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.

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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 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

 
By: /s/ Heidi Stam
  Heidi Stam, Secretary

 

 
Attest: /s/ Natalie Bej
  Natalie Bej, Assistant Secretary

 

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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/ 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 5/31/2013

Fund/Portfolio Name Net Assets Bond Requirement
 
 
Vanguard Admiral Funds    
Admiral Treasury Money Market Fund 11,931,269,887 2,500,000
S&P 500 Growth Index Fund 130,744,578 525,000
S&P 500 Value Index Fund 107,022,419 525,000
S&P Mid-Cap 400 Growth Index Fund 197,369,134 600,000
S&P Mid-Cap 400 Index Fund 352,815,649 750,000
S&P Mid-Cap 400 Value Index Fund 59,526,154 400,000
S&P Small-Cap 600 Growth Index Fund 20,845,192 250,000
S&P Small-Cap 600 Index Fund 209,300,974 600,000
S&P Small-Cap 600 Value Index Fund 24,138,069 250,000
Vanguard Bond Index Funds    
Inflation-Protected Securities Fund 35,209,453,961 2,500,000
Intermediate-Term Bond Index Fund 16,941,584,549 2,500,000
Long-Term Bond Index Fund 6,091,483,051 2,500,000
Short-Term Bond Index Fund 30,133,750,323 2,500,000
Total Bond Market Index Fund 115,182,591,234 2,500,000
Total Bond Market II Index Fund 62,903,674,544 2,500,000
Vanguard CMT Funds    
Market Liquidity Fund 30,604,832,138 2,500,000
Municipal Cash Management Fund 3,539,844,249 2,300,000
Vanguard California Tax-Free Funds    
CA Intermediate-Term Tax-Exempt Fund 7,162,353,989 2,500,000
CA Long-Term Tax-Exempt Fund 2,954,901,157 1,900,000
CA Tax-Exempt Money Market Fund 3,711,911,762 2,300,000
Vanguard Charlotte Funds    
Total International Bond Index Fund 14,159,887,657 2,500,000

 

A-6

 
Vanguard Chester Funds    
PRIMECAP Fund 34,596,572,802 2,500,000
Target Retirement Income Fund 10,451,626,897 2,500,000
Target Retirement 2010 Fund 6,876,535,125 2,500,000
Target Retirement 2015 Fund 19,993,641,483 2,500,000
Target Retirement 2020 Fund 21,162,801,060 2,500,000
Target Retirement 2025 Fund 25,550,381,107 2,500,000
Target Retirement 2030 Fund 17,224,723,578 2,500,000
Target Retirement 2035 Fund 18,598,175,442 2,500,000
Target Retirement 2040 Fund 11,257,505,256 2,500,000
Target Retirement 2045 Fund 10,877,768,136 2,500,000
Target Retirement 2050 Fund 4,954,125,717 2,500,000
Target Retirement 2055 Fund 767,772,597 1,000,000
Target Retirement 2060 Fund 156,298,879 600,000
Vanguard Convertible Securities Fund 1,851,886,128 1,500,000
Vanguard Explorer Fund 10,400,237,119 2,500,000
Vanguard Fenway Funds    
Equity Income Fund 12,589,515,008 2,500,000
Growth Equity Fund 748,784,010 900,000
PRIMECAP Core Fund 5,461,223,757 2,500,000
Vanguard Fixed Income Securities Funds    
GNMA Fund 35,907,850,617 2,500,000
High-Yield Corporate Fund 17,854,170,679 2,500,000
Intermediate-Term Investment-Grade Fund 19,096,178,192 2,500,000
Intermediate-Term Treasury Fund 5,837,732,931 2,500,000
Long-Term Investment-Grade Fund 13,194,622,052 2,500,000
Long-Term Treasury Fund 3,198,542,921 2,100,000
Short-Term Federal Fund 5,565,504,468 2,500,000
Short-Term Investment-Grade Fund 45,120,547,619 2,500,000
Short-Term Treasury Fund 6,194,774,047 2,500,000
Vanguard Florida Tax-Free Funds    
Florida Focused Long-Term Tax-Exempt Fund 924,001,297 1,000,000
Vanguard Horizon Funds    
Capital Opportunity Fund 9,519,246,192 2,500,000
Global Equity Fund 4,373,128,516 2,500,000
Strategic Equity Fund 3,956,378,026 2,300,000
Strategic Small-Cap Equity Fund 318,906,045 750,000

 

A-7

 
Vanguard Index Funds    
500 Index Fund 139,592,990,755 2,500,000
Extended Market Index Fund 29,635,510,740 2,500,000
Growth Index Fund 30,987,605,677 2,500,000
Large-Cap Index Fund 7,230,222,192 2,500,000
Mid-Cap Growth Index Fund 3,264,036,241 2,100,000
Mid-Cap Index Fund 39,269,563,856 2,500,000
Mid-Cap Value Index Fund 3,510,871,689 2,300,000
Small-Cap Growth Index Fund 11,933,755,066 2,500,000
Small-Cap Index Fund 35,326,084,150 2,500,000
Small-Cap Value Index Fund 9,916,210,514 2,500,000
Total Stock Market Index Fund 255,149,524,318 2,500,000
Value Index Fund 24,152,222,664 2,500,000
Vanguard Institutional Index Funds    
Institutional Index Fund 139,488,268,037 2,500,000
Institutional Total Stock Market Index Fund 29,073,857,408 2,500,000
Vanguard International Equity Index Funds    
Emerging Markets Stock Index Fund 70,866,374,257 2,500,000
European Stock Index Fund 10,582,009,597 2,500,000
FTSE All-World Ex-US Index Fund 17,298,515,506 2,500,000
FTSE All-World Ex-US Small-Cap Index Fund 1,699,555,883 1,500,000
Global ex-U.S. Real Estate Index Fund 1,134,707,918 1,250,000
Pacific Stock Index Fund 4,755,726,899 2,500,000
Total World Stock Index Fund 3,427,927,807 2,100,000
Vanguard Malvern Funds    
Capital Value Fund 1,009,743,173 1,500,000
U.S. Value Fund 833,203,236 1,000,000
Short-Term Inflation-Protected Securities Fund 5,195,775,103 2,500,000
Vanguard Massachusetts Tax-Exempt Funds    
Massachusetts Tax-Exempt Fund 1,117,584,685 1,250,000
Vanguard Money Market Reserves    
Federal Money Market Fund 3,612,780,200 2,300,000
Prime Money Market Fund 121,412,197,548 2,500,000
Vanguard Montgomery Funds    
Market Neutral Fund 218,412,859 600,000
Vanguard Morgan Growth Fund 9,567,817,367 2,500,000
Vanguard Municipal Bond Funds    
High-Yield Tax-Exempt Fund 8,098,070,054 2,500,000
Intermediate-Term Tax-Exempt Fund 38,562,706,496 2,500,000
Limited-Term Tax-Exempt Fund 17,625,268,646 2,500,000
Long-Term Tax-Exempt Fund 7,869,990,656 2,500,000
Short-Term Tax-Exempt Fund 11,448,114,291 2,500,000
Tax-Exempt Money Market Fund 17,309,599,646 2,500,000

 

A-8

 
Vanguard New Jersey Tax-Free Funds    
NJ Long-Term Tax-Exempt Fund 2,095,205,977 1,700,000
NJ Tax-Exempt Money Market Fund 1,670,503,476 1,500,000
Vanguard New York Tax-Free Funds    
NY Long-Term Tax-Exempt Fund 3,407,587,685 2,100,000
NY Tax-Exempt Money Market Fund 2,529,367,366 1,900,000
Vanguard Ohio Tax-Free Funds    
OH Long-Term Tax-Exempt Fund 1,036,233,730 1,250,000
OH Tax- Exempt Money Market Fund 588,254,359 900,000
Vanguard Pennsylvania Tax-Free Funds    
PA Long-Term Tax-Exempt Fund 3,196,915,023 2,100,000
PA Tax- Exempt Money Market Fund 2,450,832,443 1,700,000
Vanguard Quantitative Funds    
Growth and Income Fund 4,893,612,172 2,500,000
Structured Broad Market Fund 455,050,479 750,000
Structured Large-Cap Equity Fund 581,142,042 900,000
Vanguard Scottsdale Funds    
Explorer Value Fund 202,666,412 600,000
Intermediate-Term Corporate Bond Index Fund 3,831,690,361 2,300,000
Intermediate-Term Government Bond Index Fund 314,794,088 750,000
Long-Term Corporate Bond Index Fund 1,041,813,212 1,250,000
Long-Term Government Bond Index Fund 283,699,384 750,000
Mortgage-Backed Securities Index Fund 816,226,660 1,000,000
Russell 1000 Growth Index Fund 1,089,729,255 1,250,000
Russell 1000 Index Fund 835,618,548 1,000,000
Russell 1000 Value Index Fund 943,459,568 1,000,000
Russell 2000 Growth Index Fund 232,162,422 600,000
Russell 2000 Index Fund 457,855,698 750,000
Russell 2000 Value Index Fund 99,884,199 450,000
Russell 3000 Index Fund 432,812,036 750,000
Short-Term Corporate Bond Index Fund 6,495,441,086 2,500,000
Short-Term Government Bond Index Fund 321,142,678 750,000
Vanguard Specialized Funds    
Dividend Appreciation Index Fund 19,219,227,706 2,500,000
Dividend Growth Fund 15,317,081,437 2,500,000
Energy Fund 11,832,334,502 2,500,000
Health Care Fund 27,999,120,577 2,500,000
Precious Metals and Mining Fund 2,569,831,423 1,900,000
REIT Index Fund 36,102,176,095 2,500,000

 

A-9

 
Vanguard STAR Funds    
Developed Markets Index Fund 13,959,476,067 2,500,000
LifeStrategy Conservative Growth Fund 8,081,303,830 2,500,000
LifeStrategy Growth Fund 8,886,432,156 2,500,000
LifeStrategy Income Fund 2,873,428,685 1,900,000
LifeStrategy Moderate Growth Fund 9,809,870,420 2,500,000
STAR Fund 16,240,395,052 2,500,000
Total International Stock Index Fund 93,485,639,926 2,500,000
Vanguard Tax-Managed Funds    
Tax-Managed Balanced Fund 1,186,234,067 1,250,000
Tax-Managed Capital Appreciation Fund 4,739,532,031 2,500,000
Tax-Managed Growth and Income Fund 2,917,332,913 1,900,000
Tax-Managed International Fund 15,375,216,121 2,500,000
Tax-Managed Small-Cap Fund 2,720,196,058 1,900,000
Vanguard Trustees' Equity Fund    
Diversified Equity Fund 1,316,312,424 1,250,000
International Value Fund 7,204,225,972 2,500,000
Emerging Markets Select Stock Index Fund 190,111,428 600,000
Vanguard Valley Forge Funds    
Balanced Index Fund 19,491,325,119 2,500,000
Managed Payout Growth Focus Fund 100,106,060 525,000
Managed Payout Growth and Distribution Fund 480,967,632 750,000
Managed Payout Distribution Focus Fund 726,244,738 900,000
Vanguard Variable Insurance Fund    
Balanced Portfolio 1,908,442,640 1,500,000
Capital Growth Portfolio 519,547,798 900,000
Conservative Allocation Portfolio 81,728,785 450,000
Diversified Value Portfolio 1,028,508,275 1,250,000
Equity Income Portfolio 800,045,948 1,000,000
Equity Index Portfolio 2,803,766,944 1,900,000
Growth Portfolio 346,793,044 750,000
High Yield Bond Portfolio 554,547,981 900,000
International Portfolio 1,951,340,030 1,500,000
Mid-Cap Index Portfolio 985,298,964 1,000,000
Moderate Allocation Portfolio 90,785,763 450,000
Money Market Portfolio 1,032,376,098 1,250,000
REIT Index Portfolio 729,017,289 900,000
Short-Term Investment-Grade Portfolio 1,077,124,023 1,250,000
Small Company Growth Portfolio 1,078,472,857 1,250,000
Total Bond Market Index Portfolio 2,494,528,817 1,700,000
Total Stock Market Index Portfolio 1,050,051,810 1,250,000
Vanguard Wellesley Income Fund 35,058,105,696 2,500,000
Vanguard Wellington Fund 73,093,972,663 2,500,000

 

A-10

 
Vanguard Whitehall Funds    
High Dividend Yield Index Fund 8,709,666,792 2,500,000
International Explorer Fund 1,979,196,461 1,500,000
Mid-Cap Growth Fund 2,590,717,711 1,900,000
Selected Value Fund 5,492,975,181 2,500,000
Emerging Markets Government Bond Index Fund 95,224,765 450,000
Vanguard Windsor Funds    
Windsor Fund 14,939,081,129 2,500,000
Windsor II Fund 43,009,111,677 2,500,000
Vanguard World Fund    
Consumer Discretionary Index Fund 878,045,067 1,000,000
Consumer Staples Index Fund 1,614,585,084 1,500,000
Energy Index Fund 2,614,968,219 1,900,000
Extended Duration Treasury Index Fund 572,188,477 900,000
FTSE Social Index Fund 1,503,867,544 1,500,000
Financials Index Fund 843,939,633 1,000,000
Health Care Index Fund 1,882,766,040 1,500,000
Industrials Index Fund 805,092,060 1,000,000
Information Technology Index Fund 3,272,340,539 2,100,000
International Growth Fund 19,410,064,884 2,500,000
Materials Index Fund 904,367,807 1,000,000
Mega Cap 300 Growth Index Fund 1,040,570,017 1,250,000
Mega Cap 300 Index Fund 882,937,527 1,000,000
Mega Cap 300 Value Index Fund 736,927,587 900,000
Telecommunication Services Index Fund 615,431,231 900,000
U.S. Growth Fund 4,214,927,542 2,500,000
Utilities Index Fund 1,865,419,819 1,500,000
                        
TOTALS 2,448,673,954,523 329,325,000

 

A-11