Exhibit 2
February __, 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 ______, 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 ______, 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 February __, 1999
Xxxxxx High Yield Trust II
Xxxxxx Funds Trust
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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
Xxxxxx High Yield Total Return Fund February __, 1999
Xxxxxx High Yield Trust II
Xxxxxx Funds Trust
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(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,
Ropes & Gray
