Board of Trustees Board of Trustees UMB Scout Funds Trendstar Investment Trust Kansas City, MO 64106 Overland Park, KS 66210 Re: Agreement and Plan of Reorganization (“Agreement”) made as of this day of _______, 2009, by and between UMB Scout Funds...
| EX-99.12(a) | ||
| _______________, 2009 | ||
| Board of Trustees | Board of Trustees | |
| UMB Scout Funds | Trendstar Investment Trust | |
| 0000 Xxxxx Xxxxxxxxx | 0000 Xxxxxxx Xxxxxxxxx | |
| Kansas City, MO 64106 | Overland Park, KS 66210 | |
| Re: Agreement and Plan of Reorganization (“Agreement”) made as of this day of _______, 2009, by and between UMB Scout Funds (the “Acquiring Trust), a statutory trust created under the laws of the State of Delaware, on behalf of its series, the UMB Scout TrendStar Small Cap Fund (“Acquiring Fund”), and Trendstar Investment Trust (the “Trendstar Trust”), a statutory trust created under the laws of the State of Delaware, on behalf of its series, the Trendstar Small-Cap Fund (“Acquired Fund”) | ||
Ladies and Gentlemen:
You have requested our opinion concerning certain federal income tax consequences of the reorganization of the Acquired Fund (the “Reorganization”), which will consist of: (i) the acquisition by the Acquiring Trust on behalf of the Acquiring Fund of all of the property, assets and goodwill of the Acquired Fund in exchange solely for full and fractional shares of beneficial interest, without par value, of the Acquiring Fund (“Acquiring Fund Shares”), which are voting securities; (ii) the assumption by the Acquiring Trust on behalf of the Acquiring Fund of the liabilities of the Acquired Fund; (iii) the distribution of the Acquiring Fund Shares equal in number to the number of full and fractional shares of beneficial interest, without par value, of the Acquired Fund (“Acquired Fund Shares”) outstanding at the time of calculation of the Acquired Fund’s net asset value on the business day immediately preceding the Effective Date of the Reorganization in complete liquidation of the Acquired Fund; and (iv) the dissolution of the Acquired Fund as soon as practicable after the date of the closing (hereinafter, “the Closing”), all upon and subject to the terms and conditions of the Agreement. The Acquiring Fund currently is a shell series, without assets or liabilities, created for the purpose of acquiring the assets and liabilities of the Acquired Fund.
In rendering our opinion, we have reviewed and relied upon: (a) a copy of the executed Agreement, dated as of _________; (b) the combined proxy statement/prospectus provided to shareholders of Acquired Funds in connection with a Special Meeting of shareholders of Acquired Fund held on June 26, 2009; (c) certain representations concerning the Reorganization made to us by the Acquiring Trust and the Trendstar Trust in letters each dated ___________ (the “Representation Letters”); (d) all other documents, financial and other reports and corporate
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minutes we deemed relevant or appropriate; and (e) such statutes, regulations, rulings and decisions as we deemed material in rendering this opinion. All capitalized terms used herein, unless otherwise defined, are used as defined in the Agreement.
For purposes of this opinion, we have assumed that the Acquired Fund, on the Closing Date of the Reorganization, satisfies, and immediately following the Closing Date of the Reorganization, the Acquiring Fund will continue to satisfy, the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), for qualification as regulated investment companies.
Based on the foregoing, and provided the Reorganization is carried out in accordance with the applicable laws of the State of Delaware, the terms of the Agreement and the statements in the Representation Letter for the Acquired Fund and the Acquiring Fund, it is our opinion that:
1. The acquisition by the Acquiring Fund of all of the assets of the Acquired Fund, as provided for in the Agreement, in exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of the liabilities of the Acquired Fund, followed by the distribution by the Acquired Fund to its shareholders of the Acquiring Fund Shares in complete liquidation of the Acquired Fund, will qualify as a reorganization within the meaning of Section 368(a)(1)(F) of the Code, and the Acquired Fund and the Acquiring Fund each will be a “party to the reorganization” within the meaning of Section 368(b) of the Code.
2. No gain or loss will be recognized by the Acquired Fund upon the transfer of all of its assets to, and assumption of its Liabilities by, the Acquiring Fund in exchange solely for Acquiring Fund Shares pursuant to Section 361(a) and Section 357(a) of the Code.
3. No gain or loss will be recognized by the Acquiring Fund upon the receipt by it of all of the assets of the Acquired Fund in exchange solely for the assumption of the Liabilities of the Acquired Fund and issuance of the Acquiring Fund Shares pursuant to Section 1032(a) of the Code.
4. No gain or loss will be recognized by the Acquired Fund upon the distribution of the Acquiring Fund Shares by the Acquired Fund to its shareholders in complete liquidation (in pursuance of the Agreement) pursuant to Section 361(c)(1) of the Code.
5. The tax basis of the assets of the Acquired Fund received by the Acquiring Fund will be the same as the tax basis of such assets in the hands of the Acquired Fund immediately prior to the transfer pursuant to Section 362(b) of the Code.
6. The holding periods of the assets of the Acquired Fund in the hands of the Acquiring Fund will include the periods during which such assets were held by the Acquired Fund pursuant to Section 1223(2) of the Code.
7. No gain or loss will be recognized by the shareholders of the Acquired Fund upon the exchange of all of their Acquired Fund Shares for the Acquiring Fund Shares pursuant to Section 354(a) of the Code.
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8. The aggregate tax basis of the Acquiring Fund Shares to be received by each shareholder of the Acquired Fund will be the same as the aggregate tax basis of Acquired Fund Shares exchanged therefor pursuant to Section 358(a)(1) of the Code.
9. The holding period of Acquiring Fund Shares received by a shareholder of the Acquired Fund will include the holding period of the Acquired Fund Shares exchanged therefor, provided that the shareholder held Acquired Fund Shares as a capital asset on the date of the exchange pursuant to Section 1223(1) of the Code.
10. The Acquiring Fund will succeed to and take into account, as of the date of the transfer as defined in Section 1.381(b)-1(b) of the income tax regulations issued by the United States Department of the Treasury (the “Income Tax Regulations”), the items of the Acquired Fund described in Section 381(c) of the Code.
Our opinion is based upon the Code, the applicable Income Tax Regulations, the present positions of the Internal Revenue Service (the “Service”) as are set forth in published revenue rulings and revenue procedures, present administrative positions of the Service, and existing judicial decisions, all of which are subject to change either prospectively or retroactively. We do not undertake to make any continuing analysis of the facts or relevant law following the date of the Reorganization.
Our opinion is conditioned upon the performance by the Acquired Fund, and Acquiring Trust, on behalf of the Acquiring Fund, of their undertakings in the Agreement and the Representation Letters. Our opinion is limited to the transactions incident to the Reorganization described herein, and no opinion is rendered with respect to (i) any other transaction or (ii) the effect, if any, of the Reorganization (and/or the transactions incident thereto) on any other transaction and/or the effect, if any, of any such other transaction on the Reorganization.
This opinion is being rendered to the Acquiring Fund and the Acquired Fund, and may be relied upon only by such Funds and the shareholders of each. We hereby consent to the use of this opinion as an exhibit to the Registration Statement of Acquiring Fund on Form N-14, and any amendments thereto, covering the registration of Acquiring Fund Shares under the Securities Act of 1933, as amended, to be issued in the Reorganization.
Very truly yours,
XXXXXXXX XXXXX XXXXXXX & XXXXX, LLP
