October 28, 2009
Mr. John Ganley
Division of Investment Management
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: Touchstone Tax-Free Trust
File Nos. 811-03174 and 002-72101
Dear Mr. Ganley:
This will confirm our telephone conversation on Wednesday October 14, 2009
regarding the 485(a) filing made by the Touchstone Tax-Free Trust ("Registrant")
on August 28, 2009. Your comments and the Registrant's responses are set forth
below:
Prospectuses
Comment
You suggested that we make congruent the effective date of the filing and the
date on the front cover of the prospectus.
Response
The Registrant prefers to keep the date of the prospectus as approximately that
of the effective date of the filing, which is consistent with Rule 423 of the
Securities Act of 1933.
Comment
You suggested that we remove (or move to another section of the prospectus) all
but the first sentence of the paragraph that appears on the table of contents
page of the prospectus.
Response
The language on this page is a brief description of the Funds operations and
therefore is permittable per the instructions to Item 1(a) of the N-1A
instructions.
Comment
You asked that we remove the ticker symbols of the funds from each summary
section in the statutory prospectus.
Response
The requested change has been made.
1
Comment
You requested that we change the line items in the fee tables regarding waivers
and net expenses to the following:
Fee Waiver and/or Expense Reimbursement
Total Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement
Response
The requested change has been made.
Comment
For the following sentence on page 3 of the prospectus:
The Fund has a fundamental investment policy that under normal circumstances it
will invest its assets so that at least 80% of the income it distributes will be
exempt from federal income tax, including the alternative minimum tax.
You requested that we add the following phrase to the end of the sentence per
35d-1 requirements:
and Florida personal income tax.
Response
The Florida intangibles tax has been repealed and Florida does not impose an
income tax on individuals. Therefore, this does not apply.
Comment
You requested that we change the footnote regarding the fee waiver to state who
can terminate the fee waiver and under what conditions the fee waiver can be
terminated. You also suggested that we shorten the footnote, if possible.
Response
The requested change has been made.
Comment
You suggested that we shorten the phrase in the fee example section that reads
"(except that contractual fee waivers are reflected only for the length of the
contractual limit, i.e., the first year in the example)."
Response
The requested change has been made.
2
Comment
You requested that we remove the verbiage under the expense example section that
reads "The above example is for comparison purposes only and is not a
representation of a Fund's actual expenses and returns, either past or future."
Response
The requested change has been made.
Comment
For all applicable funds, you requested that we change the following phrases to
state 20% as opposed to 25% because the funds' 80% rules would supersede the
funds from investing 25% in the investments discussed in the following:
"The Fund may also invest more than 25% of its assets in industrial development
bonds, which may be backed only by non-governmental entities. The Fund will not
invest more than 25% of its assets in securities backed by non-governmental
entities that are in the same industry."
Response
The 25% policy and the 80% policy are not mutually exclusive. Private activity
bonds or industrial development bonds that are backed only by non-governmental
entities may be exempt from federal income tax, including the alternative
minimum tax and applicable state tax. The Fund will not invest more than 20% of
its assets in securities that are not exempt from federal income tax, including
the alternative minimum tax and applicable state tax.
Comment
You suggested that we streamline the section "The Key Risks" for each fund so
that is more reader friendly.
Response
The Registrant believes that the risks are written in a concise, clear manner
and that further streamlining may make such disclosure less useful to the
reader.
Comment
For the state specific funds, you requested that we expand the following
statement under the Key Risks section of each fund so that it gives examples of
what economic conditions may decline:
If economic conditions in the State of ________ decline
Response
The requested change has been made.
3
Comment
You requested that we move the following sentence from the Buying and Selling
Fund Shares section of each applicable fund to another section of the statutory
prospectus:
These initial and additional investment minimums may change at any time.
Response
The requested change has been made.
Comment
You requested that we state where investors can find information about the bond
market that is discussed in the Buying and Selling Fund Shares section of each
applicable fund.
Response
The requested change has been made.
Comment
You requested that we rewrite the first paragraph of the Tax Information section
of each fund so that it reads:
The Fund intends to distribute substantially all of its ordinary income and any
capital gains to its shareholders. The Fund intends to pass on to shareholders
the federal tax-exempt income. Income exempt from federal tax may be subject to
state and local tax.
You also requested that we move the second paragraph in this section to the
statutory prospectus.
Response
The requested change has been made.
Comment
For the online versions of the summary prospectuses, you suggested that we
hyperlink any references of specific sections of the statutory prospectus so
that investors can be taken directly to those sections.
Response
When viewing the documents, the investor would click on the "Prospectus" link
(which is always visible at the top of the screen), then click on the "Investing
with Touchstone" link in the statutory table of contents, thus satisfying the
SEC's two click rule.
Comment
You requested that the Portfolio Turnover section of the Ohio Tax-Free Bond Fund
be presented as a sub-heading under the fee table.
4
Response
The requested change has been made.
Comment
On page 9 of the prospectus, in reference to the paragraph discussing the
average annual returns table, you requested that the sentence "You cannot invest
directly in an index" be removed and that the sentence "The Index reflects no
deductions for fees, expenses or taxes" be moved to the table immediately
following the name of the Index.
Response
The requested change has been made.
Comment
You requested that the "What is an Index" section of the Ohio Tax-Free Bond Fund
be removed or moved to another part of the statutory prospectus.
Response
The section has been removed.
Comment
You suggested, for the funds that have multiple classes, that the information in
the Buying and Selling Fund Shares section be combined and condensed, if
possible. Specifically, you suggested making a table for the investment
minimums.
Response
The requested change has been made.
Comment
For the section titled "Additional Information About Fund Investments" on page
19 of the prospectus, you requested that we specify which funds each investment
applies to.
Response
The requested change has been made.
Comment
You requested that we verify that the Concentration Risk on page 20 of the
prospectus does not violate the fundamental policy regarding concentration that
is in the SAI.
5
Response
"Concentration Risk" in the prospectus is intended to explain how concentration
in business segments (as opposed to industries) can carry certain risks. We view
business segments as a combination of industries and/or lines of business. We
renamed "Concentration Risk," "Sector Focus Risk" and revised the disclosure.
SAI
Comment
You requested that we verify that issuers of industrial development bonds by
non-governmental agencies are not excluded from the fundamental policy regarding
concentration that is included in the SAI.
Response
We verified that issuers of industrial development bonds by non-governmental
agencies are not excluded from the fundamental policy regarding concentration
that is included in the SAI.
6
In connection with this filing, the Trust acknowledges that: (1) the Trust is
responsible for the adequacy and accuracy of the disclosure in the filing; (2)
staff comments or changes to disclosure in connection with this filing, reviewed
by the staff do not foreclose the Commission from taking any action with respect
to the filing; and (3) the Trust may not assert staff comments as a defense in
any proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
Please contact the undersigned at 513-878-4066 if you have any questions or need
any additional information.
Very truly yours,
/s/ Jay S. Fitton
Jay S. Fitton
Secretary
7