EX-3 5 agreement_2005.htm 2005 AGREEMENT FOR 40-17G

AGREEMENT

 

Made as of this 19th day of January, 2006, 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

 

2

 

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) 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.

 

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

 

VANGUARD ADMIRAL FUNDS

VANGUARD BALANCED INDEX FLND

VANGUARD BOND INDEX FLJNDS

VANGUARD CALIFORNIA TAX-FREE FUNDS

VANGUARD CONVERTIBLE SECURITIES FUND

VANGUARD CHESTER FUNDS

VANGUARD CMT FUNDS

VANGUARD EXPLORER FUND

VANGUARD FENWAY FUNDS

VANGUARD FIXED INCOME SECURITIES FUNDS

VANGUARD FLORIDA TAX-FREE FUNDS

VANGUARD HORIZON FUNDS

VANGUARD INDEX FUNDS

VANGUARD INSTITUTIONAL INDEX FUNDS

VANGUARD INTERNATIONAL EQUITY INDEX FUNDS

VANGUARD MALVERN FUNDS

VANGUARD MASSACHUSETTS TAX-EXEMPT FUNDS

VANGUARD MONEY MARKET RESERVES

VANGUARD MORGAN GROWTH FUND

VANGUARD MUNICIPAL BOND FUNDS

VANGUARD NEW JERSEY TAX-FREE FUNDS

VANGUARD NEW YORK TAX-FREE FUNDS

VANGUARD OHIO TAX-FREE FUNDS

VANGUARD PENNSYLVANIA TAX-FREE FUNDS

VANGUARD QUANTITATIVE FUNDS

VANGUARD SPECIALIZED FUNDS

VANGUARD STAR FUNDS

VANGUARD TAX-MANAGED FUNDS

VANGUARD TREASURY FUND

VANGUARD TRUSTEES EQUITY FUNDS

VANGUARD VARIABLE INSURANCE FUND

VANGUARD WELLESLEY INCOME FUND

VANGUARD WELLINGTON FUND

VANGUARD WHITEHALL FUNDS

VANGUARD WINDSOR FUNDS

VANGUARD WORLD FUNDS

 

 

 

BY

 

 

Heidi Stam, Secretary

 

 

 

 

Attest:

 

 

Christopher A. Wightman,

 

Assistant Secretary

 

 

 

 

 

 

 

THE VANGUARD GROUP, INC.

On behalf of itself and its affiliates and subsidiaries

 

 

BY

 

 

Heidi Stam, Managing Director and

 

Secretary

 

 

Attest:

 

 

Amy Cooper,

 

Assistant Secretary

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT A

 

Rule 17g-1

Minimum Bond Requirements

As of 12/31/2005

(000 omitted)

 

 

 

 

Bond

 

Fund/Portfolio Name

Net Assets

Requirement

 

 

 

 

Vanguard Admiral Funds

 

 

 

Admiral Treasury Money Market Fund

$15,459,792

$2,500

Vanguard Balanced Index Fund

7,972,591

2,500

Vanguard Bond Index Funds

 

 

 

Intermediate-Term Bond Index Fund

5,957,757

2,500

 

Long-Term Bond Index Fund

1,893,047

1,500

 

Short-Term Bond Index Fund

5,276,480

2,500

 

Total Bond Market Index Fund

33,497,179

2,500

Vanguard California Tax-Free Funds

 

 

 

CA Intermediate-Term Tax-Exempt Fund

2,867,147

1,900

 

CA Long- Term Tax-Exempt Fund

2,290,423

1,700

 

CA Tax-Ex Money Market Fund

6,306,795

2,500

Vanguard Convertible Securities Fund

558,163

900

Vanguard Chester Funds

 

 

 

PRIMECAP Fund

28,542,963

2,500

 

Target Retirement Income Fund

733,697

900

 

Target Retirement 2005 Fund

759,899

1,000

 

Target Retirement 2015 Fund

2,293,312

1,700

 

Target Retirement 2025 Fund

2,528,594

1,900

 

Target Retirement 2035 Fund

1,401,580

1,250

 

Target Retirement 2045 Fund

626,367

900

Vanguard CMT Funds

 

 

 

Market Liquidity Fund

17,470,782

2,500

 

Municipal Cash Management Fund

948,452

1,000

 

Yorktown Liquidity Fund

319,436

750

Vanguard Explorer Fund

11,032,473

2,500

Vanguard Fenway Funds

 

 

 

Equity Income Fund

4,289,804

2,500

 

Growth Equity Fund

749,479

900

 

PRIMECAP Core Fund

1,220,054

1,250

Vanguard Fixed Income Securities Funds

 

 

 

GNMA Fund

24,135,507

2,500

 

High-Yield Corporate Fund

9,009,852

2,500

 

Inflation-Protected Securities Fund

9,938,115

2,500

 

Intermediate-Term Investment-Grade Fund

4,992,430

2,500

 

Intermediate-Term Treasury Fund

3,855,828

2,300

 

Long-Term Investment-Grade Fund

5,659,991

2,500

 

Long-Term Treasury Fund

2,223,953

1,700

 

Short-Term Federal Fund

2,712,893

1,900

 

Short-Term Investment-Grade Fund

17,603,720

2,500

 

Short-Term Treasury Fund

3,332,519

2,100

Vanguard Florida Tax-Free Funds

 

 

 

Florida Long-Term Tax-Exempt Fund

1,203,064

1,250

Vanguard Horizon Funds

 

 

 

Capital Opportunity Fund

8,408,032

2,500

 

 

 

 

Global Equity Fund

2,676,040

1,900

 

Strategic Equity Fund

5,614,117

2,500

Vanguard Index Funds

 

 

 

500 Index Fund

107,403,341

2,500

 

Extended Market Index Fund

10,549,264

2,500

 

Growth Index Fund

10,609,084

2,500

 

Large-Cap Index Fund

426,206

750

 

Mid-Cap Index Fund

13,199,994

2,500

 

Small-Cap Growth Index Fund

2,004,359

1,700

 

Small-Cap Index Fund

10,638,085

2,500

 

 

 

Small-Cap Value Index Fund

3,881,108

2,300

 

Total Stock Market Index Fund

65,419,573

2,500

 

Value Index Fund

7,079,433

2,500

Vanguard Institutional Index Funds

 

 

 

Institutional Index Fund

56,249,308

2,500

 

Institutional Total Bond Market Index Fund

2,860,657

1,900

 

Inst. Total Stock Market Index Fund

3,716,276

2,300

Vanguard International Equity Index

 

 

 

Emerging Markets Stock Index Fund

7,102,464

2,500

 

European Stock Index Fund

15,256,193

2,500

 

Pacific Stock Index Fund

8,755,933

2,500

Vanguard Malvern Funds

 

 

 

Asset Allocation Fund

11,023,592

2,500

 

Capital Value Fund

427,125

750

 

U.S. Value Fund

1,013,183

1,250

Vanguard Massachusetts Tax-Exempt Funds

 

 

 

Massachusetts Tax-Exempt Fund

505,286

900

 

 

A-2

 

Vanguard Money Market Reserves

 

 

 

Federal Money Market Fund

5,754,106

2,500

 

Prime Money Market Fund

55,703,227

2,500

Vanguard Morgan Growth Fund

6,098,392

2,500

Vanguard Municipal Bond Funds

 

 

 

High-Yield Tax-Exempt Fund

4,968,919

2,500

 

Insured Long-Term Tax-Exempt Fund

3,054,010

2,100

 

Intermediate-Term Tax-Exempt Fund

12,716,555

2,500

 

Limited-Term Tax-Exempt Fund

6,523,339

2,500

 

Long-Term Tax-Exempt Fund

2,098,371

1,700

 

Short-Term Tax-Exempt Fund

4,248,961

2,500

 

Tax-Exempt Money Market Fund

16,939,371

2,500

Vanguard New Jersey Tax-Free

 

 

 

NJ Long-Term Tax-Exempt Fund

1,612,393

1,500

 

NJ Tax-Exempt Money Market Fund

2,504,850

1,900

Vanguard New York Tax-Free

 

 

 

NY Long-Term Tax-Exempt Fund

2,275,035

1,700

 

NY Tax-Exempt Money Market Fund

3,273,668

2,100

Vanguard Ohio Tax-Free

 

 

 

OH Long-Term Tax-Exempt Fund

528,888

900

 

OH Tax-Exempt Money Market Fund

942,939

1,000

Vanguard Pennsylvania Tax-Free

 

 

 

PA Long-Term Tax-Exempt Fund

2,297,919

1,700

 

PA Tax-Exempt Money Market Fund

3,008,948

2,100

 

A-3

 

Vanguard Quantitative Funds

 

 

 

Growth and Income Fund

7,356,718

2,500

Vanguard Specialized Funds

 

 

 

Energy Fund

8,244,121

2,500

 

Health Care Fund

25,593,583

2,500

 

Precious Metals and Mining Fund

2,485,010

1,700

 

RElT Index Fund

7,197,050

2,500

 

Dividend Growth Fund

983,561

1,000

Vanguard STAR Funds

 

 

 

Developed Markets Index Fund

1,780,371

1,500

 

Institutional Developed Markets Index Fund

1,874,495

1,500

 

LifeStrategy Conservative Growth Fund

4,324,197

2,500

 

LifeStrategy Growth Fund

7,001,478

2,500

 

LifeStrategy Income Fund

1,707,890

1,500

 

LifeStrategy Moderate Growth Fund

8,022,769

2,500

 

STAR Fund

12,168,148

2,500

 

Total International Stock Index Fund

12,696,004

2,500

Vanguard Tax-Managed Funds

 

 

 

Tax-Managed Balanced Fund

606,459

900

 

Tax-Managed Capital Appreciation Fund

3,420,245

2,100

 

Tax-Managed Growth and Income Fund

2,683,971

1,900

 

Tax-Managed International Fund

1,312,459

1,250

 

Tax-Managed Small-Cap Fund

1,551,193

1,500

Vanguard Treasury Fund

 

 

 

Vanguard Treasury Money Market Fund

4,832,977

2,500

Vanguard Trustees’ Equity Fund

 

 

 

Diversified Equity Fund

55,027

400

 

International Value Fund

4,127,009

2,500

Vanguard Variable Insurance Fund

 

 

 

Balanced Portfolio

1,197,024

1,250

 

Capital Growth Portfolio

190,050

600

 

Diversified Value Portfolio

658,942

900

 

Equity Income Portfolio

482,538

750

 

Equity Index Portfolio

1,813,464

1,500

 

Growth Portfolio

385,397

750

 

High-Yield Bond Portfolio

246,777

600

 

International Portfolio

840,006

1,000

 

Mid-Cap Index Portfolio

676,713

900

 

Money Market Portfolio

939,112

1,000

 

RElT Index Portfolio

453,321

750

 

Short-Term Investment-Grade Portfolio

372,983

750

 

Small Company Growth Portfolio

744,123

900

 

Total Bond Market Index Portfolio

773,830

1,000

 

Total Stock Market Index Portfolio

317,973

750

Vanguard Wellesley Fund

11,893,427

2,500

Vanguard Wellington Fund

38,949,473

2,500

Vanguard Whitehall Funds

 

 

 

International Explorer Fund

2,282,103

1,700

 

Mid-Cap Growth Fund

619,471

900

 

Selected Value Fund

3,933,493

2,300

 

A-4

 

Vanguard Windsor Funds

 

 

 

Windsor Fund

21,277,294

2,500

 

Windsor II Fund

41,839,039

2,500

Vanguard World Fund

 

 

Consumer Discretionary Index Fund

37,033

350

Consumer Staples Index Fund

93,451

450

Energy Index Fund

274,255

750

FTSE Social Index Fund

418,758

750

Financials Index Fund

65,213

400

Health Care Index Fund

336,334

750

Industrials Index Fund

28,695

300

Information Technology Index Fund

109,102

525

International Growth Fund

11,495,389

2,500

Materials Index Fund

62,246

400

Telecommunication Services Index Fund

22,802

250

U.S. Growth Fund

6,254,586

2,500

Utilities Index Fund

146,921

525

 

 

 

 

 

 

 

 

 

TOTALS

$999,288,760

$233,750

 

A-5