Registration No. 33-99520
File Number: 811-09134
United States
Securities and Exchange Commission
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 5 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 5 [X]
Exact name of Registrant as Specified in Charter:
Manor Investment Funds, Inc.
Address of Principal Executive Offices:
15 Chester Commons
Malvern, PA 19355
610-722-0900
Name and Address of Agent for Service:
Daniel A. Morris
15 Chester Commons
Malvern, PA 19355
Approximate Date of Proposed Public Offering:
As soon as practical after the Registration Statement becomes
effective.
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
X on June 30, 1999 pursuant to paragraph (a) of rule 485
Pursuant to the requirements of (the Securities Act of 1933 and) the
Investment Company Act of 1940 the Registrant (certifies that it meets all
of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(a) under the Securities Act of 1933 and) has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the Borough of Malvern, and State
of Pennsylvania on the 15th day of April, 1999.
Manor Investment Funds, Inc.
by Daniel A. Morris, President
MANOR INVESTMENT FUNDS, INC.
CROSS REFERENCE SHEET
(Pursuant to Rule 481 showing the location in the Prospectus and the
Statement of Additional Information of the responses to the Items of Parts
A and B of Form N-1A.)
Part A INFORMATION REQUIRED IN A PROSPECTUS Captions in
Filing
Item 1. Cover Page Cover Page
Item 2. Synopsis Expense Information
Item 3. Condensed Financial Financial Highlights;
Information Performance Information
Item 4. General Description of Introduction; Investment
Registrant Objective and Policies
Item 5. Management of the Fund Management of the Fund;
Capital Structure
Item 5A. Management's Discussion of Performance Information
Fund Performance
Item 6. Capital Stock and other Capitalization; Shareholder
Securities Reports
Item 7. Purchase of Securities Being Shareholder Transactions
Offered
Item 8. Redemption or Repurchase Shareholder Transactions
Item 9. Legal Proceedings Not Applicable
Part B INFORMATION REQUIRED IN A STATEMENT OF
ADDITIONAL INFORMATION
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and Not Applicable
History
Item 13. Investment Objectives and Investment Restrictions
Policies
Item 14. Management of the Registrant Officers & Directors of the
Fund
Item 15. Control Persons and Principal Shareholders
Principal Holders
of Securities
Item 16. Investment Advisory & Other Included in Prospectus under
Services _Management of the Fund_;
Investment Adviser;
Custodian; Independent
Accountants
Item 17. Brokerage Allocation Brokerage
Item 18. Capital Stock & Other Included in Prospectus under
Securities _Capital Structure_
Item 19. Purchase, Redemption & Included in Prospectus under
Pricing of _Shareholder Transactions_;
Securities Being Offered Determination of Net Asset
Value and Performance
Item 20. Tax Status Tax Status
2
Item 21. Underwriters Not Applicable
Item 22. Calculation of Performance Determination of Net Asset
Data Value and Performance
Item 23. Financial Statements Financial Statements
Part C OTHER INFORMATION
Item 24. Financial Statements & Financial Statements &
Exhibits Exhibits
Item 25. Persons Controlled by or Control Persons
Under
Common Control
Item 26. Number of Holders of Number of Shareholders
Securities
Item 27. Indemnification Indemnification
Item 28. Business & Other Connections Activities of Investment
of Advisor
Investment Advisors
Item 29. Principal Underwriters Principal Underwriter
Item 30. Location of Accounts & Location of Accounts &
Records Records
Item 31. Management Services Not Applicable
Item 32. Undertakings Not Applicable
SIGNATURES SIGNATURES
3
M Manor
Investment Funds, Inc. Prospectus
Malvern, PA 19355 April 15, 1999
610-722-0900
800-787-3334
Manor Investment Funds, Inc.
Manor Investment Funds, Inc. is an open-end management investment company
offering several investment portfolios to enable investors to diversify
fund investments in a single account.
Manor Fund For Conservative Growth & Income
Growth Fund For long-term Growth
Bond Fund For Intermediate-term Fixed Income
Fund Share Purchase
Shares of the Funds may only be purchased from the Fund at net asset value
as next determined after receipt of order. The minimum 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. This Prospectus does not set forth all of the information included
in the Registration Statement and Exhibits thereto, which the Fund has
filed with the Securities and Exchange Commission. A Statement of
Additional Information, dated April 15, 1999, which is part of the
Registration Statement, is incorporated by reference in this Prospectus. A
copy of the Statement may be obtained without charge, by writing or calling
the Fund directly at 610-722-0900.
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.
4
Manor Investment Funds, Inc.
Table of Contents
Introduction
About Manor Investment Funds, Inc. 3
Expense Information 4
Financial Highlights 5
The Funds
Investment Objectives & Policies 6
How the Funds Invest 6
Investment Risks 7
Share Description 7
Year 2000 8
Shareholder Transactions
Purchasing Shares 8
Reinvestments 8
Redemptions 8
Shareholder Services
Reports to Shareholders 9
Retirement Accounts 9
Pricing of Shares 9
Taxes 10
Investment Adviser 10
Brokerage 11
Management of Funds 12
Performance 15
5
ABOUT MANOR INVESTMENT FUNDS, INC.
Manor Investment Funds, Inc. (the _Fund_) is an open-end management
investment company. The Fund was incorporated in Pennsylvania on September
13, 1995. The Fund's registered office is 15 Chester Commons, Malvern, PA
19355. The company currently issues shares in three series, which we call
_Funds_. Each series has distinct investment objectives and policies, and
a shareholder's interest is limited to the series in which he or she owns
shares. The series are the Manor Fund, Growth Fund, and Bond Fund. Each
is a _no-load_ fund, and there are no sales or 12b-1 charges.
The funds are designed for long-term investors, including those who wish to
use shares of one or more series as a funding vehicle for tax-deferred
plans, including tax-qualified retirement plans and Individual Retirement
Account (IRA) plans.
The Funds
Manor Fund seeks long-term capital appreciation and a moderate level of
income by investing primarily in the common stock of large
corporations, or securities convertible into the common stock of
these companies.
Growth Fund seeks long-term capital appreciation by investing primarily
in the common stock of large to mid-sized corporations.
Bond Fund seeks to provide current income by investing primarily in
income producing securities issued by the U.S. Government or Agencies
of the U.S. Government.
Risks
The Funds are intended for long-term investors who can accept fluctuations
in value and other risks associated with seeking the investment objectives
of each Fund. You should understand and consider carefully the risks
involved in a Fund before investing. See _Investment Risks_ for more
information.
Purchases
Shares of the Funds may only be purchased from the Fund at net asset value
as next determined after receipt of order. The minimum initial purchase is
$1,000 and minimum subsequent purchase is $100.
Redemptions
Shares of the Funds may be redeemed by written request or by telephone
transfer between Funds.
Net Asset Value
The purchase and redemption of shares is at the net asset value per share
of that Fund. The net asset value is determined as of the close of regular
session trading on the New York Stock Exchange, or the appropriate exchange
where Fund securities are traded.
Adviser
Morris Capital Advisors, Inc. provides management and investment advisory
services to the Funds.
6
EXPENSE INFORMATION
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.
Manor Growth Bond
Fund Fund Fund
Shareholder Transaction Expenses
Sales load on purchases or None None None
reinvested dividends
Sales load on reinvested None None None
dividends
Redemption fees None None None
Exchange fees None None None
IRA Trustee fees None None None
Annual Fund Operating Expenses
Management and advisory 1.0% 1.0% 0.5%
expenses
12 b-1 fees None None None
All other expenses 0.5% 0.5% 0.5%
Total operating expenses 1.5% 1.5% 1.0%
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.
Fund 1 Year 3 Years 5 Years
Manor Fund $ 16 $ 44 $ 82
Growth Fund $ 16 $ 44 $ 82
Bond Fund $ 11 $ 33 $ 58
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.
7
FINANCIAL HIGHLIGHTS
The table below has been audited by Claude B. Granese, CPA. This table
should be read in conjunction with the financial statements for the Fund
and notes thereto, which may be obtained from the Fund upon request without
charge.
Manor Fund Since
Year Year Year Inception
Ending Ending Ending 9/30/95
1998 1997 1996 1995
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, beginning $ 13.77 $ 11.13 $ 9.97 $ 10.00
Net Investment Income (loss) 0.03 0.06 0.03 0.02
Net Realized & Unrealized 1.85 2.78 1.16 - 0.02
Gain(loss)
Total from Operations 1.88 2.84 1.19 0.00
Dividends from net investment 0.03 0.04 0.03 0.03
income
Dividends from net realized 0.16 0.16 - 0 - - 0 -
gains
0.19 0.20 0.03 0.03
Net Asset Value, ending $ 15.46 $ 13.77 $ 11.13 $ 9.97
Total Investment Return 13.65 % 25.52 % 11.98 % - 0.3 %
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of year $ 2,659 $ 1,499 $ 395 $ 111
(000's)
Ratio of expenses to average 1.50 % 1.42 % 1.50 % 0.38 %
net assets
Ratio of Net Investment
Income 0.22 % 0.50 % 0.67 % 0.34 %
to Average Assets
Portfolio Turnover rate 23 % 27 % 14 % - 0 -
Average commission rate paid $ 0.09 $ 0.11 $ 0.17 - - -
* 1.24% and 1.50%, respectively when annualized
8
INVESTMENT OBJECTIVES & POLICIES
The mutual funds offered by this prospectus are the Manor Fund, Growth
Fund, and Bond Fund. Each of the Funds is a no-load _mutual fund._ There
is no commission or charge when shares are purchased, and no 12b-1 charges.
The Funds are a series of Manor Investment Funds, Inc., and each Fund is a
separate portfolio of securities and other assets, with its own investment
objective and policies. Morris Capital Advisors, Inc. provides investment
advisory and administrative services to the Funds.
HOW THE FUNDS INVEST
The primary consideration in the selection of stock investments for the
Funds is the current price of the shares relative to the earnings and
potential growth of earnings for each company. The Funds seek to invest in
companies who generate significant free cash flow for shareholders which
can be reinvested in the business or used to repurchase outstanding shares
of the company. The primary consideration in the selection of bond
investments is high credit rating, current yield, and intermediate-term
maturity.
Manor Fund seeks long-term capital appreciation and a moderate level of
income by investing primarily in the common stock of large U.S.
corporations, or securities convertible into the common stock of these
companies. 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 large companies with strong earnings and
dividends. These companies tend to be leaders in important industries
within the U.S. Economy. Some companies in the Fund may not pay dividends.
The Fund may also invest in exchange traded securities that track the value
of an underlying basket of securities such as the S&P 500 Index or the S&P
Mid-Cap Index.
Growth Fund seeks long-term capital appreciation by investing primarily in
the common stock of large to mid-size U.S. corporations, or securities
convertible into the common stock of these companies. 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 companies with the potential for strong
earnings growth. Most of these companies reinvest earnings and do not pay
dividends. The Fund may also invest in exchange traded securities that
track the value of an underlying basket of securities such as the S&P 500
Index or the S&P Mid-Cap Index.
Bond Fund seeks current income by investing primarily in U.S. Government
securities or securities issued by U.S. Government Agencies. The Fund may
also invest in short term securities issued at a discount to face value.
Other Strategies
Under normal market conditions, each Fund should be fully invested in the
types of securities described above. Within the limitations described in
this prospectus, the percentages of Fund assets invested will vary in
9
accordance with the judgement of the Advisor. To the extent that
investments meeting a Fund's criteria for investment are not available, or
when the Advisor considers a temporary defensive posture advisable, the
Fund may invest without limitation in high-quality corporate debt
obligations of U.S. companies, U.S. government and agency obligations, or
money market instruments.
In seeking to achieve its investment objective, each Fund ordinarily
invests on a long-term basis. Occasionally, securities purchased on a
long-term basis may be sold within 12 months of purchase if circumstances
of a particular company, industry, or the general market should change.
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%, as 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.
INVESTMENT RISKS
Market Risk
The Manor Fund and the Growth Fund invest in common stocks which can
decline in price over short or even extended periods. For five-year
timeperiods from 1926-1998 the stock market, as measured by the S&P 500
returned an average of 10.7%, with a high of 24.19% and a low of -12.5%.
Over the same time period small company stocks generated an average return
of 13.7%, but had higher risk, with a high of 45.9% and a low of _27.5%.
The Bond Fund invests in fixed income securities with an average
intermediate-term maturity. Over the same time period the average return
of these securities was 5.3%, with a high of 17.0% and a low of 1.0%.
Inflation Risk
Inflation represents a risk to an investment portfolio because it reduces
the real return of a portfolio over time. Historically, inflation averaged
3.2%, offsetting most of the returns from money market investments and
bonds. Using the illustration above, inflation reduced the returns from
the stock market by approximately one third.
SHARE DESCRIPTION
The authorized capitalization of the Funds is 10,000,000 shares of common
stock of $.001 par value per share. Each Fund share has equal dividend,
distribution and liquidation rights of that Fund.
Voting Rights
Each holder of common stock 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. Issues specific to a particular Fund are voted
only by shareholders of that Fund.
10
YEAR 2000
The smooth operation of the Funds depends on the ability of the Funds'
custodian and the other service providers to the Funds to provide services
without interruption. Some computer systems used today are unable to
process date-related information because they are not programmed to
distinguish between the year 2000 and the year 1900. The Adviser, like
many other businesses, is taking steps to ensure that the computer systems
on which the smooth operation of the Funds depends will continue to
function properly. The Adviser is working with the service providers to
the Funds, such as the custodian and various broker-dealers through which
portfolio securities of the Funds are traded, to arrange for testing of
internal and external systems. Based on the information currently
available, the Adviser does not anticipate any material impact on the
delivery of services currently provided. There can be no guarantee,
however, that the steps taken by the Adviser in preparation for the year
2000 will be sufficient to avoid any adverse impact on the Funds.
PURCHASING SHARES
The offering price of shares is 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. The
Fund will maintain an account for each shareholder.
Initial purchase of shares of the Fund must be made by application to the
Fund. To purchase shares mail a check payable to Manor Investment Funds,
Inc., complete the application form included in this prospectus, and mail
to Manor Investment Funds, 15 Chester Commons, Malvern, PA 19355. For
additional information contact the Fund at 610-722-0900. Subsequent
purchases may be made by mail or in person. The minimum is $100, but less
may be accepted under special circumstances. Shareholders may also
authorize the fund to automatically debit their bank account to purchase
shares by completing the necessary information on their account
application. Shareholders may also purchase shares of any Fund by
directing a transfer from another Fund by telephone. Shares can also be
purchased by automatic payroll deduction, or by automatic deduction from an
account that you specify.
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. 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.
REDEMPTIONS
The Fund will redeem all or any portion of the total amount of the shares
of any shareholder upon written request for redemption signed by the
shareholder. Proper endorsements guaranteed either by a national bank or a
member firm of the New York Stock Exchange may be required unless
management knows the shareholder.
11
Shares are redeemed at the net asset value per share next determined after
notice is received by the Fund. The proceeds received by the shareholder
may be more or less than the cost of such shares, depending upon the net
asset value per share at the time of redemption; 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, 15
Chester Commons, Malvern, PA 19355. For additional information contact
the Fund at 610-722-0900.
REPORTS TO SHAREHOLDERS
The Fund sends shareholders quarterly reports showing the value of their
account and the performance of the Fund. Shareholders also receive annual
reports containing certified financial statements and other periodic
reports, at least semiannually, containing unaudited financial statements.
RETIREMENT ACCOUNTS
The Fund maintains Individual Retirement Accounts that allow you to invest
in a Regular IRA, Roth IRA or SIMPLE IRA on a tax deferred basis. You may
also _roll over_ or transfer a lump sum distribution from a qualified
pension or profit-sharing plan to your IRA, thereby postponing federal
income tax on the distribution. If your employer has a Simplified Employee
Pension Plan (SEP), you may establish a Regular IRA with the Fund to which
your employer may contribute, subject to special rules designed to avoid
discrimination.
There is no charge to open and maintain an IRA account with Manor
Investment Funds. The Board of Directors may change this policy 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. A Disclosure
Statement describing the general provisions of the retirement account is
provided for all prospective account holders, as required by U.S. Treasury
Regulations.
PRICING OF SHARES
The net asset value of the Fund's shares are determined as of the close of
trading on the New York Stock Exchange on each business day the Exchange is
open (presently 4:00 p.m.). 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.
12
TAXES
The Fund will endeavor to qualify annually for and elect tax treatment
applicable to a regulated investment company under Subchapter M of the
Internal Revenue Code (the _Code_). 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. Pursuant to the requirements of the
Code, the Funds intends to distribute annually, to its stockholders,
substantially all of its net investment income and realized capital gains,
if any, less any available capital loss carry-over, to avoid paying income
tax on its net investment income and net realized capital gains of being
subject to a federal excise tax on undistributed net investment income and
net realized capital gains.
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 the application
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 ADVISER
Morris Capital Advisors, Inc., 15 Chester Commons, Malvern, PA is a
Pennsylvania corporation that acts as sole Investment Adviser to the Fund.
Mr. Daniel A. Morris owns all outstanding shares of Morris Capital
Advisors, Inc. He is the director and officer of the Investment Adviser
and is also president of the Fund. Mr. Morris has been a shareholder,
executive officer and portfolio manager for investment advisors 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 Capital Advisors, 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.
13
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 Capital Advisors, Incorporated a fee of 1% per year on the net
assets of the Funds (0.5% for the Bond Fund). This rate of the advisory
fee 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 Funds to no more than
1.5% of averaged assets (1.0% for the Bond Fund).
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.
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.
14
MANAGEMENT OF THE FUNDS
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. 10). It meets four times a year to review Fund progress and status.
In addition, a non-interested Director performs an independent audit
whenever requested by the Board.
15
Manor Investment Funds, Inc.
New Account Application
Use this form for individual, custodial, trust, profit sharing or pension
plan accounts. For any additional information please contact the Fund at
610-722-0900 or 800-787-3334.
1. Investments Fund Selection: (must total
Initial Investment: 100%)
$ ______________________
Minimum initial investment Manor %
$1,000) Fund
Make your check payable to:
Manor Investment Funds, Growth %
Inc. Fund
15 Chester Commons,
Malvern, PA 19355
Bond %
Fund
2. Registration (please print)
Individual _________________________ ____
________________________ ___________________ _____________
First Name
MI Last Name SocialSecurity #
Birthdate
Joint Owner* _________________________ ____ ________________________
___________________ _____________
First Name
MI Last Name SocialSecurity #
Birthdate
* Registration will be Joint Tenancy with Rights of survivorship
(JTWROS) unless otherwise specified.
Gift to Minors _________________________ _____
_________________________
Custodian's First Name MI
Last Name
_________________________ _____
_________________________
Minor's First Name
MI Last Name
________________________
_____________________ _______________
Minor's SocialSecurity # Minor's
Birthdate State of Residence
Corporation ___________________________________________________
Trust,Estate Name of Trustees(If to be included in registration)
Pension Plan
Partnership ___________________________________________________
16
Name
Other Entity ____________________________ ________________________
Social Security # or Tax ID #
Date of Agreement
**Corporate Resolution is required. ***
Additional documentation and certification may be required.
3. Mailing Address (please print)
____________________________________________ _____________
Street
Apt./Suite
________________________________ _______ ______________
City
State Zip
______________________________ ______________________________
Daytime Phone # Evening Phone
#
Application continued on next page.
17
4. Distribution Options
Dividends and capital gains will be reinvested if no option is
selected.
___Pay all income in cash.____Pay all capital gains in cash.
5. Signature and Certification required by the Internal Revenue Service
Neither the Fund nor its transfer agent will be responsible for the
authenticity of transaction instructions received by telephone,
provided that reasonable security procedures have been followed.
Under the penalty of perjury, I certify that (1) the Social Security
Number or Taxpayer Identification Number shown on this form is my
correct Taxpayer Identification Number, and (2) I am not subject to
backup withholding either as a result of a failure to report all
interest or dividends, or the IRS has notified me that I am no longer
subject to backup withholding. The IRS does not require your consent
to any provision of the document other than the certifications
required to avoid backup withholding.
_________________________________________________
__________________
Signature of Owner or Custodian Date
_________________________________________________
__________________
Signature of Co-owner Date
If shares are to be registered in (1) joint names, both persons should
sign, (2) a custodian for a minor, the custodian should sign, (3) a
trust, the trustee(s) should sign, or (4) a corporation or other
entity, an officer should sign and print name and title on the space
provided below.
______________________________________________________________________
_________
Print name and title of officer signing for a corporation or other
entity
6. Automatic Deposit Authorization
I authorize Manor Investment Funds, Inc. to instruct my bank/savings
institution to make withdrawals from the account listed below to be
deposited in my account with the Fund. I understand this
authorization may be revoked by me at any time by providing Manor
Investment Funds, Inc. with a written notice to discontinue my
automatic payments.
Monthly Quarterly
Amount: ___________________ 15th day of the month
Last business day of the month
18
Financial Institution: ______________________ Bank phone
number:____________________
Your Account Number: ____________________ Bank routing
number:____________________
Signature:________________________________________
Date:____________________
Signature:________________________________________
Date:____________________
Please include a voided check.
19
PERFORMANCE INFORMATION
The bar chart and table below provide an indication of the risk of
investing in the Fund. The par chart shows the Fund's performance in each
calendar year since inception. The table shows how the Fund's average
annual returns compare to a broad-based securities index and an average of
other Funds in a peer group. Keep in mind that past performance does not
indicate how the Fund will perform in the future. The calculation assumes
reinvestment of all dividends and distributions and reflects the effect of
all recurring fees but ignores individual income tax consequences to
stockholders.
Total Total Annualized
Return Return Total
1st Full Year Return
Quarter 1998 Since
1999 Inception
Manor Fund 7.24 % 13.65 % 15.52 %
Lipper Growth & 1.77 % 13.58 % 19.51 %
Income Fund Index
S&P 500 Index 4.98 % 28.57 % 28.08 %
Our performance was due, in part, to excellent returns from some of our
long-term holdings, and the fact that our laggards did not under perform
the market by much. Top performers this quarter included Delta Airlines
and Citigroup, two of our longest holdings, Gillette and McDonalds, two
"old time" growth stocks, and Cisco Systems, a recent addition to the Fund.
The Fund invests primarily in companies that are priced attractively
relative the their earnings growth and financial structure. The favorable
market for these types of companies and the high level of contributions
into the Fund resulted in a low portfolio turnover of 23%.
20
CUSTODIAN
FIRST NATIONAL BANK OF WEST CHESTER
9 North High Street
West Chester, PA 19381
TRANSFER AGENT
MANOR INVESTMENT FUNDS, INC.
15 Chester Commons
Malvern, PA 19355
INDEPENDENT ACCOUNTS
CLAUDE B. GRANESE, CPA
1108 N. Bethlehem Pike
Spring House, PA
LEGAL COUNSEL
LAVERTY, MUTH & MILLER
810 Downingtown Pike
West Chester, PA 19380
BOARD OF DIRECTORS
EDWARD ERLICHMAN
President, Kara Aerospace, Inc.
Bedford, PA
RICHARD A. KUND, JR.
Professional Detailing, Inc.
Upper Saddle River, NJ
BRUCE LAVERTY
Laverty, Muth & Miller
West Chester, PA
JAMES McFADDEN
MBNA Corp.
Newark, DE
DANIEL A. MORRIS
President, Morris Capital Advisors, Inc.
Malvern, PA
FREDERICK L. MYERS
Myers & Associates, CPA's
West Chester, PA
ALAN WEINTRAUB
The Gartner Group
Stanford, CT
21
PROSPECTUS
M Manor Investment Funds, Inc.
Malvern, PA 19355
610-722-0900
800-787-3334
A no-load open-end management investment company issuing shares
in three series, the Manor Fund, Growth Fund, and Bond Fund. The
Funds are designed for long-term investors.
INVESTMENT ADVISER
MORRIS CAPITAL ADVISORS, INC.
15 Chester Commons
Malvern, PA 19355
22
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
April 14, 1999
Manor Investment Funds, Inc.
Malvern, PA 19355
610-722-0900
800-787-3334
This Statement of Additional Information is not a
Prospectus, and should be read in conjunction with the Fund's
current Prospectus (dated April 14, 1999). To obtain the
Prospectus, please write the Fund or call either of the telephone
numbers that are shown above.
TABLE OF CONTENTS
Investment Restrictions 1
Officers and Directors of the 2
Fund
Principal Shareholders 3
Investment Adviser 3
Determination of Net Asset Value 4
and Performance
Allocation of Portfolio 4
Brokerage
Custodian 5
Tax Status 5
Shareholder Meetings 5
Independent Accountants 6
Litigation 6
Financial Statements 7
No person has been authorized to give any information or to
make any representations other than those contained in this
Statement of Additional Information and the Prospectus dated
April 14, 1999 and, if given or made, such information or
representations may not be relied upon as having been authorized
by Manor Investment Funds, Inc.
This Statement of Additional Information does not constitute
an offer to sell securities.
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:
23
(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.
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:
DANIEL A. MORRIS
Mr. Morris is President of the Fund and President of
Morris Capital Advisors, Inc., investment adviser to
24
the Fund. Prior to founding Morris Capital Advisors,
Inc., he was Senior Vice President of Consistent Asset
Management Company, an investment adviser for separate
accounts and registered investment companies. Mr.
Morris resides at 304 Albermarle Grove, West Chester,
PA. As President of the Fund, he is considered an
Interested Director.
BRUCE LAVERTY
Mr. Laverty is a Partner of the law firm Laverty, Muth
& Miller, legal counsel to the Fund. Mr. Laverty
resides at 568 Spring Oaks Road, West Chester, PA. As
Legal Counsel to the Fund, he is considered an
Interested Director.
ALAN WEINTRAUB
Mr. Weintraub is a Senior Consultant with The Gartner
Group, Stanford, CT. Mr. Weintraub resides at 305
Albermarle Grove, West Chester, PA.
JAMES MCFADDEN
Mr. McFadden is Vice President of Marketing for MBNA
Corporation. Mr. McFadden resides at 461 Crescent
Drive, West Chester, PA.
FRED MYERS
Mr. Myers is founding Partner of the accounting firm of
Myers & Associates, CPA's. Mr. Myers resides at 302
Albermarle Grove, West Chester, PA.
RICHARD KUND, JR.
Mr. Kund is marketing manager of Professional
Detailing, Inc. Mr. Kund resides at 304 Hidden Creek
Drive, Hatboro, PA.
EDWARD ERLICHMAN
Mr. Erlichman is President of Kara Aerospace. Mr.
Erlichman resides at P.O. Box 513, Bedford, PA.
PRINCIPAL SHAREHOLDERS
As of December 31, 1998, Daniel A. Morris owned or
beneficially owned 19,729 shares of Common Stock, or 11.5% of the
then outstanding shares. The officers and directors of the Fund
owned or beneficially owned as a group, 31,863 shares of Common
Stock, or 18.6% of the then outstanding shares.
As of December 31, 1998, four shareholders, in addition to
Mr. Morris, owned or beneficially owned more than 5% of the then
outstanding shares of the Fund. Daniel K. Schafer owned 22,129,
or 12.9% of the Fund, Marvin Tavel owned 9,213 shares, or 5.4%,
Bradley J. Allen owned 9,143, or 5.3%, and William P. Becker
25
owned 9,142.5 shares, or 5.3%. Other than the foregoing, the
Fund was not aware of any person who, as of December 31, 1998,
owned or beneficially owned more than 5% of the shares of the
Fund.
INVESTMENT ADVISER
Morris Capital Advisors, Inc., 15 Chester Commons Street,
Malvern, 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. Mr. Morris owns all outstanding shares of
Morris Capital Advisors, Inc. and he is the largest shareholder
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 Capital Advisors,
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 Capital Advisors, Incorporated a fee of 1% per
year on the net assets of the Funds (0.5% for the Bond 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 (1.0% for the Bond Fund).
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,
26
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.
DETERMINATION OF NET ASSET VALUE AND PERFORMANCE
As set forth in the Prospectus under the caption
_Determination of Net Asset Value_ the net asset value of the
Fund will be determined as of the close of trading on each day
the New York Stock Exchange is open for trading. The New York
Stock Exchange is open for trading Monday through Friday except
New Year's Day, M. L. King Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day, and Christmas Day. Additionally, if any of the
aforementioned holidays falls on a Saturday, the New York Stock
Exchange will not be open for trading on the preceding Friday and
when any such holiday falls on a Sunday, the New York Stock
Exchange will not be open for trading on the succeeding Monday,
unless unusual business conditions exist, such as the ending of a
monthly or yearly accounting period. 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.
Any total rate of return quotation for the Fund will be for
a period of three or more months and will assume the reinvestment
of all dividends and capital gains distributions which were made
by the Fund during that period. Any period total rate of return
quotation of the fund will be calculated by dividing the net
change in value of a hypothetical shareholder account established
by an initial payment of $1,000 at the beginning of the period by
1,000. The net change in the value of a shareholder account is
determined by subtracting $1,000 from the product obtained by
multiplying the net asset value per share at the end of the
period by the sum obtained by adding (A) the number of shares
purchased at the beginning of the period plus (B) the number of
shares purchased during the period with reinvested dividends and
distributions. Any average annual compounded total rate of
return quotation of the Fund will be calculated by dividing the
redeemable value at the end of the period (i.e., the product
referred to in the preceding sentence) by $1,000. A root equal
to the period, measured in years, in question is then determined
and 1 is subtracted from such root to determine the average
annual compounded total rate of return.
The foregoing computation may also be expressed by the
following formula:
P(1+T)^n = ERV
27
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the
stated periods at the end of the stated periods.
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.
Brokerage commissions for the year ended December 31, 1998
was $3,223. 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.
CUSTODIAN
The First National Bank of West Chester, 9 North High
Street, West Chester, PA acts as custodian for the Fund.
TAX STATUS
The Fund will endeavor to qualify annually for and elect tax
treatment applicable to a regulated investment company under
Subchapter M of the Internal Revenue Code (the _Code_). To
qualify as a _regulated investment company_ under Subchapter M,
28
at least 90% of the Fund's income must be derived from dividends,
interest and gains form securities transactions, no more that 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 the application 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.
SHAREHOLDER MEETINGS
Shareholders meet annually to elect all members of the Board
of Directors, select and 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). It meets four times a year to review Fund progress and
status. In addition, a non-interested Director performs an
independent audit whenever requested by the Board.
INDEPENDENT ACCOUNTANT
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.
29
LITIGATION
As of the date of this Statement of Additional Information,
the Fund, as transfer agent, was cited in an administrative
proceeding with the SEC for not filing required TA-Y2K form. The
Fund has complied with the filing requirements and has responded
to an offer of settlement with the commission in this matter. It
is the opinion of Fund council that this matter will be settled
without any civil penalty. It is the opinion of the auditor of
the Fund that this does not present an adverse material impact
for the Fund.
30
MANOR INVESTMENT FUNDS, INC.
MALVERN, PENNSYLVANIA
Financial Statements
for the Year Ended
December 31, 1998
and
Independent Auditor's Report
31
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), including
the schedule of investments, as of December 31, 1998, and the
related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in
the period then ended, and selected per share data, total
investment return, ratios and turnover for the years ended
December 31, 1998, 1997 and 1996 and for the period ended
December 31, 1995. These financial statements, schedules, and per
share data, total investment return, ratios and turnover
(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 audits.
I conducted my audits 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, 1998, 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
audits provide 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, 1998, the results of
its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and
the selected per share data, total investment return, ratios and
turnover for the years ended December 31, 1998, 1997 and 1996,
and the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
Claude B. Granese, CPA
Spring House, Pennsylvania
January 15, 1999
32
MANOR INVESTMENT FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
ASSETS
Investments in securities, at fair
value
(identified cost $2,122,420) $ 2,478,569
(Notes 2 and 5)
Cash
295,792
Interest receivable 429
Total Assets
2,774,790
LIABILITIES
Payable for investment securities
purchased 115,767
Accrued expenses 6,697
Total Liabilities
122,464
NET ASSETS
Net assets (equivalent to $15.46 per share
based on 171,522 shares of capital stock
outstanding) (Note 4) $ 2,652,326
The accompanying notes are an
integral part of the
financial statements.
33
MANOR INVESTMENT FUNDS, INC.
SCHEDULE OF INVESTMENTS
December 31, 1998
Market
COMMON STOCK (Shares) 89.0 % Cost Value
Automobile
1,190 General Motors 3.4% $ 68,660 $ 85,159
1,040 Goodyear Tire 2.1% 63,853 52,455
5.5% 132,513 137,614
Basic Materials
2,050 DuPont 4.4% 123,938 108,778
Computer
1,335 Cisco Systems 5.0% 82,257 123,905
980 Hewlett-Packard 2.7% 55,083 66,946
830 Intel 4.0% 65,932 98,407
990 International 7.4% 96,750 182,531
Business Machines
19.1% 300,022 471,789
Construction
4,210 Masco 4.9% 96,704 121,037
Consumer Staples
1,870 Gillette 3.6% 91,570 89,409
2,560 PepsiCo 4.2% 99,405 104,640
7.8% 190,975 194,049
Finance
2,720 Allstate Insurance 4.2% 103,852 104,720
1,150 Citigroup 2.3% 66,084 57,141
1,280 Mellon Bank 3.6% 94,822 88,000
10.1% 264,758 249,861
Schedule continued on next page.
34
MANOR INVESTMENT FUNDS, INC.
SCHEDULE OF INVESTMENTS (continued)
December 31, 1998
Market
COMMON STOCK (Shares) Cost Value
Medical
680 Merck 4.0% $ 78,634 $ 100,300
990 Pfizer 5.0% 77,962 123,750
9.0% 156,596 224,050
Multi-Industry
2,610 Allied Signal 4.7% 103,267 115,656
1,750 General Electric 7.2% 119,294 178,500
11.9% 222,561 294,156
Oil
1,770 Ashland Oil 3.5% 84,193 85,624
900 Chevron 3.0% 67,755 74,644
6.5% 151,948 160,268
Retail
1,740 McDonalds 5.4% 94,687 133,654
1,060 Sears, Roebuck & 1.8% 59,289 45,050
Company
7.2% 153,976 178,704
Transportation
1,260 Delta Airlines 2.6% 61,368 65,520
TOTAL COMMON STOCK 89.0% 1,855,359 2,205,826
PREFERRED STOCK (Shares) 3.9%
1,660 Kmart Preferred Class T 95,689 96,176
INDEXED SECURITIES (Shares) 3.1%
630 S&P 500 Depository Receipts 72,437 77,687
SHORT-TERM NOTES ($100,000 Par) 4.0%
U.S. T Bill,4.52%, 3/25/99 98,935 98,880
TOTAL INVESTMENTS IN SECURITIES $2,122,420 $2,478,569
The accompanying notes are an integral part of the
Financial statements.
35
MANOR INVESTMENT FUNDS, INC.
STATEMENT OF OPERATIONS
Year Ended December 31, 1998
Investment Income
Dividends $ 28,901
Interest 7,637
Total investment income $ 36,538
Expenses
Advisory and management fee (Note 6) 22,267
Custodian fee (Note 7) 2,434
Professional fees 9,188
Other 3,286
Total expenses 37,175
Fees waived (Note 6) (5,375)
Net expenses 31,800
Net Investment Income 4,738
Realized and Unrealized Gain
on Investments (Note 5)
Net realized gain on investments 26,880
Change in unrealized appreciation
of investments for the year 198,891
Net gain on investments 225,771
Net Increase in Net Assets
Resulting from Operations $230,509
The accompanying notes are an integral part of the
financial statements.
36
MANOR INVESTMENT FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended December 31, 1998 and 1997
1998 1997
Increase in Net Assets from Operations
Investment income-net $ 4,738 $ 4,196
Net realized gain on investments 26,880 17,520
Change in unrealized appreciation 198,891 138,193
Net increase in net assets
resulting from operations 230,509 159,909
Distributions to Shareholders from
Investment income-net
(4,738) (3,942)
Net realized gain on investments
(26,880) (17,520)
Capital Share Transactions (Note 4) 954,033 966,285
Total Increase 1,152,924 1,104,732
Net Assets
Beginning of year 1,499,402 394,670
End of year $2,652,326 1,499,402
The accompanying notes are an integral part of the
financial statements.
37
MANOR INVESTMENT FUNDS, INC.
FINANCIAL HIGHLIGHTS
Years Ended December 31, 1998, 1997 and 1996
Period Ended December 31, 1995
PER SHARE DATA (1) 1998 1997 1996 1995
Investment income $ 0.26 $ 0.25 $ 0.22 $ 0.07
Expenses 0.23 0.19 0.15 0.04
Investment income-net 0.03 0.06 0.07 0.03
Distribution of net
investment income (0.03) (0.06) (0.07) (0.03)
Net realized and unrealized
gain (loss) on investments 1.69 2.64 1.16 (0.03)
Initial capitalization of Fund - - - 10.00
Net increase in net asset
value 1.69 2.64 1.16 9.97
Net asset value
Beginning of period 13.77 11.13 9.97 -
End of period $ 15.46 $ 13.77 $ 11.13 $ 9.97
(1)Selected data based on weighted average shares outstanding.
TOTAL INVESTMENT RETURN 13.65% 25.52% 11.98% -0.30%
RATIOS (to Average Net Assets)
(2)
Investment income-net 0.22% 0.50% 0.67% 0.34%
Expenses 1.50% 1.42% 1.50% 0.38%
(2) 1.24 % and 1.50 %, respectively when annualized.
TURNOVER 23% 27% 15% 0%
The accompanying notes are an integral part of the
financial statements.
38
MANOR INVESTMENT FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
Note 1-Organization
Manor Investment Funds, Inc. (the Fund) was incorporated in
Pennsylvania on September 13, 1995. The Fund was in the initial
stages of development until January 27, 1996 when it began to
sell shares of its stock to the public. It is an open-end, non-
diversified management investment company that is registered
under the Investment Company Act of 1940.
The Fund's primary investment 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-Investments in securities traded on a national
securities exchange (or reported on the NASDAQ national market)
are stated at the last reported sales price on the day of
valuation. U. S. Treasury Bills are stated at market value, which
approximates cost plus accretion.
Cash-Cash consists of checking and money market accounts with the
custodian. As financial instruments, such accounts potentially
subject the Fund to concentration of credit risk. The carrying
value of these accounts approximates market value due to their
short-term nature.
Federal Income Taxes-The Fund's policy is to continue to comply
with the requirements of the Internal Revenue Code that are
applicable to regulated investment companies and distribute all
of its taxable income to its shareholders. Therefore, no federal
income tax provision is required.
Distributions-Distributions to shareholders, which are determined
in accordance with income tax regulations, are recorded on the
ex-dividend date.
Development Stage-During its development stage there was
virtually no change in net assets from net investment income and
unrealized securities losses.
Other-The Fund follows industry practice and records security
transactions on the trade date. Dividend income is recognized on
the ex-dividend date, and interest income is recognized on the
accrual basis. Discounts on short-term U. S. government
obligations are accreted over the life of the obligation.
39
MANOR INVESTMENT FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
Accounting Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ
from those estimates.
Note 3-Distributions to Shareholders
On December 28, 1998, a distribution of $.19 per share,
aggregating $31,618, was declared from net investment income and
realized gains. The dividend was paid on December 28, 1998 to
shareholders of record on December 24, 1998.
On December 29, 1997, a distribution of $.20 per share,
aggregating $21,462 was declared from net investment income and
realized gains. The dividend was paid on December 29, 1997 to
shareholders of record on December 27, 1997.
Note 4-Capital Share Transactions
At December 31, 1998, there were 10,000,000 shares of $.001 par
value capital stock authorized and paid-in capital totaled
$2,296,177. Daniel A. Morris (see note 6), President of the Fund,
and his wife own 19,729 shares of the Fund's outstanding stock
with a value of $305,017.
Note 4-Capital Share Transactions (Continued)
Transactions in capital stock were as follows:
Shares Amount
1998 1997 1998 1997
Shares sold 96,232 90,932 $1,468,246 $1,203,905
Shares issued in
reinvestment of 2,044 1,586 31,618 21,462
dividends
98,276 92,518 1,499,864 1,225,367
Shares redeemed 35,680 19,058 545,831 259,082
Net increase 62,596 73,460 $ 954,033 $ 966,285
40
MANOR INVESTMENT FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
December 31, 1998
Note 5-Investment Transactions
Purchases of investment securities (excluding short-term U.S.
government obligations) aggregated $1,310,051 in 1998; sales
aggregated $491,214. Net gain on investments for the year ended
December 31, 1998 was $225,771. That amount represents the net
increase in value of investments held during the year. Net
unrealized gains of $356,149 on securities are the same for
financial reporting and tax reporting.
Note 6-Investment Advisory Fee
The Fund has an investment management and advisory services
agreement (the Agreement) with Morris Capital Advisors, Inc.
(Morris). Morris' sole shareholder, officer and director is
Daniel A. Morris.
Monthly, the Fund is required to pay Morris a fee (aggregating
$22,267 in 1998) equivalent to one percent per annum of the daily
average net assets of the Fund. The Fund bears expenses necessary
and incidental to the conduct of its business. However, Morris
has absorbed a portion of expenses ($5,375 in 1998) to maintain
total Fund expenses at no more than 1.5% annually of average
assets.
The Agreement must be approved annually by a majority vote of the
Fund's non-interested Board of Directors.
Note 7-Custody Agreement
Under an agreement, The First National Bank of West Chester (FNB)
acts as the Fund's custodian. FNB's fees are charged in
accordance with its standard rates for such services, payable
monthly. Such fees were $2,434 for the year ended December 31,
1998.
41
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, ratios and turnover (hereafter
referred to collectively as the _financial statements_) of Manor
Investment Funds, Inc. (the Fund), for the year ended December
31, 1998, I considered its internal control, including control
activities 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 internal control.
The management of the Fund is responsible for establishing and
maintaining internal control. In fulfilling this responsibility,
estimates and judgments by management are required to assess the
expected benefits and related costs of controls. Generally,
controls that are relevant to an audit pertain to the entity's
objective of preparing financial statements for external purposes
that are fairly presented in conformity with generally accepted
accounting principles. Those controls include the safeguarding of
assets against unauthorized acquisition, use, or disposition.
Because of inherent limitations in internal control, error or
fraud may occur and not be detected. Also, projection of any
evaluation of internal control 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 internal control would not necessarily
disclose all matters in internal control 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 components does not reduce to a relatively low
level the risk that misstatements caused by error or fraud 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
internal control and its operation, including controls for
safeguarding securities that I consider to be a material weakness
as defined above as of December 31, 1998.
This report is intended solely for the information and use of
management and the Securities and Exchange Commission.
Mr. Claude B. Granese, CPA
January 15, 1999
42
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a. Financial Statements - Financial highlights are included
in Part A and all other financial statements are presented
in Part B.
Manor Investment Funds, Inc.
Statement of Net Assets as of December 31, 1998
Statement of Operations for the Year Ended December 31,
1998
Statement of Changes in Net Assets for the Years Ended
December 31, 1997 and 1998
Financial Highlights for the Years Ended December 31,
1995, 1996, 1997 and 1998
Notes to Financial Statements
b. Exhibits
(1) Registrant's Articles of Incorporation, Exhibit 1 to
Registrant's Registration Statement of Form N-1A is
incorporated by reference pursuant to Rule 411 under the
Securities Act of 1933.
(2) Registrant's By-Laws; Exhibit 2 to Registrant's
Registration Statement of Form N-1A is incorporated by
reference pursuant to Rule 411 under the Securities Act
of 1933.
(3) Voting Trust Agreement (None)
(4) Stock Certificate; Exhibit 4 to Registrant's
Registration Statement of Form N-1A is incorporated by
reference pursuant to Rule 411 under the Securities Act
of 1933.
(5) Investment Advisory Contract; Exhibit 5 to
Registrant's Registration Statement of Form N-1A is
incorporated by reference pursuant to Rule 411 under the
Securities Act of 1933.
(6) Underwriting Agreements (None)
(7) Reimbursement Agreements with Officers and/or
Directors; Exhibit 7 to Registrant's Registration
Statement of Form N-1A is incorporated by reference
pursuant to Rule 411 under the Securities Act of 1933.
43
(8) Custodian Agreement; with First National Bank of West
Chester; Exhibit 8 to Registrant's Registration Statement
of Form N-1A is incorporated by reference pursuant to
Rule 411 under the Securities Act of 1933.
(9) Other Contracts (None)
(10) Opinion of Counsel Concerning Fund Securities; Exhibit
10 to Registrant's Registration Statement of Form N-1A is
incorporated by reference pursuant to Rule 411 under the
Securities Act of 1933.
(11) Consent of Claude B. Granese, CPA
(12) Other Financial Statements (None)
(13) Powers of Attorney (None)
(14) Initial Capital Arrangement Agreements (None)
(15) Code of Ethics; Exhibit 15 to Registrant's
Registration Statement of Form N-1A is incorporated by
reference pursuant to Rule 411 under the Securities Act
of 1933.
2. Control Persons
Mr. Daniel A. Morris is the sole owner, director and officer
of the Investment Adviser and is also president of the
Fund. As of December 31, 1998 Mr. Morris and his wife
Anne own 11.5% of the outstanding shares of the Fund.
3. Number of Shareholders
There were 114 shareholders of the Manor Investment Funds as
of December 31, 1998.
4. Indemnification
The registrant has been advised that, in the opinion of the
Securities and Exchange Commission, indemnification for
liability arising under the Securities Act of 1933 for
directors, officers and controlling persons of the
registrant is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or
controlling person in connection with the securities
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
44
and will be governed by the final adjudication of such
issue.
5. Activities of Investment Adviser
The activity of Morris Capital Advisors, Inc., at the
present time is performance of the Investment Advisory
Contract with the Manor Investment Funds and for
individual and corporate clients on an individual
account basis.
6. Principal Underwriter
The Fund acts as its own underwriter.
7. Location of Accounts & Records
All Fund records are held in corporate headquarters, 15
Chester Commons, Malvern, PA 19355.
8. Management Services
Not Applicable.
9. Distribution Expenses
The Fund currently bears no distribution expenses.
10. Undertakings
None.
45
CONSENT OF CERTIFIED PUBLIC ACCOUNTANT
I consent to the inclusion of my report, dated January 15, 1999
on my audit of the financial statements of Manor Investment
Funds, Inc. (the Fund), in the registration statement Form N-1A,
Amendment Number 4 of the Fund. I also consent to the reference
of my firm in such registration statement.
Claude B. Granese, CPA
Spring House, Pennsylvania
January 15, 1999
46
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, Manor Investment Funds, Inc.
certifies that it meets all of the requirements for effectiveness
of this Registration Statement and has duly caused this
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Malvern, Pennsylvania,
on the 31st day March.
Manor Investment Funds, Inc.
By:
_________________________________
Daniel A. Morris, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature
___________________ President, Chief 4/15/99
Daniel A. Morris Executive Officer
and Director
___________________ Secretary 4/15/99
Bruce Laverty
___________________ Director 4/15/99
James McFadden
___________________ Director 4/15/99
Edward Erlichman
___________________ Director 4/15/99
Richard A. Kund, Jr.
___________________ Director 4/15/99
Fred Myers
___________________ Director 4/15/99
Alan Weintraub
47
EXHIBIT INDEX
(1) Registrant's Articles of Incorporation *
(2) Registrant's By-Laws *
(3) Voting Trust Agreement (None)
(4) Stock Certificate *
(5) Investment Advisory Contract *
(6) Underwriting Agreements (None)
(7) Reimbursement Agreements with Officers and/or Directors *
(8) Custodian Agreement *
(9) Other Contracts (None)
(10) Opinion of Counsel Concerning Fund Securities *
(11) Consent of Claude B. Granese, CPA
(12) Other Financial Statements (None)
(13) Powers of Attorney (None)
(14) Initial Capital Arrangement Agreements (None)
(15) Code of Ethics *
* Incorporated by reference.
48
CONSENT OF CERTIFIED PUBLIC ACCOUNTANT
I consent to the inclusion of my report, dated January 15,
1999 on my audit of the financial statements of Manor
Investment Funds, Inc. (the Fund), in the registration
statement Form N-1A, Amendment Number 4 of the Fund. I
also consent to the reference of my firm in such
registration statement.
Claude B. Granese, CPA
Spring House, Pennsylvania
January 15, 1999
