TIP FUNDS
TURNER GROWTH EQUITY FUND
Dear Shareholder:
A Special Meeting of Shareholders of the Turner Growth Equity Fund (the
"Fund") of TIP Funds (the "Trust") has been scheduled for Monday, May 22, 2000.
If you are a Shareholder of record as of the close of business on Friday, March
31, 2000, you are entitled to vote at the meeting and at any adjournment of the
meeting.
While you are, of course, welcome to join us at the meeting, most
Shareholders will cast their votes by filling out and signing the enclosed Proxy
Card. Whether or not you plan to attend the meeting, we need your vote. Please
mark, sign, and date the enclosed Proxy Card and return it promptly in the
enclosed, post-paid envelope so that the maximum number of shares may be voted.
You can also vote over the telephone or the Internet by following the enclosed
instructions.
The attached Prospectus/Proxy Statement is designed to give you information
relating to the proposal upon which you will be asked to vote. The Board of
Trustees is recommending that you approve a reorganization of the Fund under
which the Fund would be combined with and into the Vanguard Growth Equity Fund
("Vanguard Fund"). Assuming approval by Shareholders of the Fund, each holder of
shares of the Trust's Turner Growth Equity Fund will receive a number of shares
of the Vanguard's Growth Equity Fund equal in dollar value and in the number of
shares of the Trust's Turner Growth Equity Fund owned by such holder at the time
of the combination. As further explained in the accompanying Prospectus/Proxy
Statement, the Board of Trustees has recommended approval of the combination. We
encourage you to support the Trustees' recommendation to approve the proposal.
Your vote is important to us. Please do not hesitate to call 1-800-224-6312
if you have any questions about the proposal under consideration. Thank you for
taking the time to consider this important proposal and for your investment in
the Fund.
Sincerely,
/s/ Stephen J. Kneeley
--------------------------
Stephen J. Kneeley
President
<PAGE>
PROXY INFORMATION
THE TURNER GROWTH EQUITY FUND WILL HOST A SPECIAL MEETING OF SHAREHOLDERS
ON MAY 22, 2000, AT THE OFFICES OF TURNER INVESTMENT PARTNERS, INC. IN BERWYN,
PENNSYLVANIA. THE PURPOSE OF THIS MEETING IS TO VOTE ON A PROPOSAL TO REORGANIZE
YOUR FUND INTO A SUBSTANTIALLY SIMILAR FUND THAT IS BEING CREATED BY THE
VANGUARD GROUP, CALLED THE VANGUARD GROWTH EQUITY FUND.
THE FIRST TWO PAGES OF THIS BOOKLET HIGHLIGHT KEY POINTS ABOUT THE PROPOSED
REORGANIZATION AND EXPLAIN THE PROXY PROCESS--INCLUDING HOW TO CAST YOUR VOTES.
BEFORE YOU VOTE, PLEASE READ THE FULL TEXT OF THE COMBINED PROXY STATEMENT AND
PROSPECTUS FOR A COMPLETE UNDERSTANDING OF OUR PROPOSAL.
KEY POINTS ABOUT THE PROPOSED REORGANIZATION
PURPOSE OF THE REORGANIZATION
The purpose of the Reorganization is to make your Fund a part of The
Vanguard Group of Investment Companies, the second largest mutual fund complex
in the United States. Under this proposal, your Fund's assets and liabilities
would be transferred to the Vanguard Growth Equity Fund, a new fund that is
being created just for this purpose. Turner Investment Partners would continue
to serve as investment adviser, carrying out your Fund's same investment program
for the Vanguard Growth Equity Fund. Vanguard, however, would replace Turner as
overall manager of your investment, subject to the direction of a Vanguard Board
of Trustees. Your existing Board of Trustees believes that the reorganization is
in shareholders' best interests for the following reasons:
LOWER SHAREHOLDER COSTS
Because they jointly own their management company, the Vanguard funds
operate on an "at-cost" basis. This operating structure, combined with the
efficiencies inherent in Vanguard's size, will result in lower operating
expenses for the Vanguard Growth Equity Fund than for your existing Fund. The
Vanguard Growth Equity Fund is expected to feature a total expense ratio of
0.65% for its first full year of operations following the Reorganization--an
annual cost to shareholders of $6.50 for each $1,000 invested. By contrast, your
Fund's total expense ratio for 1999 was 1.08%--an annual cost to shareholders of
$10.80 for each $1,000 invested.
EXPANDED SHAREHOLDER SERVICES
As a shareholder of the Vanguard Growth Equity Fund, you will have access
to a wide range of shareholder services, including 24-hour access to your
account, the ability to transact through Vanguard's website, exchange privileges
with other Vanguard funds, and access to Vanguard's comprehensive investor
education programs.
FUTURE GROWTH OF THE FUND
Given the competitive nature of the mutual fund industry, Turner determined
that it would be prudent to enter into an arrangement with Vanguard. Joining
Vanguard should enable the Fund to grow assets due to Vanguard's strong market
penetration and reputation as a low-cost provider. It is expected that assets in
the Fund will grow considerably once the Fund is within The Vanguard Group,
which will result in a larger, more stable asset base for the Fund. As a result,
expenses will be shared by a larger group of shareholders and expenses for
existing shareholders will be reduced.
HOW THE REORGANIZATION WILL AFFECT YOUR ACCOUNT
If shareholders approve the Reorganization, your Turner Growth Equity Fund
shares will be exchanged, on a tax-free basis, for an equivalent dollar amount
of Vanguard Growth Equity Fund shares. Your account registration and account
options will remain the same unless you change them. In addition, your aggregate
cost basis in the account will remain the same.
TAX-FREE NATURE OF THE REORGANIZATION
The Reorganization will be accomplished on a TAX-FREE BASIS, meaning that
you won't realize any capital gains when your Fund shares are exchanged for
shares of Vanguard Growth Equity Fund.
<PAGE>
QUESTIONS AND ANSWERS
Q. I'M A SMALL INVESTOR. WHY SHOULD I BOTHER TO VOTE?
A. Your vote makes a difference. If numerous shareholders just like you fail to
vote their proxies, the Fund may not receive enough votes to go forward with its
meeting. If this happens, we'll need to mail proxies again--a costly proposition
for your Fund!
Q. WHO GETS TO VOTE?
A. Any person who owned shares of the Turner Growth Equity Fund on the "record
date," which was March 31, 2000, gets to vote--even if the investor later sold
the shares. Shareholders are entitled to cast one vote for each dollar invested
in the Fund on the record date.
Q. HOW CAN I VOTE?
A. You can vote by mail, using the enclosed ballot. Or, you can vote in person
at the meeting. You may also vote over the Internet or by telephone. Please
follow the enclosed instructions to utilize these methods of voting. Whichever
method you choose, please take the time to read the full text of our proxy
statement before you vote.
Q. I PLAN TO VOTE BY MAIL. HOW SHOULD I SIGN MY PROXY CARD?
A. If you are an individual account owner, please sign exactly as your name
appears on the proxy card. Either owner of a joint account may sign the proxy
card, but the signer's name must exactly match one that appears on the card. You
should sign proxy cards for other types of accounts in a way that indicates your
authority (for instance, "John Brown, Custodian").
<PAGE>
TURNER GROWTH EQUITY FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Your Fund will host a Special Meeting of Shareholders on MONDAY, MAY 22,
2000, AT 3:30, EASTERN TIME. The meeting will be held at Turner's offices at
1235 Westlakes Drive, Suite 350, Berwyn, Pennsylvania. At the meeting, we will
ask shareholders to vote on:
1. A proposal to reorganize the Turner Growth Equity Fund into the
Vanguard Growth Equity Fund.
2. Any other business properly brought before the meeting.
All Shareholders are cordially invited to attend the Meeting. However, if
you are unable to attend the Meeting, you are requested to mark, sign and date
the enclosed Proxy Card and return it promptly in the enclosed, postage-paid
envelope so that the Meeting may be held and a maximum number of shares may be
voted. Please see the enclosed materials for Internet and telephone voting
instructions.
Shareholders of record at the close of business on March 31, 2000, are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
By Order of the Board of Trustees
/s/ James W. Jennings
----------------------------------
James W. Jennings, Secretary
April 7, 2000
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE EASILY AND QUICKLY. JUST FOLLOW THE SIMPLE INSTRUCTIONS THAT
APPEAR ON YOUR ENCLOSED PROXY CARD. PLEASE HELP YOUR FUND AVOID THE
EXPENSE TO SHAREHOLDERS OF A FOLLOW-UP MAILING BY VOTING TODAY!
- --------------------------------------------------------------------------------
<PAGE>
ACQUISITION OF THE ASSETS AND LIABILITIES OF
TURNER GROWTH EQUITY FUND,
A PORTFOLIO OF TIP FUNDS,
1235 WESTLAKES DRIVE
SUITE 350
BERWYN, PA 19312
IN EXCHANGE FOR SHARES OF
VANGUARD GROWTH EQUITY FUND,
A PORTFOLIO OF VANGUARD FENWAY FUNDS,
P.O. BOX 2600
VALLEY FORGE, PA 19482
COMBINED PROSPECTUS/PROXY STATEMENT DATED APRIL 7, 2000
RELATING TO THE SPECIAL MEETING OF SHAREHOLDERS OF
TURNER GROWTH EQUITY FUND TO BE HELD ON MAY 22, 2000
I. INTRODUCTION
Proposal summary. This prospectus/proxy statement describes a proposal to
reorganize the Turner Growth Equity Fund into a substantially similar fund that
is being created by The Vanguard Group, called the Vanguard Growth Equity Fund.
The Reorganization involves a few basic steps. First, your Fund will transfer
all of its assets to the Vanguard Growth Equity Fund, and the Vanguard Growth
Equity Fund will assume your Fund's liabilities. Simultaneously, the Vanguard
Growth Equity Fund will open an account for you, crediting it with shares that
are equivalent in value to your investment in the Fund at the time of the
reorganization. Thereafter, your Fund will be dissolved.
Read and keep these documents. Please read the entire prospectus/proxy
statement, along with the Vanguard Growth Equity Fund's preliminary prospectus
dated May 17, 2000, which follows the prospectus/proxy statement, before casting
your vote. The prospectus/proxy statement sets forth concisely the information
about the Vanguard Growth Equity Fund that a prospective investor ought to know
before investing. (The preliminary Vanguard prospectus is incorporated by
reference and considered part of this prospectus/proxy statement.) In addition,
a statement of additional information dated April 7, 2000 relating to this
prospectus/proxy statement is available by calling Turner (1-800-224-6312).
Finally, the Turner Growth Equity Fund's prospectus dated January 31, 2000, is
incorporated by reference and considered part of the prospectus/proxy statement
and a copy is attached to this prospectus/proxy statement. These documents
contain information that is important to your proxy decision, and you should
keep them for future reference.
Additional information is available. The Vanguard Growth Equity Fund is
being organized as a separate investment portfolio under the Vanguard Fenway
Funds, which filed an amended registration statement with the U.S. Securities
and Exchange Commission on March 2, 2000 in order to create the new fund. The
Vanguard Growth Equity Fund has not yet been declared effective by the SEC.
However, you can obtain copies of its preliminary statement of additional
information without charge by contacting Vanguard (1-800-662-7447) or visiting
the SEC's website (www.sec.gov). Copies of the Turner Growth Equity Fund's
prospectus and statement of additional information (both dated January 31,
2000), along with its most recent annual report to shareholders, are
incorporated by reference into the statement of additional information
accompanying this prospectus/proxy statement, and are also available without
charge from Turner (1-800-224-6312) or at the SEC's website
(http://www.sec.gov).
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OF THIS COMBINED PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
OVERVIEW.............................................................. 1
DETAILS OF REORGANIZATION PROPOSAL.................................... 2
Why We Want to Reorganize Your Fund................................. 2
How We Plan to Accomplish the Reorganization........................ 2
How the Reorganization Will Affect Your Fund........................ 3
How Your Fund's Legal Form of Organization Will Change.............. 5
How Many Shareholder Votes We Need to Approve the Reorganization.... 5
INVESTMENT ADVISORY ARRANGEMENTS...................................... 6
MANAGEMENT OF THE VANGUARD GROWTH EQUITY FUND......................... 8
GENERAL INFORMATION................................................... 10
APPENDIX A............................................................ A-1
i
<PAGE>
II. OVERVIEW
This section summarizes key information concerning your Fund's proposal.
Keep in mind that more detailed information appears throughout the proxy
statement and the accompanying preliminary prospectus. Please be sure to read
everything.
The Proposed Reorganization. At their meeting on February 25, 2000, the
Turner Growth Equity Fund's Board of Trustees approved a plan to reorganize your
Fund into the Vanguard Growth Equity Fund. We believe that the proposed
Reorganization is in the best interests of your Fund and its shareholders (more
on this further into the proxy statement). Also, the Reorganization will not
dilute the interests of the Fund's shareholders. If we don't win shareholder
approval of the Reorganization, the Fund will simply continue in existence
unless the Board of Trustees decides otherwise.
New Form of Organization. For legal purposes, the Turner Growth Equity Fund
is organized as part of TIP Funds, a Massachusetts business trust. On the other
hand, the Vanguard Growth Equity Fund is being organized as part of Vanguard
Fenway Funds, a Delaware business trust. The minor differences in these forms of
organization are described beginning on page 5.
New Board of Trustees. The Vanguard Growth Equity Fund will have a
different Board of Trustees than your Fund. Beginning on page 8, we describe the
backgrounds and compensation of the individuals who will serve as Trustees of
the Vanguard Growth Equity Fund.
Investment Objectives and Policies of Each Fund. The Vanguard Growth Equity
Fund is being created with an investment objective and investment policies that
are substantially similar to those of the Turner Growth Equity Fund. There is
additional information comparing your Fund to the Vanguard Fund on page 3.
Investment Adviser. The Fund's investment adviser, Turner Investment
Partners, will also serve as investment adviser to the Vanguard Growth Equity
Fund, continuing the Fund's same investment program. Although there are no
current plans to do so, one or more new advisers could be added to the Vanguard
Growth Equity Fund in the future, as either additions to or replacements for
Turner. The Board of Trustees of the Vanguard Growth Equity Fund has the
flexibility to make advisory changes in shareholders best interests, without a
shareholder vote, pursuant to an exemption received from the SEC by Vanguard.
Details of the advisory arrangements for your Fund and the Vanguard Growth
Equity Fund are provided beginning on page 6.
Independent Accountants. PricewaterhouseCoopers LLP will serve as
independent auditors to the Vanguard Growth Equity Fund, as they do for all
other Vanguard funds. In contrast, the Turner Growth Equity Fund retains Ernst &
Young LLP as its independent auditors.
1
<PAGE>
III. DETAILS OF REORGANIZATION PROPOSAL
The Turner Growth Equity Fund's Board of Trustees has approved a plan to
reorganize your Fund into a substantially similar fund that is being created by
The Vanguard Group, called the Vanguard Growth Equity Fund. (A copy of the plan
of reorganization is attached as Appendix A to this prospectus/proxy statement.)
To proceed with the Reorganization, we need shareholder approval. The next few
pages of this prospectus/proxy statement discuss important details of the
Reorganization plan, including the following:
o Why we want to reorganize your Fund.
o How we plan to accomplish the Reorganization.
o How the Reorganization will affect your Fund.
o How your Fund's legal form of organization will change.
o How many shareholder votes we need to approve the Reorganization.
A. WHY WE WANT TO REORGANIZE YOUR FUND
The mutual fund marketplace is much more competitive today than it was even
five years ago, and there is no reason to think that this competition will slow.
The Reorganization will allow Turner to better focus on its core competencies.
Turner believes that the ultimate beneficiaries of the Reorganization will be
the Fund's shareholders because they get access to Vanguard's expansive client
service capabilities, while Turner can focus on investment performance. In
addition, shareholders will gain significant efficiencies in the form of lower
fees, and a more stable, long-term client base, which will result in lower
transaction costs to the Fund.
Vanguard management believes that the Turner Growth Equity Fund will fit
well within The Vanguard Group of Investment Companies. If the Reorganization is
approved by shareholders, the Fund will provide Vanguard investors with another
proven growth fund, and broaden the array of actively-managed funds available
through Vanguard.
The Vanguard Group has entered into a Sponsorship Agreement with Turner,
which generally provides that Turner will use reasonable efforts to facilitate
the proposed Reorganization. However, neither Turner nor any other party is
being compensated by Vanguard in consideration of the Turner Growth Equity Fund
joining The Vanguard Group.
B. HOW WE PLAN TO ACCOMPLISH THE REORGANIZATION
Agreement and Plan of Reorganization. Your Fund has entered into an
Agreement and Plan of Reorganization with Vanguard Fenway Funds. This agreement
spells out the terms and conditions that will apply to your Fund's
Reorganization into the Vanguard Growth Equity Fund (assuming that shareholders
approve this proposal). For a complete description of these terms and
conditions, please see the agreement, which appears as Appendix A to this
prospectus/proxy statement.
Three steps to reorganize. After shareholder approval, the Reorganization
will be accomplished in a three-step process. First, your Fund will transfer all
of its assets to the Vanguard Growth Equity Fund, and the Vanguard Growth Equity
Fund will assume your Fund's liabilities. Second, and simultaneously with step
one, the Vanguard Growth Equity Fund will open an account for you, crediting it
with shares that are equivalent in value to your investment in the Fund at the
time of the Reorganization. Third, the Turner Growth Equity Fund will be
dissolved.
Effective as soon as practicable. If approved by shareholders, the
Reorganization will take place as soon as practicable after all necessary
regulatory approvals and legal opinions are received. We think this could be
accomplished by mid-June, 2000.
The Reorganization is conditioned on tax-free treatment at the federal
level. We fully expect that the Reorganization will have no federal income tax
consequences for you or your Fund. We will not proceed with the Reorganization
until this point is confirmed by an IRS ruling or opinion of counsel. Following
the Reorganization, from a tax standpoint, the adjusted basis of your Fund
shares will be the same as before. We
2
<PAGE>
do not expect shareholders to incur any personal state or local taxes as a
result of the Reorganization, but you should consult your own tax adviser to be
sure. There is more information about the tax consequences of the Reorganization
in the Agreement and Plan of Reorganization.
C. HOW THE REORGANIZATION WILL AFFECT YOUR FUND
Your Fund's investment objective and investment adviser will stay the same,
and its investment policies will be substantially similar. The Reorganization
will not materially change any of these. As reorganized, your Fund--which will
become Vanguard Growth Equity Fund--will continue to seek capital appreciation
through investments in a diversified portfolio of common stocks with strong
earnings growth potential. The Fund will continue investing primarily (at least
65% of it total assets) in common stocks and other equity securities of U.S.
companies with large and medium capitalizations that Turner Investment Partners
believes have strong earnings growth potential and that are reasonably valued at
the time of purchase. The Fund will invest in securities of companies that are
diversified across economic sectors, and will attempt to maintain sector
weightings that approximate those of its current benchmark, the Russell 1000
Growth Index. In addition, the existing investment adviser, Turner Investment
Partners, will continue to run the Fund's investment program.
Several of the investment policies will change, but these changes will not
have a material impact on the management of your Fund. Specifically, the
Vanguard Growth Equity Fund has more restrictive policies relating to lending
and investments in certain types of futures and options contracts. In addition
to these more restrictive policies, the Fund will have more flexibility to
borrow money since the funds in The Vanguard Group are eligible to participate
in an interfund lending program under an exemption received from the SEC.
However, since these practices are not part of the Fund's primary investment
strategies, it is expected that there will be no impact on the Fund's
management. Other than these changes, there are no other material changes to the
Fund's investment strategy, policies or objectives.
Comparing Risk Factors. Since it purchases equity securities, your Fund is
subject to the risk that stock prices will fall over short or extended periods
of time. Historically, the equity markets have moved in cycles, and the value of
the Fund's equity securities may fluctuate drastically from day to day.
Individual companies may report poor results or be negatively affected by
industry and/or economic trends and developments. The prices of securities
issued by such companies may suffer a decline in response. These factors
contribute to price volatility, which is the principal risk of investing in the
Fund. In addition, the Fund is subject to the risk that its principal market
segment, large and medium capitalization growth stocks, may underperform
compared to other market segments or to the equity markets as a whole. The
medium capitalization companies the Fund invests in may be more vulnerable to
adverse business or economic events than larger, more established companies. In
particular, these mid-sized companies may have limited product lines, markets
and financial resources, and may depend upon a relatively small management
group.
The Vanguard Fund is subject to the same risk factors as your Fund since it
invests in the same types of securities and uses the same investment strategy.
Comparing Fund Expenses. The table set forth below compares the expenses
applicable to the Turner Growth Equity Fund and the estimated expenses of the
Vanguard Growth Equity Fund for the first full year after the Reorganization is
consummated (assuming current asset levels remain the same).
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<PAGE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
PRO FORMA
EXPENSES
AS OF THE
TURNER GROWTH VANGUARD GROWTH REORGANIZATION
EXPENSE CATEGORY EQUITY FUND EQUITY FUND DATE
- ----------------------------------------------------- ------------- --------------- --------------
<S> <C> <C> <C>
Management Fees...................................... 0.75% 0.47% 0.47%
Distribution (12b-1) Fees............................ None None None
Other Expenses....................................... 0.25% 0.18% 0.18%
----- ----- ------
Total Annual Fund Operating Expenses................. 1.00%* 0.65%** 0.65%
</TABLE>
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* Restated to reflect current expenses for 2000. The Fund's Adviser has
contractually agreed to waive fees and reimburse expenses in order to keep
total operating expenses from exceeding 1.00% for a period of one year, or
from exceeding 1.25% in any subsequent year.
** Restated to reflect estimated post-Reorganization expenses.
EXAMPLE
This example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes that
you invest $10,000 in the Fund for the time periods indicated and that you sell
your shares at the end of each period. The Example also assumes that each year
your investment has a 5% return and Fund expenses remain the same. Although your
actual costs and returns might be different based on these assumptions, your
costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Turner Growth Equity Fund........................................ $102 $ 373 $ 665 $1,505
Vanguard Growth Equity Fund...................................... $ 66 $ 208 $ 362 $ 810
Proforma as of the Reorganization Date........................... $ 66 $ 208 $ 362 $ 810
</TABLE>
Your Fund will keep the same fiscal year end, but switch to an annual
distribution schedule. As reorganized, your Fund will distribute its income
annually, which is more typical for a growth fund than the quarterly
distribution schedule that currently applies. Your Fund will keep its September
30th fiscal year end.
The Reorganization will have no impact on your Fund's share price (NAV). On
the day of the Reorganization, Vanguard Growth Equity Fund's share price will be
the same as that of your existing Fund. As indicated below, the Reorganization
will not cause your Fund's share price to go up or down, and you will own the
same number of shares. Any declared but undistributed dividends or capital gains
will carry over in the Reorganization.
<TABLE>
<CAPTION>
PRO FORMA
CAPITALIZATION
TURNER GROWTH VANGUARD GROWTH AS THE
EQUITY FUND EQUITY FUND RECORD DATE
--------------- --------------- ---------------
<S> <C> <C> <C>
Total Net Assets as of the Record Date (3/31/00)........ $308,499,546.19 $ 0 $308,499,546.19
Total Number of Shares Outstanding on the Record Date... 15,739,772.7650 0 15,739,772.7650
NAV on the Record Date.................................. $19.60 N/A $19.60
</TABLE>
Your Fund's existing Trustees will be replaced by Vanguard Fenway Funds'
Trustees. As previously mentioned, your Fund will become an investment portfolio
of Vanguard Fenway Funds if shareholders approve the Reorganization. Information
on Vanguard Fenway Funds' Trustees appears in the "Management of the Vanguard
Growth Equity Fund" section of this prospectus/proxy statement.
Your Fund's existing independent auditor will be replaced by
PricewaterhouseCoopers, LLP. Currently, your Fund employs Ernst & Young, LLP as
its independent auditor. However, PricewaterhouseCoopers serves as the
independent auditor for Vanguard Fenway Funds and all other Vanguard funds. In
this role, PricewaterhouseCoopers audits and certifies the Vanguard funds'
financial
4
<PAGE>
statements. PricewaterhouseCoopers also reviews the Vanguard funds' Annual
Reports to Shareholders and their filings with the U.S. Securities and Exchange
Commission. Neither PricewaterhouseCoopers nor any of its partners have any
direct or material indirect financial interest in the Vanguard funds. If you
wish to request the attendance of a PricewaterhouseCoopers representative at the
shareholder meeting, you should contact the Fund's Secretary at 1235 Westlakes
Drive, Suite 350 Berwyn, Pennsylvania 19312.
Purchase, Redemption, and Exchange Information. After the Reorganization,
the Fund will continue to be sold to individuals and institutional investors,
including retirement and other plans. The following chart highlights the
purchase, redemption and exchange features of your Fund as compared to such
features of the Vanguard Growth Equity Fund.
<TABLE>
<CAPTION>
PURCHASE, REDEMPTION AND EXCHANGE FEATURES TURNER GROWTH EQUITY FUND VANGUARD GROWTH EQUITY FUND(1)
- -------------------------------------------- --------------------------------- ---------------------------------
<S> <C> <C>
Minimum initial purchase/Additional
investments............................... $2,500/$500 $10,000/$100
Purchases................................... By mail, wire, or systematic By mail, wire, systematic
investment plan investment plan, Vanguard Fund
Express(R), and Vanguard Direct
Deposit Service(TM)
Redemptions................................. By mail or telephone (business By mail, 24-hour telephone, or
hours only) Vanguard's website
Free exchange privileges.................... Yes, with other TIP Funds--by Yes, with other Vanguard
mail or telephone (business hours funds--by mail, 24-hour
only) telephone, or Vanguard's
website(2)
</TABLE>
- ------------------
(1) Explanations of each of the services available through the Vanguard Growth
Equity Fund can be found in the preliminary prospectus that accompanies this
prospectus/proxy statement.
(2) Investors may exchange between the TIP Funds, Vanguard Funds and other fund
families for a fee through Vanguard's FundAccess program and programs
available through other firms.
Calculating NAV. The Turner Growth Equity Fund calculates its net asset
value per share (NAV) once each business day at the regularly-scheduled close of
normal trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern
time). Similarly, the Vanguard Growth Equity Fund calculates its NAV after the
close of regular trading on the New York Stock Exchange.
D. HOW YOUR FUND'S LEGAL FORM OF ORGANIZATION WILL CHANGE
Federal securities laws have much to say about the way that mutual funds
operate, but they do not cover every aspect of a fund's existence. State law and
each fund's governing documents fill in most of the gaps. The Vanguard Growth
Equity Fund is organized under Delaware law, while your Fund is organized under
Massachusetts law. The laws of Massachusetts and Delaware governing business
trusts are similar in all material respects with one exception. Shareholders of
Massachusetts business trusts could be personally liable for the obligations of
the trust in certain highly unlikely circumstances. However, under Delaware law,
there is no similar provision providing for shareholder liability for
obligations of the fund. As a result of the Reorganization, this very remote
potential for personal liability will be eliminated.
E. HOW MANY SHAREHOLDER VOTES WE NEED TO APPROVE THE REORGANIZATION
To go forward with the Reorganization, a majority of your Fund's
outstanding shares on March 31, 2000 (the "Record Date"), must vote in favor of
this proposal. YOUR FUND'S BOARD OF TRUSTEES RECOMMENDS THAT YOU APPROVE THE
REORGANIZATION.
5
<PAGE>
IV. INVESTMENT ADVISORY ARRANGEMENTS
Turner Growth Equity Fund's investment adviser, Turner Investment Partners,
will also serve as investment adviser to the Vanguard Growth Equity Fund,
continuing the Fund's same investment program. Turner's address is 1235
Westlakes Drive, Berwyn, Pennsylvania 19312. Under its investment advisory
agreement dated April 28, 1996 with your Fund, Turner is responsible for
managing the investment and reinvestment of the Fund's assets, and for
continuously reviewing, supervising and directing the Fund's investment program.
Turner will have these same responsibilities under its investment advisory
agreement with the Vanguard Growth Equity Fund.
Turner Investment Partners, Inc., is a professional investment management
firm founded in March, 1990. Robert E. Turner is the Chairman and controlling
shareholder of Turner. As of December 31, 1999, Turner had discretionary
management authority with respect to approximately $5.6 billion of assets.
Turner has provided investment advisory services to investment companies since
1992. The principal business address of Turner is 1235 Westlakes Drive, Suite
350, Berwyn, Pennsylvania 19312.
Turner serves as the investment adviser to the Turner Growth Equity Fund
under an investment advisory agreement. Under the agreement, Turner continuously
reviews, supervises and administers the Fund's investment program, subject to
the supervision of, and policies established by, the Trustees of TIP Funds.
Robert E. Turner, a Trustee of TIP Funds, is the head of the committee that
manages the Turner Growth Equity Fund. Mr. Turner is also Chairman and Chief
Investment Officer of Turner. He has held this position since the founding of
Turner in 1990. He has been in the investment business since 1982.
The other members of the committee that manages the Turner Growth Equity
Fund are John Hammerschmidt, Mark Turner, and Christopher McHugh. Mr.
Hammerschmidt is a Senior Equity Portfolio Manager at Turner, and he has 17
years of investment experience. Mark Turner, Vice Chairman of Turner, co-founded
Turner in 1990, and has 18 years of investment experience. Christopher McHugh, a
Senior Equity Portfolio Manager at Turner, has 14 years of investment
experience.
The Turner Growth Equity Fund paid Turner advisory fees of $694,046 and
$664,499, and waived advisory fees of $24,250 and $76,793, for the fiscal years
ended September 30, 1997 and 1998, respectively. For the fiscal year ended
September 30, 1999, the Fund paid Turner advisory fees of $987,424.
The investment advisory agreement between Turner and the Turner Growth
Equity Fund is similar to the investment advisory agreement between Turner and
the Vanguard Growth Equity. Specifically, the standard of care is identical, and
the duration and termination provisions are substantially similar. The principal
difference between the two agreements is the compensation structure. In the
Turner Growth Equity Fund agreement, Turner is entitled to a fee of 0.75% of the
Fund's average daily net assets. In contrast, the agreement relating to the
Vanguard Growth Equity Fund has certain breakpoints and a performance component,
as described below.
Advisory Fees and Expenses for Vanguard Growth Equity Fund. Under its
investment advisory agreement with the Vanguard Growth Equity Fund, Turner will
be paid a Basic Fee at the end of each fiscal quarter, calculated by applying a
quarterly rate, based on the following annual percentage rates, to the Fund's
average month-end net assets for the quarter:
NET ASSETS ANNUAL RATE
---------------------------------------------- -----------
First $200 million............................ 0.50%
Next $300 million............................. 0.40%
Next $1.5 billion............................. 0.30%
Over $2 billion............................... 0.20%
6
<PAGE>
The Basic Fee paid to Turner may be increased or decreased based on the
investment performance of the Vanguard Growth Equity Fund. This Performance
Adjustment will be calculated as a percentage of the Basic Fee, and will change
proportionately with the investment performance of the Vanguard Growth Equity
Fund relative to the investment performance of the Russell 1000 Growth Index for
the thirty-six month period ending with the applicable quarter. The Performance
Adjustment will apply as follows:
<TABLE>
<CAPTION>
PERFORMANCE FEE ADJUSTMENT
CUMULATIVE 36-MONTH PERFORMANCE OF THE FUND VERSUS THE INDEX AS A PERCENTAGE OF BASIC FEE*
- ------------------------------------------------------------- ----------------------------------
<S> <C>
Exceeds by 9% or more........................................ +75%
Exceeds between 0 and +9%.................................... Linear increase from 0 to +75%
Trails between 0 and -9%..................................... Linear decrease from 0 to -75%
Trails by -9% or more........................................ -75%
</TABLE>
- ------------------
* For purposes of determining the Adjustment, the Basic Fee is calculated by
applying the above rate schedule against the average month-end net assets of
the Fund over the same time period for which performance is measured.
Based on the Fund's current size, the maximum possible fee payable by the
Vanguard Growth Equity Fund to Turner under the advisory agreement during the
first year of operations would be 0.47% of the Fund's net assets.
Duration and termination of Turner's investment advisory agreement with the
Vanguard Growth Equity Fund. Turner's investment advisory agreement with the
Vanguard Growth Equity Fund will become effective at the time of the
Reorganization, if this transaction is approved by shareholders. The agreement
will remain in effect for an initial two-year period, and may be continued
beyond that for successive one-year periods, if approved at least annually by
the vote of the Board of Trustees of the Vanguard Growth Equity Fund. Board
approval must include the votes of a majority of those Trustees who are not
parties to the contract or "interested persons" (as defined under Federal
securities laws) of any party to the contract. In addition, Trustees must vote
in person on Turner's investment advisory agreement, at a meeting called for
that purpose. The agreement is automatically terminated if assigned, and may be
terminated without penalty at any time (i) either by vote of the Fund's Trustees
or by vote of the outstanding shares of the Fund on 60 days' written notice, or
(ii) by Turner on 90 days' written notice to the Fund.
Future changes to Vanguard Growth Equity Fund's advisory arrangements.
Although there are no current plans to do so, one or more new investment
advisers could be added to the Vanguard Growth Equity Fund in the future, as
either additions to or replacements for Turner. The Board of Trustees of the
Vanguard Growth Equity Fund has the flexibility to make advisory
changes--including changes to the contract of an existing investment
adviser--without a shareholder vote, pursuant to an exemption obtained from the
SEC by Vanguard.
7
<PAGE>
V. MANAGEMENT OF THE VANGUARD GROWTH EQUITY FUND
The seven individuals listed below serve as Trustees of Vanguard Fenway
Funds. (As previously mentioned, your Fund will become an investment portfolio
of Vanguard Fenway Funds if shareholders approve the Reorganization.) Each of
these individuals was last elected to office by shareholders of Vanguard Fenway
Funds on May 1, 1998 (except for Ms. Heisen, who was appointed to office by the
other Trustees effective on July 1, 1998).
<TABLE>
<CAPTION>
BECAME
NAME DOB PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS TRUSTEE
- --------------------------- ------- -------------------------------------------- ------
<S> <C> <C> <C>
John J. Brennan* 7/29/54 Chairman, Chief Executive Officer & Trustee 1987
Chairman, Chief Executive Officer and Director of The Vanguard
Group, Inc., and Trustee of each of the investment companies in
The Vanguard Group
Joann Heffernan Heisen 1/25/50 Trustee 1998
Vice President, Chief Information Officer, and member of the
Executive Committee of Johnson & Johnson; Director of Johnson &
Johnson* MERCK Consumer Pharmaceuticals Co., The Medical Center
at Princeton, and Women's Research and Education Institute
Bruce K. MacLaury 5/7/31 Trustee 1989
President Emeritus of The Brookings Institution, Director of
American Express Bank, Ltd., The St. Paul Companies, Inc., and
National Steel Corp.
Alfred M. Rankin, Jr. 10/8/41 Trustee 1993
Chairman, President, Chief Executive Officer, and Director of
NACCO Industries, Inc.; and Director of the BFGoodrich Co.
John C. Sawhill 6/12/36 Trustee 1991
President and Chief Executive Officer of The Nature Conservancy;
Director of Pacific Gas and Electric Co., Procter & Gamble Co.,
NACCO Industries and Newfield Exploration Co., formerly,
Director and Senior Partner of McKinsey & Co., and President of
New York University
James O. Welch 5/13/31 Trustee 1987
Retired Chairman of Nabisco Brands, Inc.; retired Vice Chairman
and Director of RJR Nabisco; Director of TECO Energy, Inc. and
Kmart
J. Lawrence Wilson 3/2/36 Trustee 1987
Retired Chairman of Rohm & Haas Co., Director of Cummins Engine
Co. and The Mead Corp.; and Trustee of Vanderbilt University
</TABLE>
- ------------------
* Mr. Brennan is an "interested person" as that term is defined in the
Investment Company Act.
8
<PAGE>
THE VANGUARD GROUP
Vanguard Fenway Funds is a member of The Vanguard Group of Investment
Companies, which consists of more than 100 mutual funds. The Vanguard Group,
P.O. Box 2600, Valley Forge, PA 19482-6200, a jointly owned subsidiary of the
Vanguard funds, provides corporate management, administrative and distribution
services to the Vanguard funds on an at-cost basis. The Vanguard Group also
provides investment advisory services on an at-cost basis to many of the
Vanguard funds.
Vanguard employs a supporting staff of management and administrative
personnel needed to provide the requisite services to the Vanguard funds and
also furnishes the funds with necessary office space, furnishings and equipment.
Each Vanguard fund pays its share of The Vanguard Group's total expenses, which
are allocated among the funds under methods approved by the Board of Trustees of
each Vanguard fund. In addition, each Vanguard fund bears its own direct
expenses, such as legal, auditing and custodian fees.
Vanguard was established and operates under an Amended and Restated Funds'
Service Agreement that was approved by the shareholders of each of the Vanguard
funds. The amount that each Vanguard fund has invested in The Vanguard Group is
adjusted from time to time in order to maintain the proportionate relationship
between each fund's relative net assets and its contribution to The Vanguard
Group's capital. Under the Amended and Restated Service Agreement, no fund can
be called on to invest more than 0.40% of its current assets in The Vanguard
Group.
TRUSTEE COMPENSATION
Vanguard Growth Equity Fund's Trustees also serve as Trustees of all other
Vanguard funds, and each Vanguard fund pays a proportionate share of the
Trustees' compensation. The Vanguard funds employ their officers on a shared
basis, as well. However, officers are compensated by The Vanguard Group, not the
funds.
Independent Trustees. The Vanguard funds compensate their independent
Trustees -- that is, the ones who are not also officers of the fund -- in three
ways:
o The independent Trustees receive an annual fee of $80,000 for their
services to all Vanguard funds, which is subject to reduction based on
absences form scheduled Board meetings.
o The independent Trustees are reimbursed for the travel and other expenses
that they incur in attending Board meetings.
o Upon retirement, the independent Trustees receive an aggregate annual fee
of $1,000 for each year served on the Board, up to fifteen years of
service. This annual fee is paid for ten years following retirement, or
until each Trustee's death.
"Interested" Trustees. The Vanguard funds' sole interested Trustee--Mr.
Brennan--receives no compensation for his service in that capacity. However, Mr.
Brennan is paid in his role as an officer of The Vanguard Group.
9
<PAGE>
Compensation Table. The following table provides compensation details for
each of the Trustees. We list the amounts paid as compensation and accrued as
retirement benefits by Vanguard Fenway Funds for each Trustee. (These amounts
have been paid from the assets of the Vanguard Equity Income Fund, the sole
investment portfolio currently offered by Vanguard Fenway Funds.) In addition,
the table shows the total amount of benefits that we expect each Trustee to
receive from all Vanguard funds upon retirement, and the total amount of
compensation paid to each Trustee by all Vanguard funds. All information shown
is for the fiscal year ended September 30, 1999:
VANGUARD FENWAY FUNDS TRUSTEES' COMPENSATION TABLE
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT TOTAL
BENEFITS COMPENSATION
ACCRUED AS ESTIMATED FROM ALL
AGGREGATE PART OF THIS ANNUAL VANGUARD FUNDS
COMPENSATION FROM FUND'S BENEFITS UPON PAID TO
NAMES OF TRUSTEE THIS FUND(1) EXPENSES(1) RETIREMENT(1) TRUSTEES(2)
- ---------------- ----------------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
John C. Bogle (3).................................... None None None None
John J. Brennan...................................... None None None None
Barbara Barnes Hauptfuhrer (4)....................... $ 167 $ 21 $15,000 $ 0
JoAnn Heffernan Heisen............................... $ 667 $ 37 $15,000 $ 80,000
Bruce K. MacLaury.................................... $ 697 $ 62 $12,000 $ 75,000
Alfred M. Rankin, Jr................................. $ 667 $ 44 $15,000 $ 80,000
John C. Sawhill...................................... $ 667 $ 57 $15,000 $ 80,000
James O. Welch, Jr................................... $ 667 $ 65 $15,000 $ 80,000
J. Lawrence Wilson................................... $ 667 $ 58 $15,000 $ 80,000
</TABLE>
- ------------------
(1) The amounts reported in this column reflect the compensation paid to each
Trustee as of September 30, 1999.
(2) The amounts reported in this column reflect the total compensation paid to
each Trustee (as of December 31, 1999) for his or her service as Trustee of
103 Vanguard funds (93 in the case of Mr. MacLaury).
(3) Mr. Bogle has retired from the Fund's Board, effective December 31, 1999.
(4) Mrs. Hauptfuhrer has retired from the Fund's Board, effective December 31,
1998.
GENERAL INFORMATION
This section provides information on a number of topics relating to proxy
voting and shareholder meetings.
Proxy solicitation methods. The Turner Growth Equity Fund will solicit
shareholder proxies in a variety of ways. All shareholders that are entitled to
vote will receive these proxy materials by mail. In addition, Turner employees
and officers may solicit shareholder proxies in person, by telephone, or through
the Internet.
Proxy solicitation costs. Turner will pay all costs of soliciting proxies
from its own shareholders, including costs relating to the printing, mailing,
and tabulation of proxies. By voting immediately, you can help your Fund avoid
the considerable expense of a second solicitation.
Quorum. In order for the shareholder meeting to go forward, the Turner
Growth Equity Fund must achieve a quorum. This means that a majority of your
Fund's shares must be represented at the meeting--either in person or by proxy.
All returned proxies count towards a quorum, regardless of how they are voted
("For," "Against," or "Abstain"). Your Fund will count broker non-votes toward a
quorum, but not toward the approval of any proposals. (Broker non-votes are
shares for which (i) the underlying owner has not voted and (ii) the broker
holding the shares does not have discretionary authority to vote on the
particular matter.)
Revoking your proxy. You may revoke your proxy at any time up until voting
results are announced at the shareholder meeting. You can do this by writing to
your Fund's Secretary, c/o Turner Investment Partners, 1235 Westlakes Drive,
Suite 350, Berwyn, Pennsylvania 19312, or by voting in person at the meeting.
10
<PAGE>
Shareholder proposals. Any shareholder proposals to be included in the
proxy statement for Turner Growth Equity Fund's next annual or special meeting
must be received by the Fund within a reasonable period of time prior to that
meeting. Your Fund has no current plans to hold an annual or special meeting in
2000.
Nominee accounts. Upon request, the Turner Growth Equity Fund will
reimburse nominees for their reasonable expenses in forwarding proxy materials
to beneficial owners of the Fund's shares. Please submit invoices for our review
to Turner Investment Partners, 1235 Westlakes Drive, Suite 350, Berwyn,
Pennsylvania 19312.
Annual/semi-annual reports. Turner Growth Equity Fund's most recent annual
and semi-annual reports to shareholders are available at no cost. To request a
report, please call Turner toll-free at 1-800-224-6312 or write us at P.O. Box
219805, Kansas City, Missouri 64141-6805.
Litigation. The Turner Growth Equity Fund is not involved in any
litigation.
Principal shareholders. As of March 31, 2000, the Turner Growth Equity Fund
had approximately $308,499,546.19 million in net assets and 15,739,772.7650
outstanding shares. As of the same date, each of the following persons was known
to be the beneficial owner of more than 5% of the outstanding shares of the
Turner Growth Equity Fund:
<TABLE>
<CAPTION>
TOTAL NUMBER
SHAREHOLDER OF SHARES PERCENTAGES
- ----------- -------------- ----------
<S> <C> <C>
Charles Schwab & Co.................................. 3,913,539.4570 24.86%
Attn: Mutual Funds/Teams
4500 Cherry Creek Drive South
3rd Floor
Denver, Colorado 80209
First Union National Bank............................ 5,050,377.4150 32.09%
FBO Sheet Metal Workers Local #19
Annuity Self-Directed Fund
A/C 1546002697
1525 Harris Boulevard
CMG NC-1251
Charlotte, North Carolina 28262-8522
</TABLE>
Other matters. At this point, we know of no other business to be brought
before the shareholder meeting. However, if additional matters do arise, we will
use our best judgment to vote on your behalf. If you object to our voting other
matters on your behalf, please tell us so in writing before the meeting.
Obtaining Information from the SEC. Vanguard Fenway Funds is subject to the
informational requirements of the Securities Exchange Act of 1934 and must file
certain reports and other information with the SEC.
The proxy materials, reports and other information filed by TIP Funds and
Vanguard Fenway Funds can be inspected and copied at the public reference
facilities maintained by the SEC located at 450 5th Street N.W., Washington,
D.C. 20549, and 7 World Trade Center, Suite 1300, New York, NY 10048. Copies of
such material also can be obtained from the Public Reference Branch, Office of
Consumer Affairs and Information Services, Securities and Exchange Commission,
Washington, D.C. 20549 at prescribed rates.
------------------------------
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE REQUESTED
TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. YOU MAY ALSO VOTE OVER THE
INTERNET OR BY TELEPHONE. PLEASE FOLLOW THE ENCLOSED INSTRUCTIONS TO UTILIZE
THESE METHODS OF VOTING.
11
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this _____ day of ____, 2000 between Vanguard Fenway Funds, a business trust
formed under the laws of the State of Delaware with its principal place of
business at P.O. Box 2600, Valley Forge, PA 19482 (the "Vanguard Fund"), on
behalf of Vanguard Growth Equity Fund, a series of the Vanguard Fund (the
"Acquiring Fund"), and TIP Funds, a business trust formed under the laws of the
Commonwealth of Massachusetts with its principal place of business at 530 East
Swedesford Road, Wayne, PA 19087 ("TIP Funds"), on behalf of the Turner Growth
Equity Fund, a series of TIP Funds (the "Selling Fund").
This Agreement is intended to be, and is adopted as, a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(F) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization of the Selling Fund (the "Reorganization") will consist of (i)
the transfer of all of the assets of the Selling Fund in exchange solely for
shares of the common stock (the "Shares") of the Acquiring Fund (the "Acquiring
Fund Shares"), (ii) the assumption by the Acquiring Fund of certain identified
liabilities of the Selling Fund; and (iii) the distribution, after the Closing
Date, as defined below, of Acquiring Fund Shares to the shareholders of the
Selling Fund in liquidation of the Selling Fund as provided in this Agreement,
all upon the terms and conditions set out below.
WHEREAS, the Vanguard Fund and TIP Funds are each registered as an open-end
management investment company under the Investment Company Act of 1940 (the
"1940 Act") and the Acquiring Fund is permitted to invest in securities held by
the Selling Fund;
WHEREAS, the Acquiring Fund and the Selling Fund are authorized to issue
shares of beneficial interest;
WHEREAS, the Board of Trustees, including a majority of the trustees who
are not "interested persons" (as defined in the 1940 Act) of the Vanguard Fund
has determined with respect to the Acquiring Fund that the exchange of all of
the assets of the Selling Fund for Acquiring Fund Shares is in the best
interests of the Acquiring Fund and its shareholders; and
WHEREAS, the Board of Trustees, including a majority of the trustees who
are not "interested persons" (as defined under the 1940 Act) of TIP Funds has
determined with respect to the Selling Fund that the exchange of all the assets
of the Selling Fund for the Acquiring Fund Shares is in the best interests of
the Selling Fund and its shareholders;
In consideration of the mutual promises contained in this Agreement, the
Vanguard Fund and TIP Funds agree as follows:
ARTICLE I
Transfer of Assets of the Selling Fund in Exchange for Acquiring Fund
Shares and Assumption of Selling Fund Liabilities and Liquidation of the Selling
Fund.
1.1 Subject to the terms and conditions set out in this Agreement and on
the basis of the representations and warranties contained in this Agreement, TIP
Funds agrees to transfer the Selling Fund's assets in the manner set out in
paragraph 1.2 of this Agreement to the Acquiring Fund, and the Vanguard Fund
agrees in exchange for the assets: (a) to deliver to the Selling Fund the number
of Acquiring Fund Shares, including fractional Acquiring Fund Shares, determined
by dividing the value of the Selling Fund's net assets, computed in the manner
and as of the time and date set out in paragraph 2.1 of this Agreement, by the
net asset value of one Acquiring Fund Share, computed in the manner and as of
the time and date set out in paragraph 2.2 of this Agreement; and (b) to assume
certain identified liabilities of the Selling Fund, as set out in paragraph 1.3
of this Agreement. Each of these transactions will take place at the closing
provided for in paragraph 3.1 of this Agreement (the "Closing").
1.2(a) The assets of the Selling Fund to be acquired by the Acquiring Fund
will consist of all property including, without limitation, all cash,
securities, commodities and futures interests, and dividend or interest
receivables that are owned by the Selling Fund and any deferred or prepaid
expenses shown as an asset on
A-1
<PAGE>
the books of the Selling Fund on the closing date described in paragraph 3.1 of
this Agreement (the "Closing Date").
(b) TIP Funds, on behalf of the Selling Fund, has provided the Vanguard
Fund with TIP Funds' most recent financial statements, which contain a list of
all of the Selling Fund's assets as of the date of execution of this Agreement.
TIP Funds, on behalf of the Selling Fund, represents that as of the date of the
execution of this Agreement no changes have occurred in its financial position
as reflected in its financial statements other than those occurring in the
ordinary course of its business in connection with the purchase and sale of
securities and the payment of its normal operating expenses. TIP Funds, on
behalf of the Selling Fund, reserves the right to sell any of the Selling Fund's
assets but will not, without the prior approval of the Vanguard Fund, acquire
any additional assets for the Selling Fund other than instruments of the type in
which the Acquiring Fund is permitted to invest. TIP Funds, on behalf of the
Selling Fund, will, within a reasonable time prior to the Closing Date, furnish
the Vanguard Fund with a list of the assets, if any, on the Selling Fund's list
referred to in the first sentence of this paragraph that do not conform to the
Acquiring Fund's investment objectives, policies and restrictions. In the event
that the Selling Fund holds any assets that the Acquiring Fund may not hold, the
Selling Fund will use its best efforts to dispose of the assets prior to the
Closing Date.
1.3 TIP Funds, on behalf of the Selling Fund, will seek to discharge all of
the Selling Fund's known liabilities and obligations prior to the Closing Date,
other than those liabilities and obligations that would otherwise be discharged
at a later date in the ordinary course of the Selling Fund's business. Except as
specifically provided in paragraph 1.3 of this Agreement, the Acquiring Fund
will assume the liabilities, expenses, costs, charges and reserves reflected on
a Statement of Assets and Liabilities of the Selling Fund prepared on behalf of
the Selling Fund, as of the Valuation Date (as defined in paragraph 2.1 of this
Agreement), in accordance with generally accepted accounting principles
consistently applied from the prior audited period (hereinafter the
"Liabilities"). The Acquiring Fund will assume only those Liabilities of the
Selling Fund reflected in the Statement of Assets and Liabilities and will not,
except as specifically provided in this paragraph 1.3, assume any other
contingent, unknown, or unaccrued liabilities, all of which will remain the
obligation of the Selling Fund.
1.4 As provided in paragraph 3.4 of this Agreement, as soon after the
Closing Date as is practicable (the "Liquidation Date"), the Selling Fund will
liquidate and distribute on a proportionate basis to the Selling Fund's
shareholders of record determined as of the close of business on the Closing
Date (the "Selling Fund Shareholders") the Acquiring Fund Shares it receives
pursuant to paragraph 1.1 of this Agreement. This liquidation and distribution
will be accomplished by the transfer of the Acquiring Fund Shares then credited
to the account of the Selling Fund on the books of the Acquiring Fund to open
accounts on the share records of the Acquiring Fund in the names of the Selling
Fund Shareholders representing the respective proportionate number of Acquiring
Fund Shares due those shareholders. All issued and outstanding shares of the
Selling Fund will simultaneously be canceled on the books of the Selling Fund.
The Acquiring Fund will not issue certificates representing the Acquiring Fund's
Shares in connection with the exchange of Acquiring Fund Shares for shares of
the Selling Fund.
1.5 After the Reorganization, ownership of Acquiring Fund Shares will be
shown on the books of the Acquiring Fund's transfer agent. Shares of the
Acquiring Fund will be issued in the manner described in the Acquiring Fund's
current prospectus and statement of additional information.
1.6 As soon as practicable after distribution of the Acquiring Fund Shares
pursuant to paragraph 1.4 of this Agreement but in any event within 180 calendar
days after the Closing Date the Selling Fund will be terminated as a series of
TIP Funds ("Termination Date"). In addition, TIP Funds will as soon as
practicable after the Termination Date take all other actions in connection with
the termination of the Selling Fund as required by applicable law.
1.7 Any reporting responsibility of the Selling Fund to any public
authority is and will remain the responsibility of the Selling Fund up to and
including the Closing Date and the Termination Date.
1.8 Any transfer taxes payable upon issuance of the Acquiring Fund Shares
in a name other than the registered holder of shares of the Selling Fund
("Selling Fund Shares") on the books of the Selling Fund as of that time will,
as a condition of the issuance and transfer, be paid by the person to whom the
Acquiring Fund Shares are to be issued and transferred.
A-2
<PAGE>
ARTICLE II
Valuation.
2.1 The value of the Selling Fund's assets to be acquired under this
Agreement will be the value of the assets computed as of the close of regular
trading on the New York Stock Exchange, Inc. (the "NYSE") on the applicable
Closing Date (the time and date being referred to as the "Valuation Date" for
purposes of this Agreement), using the valuation procedures set out in the
Selling Fund's then current prospectus and/or statement of additional
information.
2.2 The net asset value of the Acquiring Fund Shares will be the net asset
value per share computed as of the Valuation Date, using the valuation
procedures set out in the Acquiring Fund's then current prospectus and/or
statement of additional information.
2.3 The number of Acquiring Fund Shares to be issued (including fractional
shares, if any) in exchange for the Selling Fund's net assets will be determined
by dividing the value of the net assets of the Selling Fund determined using the
same valuation procedures referred to in paragraph 2.1 of this Agreement by the
net asset value per share of the Acquiring Fund determined in accordance with
paragraph 2.2 of this Agreement.
2.4 All computations of value will be made in accordance with the regular
practices of the Vanguard Fund, subject to this Article II.
ARTICLE III
Closing and Closing Date.
3.1 The Closing Date for the Reorganization will be [June 5, 2000], or any
other date agreed to in writing by the Vanguard Fund and TIP Funds. All acts
taking place at the Closing will be deemed to take place simultaneously as of
the close of business on the Closing Date unless otherwise provided. The Closing
will be held as of 4:00 p.m., at the offices of the Vanguard Fund, 100 Vanguard
Blvd., Malvern, PA 19355, or at such other time and/or place agreed to by the
Vanguard Fund and TIP Funds.
3.2 The custodian for the Acquiring Fund (the "Custodian") will deliver at
the Closing a certificate of an authorized officer stating that: (a) the Selling
Fund's portfolio securities, cash and any other assets will have been delivered
in proper form to the Acquiring Fund prior to or on the Closing Date, and (b)
all necessary taxes, including all applicable federal and state stock transfer
stamps, if any, will have been paid, or provision for payment has been made, in
conjunction with the delivery of portfolio securities.
3.3 In the event that on the Valuation Date (a) the NYSE or another primary
trading market for portfolio securities of the Acquiring Fund or the Selling
Fund is closed to trading or trading on the market is restricted or (b) trading
or the reporting of trading on the NYSE or elsewhere is disrupted so that
accurate appraisal of the value of the net assets of the Acquiring Fund or the
Selling Fund is impracticable, the applicable Closing Date will be postponed
until the first business day after the day when normal trading has fully resumed
and reporting has been restored.
3.4 TIP Funds, on behalf of the Selling Fund, will deliver at the Closing a
list of the names and addresses of the Selling Fund Shareholders and the number
of outstanding Shares owned by each such shareholder immediately prior to the
Closing or provide evidence that the information has been provided to the
Acquiring Fund's transfer agent. The Vanguard Fund, on behalf of the Acquiring
Fund, will issue and deliver a confirmation evidencing the Acquiring Fund Shares
to be credited to the Selling Fund's account on the Closing Date to the
Secretary of TIP Funds or provide evidence satisfactory to TIP Funds that the
Acquiring Fund Shares have been credited to the Selling Fund's account on the
books of the Acquiring Fund. At the Closing, each party to this Agreement will
deliver to the other party such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as the other party or its
counsel may reasonably request.
A-3
<PAGE>
ARTICLE IV
Representations and Warranties.
4.1 TIP Funds, on behalf of the Selling Fund, represents and warrants to
the Vanguard Fund as follows:
(a) The Selling Fund is an investment series of TIP Funds, a business
trust duly organized, validly existing, and in good standing under the laws
of the Commonwealth of Massachusetts;
(b) TIP Funds is a registered open-end management investment company
and its registration with the Securities and Exchange Commission (the
"Commission") as an investment company under the 1940 Act is in full force
and effect;
(c) TIP Funds is not, and the execution, delivery, and performance of
this Agreement (subject to approval of the Selling Fund Shareholders) will
not result, in a violation of any provision of its Declaration of Trust or
any material agreement, indenture, instrument, contract, lease or other
undertaking to which TIP Funds on behalf of itself or on behalf of the
Selling Fund is a party or by which its property is bound;
(d) TIP Funds will turn over all of the books and records relating to
the Selling Fund (including all books and records required to be maintained
under the 1940 Act and the Code and the rules and regulations under the
1940 Act and the Code) to the Vanguard Fund at the Closing;
(e) TIP Funds has no contracts or other commitments (other than this
Agreement) with respect to the Selling Fund that will be terminated with
liability to TIP Funds prior to the Closing Date;
(f) Except as previously disclosed in writing to and accepted by the
Vanguard Fund, no litigation or administrative proceeding or investigation
of or before any court or governmental body is presently pending, or to TIP
Funds' knowledge, threatened against TIP Funds in connection with the
Selling Fund or any of its properties or assets that, if adversely
determined, would materially and adversely affect TIP Funds' financial
condition or the conduct of its business. TIP Funds knows of no facts that
might form the basis for the institution of such proceedings and is not a
party to or subject to the provisions of any order, decree or judgment of
any court or governmental body that materially and adversely affects its
business or the business of the Selling Fund or TIP Funds' ability to
consummate the transactions contemplated by this Agreement;
(g) The statements of assets and liabilities of TIP Funds relating to
the Selling Fund for the period beginning with commencement of the Selling
Fund and ending on September 30, 1999 have been audited by Ernst & Young
LLP, certified public accountants, and are in accordance with generally
accepted accounting principles consistently applied, and those statements
(copies of which have been furnished to the Acquiring Fund) fairly reflect
the financial condition of the Selling Fund as of such dates, and no known
contingent liabilities of the Selling Fund exist as of such dates that are
not disclosed in those statements;
(h) Since September 30, 1999, no material adverse change has occurred
in the Selling Fund's financial condition, assets, liabilities or business
other than changes occurring in the ordinary course of business, or any
incurrence by the Selling Fund of indebtedness maturing more than one year
from the date that such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Vanguard Fund. For the purposes of this
subparagraph (h), a decline in net asset value per share or the total
assets of the Selling Fund in the ordinary course of business does not
constitute a material adverse change;
(i) At the Closing Date, all federal and other tax returns and reports
with respect to the Selling Fund required by law to have been filed by the
Closing Date will have been filed, and all federal and other taxes will
have been paid so far as due, or provision will have been made for the
payment of those taxes and, to the best of TIP Funds' knowledge, no such
tax return is currently under audit and no assessment has been asserted
with respect to such a return;
(j) For each of its prior fiscal years of operation, TIP Funds has met
the requirements of Subchapter M of the Code for qualification and
treatment of the Selling Fund as a regulated investment
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company; and all of the Selling Fund's issued and outstanding shares have
been offered and sold in compliance in all material respects with
applicable federal and state securities laws;
(k) At the date of this Agreement, all issued and outstanding shares
of the Selling Fund are, and at the Closing Date will be, duly and validly
issued and outstanding, fully paid and non-assessable. All of the issued
and outstanding shares of the Selling Fund will, at the time of Closing, be
held by the persons and the amounts set out in the records of TIP Funds'
transfer agent as provided in paragraph 3.4 of this Agreement. TIP Funds
does not have outstanding any options, warrants or other rights to
subscribe for or purchase any of the Selling Fund's Shares, nor is any
security convertible into any of the Selling Fund's shares currently
outstanding;
(l) At the applicable Closing Date, TIP Funds will have good and
marketable title to the Selling Fund's assets to be transferred to the
Acquiring Fund pursuant to paragraph 1.2 of this Agreement, and full right,
power and authority to sell, assign, transfer and deliver the assets under
the terms and conditions of this Agreement and, upon delivery and payment
for the assets, the Acquiring Fund will acquire good and marketable title
to them, subject to no restrictions on the full transfer of the assets,
including such restrictions as might arise under the Securities Act of
1933, as amended (the "1933 Act"), other than as disclosed to the Vanguard
Fund;
(m) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary actions on the part of TIP Funds' Board of
Trustees and, subject to the approval of the Selling Fund Shareholders,
this Agreement will constitute a valid and binding obligation of TIP Funds,
enforceable in accordance with its terms, subject to the effect of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other laws relating to or affecting creditors' rights and to general
equity principles;
(n) The information to be furnished by TIP Funds for use in no-action
letters, applications for exemptive orders, registration statements, proxy
materials and other documents that may be necessary in connection with the
transactions contemplated by this Agreement will be accurate and complete
in all material respects and will comply in all material respects with
federal securities and other laws and regulations under those laws
applicable to those transactions;
(o) The proxy statement of the Selling Fund (the "Proxy Statement") to
be included in the Registration Statement referred to in paragraph 5.7 of
this Agreement (insofar as it relates to the Selling Fund) will, on the
effective date of the Registration Statement and on the Closing Date, not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated in the Proxy Statement or necessary to make the
statements in the Proxy Statement, in light of the circumstances under
which the statements were made, not materially misleading; and
(p) The current prospectus and statement of additional information
filed with the Commission as part of TIP Funds' registration statement on
Form N-1A relating to the Selling Fund conform in all material respects to
the applicable requirements of the 1933 Act and the 1940 Act and the rules
and regulations under those Acts and do not include any untrue statement of
a material fact or omit to state any material fact required to be stated in
that registration statement or necessary to make the statements in the
registration statement, in light of the circumstances under which they were
made, not misleading.
4.2 The Vanguard Fund, on behalf of the Acquiring Fund, represents and
warrants to TIP Funds as follows:
(a) The Acquiring Fund is an investment series of a business trust,
duly organized, validly existing and in good standing under the laws of the
State of Delaware;
(b) The Vanguard Fund is a registered open-end management investment
company and its registration with the Commission as an investment company
under the 1940 Act is in full force and effect;
(c) The current prospectus and statement of additional information
filed as part of the Vanguard Fund's registration statement on Form N-1A,
which will become effective prior to the Closing Date, insofar as they
relate to the Acquiring Fund (the "Vanguard Fund Registration Statement")
conform in
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all material respects to the applicable requirements of the 1933 Act and
the 1940 Act and the rules and regulations of the Commission thereunder and
do not include any untrue statement of a material fact or omit to state any
material fact required to be stated in the Vanguard Fund Registration
Statement or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading;
(d) The Vanguard Fund is not, and the execution, delivery and
performance of this Agreement will not result, in a violation of its
Declaration of Trust or any material agreement, indenture, instrument,
contract, lease or other undertaking to which the Vanguard Fund on behalf
of itself or on behalf of the Acquiring Fund is a party or by which it is
bound;
(e) Except as previously disclosed in writing to and accepted by TIP
Funds, no litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or, to the
Vanguard Fund's knowledge, threatened against the Vanguard Fund in
connection with the Acquiring Fund or any of its properties or assets that,
if adversely determined, would materially and adversely affect the Vanguard
Fund's financial condition or the conduct of its business. The Vanguard
Fund knows of no facts that might form the basis for the institution of
such proceedings and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body that materially
and adversely affects its business or the business of the Acquiring Fund or
the Vanguard Fund's ability to consummate the transactions contemplated in
this Agreement;
(f) Since the inception of the Acquiring Fund, no material adverse
change has occurred with respect to the Acquiring Fund's financial
condition, assets, liabilities or business other than changes occurring in
the ordinary course of business, or any incurrence by the Acquiring Fund of
indebtedness maturing more than one year from the date that such
indebtedness was incurred, except as otherwise disclosed to and accepted by
TIP Funds. For the purposes of this subparagraph (f), a decline in net
asset value per share or the total assets of the Acquiring Fund in the
ordinary course of business does not constitute a material adverse change;
(g) At the Closing Date, all federal and other tax returns and reports
with respect to the Acquiring Fund required by law to have been filed by
the Closing Date will have been filed, and all federal and other taxes will
have been paid so far as due, or provision will have been made for the
payment of those taxes;
(h) The Vanguard Fund intends to meet the requirements of Subchapter M
of the Code for qualification and treatment of the Acquiring Fund as a
regulated investment company in the future;
(i) At the date of this Agreement, all issued and outstanding
Acquiring Fund Shares are, and at the Closing Date will be, duly and
validly issued and outstanding, fully paid and non-assessable, with no
personal liability attaching to the ownership of those shares. The Vanguard
Fund does not have outstanding any options, warrants or other rights to
subscribe for or purchase any Acquiring Fund Shares, nor is any security
convertible into any Acquiring Fund Shares currently outstanding;
(j) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary actions, if any, of the Vanguard Fund's
Board of Trustees, and this Agreement will constitute a valid and binding
obligation of the Vanguard Fund enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;
(k) The Acquiring Fund Shares to be issued and delivered to the
Selling Fund, for the account of the Selling Fund Shareholders, under the
terms of this Agreement, will at the Closing Date have been duly authorized
and, when so issued and delivered, will be duly and validly issued
Acquiring Fund Shares, and will be fully paid and non-assessable with no
personal liability attaching to the ownership of those shares;
(l) The information to be furnished by the Vanguard Fund for use in
no-action letters, applications for exemptive orders, registration
statements, proxy materials and other documents that may be necessary in
connection with the transactions contemplated in this Agreement will be
accurate and complete in all
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material respects and will comply in all material respects with federal
securities and other laws and regulations applicable to those transactions;
(m) The Proxy Statement to be included in the Registration Statement
referred to in paragraph 5.7 of this Agreement (insofar as it relates to
the Acquiring Fund) will, on the effective date of the Registration
Statement and on the Closing Date, not contain any untrue statement of a
material fact or omit to state a material fact required to be stated in the
Proxy Statement or necessary to make the statements in the Proxy Statement,
in light of the circumstances under which such statements were made, not
materially misleading; and
(n) The Vanguard Fund agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act and the 1940 Act
as it may deem appropriate in order to continue the operations of the
Acquiring Fund after the Closing Date.
ARTICLE V
Covenants of the Acquiring Fund and the Selling Fund.
5.1 The Vanguard Fund will operate the business of the Acquiring Fund, and
TIP Funds will operate the business of the Selling Fund, in the ordinary course
between the date of this Agreement and the Closing Date. The Vanguard Fund and
TIP Funds agree for purposes of this Agreement that the declaration and payment
of customary dividends and distributions will be considered to have been paid in
the ordinary course of business.
5.2 TIP Funds, on behalf of the Selling Fund, will call a meeting of its
shareholders to consider and act upon this Agreement and to take all other
actions in coordination with the Vanguard Fund necessary to obtain approval of
the transactions contemplated by this Agreement.
5.3 TIP Funds, on behalf of the Selling Fund, covenants that the Acquiring
Fund Shares to be issued under this Agreement are not being acquired for the
purpose of making any distribution other than in accordance with the terms of
this Agreement.
5.4 TIP Funds, on behalf of the Selling Fund, will assist the Vanguard Fund
in obtaining all information that the Vanguard Fund reasonably requests
concerning the beneficial ownership of the Selling Fund's Shares.
5.5 Subject to the provisions of this Agreement, the Vanguard Fund and TIP
Funds each will take, or cause to be taken, all action, and do, or cause to be
done, all actions reasonably necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement, including any
actions required to be taken after the Closing Date.
5.6 As promptly as practicable, but in any case within forty-five calendar
days after the Closing Date, TIP Funds will furnish the Vanguard Fund, in such
form as is reasonably satisfactory to the Vanguard Fund, a statement of the
earnings and profits of the Selling Fund for federal income tax purposes that
will be carried over to the Acquiring Fund as a result of Section 381 of the
Code, and that will be certified by the Selling Fund's President and its
Treasurer.
5.7 TIP Funds, on behalf of the Selling Fund, will provide the Vanguard
Fund with information reasonably necessary for the preparation of a prospectus
(the "Prospectus") that will include the Proxy Statement referred to in
paragraphs 4.1(o) and 4.2(m) of this Agreement, all to be included in a
registration statement on Form N-14 of the Vanguard Fund (the "Registration
Statement"), in compliance with the 1933 Act, the Securities Exchange Act of
1934 (the "1934 Act") and the 1940 Act in connection with the meeting of the
Selling Fund's shareholder to consider approval of this Agreement and the
transactions contemplated by this Agreement.
5.8 As promptly as practicable, but in any case within thirty days of the
Closing Date, TIP Funds, on behalf of the Selling Fund, will furnish the
Vanguard Fund with a statement containing information required for purposes of
complying with Rule 24f-2 under the 1940 Act. A notice pursuant to Rule 24f-2
will be filed by the Acquiring Fund offsetting redemptions by the Selling Fund
during the fiscal year ending on or after the applicable Closing Date against
sales of the Acquiring Fund Shares; and TIP Funds agrees that it will not net
redemptions during that period by the Selling Fund against sales of shares of
any other series of TIP Funds.
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ARTICLE VI
Conditions Precedent to the Obligations of TIP Funds.
The obligations of TIP Funds to consummate the transactions provided for in
this Agreement will be subject, at its election, to the performance by the
Vanguard Fund of all obligations to be performed by it under this Agreement on
or before the Closing Date and, in addition to those obligations to the
following specific conditions:
6.1 All representations and warranties of the Vanguard Fund contained in
this Agreement will be true and correct in all material respects as of the date
of this Agreement and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
6.2 The Vanguard Fund will have delivered to TIP Funds a certificate
executed in its name by its Chief Executive Officer, President or Vice President
and its Secretary, Treasurer or Assistant Treasurer, in a form reasonably
satisfactory to TIP Funds and dated as of the Closing Date, to the effect that
the representations and warranties of the Vanguard Fund made in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement and as to such other
matters as TIP Funds may reasonably request.
6.3 TIP Funds will have received on the Closing Date a favorable opinion
from Shearman & Sterling, counsel to the Vanguard Fund, dated as of the Closing
Date, in a form reasonably satisfactory to TIP Funds, covering the following
points:
(a) the Acquiring Fund is a separate series of the Vanguard Fund, a
business trust duly organized, validly existing and in good standing under
the laws of the State of Delaware and the Vanguard Fund has the corporate
power to own all of the Acquiring Fund's properties and assets and to carry
on the Acquiring Fund's business as presently conducted;
(b) the Vanguard Fund is registered as an investment company under the
1940 Act, and, to such counsel's knowledge, the Fund's registration with
the Commission as an investment company under the 1940 Act is in force and
effect with respect to the Acquiring Fund;
(c) this Agreement has been duly authorized, executed and delivered by
the Vanguard Fund and, assuming that the Prospectus, Registration Statement
and Proxy Statement comply with the 1933 Act, the 1934 Act and the 1940 Act
and the rules and regulations under those laws and, assuming due
authorization, execution and delivery of the Agreement by TIP Funds, is a
valid and binding obligation of the Vanguard Fund enforceable against the
Vanguard Fund in accordance with its terms, subject to the effect of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other laws relating to or affecting creditors' rights generally and to
general equity principles;
(d) the Acquiring Fund Shares to be issued to the Selling Fund's
shareholders as provided by this Agreement are duly authorized and upon
delivery will be validly issued and outstanding and are fully paid and
nonassessable with no personal liability attaching to ownership of the
Shares, and no shareholder of the Acquiring Fund has any preemptive rights
to subscription or purchase in respect of the Shares;
(e) the execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not, result in a
violation of the Vanguard Fund's Declaration of Trust or in a material
violation of any provision of any agreement relating to the Acquiring Fund
(known to such counsel) to which the Vanguard Fund is a party or by which
it or its properties are bound or, to the knowledge of such counsel, result
in the acceleration of any obligation or the imposition of any penalty,
under any agreement, judgment, or decree to which the Vanguard Fund is a
party or by which it or its properties are bound;
(f) to the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority of the United
States or State of Delaware is required for the consummation by
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the Vanguard Fund of the actions contemplated in this Agreement, except
such as have been obtained under the 1933 Act, the 1934 Act and the 1940
Act;
(g) the descriptions in the Proxy Statement, insofar as they relate to
the Vanguard Fund or the Acquiring Fund, of statutes, legal and
governmental proceedings, investigations, orders, decrees or judgments of
any court or governmental body in the United States, and contracts and
other documents, if any, are accurate and fairly present the information
required to be shown;
(h) such counsel does not know of any legal, administrative or
governmental proceedings, investigation, order, decree or judgment of any
court or governmental body, insofar as they relate to the Vanguard Fund or
the Acquiring Fund or its assets or properties, pending, threatened or
otherwise existing on or before the effective date of the Registration
Statement or the Closing Date, which are required to be described in the
Registration Statement or to be filed as exhibits to the Registration
Statement that are not described and filed as required; and
(i) the Vanguard Fund Registration Statement is effective under the
1933 Act and the 1940 Act and no stop-order suspending its effectiveness or
order pursuant to section 8(e) of the 1940 Act has been issued.
Counsel also will state that they have participated in conferences with
officers and other representatives of the Vanguard Fund at which the contents of
the Proxy Statement, the Vanguard Fund Registration Statement and related
matters were discussed and, although they are not passing upon and do not assume
any responsibility for the accuracy, completeness or fairness of the statements
contained in the Proxy Statement and the Vanguard Fund Registration Statement
(except to the extent indicated in paragraph (g) of their above opinion), on the
basis of the foregoing information (relying as to materiality upon the opinions
of officers and other representatives of the Vanguard Fund), they do not believe
that the Proxy Statement and the Vanguard Fund Registration Statement as of
their respective dates, as of the date of the Selling Fund's shareholders'
meeting, and as of the Closing Date, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated in the Proxy
Statement and the Vanguard Fund Registration Statement or necessary to make the
statements in the Proxy Statement and the Vanguard Fund Registration Statement
in the light of the circumstances under which they were made not misleading.
The opinion may state that counsel does not express any opinion or belief
as to the financial statements or other financial data, or as to the information
relating to TIP Funds or the Selling Fund, contained in the Proxy Statement,
Registration Statement or the Vanguard Fund Registration Statement, and that the
opinion is solely for the benefit of TIP Funds and its directors and officers.
Such counsel may rely as to matters governed by the laws of the State of
Delaware on an opinion of local counsel and/or certificates of officers or
directors of the Acquiring Fund. The opinion also will include such other
matters incident to the transaction contemplated by this Agreement, as TIP Funds
may reasonably request.
In this paragraph 6.3, references to the Proxy Statement include and relate
only to the text of such Proxy Statement and not, except as specifically stated
above, to any exhibits or attachments to the Proxy Statement or to any documents
incorporated by reference in the Proxy Statement.
ARTICLE VII
Conditions Precedent to the Obligations of the Vanguard Fund.
The obligations of the Vanguard Fund to complete the transactions provided
for in this Agreement will be subject, at its election, to the performance by
TIP Funds of all the obligations to be performed by it under this Agreement on
or before the Closing Date and, in addition to those obligations, the following
conditions:
7.1 All representations and warranties of TIP Funds contained in this
Agreement will be true and correct in all material respects as of the date of
this Agreement and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date;
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7.2 TIP Funds will have delivered to the Vanguard Fund a statement of the
Selling Fund's assets and liabilities, together with a list of the Selling
Fund's portfolio securities showing the tax costs of those securities by lot and
the holding periods of the securities, as of the Closing Date, certified by the
Treasurer or Assistant Treasurer of TIP Funds;
7.3 TIP Funds will have delivered to the Vanguard Fund on the Closing Date
a certificate executed in its name, and on behalf of the Selling Fund, by its
President or Vice President and its Treasurer or Assistant Treasurer, in form
and substance satisfactory to the Vanguard Fund and dated as of the Closing
Date, to the effect that the representations and warranties of TIP Funds made in
this Agreement are true and correct at and as of the Closing Date, except as
they may be affected by the transactions contemplated by this Agreement, and as
to such other matters as the Vanguard Fund shall reasonably request; and
7.4 The Vanguard Fund will have received on the Closing Date a favorable
opinion of Morgan, Lewis & Bockius LLP, counsel to TIP Funds, dated as of the
Closing Date, in a form reasonably satisfactory to the Vanguard Fund, covering
the following points:
(a) the Selling Fund is a separate investment series of TIP Funds, a
business trust that is duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts and TIP Funds
has the corporate power to own all of the Selling Fund's properties and
assets and to carry on the Selling Fund's business as presently conducted;
(b) TIP Funds is registered as an investment company under the 1940
Act and, to such counsel's knowledge, TIP Funds' registration with the
Commission as an investment company under the 1940 Act is in force and
effect with respect to the Selling Fund;
(c) this Agreement has been duly authorized, executed and delivered by
TIP Funds and, assuming that the Prospectus, the Registration Statement and
the Proxy Statement comply with the 1933 Act, the 1934 Act and the 1940 Act
and the rules and regulations under those laws and, assuming due
authorization, execution and delivery of the Agreement by the Vanguard
Fund, is a valid and binding obligation of TIP Funds enforceable against
TIP Funds in accordance with its terms, subject to the effect of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other laws relating to or affecting creditors, rights generally and to
general equity principles;
(d) the execution and delivery of the Agreement did not, and the
consummation of the transactions contemplated by this Agreement will not,
result in a violation of TIP Funds' Declaration of Trust or a material
violation of any provision of any agreement (known to such counsel) to
which TIP Funds is a party or by which it or its properties are bound or,
to the knowledge of such counsel, result in the acceleration of any
obligation or the imposition of any penalty, under any agreement, judgment
or decree to which TIP Funds is a party or by which it or its properties
are bound;
(e) to the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority of the United
States or Commonwealth of Massachusetts is required for the consummation by
TIP Funds of the transactions contemplated in this Agreement, except such
as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act;
(f) the descriptions in the Proxy Statement under the captions [add
relevant caption headings], insofar as they relate to TIP Funds, are
accurate and fairly present the information required to be shown; and
(g) counsel does not know of any legal, administrative or governmental
proceedings, investigation, order, decree or judgment of any court or
governmental body, only insofar as they relate to TIP Funds or its
respective assets or properties, pending, threatened or otherwise existing
on or before the effective date of the Registration Statement or the
Closing Date, which are required to be described in the Registration
Statement or to be filed as exhibits to the Registration Statement that are
not described and filed as required or that materially and adversely affect
the Selling Fund's business.
Counsel also will state that they have participated in conferences with
officers and other representatives of TIP Funds at which the contents of the
Proxy Statement and related matters were discussed and, although they are not
passing upon and do not assume any responsibility for the accuracy, completeness
or fairness of
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the statements contained in the Proxy Statement (except to the extent indicated
in paragraph (f) of their above opinion), on the basis of the foregoing
information (relying as to materiality to a large extent upon the opinions of
officers and other representatives of TIP Funds), they do not believe that the
Proxy Statement as of its date, as of the date of the Selling Fund's shareholder
meeting, and as of the Closing Date, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated in the Proxy
Statement regarding the Selling Fund or necessary in the light of the
circumstances under which they were made, to make the statements in the Proxy
Statement regarding the Selling Fund not misleading.
The opinion may state that counsel does not express any opinion or belief
as to the financial statements or other financial data, or as to the information
relating to the Vanguard Fund or the Acquiring Fund, contained in the Proxy
Statement or the Registration Statement, and that such opinion is solely for the
benefit of the Vanguard Fund and its directors and officers. The opinion also
will include such other matters incident to the transaction contemplated by this
Agreement as the Fund may reasonably request.
In this paragraph 7.4, references to the Proxy Statement include and relate
only to the text of the Proxy Statement and not to any exhibits or attachments
to the Proxy Statement or to any documents incorporated by reference in the
Proxy Statement.
7.5 The Vanguard Fund will have received from Ernst & Young LLP a letter
addressed to the Vanguard Fund dated as of the effective date of the
Registration Statement in form and substance satisfactory to the Vanguard Fund,
to the effect that:
(a) they are independent public accountants with respect to TIP Funds
within the meaning of the 1933 Act and the applicable regulations under the
1933 Act;
(b) in their opinion, the financial statements and per share income
and capital changes of the Selling Fund included or incorporated by
reference in the Registration Statement and reported on by them comply as
to form in all material respects with the applicable accounting
requirements of the 1933 Act and the rules and regulations under the 1933
Act;
(c) on the basis of limited procedures agreed upon by the Vanguard
Fund and TIP Funds and described in the letter (but not an audit in
accordance with generally accepted auditing standards) with respect to the
unaudited pro forma financial statements of the Selling Fund included in
the Registration Statement and the Proxy Statement, and inquiries of
appropriate officials of TIP Funds or the officers of TIP Funds responsible
for financial and accounting matters, nothing came to their attention that
caused them to believe that (i) the unaudited pro forma financial
statements do not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the rules and
regulations under the 1933 Act, or (ii) the unaudited pro forma financial
statements are not fairly presented in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that
of the audited financial statements; and
(d) on the basis of limited procedures agreed upon by the Vanguard
Fund and TIP Funds and described in the letter (but not an examination in
accordance with generally accepted auditing standards), the information
relating to the Selling Fund appearing in the Registration Statement and
the Proxy Statement that is expressed in dollars or percentages of dollars
(with the exception of performance comparisons) has been obtained from the
accounting records of the Selling Fund or from schedules prepared by
officers of TIP Funds having responsibility for financial and reporting
matters and the information is in agreement with these records, schedules
or computations made from those documents.
7.6 TIP Funds will have delivered to the Vanguard Fund, pursuant to
paragraph 4.1(f) of this Agreement, copies of financial statements of the
Selling Fund as of and for its most recently completed fiscal year.
7.7 The Vanguard Fund will have received from Ernst & Young LLP a letter
addressed to the Vanguard Fund and dated as of the applicable Closing Date
stating that as of a date no more than three business days prior to the
applicable Closing Date, Ernst & Young LLC performed limited procedures in
connection with TIP Funds' most recent unaudited financial statements relating
to the Selling Fund and that (a) nothing came to their attention in performing
the limited procedures or otherwise that led them to believe that any changes
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had occurred in the assets, liabilities, net assets, net investment income, net
increase (decrease) in net assets from operations or net increase (decrease) in
net assets as compared with amounts as of the Selling Fund's most recent audited
fiscal year end or the corresponding period in the Selling Fund's most recent
audited fiscal year, other than changes occurring in the ordinary course of
business and (b) based on the limited procedures, no change has occurred in
their report on the most recent audited financial statements of TIP Funds
relating to the Selling Fund.
ARTICLE VIII
Further Conditions Precedent to Obligations of the Acquiring Fund and the
Selling Fund.
8.1 The Agreement and the transactions contemplated in the Agreement will
have been approved by the requisite vote of the holders of the outstanding
shares of the Selling Fund in accordance with the provisions of TIP Funds'
Declaration of Trust and applicable law and certified copies of the votes
evidencing the approval will have been delivered to the Acquiring Fund.
8.2 On the Closing Date, no action, suit or other proceeding will be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated by this Agreement. On the Closing
Date, the Commission will not have issued an unfavorable report under Section
25(b) of the 1940 Act, nor instituted any proceeding seeking to enjoin the
consummation of the transactions contemplated by this Agreement under Section
25(c) of the 1940 Act, and no action, suit or other proceeding will be
threatened or pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief in connection
with, this Agreement or the transactions contemplated by this Agreement.
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state blue sky and securities authorities, including
no-action positions of and exemptive orders from federal and state authorities)
deemed necessary by the Vanguard Fund or TIP Funds to permit consummation, in
all material respects, of the transactions contemplated by this Agreement will
have been obtained, except if the failure to obtain any such consent, order or
permit would not involve a risk of a material adverse effect on the assets or
properties of the Acquiring Fund or the Selling Fund, provided that either the
Vanguard Fund or TIP Funds may for itself waive any of the conditions in this
paragraph 8.3.
8.4 The Vanguard Fund Registration Statement and the Registration Statement
will each have become effective under the 1933 Act and no stop orders suspending
the effectiveness of the Vanguard Fund Registration Statement and the
Registration Statement will have been issued and, to the best knowledge of the
Vanguard Fund or TIP Funds, no investigation or proceeding for that purpose will
have been instituted or be pending, threatened or contemplated under the 1933
Act.
8.5 The parties will have received a favorable opinion of Stradley Ronon
Stevens & Young, LLP, addressed to, and in form and substance satisfactory to
TIP Funds substantially to the effect that, provided the acquisition
contemplated hereby is carried out in accordance with this Agreement and based
upon certificates with respect to matters of fact from the officers of TIP Funds
and the Vanguard Fund, that for federal income tax purposes:
(a) the transfer of all or substantially all of the Selling Fund's
assets in exchange for Acquiring Fund Shares and the assumption by the
Acquiring Fund of the Liabilities of the Selling Fund will constitute a
"reorganization" within the meaning of Section 368(a)(1)(F) of the Code and
the Acquiring Fund and the Selling Fund are each a "party to a
reorganization" within the meaning of Section 368(b) of the Code; (b) no
gain or loss will be recognized by the Acquiring Fund upon the receipt of
the assets of the Selling Fund solely in exchange for Acquiring Fund Shares
and the assumption by the Acquiring Fund of the Liabilities of the Selling
Fund; however, no opinion will be expressed as to whether any accrued
market discount will be required to be recognized as ordinary income; (c)
no gain or loss will be recognized by the Selling Fund upon the transfer of
the Selling Fund's assets to the Acquiring Fund in exchange for the
Acquiring Fund Shares and the assumption by the Acquiring Fund of the
Liabilities
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of the Selling Fund or upon the distribution (whether actual or
constructive) of the Acquiring Fund Shares to the Selling Fund's
shareholders in exchange for their shares of the Selling Fund; (d) no gain
or loss will be recognized by shareholders of the Selling Fund upon the
exchange of their Selling Fund Shares for the Acquiring Fund Shares and the
assumption by the Acquiring Fund of the Liabilities of the Selling Fund;
(e) the aggregate tax basis for the Acquiring Fund Shares received by each
of the Selling Fund Shareholders pursuant to the Reorganization will be the
same as the aggregate tax basis of the Selling Fund Shares held by the
shareholder immediately prior to the Reorganization, and the holding period
of the Acquiring Fund Shares to be received by each Selling Fund
shareholder will include the period during which the Selling Fund Shares
exchanged for the Acquiring Fund Shares were held by the shareholder
(provided that the Selling Fund Shares were held as capital assets on the
date of the Reorganization); and (f) the tax basis of the Selling Fund's
assets acquired by the Acquiring Fund will be the same as the tax basis of
the assets to the Selling Fund immediately prior to the Reorganization, and
the holding period of the assets of the Selling Fund in the hands of the
Acquiring Fund will include the period during which those assets were held
by the Selling Fund.
Notwithstanding anything in this Agreement to the contrary, neither the
Vanguard Fund nor TIP Funds may waive the conditions set out in this paragraph
8.5.
ARTICLE IX
Brokerage Fees and Expenses; Other Agreements.
9.1 The Vanguard Fund represents and warrants to TIP Funds, and TIP Funds
represents and warrants to the Vanguard Fund, that no brokers or finders or
other entities are entitled to receive any payments in connection with the
transactions provided for in this Agreement.
9.2 The Vanguard Fund or its affiliates agrees to bear certain of the
expenses incurred in connection with the transactions contemplated by this
Agreement, whether or not consummated (excluding extraordinary expenses such as
litigation expenses, damages and other expenses not normally associated with
transactions of the type contemplated by this Agreement). These expenses consist
of: (i) expenses incurred by Vanguard in connection with preparing this
Agreement and the Registration Statement; (ii) expenses incurred by Vanguard in
connection with preparing and filing the Vanguard Fund Registration Statement;
(iii) fees and expenses of preparing and filing such forms for notification
purposes, if required under applicable state securities laws with respect to the
Acquiring Fund Shares to be issued in connection with the Reorganization; and
(iv) postage, printing, accounting fees, and legal fees incurred in connection
with the transactions contemplated by this Agreement.
9.3 TIP Funds or its affiliates agrees to bear certain of the expenses
incurred in connection with the transactions contemplated by this Agreement.
These expenses consist of (i) expenses incurred by TIP Funds in connection with
preparing this Agreement and the Registration Statement; (ii) expenses
associated with preparing the Proxy Statement; and (iii) solicitation costs and
expenses incurred in connection with the shareholders meeting referred to in
paragraph 5.2 of this Agreement.
9.4 (a) TIP Funds or its affiliates ("Turner") will indemnify and hold
harmless the Vanguard Fund, the Acquiring Fund, The Vanguard Group, Inc., their
directors, officers, employees, and affiliates (each, a "Turner Indemnified
Party"), from and against any and all damages, costs and expenses (including
reasonable attorney's fees and costs) incurred by any of them as a result of any
breach or failure of TIP Funds' representations or warranties under this
Agreement, or as a result of any willful misconduct or negligence by TIP Funds
in the performance (or failure to perform) of TIP Funds' obligations under this
Agreement.
(b) Turner's agreement to indemnify a Turner Indemnified Party pursuant to
paragraph 9.4(a) is expressly conditioned upon Turner's being promptly notified
of any action or claim brought against any Turner Indemnified Party after that
party receives notice of the action. The failure of a Turner Indemnified Party
to notify Turner will not relieve Turner from any liability that Turner may have
otherwise than on account of this indemnification agreement.
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(c) In case any action or claim is brought against any Turner Indemnified
Party and that party timely notifies Turner of the commencement of the action or
claim, Turner will be entitled to participate in and, to the extent that it
wishes to do so, to assume the defense of the action or claim with counsel
satisfactory to it. If Turner decides to assume the defense of the action,
Turner will not be liable to the Turner Indemnified Party for any legal or other
expenses subsequently incurred by the Turner Indemnified Party in connection
with the defense of the action or claim other than: (i) reasonable costs of
investigation or the furnishing of documents or witnesses and (ii) all
reasonable fees and expenses of separate counsel to the Turner Indemnified Party
if the Turner Indemnified Party has concluded reasonably that representation of
Turner and the Turner Indemnified Party would be inappropriate as a result of
actual or potential differing interests between them in the conduct of the
defense of such action.
9.5 (a) The Vanguard Fund or its affiliates ("Vanguard") will indemnify and
hold harmless TIP Funds, the Selling Fund, Turner Investment Partners, Inc.,
their directors, officers, employees and affiliates (each, a "Vanguard
Indemnified Party") from and against any and all damages (including reasonable
attorney's fees and costs) incurred by any of them as a result of any breach or
failure of the Vanguard Fund's representations or warranties under this
Agreement, or as a result of any willful misconduct or negligence by the
Vanguard Fund in the performance (or failure to perform) of the Vanguard Fund's
obligations under this Agreement.
(b) Vanguard's agreement to indemnify a Vanguard Indemnified Party pursuant
to this paragraph 9.5(b) is expressly conditioned upon Vanguard's being promptly
notified of any action or claim brought against any Vanguard Indemnified Party
after that party receives notice of the action. The failure of a Vanguard
Indemnified Party to notify Vanguard will not relieve Vanguard from any
liability that Vanguard may have otherwise than on account of this
indemnification agreement.
(c) In case any action or claim is brought against any Vanguard Indemnified
Party and that party timely notifies Vanguard of the commencement of the action
or claim, Vanguard will be entitled to participate in and, to the extent that it
wishes to do so, to assume the defense of the action or claim with counsel
satisfactory to it. If Vanguard decides to assume the defense of the action,
Vanguard will not be liable to the Vanguard Indemnified Party for any legal or
other expenses subsequently incurred by the Vanguard Indemnified Party in
connection with the defense of the action or claim other than: (i) reasonable
costs of investigation or the furnishing of documents or witnesses and (ii) all
reasonable fees and expenses of separate counsel to the Vanguard Indemnified
Party if the Vanguard Indemnified Party has concluded reasonably that
representation of Vanguard and the Vanguard Indemnified Party would be
inappropriate as a result of actual or potential differing interest between them
in the conduct of the defense as a result of the action.
ARTICLE X
Entire Agreement; Survival of Warranties.
10.1 The Vanguard Fund and TIP Funds agree that neither of them has made
any representation, warranty or covenant not set forth in this Agreement and
that this Agreement represents the entire agreement among them.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered in accordance with its terms will survive
the consummation of the transactions contemplated under this Agreement.
ARTICLE XI
Termination.
11.1 This Agreement may be terminated at any time at or prior to the
Closing Date by: (i) mutual agreement of TIP Funds and the Vanguard Fund; (ii)
TIP Funds, in the event the Vanguard Fund has, or the Vanguard Fund in the event
TIP Funds has, materially breached any representation, warranty or agreement
contained in this Agreement to be performed at or prior to the Closing Date; or
(iii) TIP Funds, or the Vanguard Fund in the event a condition included in this
Agreement expressed to be precedent to the
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obligations of the terminating party or parties has not been met and it
reasonably appears that it will not or cannot be met.
11.2 In the event of any such termination, the Vanguard Fund or TIP Funds,
or their respective directors or officers, will not be liable to the other party
or parties.
ARTICLE XII
Amendments.
This Agreement may be amended, modified or supplemented in writing in such
manner as may be mutually agreed upon by the authorized officers of the Vanguard
Fund and TIP Funds; provided, however, that following the meeting of the Selling
Fund's shareholders called pursuant to paragraph 5.2 of this Agreement, no
amendment may have the effect of changing the provisions for determining the
number of the Acquiring Fund Shares to be issued to the Selling Fund's
Shareholders under this Agreement to the detriment of the shareholders without
their further approval.
ARTICLE XIII
Notices.
13.1 Any notice, report, statement or demand required or permitted by any
provisions of this Agreement will be in writing and given by prepaid telegraph,
telecopy, or certified mail addressed to TIP Funds:
1235 Westlakes Drive
Suite 350
Berwyn, PA 19312
Attention: Stephen J. Kneeley, President
with a copy to:
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Attention: Edward B. Baer, Esq.
or to the Vanguard Fund at:
P.O. Box 2600
Valley Forge, PA 19482
Attention: Suzanne F. Barton, Esq.
with a copy to:
Shearman & Sterling
1801 Pennsylvania Ave., N.W.
Suite 900
Washington, D.C. 20004
Attention: Barry P. Barbash, Esq.
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<PAGE>
ARTICLE XIV
Headings; Counterparts; Governing Law; Assignment; Limitation of Liability.
14.1 The article and paragraph headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of
which will be deemed an original.
14.3 This Agreement will be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania.
14.4 This Agreement will bind and inure to the benefit of the parties to
the Agreement and their respective successors and assigns, but no assignment or
transfer of the Agreement or of any rights or obligations under the Agreement
may be made by either party without the written consent of the other party.
Nothing expressed or implied in this Agreement is intended or may be construed
to confer upon or give any person, firm or corporation, other than the parties
to the Agreement and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
------------------------------
Each of the parties to this Agreement has caused this Agreement to be
executed by its Chief Executive Officer, President or Vice President, and
attested to by its Secretary or Assistant Secretary.
By: [Vanguard Fund]
Name:[_____________________]
Title:[____________________]
By:[TIP Funds]
Name:[____________________]
Title:[____________________]
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<PAGE>
TIP FUNDS
Turner Growth Equity Fund
Special Meeting of the Shareholders
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, MAY 22, 2000
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints Stephen J. Kneeley and Brian M. Ferko as proxies and
each of them, each with full power of substitution, to vote at the Special
Meeting of Shareholders of the Turner Growth Equity Fund of TIP Funds (the
"Trust") to be held in the offices of Turner Investment Partners, Inc.
("Turner"), 1235 Westlakes Drive, Suite 350, Berwyn, Pennsylvania 19312, on
Monday, May 22, 2000, at 3:30 p.m., and any adjournments or postponements
thereof (the "Meeting") all shares of beneficial interest of said Trust that the
undersigned would be entitled to vote if personally present at the Meeting
("Shares") on the proposal set forth below respecting the proposed Agreement and
Plan of Reorganization between the Trust, on behalf of the Turner Growth Equity
Fund, and Vanguard Fenway Funds, and in accordance with their own discretion,
any other matters properly brought before the Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL TO:
PROPOSAL 1. Approval of the reorganization of the Turner Growth Equity Fund into
the Vanguard Growth Equity Fund.
____For ____Against ____Abstain
This proxy will, when properly executed, be voted as directed herein by the
signing Shareholder. If no direction is given when the duly executed Proxy is
returned, this Proxy will be voted FOR the foregoing proposal and will be voted
in the appointed proxies' discretion upon such other business as may properly
come before the Meeting.
The undersigned acknowledges receipt with this Proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this Proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: ________ , 2000
_________________________________
Signature of Shareholder
_________________________________
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED, POSTAGE-PAID ENVELOPE
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN
PERSON IF YOU DO ATTEND.
<PAGE>
Telephone and Internet Voting Instructions:
To vote by Telephone:
1) Read the Proxy Statement and have this Proxy card at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit control number set forth on this Proxy card and follow
the simple instructions.
To vote by Internet:
1) Read the Proxy Statement and have this Proxy card at hand.
2) Go to Website www.proxyvote.com.
3) Enter the 12-digit control number set forth on this Proxy card and follow
the simple instructions.
