EX-3 5 agreement_1994.htm 40-17G AGREEMENT FOR 1994

AGREEMENT

Made this as of this 1st day of June, 1994, 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 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. AND VANGUARD TAX-MANAGED FUND, INC., (hereinafter collectively referred to as "Funds") and THE VANGUARD GROUP, INC. AND VANGUARD MARKETING

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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-1");

B.          Funds and Vanguard are named as joint insureds under the terms of certain bond or policy of insurance with total coverage of $130,000,000 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 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 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- 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

 

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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.

 

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)(l) as of May 31, 1994, is not more than reflected opposite its name in Exhibit A hereto. Each of the Funds further agrees that

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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)(l).

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

VANGUARD/TRUSTEES' 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

 

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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 TAX-FREE FUND

VANGUARD ADMIRAL FUNDS, INC.

VANGUARD NEW JERSEY TAX-FREE FUND

VANGUARD INSTITUTIONAL PORTFOLIOS, INC.

VANGUARD ASSET ALLOCATION FUND, INC.

VANGUARD OHIO TAX-FREE FUND

VANGUARD VARIABLE INSURANCE FUND, INC.

VANGUARD INSTITUTIONAL INDEX FUND

VANGUARD INTERNATIONAL EQUITY INDEX FUND, INC.

VANGUARD TAX-MANAGED FUND, INC.

THE VANGUARD GROUP, INC.

VANGUARD MARKETING CORPORATION

 

 

 

By:

John C. Bogle,

 

Chairman and Chief Executive Officer

 

 

 

 

Attest:

Raymond J. Klapinsky , Secretary

 

 

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Exhibit A

 

FIDELITY BOND REQUIREMENTS

AS OF MAY 31, 1994   

 

 

 

 

Rule 17(g)

 

 

Minimum

 

Net Assets

Coverage

Fund

(000,000) (1)

(000)(2)

 

 

 

Vanguard/Windsor Funds

 

 

- Windsor Fund

$10,949

$2,500

- Windsor II

7,954

2,500

 

 

 

Vanguard/Trustee's Equity Fund

 

 

- United States

128

525

- International

1,101

1,250

 

 

 

Vanguard World Fund

 

 

- U.S. Growth

1,849

1,500

- International Growth

2,679

1,900

 

 

 

Vanguard Specialized Portfolios

 

 

- Energy

402

750

- Health Care

628

900

- Gold & Precious Metals

590

900

- Service Economy

30

300

- Technology

76

450

- Utilities Income

618

900

 

 

 

Vanguard Index Trust

 

 

- 500

8,568

2,500

- Extended Market

941

1,000

- Total Stock Market

636

900

- Value

288

750

- Growth

57

400

- Small Capitalization Stock

548

900

 

 

 

Vanguard International Equity Index Fund

 

 

- European

675

900

- Pacific

647

900

- Emerging Markets

12

200

 

 

 

Vanguard Bond Index Fund

 

 

- Total Bond Market

1,669

1,500

- Short-Term Bond

57

400

- Intermediate-Term Bond

42

350

- Long Term Bond

5

150

 

 

 

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Rule 17(g)

 

 

Minimum

 

Net Assets

Coverage

Fund

(000,000) (1)

(000)(2)

 

 

 

Vanguard Fixed Income Securities Fund

 

 

- Short-Term Corporate

3,332

2,100

- Short-Term Federal

1,687

1,500

- Short-Term U.S. Treasury Bond

663

900

- Intermediate-Term U.S. Treasury Bond

873

1,000

- Intermediate-Term Corporate

98

450

- Long-Term U.S. Treasury Bond

688

900

- GNMA

6,142

2,500

- Long-Term Corporate

2,719

1,900

- High Yield Corporate

2,117

1,700

 

 

 

Vanguard Admiral Funds

 

 

- U.S. Treasury Money Market

1,026

1,250

- Short-Term U.S. Treasury

274

750

- Intermediate-Term U.S. Treasury

311

750

- Long-Term U.S. Treasury

103

525

 

 

 

Vanguard Money Market Reserves

 

 

- Prime

13,374

2,500

- Federal

2,046

1,700

- U.S. Treasury

1,981

1,500

 

 

 

Vanguard Variable Insurance Fund

 

 

- Money Market

165

600

- High Grade Bond

83

450

- Balanced

234

600

- Equity Income

71

400

- Index

183

600

- Growth

75

450

 

 

 

Vanguard Municipal Bond Fund

 

 

- Money Market

4,382

2,300

- Short-Term

1,518

1,500

- Limited-Term

1,787

1,500

- Intermediate-Term

4,961

2,500

- Long-Term

1,000

1,250

- High Yield

1,759

1,500

- Insured Long-Term

1,935

1,500

 

 

 

Vanguard California Tax-Free Fund

 

 

- Money Market

1,131

1,250

- Insured Intermediate-Term

56

400

- Insured Long-Term

927

1,000

 

 

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Rule 17(g)

 

 

 

Minimum

 

Net Assets

 

Coverage

Fund

(000,000) (1)

 

(000)(2)

 

 

 

 

Vanguard New Jersey Tax-Free Fund

 

 

 

- Money Market

804

 

1,000

- Insured Long-Term

699

 

900

 

 

 

 

Vanguard Pennsylvania Tax-Free Fund

 

 

 

- Money Market

1,040

 

1,250

- Insured Long-Term

1,425

 

1,250

 

 

 

 

Vanguard Ohio Tax-Free Fund

 

 

 

- Money Market

139

 

525

- Insured Long-Term

161

 

600

 

 

 

 

Vanguard Explorer Fund

948

 

1,000

Vanguard Equity Income Fund

908

 

1,000

Vanguard/Morgan Growth Fund

1,083

 

1,250

Vanguard PRIMECAP Fund

1,031

 

1,250

Vanguard Quantitative Fund

559

 

900

Gemini II

343

 

750

Vanguard Asset Allocation Fund

1,204

 

1,250

Vanguard Balanced Index Fund

387

 

750

Vanguard Convertible Securities Fund

190

 

600

Vanguard Preferred Stock Fund

341

 

750

Vanguard/Wellesley Income Fund

6,063

 

2,500

Vanguard/Wellington Fund

8,408

 

2,500

Vanguard New York Insured Tax-Free Fund

757

 

1,000

Vanguard Institutional Portfolios

495

 

750

Vanguard Institutional Index Fund (3)

2,972

 

1,900

Vanguard STAR Fund (3)

3,780

 

2,300

Vanguard Tax-Managed Fund

-0-

 

-0-

 

 

 

 

 

$132,587

 

$90,925

 

 

(1) As of May 31, 1994

(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.

 

 

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