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

AGREEMENT

     Made as of this 22nd day of August, 2012, by and among VANGUARD ADMIRAL FUNDS, VANGUARD BOND INDEX FUNDS, VANGUARD CALIFORNIA TAX-FREE FUNDS, VANGUARD CHARLOTTE 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.

(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.

A-2

 

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 CHARLOTTE 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 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

  /s/ Heidi Stam
By:  
  Heidi Stam, Secretary
 
  /s/ Natalie Bej
Attest:  
  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.  
 
 
  /s/ Michael L. Kimmel
By:  
  Michael L. Kimmel, Secretary
 
 
 
Attest: /s/ Caroline Cosby
  Caroline Cosby, Assistant Secretary

 

VANGUARD MARKETING CORPORATION
 
 
By: /s/ Michael L. Kimmel
  Michael L. Kimmel, Secretary
 
 
 
Attest: /s/ Caroline Cosby
  Caroline Cosby, Assistant Secretary

 

A-5

 

EXHIBIT A

Rule 17g-1
Minimum Bond Requirements

As of 5/31/2014

 

    Bond
Fund/Portfolio Name Net Assets Requirement
 
 
Vanguard Admiral Funds    
  Vanguard Admiral Treasury Money Market Fund 10,636,752,547 2,500,000
  Vanguard S&P 500 Growth Index Fund 268,437,138 750,000
  Vanguard S&P 500 Value Index Fund 179,525,153 600,000
  Vanguard S&P Mid-Cap 400 Growth Index Fund 356,586,249 750,000
  Vanguard S&P Mid-Cap 400 Index Fund 815,028,501 1,000,000
  Vanguard S&P Mid-Cap 400 Value Index Fund 174,841,168 600,000
  Vanguard S&P Small-Cap 600 Growth Index Fund 58,881,089 400,000
  Vanguard S&P Small-Cap 600 Index Fund 320,609,104 750,000
  Vanguard S&P Small-Cap 600 Value Index Fund 76,805,964 450,000
Vanguard Bond Index Funds    
  Vanguard Inflation-Protected Securities Fund 26,299,049,658 2,500,000
  Vanguard Intermediate-Term Bond Index Fund 15,048,217,757 2,500,000
  Vanguard Long-Term Bond Index Fund 6,723,905,603 2,500,000
  Vanguard Short-Term Bond Index Fund 36,146,767,852 2,500,000
  Vanguard Total Bond Market Index Fund 116,386,410,813 2,500,000
  Vanguard Total Bond Market II Index Fund 79,717,009,459 2,500,000
Vanguard CMT Funds    
  Vanguard Market Liquidity Fund 40,715,788,056 2,500,000
  Vanguard Municipal Cash Management Fund 4,168,495,807 2,500,000
Vanguard California Tax-Free Funds    
  Vanguard California Intermediate-Term Tax-Exempt Fund 7,760,450,391 2,500,000
  Vanguard California Long-Term Tax-Exempt Fund 2,912,104,176 1,900,000
  Vanguard California Tax-Exempt Money Market Fund 3,639,357,803 2,300,000
Vanguard Charlotte Funds    
  Vanguard Total International Bond Index Fund 24,314,241,249 2,500,000

 

A-6

 

Vanguard Chester Funds    
  Vanguard PRIMECAP Fund 42,457,676,509 2,500,000
  Vanguard Target Retirement Income Fund 11,038,804,198 2,500,000
  Vanguard Target Retirement 2010 Fund 6,977,288,687 2,500,000
  Vanguard Target Retirement 2015 Fund 21,706,056,282 2,500,000
  Vanguard Target Retirement 2020 Fund 26,572,269,886 2,500,000
  Vanguard Target Retirement 2025 Fund 30,484,942,888 2,500,000
  Vanguard Target Retirement 2030 Fund 22,085,175,298 2,500,000
  Vanguard Target Retirement 2035 Fund 23,024,073,812 2,500,000
  Vanguard Target Retirement 2040 Fund 15,207,278,961 2,500,000
  Vanguard Target Retirement 2045 Fund 14,017,275,634 2,500,000
  Vanguard Target Retirement 2050 Fund 7,015,442,918 2,500,000
  Vanguard Target Retirement 2055 Fund 1,481,959,592 1,250,000
  Vanguard Target Retirement 2060 Fund 401,960,759 750,000
Vanguard Convertible Securities Fund 2,177,454,808 1,700,000
Vanguard Explorer Fund 12,399,873,941 2,500,000
Vanguard Fenway Funds    
  Vanguard Equity Income Fund 17,188,141,022 2,500,000
  Vanguard PRIMECAP Core Fund 6,590,641,072 2,500,000
Vanguard Fixed Income Securities Funds    
  Vanguard GNMA Fund 26,341,154,345 2,500,000
  Vanguard High-Yield Corporate Fund 17,239,393,074 2,500,000
  Vanguard Intermediate-Term Investment-Grade Fund 17,548,601,181 2,500,000
  Vanguard Intermediate-Term Treasury Fund 5,100,380,145 2,500,000
  Vanguard Long-Term Investment-Grade Fund 15,271,501,373 2,500,000
  Vanguard Long-Term Treasury Fund 2,829,072,612 1,900,000
  Vanguard Short-Term Federal Fund 5,227,961,797 2,500,000
  Vanguard Short-Term Investment-Grade Fund 49,172,156,952 2,500,000
  Vanguard Short-Term Treasury Fund 6,620,701,081 2,500,000
Vanguard Horizon Funds    
  Vanguard Capital Opportunity Fund 12,345,566,209 2,500,000
  Vanguard Global Equity Fund 4,636,666,020 2,500,000
  Vanguard Strategic Equity Fund 5,225,473,616 2,500,000
  Vanguard Strategic Small-Cap Equity Fund 510,187,149 900,000
Vanguard Index Funds    
  Vanguard 500 Index Fund 175,979,534,639 2,500,000
  Vanguard Extended Market Index Fund 37,939,762,729 2,500,000
  Vanguard Growth Index Fund 39,483,093,391 2,500,000
  Vanguard Large-Cap Index Fund 8,817,259,676 2,500,000
  Vanguard Mid-Cap Growth Index Fund 4,543,938,718 2,500,000
  Vanguard Mid-Cap Index Fund 50,869,076,413 2,500,000
  Vanguard Mid-Cap Value Index Fund 5,677,936,200 2,500,000
  Vanguard Small-Cap Growth Index Fund 15,049,628,050 2,500,000
  Vanguard Small-Cap Index Fund 46,696,263,537 2,500,000

 

A-7

 

  Vanguard Small-Cap Value Index Fund 13,319,982,050 2,500,000
  Vanguard Total Stock Market Index Fund 338,711,214,927 2,500,000
  Vanguard Value Index Fund 31,554,030,105 2,500,000
Vanguard Institutional Index Funds    
  Vanguard Institutional Index Fund 172,633,176,550 2,500,000
  Vanguard Institutional Total Stock Market Index Fund 38,374,627,334 2,500,000
Vanguard International Equity Index Funds    
  Vanguard Emerging Markets Stock Index Fund 62,115,657,924 2,500,000
  Vanguard European Stock Index Fund 23,837,845,701 2,500,000
  Vanguard FTSE All-World Ex-US Index Fund 22,415,121,817 2,500,000
  Vanguard FTSE All-World Ex-US Small-Cap Index Fund 2,467,152,429 1,700,000
  Vanguard Global ex-U.S. Real Estate Index Fund 1,841,907,109 1,500,000
  Vanguard Pacific Stock Index Fund 5,403,299,889 2,500,000
  Vanguard Total World Stock Index Fund 5,270,228,739 2,500,000
Vanguard Malvern Funds    
  Vanguard Capital Value Fund 1,863,041,866 1,500,000
  Vanguard U.S. Value Fund 1,043,682,697 1,250,000
  Vanguard Short-Term Inflation-Protected Securities Index Fund 9,135,858,525 2,500,000
Vanguard Massachusetts Tax-Exempt Funds    
  Vanguard Massachusetts Tax-Exempt Fund 1,087,895,573 1,250,000
Vanguard Money Market Reserves    
  Vanguard Federal Money Market Fund 3,188,026,824 2,100,000
  Vanguard Prime Money Market Fund 129,688,646,247 2,500,000
Vanguard Montgomery Funds    
  Vanguard Market Neutral Fund 230,465,822 600,000
Vanguard Morgan Growth Fund 10,788,516,504 2,500,000
Vanguard Municipal Bond Funds    
  Vanguard High-Yield Tax-Exempt Fund 7,556,549,823 2,500,000
  Vanguard Intermediate-Term Tax-Exempt Fund 36,988,647,616 2,500,000
  Vanguard Limited-Term Tax-Exempt Fund 18,766,494,825 2,500,000
  Vanguard Long-Term Tax-Exempt Fund 8,154,524,150 2,500,000
  Vanguard Short-Term Tax-Exempt Fund 12,693,124,533 2,500,000
  Vanguard Tax-Exempt Money Market Fund 17,811,188,435 2,500,000
Vanguard New Jersey Tax-Free Funds    
  Vanguard New Jersey Long-Term Tax-Exempt Fund 1,976,329,420 1,500,000
  Vanguard New Jersey Tax-Exempt Money Market Fund 1,559,558,136 1,500,000
Vanguard New York Tax-Free Funds    
  Vanguard New York Long-Term Tax-Exempt Fund 3,356,597,608 2,100,000
  Vanguard New York Tax-Exempt Money Market Fund 2,377,565,629 1,700,000
Vanguard Ohio Tax-Free Funds    
  Vanguard Ohio Long-Term Tax-Exempt Fund 929,954,527 1,000,000
  Vanguard Ohio Tax- Exempt Money Market Fund 576,598,502 900,000
Vanguard Pennsylvania Tax-Free Funds    
  Vanguard Pennsylvania Long-Term Tax-Exempt Fund 3,019,406,107 2,100,000
  Vanguard Pennsylvania Tax- Exempt Money Market Fund 2,329,596,899 1,700,000

 

A-8

 

Vanguard Quantitative Funds    
  Vanguard Growth and Income Fund 5,719,339,941 2,500,000
  Vanguard Structured Broad Market Fund 565,219,494 900,000
  Vanguard Structured Large-Cap Equity Fund 770,346,267 1,000,000
Vanguard Scottsdale Funds    
  Vanguard Explorer Value Fund 280,334,093 750,000
  Vanguard Intermediate-Term Corporate Bond Index Fund 4,206,911,026 2,500,000
  Vanguard Intermediate-Term Government Bond Index Fund 381,753,465 750,000
  Vanguard Long-Term Corporate Bond Index Fund 1,097,735,431 1,250,000
  Vanguard Long-Term Government Bond Index Fund 193,942,407 600,000
  Vanguard Mortgage-Backed Securities Index Fund 829,002,055 1,000,000
  Vanguard Russell 1000 Growth Index Fund 1,572,000,161 1,500,000
  Vanguard Russell 1000 Index Fund 1,235,678,155 1,250,000
  Vanguard Russell 1000 Value Index Fund 1,371,125,608 1,250,000
  Vanguard Russell 2000 Growth Index Fund 263,223,875 600,000
  Vanguard Russell 2000 Index Fund 676,117,572 900,000
  Vanguard Russell 2000 Value Index Fund 147,467,466 525,000
  Vanguard Russell 3000 Index Fund 628,024,262 900,000
  Vanguard Short-Term Corporate Bond Index Fund 9,225,780,723 2,500,000
  Vanguard Short-Term Government Bond Index Fund 550,843,579 900,000
Vanguard Specialized Funds    
  Vanguard Dividend Appreciation Index Fund 23,663,846,381 2,500,000
  Vanguard Dividend Growth Fund 21,071,969,247 2,500,000
  Vanguard Energy Fund 13,429,488,783 2,500,000
  Vanguard Health Care Fund 37,696,252,690 2,500,000
  Vanguard Precious Metals and Mining Fund 2,496,913,731 1,700,000
  Vanguard REIT Index Fund 42,892,516,821 2,500,000
Vanguard STAR Funds    
  Vanguard LifeStrategy Conservative Growth Fund 6,914,715,162 2,500,000
  Vanguard LifeStrategy Growth Fund 10,270,839,020 2,500,000
  Vanguard LifeStrategy Income Fund 2,921,578,867 1,900,000
  Vanguard LifeStrategy Moderate Growth Fund 11,421,085,689 2,500,000
  Vanguard STAR Fund 18,405,053,713 2,500,000
  Vanguard Total International Stock Index Fund 126,364,123,383 2,500,000
Vanguard Tax-Managed Funds    
  Vanguard Developed Markets Index Fund 44,642,686,497 2,500,000
  Vanguard Tax-Managed Balanced Fund 1,617,358,246 1,500,000
  Vanguard Tax-Managed Capital Appreciation Fund 5,833,480,895 2,500,000
  Vanguard Tax-Managed Small-Cap Fund 3,385,676,306 2,100,000

 

A-9

 

Vanguard Trustees' Equity Fund    
  Vanguard Diversified Equity Fund 1,501,459,970 1,500,000
  Vanguard International Value Fund 8,558,794,953 2,500,000
  Vanguard Emerging Markets Select Stock Index Fund 282,658,915 750,000
Vanguard Valley Forge Funds    
  Vanguard Balanced Index Fund 22,644,986,112 2,500,000
  Vanguard Managed Payout Fund 1,512,431,741 1,500,000
Vanguard Variable Insurance Fund    
  Vanguard Balanced Portfolio 2,203,759,801 1,700,000
  Vanguard Capital Growth Portfolio 694,525,556 900,000
  Vanguard Conservative Allocation Portfolio 125,559,388 525,000
  Vanguard Diversified Value Portfolio 1,202,633,137 1,250,000
  Vanguard Equity Income Portfolio 944,393,221 1,000,000
  Vanguard Equity Index Portfolio 3,319,640,981 2,100,000
  Vanguard Growth Portfolio 414,252,926 750,000
  Vanguard High Yield Bond Portfolio 560,503,060 900,000
  Vanguard International Portfolio 2,297,968,742 1,700,000
  Vanguard Mid-Cap Index Portfolio 1,262,209,338 1,250,000
  Vanguard Moderate Allocation Portfolio 160,450,806 600,000
  Vanguard Money Market Portfolio 1,262,783,991 1,250,000
  Vanguard REIT Index Portfolio 829,341,787 1,000,000
  Vanguard Short-Term Investment-Grade Portfolio 1,191,834,590 1,250,000
  Vanguard Small Company Growth Portfolio 1,298,935,278 1,250,000
  Vanguard Total Bond Market Index Portfolio 2,400,676,536 1,700,000
  Vanguard Total Stock Market Index Portfolio 1,277,836,793 1,250,000
Vanguard Wellesley Income Fund 38,058,648,584 2,500,000
Vanguard Wellington Fund 85,290,335,347 2,500,000
Vanguard Whitehall Funds    
  Vanguard High Dividend Yield Index Fund 11,768,962,222 2,500,000
  Vanguard International Explorer Fund 2,729,454,281 1,900,000
  Vanguard Global Minimum Volatility Fund 388,487,267 750,000
  Vanguard Mid-Cap Growth Fund 3,150,022,014 2,100,000
  Vanguard Selected Value Fund 9,311,325,952 2,500,000
  Vanguard Emerging Markets Government Bond Index Fund 108,579,039 525,000
Vanguard Windsor Funds    
  Vanguard Windsor Fund 17,834,622,141 2,500,000
  Vanguard Windsor II Fund 49,600,675,272 2,500,000

 

A-10

 

Vanguard World Fund    
  Vanguard Consumer Discretionary Index Fund 1,256,903,758 1,250,000
  Vanguard Consumer Staples Index Fund 2,038,842,793 1,700,000
  Vanguard Energy Index Fund 3,662,086,792 2,300,000
  Vanguard Extended Duration Treasury Index Fund 1,014,924,406 1,250,000
  Vanguard FTSE Social Index Fund 2,213,375,172 1,700,000
  Vanguard Financials Index Fund 1,113,399,332 1,250,000
  Vanguard Health Care Index Fund 3,387,340,937 2,100,000
  Vanguard Industrials Index Fund 1,802,721,968 1,500,000
  Vanguard Information Technology Index Fund 5,541,289,247 2,500,000
  Vanguard International Growth Fund 23,220,753,769 2,500,000
  Vanguard Materials Index Fund 1,438,870,950 1,250,000
  Vanguard Mega Cap Growth Index Fund 1,357,212,422 1,250,000
  Vanguard Mega Cap Index Fund 1,038,132,299 1,250,000
  Vanguard Mega Cap Value Index Fund 1,002,209,445 1,250,000
  Vanguard Telecommunication Services Index Fund 744,040,119 900,000
  Vanguard U.S. Growth Fund 5,724,948,464 2,500,000
  Vanguard Utilities Index Fund 2,029,050,668 1,700,000
 
TOTALS 2,919,254,688,846 334,725,000

 

A-11