR FUNDS, INC., VANGUARD WORLD FUND, INC., GEMINI II, INC., VANGUARD EXPLORER FUND, INC., VANGUARD/MORGAN GROWTH FUND, INC., VANGUARD/WELLESLEY INCOME FUND, INC., VANGUARD FIXED INCOME SECURITIES FUND, INC., VANGUARD MONEY MARKET RESERVES, INC., VANGUARD MUNICIPAL BOND FUND, INC., VANGUARD PREFERRED STOCK FUND, VANGUARD STAR FUND, VANGUARD/PRIMECAP FUND, INC., VANGUARD INDEX TRUST, VANGUARD/TRUSTEES' EQUITY FUND, VANGUARD SPECIALIZED PORTFOLIOS, INC., VANGUARD CALIFORNIA TAX-FREE FUND, VANGUARD NEW YORK INSURED TAX-FREE FUND, VANGUARD PENNSYLVANIA TAX-FREE FUND, VANGUARD OHIO TAX-FREE FUND, VANGUARD FLORIDA INSURED TAX-FREE FUND, VANGUARD CONVERTIBLE SECURITIES FUND, INC., VANGUARD QUANTITATIVE PORTFOLIOS, INC., VANGUARD BOND INDEX FUND, INC., VANGUARD EQUITY INCOME FUND, INC., VANGUARD NEW JERSEY TAX-FREE FUND, VANGUARD ADMIRAL FUNDS, INC., VANGUARD INSTITUTIONAL PORTFOLIOS, INC., VANGUARD ASSET ALLOCATION FUND, INC., VANGUARD VARIABLE INSURANCE FUND, INC., VANGUARD BALANCED INDEX FUND, INC., VANGUARD INSTITUTIONAL INDEX FUND, VANGUARD INTERNATIONAL EQUITY INDEX FUND, INC., VANGUARD TAX-MANAGED FUND, INC., AND VANGUARD HORIZON FUND, INC., (hereinafter collectively referred to as "Funds") and THE VANGUARD

GROUP, MC. AND VANGUARD MARKETING CORPORATION (hereinafter collectively referred to as "Vanguard").

 

THIS AGREEMENT is entered into under the following circumstances:

A. 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 be bonded against larceny and embezzlement, and the SEC has promulgated rules and regulations dealing with this subject ("Rule 17g-I");

 

B.

Funds and Vanguard are named as joint insureds under the terms of certain bond

or policy of insurance with total coverage of $50,000,000 which insures against larceny and

 

embezzlement by officers and employees (the "Bond");

 

C. A majority of those members of the Board of Directors (Trustees) of e a c h of the Funds, 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 such joint insured Bond, and the Board of Directors (Trustees) of each Fund has approved the term and amount of the Bond, the portion of the premium payable by that party, and the manner in which recovery on said Bond, if any, shall be shared by and among the parties hereto as hereinafter set forth; and

D. Funds and Vanguard now desire to enter into the agreement required by Rule 17g-l(f) to establish the manner in which recovery on said Bond, if any, shall be shared.

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

I. ALLOCATION of RECOVERIES

A. In the event of a separate loss or losses under the Bond, the party suffering

such loss or losses shall be entitled to b e indemnified up to the full amount of the Bond.

B. If more than one of the parties hereto is damaged in a single loss or occurrence for which recovery is received under the Bond, each such party shall receive that portion of the recovery which represents the loss sustained by that party, unless the recovery is inadequate fully to indemnify each such party sustaining a loss.

 

C. If the recovery is inadequate fully to indemnify each such party sustaining

a loss, the recovery shall be allocated among such parties as follows:

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

the lesser of its actual loss or the minimum amount of bond deemed appropriate

to be maintained by such party as hereinafter set forth in paragraph 2 hereof

and Exhibit A hereof.

(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) in

ratio of the premium paid by each such party to the premium paid by all such

parties.

 

 

2.

BONDING COVERAGE REQUIRED

Each of the parties hereto has determined that the minimum amount of fidelity bond coverage deemed appropriate to be maintained by it is as set forth opposite its name in Exhibit A hereto and each of the Funds represents and warrants to each of the other parties hereto that the minimum amount of coverage required of it under Rule 17g-1(d)(1) as of May 31, 1995, is not more than reflected opposite its name in Exhibit A hereto. Each of the Funds further agrees that it will determine, immediately following the end of its fiscal quarters, the minimum amount of

coverage required of it by Rule 17g-1(1) and will promptly take such steps as may be necessary to insure that its minimum coverage as therein set forth shall a t no time be less than the minimum coverage required of it under Rule 17g-1(d)(1).

3. This Agreement shall apply to the present fidelity bond coverage and any renewal or replacement thereof and shall continue until terminated by any party hereto upon the giving of not less than sixty days' written notice to the other parties hereto.

4. 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, INC.

VANGUARD/WINDSOR FUNDS, INC.

VANGUARD WORLD FUND, INC.

GEMINI II, INC.

VANGUARD EXPLORER FUND, INC.

VANGUARD/MORGAN GROWTH FUND, INC.

VANGUARD/WELLESLEY INCOME FUND, INC.

VANGUARD FIXED INCOME SECURITIES FUND, INC.

VANGUARD MONEY MARKET RESERVES, INC.

VANGUARD MUNICIPAL BOND FUND, INC.

VANGUARD PREFERRED STOCK FUND

VANGUARD STAR FUND

VANGUARD INDEX TRUST

VANGUARDITRUSTEES' EQUITY FUND

VANGUARD SPECIALIZED PORTFOLIOS, INC.

VANGUARD/PRIMECAP FUND, INC.

VANGUARD CALIFORNIA TAX-FREE FUND

VANGUARD NEW YORK INSURED TAX-FREE FUND

VANGUARD PENNSYLVANIA TAX-FREE FUND

VANGUARD CONVERTIBLE SECURITIES FUND, INC.

VANGUARD QUANTITATIVE PORTFOLIOS, INC.

VANGUARD BOND INDEX FUND, INC.

VANGUARD EQUITY INCOME FUND, INC.

 

VANGUARD BALANCED INDEX FUND

VANGUARD FLORIDA INSURED TAX-FREE FUND

VANGUARD ADMIRAL FUNDS, MC.

VANGUARD NEW JERSEY TAX-FREE FUND

VANGUARD INSTITUTIONAL PORTFOLIOS, MC.

VANGUARD ASSET ALLOCATION FUND, MC.

VANGUARD OHIO TAX-FREE FUND

VANGUARD VARIABLE INSURANCE FUND, MC.

VANGUARD INSTITUTIONAL INDEX FUND

VANGUARD INTERNATIONAL EQUITY INDEX FUND, MC.

VANGUARD TAX-MANAGED FUND, MC.

VANGUARD HORIZON FUND, MC.

THE VANGUARD GROUP, INC.

VANGUARD MARKETING CORPORATION

 

 

 

BY

 

 

John C. Bogle, Chairman, and

 

Chief Executive Officer

 

 

Attest:

 

 

Raymond J. Klapinsky, Secretary

 

 

 

 

 

 

Exhibit A

 

FIDELITY BOND REQUIREMENTS
AS OF MAY 31, 1995

 

 

 

 

Rule 17(g)

 

 

Minimum

 

Net Assets

Coverage

Fund

(000.000)(1)

(000)(2)

 

 

 

Vanguard/Windsor Funds

 

 

- Windsor Fund

$12,293

$2,500

- Windsor II

9,262

2500

 

 

 

Vanguard/Trustee’s Equity Fund

 

 

- United States

118

525

- International

1,049

1,250

 

 

 

Vanguard World Fund

 

 

- U.S. Growth

2,767

1,500

- International Growth

3,112

2,100

 

 

 

Vanguard Specialized Portfolios

 

 

- Energy

549

900

- Health Care

943

1,000

- Gold & Precious Metals

589

900

- Utilities Income

634

900

 

 

 

Vanguard Index Trust

 

 

- 500

12,046

2,500

- Extended Market

1,114

1,250

- Total Stock Market

1,077

1,250

- Value

349

750

- Growth

140

525

- Small Capitalization Stock

692

900

 

 

 

Vanguard International Equity Index Fund

 

 

- European

814

1,000

- Pacific

717

900

- Emerging Markets

142

525

 

 

 

Vanguard Bond Index Fund

 

 

- Total Bond Market

2,091

1,700

- Short-Term Bond

144

525

- Intermediate-Term Bond

149

525

- Long Term Bond

12

200

 

 

 

 

Rule 17(g)

 

 

Minimum

 

Net Assets

Coverage

Fund

(000.000)(1)

(000)(2)

 

 

 

Vanguard Fixed Income Securities Fund

 

 

- Short-Term Corporate

3,260

2,100

- Short-Term Federal

1,487

1,250

- Short-Term U. S. Treasury Bond

829

1,000

- Intermediate-Term U. S. Treasury Bond

1,036

1,250

- Intermediate-Term Corporate

238

600

- Long-Term U. S. Treasury Bond

786

1,000

- GNMA

6,305

2,500

- Long-Term Corporate

2,996

1,900

- High Yield Corporate

2,490

1,700

 

 

 

Vanguard Admiral Funds

 

 

- U.S. Treasury Money Market

1,463

1,250

- Short-Term U. S. Treasury

363

750

- Intermediate-Term U. S. Treasury

493

900

- Long-Term U. S. Treasury

146

525

 

 

 

Vanguard Money Market Reserves

 

 

- Prime

16,796

2,500

- Federal

2,388

1,700

- U.S. Treasury

2,278

1,700

 

 

 

Vanguard Variable Insurance Fund

 

 

- Money Market

198

600

- High Grade Bond

110

525

- Balanced

257

750

- Equity Income

81

450

- Index

232

600

- Growth

129

525

- International

78

450

 

 

 

Vanguard Municipal Bond Fund

 

 

- Money Market

4,182

2,500

- Short-Term

1,435

1,250

- Limited-Term

1,643

1,500

- Intermediate-Term

5,277

2,500

- Long-Term

1,050

1,250

- High Yield

1,823

1,500

- Insured Long Term

1,942

1,500

 

 

 

Vanguard California Tax-Free Fund

 

 

- Money Market

1,108

1,250

- Insured Intermediate-Term

170

600

- Insured Long-Term

934

1,000

 

 

 

 

Rule 17(g)

 

 

Minimum

 

Net Assets

Coverage

Fund

(000.000)(1)

(000)(2)

 

 

 

Vanguard New Jersey Tax-Free Fund

 

 

- Money Market

813

1,000

- Insured Long-Term

739

900

 

 

 

Vanguard Pennsylvania Tax-Free Fund

 

 

- Money Market

1,143

1,250

- Insured Long-Term

1,476

1,250

 

 

 

Vanguard Ohio Tax-Free Fund

 

 

- Money Market,

165

600

- Insured Long Term

175

600

 

 

 

Vanguard Florida Insured Tax-Free Fund

360

750

Vanguard Explorer Fund

1,259

1,250

Vanguard Equity Income Fund

904

1,000

Vanguard/Morgan Growth Fund

1,196

1,250

Vanguard PRIMECAP Fund

2,456

1,700

Vanguard Quantitative Portfolios

716

900

Gemini II

361

750

Vanguard Asset Allocation Fund

1,350

1,250

Vanguard Balanced Index Fund

472

750

Vanguard Convertible Securities Fund

169

600

Vanguard Preferred Stock Fund

309

750

Vanguard/Wellesley Income Fund

6,486

2,500

Vanguard/Wellington Fund

10,423

2,500

Vanguard New York Insured Tax-Free Fund

796

1,000

'Vanguard Institutional Portfolios

631

900

Vanguard Institutional Index Fund (3)

4,395

2,500

Vanguard STAR Fund (3)

 

 

- STAR

4,255

2,500

- STAR Income

28

300

- STAR Conservative

110

525

- STAR Moderate

94

450

- STAR Growth

105

525

Vanguard Tax-Managed Fund

 

 

- Growth and Income

52

350

- Capital Appreciation

147

525

- Balanced

27

300

Vanguard Horizon Fund

-0-

-0-

 

 

 

 

 

 

 

$156,429

$99,425

 

 

 

(1) As of May 3 1, 1995

(2) The maximum bond required for an investment company by the 1940 Act is $2,500,000.

(3) Not a member of The Vanguard Group.