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

#51658  

 

            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.

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                        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.

 

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.

 

           

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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:                ______________________________                                                   

                                                                              Heidi Stam, Secretary

 

 

Attest:           ­­­­­­­­­­­­­­­­_______________________________

                                                                               F. Natalie Bej, Assistant Secretary

 

A-4

 

 

THE VANGUARD GROUP, INC.

           

 

 

By:                ______________________________                                                   

                                                                              Heidi Stam, Managing Director, General Counsel, and Secretary

 

 

 

Attest:           ­­­­­­­­­­­­­­­­_______________________________

                                                                              Michael L. Kimmel, Assistant Secretary

 

 

 

 

VANGUARD ADVISERS, INC.

           

 

 

By:                ______________________________                                                   

                                                                              Michael L. Kimmel, Secretary

 

 

 

Attest:           ­­­­­­­­­­­­­­­­_______________________________

                                                                              Deborah McCracken, Assistant Secretary

 

 

 

 

VANGUARD MARKETING CORPORATION

           

 

 

By:                ______________________________                                                   

                                                                              Michael L. Kimmel, Secretary

 

 

 

Attest:           ­­­­­­­­­­­­­­­­_______________________________

                                                                              Deborah McCracken, Assistant Secretary

 

 

 

 

 

 

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EXHIBIT A

 

Rule 17g-1

Minimum Bond Requirements

 

As of 5/31/2010

 

 

 

 

Fund/Portfolio Name

Net Assets

Bond Requirement

 

 

 

Vanguard Admiral Funds

 

 

    Admiral Treasury Money Market Fund

19,677,302,085

2,500,000

Vanguard Bond Index Funds

 

 

    Inflation-Protected Securities Fund

30,691,943,021

2,500,000

    Intermediate-Term Bond Index Fund

11,064,176,947

2,500,000

    Long-Term Bond Index Fund

3,293,993,349

2,100,000

    Short-Term Bond Index Fund

18,907,545,947

2,500,000

    Total Bond Market Index Fund

80,370,567,694

2,500,000

    Total Bond Market II Index Fund

30,070,516,747

2,500,000

Vanguard CMT Funds

 

 

    Market Liquidity Fund

27,615,026,023

2,500,000

    Municipal Cash Management Fund

3,146,724,942

2,100,000

Vanguard California Tax-Free Funds

 

 

    CA Intermediate-Term Tax-Exempt Fund

5,408,073,547

2,500,000

    CA Long-Term Tax-Exempt Fund

2,978,891,758

1,900,000

    CA Tax-Exempt Money Market Fund

4,895,773,818

2,500,000

Vanguard Chester Funds

 

 

    PRIMECAP Fund

26,976,732,099

2,500,000

    Target Retirement Income Fund

3,168,324,869

2,100,000

    Target Retirement 2005 Fund

2,051,504,596

1,700,000

    Target Retirement 2010 Fund

3,867,654,284

2,300,000

    Target Retirement 2015 Fund

11,178,952,922

2,500,000

    Target Retirement 2020 Fund

7,710,009,056

2,500,000

    Target Retirement 2025 Fund

11,989,274,596

2,500,000

    Target Retirement 2030 Fund

5,501,209,373

2,500,000

    Target Retirement 2035 Fund

8,113,116,753

2,500,000

    Target Retirement 2040 Fund

3,269,804,142

2,100,000

    Target Retirement 2045 Fund

4,320,644,421

2,500,000

    Target Retirement 2050 Fund

1,306,029,387

1,250,000

Vanguard Convertible Securities Fund

1,606,890,817

1,500,000

Vanguard Explorer Fund

8,919,088,608

2,500,000

Vanguard Fenway Funds

 

 

    Equity Income Fund

4,000,349,206

2,500,000

    Growth Equity Fund

597,549,287

900,000

    PRIMECAP Core Fund

4,470,226,854

2,500,000

A-6

 

 

 

Vanguard Fixed Income Securities Funds

 

 

 

    GNMA Fund

36,421,335,899

2,500,000

 

    High-Yield Corporate Fund

11,438,883,834

2,500,000

 

    Intermediate-Term Investment-Grade Fund

14,452,368,750

2,500,000

 

    Intermediate-Term Treasury Fund

6,218,761,683

2,500,000

 

    Long-Term Investment-Grade Fund

8,453,234,779

2,500,000

 

    Long-Term Treasury Fund

2,873,500,388

1,900,000

 

    Short-Term Federal Fund

5,583,536,054

2,500,000

 

    Short-Term Investment-Grade Fund

36,198,766,387

2,500,000

 

    Short-Term Treasury Fund

6,666,078,770

2,500,000

 

Vanguard Florida Tax-Free Funds

 

 

 

    Florida Long-Term Tax-Exempt Fund

1,005,586,673

1,250,000

 

Vanguard Horizon Funds

 

 

 

    Capital Opportunity Fund

8,048,292,265

2,500,000

 

    Global Equity Fund

3,646,722,868

2,300,000

 

    Strategic Equity Fund

3,156,318,530

2,100,000

 

    Strategic Small-Cap Equity Fund

170,580,598

600,000

 

Vanguard Index Funds

 

 

 

    500 Index Fund

91,080,383,334

2,500,000

 

    Extended Market Index Fund

13,692,594,634

2,500,000

 

    Growth Index Fund

15,694,385,436

2,500,000

 

    Large-Cap Index Fund

3,760,379,481

2,300,000

 

    Mid-Cap Growth Index Fund

1,318,833,142

1,250,000

 

    Mid-Cap Index Fund

21,259,508,305

2,500,000

 

    Mid-Cap Value Index Fund

1,234,447,819

1,250,000

 

    Small-Cap Growth Index Fund

5,751,313,322

2,500,000

 

    Small-Cap Index Fund

19,219,476,115

2,500,000

 

    Small-Cap Value Index Fund

6,098,945,587

2,500,000

 

    Total Stock Market Index Fund

126,497,062,399

2,500,000

 

    Value Index Fund

11,858,488,257

2,500,000

 

Vanguard Institutional Index Funds

 

 

 

    Institutional Index Fund

70,150,384,868

2,500,000

 

    Institutional Total Stock Market Index Fund

12,748,667,016

2,500,000

 

Vanguard International Equity Index Funds

 

 

 

    Emerging Markets Stock Index Fund

37,417,897,804

2,500,000

 

    European Stock Index Fund

11,021,206,781

2,500,000

 

    FTSE All-World Ex-US Index Fund

8,760,377,935

2,500,000

 

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

561,134,048

900,000

 

    Pacific Stock Index Fund

6,305,103,629

2,500,000

 

    Total World Stock Index Fund

831,551,348

1,000,000

 

Vanguard Malvern Funds

 

 

 

    Asset Allocation Fund

9,214,136,771

2,500,000

 

    Capital Value Fund

769,040,297

1,000,000

 

    U.S. Value Fund

489,778,939

750,000

 

Vanguard Massachusetts Tax-Exempt Funds

 

 

 

    Massachusetts Tax-Exempt Fund

981,944,248

1,000,000

 

Vanguard Money Market Reserves

 

 

 

    Federal Money Market Fund

6,445,816,894

2,500,000

 

    Prime Money Market Fund

107,826,816,989

2,500,000

 

Vanguard Montgomery Funds

 

 

 

    Market Neutral Fund

65,575,169

400,000

 

Vanguard Morgan Growth Fund

7,820,023,834

2,500,000

 

Vanguard Municipal Bond Funds

 

 

 

    High-Yield Tax-Exempt Fund

6,735,227,624

2,500,000

 

    Intermediate-Term Tax-Exempt Fund

29,039,663,228

2,500,000

 

    Limited-Term Tax-Exempt Fund

13,451,854,656

2,500,000

 

    Long-Term Tax-Exempt Fund

7,677,525,924

2,500,000

 

    Short-Term Tax-Exempt Fund

11,986,097,262

2,500,000

 

    Tax-Exempt Money Market Fund

19,035,149,701

2,500,000

 

Vanguard New Jersey Tax-Free Funds

 

 

 

    NJ Long-Term Tax-Exempt Fund

2,105,344,180

1,700,000

 

    NJ Tax-Exempt Money Market Fund

2,327,481,853

1,700,000

 

Vanguard New York Tax-Free Funds

 

 

 

    NY Long-Term Tax-Exempt Fund

3,099,904,060

2,100,000

 

    NY Tax-Exempt Money Market Fund

3,588,643,565

2,300,000

 

Vanguard Ohio Tax-Free Funds

 

 

 

    OH Long-Term Tax-Exempt Fund

997,460,268

1,000,000

 

    OH Tax- Exempt Money Market Fund

836,024,991

1,000,000

 

Vanguard Pennsylvania Tax-Free Funds

 

 

 

    PA Long-Term Tax-Exempt Fund

3,043,627,801

2,100,000

 

    PA Tax- Exempt Money Market Fund

3,048,395,099

2,100,000

 

Vanguard Quantitative Funds

 

 

 

    Growth and Income Fund

4,291,521,743

2,500,000

 

    Structured Broad Market Fund

285,762,516

750,000

 

    Structured Large-Cap Equity Fund

617,769,851

900,000

 

    Structured Large-Cap Growth Fund

45,571,116

350,000

 

    Structured Large-Cap Value Fund

51,549,186

400,000

 

Vanguard Scottsdale Funds

 

 

 

    Explorer Value Fund

81,177,617

450,000

 

    Intermediate-Term Corporate Bond Index Fund

194,908,390

600,000

 

    Intermediate-Term Government Bond Index Fund

56,531,789

400,000

 

    Long-Term Corporate Bond Index Fund

46,759,736

350,000

 

    Long-Term Government Bond Index Fund

13,253,741

200,000

 

    Mortgage-Backed Securities Index Fund

51,437,082

400,000

 

    Short-Term Corporate Bond Index Fund

497,647,450

750,000

 

    Short-Term Government Bond Index Fund

65,852,188

400,000

 

Vanguard Specialized Funds

 

 

 

    Dividend Appreciation Index Fund

3,700,857,119

2,300,000

 

    Dividend Growth Fund

3,325,316,916

2,100,000

 

    Energy Fund

10,459,772,961

2,500,000

 

    Health Care Fund

18,654,070,370

2,500,000

 

    Precious Metals and Mining Fund

3,789,051,645

2,300,000

 

    REIT Index Fund

13,056,281,786

2,500,000

 

Vanguard STAR Funds

 

 

 

    Developed Markets Index Fund

8,484,827,970

2,500,000

 

    LifeStrategy Conservative Growth Fund

5,821,134,991

2,500,000

 

    LifeStrategy Growth Fund

6,917,005,394

2,500,000

 

    LifeStrategy Income Fund

2,009,413,726

2,500,000

 

    LifeStrategy Moderate Growth Fund

7,811,000,146

2,500,000

 

    STAR Fund

12,642,339,772

2,500,000

 

    Total International Stock Index Fund

24,197,362,064

2,500,000

 

Vanguard Tax-Managed Funds

 

 

    Tax-Managed Balanced Fund

685,984,226

900,000

    Tax-Managed Capital Appreciation Fund

3,262,874,266

2,100,000

    Tax-Managed Growth and Income Fund

2,061,702,438

1,700,000

    Tax-Managed International Fund

5,354,875,511

2,500,000

    Tax-Managed Small-Cap Fund

1,739,813,850

1,500,000

Vanguard Trustees' Equity Fund

 

 

    Diversified Equity Fund

1,233,467,305

1,500,000

    International Value Fund

6,115,380,689

2,500,000

Vanguard Valley Forge Funds

 

 

    Balanced Index Fund

9,234,746,126

2,500,000

    Managed Payout Growth Focus Fund

49,600,767

350,000

    Managed Payout Growth and Distribution Fund

198,222,798

600,000

    Managed Payout Distribution Focus Fund

244,189,503

600,000

Vanguard Variable Insurance Funds

 

 

    Balanced Portfolio

1,265,768,357

1,250,000

    Capital Growth Portfolio

288,915,099

750,000

    Diversified Value Portfolio

700,125,040

900,000

    Equity Income Portfolio

397,261,374

750,000

    Equity Index Portfolio

1,962,297,532

1,500,000

    Growth Portfolio

235,011,510

600,000

    High Yield Bond Portfolio

305,791,901

750,000

    International Portfolio

1,428,074,265

1,250,000

    Mid-Cap Index Portfolio

676,923,066

900,000

    Money Market Portfolio

1,254,793,572

1,250,000

    REIT Index Portfolio

389,885,515

750,000

    Short-Term Investment-Grade Portfolio

906,939,421

1,000,000

    Small Company Growth Portfolio

613,505,300

900,000

    Total Bond Market Index Portfolio

2,048,098,932

1,700,000

    Total Stock Market Index Portfolio

799,743,158

1,000,000

Vanguard Wellesley Income Fund

15,926,486,480

2,500,000

Vanguard Wellington Fund

48,110,225,110

2,500,000

Vanguard Whitehall Funds

 

 

    High Dividend Yield Index Fund

837,457,333

1,000,000

    International Explorer Fund

1,999,628,865

1,500,000

    Mid-Cap Growth Fund

1,402,619,727

1,250,000

    Selected Value Fund

3,390,107,135

2,100,000

Vanguard Windsor Funds

 

 

    Windsor Fund

12,369,598,095

2,500,000

    Windsor II Fund

33,460,601,881

2,500,000

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A-8

 

 

A-9

 

 

 

Vanguard World Fund

 

 

    Consumer Discretionary Index Fund

274,409,611

750,000

    Consumer Staples Index Fund

607,920,764

900,000

    Energy Index Fund

1,208,514,524

1,250,000

    Extended Duration Treasury Index Fund

325,525,934

750,000

    FTSE Social Index Fund

456,860,807

750,000

    Financials Index Fund

580,628,724

900,000

    Health Care Index Fund

636,254,874

900,000

    Industrials Index Fund

329,905,969

750,000

    Information Technology Index Fund

1,176,317,415

1,250,000

    International Growth Fund

14,312,944,050

2,500,000

    Materials Index Fund

546,803,306

900,000

    Mega Cap 300 Growth Index Fund

385,770,562

750,000

    Mega Cap 300 Index Fund

318,870,215

750,000

    Mega Cap 300 Value Index Fund

287,602,803

750,000

    Telecommunication Services Index Fund

214,087,956

600,000

    U.S. Growth Fund

3,763,460,920

2,300,000

    Utilities Index Fund

642,168,591

900,000

 

 

 

TOTALS  

$1,511,536,479,676

$288,100,000

 

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