AGREEMENT
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 XXXXXX 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.
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VANGUARD WELLINGTON FUND |
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VANGUARD WINDSOR FUNDS |
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VANGUARD WORLD FUNDS |
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VANGUARD EXPLORER FUND |
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VANGUARD XXXXXX GROWTH FUND |
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VANGUARD WELLESLEY INCOME FUND |
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VANGUARD FIXED INCOME SECURITIES FUNDS |
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VANGUARD MONEY MARKET RESERVES |
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VANGUARD MUNICIPAL BOND FUNDS |
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VANGUARD STAR FUNDS |
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VANGUARD INDEX FUNDS |
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VANGUARD TRUSTEES' EQUITY FUND |
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VANGUARD SPECIALIZED FUNDS |
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VANGUARD PRZMECAP FUND |
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VANGUARD CALIFORNIA TAX-FREE FUNDS |
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VANGUARD NEW YORK TAX-FREE FUNDS |
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VANGUARD PENNSYLVANIA TAX-FREE FUNDS |
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VANGUARD CONVERTIBLE SECURITIES FUND |
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VANGUARD QUANTITATIVE FUNDS |
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VANGUARD BOND INDEX FUNDS |
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VANGUARD FENWAY FUNDS |
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VANGUARD BALANCED INDEX FUND |
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VANGUARD FLORIDA TAX-FREE FUNDS |
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VANGUARD ADMIRAL FUNDS |
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VANGUARD NEW JERSEY TAX-FREE FUNDS |
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VANGUARD MALVERN FUNDS |
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VANGUARD OHIO TAX-FREE FUNDS |
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VANGUARD VARIABLE INSURANCE FUNDS |
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VANGUARD INSTITUTIONAL INDEX FUND |
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VANGUARD INTERNATIONAL EQUITY INDEX FUNDS |
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VANGUARD TAX-MANAGED FUNDS |
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VANGUARD HORIZON FUNDS |
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VANGUARD WHITEHALL FUNDS |
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VANGUARD TREASURY FUNDS |
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VANGUARD MASSACHUSETTS TAX-EXEMPT FUNDS |
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THE VANGUARD GROUP, INC. |
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VANGUARD MARKETING CORPORATION |
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BY |
/s/ Xxxx X. Xxxxxxx |
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Xxxx X. Xxxxxxx |
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Chairman, President, and |
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Chief Executive Officer |
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Attest: |
/s/ R. Xxxxxxx xxxxxx |
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R. Xxxxxxx Xxxxxx, Secretary |
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Exhibit A
FIDELITY BOND REQUIREMENTS
As of 11/30/2002
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|
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 |
|
XX Xxxx lndex(522) |
749,745 |
900 |
|
Xxxxxxx 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 |
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Trustee Equity Fund |
|
|
|
TCF-United States(25) |
465,601 |
750 |
|
TCF-lnternational(46) |
111,702 |
525 |
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Money Market Reserves |
|
|
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Admiral |
11,084,941 |
2,500 |
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Prime MM(30) |
54,084,941 |
2,500 |
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Federal MM(33) |
6,906,596 |
2,500 |
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Treasury MoneyMkt.(SO) |
4,944,621 |
2,500 |
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STAR Fund |
|
|
|
STAR Portfolio(56) |
8,132,605 |
2,500 |
|
STAR-lncome(723) |
809,587 |
1,000 |
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STAR-ConservGr(724) |
2,012,474 |
1,700 |
|
STAR-ModGrow(914) |
4,227,708 |
2,500 |
|
STAR-Growth(l22) |
3,714,942 |
2,300 |
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Capital Value Fund |
215,826 |
600 |
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Xxxxxx Growth |
3,020,973 |
2,100 |
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PRIMECAP(59) |
15,519,662 |
2,500 |
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Strategic Equity |
932,368 |
1,000 |
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Growth & Income(93) |
5,568,438 |
2,500 |
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Selected ValuePort(934) |
1,117,754 |
1,000 |
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U.S. Growth(23) |
6,543,507 |
2,500 |
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International Growth(81) |
6,050,603 |
2,500 |
|
Wellesley(27) |
8,388,279 |
2,500 |
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Specialized Portfolios |
|
|
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Energy(51) |
1,364,839 |
1,250 |
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Gold(53) |
479,497 |
750 |
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Health Care(52) |
15,790,362 |
2,500 |
|
RElT Index Port(123) |
2,057,306 |
1,700 |
|
Utilities(57) |
586,674 |
900 |
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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 |
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GNMA(36) |
27,170,815 |
2,500 |
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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 |
|
|
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Growth and Inc.(lOl) |
1,833,919 |
1,500 |
|
Cap,Apprec.(l02) |
2,153,042 |
1,700 |
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Balanced(l03) |
416,857 |
750 |
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International |
397,406 |
750 |
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Tax-Mgd. Small Cap |
662,348 |
900 |
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Cap. Opportunity(l11) |
4,206,309 |
2,500 |
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Global Asset(l15) |
244,792 |
600 |
|
lntl Value Fund |
1,155,007 |
1,250 |
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Municipal Bond Fund |
|
|
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Money Market(45) |
11,114,502 |
2,500 |
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Short Term(41) |
3,610,122 |
2,300 |
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Intermediate Term(42) |
11,687,337 |
2,500 |
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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 |
|
Xxxxx XX 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 |
