PROSPECTUS
MAY 1, 1999 AS REVISED
JUNE 30, 1999
THE TORRAY FUND
THE TORRAY FUND IS A NO-LOAD MUTUAL FUND MANAGED BY THE TORRAY CORPORATION.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
PAGE
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About the Fund .......................... 2
Performance ............................. 4
Fund Expenses ........................... 5
Financial Highlights .................... 6
Fund Management ......................... 7
Purchasing and Redeeming Shares ......... 7
Taxes and Distributions ................. 10
1
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ABOUT THE FUND
INVESTMENT GOALS:
The Torray Fund's goals are to build shareholder wealth over long periods (10
years or more) and to minimize shareholder capital gains tax liability by
limiting the realization of long and short term gains.
There is no guarantee that the Fund will meet these objectives.
INVESTMENT STRATEGIES AND POLICIES:
The manager's strategy is to buy and hold stocks of quality companies for
long-term investment. In this context, "quality" refers to demonstrated earning
power, sound finances, solid competitive position, and capable executive
leadership. Management never trades for quick profits. Stock market trends are
largely ignored and no effort is made to forecast the market or time the Fund's
investments to profit from the perceived outlook. Ordinarily 90% or more of
assets will be invested in common stocks with the balance held in U.S. Treasury
bills or notes. Investments are not limited to any particular capitalization
size. Positions in individual stocks will generally not exceed 8% of assets and
in industry groupings, 25%.
The manager believes that value exists in businesses, not stocks. Consequently,
a thorough analysis of the economic fundamentals of potential investments is the
essential element of The Torray Corporation's approach. History shows that
stocks of companies generating higher earnings rise over time. The manager's
research, therefore, concentrates on studying businesses with proven track
records. The objective is to capitalize on the values that accumulate in such
enterprises over long periods. Companies that have performed poorly or appear
headed downhill with little chance of recovery are not bought, regardless of how
undervalued their shares may appear. However, quality companies that have fallen
from investor favor are often of interest because the price of their shares may
fail to reflect the business's intrinsic value. In such cases the manager seeks
to determine whether the seemingly low price reflects temporary problems or a
serious impairment of economic values. Investments are made only when it is
believed that a company's long-term outlook is sound and the shares are fairly
priced.
2
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Investors in search of unrealistically high returns, quick profits, or to whom
quarterly performance is important, should not invest in The Torray Fund.
The Fund's goals and investment strategy can be changed without shareholder
approval.
MAIN RISKS
Torray Fund investors face the risk that the manager's business analyses prove
faulty. The Fund usually holds between 25 and 40 stocks compared to a mutual
fund industry average of well over 100. If the fundamentals of a number of large
holdings are misjudged, shareholders may suffer losses even during a time when
the general market and many other funds are rising. Beyond that possibility
there is always a risk that money may be lost on an investment in an equity
mutual fund.
3
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PERFORMANCE
Below are a chart and a table showing the Fund's performance. The bar chart
provides some indication of the risk of investing in the Fund by illustrating
how the Fund has performed from year-to-year. The table compares the Fund's
performance against the performance of an unmanaged market index. These figures
assume that all distributions were reinvested. It is important to remember that
the Fund's past performance does not indicate how the Fund will perform in the
future.
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997 1998
----------- ----------- ---------- ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
THE TORRAY FUND 19.98% 21.04% 6.37% 2.41% 50.41% 29.09% 37.12% 8.20%
</TABLE>
Annual Total Return (%) as of 12/31
[GRAPH]
The Fund's best return for a calendar quarter was 21.30% in the Fourth Quarter
of 1998, and the lowest return for a calendar quarter was (21.30%) in the Third
Quarter of 1998.
Average Annual Total Returns as of 12/31/98
8 YEARS
BEGINNING
1 YEAR 5 YEARS 12/31/90*
---------- ----------- ----------
Torray Fund 8.20% 24.16% 20.86%
S&P 500 Index 28.58% 24.06% 20.83%
*Commencement of Operations
4
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FUND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER TRANSACTION FEES
(fees paid directly from your investment)
None
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
Management Fees 1.00%
Other Expenses .09
-----
Total Annual Fund Operating Expenses 1.09%
=====
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. This example uses the same
assumptions that are in all mutual fund prospectuses: a $10,000 investment, a 5%
return and fund expenses that remain the same each year. The figures shown in
this example are entirely hypothetical. They are not representations of past or
future performance or expenses. Your actual costs and returns may be higher or
lower.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------- --------- --------- ---------
$ 112 $347 $603 $1,334
5
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FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned on an investment in the
Fund (assuming reinvestment of all dividends and distributions). The information
for 12/31/98 and 12/31/97 has been audited by Briggs, Bunting & Dougherty, LLP,
whose report, along with the Fund's financial statements are incorporated by
reference into the Statement of Additional Information, which is available upon
request. The information for 12/31/96, 12/31/95 and 12/31/94 has been audited by
other auditors.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
PER SHARE DATA --------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD ........................ $ 33.850 $ 25.220 $ 20.110 $ 13.755 $ 14.273
Income From Investment
Operations:
Net Investment Income ........... 0.139 0.130 0.186 0.215 0.213
Net Gains on Securities
(both realized and
unrealized) ................... 2.630 9.206 5.642 6.674 0.130
--------- -------- -------- -------- --------
Total from Investment
Operations ................... 2.769 9.336 5.828 6.889 0.343
Less:
Dividends (from Net Investment
Income) ....................... (0.139) (0.130) (0.187) (0.214) (0.213)
Distributions (from Capital
Gains) ........................ 0.000 (0.576) (0.531) (0.320) (0.648)
--------- -------- -------- -------- --------
Total Distributions ........... (0.139) (0.706) (0.718) (0.534) (0.861)
--------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD ........................ $ 36.480 $ 33.850 $ 25.220 $ 20.110 $ 13.755
========= ======== ======== ======== ========
TOTAL RETURN(1) ................... 8.20% 37.12% 29.09% 50.41% 2.41%
RATIOS/SUPPLEMENTAL
DATA
Net Assets, End of Period
(000's omitted) ............... $1,458,854 $608,537 $116,593 $ 50,744 $ 23,362
Ratio of Expenses to Average
Net Assets .................... 1.09% 1.13% 1.25% 1.25% 1.25%
Ratio of Net Income to Average
Net Assets .................... 0.42% 0.47% 0.87% 1.31% 1.51%
Portfolio Turnover Rate ......... 25.96% 11.72% 20.95% 22.56% 36.63%
</TABLE>
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(1) Past performance is not predictive of future performance.
6
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FUND MANAGEMENT
The Fund's manager is The Torray Corporation, 6610 Rockledge Drive, Suite 450,
Bethesda, Maryland 20817. Robert E. Torray has served as President of the
manager since 1990. Mr. Torray is also the Chairman of Robert E. Torray & Co.
Inc., a manager of large institutional portfolios, that he founded May 1, 1972.
Douglas C. Eby, the Fund's co-manager, joined The Torray Corporation in 1992. He
serves as its Executive Vice President and is also President of Robert E. Torray
& Co. Inc. Mr. Torray is 62 and Mr. Eby is 40.
The manager provides investment advice and portfolio management services and
oversees the administration of the Fund. The manager received 1.00% of the
Fund's average daily net assets as compensation for these services for the
fiscal year ended December 31, 1998.
YEAR 2000 ISSUES
Like most mutual funds (and other organizations around the world), the Fund
could be affected by computer problems related to the transition to the year
2000. While no one knows if these problems will have any impact on the Fund or
on the financial markets in general, the Fund is taking steps to protect its
investors. These steps include efforts to ensure that the Fund's own systems are
prepared to make the transition to the year 2000, and to determine that the
problem will not affect the systems used by the Fund's major service providers.
Whether these steps will be effective can only be known for certain in the year
2000. In addition, year 2000 problems may ultimately negatively affect the
companies whose securities the Fund purchases, which may have an impact on the
value of Fund shares.
PURCHASING AND REDEEMING SHARES
PRICING FUND SHARES
Orders to buy or redeem shares that are received in good order prior to the
close of the Fund (generally 4:00 P.M. Eastern time) will be processed at the
net asset value calculated that day. Net asset value per share is calculated by
dividing the Fund's net assets by the number of shares outstanding after the New
York Stock Exchange ("NYSE") closes for the day.
The Fund uses market quotes that are readily available to value its securities.
In cases where quotes are not readily available, the securities will be valued
using fair value guidelines approved by the Fund's board of trustees.
7
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HOW TO BUY SHARES
You may buy shares of the Fund on a no-load basis on any day that the NYSE is
open.
The minimum initial purchase is $10,000. You should send your check payable to
"The Torray Fund" with a completed account application to the Fund's transfer
agent:
The Torray Fund
c/o First Data Investor Services Group, Inc.
211 South Gulph Road
P.O. Box 61503
King of Prussia, PA 19406-0903
Additional purchases can be made for $500 or more and should be mailed to:
The Torray Fund
First Data Investor Services Group, Inc.
211 South Gulph Rd.
P.O. Box 61767
King of Prussia, PA 19406-8767
Please remember to include your account number on your check.
You, your spouse, or your children may open a related account for an initial
investment of $2,000 if your current account meets the minimum initial
investment amount of $10,000. A related account can be a joint account with your
spouse or children or a retirement account such as an IRA.
To open a related account you may be asked to present additional documents as
proof of the relationship in addition to an account application. You will also
be asked to provide your existing account number and taxpayer identification
number. You should use caution when giving these numbers to another person
because that person may be able to gain access to your account or other
confidential financial information.
You may also buy shares through a broker or other financial institution and may
be charged a fee for their services.
8
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HOW TO REDEEM SHARES
You may redeem your shares either in writing or by telephone if you elected the
telephone redemption privilege on your application. You should submit your
written redemption request directly to:
The Torray Fund
c/o First Data Investor Services Group, Inc.
211 South Gulph Road
P.O. Box 61503
King of Prussia, PA 19406-0903
If your account is held in the name of a corporation, as a fiduciary or agent,
or as a surviving joint owner, you may be required to provide additional
documents with your redemption request.
To redeem by telephone you can call 1-800-626-9769.
Please remember that all redemption requests must include your name and account
number. The Fund may take up to seven days to pay redemption proceeds. If you
are redeeming shares that were recently purchased by check, the proceeds may be
delayed until the check for purchase clears; this may take up to 15 days from
the date of purchase.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Fund reserves the following rights as they relate to purchases and
redemptions:
o To redeem your shares if your account balance falls below $10,000 as a
result of redemptions. You will receive 30 days notice to increase the
value of your account to $10,000 before the account is closed.
o To refuse any purchase order.
o To refuse third-party checks for purchases of shares.
o To change or waive the Fund's investment minimums.
o To suspend the right to redeem and delay redemption proceeds during times
when trading on the NYSE is restricted or halted, or otherwise as
permitted by the SEC.
o To require a signature guarantee for fund redemptions sent to an address
different from the address of record.
o To require a signature guarantee for some fund redemptions and IRA
transfers.
Shareholders should be aware that purchase and redemption requests mailed to the
Fund's Maryland address will not be processed until they are received
9
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by the Fund's transfer agent (generally the next business day) at the address
above. You can avoid delays by mailing requests for purchases and redemptions
directly to the Fund's transfer agent.
TAXES AND DISTRIBUTIONS
The Fund declares and pays dividends quarterly and net capital gains annually.
All distributions will be invested in shares of the Fund unless you elect on
your account application to receive distributions in cash. You can elect to
cancel cash payments by notifying the Fund, in writing, prior to the date of
distribution. Your choice will be effective for distributions paid after the
Fund receives your written notice.
The Fund will distribute substantially all of its investment income and capital
gains, if any. The dividends and distributions you receive may be subject to
federal, state and local taxation, depending upon your tax situation. Capital
gains distributions may be taxable at different rates depending on the length of
time the Fund holds its securities. The manager's buy and hold strategy may act
to limit the realization of short term gains, and defer the realization of long
term gains. Each redemption of Fund shares is a taxable event. You should
consult a tax advisor regarding your investment in the Fund.
10
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INVESTMENT MANAGER
The Torray Corporation
6610 Rockledge Drive, Suite 450
Bethesda, MD 20817
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
INDEPENDENT AUDITORS
Briggs, Bunting, & Dougherty, LLP
Two Logan Square, Suite 2121
18th & Arch Streets
Philadelphia, PA 19103-4901
CUSTODIAN
United Missouri Bank
928 Grand Blvd.
Kansas City, MO 64141-6226
TRANSFER AGENT
First Data Investor Services Group, Inc.
211 South Gulph Road
P.O. Box 61503
King of Prussia, PA 19406-0903
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HOW TO OBTAIN MORE INFORMATION
The Statement of Additional Information (SAI) contains additional information
about the Fund including a more detailed discussion of its investment policies
and the risks associated with various investments. The SAI is incorporated by
reference into this prospectus. This means that the SAI is legally a part of the
prospectus.
Additional information about the Fund's investments is available in the Fund's
Annual and Semi-annual Report to Shareholders. In the Fund's annual report, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.
You may obtain a copy of the SAI or Reports to Shareholders by request and
without charge by contacting the Fund at 1-800-443-3036 or in writing to The
Torray Corporation, 6610 Rockledge Drive, Suite 450, Bethesda, Maryland 20817.
You can also obtain these documents, and other information about the Fund from
the SEC's website ("http://www.sec.gov"). You may review and copy documents at
the SEC Public Reference Room in Washington, D.C. (1-800-SEC-0330). You may
request documents by mail from the SEC by writing to Securities and Exchange
Commission, Public Reference Section, Washington, D.C. 20549-6009. The SEC will
charge a duplicating fee for any requested materials.
The Torray Fund - 811-06096
The
TORRAY
FUND
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PROSPECTUS
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May 1, 1999 as revised
June 30, 1999
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