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Vanguard Proposes Reorganization of Two Actively Managed Funds

The Vanguard Group plans to reorganize two stock funds managed by Provident Investment Counsel and Schroder International into two new Vanguard products.

The firm filed statements with the Securities and Exchange Commission today to create two new funds, the Vanguard Mid-Cap Growth Fund and Vanguard International Explorer Fund. If the proposals are approved by shareholders, who are expected to decide on the issue early this summer, Vanguard will reorganize the Provident Investment Counsel Mid Cap Fund A, $31 million, and Schroder International Smaller Companies Fund, $26 million, into the new Vanguard offerings.

Provident is expected to continue to serve as investment advisor to the new Vanguard Mid-Cap Growth Fund. Schroder will also be retained as the investment advisor to the new Vanguard International Explorer Fund. The investment objectives of both products are not expected to change, Vanguard said.

The new funds will increase Vanguard's U.S. actively managed equity offerings to 23, excluding annuities. The move will also expand the company's external investment adviser relationships to 22.