EXHIBIT 12
[Letterhead of Dorsey & Whitney LLP]
October 13, 2000
First American Investment Funds, Inc.
601 Second Avenue South
Minneapolis, MN 55402
Ladies and Gentlemen:
We have acted as counsel to First American Investment Funds, Inc.
("FAIF") in connection with the proposed acquisition of all of the assets and
all of the liabilities of International Index Fund ("Acquired Fund"), a
separately managed series of FAIF, by International Fund ("Acquiring Fund"), a
separately managed series of FAIF, pursuant to an Agreement and Plan of
Reorganization dated as of October 13, 2000, by and between FAIF on behalf of
the Acquired Fund and FAIF on behalf of the Acquiring Fund (the "Agreement").
You have requested our opinion concerning certain federal income tax
consequences of the exchange of Acquiring Fund Shares for the assets and
liabilities of Acquired Fund and the distribution of such shares to Acquired
Fund Shareholders upon liquidation of Acquired Fund, all pursuant to the
Agreement (the "Reorganization"). In this regard we have examined (1) the
Agreement, (2) the Registration Statement on Form N-14 (including, but not
limited to, the Prospectus and Proxy Statement included therein) filed with the
Securities and Exchange Commission on or about August 2, 2000, and such other
documents and records as we consider necessary in order to render this opinion.
Unless otherwise provided herein, capitalized terms used in this opinion shall
have the same meaning as set forth in the Prospectus and Proxy Statement or the
Agreement, as the case may be.
Pursuant to the Agreement, all of the assets and all of the liabilities
of the Acquired Fund as of the Closing will be exchanged for shares of common
stock of Acquiring Fund having an aggregate net asset value equal to the net
value of the assets of Acquired Fund at the Closing. All Acquiring Fund Shares
then held by Acquired Fund, representing all of the assets of Acquired Fund,
will be distributed to Acquired Fund Shareholders pursuant to the Agreement in a
liquidating distribution and all of the issued and outstanding shares of
Acquired Fund at the Closing shall be redeemed and cancelled on the books of
Acquired Fund. In the distribution, each Acquired Fund Shareholder will receive
Acquiring Fund Shares of a class corresponding to the class of shares that he or
she held in Acquiring Fund, with a net asset value equal at the Closing to the
net asset value of the shareholder's Acquired Fund Shares as of such time.
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The acquisition of all of the assets and all of the liabilities of
Acquired Fund by the Acquiring Fund is being undertaken because the Board of
Directors of FAIF has determined that the Reorganization is expected to provide
certain benefits to the Acquired Fund and the Acquiring Fund and is in the best
interests of each Fund and its respective shareholders. The Board of Directors
has also determined that the interests of the existing shareholders of each Fund
will not be diluted as a result of the Reorganization. The Board considered,
among other things, the following factors in making such determinations: (1) the
advantages which may be realized by the International Index Fund shareholders,
including the potential for enhanced investment performance; (2) the terms and
conditions of the Plan, including that (a) the exchange of International Index
Fund shares for International Fund shares will take place on a net asset value
basis; and (b) no sales charge will be incurred by International Index Fund
shareholders in connection with their acquisition of International Fund shares
in the Reorganization; (3) the agreement of the Adviser to bear the costs
associated with the proposed Reorganization; (4) the fact that the Rule 12b-1
fees and sales charges would remain constant for International Index Fund
shareholders; and (5) the International Fund's agreement that in applying the 18
month 1% deferred sales charge on Class A shares with respect to which the
front-end sales charge was waived, credit will be given for the period a former
International Index Fund shareholder who is subject to such a deferred sales
charge held his or her shares.
Our opinion is based upon existing law and currently applicable
Treasury Regulations, currently published administrative positions of the
Internal Revenue Service contained in Revenue Rulings and Revenue Procedures and
judicial decisions, all of which are subject to change prospectively and
retroactively. It is not a guarantee of the current status of the law and should
not be accepted as a guarantee that a court of law or an administrative agency
will concur in the opinion.
Based on the Agreement, the other documents referred to herein, the
facts and assumptions stated above, as well as representations made by FAIF in a
Certificate dated October 13, 2000, representations made by U.S. Bank National
Association, adviser to Acquiring Fund and Acquired Fund, in a Certificate dated
October 13, 2000, the provisions of the Code and judicial and administrative
interpretations as in existence on the date hereof, it is our opinion that the
Reorganization will constitute a reorganization within the meaning of Section
368(a)(1)(C) of the Code, and that Acquiring Fund and Acquired Fund will each be
a party to the reorganization within the meaning of Section 368(b) of the Code.
On the basis of the foregoing opinion that the Reorganization will
constitute a reorganization within the meaning of Section 368 of the Code, it is
further our opinion that:
(i) Acquired Fund shareholders will recognize no income, gain or
loss upon receipt, pursuant to the Reorganization, of
Acquiring Fund Shares. Acquired Fund shareholders subject to
taxation will recognize income upon receipt of any net
investment income or net capital gains of Acquired Fund which
are distributed by the Acquired Fund prior to the Closing;
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(ii) the tax basis of Acquiring Fund Shares received by each
Acquired Fund shareholder pursuant to the Reorganization will
be equal to the tax basis of the Acquired Fund shares
exchanged therefor;
(iii) the holding period of the Acquiring Fund shares received by
each Acquired Fund shareholder pursuant to the Reorganization
will include the period during which the Acquired Fund
shareholder held the Acquired Fund shares exchanged therefor,
provided that the Acquired Fund shares were held as a capital
asset at the Closing;
(iv) Acquired Fund will recognize no income, gain or loss by reason
of the Reorganization;
(v) Acquiring Fund will recognize no income, gain or loss by
reason of the Reorganization;
(vi) the tax basis of the assets received by Acquiring Fund
pursuant to the Reorganization will be the same as the basis
of those assets in the hands of Acquired Fund as of the
Closing;
(vii) the holding period of the assets received by Acquiring Fund
pursuant to the Reorganization will include the period during
which such assets were held by Acquired Fund, provided that
Acquired Fund held such assets as capital assets as of the
Closing; and
(viii) Acquiring Fund will succeed to and take into account the
earnings and profits, or deficit in earning and profits, of
Acquired Fund as of the Closing.
The foregoing opinion is being furnished to you solely for your benefit
in connection with the Reorganization and may not be relied upon by, nor may
copies be delivered to, any person without our prior written consent. Our
opinion is limited to the matters expressly addressed in the eight (8) numbered
paragraphs above. No opinion is expressed and none should be inferred as to any
other matter.
We consent to the filing of this opinion as an exhibit to the
above-referenced Registration Statement on Form N-14 and to the reference to
this firm under the caption "Information Relating to the Proposed
Reorganization--Federal Income Tax Consequences" in the Prospectus/Proxy
Statement included in Part A of said Registration Statement.
Very truly yours,
