EX-3 5 agreement2002.htm EXHIBIT 3 TO 40-17G REPORT

AGREEMENT

 

Made as of this 13th day of December, 2002, 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 RESERVES, VANGUARD MUNICIPAL BOND FUNDS, VANGUARD STAR FUNDS, VANGUARD PRIMECAP FUND, VANGUARD INDEX FUNDS, VANGUARD TRUSTEES ' EQUITY FUND, VANGUARD SPECIALIZED FUNDS, VANGUARD CALIFORNIA TAX-FREE FUNDS, VANGUARD NEW YORK TAX-FREE FUNDS, VANGUARD PENNSYLVANIA TAX-FREE FUNDS, 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 FUNDS, VANGUARD HORIZON FUNDS, AND VANGUARD MASSACHUSETTS TAX-EXEMPT FUNDS, (herein after collectively referred to as the "Funds") and THE VANGUARD GROUP, INC. AND VANGUARD MARKETING CORPORATION (herein after 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 each 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 that party, and the manner in which recovery on the Joint Insured Bond, if any, shall be shared by and among the parties hereto as hereinafter set forth; 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 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 such loss or losses shall be entitled to be indemnified up to the full amount of the Joint Insured Bond.

B. If more than one of the parties 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 indemnify fully each such party sustaining a loss.

C. If the recovery is inadequate to indemnify fully 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 set forth in paragraph 2 below and 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 (C)(i) in ratio of the premium paid by each such party to the premium paid by all such parties.

 

3. BOND COVERAGE REQUIRED

Each party has determined that 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-l(d)(1) as of July 3 1,2002, is not more than reflected in Exhibit A. Each Fund further agrees that it will determine, immediately following the end of its fiscal quarters, the minimum amount of coverage required by Rule 17g-1(1), and will promptly take such steps as may be necessary to insure that its minimum coverage as set forth in Exhibit A 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 hereto upon the giving of not less than sixty days' written notice to the other parties hereto.

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 RESERVES

VANGUARD MUNICIPAL BOND FUNDS

VANGUARD STAR FUNDS

VANGUARD INDEX FUNDS

VANGUARD TRUSTEES' EQUITY FUND

VANGUARD SPECIALIZED FUNDS

VANGUARD PRZMECAP FUND

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 FUNDS

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 FUNDS

 

VANGUARD MASSACHUSETTS TAX-EXEMPT FUNDS

THE VANGUARD GROUP, INC.

VANGUARD MARKETING CORPORATION

 

 

 

BY

/s/ John J. Brennan

 

John J. Brennan

 

Chairman, President, and

 

Chief Executive Officer

 

 

 

 

Attest:

/s/ R. Gregory barton

 

R. Gregory Barton, Secretary

 

 

 

 

 

Exhibit A

FIDELITY BOND REQUIREMENTS

As of 11/30/2002

 

 

Gross Fund Amount

SEC Insurance

Trust/Fund Name

(000)

Requirements

 

 

 

Bond lndex Fund

 

 

Total Bond lnst.(222)

$847,554

$1,500

Total Bond lndex(84)

24,514,964

2,500

ST Bond lndex(132)

3,088,914

2,100

InterT Bond lndex(314)

2,950,900

1,900

LT Bond lndex(522)

749,745

900

Calvert Social lnd.(0213)

103,277

525

Explorer Fund(24)

4,086,303

2,500

lndex Trust

 

 

Index-Extended(98)

4,017,387

1,900

Index-Extendlnst(856)

717,719

900

Index-MidCap(859)

3,408,134

1,500

Index-MidCaplnst(864)

582,506

900

Index-SmCapVal(860)

1,580,105

900

Index-SmCapVal.lnst

285,516

750

Index-SmCap Gro

527,985

750

Index-SmCapGro.lnst

96,903

450

lndex 500(40)

72,342,157

2,500

Index-Tot.Stock(85)

24,901,174

2,500

IndexTotStocklnst(855)

1,011,478,8

1,250

Index-Growth(9)

8,084,091

2,500

Index-Grolnst.(868)

1,742,772

1,500

Index-Value(6)

3,389,451

2,100

Index-Val.Inst(867)

1,377,935

1,250

Index-Small Cap(48)

4,433,448

2,500

Index-SmCaplnst(857)

1,011,870

1,250

Wellington Fund(21)

22,929,125

2,500

Windsor Funds

 

 

Windsor(22)

14,121,306

2,500

Windsor ll(73)

21,090,042

2,500

Trustee Equity Fund

 

 

TCF-United States(25)

465,601

750

TCF-lnternational(46)

111,702

525

Money Market Reserves

 

 

Admiral

11,084,941

2,500

Prime MM(30)

54,084,941

2,500

Federal MM(33)

6,906,596

2,500

Treasury MoneyMkt.(SO)

4,944,621

2,500

STAR Fund

 

 

STAR Portfolio(56)

8,132,605

2,500

STAR-lncome(723)

809,587

1,000

STAR-ConservGr(724)

2,012,474

1,700

 

STAR-ModGrow(914)

4,227,708

2,500

STAR-Growth(l22)

3,714,942

2,300

Capital Value Fund

215,826

600

Morgan Growth

3,020,973

2,100

PRIMECAP(59)

15,519,662

2,500

Strategic Equity

932,368

1,000

Growth & Income(93)

5,568,438

2,500

Selected ValuePort(934)

1,117,754

1,000

U.S. Growth(23)

6,543,507

2,500

International Growth(81)

6,050,603

2,500

Wellesley(27)

8,388,279

2,500

Specialized Portfolios

 

 

Energy(51)

1,364,839

1,250

Gold(53)

479,497

750

Health Care(52)

15,790,362

2,500

RElT Index Port(123)

2,057,306

1,700

Utilities(57)

586,674

900

Fixed Income Securities

 

 

Short Term US Tr(32)

3,999,836

2,300

Short Term Fed(49)

3,481,199

2,100

ST Corp(391858)

11,524,012

2,500

lnter Term Corp(71)

3,465,523

2,100

lnter Term Treas(35)

4,583,838

2,500

GNMA(36)

27,170,815

2,500

Long TermTreas(83)

2,145,947

1,700

Long Term Corp(28)

4,245,622

2,500

High Yield Corp(29)

7,062,055

2,500

Tax Managed Fund

 

 

Growth and Inc.(lOl)

1,833,919

1,500

Cap,Apprec.(l02)

2,153,042

1,700

Balanced(l03)

416,857

750

International

397,406

750

Tax-Mgd. Small Cap

662,348

900

Cap. Opportunity(l11)

4,206,309

2,500

Global Asset(l15)

244,792

600

lntl Value Fund

1,155,007

1,250

Municipal Bond Fund

 

 

Money Market(45)

11,114,502

2,500

Short Term(41)

3,610,122

2,300

Intermediate Term(42)

11,687,337

2,500

Long Term(43)

2,054,789

1,700

High Yield(44)

3,907,795

2,300

lnsured LongTerm(58)

2,881,527

1,900

Limited Term(31)

5,241,628

2,500

California TF Fund

 

 

Money Market(62)

3,594,036

2,300

lnsured InterTerm(l00)

2,591,213

1,900

lnsured LongTerm(75)

2,119,830

1,700

MA Tax-Exempt Fund

374,962

750

Florida lnsured TF(18)

1,181,975

1,250

New York TF Fund

 

 

Money Market(l63)

1,627,414

1,250

lnsured LongTerm(76)

2,150889

1,700

Penna TF Fund

 

 

Money Market(63)

2,448,369

1,700

 

lnsured LongTerm(77)

2,425,559

1,700

New Jersey TF Fund

 

 

Money Market(95)

1,757,531

1,500

Insured LongTerm(l4)

1,554,650

1,500

Ohio TF Fund

 

 

Money Market(96)

711,576

900

Insured LongTerm(97)

526,219

900

Equity Income Fund(65)

2,301,679

1,700

Asset Allocation (78)

7,504,637

2,500

Instit. lndex(941854)

31,223,948

2,500

Inter Equity Index Fund

 

 

European(79)

4,876,616

2,500

Pacific(72)

1,740,805

1,500

Emerging Mkts(533)

997,079

1,000

Variable Insurance Fund

 

 

Money Market(64)

1,035,534

1,250

High Grade Bond(67)

539,781

900

Equity lndex(68)

1,210,491

1,250

Balanced(69)

682,670

900

Growth(l0)

594,392

900

Equity Income(8)

340,773

750

High Yield(146)

173,538

525

Small Company(1 60)

455,919

750

International(86)

235,610

600

Balanced Index(2)

4,353,852

2,500

 

 

TOTALS

$589,096,746

$177,825