12
Manor Investment Funds, Inc.
113 West Chestnut Street
West Chester, PA 19380
610-431-0630
March 20, 1996
via: EDGAR
Ms. Kathy Tewey
Securities & Exchange Commission
Washington, DC 20549
Re: Filing under Rule 497
CIK 0001003924
Co. Manor Investment Funds, Inc.
File 33-99520
811-9134
Dear Ms. Tewey:
Please accept the attached filing of the Prospectus and
Statement of Additional Information for Manor Investment
Funds, Inc., filed pursuant to Rule 497.
Thank you for your assistance in this matter. If you
have any addition comments or questions, please do not
hesitate to contact me.
Sincerely,
Daniel A. Morris
President
Manor Investment Funds, Inc.
West Chester, PA 19380
610-431-0630
800-787-3334
PROSPECTUS March 15, 1996
The Fund & Investment Objective
Manor Investment Funds, Inc. is an open-end non-diversified
management investment company whose primary objective is
capital appreciation. A secondary objective is to provide a
moderate level of current income. The Fund seeks to achieve
its objectives primarily by investing in common stocks and
securities convertible into common stocks.
Fund Share Purchase
Capital shares of the Fund may only be purchased directly
from the Fund at net asset value as next determined after
receipt of order. The minimium initial purchase is $1,000
and the minimum subsequent purchase is $100.
Additional Information
This Prospectus, which should be retained for future
reference, is designed to set forth concisely the
information that you should know before you invest. A
"Statement of Additional Information" containing additional
information about the Fund has been filed with the
Securities and Exchange Commission. Such Statement is dated
September 30, 1995 and has been incorporated by reference
into the Prospectus. A copy of the Statement may be
obtained without charge, by writing to the Fund or by
calling either of the telephone numbers shown above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
FUND EXPENSES
The following illustrates all expenses and fees that a
shareholder of Manor Investment Funds, Inc. will incur. The
expenses and fees set forth are estimates based on the
expected operating expenses of the Fund for its first full
year of operation.
Shareholder Transaction
Expenses
Sales load imposed on purchases No
ne
Sales load imposed on No
reinvested dividends ne
Redemption fees No
ne
Exchange fees No
ne
IRA Trustee fees No
ne
Annual Fund Operating Expenses
Management and advisory 1.
expenses 0%
12 b-1 fees No
ne
All other expenses 0.
5%
Total operating expenses 1.
5%
The purpose of this table is to assist investors in
understanding the various costs and expenses that an
investor in the Fund will bear directly and indirectly. The
following example illustrates the expenses paid on a $1,000
investment over various time periods assuming (1) a 5%
annual rate of return and (2) redemption at the end of each
time period. As noted above, the fund charges no redemption
fees.
1 Year 3 Years
$15 $47
This example should not be considered a representation of
past or future expenses or performance. Actual expenses may
be greater or less than those shown.
THE FUND continuous operations.
Manor Investment Funds,
Inc. (also referred to as The Fund will utilize
the "Fund") is an open-end information obtained from
non-diversified management various sources including
investment company. The earnings expectations,
Fund was incorporated in fundamental securities
Pennsylvania on September valuation and securities
13, 1995. The Fund's price trends.
registered office is in
West Chester, PA 19380. The Fund invests primarily
in securities which provide
favorable growth prospects
OBJECTIVE AND POLICIES and some level of current
Objective: The primary income. The Fund may also
objective of the Fund is invest in securities which
capital appreciation. A provide favorable growth
secondary objective is to prospects but do not
provide a moderate level of provide some level of
current income. The Fund current income. The Fund
seeks to achieve its may also invest in
objectives primarily by government and corporate
investing in common stocks bonds, or short-term
and securities convertible interest bearing
into common stocks. securities, when the
adviser believes market
It must be realized, as is conditions warrant a
true of almost all defensive position.
securities, there can be no
assurance that the Fund Portfolio Turnover Policy:
will obtain its ongoing The Fund does not propose
objective of capital to purchase securities for
appreciation and moderate short term trading in the
income. ordinary course of
operations. Accordingly,
Investment Policies it is expected that the
The Fund will invest annual turnover rate will
primarily in common stock not exceed 50%, wherein
of large U.S. corporations. turnover is computed by
The Fund will not invest in dividing the lesser of the
foreign securities, and no Fund's total purchases or
more than 5% of the Fund's sales of securities within
net assets will be invested the period by the average
in companies that do not monthly portfolio value of
have three years of the Fund during such
period. There may be times INVESTMENT RISKS
when management deems it Market Risk: The Fund
advisable to substantially invests in common stocks
alter the composition of which can decline in price
the portfolio, in which over short or even extended
event, the portfolio periods. For five year
turnover rate might timeperiods from 1926-1994
substantially exceed 50%; the stock market, as
this would only result from measured by the S&P 500
special circumstances and returned an average of
not from the Fund's normal 10.2%, with a high of 23.9%
operations. and a low of -12.5%.
Nondiversitfication Policy: Inflation Risk: Inflation
The Fund is classified as represents a risk to an
being non-diversified which investment portfolio
means that it may invest a because it reduces the real
relatively high percentage return of a portfolio over
of its assets in the time. Historically,
obligations of a limited inflation averaged 3.1%,
number of issuers. The offsetting most of the
Fund, therefore, may be returns from money market
more susceptible than a investments and bonds.
more widely diversified Using the illustration
fund to any single above, average inflation
economic, political, or reduced the returns from
regulatory occurrence. The the stock market by
policy of the Fund, in the approximately one third.
hope of achieving its
objective as stated above,
is, therefore, one of TAX STATUS
selective investments Under provisions of Sub-
rather than broad Chapter M of the Internal
diversification. The Fund Revenue Code of 1954 as
seeks only enough amended, the Fund, by
diversification for paying out substantially
adequate representation all of its investment
among what it considers to income and realized capital
be the best performing gains, intends to be
securities and to maintain relieved of federal income
its federal non-taxable tax on the amounts
status under Sub-Chapter M distributed to
of the Internal Revenue shareholders. In order to
Code. qualify as a "regulated
investment company" under
Sub-Chapter M, at least 90% capital, are subject to
of the Fund's income must federal income taxes.
be derived from dividends,
interest and gains from The Fund is required by
securities transactions, no Federal law to withhold 31%
more than 30% of the Fund's of reportable payments
profits may be derived from (which may include
sales of securities held dividends, capital gains,
less than three months, and distributions and
no more than 50% of the redemptions) paid to
Fund's assets may be in shareholders who have not
security holdings of any complied with IRS
issuer that exceed 5% of regulations. In order to
the total assets of the avoid this withholding
Fund at the time of requirement, you must
purchase. certify on a W-9 tax form
supplied by the Fund that
Distribution of any net your Social Security or
long term capital gains Taxpayer Identification
realized by the fund will Number provided is correct
be taxable to the and that you are not
shareholder as long term currently subject to back-
capital gains, regardless up withholding, or that you
of the length of time Fund are exempt from back-up
shares have been held by withholding.
the investor. All income
realized by the Fund
including short term INVESTMENT RESTRICTIONS
capital gains, will be The By-Laws of the Fund
taxable to the shareholder provide the following
as ordinary income. fundamental investment
Dividends from net income restrictions; the Fund may
will be made annually or not, except by the approval
more frequently at the of a majority of the
discretion of the Fund's outstanding shares:
Board of Directors.
Dividends received shortly (a) Act as underwriter for
after purchase of shares by securities of other
an investor will have the issuers except insofar as
effect of reducing the per the Fund may be deemed an
share net asset value of underwriter in disposing
his shares by the amount of of its own portfolio.
such dividends or (b) Issue senior
distributions and, although securities, borrow money
in effect a return of or purchase securities on
margin, but may obtain a loan.
such short term credit as (h) Acquire more than 10%
may be necessary for of the securities of any
clearance of purchases class of another issuer,
and sales of securities treating all preferred
for temporary or securities of an issuer
emergency purposes in an as a single class and all
amount not exceeding 5% debt securities as a
of the value of its total single class, or acquire
assets. more than 10% of the
(c) Sell securities voting securities of
short. another issuer.
(d) Invest in securities of (i) Invest in companies
other investment for the purpose of
companies except as part acquiring control.
of a merger, (j) Purchase or retain
consolidation, or securities of any issuer
purchase of assets if the officers and
approved by the Fund's directors of the Fund or
shareholders or by its Investment Adviser
purchases with no more owning individually more
that 10% of the Fund's than 1/2 of 1% of any
assets in the open market class of security,
involving only customary collectively own more
brokers commissions. than 5% of such class of
(e) Invest more that 25% securities of such
of its assets at the time issuer.
of purchase in any one (k) Pledge, mortgage or
industry. hypothecate any of its
(f) Make investments in assets.
commodities, commodity (l) Invest in securities
contracts or real estate which may be subject to
although the Fund may registration under the
purchase and sell Securities Act of 1933
securities of companies prior to sale to the
which deal in real estate public or which are not
or interests therein. at the time of purchase
(g) Make loans. The readily salable.
purchase of a portion of (m) Invest more than 5%
a readily marketable of the total Fund assets,
issue of publicly taken at market value at
distributed bonds, the time of purchase, in
debentures or other debt securities of companies
securities will not be with less than three
considered the making of years' continuous
operation, including the approval is voted at least
operations of any annually by a majority of
predecessor. the directors of the Fund
who are neither parties to
INVESTMENT ADVISER the agreement nor
Morris Investment interested persons as
Management Services, Inc., defined in the Investment
113 West Chestnut Street, Company Act of 1940 at a
West Chester, PA, is a meeting called for the
Pennsylvania corporation purpose of voting on such
that acts as sole approval.
Investment Adviser to the
Fund. Mr. Daniel A. Morris Under the agreement, the
is the sole owner, director Investment Adviser will
and officer of the direct the purchase or sale
Investment Adviser and is of investment securities in
also president of the Fund. accordance with the stated
As of September 30, 1995 objectives of the Fund,
Mr. Morris owns all under the review of the
outstanding shares of Directors of the Fund.
Morris Investment The Agreement may be
Management, Inc. and of the terminated at any time,
outstanding shares of Manor without the payment of any
Investment Funds. Mr. penalty, by the Board of
Morris has been a Directors or by vote of a
shareholder, executive majority of the outstanding
officer and portfolio voting securities of the
manager for investment Fund on not more than 60
advisors to mutual funds days' written notice to the
and other investors since Investment Adviser. In the
1981. event of its assignment,
the Agreement will
On September 18, 1995 the terminate automatically.
shareholders of the Fund For these services the Fund
approved a management and has agreed to pay to Morris
advisory contract with Investment Management
Morris Investment Services, Incorporated a
Management Services, Inc., fee of 1% per year on the
to act as Investment net assets of the Fund.
Adviser of the Fund, which This rate of the advisory
was unanimously approved by fee is generally higher
the Board of Directors. than that paid by most
This agreement will mutual funds. All fees are
continue on a year to year computed on the average
basis provided that daily closing net asset
value of the Fund and are
payable monthly. The
Investment Adviser will
forego all or a portion of
its fees in order to hold
the total expenses of the
Fund to no more than 1.5%
of averaged assets.
Pursuant to its contract
with the Fund, the
Investment Adviser is
required to render
research, statistical, and
advisory services to the
Fund; and to make specific
recommendations based on
the Fund's investment
requirements. Fees of the
custodian, registrar, and
transfer agents shall be
paid by the Fund. The Fund
pays all other expenses,
including fees and expenses
of directors not affiliated
with the Adviser, if any;
legal and accounting fees;
interest, taxes, and
brokerage commissions,
recordkeeping and the
expense of operating its
offices. The Investment
Adviser has paid the
initial organizational
costs of the Fund and will
reimburse the Fund for any
and all losses incurred
because of rescinded
purchases.
OFFICERS AND DIRECTORS OF THE FUND
The Officers and Directors of the Fund have agreed to serve
without compensation, their addresses, principal occupations
during the past five years are:
Name and Address Position
Principal Occupation Past Five Years
Daniel A. Morris President
President
304 Albermarle Grove Interested Director
Morris Investment Management Services, Inc.
West Chester, PA West
Chester, PA
Senior Vice President
Consistent Asset Management
Co,
Chadds Ford, PA
Bruce Laverty Secretary
Attorney
810 Dowingtown Pike Interested Director
Laverty, Nilsen & Reed
West Chester, PA West
Chester, PA
James McFadden Treasurer Vice
President, Credit Administration
305 Devonshire Circle Interested Director MBNA
America Bank, N.A.
West Chester, PA
Newark, DE
Edward Erlichman Non-Interested
President
P.O. Box 513 Director Kara Aerospace, Inc.
Bedford, PA Bedford, PA
Richard A. Kund, Jr. Non-Interested
Marketing Representative
304 Hidden Creek Dr. Director
Laboratory Corporation of America
Horsham, PA Burlington, NC
Frederick L. Myers, CPA Non-Interested
Certified Public Accountant
302 Albermarle Grove Director
Myers & Associates, CPA's
West Chester, PA West
Chester, PA
James F. Nolan Non-Interested
Attorney
113 West Chestnut St. Director West
Chester, PA
West Chester, PA
Alan Weintraub Non-Interested
Manager of Technology Consulting
305 Albermarle Grove Director JVC
Technology, Inc.
West Chester, PA
Wayne, PA
CAPITALIZATION terminate the offering of
Description of Common Stock: its shares made by this
The authorized Prospectus at any time and
capitalization of the Fund to reject purchase
consists of 10,000,000 applications when, in the
shares of common stock of judgment of the management
$.001 par value per share. such termination or
Each share has equal rejection is in the best
dividend, distribution and interests of the Fund.
liquidation rights. There
are no conversion or pre- Initial Investments:
emptive rights applicable to Initial purchase of shares
any shares of the Fund. All of the Fund may be made only
shares issued are fully paid by application submitted to
and non-accessible. the Fund. For the
convenience of investors, a
Voting Rights: Each holder Share Purchase Application
of common stocks has one form is provided with this
vote for each share held. Prospectus. The minimum
Voting rights are non- initial purchase of shares
cumulative, which means that is $1,000.
the holders of a majority of
shares of common stock can Subsequent Purchases:
elect all the directors of Subsequent purchases may be
the Fund if they so choose, made by mail or in person.
and the holders of the The minimum is $100, but
remaining shares will not be less may be accepted under
able to elect any person as special circumstances.
a director.
To purchase shares complete
the application form and
PURCHASE OF SHARES - mail to Manor Investment
REINVESTMENTS Funds, 113 West Chestnut
The offering price of the Street, West Chester, PA
shares offered by the Fund 19380. For additional
is at the net asset value information contact the Fund
per share next determined at 610-431-0630.
after receipt of the
purchase order by the Fund Reinvestments: The Fund will
and is computed in the automatically retain and
manner described under the reinvest dividends and
caption "PRICING OF SHARES" capital gain distributions
in this prospectus. The and purchase additional
Fund reserves the right at shares for the shareholder
its sole discretion to at net asset value as of the
close of business on the are not taxed until the
distribution date. Any account is distributed.
surplus over whole shares
will be paid in cash. A A Disclosure Statement is
shareholder may at any time required by U.S. Treasury
by letter or forms supplied Regulations. This Statement
by the Fund direct the fund describes the general
to pay dividend and/or provisions of the IRA and is
capital gains distributions, forwarded to all prospective
if any, to such shareholder IRA's. There is no charge
in cash. to open and maintain a Manor
Investment Funds IRA. This
Whole Shares: Whole shares policy may be changed by the
may be purchased from the Board of Directors if they
Fund. No fractional shares deem it to be in the best
will be issued. The Fund interests of all
will maintain an account for shareholders. All IRA's may
each shareholder of shares be revoked within 7 days of
for which no certificates their establishment with no
have been issued. penalty.
RETIREMENT PLANS PRICING OF SHARES
Individual Retirement The net asset value of the
Account: Individuals who Fund's shares are determined
have compensation, but who as of the close of business
are either not covered by of the New York Stock
existing qualified Exchange on each business
retirement plans, or are day of which that Exchange
covered and do not have is open (presently 4:00
incomes which exceed certain p.m.) Monday through Friday
amounts, may contribute tax- exclusive of Washington's
deductible dollars to an Birthday, Good Friday,
IRA. Individuals who are Memorial Day, 4th of July,
covered by existing Labor Day, Thanksgiving,
retirement plans, and whose Christmas and New Years.
incomes exceed the The price is determined by
applicable amounts, are not dividing the value of its
permitted to deduct their securities, plus any cash
IRA contributions for and other assets less all
federal income tax purposes. liabilities, by the number
However, whether an of shares outstanding. The
individual's contributions market value of securities
are deductible or not, the listed on a national
earnings on his or her IRA exchange is determined to be
the last recent sales price proceeds received by the
on such exchange. Listed shareholder may be more or
securities that have not less than his cost of such
recently traded and over-the- shares, depending upon the
counter securities are net asset value per share at
valued at the last bid price the time of redemption and
in such market. the difference should be
treated by the shareholder
Short term paper (debt as a capital gain or loss
obligations that mature in for federal income tax
less than 60 days) are purposes.
valued at amortized cost
which approximates market Payment by the Fund will
value. Other assets are ordinarily be made by check
valued at fair value as within seven days after
determined in good faith by tender. The Fund may
the Board of Directors. suspend the right of
redemption or postpone the
date of payment if: The New
REDEMPTION OF SHARES York Stock Exchange is
The Fund will redeem all or closed for other than
any portion of the total customary weekend or holiday
amount of the shares of any closings, or when trading on
shareholder who tenders a the New York Stock Exchange
written request for is restricted as determined
redemption signed by the by the Securities and
shareholder. If Exchange Commission or when
certificates have been the Securities and Exchange
issued the shareholder must Commission has determined
submit properly executed that an emergency exists,
certificates for redemption. making disposal of fund
In either case, proper securities or valuation of
endorsements guaranteed net assets not reasonably
either by a national bank or practicable.
a member firm of the New
York Stock Exchange will be To redeem shares send your
required unless the written request to Manor
shareholder is known to Investment Funds, 113 West
management. Chestnut Street, West
Chester, PA 19380. For
The redemption price is the additional information
net asset value per share contact the Fund at 610-431-
next determined after notice 0630.
is received by the Fund for
redemption of shares. The
BROKERAGE reduced expenses of the
The Fund requires all Adviser.
brokers to effect
transactions in portfolio Other than set forth above,
securities in such a manner the Fund has no fixed
as to get prompt execution policy, formula, method or
of the orders at the most criteria which it uses in
favorable price. Where allocating brokerage
consistent with best price business to brokers
and execution and in light furnishing materials and
of its limited resources, services. The Board of
the Fund will deal with Directors evaluates and
primary market makers in reviews the reasonableness
placing over-the-counter of brokerage commissions
portfolio orders. paid semiannually.
The Fund places all orders
for purchase and sale of its MANAGEMENT OF THE FUND
portfolio securities through Shareholders meet annually
the Fund President who is to elect all members of the
answerable to the Fund Board Board of Directors, select
of Directors. He may select an independent auditor, and
brokers who, in addition to vote on any other items
meeting the primary deemed pertinent by the
requirements of execution incumbent Board. The
and price, have furnished Directors supervise the
statistical or other factual operation of the Fund in
information and services, accordance with its stated
which, in the opinion of objectives, policies, and
management, are helpful or investment restrictions.
necessary to the Fund's The Board appoints the
normal operations. Those officers to run the Fund and
services may include selects an Investment
economic studies, industry Adviser to provide
studies, security analysis investment advice (See
and reports, sales Investment Adviser, pg. 5).
literature and statistical It meets six times a year to
services furnished either review Fund progress and
directly to the Fund or to status. In addition, a non-
the Adviser. No effort is interested Director performs
made in any given an independent audit
circumstance to determine whenever requested by the
the value of these materials Board.
or services or the amount by
which they might have
registration statement on
file with the Securities &
Exchange Commission. The
CUSTODIAN & TRANSFER AGENT registration statement may
The Fund acts as its own be inspected without charge
transfer agent. First at the principal office of
National Bank of West the Commission in
Chester acts as custodian Washington, D.C. and copies
for the Fund. of all or part thereof may
be obtained upon payment of
the fee prescribed by the
REPORTS TO SHAREHOLDERS Commission. Shareholders
The Fund sends all may also direct inquiries to
shareholders annual reports the Fund by phone or at the
containing certified address given on page one of
financial statements and this Prospectus.
other periodic reports, at
least semiannually,
containing unaudited
financial statements.
AUDITORS & LITIGATION
Claude Granese, Certified
Public Accountant, Spring
House, PA has been selected
as the independent
accountant and auditor of
the Fund. Claude Granese
has no direct or indirect
financial interest in the
Fund or the Adviser.
As of the date of this
prospectus, there was no
pending or threatened
litigation involving the
Fund in any capacity
whatsoever.
ADDITIONAL INFORMATION
This Prospectus omits
certain information
contained in the
NEW ACCOUNT REGISTRATION one permitted)
1. Investment Selection
Make Check Payable ____________________________
to: ____________under the
The Manor Minor's name (only one
Investment Funds permitted)
113 West Chestnut
Street
West Chester, PA __________________Uniform
19380 Gifts/Transfers to Minors
610-431-0630 Act
Initial Investment: Donor's State
$__________ Minor's Social
(Minimum initial Security Number must be in
purchase $1,000) Sec. 4.
2. Account Registration
Individual: Please
print or type. A Trust (including
Corporate Pension Plans):
____________________________
__________________ ____________________________
First Name _______as trustee(s) for
MI Last Name of Trustee(s)
Name
Joint Owner: Please ____________________________
print or type. ___________________
Name of Trust
____________________________ under agreement dated
__________________ ____________________________
First Name _
MI Last
Name Date of Trust
Gift to Minor: A Corporation,
Partnership, or other
entity:
____________________________
_______as custodian for
Custodian's name (only ____________________________
_ Number
Name of Corporation or
other entity ________-_____-
________ or _____-
_____________
Do not use for IRA's, call Social Security
for information Number
Employer ID Number
Mailing Address
Your application will
be returned if this
____________________________ section is not
________________ completed and signed.
Street Address
Check One: ____
U.S. Citizen
____________________________
________________ ____ Resident Alien
City
State Zip ____ Non-resident Alien
____________________________ ____________________________
________________ _________________
Home Phone Country Of Residence
____________________________ The undersigned certify that
________________ I/we have full authority and
Business Phone legal capacity to purchase
shares of the Fund and
3. Distribution Options affirm that I/we have
All income dividends received a current
and capital gains prospectus for The Manor
distributions will be Investment Funds and agree
reinvested unless noted to be bound by its terms.
below:
____ Pay all income in ____________________________
cash. _____________________
____ Pay all capital Signature of Owner, Trustee
gains in cash. or Custodian
Date
4. Required Information,
Signatures ____________________________
Tax Identification _____________________
Signature of Joint Owner (if
any)
Date
INVESTMENT ADVISER
MORRIS INVESTMENT MANAGEMENT SERVICES, INC.
113 West Chestnut Street
West Chester, PA 19380
TABLE OF CONTENTS
Fund Expenses 2
The Fund 3
Objective & Policies
Objective 3
Investment 3
Policies
Portfolio 3
Turnover Policy
3
Nondiversification
Policy
Investment Risks
Market Risk 3
Inflation Risk 4
Tax Status 4
Investment 4
Restrictions
Investment Adviser 5
Officers & Directors 6
of the Fund
Capitalization
Description of 7
Common Stock
Voting Rights 7
Purchase of Shares -
Reinvestments
Initial 7
Investments
Subsequent 7
Purchases
Reinvestments 7
Whole Shares 7
Retirement Plans
IRA 7
Pricing of Shares 8
Redemption of Shares 8
Brokerage 8
Management of the 9
Fund
Custodian & Transfer 9
Agent
Reports to 9
Shareholders
Auditors & 9
Litigation
Additional 9
Information
Share Purchase 1
Application 0
PROSPECTUS
Manor Investment Funds, Inc.
West Chester, PA 19380
610-431-0630
800-787-3334
The primary objective of the Fund is capital appreciation. A
secondary objective is to provide a moderate level of current
income. The Fund seeks to achieve its objectives primarily by
investing in common stocks and securities convertible into common
stocks.
FORM N1-A
PART B
STATEMENT OF ADDITIONAL INFORMATION
Manor Investment Funds, Inc.
West Chester, PA 19380
610-431-0630
800-787-3334
This Statement is not a Prospectus, but should be read in
conjunction with the Fund's current Prospectus (dated March 15,
1996). To obtain the Prospectus, please write the Fund or call
either of the telephone numbers that are shown above.
TABLE OF CONTENTS
The Fund 2
Objective & Policies
Objectives 2
Investment Policies 2
Portfolio Turnover Policy 2
Nondiversificaton Policy 2
Investment Risks
Market Risk 2
Inflation Risk 2
Tax Status 3
Investment Restrictions 3
Investment Adviser 4
Officers & Directors of the Fund 5
Capitalization
Description of Common Stock 6
Voting Rights 6
Purchase of Shares - Reinvestment
Initial Investments 6
Subsequent Purchases 6
Reinvestments 6
Whole Shares 6
Retirement Plans
IRA 6
Pricing of Shares 7
Redemption of Shares 7
Brokerage 7
Management of Fund 7
Custodian and Transfer Agent 7
Reports to Shareholders 7
Auditors and Litigation 7
Additional Information 7
Auditor's Report 8
Statement of Assets & Liabilities
Notes to Financial Statements
THE FUND
Manor Investment Funds, Inc. (also referred to as the "Fund") is
an open-end non-diversified management investment company. The
Fund was incorporated in Pennsylvania on September 13, 1995. The
Fund's registered office is in West Chester, PA 19380.
OBJECTIVE AND POLICIES
Objective: The primary objective of the Fund is capital
appreciation. A secondary objective is to provide a moderate
level of current income. The Fund seeks to achieve its
objectives primarily by investing in common stocks and securities
convertible into common stocks.
It must be realized, as is true of almost all securities, there
can be no assurance that the Fund will obtain its ongoing
objective of capital appreciation and moderate income.
Investment Policies
The Fund will invest primarily in common stock of large U.S.
corporations. The Fund will not invest in foreign securities,
and no more than 5% of the Fund's net assets will be invested in
companies that do not have three years of continuous operations.
The Fund will utilize information obtained from various sources
including earnings expectations, fundamental securities valuation
and securities price trends.
The Fund invests primarily in securities which provide favorable
growth prospects and some level of current income. The Fund may
also invest in securities which provide favorable growth
prospects but do not provide some level of current income. The
Fund may also invest in government and corporate bonds, or short-
term interest bearing securities, when the adviser believes
market conditions warrant a defensive position.
Portfolio Turnover Policy: The Fund does not propose to purchase
securities for short term trading in the ordinary course of
operations. Accordingly, it is expected that the annual turnover
rate will not exceed 50%, wherein turnover is computed by
dividing the lesser of the Fund's total purchases or sales of
securities within the period by the average monthly portfolio
value of the Fund during such period. There may be times when
management deems it advisable to substantially alter the
composition of the portfolio, in which event, the portfolio
turnover rate might substantially exceed 50%; this would only
result from special circumstances and not from the Fund's normal
operations.
Nondiversitfication Policy: The Fund is classified as being non-
diversified which means that it may invest a relatively high
percentage of its assets in the obligations of a limited number
of issuers. The Fund, therefore, may be more susceptible than a
more widely diversified fund to any single economic, political,
or regulatory occurrence. The policy of the Fund, in the hope of
achieving its objective as stated above, is, therefore, one of
selective investments rather than broad diversification. The
Fund seeks only enough diversification for adequate
representation among what it considers to be the best performing
securities and to maintain its federal non-taxable status under
Sub-Chapter M of the Internal Revenue Code
INVESTMENT RISKS
Market Risk: The Fund invests in common stocks which can decline
in price over short or even extended periods. For five year
timeperiods from 1926-1994 the stock market, as measured by the
S&P 500 returned an average of 10.2%, with a high of 23.9% and a
low of -12.5%.
Inflation Risk: Inflation represents a risk to an investment
portfolio because it reduces the real return of a portfolio over
time. Historically, inflation averaged 3.1%, offsetting most of
the returns from money market investments and bonds. Using the
illustration above, average inflation reduced the returns from
the stock market by approximately one third.
TAX STATUS
Under provisions of Sub-Chapter M of the Internal Revenue Code of
1954 as amended, the Fund, by paying out substantially all of its
investment income and realized capital gains, intends to be
relieved of federal income tax on the amounts distributed to
shareholders. In order to qualify as a "regulated investment
company" under Sub-Chapter M, at least 90% of the Fund's income
must be derived from dividends, interest and gains from
securities transactions, no more than 30% of the Fund's profits
may be derived from sales of securities held less than three
months, and no more than 50% of the Fund's assets may be in
security holdings of any issuer that exceed 5% of the total
assets of the Fund at the time of purchase.
Distribution of any net long term capital gains realized by the
fund will be taxable to the shareholder as long term capital
gains, regardless of the length of time Fund shares have been
held by the investor. All income realized by the Fund including
short term capital gains, will be taxable to the shareholder as
ordinary income. Dividends from net income will be made annually
or more frequently at the discretion of the Fund's Board of
Directors. Dividends received shortly after purchase of shares
by an investor will have the effect of reducing the per share net
asset value of his shares by the amount of such dividends or
distributions and, although in effect a return of capital, are
subject to federal income taxes.
The Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gains,
distributions and redemptions) paid to shareholders who have not
complied with IRS regulations. In order to avoid this
withholding requirement, you must certify on a W-9 tax form
supplied by the Fund that your Social Security or Taxpayer
Identification Number provided is correct and that you are not
currently subject to back-up withholding, or that you are exempt
from back-up withholding.
INVESTMENT RESTRICTIONS
The By-Laws of the Fund provide the following fundamental
investment restrictions; the Fund may not, except by the approval
of a majority of the outstanding shares:
(a) Act as underwriter for securities of other issuers except
insofar as the Fund may be deemed an underwriter in disposing
of its own portfolio.
(b) Issue senior securities, borrow money, or purchase securities
on margin, but may obtain such short term credit as may be
necessary for clearance of purchases and sales of securities
for temporary or emergency purposes in an amount not exceeding
5% of the value of its total assets.
(c) Sell securities short.
(d) Invest in securities of other investment companies except as
part of a merger, consolidation, or purchase of assets approved
by the Fund's shareholders or by purchases with no more that
10% of the Fund's assets in the open market involving only
customary brokers commissions.
(e) Invest more that 25% of its assets at the time of purchase in
any one industry.
(f) Make investments in commodities, commodity contracts or real
estate although the Fund may purchase and sell securities of
companies which deal in real estate or interests therein.
(g) Make loans. The purchase of a portion of a readily
marketable issue of publicly distributed bonds, debentures or
other debt securities will not be considered the making of a
loan.
(h) Acquire more than 10% of the securities of any class of
another issuer, treating all preferred securities of an issuer
as a single class and all debt securities as a single class, or
acquire more than 10% of the voting securities of another
issuer.
(i) Invest in companies for the purpose of acquiring control.
(j) Purchase or retain securities of any issuer if the officers
and directors of the Fund or its Investment Adviser owning
individually more than 1/2 of 1% of any class of security,
collectively own more than 5% of such class of securities of
such issuer.
(k) Pledge, mortgage or hypothecate any of its assets.
(l) Invest in securities which may be subject to registration
under the Securities Act of 1933 prior to sale to the public or
which are not at the time of purchase readily salable.
(m) Invest more than 5% of the total Fund assets, taken at market
value at the time of purchase, in securities of companies with
less than three years' continuous operation, including the
operations of any predecessor.
INVESTMENT ADVISER
Morris Investment Management Services, Inc., 113 West Chestnut
Street, West Chester, PA, is a Pennsylvania corporation that acts
as sole Investment Adviser to the Fund. Mr. Daniel A. Morris is
the sole owner, director and officer of the Investment Adviser
and is also president of the Fund. As of September 30, 1995 Mr.
Morris owns all outstanding shares of Morris Investment
Management, Inc. and of the outstanding shares of Manor
Investment Funds. Mr. Morris has been a shareholder, executive
officer and portfolio manager for investment advisers to mutual
funds and other investors since 1981.
On September 18, 1995 the shareholders of the Fund approved a
management and advisory contract with Morris Investment
Management Services, Inc., to act as Investment Adviser of the
Fund, which was unanimously approved by the Board of Directors.
This agreement will continue on a year to year basis provided
that approval is voted at least annually by a majority of the
directors of the Fund who are neither parties to the agreement
nor interested persons as defined in the Investment Company Act
of 1940 at a meeting called for the purpose of voting on such
approval.
Under the agreement, the Investment Adviser will direct the
purchase or sale of investment securities in accordance with the
stated objectives of the Fund, under the review of the Directors
of the Fund. The Agreement may be terminated at any time,
without the payment of any penalty, by the Board of Directors or
by vote of a majority of the outstanding voting securities of the
Fund on not more than 60 days' written notice to the Investment
Adviser. In the event of its assignment, the Agreement will
terminate automatically. For these services the Fund has
agreed to pay to Morris Investment Management Services,
Incorporated a fee of 1% per year on the net assets of the Fund.
This rate is generally higher than that paid by most mutual
funds. All fees are computed on the average daily closing net
asset value of the Fund and are payable monthly. The Investment
Adviser will forego all or a portion of its fees in order to hold
the total expenses of the Fund to no more than 1.5% of averaged
assets.
Pursuant to its contract with the Fund, the Investment Adviser is
required to render research, statistical, and advisory services
to the Fund; and to make specific recommendations based on the
Fund's investment requirements. Fees of the custodian,
registrar, and transfer agents shall be paid by the Fund. The
Fund pays all other expenses, including fees and expenses of
directors not affiliated with the Adviser, if any; legal and
accounting fees; interest, taxes, and brokerage commissions,
recordkeeping and the expense of operating its offices. The
Investment Adviser has paid the initial organizational costs of
the Fund and will reimburse the Fund for any and all losses
incurred because of rescinded purchases.
OFFICERS AND DIRECTORS OF THE FUND
The Officers and Directors of the Fund have agreed to serve
without compensation, their addresses, principal occupations
during the past five years are:
Name and Address Position Principal
Occupation Past Five Years
Daniel A. Morris President President
304 Albermarle Grove Interested Director Morris
Investment Management Services, Inc.
West Chester, PA West
Chester, PA
Senior Vice President
Consistent Asset Management Co,
Chadds Ford, PA
Bruce Laverty Secretary Attorney
810 Dowingtown Pike Interested Director Laverty,
Nilsen & Reed
West Chester, PA West
Chester, PA
James McFadden Treasurer Vice
President, Credit Administration
305 Devonshire Circle Interested Director MBNA
America Bank, N.A.
West Chester, PA Newark,
DE
Edward Erlichman Non-Interested President
P.O. Box 513 Director Kara Aerospace, Inc.
Bedford, PA Bedford, PA
Richard A. Kund, Jr. Non-Interested Marketing
Representative
304 Hidden Creek Dr. Director
Laboratory Corporation of America
Horsham, PA Burlington, NC
Frederick L. Myers, CPA Non-Interested Certified
Public Accountant
302 Albermarle Grove Director Meyers &
Associates, CPA's
West Chester, PA West
Chester, PA
James F. Nolan Non-Interested Attorney
113 West Chestnut St. Director West
Chester, PA
West Chester, PA
Alan Weintraub Non-Interested Manager
of Technology Consulting
305 Albermarle Grove Director JVC
Technology, Inc.
West Chester, PA Wayne, PA
CAPITALIZATION
Description of Common Stock: The authorized capitalization of
the Fund consists of 10,000,000 shares of common stock of $.001
par value per share. Each share has equal dividend, distribution
and liquidation rights. There are no conversion or pre-emptive
rights applicable to any shares of the Fund. All shares issued
are fully paid and non-accessible.
Voting Rights: Each holder of common stocks has one vote for
each share held. Voting rights are non-cumulative, which means
that the holders of a majority of shares of common stock can
elect all the directors of the Fund if they so choose, and the
holders of the remaining shares will not be able to elect any
person as a director.
PURCHASE OF SHARES - REINVESTMENTS
The offering price of the shares offered by the Fund is at the
net asset value per share next determined after receipt of the
purchase order by the Fund and is computed in the manner
described under the caption "PRICING OF SHARES" in this
prospectus. The Fund reserves the right at its sole discretion
to terminate the offering of its shares made by this Prospectus
at any time and to reject purchase applications when, in the
judgment of the management such termination or rejection is in
the best interests of the Fund.
Initial Investments: Initial purchase of shares of the Fund may
be made only by application submitted to the Fund. For the
convenience of investors, a Share Purchase Application form is
provided with this Prospectus. The minimum initial purchase of
shares is $1,000.
Subsequent Purchases: Subsequent purchases may be made by mail
or in person. The minimum is $100, but less may be accepted
under special circumstances.
To purchase shares complete the application form and mail to
Manor Investment Funds, 113 West Chestnut Street, West Chester,
PA 19380. For additional information contact the Fund at 610-
431-0630.
Reinvestments: The Fund will automatically retain and reinvest
dividends and capital gain distributions and purchase additional
shares for the shareholder at net asset value as of the close of
business on the distribution date. Any surplus over whole shares
will be paid in cash. A shareholder may at any time by letter or
forms supplied by the Fund direct the fund to pay dividend and/or
capital gains distributions, if any, to such shareholder in cash.
Whole Shares: Whole shares may be purchased from the Fund. No
fractional shares will be issued. The Fund will maintain an
account for each shareholder of shares for which no certificates
have been issued.
RETIREMENT PLANS
Individual Retirement Account: Individuals who have
compensation, but who are either not covered by existing
qualified retirement plans, or are covered and do not have
incomes which exceed certain amounts, may contribute tax-
deductible dollars to and IRA. Individuals who are covered by
existing retirement plans, and whose incomes exceed the
applicable amounts, are not permitted to deduct their IRA
contributions for federal income tax purposes. However, whether
an individual's contributions are deductible or not, the earnings
on his or her IRA are not taxed until the account is distributed.
A Disclosure Statement is required by U.S. Treasury Regulations.
This Statement describes the general provisions of the IRA and is
forwarded to all prospective IRA's. There is no charge to open
and maintain a Manor Investment Funds IRA. This policy may be
changed by the Board of Directors if they deem it to be in the
best interests of all shareholders. All IRA's may be revoked
within 7 days of their establishment with no penalty.
PRICING OF SHARES
The net asset value of the Fund's shares are determined as of the
close of business of the New York Stock Exchange on each business
day of which that Exchange is open (presently 4:00 p.m.) Monday
through Friday exclusive of Washington's Birthday, Good Friday,
Memorial Day, 4th of July, Labor Day, Thanksgiving, Christmas and
New Years. The price is determined by dividing the value of its
securities, plus any cash and other assets less all liabilities,
by the number of shares outstanding. The market value of
securities listed on a national exchange is determined to be the
last recent sales price on such exchange. Listed securities that
have not recently traded and over-the-counter securities are
valued at the last bid price in such market.
Short term paper (debt obligations that mature in less than 60
days) are valued at amortized cost which approximates market
value. Other assets are valued at fair value as determined in
good faith by the Board of Directors.
REDEMPTION OF SHARES
The Fund will redeem all or any portion of the total amount of
the shares of any shareholder who tenders a written request for
redemption signed by the shareholder. If certificates have been
issued the shareholder must submit properly executed certificates
for redemption. In either case, proper endorsements guaranteed
either by a national bank or a member firm of the New York Stock
Exchange will be required unless the shareholder is known to
management.
The redemption price is the net asset value per share next
determined after notice is received by the Fund for redemption of
shares. The proceeds received by the shareholder may be more or
less than his cost of such shares, depending upon the net asset
value per share at the time of redemption and the difference
should be treated by the shareholder as a capital gain or loss
for federal income tax purposes.
Payment by the Fund will ordinarily be made by check within seven
days after tender. The Fund may suspend the right of redemption
or postpone the date of payment if: The New York Stock Exchange
is closed for other than customary weekend or holiday closings,
or when trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission or when the
Securities and Exchange Commission has determined that an
emergency exists, making disposal of fund securities or valuation
of net assets not reasonably practicable.
To redeem shares send your written request to Manor Investment
Funds, 113 West Chestnut Street, West Chester, PA 19380. For
additional information contact the Fund at 610-431-0630.
BROKERAGE
The Fund requires all brokers to effect transactions in portfolio
securities in such a manner as to get prompt execution of the
orders at the most favorable price. Where consistent with best
price and execution and in light of its limited resources, the
Fund will deal with primary market makers in placing over-the-
counter portfolio orders.
The Fund places all orders for purchase and sale of its portfolio
securities through the Fund President who is answerable to the
Fund Board of Directors. He may select brokers who, in addition
to meeting the primary requirements of execution and price, have
furnished statistical or other factual information and services,
which, in the opinion of management, are helpful or necessary to
the Fund's normal operations. Those services may include
economic studies, industry studies, security analysis and
reports, sales literature and statistical services furnished
either directly to the Fund or to the Adviser. No effort is made
in any given circumstance to determine the value of these
materials or services or the amount by which they might have
reduced expenses of the Adviser.
Other than set forth above, the Fund has no fixed policy,
formula, method or criteria which it uses in allocating brokerage
business to brokers furnishing materials and services. The Board
of Directors evaluates and reviews the reasonableness of
brokerage commissions paid semiannually.
MANAGEMENT OF THE FUND
Shareholders meet annually to elect all members of the Board of
Directors, select an independent auditor, and vote on any other
items deemed pertinent by the incumbent Board. The Directors
supervise the operation of the Fund in accordance with its stated
objectives, policies, and investment restrictions. The Board
appoints the officers to run the Fund and selects an Investment
Adviser to provide investment advice (See Investment Adviser, pg.
3). It meets six times a year to review Fund progress and
status. In addition, a non-interested Director performs an
independent audit whenever requested by the Board.
CUSTODIAN & TRANSFER AGENT
The Fund acts as its own transfer agent. First National Bank of
West Chester acts as custodian for the Fund.
REPORTS TO SHAREHOLDERS
The Fund sends all shareholders annual reports containing
certified financial statements and other periodic reports, at
least semiannually, containing unaudited financial statements.
AUDITORS & LITIGATION
Claude Granese, Certified Public Accountant, Spring House, PA has
been selected as the independent accountant and auditor of the
Fund. Claude Granese has no direct or indirect financial
interest in the Fund or the Adviser.
As of the date of this prospectus, there was no pending or
threatened litigation involving the Fund in any capacity
whatsoever.
ADDITIONAL INFORMATION
This Prospectus omits certain information contained in the
registration statement on file with the Securities & Exchange
Commission. The registration statement may be inspected without
charge at the principal office of the Commission in Washington,
D.C. and copies of all or part thereof may be obtained upon
payment of the fee prescribed by the Commission. Shareholders
may also direct inquiries to the Fund by phone or at the address
given on page one of this Prospectus.
MANOR INVESTMENT FUNDS, INC.
(A Development Stage Enterprise)
WEST CHESTER, PENNSYLVANIA
Financial Statements
for the Period Ended
December 31, 1995
and
Independent Auditor's Report
Independent Auditor's Report
To the Shareholders and
Board of Directors
Manor Investment Funds, Inc.
I have audited the accompanying statement of assets and
liabilities of Manor Investment Funds, Inc. (the Fund), a
development stage enterprise, including the schedule of portfolio
investments, as of December 31, 1995, and the related statements
of operations and changes in net assets, and selected per share
data and ratios for the period then ended. These financial
statements and per share data and ratios (hereafter referred to
collectively as "financial statements") are the responsibility of
the Fund's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. My
procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Manor
Investment Funds, Inc. as of December 31, 1995, and the results
of its operations and the changes in its net assets, and the
selected per share data and ratios for the period then ended, in
conformity with generally accepted accounting principles.
February 11, 1996
MANOR INVESTMENT FUNDS, INC.
(A Development Stage Enterprise)
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
ASSETS
Investments in securities, at value (cost $70,249) $ 69,947
Cash equivalents 41,161
Dividends and interest receivable 161
Total
Assets
$111,269
LIABILITIES
Accounts payable $ 206
NET ASSETS
Net assets (equivalent to $9.97 per share based on
11,136 shares of capital stock outstanding) (Note 3) $111,063
The accompanying notes are an integral part of these financial
statements.
MANOR INVESTMENT FUNDS, INC.
(A Development Stage Enterprise)
PORTFOLIO OF INVESTMENTS
December 31, 1995
MARKET
COMMON STOCK (Shares) 63.0% COST VALUE
Airlines 6.6%
100 Delta Airlines $ 6,913 $ 7,363
Automobile Manufacturers 4.7%
100 General Motors 5,138 5,288
Banking 6.3%
100 NationsBank 7,150 6,963
Communications Equipment 4.0%
300 Scientific Atlanta 4,150 4,500
Electronic Equipment Manufacturers 4.0%
100 Micron Technology 7,225 3,962
Financial Services 10.1%
120 Allstate Insurance 4,945 4,935
100 Travelers, Inc. 5,711 6,262
10,656 11,197
Metals, Mining & Refining 10.3%
200 CyprusAmax Minerals 5,275 5,225
100 Phelps Dodge 6,325 6,225
11,600 11,450
Multi-Industry 6.5%
100 General Electric 6,525 7,200
Paper 10.8%
140 Federal Paper Board 5,292 7,262
100 Union Camp Corp. 5,600 4,762
10,892 12,024
TOTAL COMMON STOCK $ 70,249 $ 69,947
The accompanying notes are an integral part of these financial
statements.
MANOR INVESTMENT FUNDS, INC.
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
Period Ended December 31, 1995
Investment income
Dividends $ 264
Interest 536
Total investment income $ 800
Expenses
Custodian (note 5) 220
Other (note 4) 207
Total expenses 427
Net investment income 373
Unrealized depreciation of investments (302)
Net increase in net assets resulting
from operations $ 71
The accompanying notes are an integral part of these financial
statements.
MANOR INVESTMENT FUNDS, INC.
(A Development Stage Enterprise)
STATEMENT OF CHANGES IN NET ASSETS
Period Ended December 31, 1995
Increase in net assets
from operations
Investment income-net $ 373
Unrealized depreciation of investments (302)
Net increase in net assets resulting
from operations $ 71
Distributions to shareholders from
investment income-net (366)
Capital share transactions (note 3) 111,358
Total increase 111,063
Net assets
September 13, 1995 (Inception) 0
December 31, 1995 $111,063
The accompanying notes are an integral part of these financial
statements.
MANOR INVESTMENT FUNDS, INC.
(A Development Stage Enterprise)
SUPPLEMENTARY INFORMATION
Period Ended December 31, 1995
PER SHARE DATA
Investment income $ .07
Expenses .04
Investment income-net $ .03
Distribution of net investment income (.03)
Unrealized depreciation of investments (.03)
Capital share transactions 10.10
Net increase in net asset value $10.07
Net asset value September 13, 1995 0
Net asset value December 31, 1995 $10.07
Based on 11,023 weighted average shares outstanding for the
period.
RATIOS (to Average Net Assets)
Investment income-net .34%*
Expenses .38%*
*1.24% and 1.50%, respectively when annualized.
The accompanying notes are an integral part of these financial
statements.
MANOR INVESTMENT FUNDS, INC.
(A Development Stage Enterprise)
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
Note 1-Organization
Manor Investment Funds, Inc. (the Fund) was incorporated in
Pennsylvania on September 13, 1995. The Fund is in the initial
stages of development. It is an open-end, non-diversified
management investment company which is in the process of
registering under the Investment Company Act of 1940.
The Fund's primary objective is capital appreciation. It invests
primarily in common stock of large U. S. corporations.
Note 2-Significant Accounting Policies
The following significant accounting policies are in conformity
with generally accepted accounting principles for investment
companies:
Security Valuation-Common stocks are valued at the latest quoted
sales price at the close of the New York Stock Exchange on the
valuation date.
There were no sales of securities during the period September 13,
1995 through December 31, 1995. Net unrealized losses ($302) on
securities are the same for financial reporting and tax
reporting. Purchases of securities totaled $70,249.
Cash Equivalents-Cash equivalents consist of a money market
account, at cost which approximates market value, with the
custodian.
Federal Income Taxes-The Fund intends to qualify as a regulated
investment company and distribute all of its taxable income.
Accordingly, no provision for federal income taxes is required in
these financial statements.
Development Stage-During this development stage net assets
increased $71 from net investment income and unrealized
securities losses.
MANOR INVESTMENT FUNDS, INC.
(A Development Stage Enterprise)
NOTES TO STATEMENT OF ASSETS AND LIABILITIES (Continued)
December 31, 1995
Note 3-Capital Share Transactions
On incorporation, 10,000,000 shares of $.001 par value capital
stock was authorized. Mr. Daniel A. Morris (see note 4),
President of the Fund, and his wife own all of the Fund's
outstanding stock at December 31, 1995. During the period ended
December 31, 1995, 11,099 shares were sold to them for $110,992,
and 37 shares were sold through dividend reinvestment of $366.
Note 4-Investment Advisory Fee
The Fund has an investment management and advisory services
agreement (the Agreement) with Morris Investment Management
Services, Inc. (Morris). Morris' sole shareholder, officer and
director is Daniel A. Morris.
Monthly, the Fund will pay Morris a fee equivalent to one percent
per annum of the daily average net assets of the Fund. The Fund
will bear expenses necessary and incidental to the conduct of its
business. However, Morris will forego all or a portion of its
fees to maintain total Fund expenses at no more than 1.5%
annually of averaged assets. Accordingly, Morris has incurred
expenditures of $7,653 on behalf of the Fund, for which it will
not be reimbursed.
The Agreement must be approved annually by a majority vote of the
Fund's non-interested Board Directors.
Note 5-Custody Agreement
Under an agreement, The First National Bank of West Chester (FNB)
will act as the Fund's custodian. FNB's fees will be in
accordance with its standard rates for such services, payable
monthly. Such fees were $220 for the period ended December 31,
1995.
To the Shareholders and
Board of Directors
Manor Investment Funds, Inc.
In planning and performing my audit of the financial
statements and selected per share data and ratios (hereafter
referred to collectively as the "financial statements") of
Manor Investment Funds, Inc. (the Fund), for the period ended
December 31, 1995, I considered its internal control
structure, including procedures for safeguarding securities.
I did so to determine my auditing procedures for the purpose
of expressing my opinion on the financial statements, and to
comply with the requirements of Form N-SAR, not to provide
assurance on the internal control structure.
The management of the Fund is responsible for establishing and
maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments by management are
required to assess the expected benefits and related costs of
internal control structure policies and procedures. Two of
the objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that
assets are safeguarded against loss from unauthorized use or
disposition and that transactions are executed in accordance
with management's authorization and recorded properly to
permit preparation of financial statements in conformity with
generally accepted accounting principles.
Because of inherent limitations in any internal control
structure, errors or irregularities may occur and not be
detected. Also, projection of any evaluation of the structure
to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
My consideration of the internal control structure would not
necessarily disclose all matters in the internal control
structure that might be material weaknesses, under standards
established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the
design or operation of the specific internal control structure
elements does not reduce to a relatively low level the risk
that errors or irregularities in amounts that would be
material in relation to the financial statements being audited
may occur and not be detected within a timely period by
employees in the normal course of performing their assigned
functions. However, I noted no matters involving the internal
control structure, including procedures for safeguarding
securities, that I consider to be material weakness as defined
above as of December 31, 1995
This report is intended solely for the information and use of
management and the Securities and Exchange Commission.
February 11, 1996
February 11, 1996
Mr. Claude B. Granese, CPA
P.O. Box 483
1108 North Bethlehem Pike
Spring House, PA 19477
In connection with your audit of the statements of assets and
liabilities of Manor Investment Funds, Inc. (the Fund), a
development stage enterprise, including the schedule of
portfolio investments, as of December 31, 1995, and the
related statements of operations and changes in net assets,
and selected per share data and ratios for the period then
ended for the purpose of expressing an opinion as to whether
such financial statements, per share data and ratios presents
fairly, in all material respects, the financial position,
results of operations, and changes in net assets of the Fund
in conformity with generally accepted accounting principles,
we confirm, to the best of our knowledge and belief, the
following representations made to you during your audit:
1. We are responsible for the fair presentation in the
financial statements, of financial position, results of
operations, changes in net assets, and selected per share
data and ratios in conformity with generally accepted
accounting principles.
2. We have made available to you:
a. All financial records and related data
b. All minutes of the meetings of stockholders, directors,
and committees of directors, or summaries of actions of
recent meetings for which minutes have not yet been
prepared
c. Information relating to all statutes, laws, rules and
regulations that have a direct effect on our financial
statements
3. There have been no:
a. Irregularities involving management or employees who
have significant roles in the internal control structure
b. Irregularities involving employees that could have a
material effect on the financial statements
c. Communications from regulatory agencies concerning
noncompliance with, or deficiencies in, financial
reporting practices that could have a material effect on
the financial statement
d. Arrangements with financial institutions involving
compensating balances or other arrangements involving
restrictions on cash balances and line of credit or
similar arrangements
e. Agreements to repurchase assets previously sold
f. Security agreements under the Uniform Commercial Code
g. Contractual obligations for purchases of assets
h. Liens, encumbrances, or subordination of assets pledged
as collateral in any way
i. Subordination of any liabilities
j. Lease or rental obligations under noncancelable
long-term leases
4. We have no plans or intentions that may materially affect
the carrying value or classification of assets and
liabilities.
5. The following have been properly recorded or disclosed in
the financial statements:
a. Related-party transactions and related amounts
receivable or payable, including contracts with the
investment adviser, Morris Investment Management
Services, Inc.
b. Capital stock transactions representing seed money to
start the Fund, and dividend reinvestments.
6. There are no:
a. Violations or possible violations of laws or regulations
whose effects should be considered for disclosure in the
financial statements or as a basis for recording a loss
contingency
b. Other material liabilities or gain or loss contingencies
that are required to be accrued or disclosed by
Statement of Financial Accounting Standards No. 5
7. There are no unasserted claims or assessments that our
lawyer has advised are probable of assertion and must be
disclosed in accordance with Statement of Financial
Accounting Standards No. 5.
8. There are no material transactions that have not been
properly recorded in the accounting records underlying the
financial statements.
9. The Fund has satisfactory title to all owned assets, and
there are no liens or encumbrances on such assets nor has
any asset been pledged.
10. We have complied with all aspects of contractual
agreements that would have a material effect on the financial
statements in the event of noncompliance.
11. We advise you that to the best of our knowledge and
belief:
a. The Fund has complied with the provisions of the
Investment Company Act of 1940 and the rules and
regulations thereunder, complied with the provisions of its
Prospectus and the requirements of the Blue Sky Laws of
Pennsylvania
b. The Fund intends to qualify as a regulated investment
company
c. The disclosures made in the Fund's annual report and
financial statements are true and accurate
12. No events have occurred subsequent to the financial
statement date that would require adjustments to, or
disclosure in, the financial statements.
___________________________
Daniel A. Morris, President
Manor Investment Funds, Inc.
