EX-3 4 agreementjointinsuredbondcov.htm agreementjointinsuredbondcov.htm - Generated by SEC Publisher for SEC Filing

 

AGREEMENT

            Made as of this 28th day of July, 2010, by and among VANGUARD ADMIRAL FUNDS, VANGUARD BOND INDEX FUNDS, VANGUARD CALIFORNIA TAX-FREE FUNDS, VANGUARD CHESTER FUNDS, VANGUARD CMT FUNDS, VANGUARD CONVERTIBLE SECURITIES FUND, 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 MONTGOMERY FUNDS, 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 SCOTTSDALE FUNDS, VANGUARD SPECIALIZED FUNDS, VANGUARD STAR FUNDS, VANGUARD TAX-MANAGED FUNDS, VANGUARD TRUSTEES’ EQUITY FUND, VANGUARD VALLEY FORGE FUNDS, VANGUARD VARIABLE INSURANCE FUNDS, VANGUARD WELLESLEY INCOME FUND, VANGUARD WELLINGTON FUND, VANGUARD WHITEHALL FUNDS, VANGUARD WINDSOR FUNDS, AND VANGUARD WORLD FUND (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 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.

A-2

 

 

                                    (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 REQUIRED

                        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.

 

           

A-3

 

 

IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed on their behalf by their duly authorized officers as of the date first written above.

           

            VANGUARD ADMIRAL FUNDS

            VANGUARD BOND INDEX FUNDS

            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 MONTGOMERY FUNDS

            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 SCOTTSDALE FUNDS

            VANGUARD SPECIALIZED FUNDS

            VANGUARD STAR FUNDS

            VANGUARD TAX-MANAGED FUNDS

            VANGUARD TRUSTEES’ EQUITY FUNDS

            VANGUARD VARIABLE INSURANCE FUNDS

            VANGUARD VALLEY FORGE FUNDS

            VANGUARD WELLESLEY INCOME FUND

            VANGUARD WELLINGTON FUND

            VANGUARD WHITEHALL FUNDS

            VANGUARD WINDSOR FUNDS

            VANGUARD WORLD FUND

                       

By:               /s/ Heidi Stam

                     ______________________________                                                  

                                                                              Heidi Stam, Secretary

 

Attest:          /s/ Natalie Bej

                      ­­­­­­­­­­­­­­­­_______________________________

                                                                               Natalie Bej, Assistant Secretary

A-4

 

 

 

 

THE VANGUARD GROUP, INC.

           

 

 

By:               /s/ Heidi Stam

                     ______________________________                                                  

                                                                              Heidi Stam, Managing Director, General Counsel, and Secretary

 

 

 

Attest:          /s/ Michael L. Kimmel

                      ­­­­­­­­­­­­­­­­_______________________________

                                                                              Michael L. Kimmel, Assistant Secretary

 

 

 

 

VANGUARD ADVISERS, INC.

           

 

 

By:               /s/ Michael L. Kimmel

                     ______________________________                                                  

                                                                              Michael L. Kimmel, Secretary

 

 

 

Attest:          /s/ Deborah McCracken

                      ­­­­­­­­­­­­­­­­_______________________________

                                                                              Deborah McCracken, Assistant Secretary

 

 

 

 

VANGUARD MARKETING CORPORATION

           

 

 

By:               /s/ Michael L. Kimmel

                     ______________________________                                                  

                                                                              Michael L. Kimmel, Secretary

 

 

Attest:          /s/ Deborah McCracken

                      ­­­­­­­­­­­­­­­­_______________________________

                                                                              Deborah McCracken, Assistant Secretary

A-5

 

 

 

 

 

 

 

 

 

EXHIBIT A

 

Rule 17g-1

Minimum Bond Requirements

 

As of 5/31/2011

 

 

 

 

 

 

Fund/Portfolio Name

Net Assets

Bond Requirement

 

 

 

 

 

Vanguard Admiral Funds

 

 

    Admiral Treasury Money Market Fund

15,968,037,900

2,500,000

 

 

    S&P 500 Growth Index Fund

47,381,253

350,000

 

 

    S&P 500 Value Index Fund

21,308,209

250,000

 

 

    S&P Mid-Cap 400 Growth Index Fund

57,384,390

400,000

 

 

    S&P Mid-Cap 400 Index Fund

46,879,122

350,000

 

 

    S&P Mid-Cap 400 Value Index Fund

39,148,322

350,000

 

 

    S&P Small-Cap 600 Growth Index Fund

17,546,245

225,000

 

 

    S&P Small-Cap 600 Index Fund

95,465,014

450,000

 

 

    S&P Small-Cap 600 Value Index Fund

16,062,558

225,000

 

 

Vanguard Bond Index Funds

 

 

    Inflation-Protected Securities Fund

34,748,605,462

2,500,000

 

 

    Intermediate-Term Bond Index Fund

11,989,824,717

2,500,000

 

 

    Long-Term Bond Index Fund

4,175,824,802

2,500,000

 

 

    Short-Term Bond Index Fund

21,914,269,735

2,500,000

 

 

    Total Bond Market Index Fund

90,170,275,635

2,500,000

 

 

    Total Bond Market II Index Fund

43,784,908,777

2,500,000

 

 

Vanguard CMT Funds

 

 

    Market Liquidity Fund

33,140,319,634

2,500,000

 

 

    Municipal Cash Management Fund

3,484,420,700

2,100,000

 

 

Vanguard California Tax-Free Funds

 

 

    CA Intermediate-Term Tax-Exempt Fund

5,213,975,346

2,500,000

 

 

    CA Long-Term Tax-Exempt Fund

2,646,092,818

1,900,000

 

 

    CA Tax-Exempt Money Market Fund

4,399,456,222

2,500,000

 

A-6

 

 

 

Vanguard Chester Funds

    PRIMECAP Fund

32,424,651,324

2,500,000

    Target Retirement Income Fund

4,643,157,206

2,500,000

    Target Retirement 2005 Fund

2,282,117,782

1,700,000

    Target Retirement 2010 Fund

5,107,072,728

2,500,000

    Target Retirement 2015 Fund

15,119,828,500

2,500,000

    Target Retirement 2020 Fund

12,253,473,584

2,500,000

    Target Retirement 2025 Fund

17,324,407,867

2,500,000

    Target Retirement 2030 Fund

9,293,124,627

2,500,000

    Target Retirement 2035 Fund

12,158,460,389

2,500,000

    Target Retirement 2040 Fund

5,678,169,013

2,500,000

    Target Retirement 2045 Fund

6,655,555,036

2,500,000

    Target Retirement 2050 Fund

2,345,455,070

1,700,000

    Target Retirement 2055 Fund

94,237,013

450,000

Vanguard Convertible Securities Fund

2,204,110,773

1,700,000

Vanguard Explorer Fund

10,741,075,116

2,500,000

Vanguard Fenway Funds

    Equity Income Fund

5,779,726,533

2,500,000

    Growth Equity Fund

705,755,597

900,000

    PRIMECAP Core Fund

5,416,917,634

2,500,000

Vanguard Fixed Income Securities Funds

    GNMA Fund

35,708,122,432

2,500,000

    High-Yield Corporate Fund

13,837,081,359

2,500,000

    Intermediate-Term Investment-Grade Fund

14,480,613,036

2,500,000

    Intermediate-Term Treasury Fund

6,091,112,266

2,500,000

    Long-Term Investment-Grade Fund

9,964,020,042

2,500,000

    Long-Term Treasury Fund

2,895,724,656

1,900,000

    Short-Term Federal Fund

5,648,034,384

2,500,000

    Short-Term Investment-Grade Fund

38,955,602,958

2,500,000

    Short-Term Treasury Fund

6,380,672,504

2,500,000

Vanguard Florida Tax-Free Funds

    Florida Long-Term Tax-Exempt Fund

882,050,597

1,000,000

Vanguard Horizon Funds

    Capital Opportunity Fund

8,966,619,941

2,500,000

    Global Equity Fund

4,361,049,634

2,500,000

    Strategic Equity Fund

3,743,262,414

2,300,000

    Strategic Small-Cap Equity Fund

305,416,502

750,000

A-7

 

 

 

Vanguard Index Funds

    500 Index Fund

111,207,698,062

2,500,000

    Extended Market Index Fund

20,532,272,943

2,500,000

    Growth Index Fund

21,514,611,133

2,500,000

    Large-Cap Index Fund

5,270,233,819

2,500,000

    Mid-Cap Growth Index Fund

2,557,105,559

1,900,000

    Mid-Cap Index Fund

30,208,367,074

2,500,000

    Mid-Cap Value Index Fund

1,702,054,071

1,250,000

    Small-Cap Growth Index Fund

9,645,690,635

2,500,000

    Small-Cap Index Fund

26,961,031,994

2,500,000

    Small-Cap Value Index Fund

7,613,185,097

2,500,000

    Total Stock Market Index Fund

169,978,956,316

2,500,000

    Value Index Fund

16,031,690,455

2,500,000

Vanguard Institutional Index Funds

    Institutional Index Fund

98,388,265,871

2,500,000

    Institutional Total Stock Market Index Fund

16,831,299,995

2,500,000

Vanguard International Equity Index Funds

    Emerging Markets Stock Index Fund

64,166,048,093

2,500,000

    European Stock Index Fund

8,830,673,479

2,500,000

    FTSE All-World Ex-US Index Fund

14,421,963,195

2,500,000

    FTSE All-World Ex-US Small-Cap Index Fund

1,323,483,546

1,250,000

    Global ex-U.S. Real Estate Index Fund

235,699,394

600,000

    Pacific Stock Index Fund

4,351,078,681

2,500,000

    Total World Stock Index Fund

1,387,225,580

1,250,000

Vanguard Malvern Funds

    Asset Allocation Fund

9,343,272,439

2,500,000

    Capital Value Fund

1,024,641,729

1,250,000

    U.S. Value Fund

565,359,750

900,000

Vanguard Massachusetts Tax-Exempt Funds

    Massachusetts Tax-Exempt Fund

908,743,237

1,000,000

Vanguard Money Market Reserves

    Federal Money Market Fund

5,008,597,616

2,500,000

    Prime Money Market Fund

110,587,935,816

2,500,000

Vanguard Montgomery Funds

    Market Neutral Fund

140,143,462

525,000

Vanguard Morgan Growth Fund

9,578,576,541

2,500,000

Vanguard Municipal Bond Funds

    High-Yield Tax-Exempt Fund

5,920,521,383

2,500,000

    Intermediate-Term Tax-Exempt Fund

29,259,419,127

2,500,000

    Limited-Term Tax-Exempt Fund

14,005,252,092

2,500,000

    Long-Term Tax-Exempt Fund

7,025,773,850

2,500,000

    Short-Term Tax-Exempt Fund

11,392,751,442

2,500,000

    Tax-Exempt Money Market Fund

18,345,775,662

2,500,000

A-8

 

 

 

Vanguard New Jersey Tax-Free Funds

    NJ Long-Term Tax-Exempt Fund

1,872,217,627

1,500,000

    NJ Tax-Exempt Money Market Fund

2,048,040,298

1,700,000

Vanguard New York Tax-Free Funds

    NY Long-Term Tax-Exempt Fund

2,923,185,585

1,900,000

    NY Tax-Exempt Money Market Fund

3,078,905,858

2,100,000

Vanguard Ohio Tax-Free Funds

    OH Long-Term Tax-Exempt Fund

850,804,345

1,000,000

    OH Tax- Exempt Money Market Fund

732,321,045

900,000

Vanguard Pennsylvania Tax-Free Funds

    PA Long-Term Tax-Exempt Fund

2,825,847,615

1,900,000

    PA Tax- Exempt Money Market Fund

2,851,085,072

1,900,000

Vanguard Quantitative Funds

    Growth and Income Fund

4,451,500,875

2,500,000

    Structured Broad Market Fund

354,662,433

750,000

    Structured Large-Cap Equity Fund

454,159,470

750,000

Vanguard Scottsdale Funds

    Explorer Value Fund

134,906,625

525,000

    Intermediate-Term Corporate Bond Index Fund

580,108,565

900,000

    Intermediate-Term Government Bond Index Fund

131,690,836

525,000

    Long-Term Corporate Bond Index Fund

120,734,870

525,000

    Long-Term Government Bond Index Fund

81,762,160

450,000

    Mortgage-Backed Securities Index Fund

68,477,251

400,000

    Russell 1000 Growth Index Fund

151,087,513

600,000

    Russell 1000 Index Fund

95,922,717

450,000

    Russell 1000 Value Index Fund

161,900,116

600,000

    Russell 2000 Growth Index Fund

40,322,748

350,000

    Russell 2000 Index Fund

117,639,599

525,000

    Russell 2000 Value Index Fund

6,409,040

150,000

    Russell 3000 Index Fund

44,108,399

350,000

    Short-Term Corporate Bond Index Fund

1,731,340,304

1,500,000

    Short-Term Government Bond Index Fund

148,937,865

525,000

Vanguard Specialized Funds

    Dividend Appreciation Index Fund

8,218,089,733

2,500,000

    Dividend Growth Fund

5,834,471,614

2,500,000

    Energy Fund

14,516,452,530

2,500,000

    Health Care Fund

22,258,952,647

2,500,000

    Precious Metals and Mining Fund

5,520,673,509

2,500,000

    REIT Index Fund

20,944,728,990

2,500,000

A-9

 

 

 

Vanguard STAR Funds

    Developed Markets Index Fund

12,046,275,088

2,500,000

    LifeStrategy Conservative Growth Fund

6,896,286,686

2,500,000

    LifeStrategy Growth Fund

8,446,663,642

2,500,000

    LifeStrategy Income Fund

2,449,821,736

1,700,000

    LifeStrategy Moderate Growth Fund

8,866,024,931

2,500,000

    STAR Fund

14,770,360,307

2,500,000

    Total International Stock Index Fund

60,474,396,712

2,500,000

Vanguard Tax-Managed Funds

    Tax-Managed Balanced Fund

780,521,009

1,000,000

    Tax-Managed Capital Appreciation Fund

3,983,376,977

2,300,000

    Tax-Managed Growth and Income Fund

2,486,073,643

1,700,000

    Tax-Managed International Fund

8,752,341,071

2,500,000

    Tax-Managed Small-Cap Fund

2,211,345,300

1,700,000

Vanguard Trustees' Equity Fund

    Diversified Equity Fund

1,367,686,212

1,250,000

    International Value Fund

7,732,197,078

2,500,000

Vanguard Valley Forge Funds

    Balanced Index Fund

11,347,090,762

2,500,000

    Managed Payout Growth Focus Fund

70,614,580

400,000

    Managed Payout Growth and Distribution Fund

310,397,474

750,000

    Managed Payout Distribution Focus Fund

441,932,011

750,000

Vanguard Variable Insurance Fund

    Balanced Portfolio

1,507,773,990

1,500,000

    Capital Growth Portfolio

387,150,242

750,000

    Diversified Value Portfolio

831,420,783

1,000,000

    Equity Income Portfolio

535,633,682

900,000

    Equity Index Portfolio

2,455,223,794

1,700,000

    Growth Portfolio

288,140,744

750,000

    High Yield Bond Portfolio

363,305,209

750,000

    International Portfolio

1,896,471,103

1,500,000

    Mid-Cap Index Portfolio

904,404,308

1,000,000

    Money Market Portfolio

1,154,628,556

1,250,000

    REIT Index Portfolio

546,063,576

900,000

    Short-Term Investment-Grade Portfolio

915,218,815

1,000,000

    Small Company Growth Portfolio

992,239,619

1,000,000

    Total Bond Market Index Portfolio

2,149,198,540

1,700,000

    Total Stock Market Index Portfolio

1,031,576,719

1,250,000

Vanguard Wellesley Income Fund

22,246,311,195

2,500,000

Vanguard Wellington Fund

58,423,838,546

2,500,000

A-10

 

 

 

Vanguard Whitehall Funds

    High Dividend Yield Index Fund

1,983,374,587

1,500,000

    International Explorer Fund

2,815,910,605

1,900,000

    Mid-Cap Growth Fund

1,985,510,289

1,500,000

    Selected Value Fund

4,425,099,382

2,500,000

Vanguard Windsor Funds

    Windsor Fund

14,046,572,662

2,500,000

    Windsor II Fund

37,730,349,975

2,500,000

Vanguard World Fund

    Consumer Discretionary Index Fund

399,061,139

750,000

    Consumer Staples Index Fund

795,802,234

1,000,000

    Energy Index Fund

2,335,983,391

1,700,000

    Extended Duration Treasury Index Fund

492,988,095

750,000

    FTSE Social Index Fund

566,296,341

900,000

    Financials Index Fund

738,845,905

900,000

    Health Care Index Fund

886,395,477

1,000,000

    Industrials Index Fund

578,756,249

900,000

    Information Technology Index Fund

1,974,915,045

1,500,000

    International Growth Fund

19,644,986,662

2,500,000

    Materials Index Fund

879,127,678

1,000,000

    Mega Cap 300 Growth Index Fund

624,590,471

900,000

    Mega Cap 300 Index Fund

500,358,905

900,000

    Mega Cap 300 Value Index Fund

506,727,973

900,000

    Telecommunication Services Index Fund

449,910,108

750,000

    U.S. Growth Fund

3,913,165,340

2,300,000

    Utilities Index Fund

955,268,476

1,000,000

Total

1,883,332,713,999

304,750,000

 

A-11