[FORM OF OPINION]
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, DC 20006
___________, 2000
Pilgrim Government Securities Income Fund, Inc.
40 North Central Avenue, Suite 1200
Phoenix, Arizona 85004
Dear Sirs:
You have requested our opinion regarding certain Federal income tax
consequences to Pilgrim Government Securities Fund (the "Target Fund"), a
Massachusetts business trust, to the holders of the shares of the Target Fund
(the "Target Shareholders"), and to Pilgrim Government Securities Income Fund
(the "Acquiring Fund"), the only series of Pilgrim Government Securities Income
Fund, Inc. (the "Acquiring Company"), a California corporation, in connection
with the proposed transfer of substantially all of the properties of the Target
Fund to the Acquiring Fund, in exchange solely for voting shares of common stock
of the Acquiring Fund ("Acquiring Fund Shares") followed by the distribution of
such Acquiring Fund Shares received by the Target Fund in complete liquidation
and termination of the Target Fund (the "Reorganization"), all pursuant to the
Agreement and Plan of Reorganization (the "Agreement") dated as of ________ ___,
1999 between the Target Fund and the Acquiring Fund.
For purposes of this opinion, we have examined and rely upon the Agreement
and the Acquiring Company's registration statement on Form N-14 (Securities Act
File No. 002-91302) (the "Form N-14") and such other documents and instruments
as we deem necessary or appropriate for purposes of rendering this opinion.
This opinion is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), United States Treasury regulations, judicial decisions, and
administrative rulings and pronouncements of the Internal Revenue Service, all
as in effect on the date hereof. This opinion is conditioned upon the
Reorganization taking place in the manner described in the Agreement and the
Form N-14 referred to above, and upon our receipt of satisfactory representation
letters from the Target Fund and from the Acquiring Company on behalf of the
Acquiring Fund.
Based upon the foregoing, it is our opinion that:
1. The acquisition by the Acquiring Fund of substantially all of the
properties of the Target Fund in exchange solely for Acquiring Fund
Shares followed by the distribution of Acquiring Fund Shares to the
shareholders of the Target Fund in exchange for their Target Fund
shares in complete liquidation and termination of the Target Fund will
constitute a reorganization within the meaning of section 368 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.
2. The Target Fund will not recognize gain or loss upon the transfer of
substantially all of its assets to the Acquiring Fund in exchange
solely for Acquiring Fund Shares or upon distributing to its
shareholders the Acquiring Fund Shares received by the Target Fund in
the transaction pursuant to the Agreement. We do not express any
opinion as to whether any accrued market discount will be required to
be recognized as ordinary income.
3. The Acquiring Fund will recognize no gain or loss upon receiving the
properties of the Target Fund in exchange solely for Acquiring Fund
Shares.
4. The aggregated adjusted basis to the Acquiring Fund of the properties
of the Target Fund received by the Acquiring Fund in the
reorganization will be the same as the aggregate adjusted basis of
those properties in the hands of the Target Fund immediately before
the exchange.
5. The Acquiring Fund's holding periods with respect to the properties of
the Target Fund that the Acquiring Fund acquires in the transaction
will include the respective periods for which those properties were
held by the Target Fund (except where investment activities of the
Acquiring Fund have the effect of reducing or eliminating a holding
period with respect to an asset).
6. The shareholders of the Target Fund will recognize no gain or loss
upon receiving Acquiring Fund Shares solely in exchange for Target
Fund shares.
7. The aggregate basis of the Acquiring Fund Shares received by a
shareholder of the Target Fund in the transaction will be the same as
the aggregate basis of Target Fund shares surrendered by the
shareholder in exchange therefor.
8. A Target Fund shareholder's holding period for the Acquiring Fund
Shares received by the shareholder in the transaction will include the
holding period during which the shareholder held Target Fund shares
surrendered in exchange therefor, provided that the shareholder held
such shares as a capital asset on the date of Reorganization.
We express no opinion as to the federal income tax consequences of the
Reorganization except as expressly set forth above, or as to any transaction
except those consummated in accordance with the Plan.
Our opinion as expressed herein, is solely for the benefit of the Target
Fund, the Target Fund shareholders, and the Acquiring Fund, and unless we give
our prior written consent, neither our opinion nor this opinion letter may be
quoted in whole or in part or relied upon by any other person.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the references to this firm in the Tax Section. In
giving this consent, we do not admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission thereunder.
Very truly yours,