XXXXXXXX RONON XXXXXXX & XXXXX, LLP
0000 XXX XXXXXXXX XXXXXX
XXXXXXXXXXXX, XX 00000-0000
TELEPHONE (000) 000-0000
FAX (000) 000-0000
October 21, 1999
Board of Trustees
Xxxxxxxxx Income Trust
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Board of Trustees
Xxxxxxxxx Global Investment Trust
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Re: AGREEMENT AND PLAN OF REORGANIZATION, DATED AS OF
THE 2ND DAY OF AUGUST, 1999 (THE "AGREEMENT"), BY AND BETWEEN
XXXXXXXXX GLOBAL INVESTMENT TRUST, A DELAWARE BUSINESS TRUST
("INVESTMENT TRUST"), ON BEHALF OF ITS SERIES, XXXXXXXXX
AMERICAS GOVERNMENT SECURITIES FUND ("ACQUIRED FUND") AND
XXXXXXXXX INCOME TRUST, A MASSACHUSETTS BUSINESS TRUST
("INCOME TRUST"), ON BEHALF OF ITS SERIES, XXXXXXXXX GLOBAL
BOND FUND ("ACQUIRING FUND")
Ladies and Gentlemen:
You have requested our opinion as to certain federal income
tax consequences of the reorganization of Acquired Fund which will consist of
(i) the acquisition by the Acquiring Fund of substantially all of the property,
assets and goodwill of the Acquired Fund in exchange solely for shares of common
stock, par value $0.01, of the Acquiring Fund - Class A ("Acquiring Fund
Shares"), (ii) the distribution of Acquiring Fund Shares to the shareholders of
the Acquired Fund according to their respective interests, and (iii) the
subsequent dissolution of the Acquired Fund as soon as practicable after the
closing (the "Reorganization"), all upon and subject to the terms and conditions
of the Agreement.
In rendering our opinion, we have reviewed and relied upon (a)
the Agreement and Plan of Reorganization, dated as of the 2nd day of August,
1999, by and between the Investment Trust and the Income Trust (the
"Agreement"), (b) the proxy materials provided to stockholders of the Acquired
Fund in connection with the Special Meeting of Stockholders of the Acquired Fund
held on the 1st day of October, 1999, (c) certain representations concerning the
Reorganization made to us by the Investment Trust and the Income Trust in a
letter dated October 21, 1999 (the "Representation Letter"), (d) all other
documents, financial and other reports and corporate minutes which we deemed
relevant or appropriate, and (e) such statutes, regulations, rulings and
decisions as we deemed material to the rendition of this opinion. All 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 effective date of the Reorganization satisfies, and
following 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 a regulated investment company.
Under regulations to be prescribed by the Secretary of
Treasury under Section 1276(d) of the Code, certain transfers of market discount
bonds will be excepted from the requirement that accrued market discount be
recognized on disposition of a market discount bond under Section 1276(a) of the
Code. Such regulations are to provide, in part, that accrued market discount
will not be included in income if no gain is recognized under Section 361(a) of
the Code where a bond is transferred in an exchange qualifying as a tax-free
reorganization. As of the date hereof, the Secretary has not issued any
regulations under Section 1276 of the Code.
Based on the foregoing and provided the Reorganization is
carried out in accordance with the applicable laws of the State of Delaware and
the Commonwealth of Massachusetts, the Agreement and the Representation Letter,
it is our opinion that:
1. The Reorganization will constitute a tax-free
reorganization within the meaning of Section 368(a)(1)(C) of the Code, and
Acquired Fund and Acquiring 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 Acquired Fund
upon the transfer of all of its assets to Acquiring Fund in exchange solely for
Acquiring Fund Shares pursuant to Section 361(a) and Section 357(a) of the Code.
We express no opinion as to whether any accrued market discount will be required
to be recognized as ordinary income pursuant to Section 1276 of the Code.
3. No gain or loss will be recognized by Acquiring
Fund upon the receipt by it of all of the assets of Acquired Fund in exchange
solely for Acquiring Fund Shares pursuant to Section 1032(a) of the Code.
4. The basis of the assets of Acquired Fund received
by Acquiring Fund will be the same as the basis of such assets to Acquired Fund
immediately prior to the exchange pursuant to Section 362(b) of the Code.
5. The holding period of the assets of Acquired Fund
received by Acquiring Fund will include the period during which such assets were
held by Acquired Fund pursuant to Section 1223(2) of the Code.
6. No gain or loss will be recognized by the
stockholders of Acquired Fund upon the exchange of their Acquired Fund Shares
for Acquiring Fund Shares (including fractional shares to which they may be
entitled), pursuant to Section 354(a) of the Code.
7. The basis of the Acquiring Fund Shares received by
the stockholders of Acquired Fund (including fractional shares to which they may
be entitled) will be the same as the basis of the Acquired Fund Shares exchanged
therefor pursuant to Section 358(a)(1) of the Code.
8. The holding period of the Acquiring Fund Shares
received by the stockholders of Acquired Fund (including fractional shares to
which they may be entitled) will include the holding period of the Acquired Fund
Shares surrendered in exchange therefor, provided that the Acquired Fund Shares
were held as a capital asset on the effective date of the Reorganization,
pursuant to Section 1223(1) of the Code.
9. Acquiring Fund will succeed to and take into
account as of the date of the proposed transfer (as defined in Section
1.381(b)-1(b) of the Income Tax Regulations) the items of Acquired 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.
Our opinion is based upon the Code, the applicable Treasury
Regulations promulgated thereunder, the present position of the Internal Revenue
Service as set forth in published revenue rulings and revenue procedures,
present administrative positions of the Internal Revenue 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 this letter.
Our opinion is conditioned upon the performance by Acquiring
Fund and Acquired Fund of their undertakings in the Agreement and the
Representation Letter.
This opinion is being rendered to the Acquiring Fund and
Acquired Fund and may be relied upon only by such funds and the stockholders of
each.
Very truly yours,
STRADLEY, RONON, XXXXXXX & YOUNG, LLP
By:/s/XXXXXXX X. XXXXXXXXX
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Xxxxxxx X. Xxxxxxxxx, a Partner
