Exhibit 12(a)
_________________, 2002
Board of Trustees
Vanguard Whitehall Funds
100 Vanguard Boulevard
Malvern, PA 19355
PIC Investment Trust
300 North Lake Avenue
Pasadena, California 91101-4106
Re: AGREEMENT AND PLAN OF REORGANIZATION, DATED AS OF THE ___ OF
___________, 2002 (THE "AGREEMENT"), BY AND BETWEEN VANGUARD WHITEHALL
FUNDS, A DELAWARE BUSINESS TRUST, (THE "VANGUARD TRUST") ON BEHALF OF
ITS SERIES, VANGUARD MID-CAP GROWTH FUND (THE "VANGUARD FUND"), AND
PIC INVESTMENT TRUST, A DELAWARE BUSINESS TRUST (THE "PROVIDENT
TRUST"), ON BEHALF OF ITS SERIES, PROVIDENT INVESTMENT COUNSEL MID CAP
FUND A ("PROVIDENT FUND")
Ladies and Gentlemen:
You have requested our opinion as to certain federal income tax
consequences of the reorganization of Provident Fund which will consist of (i)
the transfer of all or substantially all of the assets of the Provident Fund to
the Vanguard Fund, in exchange solely for shares of beneficial interest of the
Vanguard Fund (the "Vanguard Fund Shares"); (ii) the assumption by the Vanguard
Fund of the liabilities of the Provident Fund; and (iii) the distribution of the
Vanguard Fund Shares to the shareholders of the Provident Fund in complete
liquidation of the Provident Fund as provided herein, all upon the terms and
conditions hereinafter set forth in the Agreement (the "Reorganization").
In rendering our opinion, we have reviewed and relied upon (a) the
Agreement and Plan of Reorganization, dated as of the __ day of ___________,
2002, by and between the Vanguard Trust and the Provident Trust, (b) the proxy
materials provided to shareholders of the Provident Fund in connection with the
Special Meeting of Shareholders of the Provident Fund held on _____________,
2002, (c) certain representations concerning the Reorganization made to us by
the Vanguard Trust and the Provident Trust in letters dated _____________, 2002
(the "Representation Letters"), (d) all other documents, financial and other
reports and corporate minutes which we deemed relevant or appropriate, and (e)
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such statutes, regulations, rulings and decisions as we deemed material to the
rendition of this opinion. All terms used herein, unless otherwise defined, are
used as defined in the Agreement.
For purposes of this opinion, we have assumed that each of the Provident
Fund and the Vanguard Fund on the effective date of the Reorganization satisfy,
and following the Reorganization, the Vanguard Fund will continue to satisfy,
the requirements of subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), for qualification as a regulated investment company.
Based on the foregoing and provided the Reorganization is carried out in
accordance with the applicable laws of the State of Delaware, the Agreement and
the Representation Letters, it is our opinion that:
1. The Reorganization will constitute a tax-free reorganization within the
meaning of Section 368(a)(1)(F) of the Code, and Provident Fund and Vanguard
Fund will each be a party to a reorganization within the meaning of Section
368(b) of the Code.
2. No gain or loss will be recognized by Provident Fund upon the transfer
of all of its assets to Vanguard Fund in exchange solely for Vanguard Fund
Shares or upon the distribution of the Vanguard Fund Shares to the Provident
Fund's shareholders in exchange for their shares of the Provident Fund.
3. No gain or loss will be recognized by Vanguard Fund upon the receipt by
it of all of the assets of Provident Fund in exchange solely for Vanguard Fund
Shares and the assumption by the Vanguard Fund of the liabilities of the
Provident Fund.
4. The tax basis of the assets of Provident Fund received by Vanguard Fund
will be the same as the tax basis of such assets to Provident Fund immediately
prior to the Reorganization.
5. The holding period of the assets of Provident Fund received by Vanguard
Fund will be the same holding period which such assets had in the hands of
Provident Fund immediately prior to the Reorganization.
6. No gain or loss will be recognized by the shareholders of Provident Fund
upon the exchange of their Provident Fund Shares for Vanguard Fund Shares
(including fractional shares to which they may be entitled) and the assumption
by the Vanguard Fund of the liabilities of the Provident Fund.
7. The aggregate tax basis of the Vanguard Fund Shares received by the
shareholders of Provident Fund (including fractional shares to which they may be
entitled) pursuant to the Reorganization will be the same as the basis of the
Provident Fund Shares held by the Provident shareholder's immediately prior to
the Reorganization.
8. The holding period of the Vanguard Fund Shares received by the
shareholders of Provident Fund (including fractional shares to which they may be
entitled) will include the holding period of the Provident Fund Shares
surrendered in exchange therefor, provided that the Provident Fund Shares were
held as a capital asset on the effective date of the Reorganization.
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9. For purposes of section 381 of the Code, the Vanguard Fund will be
treated as the same corporation as the Provident Fund and the tax attributes of
the Provident Fund enumerated in section 381(c) will be taken into account by
the Vanguard Fund as if there had been no reorganization (section
1.381(b)-1(a)(2) of the Regulations). The taxable year of Provident Fund will
not end on the date of the reorganization and the part of the taxable year of
taxpayer before the reorganization and the part of the taxable year of the
Vanguard Fund after the reorganization will constitute a single taxable year of
the Vanguard Fund (section 381(b) of the Code, section 1.381(b)-1(a)(2) of the
Regulations, and Rev. Rul. 57- 276, 1957-1 C.B. 126).
This opinion letter expresses our views only as to U.S. federal income tax
laws in effect as of the date hereof. It represents our best legal judgment as
to the matters addressed herein, but is not binding on the Internal Revenue
Service or the courts. Accordingly, no assurance can be given that the opinions
and analysis expressed herein, if contested, would be sustained by a court. Our
opinion is based upon the Code, the applicable Treasury Regulations promulgated
thereunder, the present position of the Internal Revenue Service as set forth in
published revenue rulings and revenue procedures, present administrative
positions of the Internal Revenue Service, and existing judicial decisions, all
of which are subject to change either prospectively or retroactively. We do not
undertake to make any continuing analysis of the facts or relevant law following
the date of this letter.
Our opinion is conditioned upon the performance by the Vanguard Trust and
the Provident Trust of their undertakings in the Agreement and the
Representation Letters.
This opinion is being rendered to Vanguard Fund and Provident Fund and may
be relied upon only by such funds and the shareholders of each fund.
Very truly yours,
MORGAN, LEWIS & BOCKIUS LLP
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