MORRIS, NICHOLS, ARSHT & TUNNELL, LLP
1201 NORTH MARKET STREET
P.O. BOX 1347
WILMINGTNO, DELAWARE, 19899-1347
302 658 9200
302 658 3989 FAX
August 22, 2007
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, New York 10019
Re: Vanguard Marekt Neutral Fund
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Ladies and Gentlemen:
We have acted as special Delaware counsel to Vanguard Montgomery Funds, a
Delaware statutory trust (the "Trust"), in connection with certain matters
relating to the formation of the Trust and the issuance of Shares of the Trust.
Capitalized terms used herein and not otherwise herein defined are used as
defined in the Governing Instrument (as defined below).
We understand that, pursuant to an Agreement and Plan of Reorganization
(the "Plan") to be entered into by the Trust, on behalf of Vanguard Market
Neutral Fund, a Series of the Trust (the "Acquiring Fund"), and Laudus Trust
("Laudus"), on behalf of Laudus Rosenberg U.S. Large/Mid Capitalization
LondShort Equity Fund, a series of Laudus (the "Selling Fund"), i1 and subject
to the conditions set forth therein, Shares of the Acquiring Fund will be
distributed to l1 the shareholders of the Selling Fund in connection with the
liquidation and termination of the Selling Fund.
In rendering this opinion, we have examined and relied on copies of the
following documents, each in the form provided to us: the Plan; the Trust's
Registration Statement on Form N-14 to be filed with the Securities and Exchange
Commission on or about the date hereof (the "Registration Statement"); the
Certificate of Trust of the Trust as filed in the Office of the 1 1 Secretary of
State of the State of Delaware (the "State Office") on July 18, 2007 (the
"Certificate"); the Agreement and Declaration of Trust of the Trust dated as of
July 18,2007 (the "Original Governing Instrument"); the Amended and Restated
Agreement and Declaration of Trust of the Trust dated as of July 20, 2007 (the
"Governing Instrument"); the Bylaws of the Trust (the "Bylaws"); the Unanimous
Written Consent of the Initial Trustee of the Trust dated July 17, 2007 (the
"Initial Trustee Consent"); resolutions prepared for adoption at a meeting of I
the Trustees of the Trust held on July 20, 2007 (the "July 20 Resolutions" and,
together with the Registration Statement, the Governing Instrument, the Bylaws
and the Initial Trustee Consent, the "Governing Documents"); a memorandum to
Willkie Farr & Gallagher LLP
August 22, 2007
Page 2
the Board of Directors of the Vanguard Group, the Board of Trustees of the
Vanguard Funds and the Prospective Board of Trustees of the Trust dated July
18,2007; a memorandum to the Prospective Board of Trustees of the Trust dated
July 20, 2007; and a certification of good standing of the Trust obtained as of
a recent date from the State Office. In such examinations, we have assumed the
genuineness of all signatures, the conformity to original documents of all
documents submitted to us as copies or drafts of documents to be executed, and
the legal capacity of natural persons to complete the execution of documents. We
have fiuther assumed for purposes of this opinion: (i) the due formation or
organization, valid existence and good standing of each entity (other than the
Trust) that is a party to any of the documents reviewed by us under the laws of
the jurisdiction of its respective formation or organization; (ii) the due
adoption, authorization, execution and delivery by, or on behalf of, each of the
parties thereto of the above-referenced agreements, instruments, certificates
and other documents and of all documents contemplated by the Governing Documents
to be executed by investors desiring to become Shareholders (including the due
authorization, execution and delivery of the Governing Instrument and the Plan
prior to the first issuance of Shares pursuant to the Plan); (iii) the payment
of consideration for Shares, and the application of such consideration, as
provided in the Original Governing Instrument, the Governing Documents and the
Plan, as applicable, the satisfaction of all conditions precedent to the
issuance of Shares pursuant to the Plan and compliance with all other terms,
conditions and restrictions set forth in the Plan and the Governing Documents in
connection with the issuance of ' Shares (including, without limitation, the
taking of all appropriate action by the Trustees to designate the Acquiring Fund
as a Series of the Trust and to designate Classes of Shares to be issued under
the Plan and the rights and preferences attributable thereto prior to the
issuance thereof); (iv) that prior to the first issuance of Shares pursuant to
the Plan, the Trustees will have duly adopted resolutions authorizing the
execution, delivery and performance by the Trust, on behalf of the Acquiring
Fund, of the Plan (including the issuance of Shares pursuant thereto); (v) that
appropriate notation of the names and addresses of, the number of Shares held
by, and the consideration paid by, Shareholders will be maintained in the
appropriate registers and other books and records of the Trust in connection
with the issuance, redemption or transfer of Shares; (vi) that, subsequent to
the filing of the Certificate, no event has occurred, or prior to the issuance
of Shares pursuant to the Plan will occur, that would cause a termination,
dissolution or reorganization of the Trust under the Original Governing
Instrument or the Governing lnstrument, as applicable; (vii) that, subsequent to
the filing of the Certificate, no event has occurred, or prior to the issuance
of Shares pursuant to the Plan will occur, that would cause a termination,
dissolution or reorganization of the Acquiring Fund under the Original Governing
lnstrument or the Governing Instrument, as applicable; (viii) that the Trust is,
becomes, or will become prior to or within 180 days following the first issuance
of beneficial interests therein, a registered investment company under the
Investment Company Act of 1940, as amended; and (ix) that each of the documents
examined by us is in full force and effect, expresses the entire understanding
of the parties thereto with respect to the subject matter thereof and has not
been amended, supplemented or otherwise modified, except as herein referenced.
We have not reviewed any documents other than those identified above in
connection with this opinion, and we have assumed that there are no other
documents that are contrary to or inconsistent with the opinions expressed
herein. No opinion is expressed herein with respect to the requirements of, or
compliance with, federal or state securities or blue sky laws. Further, we
express no opinion on the sufficiency or accuracy of the Registration Statement,
or any other registration or offering documentation relating to the Trust, the
Acquiring Fund or the Shares. As to any facts material to our opinion, other
than those assumed, we have relied without independent investigation on k the
above-referenced documents and on the accuracy, as of the date hereof, of the
matters therein I contained.
Willkie Farr & Gallagher LLP
August 22, 2007
Page 3
Based on and subject to the foregoing, and limited in all respects to
matters of Delaware law, it is our opinion that:
1. The Trust is a duly formed and validly existing statutory trust in good I
standing under the laws of the State of Delaware.
2. The Shares of the Acquiring Fund to be issued and delivered to shareholders
of the Selling Fund pursuant to the terms of the Plan, upon issuance, will
be validly issued, fully paid and non-assessable.
We hereby consent to the filing of a copy of this opinion with the
Securities and Exchange Commission as an exhibit to the Registration Statement.
In giving this consent, we do not thereby admit that we come within the category
of person whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder. This opinion speaks only as of the date hereof and is
based on our understandings and assumptions as to present facts, and on the
application of Delaware law as the same exist on the date hereof, and we
undertake no obligation to update or supplement this opinion after the date
hereof for the benefit of any person or entity with respect to any facts or
circumstances that may hereafter come to our attention or any changes in facts
or law that may hereafter occur or take effect. This opinion is intended solely
for the benefit of the addressee hereof in connection with the matters
contemplated hereby and may not be relied on by any other person or entity, or
for any other purpose, without our prior written consent; provided, however,
that we understand that the addressee hereof wishes to rely on the opinions set
forth herein as to certain matters of Delaware law in connection with its
opinion to the Trust dated the date hereof and filed as an exhibit to the
Registration Statement, and we hereby consent I to such reliance.
Very truly yours,
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
Louise G. Hering