Filed with the U.S. Securities and Exchange Commission on December 15, 2021
Securities Act File No. 333-255986
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 2
PIMCO DYNAMIC INCOME FUND
(Exact Name of Registrant as Specified in Charter)
1633 Broadway
New York, New York 10019
(Address of Principal Executive Offices)
(844) 337-4626
(Registrants Telephone Number, Including Area Code)
Ryan G. Leshaw
c/o Pacific Investment Management Company LLC
650 Newport Center Drive
Newport Beach, California 92660
(Name and Address of Agent for Service)
Copies of Communications to:
David C. Sullivan, Esq.
Ropes & Gray LLP
Prudential Tower, 800 Boylston Street
Boston, Massachusetts 02199
EXPLANATORY NOTE
This Post-Effective Amendment is being filed solely to file as an exhibit the final opinion of Ropes & Gray LLP supporting the tax consequences of the reorganizations (Exhibit 12 to Item 16) of this Registration Statement on Form N-14. This Post-Effective Amendment will become effective automatically upon filing with the Commission pursuant to Rule 462(d) under the Securities Act of 1933, as amended.
The Proxy Statement/Prospectus and Statement of Additional Information is incorporated by reference to the Registrants Registration Statement on Form N-14 filed on June 30, 2021, as supplemented (File No. 333-255986).
PART C
OTHER INFORMATION
Item 15. Indemnification
Reference is made to Article VIII, Sections 1 through 4, of the Registrants Amended and Restated Agreement and Declaration of Trust.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the Securities Act), may be permitted to trustees, officers and controlling persons of the Registrant by the Registrant pursuant to the Trusts Amended and Restated Agreement and Declaration of Trust, its Amended and Restated Bylaws or otherwise, the Registrant is aware that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and, therefore, is unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by trustees, officers or controlling persons of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustees, officers or controlling persons in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Item 16. Exhibits
(1) Charter of Registrant
a. | Amended and Restated Agreement and Declaration of Trust dated May 7, 2012. (1) |
b. | Notice of Change of Trustee and Principal Address dated September 5, 2014. (2) |
c. | Notice of Change of Trustees dated January 16, 2019. (3) |
d. | Notice of Change of Trustee dated January 8, 2020. (5) |
e. | Notice of Change of Trustees dated July 9, 2020. (5) |
f. | Notice of Change of Trustees dated January 29, 2021. (7) |
g. | Notice of Change of Trustees dated June 29, 2021. (11) |
(2) By-laws
a. | Amended and Restated Bylaws of Registrant dated May 7, 2012. (1) |
(3) Voting Trust Agreement None
(4) Agreement of Reorganization
a. | Form of Agreement and Plan of Reorganization Filed as an Appendix to the Proxy Statement/Prospectus. |
(5) Instruments Defining the Rights of Holders of the Securities being Registered
a. | Article III (Shares) and Article V (Shareholders Voting Powers and Meetings) of the Amended and Restated Agreement and Declaration of Trust. (1) |
b. | Article 10 (Shareholders Voting Powers and Meetings) of the Amended and Restated Bylaws of Registrant. (1) |
c. | Form of Share Certificate of the Common Shares. (1) |
(6) Investment Advisory Contracts
a. | Investment Management Agreement between Registrant and Pacific Investment Management Company LLC dated September 5, 2014. (2) |
b. | Investment Management Agreement between PDILS I LLC and PIMCO Investment Management Company LLC dated May 8, 2018. (3) |
(7) Distribution Contracts
a. | Amended & Restated Sales Agreement between Registrant and JonesTrading Institutional Services LLC dated November 8, 2019. (4) |
b. | Amendment dated January 8, 2020 to Amended & Restated Sales Agreement between Registrant and JonesTrading Institutional Services LLC. (5) |
(8) Bonus or Profit Sharing Contracts None
(9) Custodian Agreements
a. | Custodian Agreement between Registrant and State Street Bank & Trust Co. dated April 16, 2012. (2) |
b. | Amendment to Custodian Agreement between Registrant and State Street Bank & Trust Co. dated September 5, 2014. (2) |
(10) Rule 12b-1 and Rule 18f-3 Plans None
(11) Opinion of Counsel Regarding Legality of the Securities Being Registered. (11)
(13) Other Material Contracts
a. | Transfer Agency Services Agreement between Registrant and American Stock Transfer & Trust Company, LLC dated April 19, 2016. (2) |
b. | Amendment to Transfer Agency and Registrar Services Agreement dated July 29, 2016. (6) |
c. | Amendment to Transfer Agency and Registrar Services Agreement dated December 13, 2018. (3) |
d. | Amendment to Transfer Agency and Registrar Services Agreement dated December 15, 2020. (8) |
e. | Support Services Agreement between Registrant and PIMCO Investments LLC dated April 4, 2012, as amended May 23, 2012, January 4, 2013 and September 5, 2014. (2) |
f. | Offering Expenses Agreement between Registrant and Pacific Investment Management Company LLC dated September 17, 2020. (5) |
(14) Other Opinions
a. | Consent of Independent Registered Public Accounting Firm. (11) |
(15) Omitted Financial Statements None
(16) Powers of Attorney
a. | Powers of Attorney for Sarah Cogan, Deborah A. DeCotis, David Fisher, Hans W. Kertess, Joseph B. Kittredge, Jr., John C.Maney, William B. Ogden, IV, Alan Rappaport and Grace Vandecruze. (10) |
b. | Power of Attorney for Eric D. Johnson. (3) |
c. | Power of Attorney for Bijal Parikh. (7) |
d. | Certified Resolution of the Board of Trustees of Registrant. (9) |
(17) Additional Exhibits None
(1) Incorporated by reference to Pre-Effective Amendment No. 3 the Registrants Registration Statement on Form N-2, Registration Nos. 333-179887 and 811-22673 (filed on May 11, 2012).
(2) Incorporated by reference to Pre-Effective Amendment No. 1 to the Registrants Registration Statement on Form N-2, Registration No. 333-215573 and 811-22673 (filed on March 23, 2017).
(3) Incorporated by reference to Pre-Effective Amendment No. 1 to the Registrants Registration Statement on Form N-2, Registration No. 333- 227489 and 811-22673 (filed on November 4, 2019).
(4) Incorporated by reference to Post-Effective Amendment No. 1 to the Registrants Registration Statement on Form N-2, Registration No. 333-227489 and 811-22673 (filed on November 14, 2019).
(5) Incorporated by reference to the Registrants Registration Statement on Form N-2, Registration Nos. 333-250288 and 811-22673 (filed on November 19, 2020).
(6) Incorporated by reference to Post-Effective Amendment No. 2 to PIMCO Income Opportunity Fund Registration Statement on Form N-2, Registration Nos. 333-235485, 811-22121 (filed October 28, 2020).
(7) Incorporated by reference to Pre-Effective Amendment No. 1 to PIMCO Income Opportunity Fund Registration Statement on Form N-2, Registration Nos. 333-248710, 811-22121 (filed February 8, 2021).
(8) Incorporated by reference to the Registrants Registration Statement on Form N-14, Registration No. 333-255986 (filed May 10, 2021).
(9) Incorporated by reference to Pre-Effective Amendment No. 1 to the Registrants Registration Statement on Form N-14, Registration Nos. 333-255986, 811-22673 (filed June 28, 2021).
(10) Incorporated by reference to Pre-Effective Amendment No. 4 to PIMCO Flexible Emerging Markets Income Fund Registration Statement on Form N-2, Registration Nos. 333-254586, 811-23648 (filed July 26, 2021).
(11) Incorporated by reference to Post-Effective Amendment No. 1 to the Registrants Registration Statement on Form N-14, Registration Nos. 333-255986 (filed December 8, 2021).
(12) Filed herewith.
Item 17. Undertakings
(1) The undersigned registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933 [17 CFR 230.145(c)], the reoffering prospectus will contain the information called for by the applicable registration form for the reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the Securities Act of 1933, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them.
(3) The undersigned registrant agrees to file, by post-effective amendment, opinions of counsel supporting the tax consequences of the Reorganizations within a reasonably prompt time after receipt of such opinions.
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has been signed on behalf of the Registrant, in the City of Boston, Massachusetts, on the 15th day of December, 2021.
PIMCO DYNAMIC INCOME FUND
By: Eric D. Johnson*, President
As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
Signature | Title | Date | ||
Sarah E. Cogan* | Trustee | December 15, 2021 | ||
Deborah A. DeCotis* | Trustee | December 15, 2021 | ||
David Fisher* | Trustee | December 15, 2021 | ||
Hans W. Kertess* | Trustee | December 15, 2021 | ||
Joseph B. Kittredge, Jr.* | Trustee | December 15, 2021 | ||
John C. Maney* | Trustee | December 15, 2021 | ||
William B. Ogden, IV* | Trustee | December 15, 2021 | ||
Alan Rappaport* | Trustee | December 15, 2021 | ||
E. Grace Vandecruze* | Trustee | December 15, 2021 | ||
Eric D. Johnson* | President (Principal Executive Officer) |
December 15, 2021 | ||
Bijal Parikh* | Treasurer (Principal Financial and Accounting Officer) |
December 15, 2021 |
*By: | /s/ David C. Sullivan | |
David C. Sullivan | ||
as attorney-in-fact |
*Pursuant to Powers of Attorney.
EXHIBIT INDEX
12 | Tax Opinion. |
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ROPES & GRAY LLP 1211 AVENUE OF THE AMERICAS NEW YORK, NY 10036-8704 WWW.ROPESGRAY.COM |
December 10, 2021
PIMCO Dynamic Credit and Mortgage Income Fund
1633 Broadway
New York, NY 10019
PIMCO Dynamic Income Fund
1633 Broadway
New York, NY 10019
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of Reorganization (the Agreement) dated November 10, 2021 by and among PIMCO Dynamic Credit and Mortgage Income Fund (Acquired Fund), PIMCO Dynamic Income Fund (Acquiring Fund, together with Acquired Fund, the Funds), and PIMCO Income Opportunity Fund, each a Massachusetts business trust. The Agreement describes a proposed transaction (the Reorganization) to occur as of the date of this letter (the Closing Date), pursuant to which Acquiring Fund will acquire all of the assets of Acquired Fund in exchange for shares of beneficial interest in Acquiring Fund (the Merger Shares) (and cash in lieu of fractional shares, if any) and the assumption by Acquiring Fund of all of the liabilities of Acquired Fund following which the Merger Shares received by Acquired Fund (and cash in lieu of fractional shares, if any) will be distributed by Acquired Fund to its shareholders in liquidation of Acquired Fund.1 This opinion as to certain U.S. federal income
1 Under the Agreement, in order to account for restrictions on the transferability of certain Acquired Fund assets, immediately following the transfer of assets from the Acquired Fund to the Acquiring Fund, the Acquiring Fund may, if it so elects, transfer back to the Acquired Fund bare legal title to a portion of the acquired assets, to be held by the Acquired Fund as the nominee for or agent on behalf of the Acquiring Fund until such assets are sold or legal title can be transferred to the Acquiring Fund. As a result, the Acquired Fund will not terminate its legal existence in connection with the distribution of Merger Shares to its shareholders. Under the terms of the Agreement, the Acquired Fund will be terminated pursuant to its Amended and Restated Agreement and Declaration of Trust and applicable law, and its legal existence terminated, once the Acquired Fund no longer holds bare legal title to any of the assets held as the nominee for or agent on behalf of the Acquiring Fund. The Acquired Fund will make a protective election to be treated as a disregarded entity for U.S. federal income tax
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PIMCO Dynamic Credit and Mortgage Income Fund | ||
PIMCO Dynamic Income Fund | December 10, 2021 |
tax consequences of the Reorganization is furnished to you pursuant to Section 8(e) of the Agreement. Capitalized terms not defined herein are used herein as defined in the Agreement.
Acquired Fund is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a closed-end management investment company. Acquired 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 registered under the 1940 Act as a closed-end management investment company. Acquiring Fund has elected to be a regulated investment company for federal income tax purposes under Section 851 of the Code.
For purposes of this opinion, we have considered the Agreement, the Combined Proxy Statement/Prospectus filed on June 29, 2021, and such other items as we have deemed necessary to render this opinion. In addition, each of Acquired Fund and Acquiring Fund has provided us with a letter dated as of the date hereof (collectively, the Representation Letters) representing as to certain facts, occurrences and information upon which each of Acquired Fund and Acquiring Fund has indicated that we may rely upon in rendering this opinion (whether or not contained or reflected in the documents and items referred to above).
In reviewing the foregoing materials, we have assumed, with your permission, the authenticity of original documents, the accuracy of copies, the genuineness of signatures, the legal capacity of signatories, and the proper execution of documents. We have further assumed that (i) all parties to the Agreement and any other documents examined by us have acted, and will act, in accordance with the terms of such Agreement and documents, and that the Reorganization will be consummated pursuant to the terms and conditions set forth in the Agreement without the waiver or modification of any such terms and conditions; (ii) all representations contained in the Agreement, as well as those representations contained in the Representation Letters, are true and complete; and (iii) any representation made in any of the documents referred to herein to the best of the knowledge of any person or party is true without regard to such qualification.
Based on and subject to the foregoing and subject to the final paragraphs hereof, we are of the opinion that, for U.S. federal income tax purposes:
(i) | The Reorganization will constitute a reorganization within the meaning of Section 368(a)(1) of the Code, and each of Acquiring Fund and Acquired Fund will be a party to a reorganization within the meaning of Section 368(b) of the Code; |
purposes effective as of the date immediately following the Closing Date, which will be treated as a liquidation of the Acquired Fund for U.S. federal income tax purposes.
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PIMCO Dynamic Credit and Mortgage Income Fund | ||
PIMCO Dynamic Income Fund | December 10, 2021 |
(ii) | Under Sections 361 and 357 of the Code, Acquired Fund will not recognize any gain or loss upon the transfer of the assets of Acquired Fund to Acquiring Fund pursuant to the Agreement in exchange for Merger Shares (and cash in lieu of fractional shares, if any) and the assumption by Acquiring Fund of all the liabilities of Acquired Fund, or upon the distribution of Merger Shares (and cash in lieu of fractional shares, if any) by Acquired Fund to its shareholders in liquidation of Acquired Fund, except for (A) any gain or loss recognized on (1) section 1256 contracts as defined in Section 1256(b) of the Code, or (2) stock in a passive foreign investment company as defined in Section 1297(a) of the Code, and (B) any other gain or loss that may be required to be recognized (1) as a result of the closing of the tax year of Acquired Fund, (2) upon the termination of a position, or (3) upon the transfer of an asset regardless of whether such a transfer would otherwise be a nontaxable transaction under the Code; |
(iii) | Under Section 354 of the Code, each shareholder of Acquired Fund will not will not recognize any gain or loss upon the exchange of all of their shares of Acquired Fund shares for Merger Shares other than any gain in respect of any cash received in lieu of fractional shares under the terms described in the Agreement; |
(iv) | Under Section 358 of the Code, the aggregate tax basis in the Merger Shares that the Acquired Funds shareholder receives in exchange for their shares of the Acquired Fund will be the same as the aggregate tax basis of the shares of the Acquired Fund exchanged therefor; |
(v) | Under Section 1223(1) of the Code, an Acquired Fund shareholders holding period for the Merger Shares received pursuant to the Agreement will include the shareholders holding period for the Acquired Fund shares exchanged therefor, provided that the shareholder held the Acquired Funds shares as capital assets on the date of the exchange; |
(vi) | Under Section 1032 of the Code, Acquiring Fund will not recognize any gain or loss upon the receipt of the assets of Acquired Fund solely in exchange for Merger Shares (and cash in lieu of fractional shares, if any) and the assumption by Acquiring Fund of the liabilities of Acquired Fund; |
(vii) | Under Section 362(b) of the Code, Acquiring Funds tax basis in the assets of Acquired Fund will be the same as Acquired Funds tax basis immediately prior to the transfer, increased by any gain or decreased by any loss required to be recognized as described in (ii) above; |
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PIMCO Dynamic Credit and Mortgage Income Fund | ||
PIMCO Dynamic Income Fund | December 10, 2021 |
(viii) | Under Section 1223(2) of the Code, the holding period of each asset of Acquired Fund in the hands of Acquiring Fund, other than any asset of Acquired Fund with respect to which gain or loss is to be recognized as described in (ii) above, will include the period during which such asset was held or treated for U.S. federal income tax purposes as held by Acquired Fund; and |
(ix) | Acquiring Fund will succeed to and take into account the items of Acquired Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and the regulations thereunder. |
We believe that (i) Acquiring Fund will continue Acquired Funds historic business within the meaning of Treas. Reg. § 1.368-1(d), as a closed-end management investment company investing across multiple fixed-income sectors, in developed and emerging global credit markets, to pursue current income as a primary object and capital appreciations as a second objectives, and therefore (ii) the continuity of business enterprise test required for qualification under Section 368(a) of the Code is met in the Reorganization.
You should recognize that our opinions are not binding on the Internal Revenue Service (the IRS). No ruling has been or will be obtained from the IRS as to the subject matter of this opinion and there can be no assurance that the IRS or a court of law will concur with the opinion set forth above. Our opinion is based on the Code, Treasury Regulations, IRS rulings, judicial decisions, and other applicable authority, all as in effect on the date of this opinion. The legal authorities on which this opinion is based may be changed at any time. Any such changes may be retroactively applied and could modify the opinions expressed above. We undertake no obligation to update or supplement this opinion to reflect any such changes that may occur.
Very truly yours, |
|
Ropes & Gray LLP |
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ROPES & GRAY LLP 1211 AVENUE OF THE AMERICAS NEW YORK, NY 10036-8704 WWW.ROPESGRAY.COM |
December 10, 2021
PIMCO Income Opportunity Fund
1633 Broadway
New York, NY 10019
PIMCO Dynamic Income Fund
1633 Broadway
New York, NY 10019
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of Reorganization (the Agreement) dated November 10, 2021 by and among PIMCO Income Opportunity Fund (Acquired Fund), PIMCO Dynamic Income Fund (Acquiring Fund, together with Acquired Fund, the Funds), and PIMCO Income Opportunity Fund, each a Massachusetts business trust. The Agreement describes a proposed transaction (the Reorganization) to occur as of the date of this letter (the Closing Date), pursuant to which Acquiring Fund will acquire all of the assets of Acquired Fund in exchange for shares of beneficial interest in Acquiring Fund (the Merger Shares) (and cash in lieu of fractional shares, if any) and the assumption by Acquiring Fund of all of the liabilities of Acquired Fund following which the Merger Shares received by Acquired Fund (and cash in lieu of fractional shares, if any) will be distributed by Acquired Fund to its shareholders in liquidation of Acquired Fund.1 This opinion as to certain U.S. federal income tax
1 Under the Agreement, in order to account for restrictions on the transferability of certain Acquired Fund assets, immediately following the transfer of assets from the Acquired Fund to the Acquiring Fund, the Acquiring Fund may, if it so elects, transfer back to the Acquired Fund bare legal title to a portion of the acquired assets, to be held by the Acquired Fund as the nominee for or agent on behalf of the Acquiring Fund until such assets are sold or legal title can be transferred to the Acquiring Fund. As a result, the Acquired Fund will not terminate its legal existence in connection
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PIMCO Income Opportunity Fund | ||
PIMCO Dynamic Income Fund | December 10, 2021 |
consequences of the Reorganization is furnished to you pursuant to Section 8(e) of the Agreement. Capitalized terms not defined herein are used herein as defined in the Agreement.
Acquired Fund is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a closed-end management investment company. Acquired 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 registered under the 1940 Act as a closed-end management investment company. Acquiring Fund has elected to be a regulated investment company for federal income tax purposes under Section 851 of the Code.
For purposes of this opinion, we have considered the Agreement, the Combined Proxy Statement/Prospectus filed on June 29, 2021, and such other items as we have deemed necessary to render this opinion. In addition, each of Acquired Fund and Acquiring Fund has provided us with a letter dated as of the date hereof (collectively, the Representation Letters) representing as to certain facts, occurrences and information upon which each of Acquired Fund and Acquiring Fund has indicated that we may rely upon in rendering this opinion (whether or not contained or reflected in the documents and items referred to above).
In reviewing the foregoing materials, we have assumed, with your permission, the authenticity of original documents, the accuracy of copies, the genuineness of signatures, the legal capacity of signatories, and the proper execution of documents. We have further assumed that (i) all parties to the Agreement and any other documents examined by us have acted, and will act, in accordance with the terms of such Agreement and documents, and that the Reorganization will be consummated pursuant to the terms and conditions set forth in the Agreement without the waiver or modification of any such terms and conditions; (ii) all representations contained in the Agreement, as well as those representations contained in the Representation Letters, are true and complete; and (iii) any representation made in any of the documents referred to herein to the best of the knowledge of any person or party is true without regard to such qualification.
Based on and subject to the foregoing and subject to the final paragraphs hereof, we are of the opinion that, for U.S. federal income tax purposes:
with the distribution of Merger Shares to its shareholders. Under the terms of the Agreement, the Acquired Fund will be terminated pursuant to its Amended and Restated Agreement and Declaration of Trust and applicable law, and its legal existence terminated, once the Acquired Fund no longer holds bare legal title to any of the assets held as the nominee for or agent on behalf of the Acquiring Fund. The Acquired Fund will make a protective election to be treated as a disregarded entity for U.S. federal income tax purposes effective as of the date immediately following the Closing Date, which will be treated as a liquidation of the Acquired Fund for U.S. federal income tax purposes.
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PIMCO Income Opportunity Fund | ||
PIMCO Dynamic Income Fund | December 10, 2021 |
(i) | The Reorganization will constitute a reorganization within the meaning of Section 368(a)(1) of the Code, and each of Acquiring Fund and Acquired Fund will be a party to a reorganization within the meaning of Section 368(b) of the Code; |
(ii) | Under Sections 361 and 357 of the Code, Acquired Fund will not recognize any gain or loss upon the transfer of the assets of Acquired Fund to Acquiring Fund pursuant to the Agreement in exchange for Merger Shares (and cash in lieu of fractional shares, if any) and the assumption by Acquiring Fund of all the liabilities of Acquired Fund, or upon the distribution of Merger Shares (and cash in lieu of fractional shares, if any) by Acquired Fund to its shareholders in liquidation of Acquired Fund, except for (A) any gain or loss recognized on (1) section 1256 contracts as defined in Section 1256(b) of the Code, or (2) stock in a passive foreign investment company as defined in Section 1297(a) of the Code, and (B) any other gain or loss that may be required to be recognized (1) as a result of the closing of the tax year of Acquired Fund, (2) upon the termination of a position, or (3) upon the transfer of an asset regardless of whether such a transfer would otherwise be a nontaxable transaction under the Code; |
(iii) | Under Section 354 of the Code, each shareholder of Acquired Fund will not will not recognize any gain or loss upon the exchange of all of their shares of Acquired Fund shares for Merger Shares other than any gain in respect of any cash received in lieu of fractional shares under the terms described in the Agreement; |
(iv) | Under Section 358 of the Code, the aggregate tax basis in the Merger Shares that the Acquired Funds shareholder receives in exchange for their shares of the Acquired Fund will be the same as the aggregate tax basis of the shares of the Acquired Fund exchanged therefor; |
(v) | Under Section 1223(1) of the Code, an Acquired Fund shareholders holding period for the Merger Shares received pursuant to the Agreement will include the shareholders holding period for the Acquired Fund shares exchanged therefor, provided that the shareholder held the Acquired Funds shares as capital assets on the date of the exchange; |
(vi) | Under Section 1032 of the Code, Acquiring Fund will not recognize any gain or loss upon the receipt of the assets of Acquired Fund solely in exchange for Merger Shares (and cash in lieu of fractional shares, if any) and the assumption by Acquiring Fund of the liabilities of Acquired Fund; |
(vii) | Under Section 362(b) of the Code, Acquiring Funds tax basis in the assets of Acquired Fund will be the same as Acquired Funds tax basis immediately prior to the transfer, increased by any gain or decreased by any loss required to be recognized as described in (ii) above; |
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PIMCO Income Opportunity Fund | ||
PIMCO Dynamic Income Fund | December 10, 2021 |
(viii) | Under Section 1223(2) of the Code, the holding period of each asset of Acquired Fund in the hands of Acquiring Fund, other than any asset of Acquired Fund with respect to which gain or loss is to be recognized as described in (ii) above, will include the period during which such asset was held or treated for U.S. federal income tax purposes as held by Acquired Fund; and |
(ix) | Acquiring Fund will succeed to and take into account the items of Acquired Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and the regulations thereunder. |
We believe that (i) Acquiring Fund will continue Acquired Funds historic business within the meaning of Treas. Reg. § 1.368-1(d), as a closed-end management investment company investing across multiple fixed-income sectors, in developed and emerging global credit markets, to pursue current income as a primary object and capital appreciations as a second objectives, and therefore (ii) the continuity of business enterprise test required for qualification under Section 368(a) of the Code is met in the Reorganization.
You should recognize that our opinions are not binding on the Internal Revenue Service (the IRS). No ruling has been or will be obtained from the IRS as to the subject matter of this opinion and there can be no assurance that the IRS or a court of law will concur with the opinion set forth above. Our opinion is based on the Code, Treasury Regulations, IRS rulings, judicial decisions, and other applicable authority, all as in effect on the date of this opinion. The legal authorities on which this opinion is based may be changed at any time. Any such changes may be retroactively applied and could modify the opinions expressed above. We undertake no obligation to update or supplement this opinion to reflect any such changes that may occur.
Very truly yours, |
|
Ropes & Gray LLP |
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