THE SECURITIES ACT OF 1933 | ☒ | |||
Pre‑Effective Amendment No. | ☐ | |||
Post-Effective Amendment No. 52 | ☒ |
THE INVESTMENT COMPANY ACT OF 1940 | ☒ |
Shawn M Hendon, President The Torray Fund 7501 Wisconsin Ave., Ste. 750W, Bethesda, Maryland 20814 |
Thomas G. Sheehan, Esq. Bernstein Shur 100 Middle Street, Portland, ME 04101 | |
(Name and address of agent for service of process) |
☐ | immediately upon filing pursuant to paragraph (b) |
☒ | on |
☐ | 60 days after filing pursuant to paragraph (a)(1) |
☐ | on (date) pursuant to paragraph (a)(1) |
☐ | 75 days after filing pursuant to paragraph (a)(2) |
☐ | on (date) pursuant to paragraph (a)(2) of Rule 485. |
☐ | This post-effective amendment designates a new effective date for a previously filed post-effective amendment. |
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Management Fees |
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Other Expenses |
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Total Annual Fund Operating Expenses |
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Less: Fee Waiver(1) |
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Total Annual Fund Operating Expenses After Fee Waiver(1) |
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(1) | Torray LLC (the “Manager”) has contractually agreed prospectively pursuant to an Operating Expense Limitation Agreement (the “Agreement”) to waive its management fee and reimburse the Fund for its current Operating Expenses so as to limit the Fund’s current Operating Expenses to an annual rate, expressed as a percentage of the Fund’s average annual net assets, to 1.00% (the “Expense Cap”). For purposes of the Agreement, the term “Operating Expenses” includes the Manager’s management fee and all other expenses necessary or appropriate for the operation of the Fund, excluding any front‑end or contingent deferred loads, taxes, leverage, interest, brokerage commissions, acquired fund fees and expenses (“AFFE”), trustee fees and expenses, auditor fees and expenses, legal fees and expenses, insurance costs, registration and filing fees, printing, postage and mailing expenses, expenses incurred in connection with any merger or reorganization, or extraordinary expenses such as litigation. The Agreement will remain in effect until |
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10 Years | |||
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$ |
1 Year |
5 Years |
10 Years |
Since Inception |
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The Torray Fund |
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Return Before Taxes |
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Return After Taxes on Distributions |
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Return After Taxes on Distributions and Sale of Fund Shares |
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Russell 1000 Value Index* (reflects no deduction for fees, expenses, or taxes) |
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S&P 500 Stock Index* (reflects no deduction for fees, expenses, or taxes) |
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Regular Mail Address |
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Courier Address |
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The Torray Fund |
The Torray Fund |
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c/o U.S. Bank Global Fund Services |
c/o U.S. Bank Global Fund Services |
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P.O. Box 701 |
615 E. Michigan Street, 3rd Floor |
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Milwaukee, WI 53201-0701 |
Milwaukee, WI 53202-5207 |
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Regular Mail Address |
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Courier Address |
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The Torray Fund |
The Torray Fund |
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c/o U.S. Bank Global Fund Services |
c/o U.S. Bank Global Fund Services |
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P.O. Box 701 |
615 E. Michigan Street, 3rd Floor |
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Milwaukee, WI 53201-0701 |
Milwaukee, WI 53202-5207 |
• | If ownership is being changed on your account; |
• | When redemption proceeds are payable or sent to any person, address or bank account not on record; |
• | If a change of address was received by the transfer agent within the 30 calendar days prior to the redemption request; |
• | For all redemptions in excess of $100,000 from any shareholder account. |
• | To redeem your shares if your account balance falls below $2,000 as a result of redemptions and not market performance. You will receive 30 days’ notice to increase the value of your account to $2,000 before the account is closed; |
• | To refuse any purchase order; |
• | To refuse third-party checks, starter checks or cash equivalents for purchases of shares; |
• | To change or waive the Fund’s investment minimums; |
• | 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; |
• | To require additional documentation or a medallion signature guarantee on any redemption request. |
• | Name; |
• | Date of birth (for individuals); |
• | Residential or business street address (although post office boxes are still permitted for mailing); and |
• | Social security number, taxpayer identification number, or other identifying number. |
• | a confirmation statement after each transaction; |
• | an account statement reflecting your transactions for the calendar quarter; |
• | an account statement reflecting your annual transactions; and |
• | by February 15 of each year, certain tax information which is also filed with the Internal Revenue Service. |
Years ended December 31: | ||||||||||||||||||||
2021 |
2020 |
2019 |
2018 |
2017 |
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Net Asset Value, Beginning of Year |
$47.640 | $50.700 | $43.450 | $49.600 | $47.600 | |||||||||||||||
Investment operations: |
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Net investment income(1) |
0.595 | 0.631 | 0.739 | 0.619 | 0.550 | |||||||||||||||
Net realized and unrealized gain (loss) on securities |
9.646 | (2.156) | 7.862 | (5.806) | 5.091 | |||||||||||||||
Total from investment operations |
10.241 | (1.525) | 8.601 | (5.187) | 5.641 | |||||||||||||||
Less distributions from: |
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Net investment income |
(0.594) | (0.636) | (0.953) | (0.620) | (0.576) | |||||||||||||||
Net capital gains |
(5.047) | (0.899) | (0.398) | (0.343) | (3.065) | |||||||||||||||
Total distributions |
(5.641) | (1.535) | (1.351) | (0.963) | (3.641) | |||||||||||||||
Net Asset Value, End of Year |
$52.240 | $47.640 | $50.700 | $43.450 | $49.600 | |||||||||||||||
TOTAL RETURN(2) |
21.39% | -2.51% | 19.89% | -10.60% | 12.07% | |||||||||||||||
RATIOS/ SUPPLEMENTAL DATA |
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Net assets, end of year (000’s omitted) |
$380,868 | $356,342 | $408,961 | $370,973 | $447,688 | |||||||||||||||
Ratios of expenses to average net assets: |
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Before expense waiver |
1.16% | 1.17% | 1.15% | 1.16% | 1.16% | |||||||||||||||
After expense waiver |
1.07% | 1.06% | 1.06% | 1.07% | 1.07% | |||||||||||||||
Ratios of net investment income to average net assets |
1.10% | 1.46% | 1.53% | 1.28% | 1.11% | |||||||||||||||
Portfolio turnover rate |
36.46% | 32.79% | 11.05% | 4.18% | 19.38% |
(1) | Calculated based on the average amount of shares outstanding during the year. |
(2) | Past performance is not predictive of future performance. Returns assume reinvestment of all dividends and distributions. |
THE TORRAY FUND
Ticker: TORYX
STATEMENT OF ADDITIONAL INFORMATION
April 29, 2022
This Statement of Additional Information (“SAI”) is not a prospectus. This Statement of Additional Information should be read in conjunction with the Prospectus for The Torray Fund (the “Fund”) dated April 29, 2022. A copy of the Prospectus may be obtained by writing Torray LLC, 7501 Wisconsin Avenue, Suite 750W, Bethesda, Maryland 20814, or by telephoning toll free at 1-855-753-8174, or on the Fund’s website at https://funds.torray.com/literature.html. The Fund’s most recent Annual Report is a separate document and includes the Fund’s audited financial statements, which are deemed to be incorporated by reference into this Statement of Additional Information.
TABLE OF CONTENTS
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ORGANIZATION OF THE FUND
The Torray Fund was established as a Massachusetts business trust (the “Trust”) under the laws of Massachusetts by an Agreement and Declaration of Trust dated April 19, 1990. The Trust currently consists of one series, also known as The Torray Fund (the “Fund”). The Fund’s fiscal year ends on December 31 of each year.
Under Massachusetts law, shareholders could, under certain circumstances, be held liable for the obligations of the Fund. However, the Fund’s Agreement and Declaration of Trust disclaims shareholder liability for acts or obligations of the Fund and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed on behalf of the Fund. The Agreement and Declaration of Trust provides for indemnification out of the Fund’s property for all loss and expense of any shareholder of the Fund held liable on account of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Fund would be unable to meet its obligations.
INVESTMENT OBJECTIVES, POLICIES, RISKS AND RESTRICTIONS
Investment Objectives
The Fund is a diversified, open-end management investment company. The Fund’s investment objectives are to build investor wealth over extended periods 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 achieve these objectives.
Equity Securities. Since the Fund purchases equity securities, including common stocks, preferred stocks and securities convertible into common stocks, the Fund is subject to the risks that stock prices both individually and market-wide will fall over short or extended periods of time, and that prices of the equity securities held by the Fund may fluctuate from day -to- day. Historically, the stock markets have moved in cycles. Individual companies may report poor results or be negatively affected by industry and/or economic trends and developments. The stock prices of these companies may suffer a decline in response. These factors contribute to price volatility. Therefore, in order to be successful, investors must accept that, although the stocks of good companies generally rise over long periods, they can trade at virtually any price in the short run.
Fixed-Income Securities. The Fund may invest up to 5% of its assets in fixed-income securities consisting of corporate notes, bonds and debentures, which may include convertible notes and bonds. Fixed-income securities are subject to interest rate risk which refers to the risk that the value of the Fund’s fixed -income securities can change in response to changes in prevailing interest rates causing volatility and possible loss of value in response to the movement in interest rates. The Fund is not limited with respect to the investment rating of the fixed -income securities in which it may invest, and it may therefore purchase securities with investment ratings below investment grade. Securities that are rated below investment grade are subject to risks related to the credit quality of the issuer of the security. Such high yield/high risk securities are further subject to the risk that changes in economic conditions could lead to a weakened capacity of the issuers of the securities to make principal and interest payments, which is not necessarily the case with issuers of higher rated securities.
U.S. Treasury Securities. The Fund is free to invest in U.S. Treasury Securities of varying maturities. There are usually no brokerage commissions as such paid by the Fund in connection with the purchase of such instruments. The value of such securities can be expected to vary inversely to the changes in prevailing interest rates. Thus, if interest rates have increased from the time a security was purchased, such security, if sold, might be sold at a price less than its cost. Similarly, if interest rates have declined from the time a security was purchased, such security, if sold, might be sold at a price greater than its cost. See “Brokerage Services,” for a discussion of underwriters’ commissions and dealers’ spreads involved in the purchase and sale of such instruments.
Cash Investments. The Fund may invest in high-quality, short-term debt securities and money market instruments, including money market funds, certificates of deposit, bankers’ acceptances time deposits, savings association obligations, commercial paper, short-term notes (including discount notes), and other obligations.
While the Fund holds cash investments, the Fund may not participate in market advances to the extent it would have if the Fund had been more fully invested. Cash investments are subject to credit risk and interest rate risk, although to a lesser extent than longer-term debt securities, due to cash investments’ short-term, significant liquidity, and typical high credit quality.
Generally, money market mutual funds seek to earn income consistent with the preservation of capital and maintenance of liquidity. They primarily invest in high-quality money market obligations, including U.S. government obligations, bank obligations and high-grade corporate instruments. These investments generally mature within 397 calendar days from the date of acquisition. An investment in a money market mutual fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit
3
Insurance Corporation or any government agency.
To the extent that the Fund invests in money market mutual funds, shareholders will indirectly bear fees and expenses charged by the underlying money market mutual funds in addition to the Fund’s direct fees and expenses. Furthermore, investing in money market mutual funds could affect the timing, amount and character of distributions to shareholders and therefore may increase the amount of taxes payable by shareholders.
The investment objectives and policies of the Fund set forth above and, in the Prospectus, may be changed without shareholder approval. Shareholders will be provided with prior written notice of any changes to the Fund’s investment objective.
Illiquid Investments
The Fund may not acquire any illiquid investments if, immediately after the acquisition, the Fund would have invested more than 15% of its net assets in illiquid investments that are assets. The term “illiquid investments” for this purpose means any investment that a fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment, as determined pursuant to the provisions of Rule 22e-4 under the 1940 Act. The Fund may not be able to sell illiquid investments when the Adviser considers it desirable to do so or may have to sell such investments at a price that is lower than the price that could be obtained if the investments were more liquid. In addition, the sale of illiquid investments also may require more time and may result in higher dealer discounts and other selling expenses than does the sale of investments that are more liquid. Illiquid investments also may be more difficult to value due to the unavailability of reliable market quotations for such investments, and investments in illiquid investments may have an adverse impact on NAV.
Institutional markets for restricted securities have developed as a result of the promulgation of Rule 144A under the Securities Act, which provides a safe harbor from Securities Act registration requirements for qualifying sales to institutional investors. When Rule 144A restricted securities present an attractive investment opportunity and otherwise meet selection criteria, the Fund may make such investments. Whether or not such investments are illiquid depends on the market that exists for the particular investment. It is not possible to predict with assurance exactly how the market for Rule 144A restricted securities or any other security will develop. An investment which when purchased enjoyed a fair degree of marketability may subsequently become illiquid. In such event, appropriate remedies are considered to minimize the effect on the Fund’s liquidity.
Investment Restrictions
Without a vote of the majority of the outstanding voting securities of the Fund, the Fund will not take any of the following actions:
(1) | Borrow money in excess of 5% of the value (taken at the lower of cost or current value) of the Fund’s total assets (not including the amount borrowed) at the time the borrowing is made, and then only from banks as a temporary measure to facilitate the meeting of redemption requests (and not for leverage) or for extraordinary or emergency purposes. |
(2) | Pledge, hypothecate, mortgage or otherwise encumber its assets in excess of 10% of the Fund’s total assets (taken at cost), and then only to secure borrowings permitted by Restriction 1 above. |
(3) | Purchase securities on margin, except such short-term credits as may be necessary for the clearance of purchases and sales of securities. |
(4) | Make short sales of securities or maintain a short position for the account of the Fund unless at all times when a short position is open the Fund owns an equal amount of such securities or owns securities which, without payment of any further consideration, are convertible into or exchangeable for securities of the same issue as, and equal in amount to, the securities sold short. |
(5) | Underwrite securities issued by other persons except to the extent that, in connection with the disposition of its portfolio investments, it may be deemed to be an underwriter under federal securities laws. |
(6) | Purchase or sell real estate, although it may invest in securities of issuers which deal in real estate, including securities of real estate investment trusts, and may purchase securities which are secured by interests in real estate. |
(7) | Purchase or sell commodities or commodity contracts, including future contracts. |
(8) | Make loans, except by purchase of debt obligations or by entering into repurchase agreements. |
4
(9) | Invest in securities of any issuer if, immediately after such investment, more than 5% of the total assets of the Fund (taken at current value) would be invested in the securities of such issuer, except that up to 25% of the Fund’s total assets taken at current value may be invested without regard to such 5% limitation; provided, however, that this limitation does not apply to obligations issued or guaranteed as to interest and principal by the U.S. government or its agencies or instrumentalities. |
(10) | Acquire more than 10% of the voting securities of any issuer. |
(11) | Concentrate more than 25% of the value of its total assets in any one industry. |
(12) | Issue senior securities, except to the extent permitted by the Investment Company Act of 1940, by a Securities and Exchange Commission (“SEC”) exemptive order, or by the SEC. |
It is contrary to the Fund’s present policy, which may be changed by the Trustees without shareholder approval, to pledge or hypothecate its assets, make any short sales of securities, maintain any short position for the account of the Fund, issue senior securities, or purchase foreign securities which are not publicly traded in the United States. In addition, it is contrary to the Fund’s present policy to:
(1) | Invest more than 10% of the Fund’s net assets (taken at current value) in securities which at the time of such investment are not readily marketable. |
(2) | Write (sell) or purchase options. |
(3) | Buy or sell oil, gas or other mineral leases, rights or royalty contracts. |
(4) | Make investments for the purpose of gaining control of a company’s management. |
All percentage limitations on investments set forth herein and in the Prospectus will apply at the time of the making of an investment and shall not be considered violated unless an excess or deficiency occurs or exists immediately after and as a result of such investment.
The phrase “shareholder approval,” as used in the Prospectus, and the phrase “vote of a majority of the outstanding voting securities,” as used herein, means the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the Fund, or (2) 67% or more of the shares of the Fund present at a meeting if more than 50% of the outstanding shares are represented at the meeting in person or by proxy.
MANAGEMENT OF THE FUND
The Fund is overseen by a Board of Trustees (the “Board”), who has delegated the day-to-day management to the officers of the Fund. The Board meets regularly to review the Fund’s activities, contractual arrangements, and performance. The Trustees and officers serve until their successors are elected and qualified, or until the trustee or officer dies, resigns or is removed, or becomes disqualified.
Information regarding the Trustees and Officers of the Fund is provided below. As used in this Statement of Additional Information, “Fund Complex” includes only the Torray Fund. Although the Manager has historically provided investment advisory services to other mutual funds, it does not currently do so.
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Independent Trustees | ||||||||||
Name, Age, Address* and Positions with the Fund |
Term of Office and Length of Time Served |
Principal Occupation During the Past Five Years |
Number of Portfolios in Fund Complex Overseen by Trustee |
Other Directorships Held | ||||||
Patrick J. Carolan Age: 60 Trustee and Audit Committee Chair |
Indefinite Term Since 2021 | Managing Partner & Founder, Endeavour Investment Partners, Hingham, MA (2006 – present) | 1 | None | ||||||
Carol T. Crawford Age: 79 Trustee and Nominating Committee Chair |
Indefinite Term Since 2006 | Attorney and International Trade Consultant, McLean, VA | 1 | None | ||||||
Wayne H. Shaner** Age: 74 Trustee and Chair of the Board |
Indefinite Term Since 1993 | Managing Partner, Rockledge Partners, LLC, Investment Advisory Firm, Easton, MD (Jan. 2004 – present) |
1 | None | ||||||
Interested Trustees and Officers of the Trust | ||||||||||
Name, Age, Address* and Positions with the Fund |
Term of Office and Length of Time Served |
Principal Occupation During the Past Five Years |
Number of Trustee |
Other | ||||||
Interested Trustees |
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William M Lane*** Age: 71 Trustee, Treasurer and Secretary |
Indefinite Term since 1990 | Executive Vice President and Chief Financial Officer, Torray LLC, Bethesda, MD (Oct. 2005 – present) | 1 | None | ||||||
Officers of the Trust | ||||||||||
Shawn M. Hendon*** Age: 70 President |
Indefinite Term since 2020 | President of Torray LLC and Co-Manager of the Torray Fund, Torray LLC, Bethesda, MD (Jan. 2017 – present); Founder and Managing Partner, Harewood Partners, LLC, Rockville, MD (March 2012 – present) | N/A | None | ||||||
Suzanne E. Kellogg*** Age: 40 Chief Compliance Officer and Anti-Money Laundering Officer |
Indefinite Term since 2017 | Chief Compliance Officer and Anti-Money Laundering Officer, Torray LLC, Bethesda, MD (Jul. 2017 – present); Compliance Manager, FINRA, Washington, DC (Sep. 2016 – Jul. 2017) | N/A | None |
* All addresses are c/o The Torray Fund, 7501 Wisconsin Avenue, Suite 750W, Bethesda, MD 20814.
** Mr. Shaner is deemed to be an independent Trustee effective as of January 1, 2011.
*** Mr. Lane, Mr. Hendon and Ms. Kellogg, by virtue of their employment with Torray LLC, the Fund’s investment adviser, are considered “ interested persons” of the Trust, as that term is defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended.
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Leadership Structure
Board Leadership Structure. Wayne H. Shaner serves as the Chair of the Board of the Fund. In that capacity, he presides over all meetings of the Trustees and oversees the functioning of the Board’s activities. The Chair may perform such other functions as may be requested by the Board’s Trustees from time to time. Except for any duties specified herein or pursuant to the Fund’s Declaration of Trust and By-Laws, the designation of Chair does not impose on Mr. Shaner any duties, obligations or liability that are greater than the duties, obligations or liability imposed on such person as a member of the Board. The majority of the Board is comprised of Trustees who are not interested persons of the Fund (the “Independent Trustees”). The Board believes that maintaining a Board with a majority of Independent Trustees allows the Board to operate with an appropriate level of independent action and oversight. In accordance with applicable fund governance regulations, the Independent Trustees meet in a separate quarterly session in conjunction with each quarterly meeting of the Board, during which they review matters relating to their independent oversight of the Fund.
The Board has designated various standing committees, as further discussed below, each of which has a Chair who is an Independent Trustee. The Board may also designate working groups or ad hoc committees as it deems appropriate, from time to time.
The Board regularly reviews its leadership structure and believes it to be appropriate because it allows the Board to exercise informed judgment over matters under its purview, and also allocates responsibilities among committees of Trustees and the full Board in a manner that enhances effective oversight.
Trustee Qualifications. There are no specific required qualifications for Board membership. The Board believes that the different perspectives, viewpoints, professional experience, education and individual attributes of each Trustee reflect a diversity of experiences and skills. In addition to the table above, the following is a brief discussion of the specific experience, qualifications, attributes and skills that led to the conclusion that each person identified below is qualified to serve as a Trustee.
Patrick J. Carolan – Mr. Carolan has been in the mutual fund industry for over twenty years and brings to the Board extensive experience and expertise focused on mutual fund distribution and product development.
Carol T. Crawford – As a trained attorney, Ms. Crawford has experience with various business, legal and regulatory issues. In addition, Ms. Crawford also has useful board experience derived from her prior service on other boards of directors. She also has experience as a longstanding member of the Board.
William M Lane – Through his position as an officer of the Manager, Mr. Lane has experience in the management and operation of registered investment advisers and registered investment companies, enabling him to provide management input and guidance to the Board. In addition, he also has experience as a longstanding interested member of the Board.
Wayne H. Shaner – As someone who has been a participant in the investment industry for over thirty years, Mr. Shaner has extensive experience in the area of portfolio management. In addition, Mr. Shaner also has useful board experience derived from his prior service on other boards of directors, including other registered investment companies, as well as his longstanding membership on the Board.
Board Committees. The Board has an Audit Committee, a Nominating and Corporate Governance Committee and a Valuation Committee. The Audit Committee and the Nominating and Corporate Governance Committee are each comprised of all of the Board’s Independent Trustees. The Valuation Committee is comprised of at least two of the Board’s Independent Trustees. The Valuation Committee meets quarterly, as needed, in the event that the Fund holds any securities that are subject to fair valuation, and also reviews the fair valuation of such securities on an as needed basis. The Valuation Committee did not meet during the fiscal year ended December 31, 2021. The Audit Committee oversees the Fund’s accounting and financial reporting policies and practices and oversees the quality and objectivity of the Fund’s financial statements and the independent audit thereof. Mr. Carolan serves as Chair of the Audit Committee. During the fiscal year ended December 31, 2021, the Audit Committee met two times. The Nominating and Corporate Governance Committee evaluates the qualifications of Board member candidates and makes nominations for Independent Trustee membership on the Board. Ms. Crawford serves as Chair of the Nominating and Corporate Governance Committee. The Committee does not generally consider nominees recommended by shareholders. The Nominating and Corporate Governance Committee also oversees the Board governance process and has responsibility for periodically reviewing Board composition, Board compensation, Board committee structure and related Board process matters. The Nominating and Corporate Governance Committee meet once during the fiscal year ended December 31, 2021.
7
Risk Oversight
Board Oversight of Risk Management. The Fund is subject to various risks including, among others, investment, financial, compliance, valuation and operational risks. Day-to-day risk management functions are included within the responsibilities of the Manager and other service providers who carry out the Fund’s investment management and business affairs. The Manager and other service providers each have their own, independent interest in risk management, and their policies and procedures for carrying out risk management functions will depend, in part, on their individual priorities, resources and controls.
The Board has not established a standing risk oversight committee. Instead, in fulfilling its risk oversight responsibilities, the Board regularly solicits and/or receives reports from the Manager, the Fund’s Chief Compliance Officer (“CCO”) and from legal counsel to the Fund and its Independent Trustees. The Board has designated the CCO to oversee the risk management processes, procedures and controls for the Fund. In this role, the CCO reports directly to the Board’s Independent Trustees and provides quarterly reports to the Board, as well as an annual report to the Board, concerning the efficacy of the compliance policies and procedures of the Fund and specified service providers under relevant securities laws and regulations. The CCO also regularly provides the Board with updates on the application of the Fund’s compliance policies and procedures and how these procedures are designed to mitigate risk. In addition, as part of the Board’s periodic review of the Fund’s advisory and other service provider arrangements, the Board may consider risk management aspects of their operations and the functions for which they are responsible. The Board may, at any time and in its discretion, change the manner in which it conducts its risk oversight role in response to various relevant factors.
As of the fiscal year ended December 31, 2021, the dollar range of equity securities owned by each Trustee in the Fund and in all funds overseen by the Trustees within the same family of investment companies is as follows:
Independent Trustees
Name of Trustee |
Dollar Range of Equity Securities in the Fund |
Aggregate Dollar Range of Equity Securities in All Funds Overseen by Trustee in Family of Investment Companies |
||||||
Patrick J. Carolan |
$10,001-$50,000 | $10,001-$50,000 | ||||||
Carol T. Crawford |
$10,001-$50,000 | $10,001-$50,000 | ||||||
Wayne H. Shaner |
$10,001-$50,000 | $10,001-$50,000 |
A “Family of Investment Companies” is comprised of mutual funds that: (1) share a common investment adviser or retain affiliated investment advisers; and (2) hold themselves out to investors as related companies for purposes of investment and investor services. The Fund is the only mutual fund within its family of investment companies.
As of December 31, 2021, no Independent Trustee (or any of his/her immediate family members) owned beneficially or of record, securities of the Manager, the Fund’s principal underwriter, or any person (other than a registered investment company) directly or indirectly controlling, controlled by or under common control with the Manager or principal underwriter.
Interested Trustees
Name of Trustee |
Dollar Range of Equity Securities in the Fund |
Aggregate Dollar Range of Equity Securities in All Funds Overseen by Trustee in Family of Investment Companies |
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William M Lane |
Over $100,000 | Over $100,000 |
The Fund’s Agreement and Declaration of Trust provides that the Fund will indemnify its Trustees and each of its officers against liabilities and expenses incurred in connection with the litigation in which they may be involved because of their offices with the Fund, except if it is determined in the manner specified in the Agreement and Declaration of Trust that they have not acted in good faith in the reasonable belief that their actions were in the best interests of the Fund or that such indemnification would relieve any officer or Trustee of any errors and omissions to the Fund or its shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of his or her duties.
The Trustees set their level of compensation, which may be subject to change from time to time. Each of the Trustees who are not officers or employees of Torray LLC receives an annual retainer of $14,000, plus $2,000 for each Trustee meeting attended. The Chair of the Board receives an additional annual retainer of $10,000. The salaries and expenses of each of the Fund’s officers are paid by the Manager. The Trustees do not receive any pension or retirement benefits. The following table exhibits Trustee compensation for the fiscal year ended December 31, 2021.
8
Name of Trustee |
Aggregate Compensation from the Fund |
Aggregate Compensation from Fund Complex | ||
Patrick J. Carolan |
$14,420 | $14,420 | ||
Carol T. Crawford |
$22,000 | $22,000 | ||
Wayne H. Shaner |
$32,000 | $32,000 | ||
William M Lane |
$0 | $0 |
As of March 31, 2022, the Trustees, officers, and affiliated persons of the Fund, as a group, owned 15.34% of the outstanding shares of the Fund. As of March 31, 2022, no shareholder owned more than 25% of the Fund and therefore no shareholder may be deemed to control the Fund.
As of March 31, 2022, the following entities owned beneficially or of record, for their own account or the accounts of their customers, more than 5% of the outstanding shares of the Fund:
Shareholder |
# of Shares | % of Fund | ||
JP Morgan Securities LLC Brooklyn, NY 11201-3873 |
1,409,328 | 10.56% | ||
Charles Schwab & Co. Inc. FBO Schwab Customers San Francisco, CA 94105-1905 |
582,761 | 8.86% | ||
National Financial Services LLC Jersey City, NJ 07310-1995 |
402,926 | 6.53% |
INVESTMENT MANAGER AND OTHER SERVICE PROVIDERS
The Manager
Pursuant to a written management contract (“Management Agreement”) between the Fund and Torray LLC (the “Manager”) and subject to such policies as the Trustees of the Fund may determine, the Manager, at its expense, will furnish continuously an investment program for the Fund and will make investment decisions on behalf of the Fund and place all orders for the purchase and sale of portfolio securities subject always to applicable investment objectives, policies and restrictions. The Fund pays the Manager a fee, computed daily and payable monthly, at the annual rate of 1.00% of the Fund’s average daily assets. The Manager is a Maryland limited liability company organized in 2005. The Manager is the successor to the Fund’s prior investment adviser, The Torray Corporation.
Pursuant to the Management Agreement and subject to the control of the Trustees, the Manager also manages, supervises and conducts the other affairs and business of the Fund, furnishes office space and equipment, provides bookkeeping and certain clerical services and pays all fees and expenses of the officers of the Fund. As indicated under “Brokerage Services,” the Fund’s portfolio transactions may be placed with brokers which furnish the Manager, without cost, certain research, statistical and quotation services of value to it or its affiliates in advising the Fund or the Manager’s other clients. In so doing, the Fund may incur greater brokerage commissions than it might otherwise pay.
The Management Agreement has been approved by the Trustees of the Fund. By its terms, the Management Agreement has an initial two-year term following its approval by shareholders and will continue in force thereafter from year to year, but only so long as its continuance is approved at least annually by the Trustees at a meeting called for that purpose or by the vote of a majority of the outstanding shares of the Fund. The Management Agreement automatically terminates on assignment, and is terminable upon notice by the Fund. In addition, the Management Agreement may be terminated on not more than 60 days’ notice by the Manager to the Fund. In the event the Manager ceases to be the Manager of the Fund, the right of the Fund to use the identifying name of “Torray” may be withdrawn.
9
The table below sets forth the management fees paid by the Fund for the fiscal years ended December 31:
The Torray Fund | 2021 | 2020 | 2019 | |||
Management Fees Accrued |
$3,856,752 | $3,372,231 | $4,003,907 | |||
Management Fees Waived |
$(358,941) | $(356,724) | $(359,841) | |||
Total Management Fees Paid to Adviser |
$3,497,811 | $3,015,507 | $3,644,066 |
The Manager has contractually agreed, through April 30, 2024, to waive its management fee and reimburse the Fund for its current Operating Expenses so as to limit the Fund’s current Operating Expenses to an annual rate, expressed as a percentage of the Fund’s average annual net assets, to 1.00% (the “Expense Cap”). For purposes of the Agreement, the term “Operating Expenses” includes the Manager’s management fee and all other expenses necessary or appropriate for the operation of the Fund, excluding any front-end or contingent deferred loads, taxes, leverage, interest, brokerage commissions, acquired fund fees and expenses, trustee fees and expenses, auditor fees and expenses, legal fees and expenses, insurance costs, registration and filing fees, printing, postage and mailing expenses, expenses incurred in connection with any merger or reorganization or extraordinary expenses such as litigation. The Expense Cap may only be raised or eliminated with the consent of the Trustees of the Fund.
The Management Agreement provides that the Manager shall not be subject to any liability in connection with the performance of its services thereunder in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations and duties.
Shawn M. Hendon and Jeffrey D. Lent are co-managers of the Fund. The following table lists the number and types of other accounts managed by each individual and assets under management in those accounts as of December 31, 2021:
Portfolio Manager |
Other |
Assets ($ millions) |
Other |
Assets ($ millions) |
Other |
Assets ($ millions) |
Total | |||||||
Shawn M. Hendon |
0 | $0 | 0 | $0 | 2 | $3 | $384 | |||||||
Jeffrey D. Lent |
0 | $0 | 0 | $0 | 367 | $330 | $711 |
* | If an account has a co-portfolio manager, the total number of accounts and assets have been allocated to each respective manager. Therefore, some accounts and assets have been counted twice. |
As indicated in the table above, portfolio managers at the Manager may manage accounts for multiple clients. The portfolio managers may manage other registered investment companies, and separate accounts (i.e., accounts managed on behalf of individuals). Portfolio managers at the Manager make investment decisions for each account based on the investment objectives and policies and other relevant investment considerations applicable to that portfolio. Because a portfolio manager’s compensation is affected by revenues earned by the Manager, the incentives associated with any given account may be higher or lower than those associated with other accounts. The Manager has adopted and implemented policies and procedures, including brokerage and trade allocation policies and procedures, which it believes address the conflicts associated with managing multiple accounts for multiple clients. The Manager monitors a variety of areas, including compliance with account investment guidelines, the allocation of initial public offerings and other similar investment opportunities, and compliance with the Manager’s Code of Ethics.
The compensation of each of the Fund’s portfolio managers consists of a fixed annual salary, plus additional remuneration based on the firm-wide results of the Manager for the given time period.
The dollar range of equity securities of the Fund beneficially owned by the Fund’s portfolio managers as of December 31, 2021, is as follows:
Portfolio Manager |
Dollar Range of Equity Securities of The Fund Beneficially Owned | |
Shawn M. Hendon |
$500,001 – $1,000,000 | |
Jeffrey D. Lent |
$500,001 – $1,000,000 |
10
Code of Ethics
The Fund and the Manager have adopted a joint Code of Ethics pursuant to Rule 17j-1 under the Investment Company Act of 1940. This Code of Ethics applies to the personal investing activities of trustees, officers and certain employees (“access persons”) of the Fund and the Manager. Rule 17j-1 and the Code of Ethics is designed to prevent unlawful practices in connection with the purchase or sale of securities by access persons. Under the Code of Ethics, access persons are permitted to engage in personal securities transactions, but are required to report their personal securities transactions for monitoring purposes. In addition, all access persons are required to obtain approval before investing in initial public offerings or private placements. A copy of the Code of Ethics is on file with the SEC, and is available to the public at www.sec.gov.
Other Service Providers
Pursuant to an administration agreement (the “Administration Agreement”) between The Torray Fund (the “ Trust”) and U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”), 615 East Michigan Street, Milwaukee, Wisconsin, 53202 (the “Administrator”), the Administrator acts as the Fund’s administrator. The Administrator provides certain administrative services to the Fund, including, among other responsibilities, preparation for signature by an officer of the Trust of all documents required to be filed for compliance by the Trust and the Fund with applicable laws and regulations; arranging for the computation of performance data, including NAV and yield; responding to shareholder inquiries; and arranging for the maintenance of books and records of the Fund, and providing, at its own expense, office facilities, equipment and personnel necessary to carry out its duties. In this capacity, the Administrator does not have any responsibility or authority for the management of the Fund, the determination of investment policies, or for any matter pertaining to the distribution of Fund shares. Pursuant to the Administration Agreement, for its services, the Administrator receives from the Fund a fee computed daily and payable monthly based on the Fund’s average net assets, subject to an annual minimum fee.
Fund Services also acts as Fund Accountant, Transfer Agent and dividend disbursing agent under separate agreements with the Trust.
The Fund paid the following in fund administration and fund accounting fees to Fund Services during the fiscal years ended December 31:
2021 | 2020 | 2019 | ||||
The Torray Fund |
$189,544 | $176,772 | $177,790 |
Pursuant to a custody agreement between the Trust and the Fund, U.S. Bank, N.A., an affiliate of Fund Services, serves as the custodian of the Fund’s assets. For its services, the Custodian receives a monthly fee based on a percentage of the Fund’s assets, in addition to certain transaction-based fees. The Custodian’s address is 1555 North Rivercenter Drive, Suite 302, Milwaukee, Wisconsin, 53212. The Custodian does not participate in decisions relating to the purchase and sale of securities by the Fund. U.S. Bank, N.A. and its affiliates may participate in revenue sharing arrangements with service providers of mutual funds in which the Fund may invest.
Independent Registered Public Accounting Firm. The Fund’s independent registered public accounting firm is BBD, LLP, 1835 Market St., 3rd Floor, Philadelphia, PA 19103. BBD, LLP audits the annual financial statements of the Fund and provides the Fund with an audit opinion. BBD, LLP also provides certain related tax services to the Fund.
Underwriter. Foreside Funds Distributors LLC, (the “Underwriter”), located at 400 Berwyn Park, 899 Cassatt Road, Berwyn, PA 19312, serves as the principal underwriter of the Fund’s shares. The Underwriter acts as the Fund’s principal underwriter in a continuous public offering of the Fund’s shares. The Underwriter has no obligation to sell any specific quantity of Fund shares. The Underwriter and its officers have no role in determining the Fund’s investment policies or which securities are to be purchased or sold by the Fund.
The Underwriter may enter into agreements with selected broker-dealers, banks or other financial intermediaries for distribution of shares of the Fund. With respect to certain financial intermediaries and related fund “supermarket” platform arrangements, the Funds and/or the Manager, rather than the Underwriter, typically enters into such agreements. These financial intermediaries may charge a fee for their services and may receive shareholder service or other fees from parties other than the Underwriter. These financial intermediaries may otherwise act as processing agents and are responsible for promptly transmitting purchase, redemption and other requests to the Fund.
Fund Counsel. Bernstein Shur, 100 Middle Street, 6th Floor, Portland, ME 04101, serves as counsel to the Fund.
11
DISTRIBUTIONS
Distributions from Net Investment Income. The Fund pays out substantially all of its net investment income (i.e., dividends, interest it receives from its investments and short-term gains). It is the present policy of the Fund to declare and pay distributions from net investment income quarterly.
Distributions of Capital Gains. The Fund’s policy is to distribute annually substantially all of the net realized capital gain, if any, after giving effect to any available capital loss carryover. Net realized capital gain is the excess of net realized long-term capital gain over net realized short-term capital loss.
BROKERAGE SERVICES
Transactions on stock exchanges and other agency transactions involve the payment by the Fund of negotiated brokerage commissions. Such commissions vary among different brokers. Also, a particular broker may charge different commissions according to such factors as the difficulty and size of the transaction. There is generally no stated commission in the case of securities traded in the over-the-counter markets but the price paid by the Fund usually includes a dealer commission or mark-up. It is anticipated that most purchases and sales of short-term portfolio securities will be with the issuer or with major dealers in money market instruments acting as principals. In underwritten offerings, the price paid includes a disclosed, fixed commission or discount retained by the underwriter or dealer.
When the Manager places orders for the purchase and sale of portfolio securities for the Fund and buys and sells securities for the Fund, it is anticipated that such transactions will be effected through a number of brokers and dealers. In so doing, the Manager intends to use its best efforts to obtain for the Fund the most favorable price and execution available, except to the extent that it may be permitted to pay higher brokerage commissions as described below. In seeking the most favorable price and execution, the Manager considers all factors it deems relevant, including, by way of illustration, price, the size of the transaction, the nature of the market for the security, the amount of commission, the timing of the transaction taking into account market prices and trends, the reputation, experience and financial stability of the broker/ dealer involved and the quality of service rendered by the broker/dealer in other transactions.
It has for many years been a common practice in the investment advisory business for advisors of investment companies and other institutional investors to receive research, statistical and quotation services from brokers which execute portfolio transactions for the clients of such advisors. Consistent with this practice, the Manager may receive research, statistical and quotation services from brokers with which the Fund’s portfolio transactions are placed. These services, which in some instances could also be purchased for cash, include such matters as general economic and security market reviews, industry and company reviews, evaluations of securities and recommendations as to the purchase and sale of securities. Some of these services may be of value to the Manager in advising various clients (including the Fund), although not all of these services are necessarily useful and of value in managing the Fund. The fees paid to the Manager are not reduced because it receives such services.
As permitted by Section 28(e) of the Securities Exchange Act of 1934 and the Management Agreement, the Manager may cause the Fund to pay a broker which provides “brokerage and research services” (as defined in the Act) to the Manager an amount of disclosed commission for effecting a securities transaction for the Fund in excess of the commission which another broker would have charged for effecting that transaction. The authority of the Manager to cause the Fund to pay any such greater commissions is subject to such policies as the Trustees may adopt from time to time.
Under the Investment Company Act, persons affiliated with the Fund are prohibited from dealing with the Fund as a principal in the purchase and sale of securities.
The following table sets forth the amount of brokerage commissions paid by the Fund during its fiscal years ended December 31:
2021 | 2020 | 2019 | ||||
The Torray Fund |
$85,180 | $115,330 | $83,923 |
12
DESCRIPTION OF THE FUND’S SHARES
The Fund is organized as a Massachusetts business trust and currently consists of one series of shares. Shares of the series of the Fund consist of an unlimited number of shares, without par value. Under the Fund’s Agreement and Declaration of Trust, the Trustees of the Fund are authorized to divide the interests in the Fund into additional series of shares. Shareholders are entitled to one vote for each full share held and a proportionate fractional vote for any fractional shares held. No share of the Fund shall have any priority or preference over any other share of the Fund with respect to dividends or distributions upon termination of the Fund. Shareholders have no preemptive or other rights to subscribe to any additional shares or other securities issued by the Fund.
REDEMPTION OF SHARES AND DETERMINATION OF NET ASSET VALUE
How to Redeem Shares
The procedures for redemption of Fund shares are summarized in the text of the Prospectus following the caption “ More Information about Purchasing and Redeeming Shares - How to Redeem Shares.” Redemption requests must be in good order, as defined in the Prospectus. Upon receipt of a redemption request in good order, the shareholder will receive proceeds equal to the net asset value of the redeemed shares next determined after the redemption request has been received. The Fund will accept redemption requests only on days the New York Stock Exchange (“NYSE”) is open. Proceeds will normally be forwarded on the next day on which the NYSE is open; however, the Fund reserves the right to take up to seven days to make payment if, in the judgment of the manager, the Fund could be adversely affected by immediate payment. The proceeds of redemption may be more or less than the shareholder’s investment and thus may involve a capital gain or loss for tax purposes. If the shares to be redeemed represent an investment made by check or electronic funds transfer through the ACH network, the Fund reserves the right not to forward the proceeds of the redemption until the payment for purchase has been collected.
The Fund may suspend the right of redemption and may postpone payment only when the NYSE is closed for other than customary weekends and holidays, or if permitted by the rules of the SEC during periods when trading on the NYSE is restricted or during any emergency which makes it impracticable for the Fund to dispose of its securities or to determine fairly the value of its net assets, or during any other period permitted by order of the SEC.
The Fund reserves the right to redeem shares and mail the proceeds to the shareholder if at any time the net asset value of the shares in the shareholder’s account in the Fund falls below a specified level, currently set at $2,000. Shareholders will be notified and will have 30 days to bring the account up to the required level before any redemption action will be taken by the Fund. The Fund also reserves the right to redeem shares in a shareholder’s account in excess of an amount set from time to time by the Trustees. No such limit is presently in effect, but such a limit could be established at any time and could be applicable to existing as well as future shareholders.
How Net Asset Value is Determined
The net asset value per share of the Fund is determined once on each day on which the NYSE is open, as of the close of the NYSE. The Fund expects that the days, other than weekend days, that the NYSE will not be open are New Year’s Day, Martin Luther King, Jr. Day, President’s Day, Good Friday, Memorial Day, Juneteenth, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The Fund’s portfolio securities for which market quotations are readily available are valued at market value, which is determined by using the last reported sale price, or, if no sales are reported—and in the case of certain securities traded over-the-counter—the last reported bid price. For Nasdaq traded securities, market value may also be determined on the basis of the Nasdaq Official Closing Price (the “NOCP”) instead of the last reported sales price.
Certain securities and assets of the Fund may be valued at fair value as determined in good faith by the Trustees or by persons acting at their direction pursuant to guidelines established by the Trustees. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of such securities is generally determined as the amount which the Fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. The valuation procedures applied in any specific instance are likely to vary from case to case. However, consideration is generally given to the financial position of the issuer and other fundamental analytical data relating to the investment and to the nature of the restrictions on disposition of the securities (including any registration expenses that might be borne by the Fund in connection with such disposition). In addition, such specific factors are also generally considered as the cost of the investment, the market value of any unrestricted securities of the same class (both at the time of purchase and at the time of valuation), the size of the holding, the prices of any recent transactions or offers with respect to such securities and any available analysts’ reports regarding the issuer. Generally, trading in U.S. Government Securities is substantially completed each day at various times prior to the close of the Exchange. The value of such securities used for determining the Fund’s net asset value per share is computed as of such times. Occasionally, events affecting the value of such securities may occur between such times and the close of the NYSE which will not be reflected in the computation of the Fund’s net asset value. If events materially affecting the value of the Fund’s securities occur
13
during such period, then these securities will be valued at their fair value as determined in good faith by the Trustees.
TAXES
All dividends and distributions of the Fund, whether received in shares or cash, are taxable to the Fund’s shareholders and must be reported by each shareholder on their federal income tax return. Although a dividend or capital gains distribution received after the purchase of the Fund’s shares reduces the net asset value of the shares by the amount of the dividend or distribution, it will be treated as a distribution, and will be subject to federal income taxes as a dividend, ordinary income or, if properly designated by the Fund, as long-term capital gain. The maximum tax rate for individual taxpayers applicable to long- term capital gains and income from certain qualifying dividends on certain corporate stock is generally either 15% or 20%, depending on whether the individual’s income exceeds certain threshold amounts. These rate reductions do not apply to corporate taxpayers. Distributions of earnings from dividends paid by certain “qualified foreign corporations” can also qualify for the lower tax rates on qualifying dividends. A shareholder will also have to satisfy a more than 60-day holding period with respect to any distributions of qualifying dividends in order to obtain the benefit of the lower tax rate. Distributions of earnings from non-qualifying dividends, interest income, other types of ordinary income and short-term capital gains will be taxed at the ordinary income tax rate applicable to the taxpayer. In general, any gain or loss realized upon a taxable disposition of Fund shares by a shareholder will be treated as long-term capital gain or loss if the shares have been held for more than one year and otherwise as short-term capital gain or loss. However, any loss realized upon a taxable disposition of shares held for six months or less will be treated as long-term capital loss to the extent of any long-term capital gain distributions received by the shareholder with respect to those shares. All or a portion of any loss realized upon a taxable disposition of Fund shares will be disallowed if other Fund shares are purchased by the shareholder within 30 days before or after the disposition.
An additional 3.8% Medicare tax will be imposed on certain net investment income (including ordinary dividends and capital gain distributions received from the Fund and net gains from redemptions or other taxable dispositions of Fund shares) of U.S. individuals, estates and trusts to the extent that such person’s “modified adjusted gross income” (in the case of an individual) or “adjusted gross income” (in the case of an estate or trust) exceeds certain threshold amounts.
The Fund intends to qualify each year as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). In order to so qualify, the Fund must, among other things, (a) derive at least 90% of its gross income from dividends, interest, payments with respect to certain securities loans, net income from certain “qualified publicly traded partnerships” and gains from the sale of stock or securities, or other income derived with respect to its business of investing in such stock or securities; (b) each year distribute at least 90% of its “investment company taxable income,” which, in general, consists of investment income and short-term capital gains; and (c) diversify its holdings so that, at the end of each fiscal quarter (i) at least 50% of the market value of the Fund’s assets is represented by cash, cash items, U.S. Government securities, securities of other regulated investment companies, and other securities, limited in respect of any one issuer to a value not greater than 5% of the value of the Fund’s total assets and 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of its assets is invested in the securities (other than those of the U.S. Government or other regulated investment companies) of any one issuer or of two or more issuers which the Fund controls and which are engaged in the same, similar or related trades or businesses. By so qualifying, the Fund will not be subject to federal income taxes to the extent that its net investment income, net realized short-term capital gains and net realized long-term capital gains are distributed.
In years when the Fund distributes amounts in excess of its earnings and profits, such distributions may be treated in part as a return of capital. A return of capital is not taxable to a shareholder and has the effect of reducing the shareholder’s basis in the shares. The Fund currently has no intention or policy to distribute amounts in excess of its earnings and profits.
Distributions from the Fund will qualify for the dividends-received deduction for corporations to the extent that the Fund’s gross income was derived from qualifying dividends from domestic corporations.
Annually, shareholders will receive information as to the tax status of distributions made by the Fund in each calendar year.
The Fund is required to withhold and remit to the U.S. Treasury at a rate set under Section 3406 of the Code for U.S. residents of all dividend income earned by any shareholder account for which an incorrect or no taxpayer identification number has been provided or where the Fund is notified that the shareholder has under-reported income in the past (or the shareholder fails to certify that he is not subject to such withholding). In addition, the Fund will be required to withhold and remit to the U.S. Treasury at a rate set under Section 3406 of the Code for U.S. residents of the amount of the proceeds of any redemption of shares of a shareholder account for which an incorrect or no taxpayer identification number has been provided.
The foregoing relates to federal income taxation of United States citizens or residents. It does not apply to anyone who may be in a special tax situation. Distributions from investment income and capital gains may also be subject to state and local taxes. The Fund is organized as a Massachusetts business trust. Under current law, as long as the Fund qualifies for the federal income tax
14
treatment described above, it is believed that the Fund will not be liable for any income or franchise tax imposed by Massachusetts.
The Fund is required to withhold U.S. tax (at a 30% rate) on payments of dividends and, effective January 1, 2017, redemption proceeds made to certain non-U.S. entities that fail to comply (or be deemed compliant) with extensive new reporting and withholding requirements designed to inform the U.S. Department of the Treasury of U.S.-owned foreign investment accounts. Shareholders may be requested to provide additional information to the Fund to enable the Fund to determine whether withholding is required.
CALCULATION OF RETURN AND PERFORMANCE COMPARISONS
Calculation of Return
Total Return is a measure of the change in value of an investment in the Fund over the period covered, which assumes any dividends or capital gains distributions are reinvested immediately rather than paid to the investor in cash. The formula for Total Return used herein includes four steps: (1) adding to the total number of shares purchased by a hypothetical $1,000 investment in the Fund all additional shares which would have been purchased if all dividends and distributions paid or distributed during the period had been immediately reinvested; (2) calculating the value of the hypothetical initial investment of $1,000 as of the end of the period by multiplying the total number of shares owned at the end of the period by the net asset value per share on the last trading day of the period; (3) assuming redemption at the end of the period; and (4) dividing this account value for the hypothetical investor by the initial $1,000 investment.
Average annual total return is the average annual compounded rate of return for periods of one year, five years and ten years, all ended on the last day of a recent calendar quarter. Average annual total return quotations reflect changes in the price of the Fund’s shares and assume that all dividends and capital gains distributions during the respective periods were reinvested in Fund shares. Average annual total return (before taxes) is calculated by computing the average annual compounded rates of return of a hypothetical investment over such periods, according to the following formula (average annual total return is then expressed as a percentage):
P(1+T)n = ERV
Where: |
||||
T |
= |
average annual total return | ||
P |
= |
a hypothetical initial payment of $1,000 | ||
n |
= |
number of years | ||
ERV |
= |
ending redeemable value of a hypothetical $1,000 payment made at the beginning of the designated time period. |
It should be noted that average annual total return is based on historical performance and is not intended to indicate future performance. Average annual total return for the Fund will vary based on changes in market conditions and the level of the Fund’s expenses.
The average annual total return (after taxes on distributions) will be calculated according to the following formula:
P(1 + T)n = ATVD
Where: |
||||
P |
= |
a hypothetical initial payment of $1,000, | ||
T |
= |
average annual total return (after taxes on distributions), | ||
n |
= |
number of years, and | ||
ATVD |
= |
the ending value of a hypothetical $1,000 payment made at the beginning of the designated time period, after taxes on fund distributions but not after taxes on redemption. |
The average annual total return (after taxes on distributions and redemptions) will be calculated according to the following formula:
P(1+T)n = ATVDR
Where: |
||||
P |
= |
a hypothetical initial payment of $1,000, | ||
T |
= |
average annual total return (after taxes on distributions and redemption), | ||
n |
= |
number of years, and | ||
ATVDR |
= |
the ending value of a hypothetical $1,000 payment made at the beginning of the designated time period, after taxes on distributions and redemption. |
15
Performance Comparisons
The Fund may from time to time include its Total Return in information furnished to present or prospective shareholders. The Fund may from time to time also include its Total Return and Yield and the ranking of those performance figures relative to such figures for groups of mutual funds categorized by Lipper Analytical Services, Morningstar, the Investment Company Institute and other similar services as having the same investment objectives as the Fund.
PROXY VOTING
The Board of Trustees of the Fund has adopted proxy voting policies and procedures (the “Policy”), pursuant to which the Trustees have delegated proxy voting responsibility to the Manager and adopted the Manager’s proxy voting policy and procedures which are described below. The Trustees will review the Fund’s proxy voting records from time to time and will annually consider approving the Policy for the upcoming year. In the event that a conflict of interest arises between the Fund’s shareholders and the Manager or any of its affiliates or any affiliate of the Fund, the Manager will generally refrain from voting the proxies related to the companies giving rise to such conflict until it consults with the Board of Trustees. The Board or a Committee of the Board with responsibility for proxy oversight will instruct the Manager on the appropriate course of action. The Manager generally reviews each matter on a case-by-case basis in order to make a determination of how to vote in a manner that best serves the interests of Fund shareholders. The Manager may abstain from voting from time to time where it determines that the costs associated with voting a proxy outweigh the benefits derived from exercising the right to vote. In addition, the Manager will monitor situations that may result in a conflict of interest between the Fund’s shareholders and the Manager or any of its affiliate or any affiliates, or any affiliate of the Fund. Information on how the Fund voted proxies relating to portfolio securities during the 12-month period ended June 30th each year is available (1) without charge, upon request, by calling 1-855-753-8174 and (2) on the SEC’s website at https://www.sec.gov.
DISCLOSURE OF FUND PORTFOLIO HOLDINGS
The Board of Trustees has adopted policies and procedures concerning the public and nonpublic disclosure of the Fund’s portfolio securities. In order to protect the confidentiality of the Fund’s portfolio holdings, information regarding those holdings may not, as a general matter, be disclosed except: (1) to service providers that require such information in the course of performing their duties (such as the Fund’s investment adviser, administrator, custodian, independent public accountants, legal counsel, officers, the Board of Trustees, and each of their respective affiliates) and that are subject to a duty of confidentiality; and (2) pursuant to certain enumerated exceptions. These exceptions include: (1) disclosure of portfolio holdings only after such information has been publicly disclosed; and (2) to third-party vendors, such as Morningstar, Inc., Lipper Analytical Services, and other financial intermediaries, pursuant to a confidentiality agreement. A complete list of the Fund’s portfolio holdings is publicly available on a quarterly basis through filings made with the SEC on Forms N-CSR and Part F of Form N-PORT. The Fund also makes available certain additional information regarding its portfolio holdings on its website, https://funds.torray.com.
Whenever portfolio holdings disclosure made pursuant to the Fund’s procedures involves a conflict of interest between the Fund’s shareholders and the Fund’s Manager or any affiliated person of the Fund, the disclosure may not be made unless a majority of the Fund’s Independent Trustees or a majority of a board committee consisting solely of Independent Trustees approves such disclosure. Neither the Fund nor the Manager may enter into any arrangement providing for the disclosure of non-public portfolio holding information for the receipt of compensation or benefit of any kind.
Any exceptions to the policies and procedures may only be made by the consent of the Fund’s chief compliance officer upon a determination that such disclosure serves a legitimate business purpose and is in the best interests of the Fund and will be reported to the Board at the Board’s next regularly scheduled meeting. Any amendments to the Fund’s policies and procedures must be approved and adopted by the Fund’s Board of Trustees.
FINANCIAL STATEMENTS
The audited financial statements for the Fund for the year ended December 31, 2021, including notes thereto and the report of BBD, LLP have been filed with the SEC and are deemed to be incorporated by reference into this Statement of Additional Information.
16
PART C
OTHER INFORMATION
Item 28. Exhibits
(a)(1) Agreement and Declaration of Trust originally filed as exhibit (1) to the Registrant’s Initial Registration Statement on Form N-1A dated April 24, 1990, is incorporated by reference to exhibit (1) to Post-Effective Amendment No. 6, electronically filed on April 30, 1996.
(b) By-Laws originally filed as exhibit (2) to the Registrant’s Initial Registration Statement on Form N-1A dated April 24, 1990, are incorporated by reference to exhibit (2) to Post-Effective Amendment No. 6, electronically filed on April 30, 1996.
(c) Not Applicable
(f) Not Applicable
(j)(1) Consent of BBD, LLP is filed herewith.
(j)(2) Opinion of Bernstein Shur is filed herewith.
(k) Not Applicable
(l) Purchase Agreement between Registrant and Robert E. Torray is filed as exhibit (13) to Pre-Effective Amendment No. 2 to the Registrant’s Registration Statement on Form N-1A, filed November 20, 1990, is incorporated by reference to exhibit (13) to Post-Effective Amendment No. 6, as filed on April 30, 1996.
(m) Not Applicable
(n) Not Applicable
(o) Not Applicable
(p) Code of Ethics of the Trust and the Adviser is filed herewith.
EX-101.INS XBRL Instance Document
EX-101.SCH XBRL Taxonomy Extension Schema Document
EX-101.CAL XBRL Taxonomy Extension Calculated Linkbase
EX-101.DEF XBRL Taxonomy Extension Definition Linkbase
EX-101.LAB XBRL Taxonomy Extension Label Linkbase
EX-101.PRE XBRL Taxonomy Extension Presentation Linkbase
Item 29. Persons Controlled by or Under Common Control with Registrant
None.
Item 30. Indemnification
Article VIII of the Registrant’s Agreement and Declaration of Trust, provides in effect that the Registrant will indemnify its officers and Trustees under certain circumstances. However, in accordance with Section 17(h) and 17(i) of the Investment Company Act of 1940 and its own terms, said Agreement and Declaration of Trust does not protect any person against any liability to the Registrant or its shareholders to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties in the conduct of his or her office.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to Trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions (or otherwise), the Registrant is aware that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and, therefore, is unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by Trustees, officers or controlling persons of the Registrant in connection with the successful defense of any act, suit or proceeding) is asserted by such Trustees, officers or controlling persons in connection with the shares being registered, the
Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issues.
Section 10.02 of the Custody Agreement provides as follows:
Indemnification by Custodian. The Custodian shall indemnify and hold harmless the Trust from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys’ fees) that the Trust may sustain or incur or that may be asserted against the Trust by any person arising directly or indirectly out of any action taken or omitted to be taken by an Indemnified Party as a result of the Indemnified Party’s refusal or failure to comply with the terms of this Agreement (or any sub-custody agreement), or from its bad faith, negligence or willful misconduct in the performance of its duties under this Agreement (or any sub-custody agreement). This indemnity shall be a continuing obligation of the Custodian, its successors and assigns, notwithstanding the termination of this Agreement. As used in this paragraph, the term “Trust” shall include the Trust’s trustees, officers and employees.
Section 7 of the Distribution Agreement states in part:
The Client shall indemnify, defend and hold the Distributor, its affiliates and each of their respective members, managers, directors, officers, employees, representatives and any person who controls or previously controlled the Distributor within the meaning of Section 15 of the 1933 Act (collectively, the “Distributor Indemnitees”), free and harmless from and against any and all losses, claims, demands, liabilities, damages and expenses (including the costs of investigating or defending any alleged losses, claims, demands, liabilities, damages or expenses and any reasonable counsel fees incurred in connection therewith) (collectively, “Losses”) that any Distributor Indemnitee may incur under the 1933 Act, the 1934 Act, the 1940 Act any other statute (including Blue Sky laws) or any rule or regulation thereunder, or under common law or otherwise, arising out of or relating to (i) the Distributor serving as distributor of the Funds pursuant to this Agreement; (ii) the Client’s breach of any of its obligations, representations, warranties or covenants contained in this Agreement; (iii) the Client’s failure to comply with any applicable securities laws or regulations; or (iv) any claim that the Registration Statement, Prospectus, shareholder reports, sales literature and advertising materials or other information filed or made public by the Client (as from time to time amended) include or included an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading under the 1933 Act, or any other statute or the common law any violation of any rule of FINRA or of the SEC or any other jurisdiction wherein Shares of the Funds are sold, provided, however, that the Client’s obligation to indemnify any of the Distributor Indemnitees shall not be deemed to cover any Losses arising out of any untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, Prospectus, annual or interim report, or any such advertising materials or sales literature in reliance upon and in conformity with information relating to the Distributor and furnished to the Client or its counsel by the Distributor in writing and acknowledging the purpose of its use. In no event shall anything contained herein be so construed as to protect the Distributor against any liability to the Client or its shareholders to which the Distributor would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of its duties under this Agreement or by reason of its reckless disregard of its obligations under this Agreement.
The Distributor shall indemnify, defend and hold the Client, its affiliates, and each of their respective directors, officers, employees, representatives, and any person who controls or previously controlled the Client within the meaning of Section 15 of the 1933 Act (collectively, the “Client Indemnitees”), free and harmless from and against any and all Losses that any Client Indemnitee may incur under the 1933 Act, the 1934 Act, the 1940 Act, any other statute (including Blue Sky laws) or any rule or regulation thereunder, or under common law or otherwise, arising out of or based upon (i) the Distributor’s breach of any of its obligations, representations, warranties or covenants contained in this Agreement; (ii) the Distributor’s failure to comply with any applicable securities laws or regulations; or (iii) any claim that the Registration Statement, Prospectus, sales literature and advertising materials or other information filed or made public by the Client (as from time to time amended) include or included an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements not misleading, insofar as such statement or omission was made in reliance upon, and in conformity with, information furnished to the Client by the Distributor in writing. In no event shall anything contained herein be so construed as to protect the Client against any liability to the Distributor to which the Client
would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of its duties under this Agreement or by reason of its reckless disregard of its obligations under this Agreement.
Section 9 of the Fund Accounting Agreement provides as follows:
USBFS shall indemnify and hold the Trust harmless from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys’ fees) that the Trust may sustain or incur or that may be asserted against the Trust by any person arising out of any action taken or omitted to be taken by USBFS as a result of USBFS’ refusal or failure to comply with the terms of this Agreement, or from its bad faith, negligence, or willful misconduct in the performance of its duties under this Agreement. This indemnity shall be a continuing obligation of USBFS, its successors and assigns, notwithstanding the termination of this Agreement. As used in this paragraph, the term “Trust” shall include the Trust’s trustees, officers and employees.
Section 6 of the Fund Administration Servicing Agreement provides as follows:
USBFS shall indemnify and hold the Trust harmless from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys’ fees) that the Trust may sustain or incur or that may be asserted against the Trust by any person arising out of any action taken or omitted to be taken by USBFS as a result of USBFS’ refusal or failure to comply with the terms of this Agreement, or from its bad faith, negligence, or willful misconduct in the performance of its duties under this Agreement. This indemnity shall be a continuing obligation of USBFS, its successors and assigns, notwithstanding the termination of this Agreement. As used in this paragraph, the term “Trust” shall include the Trust’s trustees, officers and employees.
Section 8 of the Transfer Agent Servicing Agreement provides as follows:
USBFS shall indemnify and hold the Trust harmless from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature (including reasonable attorneys’ fees) that the Trust may sustain or incur or that may be asserted against the Trust by any person arising out of any action taken or omitted to be taken by USBFS as a result of USBFS’s refusal or failure to comply with the terms of this Agreement, or from its bad faith, negligence, or willful misconduct in the performance of its duties under this Agreement. This indemnity shall be a continuing obligation of USBFS, its successors and assigns, notwithstanding the termination of this Agreement. As used in this paragraph, the term “Trust” shall include the Trust’s trustees, officers and employees.
Neither party to this Agreement shall be liable to the other party for consequential, special or punitive damages under any provision of this Agreement.
Item 31. Business and Other Connections of Investment Advisor
The business and other connections of the officers and directors of Torray LLC are set forth in the Form ADV of Torray LLC (No. 801-8629) as currently on file with the U.S. Securities and Exchange Commission, which is incorporated by reference herein.
As of 3.11.22
Item 32. | Foreside Funds Distributors LLC |
Item 32(a) | Foreside Funds Distributors LLC (the “Distributor”) serves as principal underwriter for the following investment companies registered under the Investment Company Act of 1940, as amended: |
1. | Fairholme Funds, Inc. |
2. | FundVantage Trust |
3. | GuideStone Funds |
4. | Matthews International Funds (d/b/a Matthews Asia Funds) |
5. | New Alternatives Fund |
6. | Old Westbury Funds, Inc. |
7. | The Torray Fund |
8. | Versus Capital Multi-Manager Real Estate Income Fund LLC (f/k/a Versus Global Multi-Manager Real Estate Income Fund LLC) |
9. | Versus Capital Real Assets Fund LLC |
Item 32(b) | The following are the Officers and Manager of the Distributor, the Registrant’s underwriter. The Distributor’s main business address is 899 Cassatt Road, 400 Berwyn Park, Suite 110, Berwyn, PA 19312. |
Name | Address | Position with Underwriter |
Position with Registrant | |||
Richard J. Berthy | Three Canal Plaza, Suite 100,
Portland, ME 04101 |
President, Treasurer
and Manager |
None | |||
Mark A. Fairbanks | Three Canal Plaza, Suite 100,
Portland, ME 04101 |
Vice President | None | |||
Teresa Cowan | 111 E. Kilbourn Ave, Suite 2200,
Milwaukee, WI 53202 |
Vice President | None | |||
Susan K. Moscaritolo | 899 Cassatt Road, 400 Berwyn
Park, Suite 110, Berwyn, PA
19312 |
Vice President and
Chief Compliance
Officer |
None | |||
Kelly B. Whetstone | Three Canal Plaza, Suite 100, Portland, ME 04101
|
Secretary | None |
Item 32(c) | Not applicable. |
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended (the “Securities Act”), and the Investment Company Act of 1940, as amended, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act and has duly caused this Post-Effective Amendment No. 52 to be signed on its behalf by the undersigned, thereto duly authorized, in the City of Bethesda and State of Maryland on the 5th of May, 2022.
The Torray Fund | ||
By: | /s/ Shawn M. Hendon | |
Shawn M. Hendon, President |
Pursuant to the requirements of the Securities Act, this Post-Effective Amendment No. 52 to the Registration Statement has been signed below by the following persons in the capacities and on the date indicated.
Signature |
Capacity |
| ||
/s/ Shawn M. Hendon |
President | |||
Shawn M. Hendon | ||||
/s/ William M Lane |
Trustee and Treasurer | |||
William M Lane | ||||
/s/ Patrick J. Carolan |
Trustee | |||
Patrick J. Carolan* | ||||
/s/ Carol T. Crawford |
Trustee | |||
Carol T. Crawford* | ||||
/s/ Wayne H. Shaner |
Trustee | |||
Wayne H. Shaner * |
* By: | /s/ William M Lane | |
William M Lane | ||
Attorney-in-Fact |
* Pursuant to Powers of Attorney as previously filed.
EXHIBIT INDEX
(j)(2) Opinion of Bernstein Shur.
(p) Code of Ethics of the Trust and Adviser.
EX-101.INS XBRL Instance Document
EX-101.SCH XBRL Taxonomy Extension Schema Document
EX-101.CAL XBRL Taxonomy Extension Calculated Linkbase
EX-101.DEF XBRL Taxonomy Extension Definition Linkbase
EX-101.LAB XBRL Taxonomy Extension Label Linkbase
EX-101.PRE XBRL Taxonomy Extension Presentation Linkbase