EXHIBIT 12
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[XXXXXXX & XXXXX LLP LETTERHEAD]
___________, 2003
Board of Trustees Board of Directors
Eastern Point Advisors Funds Trust The Avalon Fund of Maryland, Inc.
000 Xxxxxxxx Xxxx, Xxxxx 000 000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000-0000 Xxx Xxxxx, XX 00000
RE: AGREEMENT AND PLAN OF REORGANIZATION - FEDERAL TAX CONSEQUENCES
Ladies and Gentlemen:
We have acted as counsel to The Avalon Fund of Maryland, Inc. ("Avalon"), a
Maryland corporation, in connection with the proposed transfer of substantially
all of the assets of Avalon's single series, known as the Avalon Capital
Appreciation Fund (the "Avalon Fund"), to the Eastern Point Advisors Twenty Fund
(the "Eastern Point Fund"), a series of Eastern Point Advisors Funds Trust
("Eastern Point Trust"), solely in exchange for shares of beneficial interest of
the Eastern Point Fund (the "Eastern Point Fund Shares") to be distributed to
the Avalon Fund shareholders in liquidation of the Avalon Fund. The transactions
will occur pursuant to the Agreement and Plan of Reorganization (the
"Agreement"), dated as of June 19, 2003, executed by Xxxxxx on behalf of the
Avalon Fund and by Eastern Point Trust on behalf of the Eastern Point Fund. The
Agreement is attached as Appendix A to the Proxy Statement/Prospectus included
in the Registration Statement on Form N-14 under the Securities Act of 1933 (the
"Registration Statement"), as filed by Eastern Point Trust with the Securities
and Exchange Commission. This opinion is rendered pursuant to Sections 7.7 and
8.7 of the Agreement. Capitalized terms not otherwise defined herein have the
meanings ascribed to them in the Agreement.
In rendering our opinion, we have examined the Registration Statement and
the Agreement and have, with your permission, relied upon, and assumed as
correct, (i) the factual information contained in the Registration Statement;
(ii) the representations and covenants contained in the Agreement; (iii) the
Acquiring Portfolio Tax Representation Certificate and the Acquired Portfolio
Tax Representation Certificate attached hereto; and (iv) such other materials as
we have deemed necessary or appropriate as a basis for our opinion.
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Eastern Point Advisors Funds Trust
The Avalon Fund of Maryland, Inc.
_________________, 2003
On the basis of the information, representations and covenants contained in
the foregoing materials and assuming the Reorganization is consummated in the
manner described in the Agreement and the Proxy Statement/Prospectus included in
the Registration Statement, we are of the opinion that:
1. The Reorganization will constitute a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Avalon Fund and the Eastern Point Fund will each 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 Avalon Fund upon the
transfer of substantially all of its assets to the Eastern Point Fund in
exchange solely for the Eastern Point Fund Shares and the assumption by the
Eastern Point Fund of the Avalon Fund Liabilities;
3. No gain or loss will be recognized by the Eastern Point Fund upon
its receipt of substantially all of the assets of the Avalon Fund in exchange
solely for the Eastern Point Fund Shares, or upon its assumption of the Avalon
Fund Liabilities;
4. No gain or loss will be recognized by the Avalon Fund on the
distribution to the Avalon Fund Shareholders of the Eastern Point Fund Shares
received by the Avalon Fund in the Reorganization;
5. No gain or loss will be recognized by the Avalon Fund Shareholders
upon the liquidation of the Avalon Fund and the related surrender of their
shares of the Avalon Fund solely in exchange for the Eastern Point Fund Shares;
6. The Eastern Point Fund's basis in the assets acquired from the
Avalon Fund will be the same as the basis of those assets in the hands of the
Avalon Fund immediately prior to the Reorganization;
7. The holding period of the assets of the Avalon Fund received by the
Eastern Point Fund will include the period during which such assets were held by
the Avalon Fund;
8. The basis of the Eastern Point Fund Shares received by each Avalon
Fund Shareholder in connection with the Reorganization will be the same as the
Avalon Fund Shareholder's basis in his or her Avalon Fund Shares immediately
prior to the Reorganization;
9. The holding period of the Eastern Point Fund Shares received by
each Avalon Fund Shareholder in connection with the Reorganization will include
such Avalon Fund Shareholder's holding period of his or her Avalon Fund Shares
held immediately prior to the Reorganization, provided that such Avalon Fund
Shares were held by such Avalon Fund Shareholder as a capital asset as of the
Effective Time;
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Eastern Point Advisors Funds Trust
The Avalon Fund of Maryland, Inc.
_________________, 2003
10. The Eastern Point Fund will succeed to and take into account as of
the Effective Time the items of the Avalon Fund described in Section 381(c) of
the Code, subject to the conditions and limitations specified in Sections 381(b)
and (c), 382, 383 and 384 of the Code, and the applicable Treasury Regulations
thereunder.
The discussion in the Proxy Statement/Prospectus under the captions
"Summary - Federal Tax Consequences" and "Approval of the Agreement and
Reorganization - Federal Tax Considerations," to the extent it constitutes
summaries of legal matters or legal conclusions, is accurate in all material
respects.
This opinion expresses our views only as to federal income tax laws in
effect as of the date hereof, including the Code, applicable Treasury
Regulations, published rulings and administrative practices of the Internal
Revenue Service (the "Service") and court decisions.
This opinion represents our best legal judgment as to the matters addressed
herein, but is not binding on the Service or the courts. Furthermore, the legal
authorities upon which we rely are subject to change either prospectively or
retroactively. Any change in such authorities or any change in the facts or
representations, or any past or future actions by the Eastern Point Trust, the
Eastern Point Fund, Avalon or the Avalon Fund contrary to such representations
might adversely affect the conclusions stated herein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name under the
captions "Summary - Federal Tax Consequences" and "Approval of the Agreement and
Reorganization - Federal Tax Considerations" in the Proxy Statement/Prospectus
included in the Registration Statement.
Very truly yours,
DRAFT
XXXXXXX & XXXXX LLP
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