July 14, 2000
Strategist Equity Fund
Strategist Growth and Income Fund, Inc.
IDS Tower 10
Minneapolis, MN 55440-0010
AXP Stock Fund, Inc.
901 Marquette Avenue South
Suite 2810
Minneapolis, MN 55402-3268
Ladies and Gentlemen:
We have acted as counsel in connection with the Agreement and Plan of
Reorganization (the "Agreement") dated as of March 10, 2000, between Strategist
Growth and Income Fund, Inc., a Minnesota corporation, on behalf of its series,
Strategist Equity Fund ("Target Fund"), and AXP Stock Fund, Inc., a Minnesota
corporation ("Acquiring Fund"). The Agreement describes a proposed transaction
(the "Transaction") to occur today (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 7(d)
and 8(d) of the Agreement. Capitalized terms not defined herein are used herein
as defined in the Agreement.
Target Fund 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 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. Acquiring Fund has elected to be a
regulated investment company for federal income tax purposes under Section 851
of the Code.
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For purposes of this opinion, we have considered the Agreement, the
Acquired Fund 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 have provided us with letters
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) (the "Acquiring Fund Rep Letter" and "Target Fund Rep
Letter").
Based on the foregoing representations and assumptions 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. Acquiring Fund and Target 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 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;
(iii)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;
(iv) 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;
(v) 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;
(vi) No gain or loss will be recognized by Target Fund shareholders upon the
exchange of their Target Fund Shares for Acquiring Fund Shares;
(vii) 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;
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(viii) 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; and
(ix) Acquiring Fund will succeed to and take into account the items of
Target Fund described in Section 381(c) of the Code. Acquiring Fund
will take these items into account subject to the conditions and
limitations specified in Sections 381, 382, 383 and 384 of the Code and
the Regulations thereunder.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
