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 XXXXXX GROWTH FUND, VANGUARD WELLESLEY INCOME FUND, VANGUARD FIXED INCOME SECURITIES FUNDS, VANGUARD MONEY MARKET FUND, VANGUARD MUNICIPAL BOND FUNDS, VANGUARD STAR FUND, VANGUARD XXXXXXX 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:
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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.
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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:
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(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.
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(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.
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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.
3
IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed as of the date aforesaid. .
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VANGUARD ADMIRAL FUNDS |
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VANGUARD BALANCED INDEX FLND |
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VANGUARD BOND INDEX FLJNDS |
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VANGUARD CALIFORNIA TAX-FREE FUNDS |
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VANGUARD CONVERTIBLE SECURITIES FUND |
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VANGUARD XXXXXXX FUNDS |
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VANGUARD CMT FUNDS |
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VANGUARD EXPLORER FUND |
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VANGUARD FENWAY FUNDS |
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VANGUARD FIXED INCOME SECURITIES FUNDS |
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VANGUARD FLORIDA TAX-FREE FUNDS |
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VANGUARD HORIZON FUNDS |
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VANGUARD INDEX FUNDS |
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VANGUARD INSTITUTIONAL INDEX FUNDS |
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VANGUARD INTERNATIONAL EQUITY INDEX FUNDS |
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VANGUARD MALVERN FUNDS |
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VANGUARD MASSACHUSETTS TAX-EXEMPT FUNDS |
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VANGUARD MONEY MARKET RESERVES |
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VANGUARD XXXXXX GROWTH FUND |
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VANGUARD NEW JERSEY TAX-FREE FUNDS |
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VANGUARD NEW YORK TAX-FREE FUNDS |
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VANGUARD OHIO TAX-FREE FUNDS |
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VANGUARD PENNSYLVANIA TAX-FREE FUNDS |
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VANGUARD QUANTITATIVE FUNDS |
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VANGUARD SPECIALIZED FUNDS |
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VANGUARD STAR FUNDS |
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VANGUARD TAX-MANAGED FUNDS |
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VANGUARD TREASURY FUND |
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VANGUARD TRUSTEES EQUITY FUNDS |
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VANGUARD VARIABLE INSURANCE FUND |
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VANGUARD WELLESLEY INCOME FUND |
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VANGUARD WELLINGTON FUND |
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VANGUARD WHITEHALL FUNDS |
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VANGUARD WINDSOR FUNDS |
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VANGUARD WORLD FUNDS |
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BY |
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Xxxxx Xxxx, Secretary |
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Attest: |
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Xxxxxxxxxxx X. Xxxxxxxx, |
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Assistant Secretary |
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THE VANGUARD GROUP, INC.
On behalf of itself and its affiliates and subsidiaries
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BY |
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Xxxxx Xxxx, Managing Director and |
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Secretary |
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Attest: |
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Xxx Xxxxxx, |
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Assistant Secretary |
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EXHIBIT A
Rule 17g-1
Minimum Bond Requirements
As of 12/31/2005
(000 omitted)
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Bond |
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Fund/Portfolio Name |
Net Assets |
Requirement |
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Vanguard Admiral Funds |
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| |
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|
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 |
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Short-Term Bond Index Fund |
5,276,480 |
2,500 |
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Total Bond Market Index Fund |
33,497,179 |
2,500 |
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Vanguard California Tax-Free Funds |
|
| |
|
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CA Intermediate-Term Tax-Exempt Fund |
2,867,147 |
1,900 |
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|
CA Long- Term Tax-Exempt Fund |
2,290,423 |
1,700 |
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|
CA Tax-Ex Money Market Fund |
6,306,795 |
2,500 |
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Vanguard Convertible Securities Fund |
558,163 |
900 | |
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Vanguard Xxxxxxx Funds |
|
| |
|
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PRIMECAP Fund |
28,542,963 |
2,500 |
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Target Retirement Income Fund |
733,697 |
900 |
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Target Retirement 2005 Fund |
759,899 |
1,000 |
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Target Retirement 2015 Fund |
2,293,312 |
1,700 |
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Target Retirement 2025 Fund |
2,528,594 |
1,900 |
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Target Retirement 2035 Fund |
1,401,580 |
1,250 |
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Target Retirement 2045 Fund |
626,367 |
000 |
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Xxxxxxxx XXX Xxxxx |
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| |
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Xxxxxx Liquidity Fund |
17,470,782 |
2,500 |
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Municipal Cash Management Fund |
948,452 |
1,000 |
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Yorktown Liquidity Fund |
319,436 |
750 |
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Vanguard Explorer Fund |
11,032,473 |
2,500 | |
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Vanguard Fenway Funds |
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| |
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Equity Income Fund |
4,289,804 |
2,500 |
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Growth Equity Fund |
749,479 |
900 |
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PRIMECAP Core Fund |
1,220,054 |
1,250 |
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Vanguard Fixed Income Securities Funds |
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| |
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GNMA Fund |
24,135,507 |
2,500 |
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High-Yield Corporate Fund |
9,009,852 |
2,500 |
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Inflation-Protected Securities Fund |
9,938,115 |
2,500 |
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Intermediate-Term Investment-Grade Fund |
4,992,430 |
2,500 |
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Intermediate-Term Treasury Fund |
3,855,828 |
2,300 |
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Long-Term Investment-Grade Fund |
5,659,991 |
2,500 |
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Long-Term Treasury Fund |
2,223,953 |
1,700 |
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Short-Term Federal Fund |
2,712,893 |
1,900 |
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Short-Term Investment-Grade Fund |
17,603,720 |
2,500 |
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Short-Term Treasury Fund |
3,332,519 |
2,100 |
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Vanguard Florida Tax-Free Funds |
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Florida Long-Term Tax-Exempt Fund |
1,203,064 |
1,250 |
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Vanguard Horizon Funds |
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Capital Opportunity Fund |
8,408,032 |
2,500 |
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Global Equity Fund |
2,676,040 |
1,900 |
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Strategic Equity Fund |
5,614,117 |
2,500 |
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Vanguard Index Funds |
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500 Index Fund |
107,403,341 |
2,500 |
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Extended Market Index Fund |
10,549,264 |
2,500 |
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Growth Index Fund |
10,609,084 |
2,500 |
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Large-Cap Index Fund |
426,206 |
750 |
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Mid-Cap Index Fund |
13,199,994 |
2,500 |
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Small-Cap Growth Index Fund |
2,004,359 |
1,700 |
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Small-Cap Index Fund |
10,638,085 |
2,500 |
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Small-Cap Value Index Fund |
3,881,108 |
2,300 |
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Total Stock Market Index Fund |
65,419,573 |
2,500 |
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Value Index Fund |
7,079,433 |
2,500 |
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Vanguard Institutional Index Funds |
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Institutional Index Fund |
56,249,308 |
2,500 |
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Institutional Total Bond Market Index Fund |
2,860,657 |
1,900 |
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Inst. Total Stock Market Index Fund |
3,716,276 |
2,300 |
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Vanguard International Equity Index |
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Emerging Markets Stock Index Fund |
7,102,464 |
2,500 |
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European Stock Index Fund |
15,256,193 |
2,500 |
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Pacific Stock Index Fund |
8,755,933 |
2,500 |
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Vanguard Malvern Funds |
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Asset Allocation Fund |
11,023,592 |
2,500 |
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Capital Value Fund |
427,125 |
750 |
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U.S. Value Fund |
1,013,183 |
1,250 |
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Vanguard Massachusetts Tax-Exempt Funds |
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Massachusetts Tax-Exempt Fund |
505,286 |
900 |
A-2
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Vanguard Money Market Reserves |
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Federal Money Market Fund |
5,754,106 |
2,500 |
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Prime Money Market Fund |
55,703,227 |
2,500 |
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Vanguard Xxxxxx Growth Fund |
6,098,392 |
2,500 | |
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High-Yield Tax-Exempt Fund |
4,968,919 |
2,500 |
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Insured Long-Term Tax-Exempt Fund |
3,054,010 |
2,100 |
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Intermediate-Term Tax-Exempt Fund |
12,716,555 |
2,500 |
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Limited-Term Tax-Exempt Fund |
6,523,339 |
2,500 |
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Long-Term Tax-Exempt Fund |
2,098,371 |
1,700 |
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Short-Term Tax-Exempt Fund |
4,248,961 |
2,500 |
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Tax-Exempt Money Market Fund |
16,939,371 |
2,500 |
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Vanguard New Jersey Tax-Free |
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NJ Long-Term Tax-Exempt Fund |
1,612,393 |
1,500 |
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NJ Tax-Exempt Money Market Fund |
2,504,850 |
1,900 |
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Vanguard New York Tax-Free |
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NY Long-Term Tax-Exempt Fund |
2,275,035 |
1,700 |
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NY Tax-Exempt Money Market Fund |
3,273,668 |
2,100 |
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Vanguard Ohio Tax-Free |
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OH Long-Term Tax-Exempt Fund |
528,888 |
900 |
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OH Tax-Exempt Money Market Fund |
942,939 |
1,000 |
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Vanguard Pennsylvania Tax-Free |
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PA Long-Term Tax-Exempt Fund |
2,297,919 |
1,700 |
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PA Tax-Exempt Money Market Fund |
3,008,948 |
2,100 |
A-3
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Vanguard Quantitative Funds |
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Growth and Income Fund |
7,356,718 |
2,500 |
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Vanguard Specialized Funds |
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Energy Fund |
8,244,121 |
2,500 |
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Health Care Fund |
25,593,583 |
2,500 |
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Precious Metals and Mining Fund |
2,485,010 |
1,700 |
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RElT Index Fund |
7,197,050 |
2,500 |
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Dividend Growth Fund |
983,561 |
1,000 |
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Vanguard STAR Funds |
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Developed Markets Index Fund |
1,780,371 |
1,500 |
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Institutional Developed Markets Index Fund |
1,874,495 |
1,500 |
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LifeStrategy Conservative Growth Fund |
4,324,197 |
2,500 |
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LifeStrategy Growth Fund |
7,001,478 |
2,500 |
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LifeStrategy Income Fund |
1,707,890 |
1,500 |
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LifeStrategy Moderate Growth Fund |
8,022,769 |
2,500 |
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STAR Fund |
12,168,148 |
2,500 |
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Total International Stock Index Fund |
12,696,004 |
2,500 |
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Vanguard Tax-Managed Funds |
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Tax-Managed Balanced Fund |
606,459 |
900 |
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Tax-Managed Capital Appreciation Fund |
3,420,245 |
2,100 |
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Tax-Managed Growth and Income Fund |
2,683,971 |
1,900 |
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Tax-Managed International Fund |
1,312,459 |
1,250 |
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Tax-Managed Small-Cap Fund |
1,551,193 |
1,500 |
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Vanguard Treasury Fund |
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| |
|
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Vanguard Treasury Money Market Fund |
4,832,977 |
2,500 |
|
Vanguard Trustees’ Equity Fund |
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| |
|
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Diversified Equity Fund |
55,027 |
400 |
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International Value Fund |
4,127,009 |
2,500 |
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Vanguard Variable Insurance Fund |
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| |
|
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Balanced Portfolio |
1,197,024 |
1,250 |
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Capital Growth Portfolio |
190,050 |
600 |
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Diversified Value Portfolio |
658,942 |
900 |
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Equity Income Portfolio |
482,538 |
750 |
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Equity Index Portfolio |
1,813,464 |
1,500 |
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Growth Portfolio |
385,397 |
750 |
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High-Yield Bond Portfolio |
246,777 |
600 |
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International Portfolio |
840,006 |
1,000 |
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Mid-Cap Index Portfolio |
676,713 |
900 |
|
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Money Market Portfolio |
939,112 |
1,000 |
|
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RElT Index Portfolio |
453,321 |
750 |
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Short-Term Investment-Grade Portfolio |
372,983 |
750 |
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Small Company Growth Portfolio |
744,123 |
900 |
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Total Bond Market Index Portfolio |
773,830 |
1,000 |
|
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Total Stock Market Index Portfolio |
317,973 |
750 |
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Vanguard Wellesley Fund |
11,893,427 |
2,500 | |
|
Vanguard Wellington Fund |
38,949,473 |
2,500 | |
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Vanguard Whitehall Funds |
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International Explorer Fund |
2,282,103 |
1,700 |
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Mid-Cap Growth Fund |
619,471 |
900 |
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Selected Value Fund |
3,933,493 |
2,300 |
A-4
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Vanguard Windsor Funds |
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Windsor Fund |
21,277,294 |
2,500 |
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Windsor II Fund |
41,839,039 |
2,500 |
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Vanguard World Fund |
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Consumer Discretionary Index Fund |
37,033 |
350 | |
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Consumer Staples Index Fund |
93,451 |
450 | |
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Energy Index Fund |
274,255 |
750 | |
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FTSE Social Index Fund |
418,758 |
750 | |
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Financials Index Fund |
65,213 |
400 | |
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Health Care Index Fund |
336,334 |
750 | |
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Industrials Index Fund |
28,695 |
300 | |
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Information Technology Index Fund |
109,102 |
525 | |
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International Growth Fund |
11,495,389 |
2,500 | |
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Materials Index Fund |
62,246 |
400 | |
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Telecommunication Services Index Fund |
22,802 |
250 | |
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U.S. Growth Fund |
6,254,586 |
2,500 | |
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Utilities Index Fund |
146,921 |
525 | |
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TOTALS |
$999,288,760 |
$233,750 |
A-5
