February 25, 1999
Morgan Stanley Dean Witter Income Builder Fund
Two World Trade Center
New York, New York 10048
TCW/DW Income and Growth Fund
Two World Trade Center
New York, New York 10048
Gentlemen:
You have requested our opinion as to the Federal income tax
consequences of the transaction (the "Reorganization") described below pursuant
to which (i) substantially all assets of TCW/DW Income and Growth Fund ("Income
& Growth"), a Massachusetts business trust, will be combined with those of
Morgan Stanley Dean Witter Income Builder Fund, a Massachusetts business trust
(the "Trust"), in exchange for shares of the Trust ("Trust Shares"), and the
assumption by the Trust of certain liabilities of Income & Growth (the
"Liabilities"); (ii) Income & Growth will be liquidated; and (iii) the Trust
Shares will be distributed to the holders ("Income & Growth Shareholders") of
shares in Income & Growth ("Income & Growth Shares").
We have examined and are familiar with such documents, records and
other instruments as we have deemed appropriate for purposes of this opinion
letter, including the Registration Statement filed with the Securities and
Exchange Commission under the Securities Act of 1933 on Form N-14, relating to
the Trust Shares (the "Registration Statement") which includes, as a part
thereof, the proxy statement of Income & Growth (the "Income & Growth Proxy"),
which will be used to solicit proxies of Income & Growth Shareholders in
connection with the Special Meeting of Income & Growth Shareholders and the
Agreement and Plan of Reorganization by and between the Trust and Income &
Growth (the "Plan").
In rendering this opinion, we have assumed that such documents as yet
unexecuted will, when executed, conform to the proposed forms of such documents
that we have examined. We have further assumed that the Reorganization will be
carried out pursuant to the terms of the Plan, that factual statements and
information contained in the Registration Statement, the Income & Growth Proxy
and other documents, records and instruments supplied to us are correct and
that there will be no material change with respect to such facts or information
prior to the time of the Reorganization. In rendering our opinion, we have also
relied on the representations and facts discussed below which have been
provided to us by Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"),
TCW Funds Management Inc. ("TCW"), the Trust and Income & Growth, and we have
assumed that such representations and facts will remain correct at the time of
the Reorganization.
FACTS
The Trust is an open-end diversified management investment company
engaged in the continuous offering of its shares to the public. Since its
inception, the Trust has conducted its affairs so as to qualify, and has
elected to be taxed, as a regulated investment company under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Income & Growth is an open-end diversified management investment
company engaged in the continuous offering of its shares to the public. Since
its inception, Income & Growth has conducted its affairs so as to qualify, and
has elected to be taxed, as a regulated investment company under Section 851 of
the Code.
The Board of Trustees of each of the Trust and Income & Growth have
determined, for valid business reasons, that it is advisable to combine the
assets of the Trust and Income & Growth into one fund.
In view of the above, the Board of Trustees of Income & Growth adopted
the Plan, subject to, among other things, approval by Income & Growth
Shareholders. Pursuant to the Plan, Income & Growth will transfer all of its
assets to the Trust in exchange for the Trust Shares (including fractional
Trust Shares) and the assumption by the Trust of the Liabilities. Immediately
thereafter, Income & Growth will distribute the Trust Shares to Income & Growth
Shareholders in exchange for and in cancellation of their Income & Growth
Shares and in complete liquidation of Income & Growth.
Each of the following representations, among other representations,
has been made to us in connection with the Reorganization by MSDW Advisors,
TCW, Income & Growth and by the Trust.
(1) To the best of the knowledge of the management of MSDW Advisors,
TCW, Income & Growth, the Trust, and their affiliates, there is no plan or
intention on the part of Income & Growth Shareholders, to redeem, sell,
exchange or otherwise dispose of a number of Trust Shares that would reduce
Income & Growth Shareholders' ownership of Trust Shares to a number of
Trust Shares having a value, as of the date of the Reorganization, of less than
fifty percent of the value of all of the formerly outstanding Income & Growth
Shares as of such date;
(2) The Trust has no plan or intention to reacquire any of the Trust
Shares to be issued pursuant to the Reorganization except to the extent
necessary to comply with its legal obligation to redeem its own shares;
(3) The Liabilities to be assumed by or transferred to the Trust were
incurred by Income & Growth in the ordinary course of business and are
associated with the assets being transferred to the Trust;
(4) The amount of the Liabilities will not exceed the aggregate
adjusted basis of Income & Growth for its assets transferred to the Trust;
(5) The Trust has no plan or intention to sell or otherwise dispose of
more than fifty percent of the assets of Income & Growth acquired in the
Reorganization, except for dispositions made in the ordinary course of
business;
(6) There is no indebtedness between Income & Growth and the Trust
that was issued, acquired or will be settled at a discount;
(7) Income & Growth has been a regulated investment company within the
meaning of Section 851 of the Code since the date of its organization through
the end of its last complete taxable year and will qualify as a regulated
investment company for its taxable year ending on the date of the
Reorganization;
(8) The Trust has been a regulated investment company within the
meaning of Section 851 of the Code since the date of its organization through
the date hereof and will qualify as a regulated investment company for its
taxable year ending on September 30, 1999;
(9) Income & Growth will have no accumulated earnings and profits as
of the close of its taxable year ending on the date of the Reorganization.
OPINION
Based on the Code, Treasury Regulations issued thereunder, Internal
Revenue Service Rulings and the relevant case law, as of the date hereof, and
on the facts, representations and assumptions set forth above, and the
documents, records and other instruments we have reviewed, it is our opinion
that the Federal income tax consequences of the Reorganization to the Trust,
Income & Growth and the Income & Growth Shareholders will be as follows:
(1) The transfer of substantially all of Income & Growth's assets in
exchange for the Trust Shares and the assumption by the Trust of certain stated
Liabilities of Income & Growth, followed by the distribution by Income & Growth
of the Trust Shares to the Income & Growth Shareholders in exchange for their
Income & Growth Shares, will constitute a "reorganization" within the meaning
of Section 368(a)(1)(C) the Code, and Income & Growth and the Trust will each
be a "party to a reorganization" within the meaning of Section 368(b) of the
Code;
(2) No gain or loss will be recognized by the Trust upon the receipt
of the assets of Income & Growth solely in exchange for the Trust Shares and
the assumption of the Liabilities by the Trust;
(3) No gain or loss will be recognized by Income & Growth upon the
transfer of the assets of Income & Growth to the Trust, in exchange for the
Trust Shares and the assumption of the Liabilities by the Trust, or upon the
distribution of the Trust Shares to Income & Growth Shareholders in exchange
for their Income & Growth Shares as provided in the Plan;
(4) No gain or loss will be recognized by Income & Growth Shareholders
upon the exchange of their Income & Growth Shares for the Trust Shares;
(5) The aggregate tax basis for the Trust Shares received by each
Income & Growth Shareholder pursuant to the Reorganization will be the same as
the aggregate tax basis of the Income & Growth Shares held by each such Income
& Growth Shareholder immediately prior to the Reorganization;
(6) The holding period of the Trust Shares to be received by each
Income & Growth Shareholder will include the period during which the Income &
Growth Shares surrendered in exchange therefor were held (provided such Income
& Growth Shares were held as capital assets on the date of the Reorganization);
(7) The tax basis of the assets of Income & Growth acquired by the
Trust will be the same as the tax basis of such assets to Income & Growth
immediately prior to the Reorganization; and
(8) The holding period of the assets of Income & Growth in the hands
of the Trust will include the period during which those assets were held by
Income & Growth.
We are not expressing an opinion as to any aspect of the
Reorganization other than those opinions expressly stated above.
As noted above, this opinion is based upon our analysis of the Code,
Treasury Regulations issued thereunder, Internal Revenue Service Rulings and
case law which we deem relevant as of the date hereof. No assurances can be
given that there will not
be a change in the existing law or that the Internal Revenue Service will not
alter its present views, either prospectively or retroactively, or adopt new
views with regard to any of the matters upon which we are rendering this
opinion, nor can any assurances be given that the Internal Revenue Service will
not audit or question the treatment accorded to the Reorganization on the
Federal income tax returns of the Trust, Income & Growth or the Income & Growth
Shareholders.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name and any reference to our firm
in the Registration Statement and the Income & Growth Proxy constituting a part
thereof.
Very truly yours,
/S/ GORDON ALTMAN BUTOWSKY
WEITZEN SHALOV & WEIN