July 12, 1999
Xxxxxx High Yield Total Return Fund
-- Xxxxxx Funds Trust
Xxxxxx High Yield Trust II
-- Xxxxxx Funds Trust
One Post Office Xxxxxx
Xxxxxx, XX 00000
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization dated as of March 17, 1999 (the "Agreement"), by Xxxxxx Funds
Trust (the "Trust"), a Massachusetts business trust, on behalf of two of its
series, Xxxxxx High Yield Trust II ("Acquiring Fund") and Xxxxxx High Yield
Total Return Fund ("Target Fund"). The Agreement describes a proposed
transaction (the "Transaction") to occur on July 12, 1999, or such other date as
may be decided by the Trust (the "Exchange Date"), pursuant to which Acquiring
Fund will acquire substantially all of the assets of Target Fund in exchange for
shares of beneficial interest in Acquiring Fund (the "Acquiring Fund Shares")
and the assumption by Acquiring Fund of all of the liabilities of Target Fund
following which the Acquiring Fund Shares received by Target Fund will be
distributed by Target Fund to its shareholders in liquidation and termination of
Target Fund. This opinion as to certain federal income tax consequences of the
Transaction is furnished to you pursuant to Sections 8(g) and 9(g) of the
Agreement. Capitalized terms not defined herein are defined in the Agreement.
Target Fund is a series of the Trust which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Trust which is registered under the
1940 Act as an open-end management investment company. Shares of Acquiring Fund
are redeemable at net asset value at each shareholder's option.
XXXXXX HIGH YIELD TOTAL RETURN FUND JULY 12, 1999
XXXXXX HIGH YIELD TRUST II
XXXXXX FUNDS TRUST
For purposes of this opinion, we have considered the Agreement, the
Proxy Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the
documents and items referred to above, we are of the opinion that for federal
income tax purposes:
(i) The Transaction will constitute a reorganization within the
meaning of Section 368(a) of the Code. The Target Fund and
the Acquiring Fund will each be a "party to a
reorganization" within the meaning of Section 368(b) of the
Code;
(ii) No gain or loss will be recognized by Target Fund upon the
transfer of Target Fund's assets to Acquiring Fund in
exchange for Acquiring Fund Shares and the assumption by
Acquiring Fund of the liabilities of Target Fund, or upon
the distribution of Acquiring Fund Shares by Target Fund to
its shareholders in liquidation;
(iii) No gain or loss will be recognized by the Target Fund
shareholders upon the exchange of their Target Fund Shares
for Acquiring Fund Shares;
(iv) The basis of Acquiring Fund Shares a Target Fund
shareholder receives in connection with the Transaction
will be the same as the basis of his or her Target Fund
Shares exchanged therefor;
(v) A Target Fund shareholder's holding period for his or her
Acquiring Fund Shares will be determined by including the
period for which he or she held the Target Fund Shares
exchanged therefor, provided that he or she held such
Target Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon
the receipt of the assets of Target Fund in exchange for
Acquiring Fund Shares and the assumption by Acquiring Fund
of the liabilities of Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of
Target Fund transferred to Acquiring Fund in the
Transaction will be the same as the basis of such assets in
the hands of Target Fund immediately prior to the transfer;
and
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XXXXXX HIGH YIELD TOTAL RETURN FUND JULY 12, 1999
XXXXXX HIGH YIELD TRUST II
XXXXXX FUNDS TRUST
(viii) The holding periods of the assets of Target Fund in the
hands of Acquiring Fund will include the periods during
which such assets were held by Target Fund.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
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