EX-3 5 agreement_2001.htm 2001 AGREEMENT FOR 40-17G

AGREEMENT

Made this as of this 1st day of August, 2000, by and among VANGUARD WELLINGTON FUND, VANGUARD WINDSOR FUNDS, VANGUARD WORLD FUND, 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 PREFERRED STOCK FUND, 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 FUNDS, VANGUARD INSTITUTIONAL INDEX FUNDS, VANGUARD INTERNATIONAL EQUITY INDEX FUNDS, VANGUARD TAX-MANAGED FUNDS, VANGUARD WHITEHALL FUNDS, VANGUARD TREASURY FUND, VANGUARD HORIZON FUNDS, VANGUARD CALVERT SOCIAL INDEX FUNDS AND VANGUARD MASSACHUSETTS TAX-EXEMPT FUNDS, (hereinafter collectively referred to as "Funds") and THE VANGUARD GROUP, INC. AND VANGUARD MARKETING CORPORATION (hereinafter collectively referred to as "Vanguard").

 

 

 

4

THIS AGREEMENT is entered into under the following circumstances:

A.     Section 17(g) of the lnvestment 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 1 7g- 1");

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

C.          A majority of those members of the Board of Trustees of each 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 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- 1(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:

 

1.

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 be 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.

 

5

 

 

2.

BONDING COVERAGE REQLTIRED

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 July 31,2000, 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 at 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

VANGUARD WINDSOR FUNDS

VANGUARD WORLD FUND

VANGUARD EXPLORER FUND

VANGUARD MORGAN GROWTH FUND

VANGUARD WELLESLEY INCOME FUND

VANGUARD FIXED INCOME SECURITIES FUNDS

VANGUARD MONEY MARKET RESERVES

VANGUARD MUNICLPAL BOND FUNDS

VANGUARD PREFERRED STOCK FUND

VANGUARD STAR FUNDS

VANGUARD INDEX FUNDS

VANGUARD TRUSTEES' EQUITY FUND

VANGUARD SPECIALIZED FUNDS

VANGUARD PRIMECAP FUND

VANGUARD CALIFORNIA TAX-FREE FUNDS

VANGUARD NEW YORK TAX-FREE FUNDS

VANGUARD PENNSYLVANIA TAX-FREE FUNDS

VANGUARD CONVERTIBLE SECURITIES FUND

 

6

 

VANGUARD QUANTITATIVE FUNDS

VANGUARD BOND INDEX FUNDS

VANGUARD FENWAY FUNDS

VANGUARD BALANCED INDEX FUNDS

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 FUNDS

VANGUARD INTERNATIONAL EQUITY INDEX FUNDS

VANGUARD TAX-MANAGED FUNDS

VANGUARD HORIZON FUNDS

VANGUARD WHITEHALL FUNDS

VANGUARD TREASURY FUND

VANGUARD CALVERT SOCIAL INDEX FUND

VANGUARD MASSACHUSETTS TAX-EXEMPT FUNDS

THE VANGUARD GROUP, INC.

VANGUARD MARKETING CORPORATION

By:

 

 

John J. Breman,

 

Chairman, President and

 

Chief Executive Officer

 

 

 

 

 

 

Attest:

 

 

Raymond J. Klapinsky, Secretary

 

 

7

EXHIBIT A

 

Rule 17g1

Calculation

11/30/2001

 

 

 

 

Gross

Gross

 

 

 

Fund/Portfolio Name

Portfolio Amt

Fund Amt

Portfolio Ins.

Fund Ins.

 

 

 

 

 

 

Bond Index Fund

 

23,243,119

0

2,500

 

Total Bond Inst. (222)

6,765,906

 

1,500

0

 

Total Bond Index (84)

14,891,364

 

2,500

0

 

ST Bond Index (132)

562,916

 

900

0

 

InterT Bond Index (314)

882,640

 

1,000

0

 

LT Bond Index (522)

140,293

 

525

0

Calvert Social Ind. (0213)

94,756

94,756

450

450

Explorer Fund (24)

4,399,088

4,399,088

2,500

2,500

Index Trust

 

136,968,865

0

2,500

 

Index-Extended (98)

2,966,251

 

1,900

0

 

Index-Extended Inst (856)

717,719

 

900

0

 

Index-MidCap (859)

1,906,985

 

1,500

 

 

Index-MidCapInst (864)

582,506

 

900

 

 

Index-SmCapVal (860)

718,497

 

900

 

 

Index-SmCapVal.Inst

285,516

 

750

 

 

Index-SmCap Gro

329,325

 

750

 

 

Index-SmCap Gro.Inst

96,903

 

450

 

 

Index 500(40)

85,986,171

 

2,500

0

 

Index-Tot. Stock (85)

15,559,697

 

2,500

0

 

Index-TotStockInst (855)

8,866,000

 

2,500

0

 

Index-Growth (9)

8,500,588

 

2,500

0

 

Index-GroInst (868)

1,742,772

 

1,500

 

 

Index-Value (6)

3,013,501

 

2,100

0

 

Index-Val.Inst. (867)

1,377,935

 

1,250

0

 

Index-Small Cap (48)

3,306,629

 

2,100

0

 

Index-SmCapInst (857)

1,011,870

 

1,250

 

Wellington Fund (21)

24,149,928

24,149,928

2,500

2,500

Windsor Funds

 

41,357,200

0

2,500

 

Windsor (22)

17,015,200

 

2,500

0

 

Windsor II(73)

24,342,000

 

2,500

0

Trustee Equity Fund

 

1,076,191

0

1,250

 

TCF-United States (25)

196,024

 

600

0

 

TCF-International (46)

880,167

 

1,000

0

Money Market Reserves

 

71,197,531

0

2,500

 

Admiral

9,559,632

 

2,500

 

 

Prime MM(30)

54,723,187

 

2,500

0

 

Federal MM(33)

6,987,861

 

2,500

0

Treasury MoneyMkt. (50)

4,926,849

4,926,849

2,500

2,500

STAR Fund

 

18,897,316

0

2,500

 

STAR Portfolio (56)

8,132,605

 

2,500

0

 

STAR-Income (723)

809,587

 

1,000

0

 

STAR-ConservGr (724)

2,012,474

 

1,700

0

 

STAR-ModGrow (914)

4,227,708

 

2,500

0

 

STAR-Growth(122)

3,714,942

 

2,300

0

Morgan Growth

3,775,244

3,775,244

2,300

2,300

 

 

 

PRIMECAP (59)

18,437,612

18,437,612

2,500

2,500

Strategic Equity

836,446

836,446

1,000

1,000

Growth & Income (93)

7,502,516

7,502,516

2,500

2,500

Selected ValuePort (934)

954,819

954,819

1,000

1,000

U.S. Growth (23)

10,183,294

10,183,294

2,500

2,500

International Growth (81)

6,743,916

6,743,916

2,500

2,500

Wellesley (27)

7,245,518

7,245,518

2,500

2,500

Specialized Portfolios

 

21,357,887

0

2,500

 

Energy (51)

1,250,683

 

1,250

0

 

Gold (53)

356,659

 

750

0

 

Health Care (52)

17,853,033

 

2,500

0

 

REIT Index Port (123)

1,209,619

 

1,250

 

 

Utilities (57)

687,893

 

900

0

Fixed Income Securities

 

51,835,163

0

2,500

 

Short Term US Tr (32)

2,629,276

 

1,900

0

 

Short Term Fed (49)

2,122,165

 

1,700

0

 

ST Corp (39/858)

9,278,669

 

2,500

0

 

Inter Term Corp (71)

2,750,797

 

1,900

0

 

Inter Term Treas (35)

3,828,435

 

2,300

0

 

GNMA (36)

19,021,205

 

2,500

0

 

Long Term Treas (83)

1,967,422

 

1,500

0

 

Long Term Corp (28)

4,047,056

 

2,500

0

 

High Yield Corp (29)

6,190,138

 

2,500

0

Tax Managed Fund

 

5,209,706

0

2,500

 

Growth and Inc. (101)

2,248,145

 

1,700

0

 

Cap.Apprec. (102)

2,549,698

 

1,900

0

 

Balanced (103)

411,863

 

750

0

 

Cap. Opportunity(111)

4,969,767

 

2,500

0

 

Global Asset(115)

85,267

 

450

0

 

Intl Value Fund

872,268

 

1,000

0

Municipal Bond Fund

 

34,130,117

0

2,500

 

Money Market (45)

9,209,174

 

2,500

0

 

Short Term (41)

2,458,818

 

1,700

0

 

Intermediate Term (42)

10,140,000

 

2,500

0

 

Long Term (43)

1,957,409

 

1,500

0

 

High Yield (44)

3,615,841

 

2,300

0

 

Insured Long Term (58)

2,751,545

 

1,900

0

 

Limited Term (31)

3,727,330

 

2,300

0

California TF Fund

 

6,864,031

0

2,500

 

Money Market (62)

2,774,219

 

1,900

0

 

Insured InterTerm (100)

2,103,114

 

1,700

0

 

Insured LongTerm (75)

1,986,698

 

1,500

0

MA Tax-Exempt Fund

293,915

 

750

 

Florida Insured TF (18)

1,095,100

1,095,100

1,250

1,250

New York TF Fund

 

3,316,946

0

1,250

 

Money Market (163)

1,358,526

 

1,250

0

 

Insured LongTerm(76)

1,958,420

 

1,500

0

Penna TF Fund

 

4,699,408

0

2,500

 

Money Market (63)

2,427,367

 

1,700

0

 

Insured LongTerm(77)

2,272,041

 

1,700

0

New Jersey TF Fund

 

2,978,902

0

1,900

 

Money Market (95)

1,548,951

 

1,500

0

 

Insured LongTerm(14)

1,429,951

 

1,250

0

 

 

 

Ohio TF Fund

 

1,103,248

0

1,250

 

Money Market (96)

619,143

 

900

0

 

Insured LongTerm(97)

484,105

 

750

0

Equity Income Fund (65)

2,455,780

2,455,780

1,700

1,700

Asset Allocation(78)

8,509,605

8,509,605

2,500

2,500

Instit. Index (94/854)

34,694,710

34,694,710

2,500

2,500

Inter Equity Index Fund

 

7,373,964

0

2,500

 

European (79)

4,868,762

 

2,500

0

 

Pacific (72)

1,592,147

 

1,500

0

 

Emerging Mkts(533)

913,055

 

1,000

0

Variable Insurance Fund

 

5,268,708

0

2,500

 

Money Market(64)

1,035,534

 

1,250

0

 

High Grade Bond (67)

539,781

 

900

0

 

Equity Index(68)

1,210,491

 

1,250

0

 

Balanced (69)

682,670

 

900

0

 

Growth (10)

594,392

 

900

0

 

Equity Income(8)

340,773

 

750

0

 

High Yield (146)

173,538

 

525

0

 

Small Company (160)

455,919

 

750

0

 

International (86)

235,610

 

600

0

Balanced Index(2)

4,125,545

4,125,545

2,500

2,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTALS

583,303,394

577,009,028

170,150

73,350