PEPPER HAMILTON LLP
ATTORNEYS AT LAW
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, PA 19103-2799
215.981.4000
Fax 215.981.4750
[DATE], 2010
Touchstone Large Cap Growth Fund Touchstone Healthcare and Biotechnology Fund
Touchstone Strategic Trust Touchstone Funds Group Trust
303 Broadway 303 Broadway
Suite 1100 Suite 1100
Cincinnati, Ohio 45202 Cincinnati, Ohio 45202
Ladies and Gentlemen:
You have requested our opinion regarding certain U.S. federal income tax
consequences to (i) Touchstone Healthcare and Biotechnology Fund (the "Acquired
Fund"), a separate series of Touchstone Funds Group Trust, a Delaware statutory
trust ("TFGT"), (ii) the holders (the "Acquired Fund Shareholders") of voting
shares of common stock of the Acquired Fund (the "Acquired Fund Shares"), and
(iii) Touchstone Large Cap Growth Fund (the "Acquiring Fund," and together with
the Acquired Fund, the "Funds"), a separate series of Touchstone Strategic Trust
("TST"), a Massachusetts business trust, in connection with the transfer of all
of the assets of the Acquired Fund to the Acquiring Fund in exchange solely for
voting shares of common stock of the Acquiring Fund (the "Acquiring Fund
Shares") and the assumption of certain of the liabilities of the Acquired Fund
by the Acquiring Fund, followed by the distribution of such Acquiring Fund
Shares received by the Acquired Fund in complete liquidation and termination of
the Acquired Fund (these transactions taken together are referred to as, the
"Reorganization"), all pursuant to the Agreement and Plan of Reorganization (the
"Agreement") dated as of [DATE] executed by TFGT on behalf of the Acquired Fund
and TST on behalf of the Acquiring Fund.
For the purpose of rendering this opinion, we have examined and are relying,
with your permission (without any independent investigation or review thereof
other than such investigation and review as we have deemed necessary to comply
with our professional obligations under IRS Circular 230 or otherwise), upon the
truth and accuracy, at all relevant times, of the statements, covenants,
representations and warranties contained in the following documents (the
"Documents"):
1. The Agreement;
2. The registration statement of TST on Form N-14 to which this opinion is an
exhibit, filed with the Securities and Exchange Commission with respect to the
Acquiring Fund Shares to be issued in connection with the Reorganization (the
"Registration Statement"), and the proxy statement/prospectus included in the
Registration Statement (the "Prospectus/Proxy Statement");
Boston Washington, D.C. Detroit New York Pittsburgh
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Berwyn Harrisburg Orange County Princeton Wilmington
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PEPPER HAMILTON LLP
ATTORNEYS AT LAW
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3. The representations made to us by each of the Funds in their letters to us
dated the date hereof; and
4. Such other instruments and documents as we have deemed necessary or
appropriate for purposes of rendering this opinion.
For purposes of this opinion, we have assumed, with your permission and without
independent investigation (other than such investigation as we have deemed
necessary to comply with our professional obligations under IRS Circular 230 or
otherwise), that (i) the Reorganization will be consummated in the manner
contemplated by the Prospectus/Proxy Statement and in accordance with the
provisions of the Agreement without the waiver of any conditions to any party's
obligation to effect the Reorganization, (ii) the original documents (including
signatures) are authentic, (iii) the documents submitted to us as copies conform
to the original documents, (iv) there has been (or will be by the date of the
Reorganization) due execution and delivery of all documents where due execution
and delivery are prerequisites to the effectiveness of those documents, (v) the
statements and representations contained in the Documents are accurate, (vi) the
covenants and warranties set forth in the Documents will be complied with and
(vii) the Reorganization will be effective under applicable law.
Furthermore, we have assumed, with your permission and without independent
investigation (other than such investigation as we have deemed necessary to
comply with our professional obligations under IRS Circular 230 or otherwise),
that, as to all matters in which a person or entity making a representation has
represented that such person or entity or a related party is not a party to,
does not have, or is not aware of, any plan, intention, understanding or
agreement to take action, there is in fact no plan, intention, understanding or
agreement and such action will not be taken, and we have further assumed that
any statement made "to the knowledge of" or otherwise similarly qualified is
correct without such qualification.
Subject to the foregoing and any other assumptions, limitations and
qualifications specified herein, it is our opinion that for U.S. federal income
tax purposes:
1. The acquisition by the Acquiring Fund of all of the assets of the
Acquired Fund solely in exchange for the Acquiring Fund's assumption of certain
of the liabilities of the Acquired Fund and the issuance of the Acquiring Fund
Shares, followed by the distribution by the Acquired Fund in liquidation of such
Acquiring Fund Shares to the Acquired Fund Shareholders in exchange for their
Acquired Fund Shares, all as provided in the Agreement, will constitute a
reorganization within the meaning of Section 368(a) of the Code, and the
Acquired Fund and the Acquiring Fund each will be "a party to a reorganization"
within the meaning of Section 368(b) of the Code;
PEPPER HAMILTON LLP
ATTORNEYS AT LAW
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[DATE]
2. Under Code Section 361, no gain or loss will be recognized by the
Acquired Fund (i) upon the transfer of its assets to the Acquiring Fund solely
in exchange for the Acquiring Fund Shares and the assumption by the Acquiring
Fund of certain of the liabilities of the Acquired Fund or (ii) upon the
distribution of the Acquiring Fund Shares by the Acquired Fund to the Acquired
Fund Shareholders in liquidation, as contemplated in the Agreement;
3. Under Code Section 1032, no gain or loss will be recognized by the
Acquiring Fund upon the receipt of the assets of the Acquired Fund solely in
exchange for the assumption of the liabilities of the Acquired Fund and the
issuance of the Acquiring Fund Shares as contemplated in the Agreement;
4. Under Code Section 362(b), the tax basis of the assets of the Acquired
Fund acquired by the Acquiring Fund will be the same as the tax basis of such
assets in the hands of the Acquired Fund immediately prior to the
Reorganization;
5. Under Code Section 1223(2), the holding periods of the assets of the
Acquired Fund in the hands of the Acquiring Fund will include the periods during
which such assets were held by the Acquired Fund;
6. Under Code Section 354, no gain or loss will be recognized by the
Acquired Fund Shareholders upon the exchange of all of their Acquired Fund
Shares for the Acquiring Fund Shares in the Reorganization;
7. Under Code Section 358, the aggregate tax basis of the Acquiring Fund
Shares to be received by each Acquired Fund Shareholder pursuant to the
Reorganization will be the same as the aggregate tax basis of the Acquired Fund
Shares exchanged therefore;
8. Under Code Section 1223(1), an Acquired Fund Shareholder's holding
period for the Acquiring Fund Shares to be received will include the period
during which the Acquired Fund Shares exchanged therefor were held, provided
that the Acquired Fund Shareholder held the Acquired Fund Shares as a capital
asset on the date of the Reorganization.
We express no opinion as to (1) the effect of the Reorganization on (A) the
Acquired Fund or the Acquiring Fund with respect to any asset as to which any
unrealized gain or loss is required to be recognized for U.S. federal income tax
purposes at the end of a taxable year (or on the termination or transfer
thereof) under a mark-to-market system of accounting and (B) any Acquired Fund
Shareholder or Acquiring Fund Shareholder that is required to recognize
unrealized gains and losses for U.S. federal income tax purposes under a
mark-to-market system of accounting, or (C) the Acquired Fund or the Acquiring
Fund with respect to any stock held in a passive foreign investment company as
defined in Section 1297(a) of the Code or (2) any other federal tax issues
(except those set forth above) and all state, local or foreign tax issues of any
kind.
This opinion is based upon the Code, regulations promulgated thereunder,
administrative pronouncements and judicial authority, all as in effect as of the
date hereof. It represents our best legal judgment as to the matters addressed
herein but is not binding on the Internal Revenue Service or the courts.
Accordingly, no assurance can be given that the Internal Revenue Service would
agree with the opinion expressed herein or, if contested, the opinion would be
sustained by a court.
PEPPER HAMILTON LLP
ATTORNEYS AT LAW
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Furthermore, the authorities upon which we rely may be changed at any time,
potentially with retroactive effect. No assurances can be given as to the effect
of any such changes on the conclusions expressed in this opinion. We undertake
no responsibility to advise you of any new developments in the application or
interpretation of relevant federal tax laws. If any of the facts or assumptions
pertinent to the U.S. federal income tax treatment of the Reorganization
specified herein or any of the statements, covenants, representations or
warranties contained in the Documents are, or later become, inaccurate, such
inaccuracy may adversely affect the conclusions expressed in this opinion. In
addition, our opinion is limited to the tax matters specifically covered hereby,
and we have not been asked to address, nor have we addressed, any other tax
consequences of the Reorganization or any other transactions.
This opinion is being provided solely for the benefit of the Funds. No other
person or party shall be entitled to rely on this opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the section captioned
"Information About the Reorganization - Federal Income Tax Consequences"
therein. In giving this consent we do not hereby admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
Pepper Hamilton LLP