AGREEMENT
Made as of this 30th day of August, 2017, by and among VANGUARD ADMIRAL FUNDS, VANGUARD BOND INDEX FUNDS, VANGUARD CALIFORNIA TAX-FREE FUNDS, VANGUARD CHARLOTTE FUNDS, VANGUARD XXXXXXX FUNDS, VANGUARD CMT FUNDS, VANGUARD CONVERTIBLE SECURITIES FUND, VANGUARD EXPLORER FUND, VANGUARD FENWAY FUNDS, VANGUARD FIXED INCOME SECURITIES 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 XXXXXXXXXX FUNDS, VANGUARD XXXXXX 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”), AND VANGUARD MARKETING CORPORATION (“VMC”).
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, Vanguard and WMC 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 members of the Boards 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 Boards have 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, Vanguard and VMC 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 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.
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.
6. No amendment, modification, or supplement of any provision of this Agreement will be valid or effective unless made in writing and signed by a duly authorized representative of each party. Notwithstanding the foregoing, Exhibit A to this Agreement shall be reviewed and updated by the parties from time to time as agreed by the parties. Such Exhibit A may be revised and replaced by (a) mutual written agreement, which does not require an amendment to the Agreement, or (b) one party providing written notice to the other parties. Such written agreement or notice shall set forth the revised version of the Exhibit A and the date on which such revisions shall be effective.
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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 XXXXXXX FUNDS |
| VANGUARD CMT FUNDS |
| VANGUARD CONVERTIBLE SECURITIES FUND |
| VANGUARD EXPLORER FUND |
| VANGUARD FENWAY FUNDS |
| VANGUARD FIXED INCOME SECURITIES 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 XXXXXXXXXX FUNDS |
| VANGUARD XXXXXX 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 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/ Xxxx X. Xxxxxxxx |
| Xxxx X. Xxxxxxxx | |
| Secretary | |
| Attest: | /s/ Xxxxx X. Xxxxxxxx |
| Xxxxx X. Xxxxxxxx | |
| Assistant Secretary | |
THE VANGUARD GROUP, INC.
| By: | /s/ Xxxx X. Xxxxxxxx |
| Xxxx X. Xxxxxxxx | |
| Managing Director, General Counsel, and Secretary | |
| Attest: | /s/ Xxxxxxx X. Xxxxxx |
| Xxxxxxx X. Xxxxxx | |
| Principal and Assistant Secretary | |
VANGUARD MARKETING CORPORATION
| By: | /s/ Xxxx X. Xxxxxxxx |
| Xxxx X. Xxxxxxxx | |
| Director and Senior Vice President | |
| Attest: | /s/ Xxxxxxx X. Xxxxxx |
| Xxxxxxx X. Xxxxxx | |
| Assistant Secretary | |
EXHIBIT A
Rule 17g-1
Minimum Bond Requirements
As of 5/31/2017
| Bond | ||
| Fund/Portfolio Name | Net Assets | Requirement |
| Vanguard Admiral Funds | 22,873,605,932 | 2,500,000 |
| Vanguard S&P 500 Growth Index Fund | ||
| Vanguard S&P 500 Value Index Fund | ||
| Vanguard S&P Mid-Cap 400 Growth Index Fund | ||
| Vanguard S&P Mid-Cap 400 Index Fund | ||
| Vanguard S&P Mid-Cap 400 Value Index Fund | ||
| Vanguard S&P Small-Cap 600 Growth Index Fund | ||
| Vanguard S&P Small-Cap 600 Index Fund | ||
| Vanguard S&P Small-Cap 600 Value Index Fund | ||
| Vanguard Treasury Money Market Fund | ||
| Vanguard Bond Index Funds | 430,511,236,091 | 2,500,000 |
| Vanguard Inflation-Protected Securities Fund | ||
| Vanguard Intermediate-Term Bond Index Fund | ||
| Vanguard Long-Term Bond Index Fund | ||
| Vanguard Short-Term Bond Index Fund | ||
| Vanguard Total Bond Market Index Fund | ||
| Vanguard Total Bond Market II Index Fund | ||
| Vanguard California Tax-Free Funds | 19,603,365,242 | 2,500,000 |
| Vanguard California Intermediate-Term Tax-Exempt Fund | ||
| Vanguard California Long-Term Tax-Exempt Fund | ||
| Vanguard California Municipal Money Market Fund | ||
| Vanguard Charlotte Funds | 84,915,692,592 | 2,500,000 |
| Vanguard Total International Bond Index Fund | ||
| Vanguard Xxxxxxx Funds | 383,034,016,462 | 2,500,000 |
| Vanguard Institutional Target Retirement Income Fund | ||
| Vanguard Institutional Target Retirement 2010 Fund | ||
| Vanguard Institutional Target Retirement 2015 Fund | ||
| Vanguard Institutional Target Retirement 2020 Fund | ||
| Vanguard Institutional Target Retirement 2025 Fund | ||
| Vanguard Institutional Target Retirement 2030 Fund | ||
| Vanguard Institutional Target Retirement 2035 Fund | ||
| Vanguard Institutional Target Retirement 2040 Fund | ||
| Vanguard Institutional Target Retirement 2045 Fund | ||
| Vanguard Institutional Target Retirement 2050 Fund | ||
| Vanguard Institutional Target Retirement 2055 Fund | ||
| Vanguard Institutional Target Retirement 2060 Fund | ||
| Vanguard PRIMECAP Fund | ||
| Vanguard Target Retirement Income Fund | ||
| Vanguard Target Retirement 2010 Fund | ||
| Vanguard Target Retirement 2015 Fund | ||
| Vanguard Target Retirement 2020 Fund | ||
| Vanguard Target Retirement 2025 Fund | ||
| Vanguard Target Retirement 2030 Fund | ||
| Vanguard Target Retirement 2035 Fund | ||
| Vanguard Target Retirement 2040 Fund | ||
| Vanguard Target Retirement 2045 Fund | ||
| Vanguard Target Retirement 2050 Fund | ||
| Vanguard Target Retirement 2055 Fund | ||
| Vanguard Target Retirement 2060 Fund | ||
| Vanguard CMT Funds | 61,676,169,293 | 2,500,000 |
| Vanguard Market Liquidity Fund | ||
| Vanguard Municipal Cash Management Fund | ||
| Vanguard Convertible Securities Fund | 1,385,318,096 | 1,250,000 |
| Vanguard Explorer Fund | 12,112,170,120 | 2,500,000 |
| Vanguard Fenway Funds | 37,662,611,620 | 2,500,000 |
| Vanguard Equity Income Fund | ||
| Vanguard PRIMECAP Core Fund | ||
| Vanguard Fixed Income Securities Funds | 177,988,359,366 | 2,500,000 |
| Vanguard GNMA Fund | ||
| Vanguard High-Yield Corporate Fund | ||
| Vanguard Intermediate-Term Investment-Grade Fund | ||
| Vanguard Intermediate-Term Treasury Fund | ||
| Vanguard Long-Term Investment-Grade Fund | ||
| Vanguard Long-Term Treasury Fund | ||
| Vanguard Short-Term Federal Fund | ||
| Vanguard Short-Term Investment-Grade Fund | ||
| Vanguard Short-Term Treasury Fund | ||
| Vanguard Ultra-Short-Term Bond Fund | ||
| Vanguard Horizon Funds | 29,391,782,233 | 2,500,000 |
| Vanguard Capital Opportunity Fund | ||
| Vanguard Global Equity Fund | ||
| Vanguard Strategic Equity Fund | ||
| Vanguard Strategic Small-Cap Equity Fund | ||
| Vanguard Index Funds | 1,322,159,978,349 | 2,500,000 |
| Vanguard 500 Index Fund | ||
| Vanguard Extended Market Index Fund |
| Vanguard Growth Index Fund | ||
| Vanguard Large-Cap Index Fund | ||
| Vanguard Mid-Cap Growth Index Fund | ||
| Vanguard Mid-Cap Index Fund | ||
| Vanguard Mid-Cap Value Index Fund | ||
| Vanguard Small-Cap Growth Index Fund | ||
| Vanguard Small-Cap Index Fund | ||
| Vanguard Small-Cap Value Index Fund | ||
| Vanguard Total Stock Market Index Fund | ||
| Vanguard Value Index Fund | ||
| Vanguard Institutional Index Funds | 268,350,062,673 | 2,500,000 |
| Vanguard Institutional Index Fund | ||
| Vanguard Institutional Total Stock Market Index Fund | ||
| Vanguard International Equity Index Funds | 155,258,395,556 | 2,500,000 |
| Vanguard Emerging Markets Stock Index Fund | ||
| Vanguard European Stock Index Fund | ||
| Vanguard FTSE All-World Ex-US Index Fund | ||
| Vanguard FTSE All-World Ex-US Small-Cap Index Fund | ||
| Vanguard Global ex-U.S. Real Estate Index Fund | ||
| Vanguard Pacific Stock Index Fund | ||
| Vanguard Total World Stock Index Fund | ||
| Vanguard Malvern Funds | 44,350,263,542 | 2,500,000 |
| Vanguard Capital Value Fund | ||
| Vanguard Core Bond Fund | ||
| Vanguard Emerging Markets Bond Fund | ||
| Vanguard Institutional Intermediate-Term Bond Fund | ||
| Vanguard Institutional Short-Term Bond Fund | ||
| Vanguard Short-Term Inflation-Protected Securities Index Fund | ||
| Vanguard U.S. Value Fund | ||
| Vanguard Massachusetts Tax-Exempt Funds | 1,593,761,214 | 1,500,000 |
| Vanguard Massachusetts Tax-Exempt Fund | ||
| Vanguard Money Market Reserves | 171,750,474,913 | 2,500,000 |
| Vanguard Federal Money Market Fund | ||
| Vanguard Prime Money Market Fund | ||
| Vanguard Xxxxxxxxxx Funds | 2,064,577,696 | 1,700,000 |
| Vanguard Market Neutral Fund | ||
| Vanguard Xxxxxx Growth Fund | 12,153,486,090 | 2,500,000 |
| Vanguard Municipal Bond Funds | 132,167,796,242 | 2,500,000 |
| Vanguard High-Yield Tax-Exempt Fund | ||
| Vanguard Intermediate-Term Tax-Exempt Fund | ||
| Vanguard Limited-Term Tax-Exempt Fund | ||
| Vanguard Long-Term Tax-Exempt Fund | ||
| Vanguard Short-Term Tax-Exempt Fund |
| Vanguard Tax-Exempt Bond Index Fund | ||
| Vanguard Municipal Money Market Fund | ||
| Vanguard New Jersey Tax-Free Funds | 3,295,807,144 | 2,100,000 |
| Vanguard New Jersey Long-Term Tax-Exempt Fund | ||
| Vanguard New Jersey Municipal Money Market Fund | ||
| Vanguard New York Tax-Free Funds | 6,550,327,199 | 2,500,000 |
| Vanguard New York Long-Term Tax-Exempt Fund | ||
| Vanguard New York Municipal Money Market Fund | ||
| Vanguard Ohio Tax-Free Funds | 1,163,855,924 | 1,250,000 |
| Vanguard Ohio Long-Term Tax-Exempt Fund | ||
| Vanguard Pennsylvania Tax-Free Funds | 5,426,390,547 | 2,500,000 |
| Vanguard Pennsylvania Long-Term Tax-Exempt Fund | ||
| Vanguard Pennsylvania Municipal Money Market Fund | ||
| Vanguard Quantitative Funds | 7,467,999,328 | 2,500,000 |
| Vanguard Growth and Income Fund | ||
| Vanguard Scottsdale Funds | 64,536,267,094 | 2,500,000 |
| Vanguard Explorer Value Fund | ||
| Vanguard Intermediate-Term Corporate Bond Index Fund | ||
| Vanguard Intermediate-Term Government Bond Index Fund | ||
| Vanguard Long-Term Corporate Bond Index Fund | ||
| Vanguard Long-Term Government Bond Index Fund | ||
| Vanguard Mortgage-Backed Securities Index Fund | ||
| Vanguard Xxxxxxx 1000 Growth Index Fund | ||
| Vanguard Xxxxxxx 1000 Index Fund | ||
| Vanguard Xxxxxxx 1000 Value Index Fund | ||
| Vanguard Xxxxxxx 2000 Growth Index Fund | ||
| Vanguard Xxxxxxx 2000 Index Fund | ||
| Vanguard Xxxxxxx 2000 Value Index Fund | ||
| Vanguard Xxxxxxx 3000 Index Fund | ||
| Vanguard Short-Term Corporate Bond Index Fund | ||
| Vanguard Short-Term Government Bond Index Fund | ||
| Vanguard Specialized Funds | 183,405,311,494 | 2,500,000 |
| Vanguard Dividend Appreciation Index Fund | ||
| Vanguard Dividend Growth Fund | ||
| Vanguard Energy Fund | ||
| Vanguard Health Care Fund | ||
| Vanguard Precious Metals and Mining Fund | ||
| Vanguard REIT Index Fund | ||
| Vanguard STAR Funds | 341,363,697,247 | 2,500,000 |
| Vanguard LifeStrategy Conservative Growth Fund | ||
| Vanguard LifeStrategy Growth Fund | ||
| Vanguard LifeStrategy Income Fund | ||
| Vanguard LifeStrategy Moderate Growth Fund |
| Vanguard STAR Fund | ||
| Vanguard Total International Stock Index Fund | ||
| Vanguard Tax-Managed Funds | 103,220,260,945 | 2,500,000 |
| Vanguard Developed Markets Index Fund | ||
| Vanguard Tax-Managed Balanced Fund | ||
| Vanguard Tax-Managed Capital Appreciation Fund | ||
| Vanguard Tax-Managed Small-Cap Fund | ||
| Vanguard Trustees' Equity Fund | 11,232,852,100 | 2,500,000 |
| Vanguard Alternative Strategies Fund | ||
| Vanguard Diversified Equity Fund | ||
| Vanguard Emerging Markets Select Stock Fund | ||
| Vanguard International Value Fund | ||
| Vanguard Valley Forge Funds | 35,600,617,833 | 2,500,000 |
| Vanguard Balanced Index Fund | ||
| Vanguard Managed Payout Fund | ||
| Vanguard Variable Insurance Funds | 26,857,611,920 | 2,500,000 |
| Vanguard Balanced Portfolio | ||
| Vanguard Capital Growth Portfolio | ||
| Vanguard Conservative Allocation Portfolio | ||
| Vanguard Diversified Value Portfolio | ||
| Vanguard Equity Income Portfolio | ||
| Vanguard Equity Index Portfolio | ||
| Vanguard Growth Portfolio | ||
| Vanguard High Yield Bond Portfolio | ||
| Vanguard International Portfolio | ||
| Vanguard Mid-Cap Index Portfolio | ||
| Vanguard Moderate Allocation Portfolio | ||
| Vanguard Money Market Portfolio | ||
| Vanguard REIT Index Portfolio | ||
| Vanguard Short-Term Investment-Grade Portfolio | ||
| Vanguard Small Company Growth Portfolio | ||
| Vanguard Total Bond Market Index Portfolio | ||
| Vanguard Total Stock Market Index Portfolio | ||
| Vanguard Wellesley Income Fund | 52,434,864,859 | 2,500,000 |
| Vanguard Wellington Fund | 100,071,536,493 | 2,500,000 |
| Vanguard Whitehall Funds | 46,959,608,273 | 2,500,000 |
| Vanguard Emerging Markets Government Bond Index Fund | ||
| Vanguard Global Minimum Volatility Fund | ||
| Vanguard High Dividend Yield Index Fund | ||
| Vanguard International Dividend Appreciation Index Fund | ||
| Vanguard International Explorer Fund | ||
| Vanguard International High Dividend Yield Index Fund | ||
| Vanguard Mid-Cap Growth Fund |
| Vanguard Selected Value Fund | |||
| Vanguard Windsor Funds | 66,462,832,155 | 2,500,000 | |
| Vanguard Windsor Fund | |||
| Vanguard Windsor II Fund | |||
| Vanguard World Fund | 94,718,763,420 | 2,500,000 | |
| Vanguard Consumer Discretionary Index Fund | |||
| Vanguard Consumer Staples Index Fund | |||
| Vanguard Energy Index Fund | |||
| Vanguard Extended Duration Treasury Index Fund | |||
| Vanguard FTSE Social Index Fund | |||
| Vanguard Financials Index Fund | |||
| Vanguard Health Care Index Fund | |||
| Vanguard Industrials Index Fund | |||
| Vanguard Information Technology Index Fund | |||
| Vanguard International Growth Fund | |||
| Vanguard Materials Index Fund | |||
| Vanguard Mega Cap Growth Index Fund | |||
| Vanguard Mega Cap Index Fund | |||
| Vanguard Mega Cap Value Index Fund | |||
| Vanguard Telecommunication Services Index Fund | |||
| Vanguard U.S. Growth Fund | |||
| Vanguard Utilities Index Fund | |||
| TOTALS | 4,521,771,727,297 | 87,800,000 | |
