Exhibit 12(b)
(213) 683-6000
March __, 2002 31584.00017
Vanguard Whitehall Funds
P.O. Box 2600
Valley Forge, PA 19482
PIC Investment Trust
PIC Mid Cap Portfolio
300 North Lake Avenue
Pasadena, CA 91101
Re: Tax Opinion Regarding Redemption of Provident Investment
Counsel Mid Cap Fund A Interest in PIC Mid Cap Portfolio
Ladies and Gentlemen:
You have requested our opinion with respect to certain federal income tax
matters in connection with the complete redemption (the "REDEMPTION") by PIC Mid
Cap Portfolio ("PROVIDENT PORTFOLIO"), a New York business trust taxable as a
partnership for federal income tax purposes, of the ownership interest of
Provident Investment Counsel Mid Cap Fund A ("PROVIDENT FUND"), a series of PIC
Investment Trust ("PIC TRUST"), a Delaware business trust, in Provident
Portfolio. This opinion is rendered in connection with the Redemption as
described in the Agreement and Plan of Reorganization dated as of February ___,
2002 (the "REORGANIZATION AGREEMENT"), by and between PIC Trust, on behalf of
Provident Fund and by Vanguard Whitehall Funds ("VANGUARD TRUST"), a Delaware
business trust, on behalf of Vanguard Mid Cap Growth Fund ("VANGUARD FUND"), a
series of Vanguard Trust, and adopts the applicable defined terms therein.
In this connection, we have examined, with respect to Provident Fund, (i) a copy
of the Trust Agreement of PIC Mid Cap Portfolio dated as of December 29,
1997 (the "TRUST AGREEMENT"), (ii) a copy of the Reorganization Agreement,
and (iii) representations of Provident Portfolio dated as of February ___, 2002,
furnished to us for purposes of this opinion.
We understand, and the opinion expressed below is based upon the assumptions,
that:
(1) Provident Portfolio is an entity taxable as a partnership for federal income
tax purposes within the meaning of Sections 7701 and 7704 of the Internal
Revenue Code of 1986, as amended (the "CODE");
Vanguard Whitehall Funds
PIC Investment Trust
PIC Mid Cap Portfolio
March __, 2002
Page 2
(2) Provident Portfolio is an "investment partnership" within the meaning of
Code Section 731(c)(1)(C)(i). The term "investment partnership" means any
partnership that has never been engaged in a trade or business and substantially
all of the assets (by value) of which have always consisted of (I) money, (II)
stock in a corporation, (III) notes, bonds, debentures, or other evidences of
indebtedness, (IV) interest rate, currency, or equity notional principal
contracts, (V) foreign currencies, (VI) interests in or derivative financial
instruments (including options, forward or futures contracts, short positions,
and similar financial instruments) in any asset described in any other subclause
of this clause or in any commodity traded on or subject to the rules of a board
of trade or commodity exchange, (VII) other assets specified in regulations
prescribed by the Secretary, or (VIII) any combination of the foregoing
(collectively, "PERMITTED INVESTMENTS"). The activities of Provident Portfolio
have been limited to investing and trading in Permitted Investments;
(3) Following the Redemption, Provident Portfolio will have at least two
continuing partners;
(4) Provident Fund is an "eligible partner" within the meaning of Code Section
731(c)(3)(C)(iii), which provides that the term "eligible partner" means any
partner who, before the date of the distribution, did not contribute to the
partnership any property other than cash or Permitted Investments;
(5) No investor in Provident Portfolio acquired its interest in Provident
Portfolio in exchange for any asset other than cash;
(6) The assets to be distributed to Provident Fund consist solely of cash and
marketable securities within the meaning of Code Section 731(c)(2), which
provides that the term "marketable securities" means financial instruments and
foreign currencies that are, as of the date of the distribution, actively traded
on an established securities market;
(7) [The assets held by Provident Portfolio are neither unrealized receivables
nor inventory of Provident Portfolio within the meaning of Code Section 751];
(8) The assets to be distributed to Provident Fund consist solely of Provident
Fund's PRO RATA, in proportion to its Interest (as defined in the Trust
Agreement) in Provident Portfolio, share of each of the assets held by Provident
Portfolio; and
(9) The adjusted tax basis of Provident Fund in its interest in Provident
Portfolio equals or exceeds the amount of cash to be distributed to Provident
Fund pursuant to the Redemption.
Vanguard Whitehall Funds
PIC Investment Trust
PIC Mid Cap Portfolio
March __, 2002
Page 3
Based upon the foregoing examination, assumptions and representations and upon a
review of such statutes, regulations, cases and other authorities as we deemed
necessary, we are of the opinion that:
(1) The Redemption will not be taxable to Provident Portfolio or any partner in
Provident Portfolio (including Provident Fund) for federal income tax purposes
under Code Section 704(c)(1)(B), Code Section 731 or Code Section 737;
(2) The basis of the property distributed to Provident Fund shall be an amount
equal to the adjusted basis of Provident Fund's interest in Provident Portfolio
reduced by any money distributed in the Redemption, and such basis will be
allocated according Code Section 732(b) and Code Section 732(c); and
(3) In determining the holding period of the property received by Provident Fund
in the Redemption, there shall be included the holding period of Provident
Portfolio, as determined under Code Section 1223, with respect to such property.
This opinion is provided solely to Provident Fund, Provident Portfolio and
Vanguard Fund. It should not be used or relied upon by any other person or
entity, other than Provident Fund, Provident Portfolio and Vanguard Fund, and is
not to be quoted in whole or in part in any letter or document without our prior
written consent. The opinion set forth above represents our conclusions as to
the application of federal income tax law existing as of the date of this letter
to the parties named above, and we can give no assurance that legislative
enactments, administrative changes or court decisions may not be forthcoming
that would require modifications or revocations of our opinion expressed herein.
We assume no responsibility or obligation to withdraw or to revise this opinion
or to notify any party if, at any time hereafter, there is a change in the Code,
Treasury Regulations, revenue rulings, revenue procedures, judicial decisions or
in the facts and assumptions set forth herein, that in any manner affect this
opinion.
Vanguard Whitehall Funds
PIC Investment Trust
PIC Mid Cap Portfolio
March __, 2002
Page 4
The opinion set forth above represents our conclusions based upon the documents
and facts referred to above. Any material amendments to such documents or
changes in any significant facts may affect the opinion referred to herein.
Although we have made such inquiries and performed such investigation as we have
deemed necessary to fulfill our professional responsibilities, we have not
undertaken an independent investigation of the facts referred to in this letter.
We express no opinion as to any federal income tax issue or other matter except
as set forth above.
Very truly yours,
PAUL, HASTINGS, JANOFSKY & WALKER LLP