UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-09134
Manor Investment Funds, Inc.
(Exact name of registrant as specified in charter)
15 Chester Commons, Malvern, PA 19355
(Address of principal executive offices)
Daniel A. Morris
15 Chester Commons, Malvern, PA 19355
(Name and address of agent for service)
Registrant's telephone number, including area code: 610-722-0900
Date of fiscal year end: December 31
Date of reporting period: June 30, 2004
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270-30e-1).
The Commission may use the information provided on Form N-CSR in its
regulatory, disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant
is not required to respond to the collection of information contained in
Form N-CSR unless the Form displays a currently valid Office of Management
and Budget ("OMB") control number. Please direct comments concerning the
accuracy of the information collection burden estimate and any suggestions
for reducing the burden to Secretary, Securities and Exchange Commission,
450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed
this collection if information under the clearance requirement of 44 U.S.C.
3507.
Item 1. Reports to Stockholders.
Manor Investment Funds, Inc.
15 Chester Commons, Malvern, PA 19355
610-722-0900 800-787-3334
Semi-Annual Report
June 30, 2004
(Unaudited)
Fund Office:
15 Chester Commons
Malvern, PA 19355
610-722-0900 800-787-3334
www.manorfunds.com
Managed by:
Morris Capital Advisors, Inc.
Manor Investment Funds, Inc.
15 Chester Commons
Malvern, PA 19355
June 30, 2004
Dear Fellow Shareholders:
I am pleased to report that the Manor Investment Funds,
Inc. Growth Fund has earned a 5 star rating from
Morningstar for the 3 year period ending June 30, 2004. The
Growth Fund continues to hold a 4 star rating for the 5 year
period ending June 30. This excellent performance record
supports our conservative long-term investment process.
Range Ball
Each year we enjoy a family vacation during the week of
July 4th. It is a week of fun, food, friends, relaxation,
and golf. Lots of golf. Traditionally, we start the week
with a round of family golf. Everybody gets a new sleeve of
golf balls, and out we go. This year started as usual, but
on my second shot I hit well left of the green and couldn't
find my ball. On the next hole, a par 3, my tee shot went
off to the right, and that ball went missing. On the next
hole, a long par 4, with woods on the left, and a steep drop-
off on the right, I ripped my tee shot so deep into the
woods that there was no possibility of finding it. I was so
disgusted by that point that I reached into my golf bag and
pulled out an old banged-up range ball and used it to play
the rest of that hole. I used it the rest of that day, and
several days thereafter, recording some of my best scores
ever. It was an ugly, beat-up ball, but it served me well
until I finally lost it, in the woods again.
Investors in the stock market are generally not
successful when they focus too much on the hot new stocks.
They get lulled into the belief that the newest companies
with the newest technology or the best story are the best
investments. Often it is the old boring unattractive
companies that produce in good markets and bad markets.
These are the companies that may not impress your friends
but provide an important component of investment returns in
markets like this. While we believe in investing in new
technology and products, we believe that there is an
important place for those "range ball" companies in our
portfolios. We'll pass on those hot new issues and elect
instead to pick our opportunities to invest in companies at
reasonable valuations.
The Manor Fund
The Manor Fund declined during the quarter, but rose
17.46% for the trailing year, outperforming the Lipper Large-
Cap Core mutual fund index. The Fund was helped by gains in
Boeing, Tyco, Devon Energy, Johnson & Johnson, and Freddie
Mac.
Boeing rose after a weak 1st quarter based on the
strength of new order commitments for their new 7E7
Dreamliner. It seems as if this new plane is doing well
against the competition from Airbus Industries. Tyco
continues to perform well as new management improved
operating margins. Devon Energy, a producer of oil and
natural gas rose as improving commodity prices boosted
earnings. Johnson & Johnson rose after a weak 1st quarter
on the expectation of stronger earnings. Freddie Mac
rebounded, despite the expectations of higher interest
rates, because investors do not expect a dramatic slowdown
in the earnings of this government sponsored mortgage
refinance company.
The Fund was hurt by weak performance from Kaufman &
Broad, Reebok, Citigroup, and Manor Care. Each of these
companies recorded strong returns during the previous
quarter. Kaufman & Broad declined as investors expect
rising interest rates to reduce earnings at this
homebuilder. Reebok declined on disappointing sales, while
Citigroup declined on the expectation that rising interest
rates would hurt earnings. Manor Care struggled along with
the entire health care industry.
During the quarter we sold Time Warner and took some
gains in Kaufman & Broad. We purchased Deere and Norfolk
Southern, and added to positions in Citigroup, Pfizer, and
Tyco.
The Growth Fund
The Growth Fund rose 2.19% during the quarter, and
23.27% for the trailing year, outperforming the S&P 500 and
the Lipper Large-Cap Growth mutual fund index. The Fund has
also outperformed both of these indices since inception.
The Fund was helped by gains in Ebay, Valero Energy,
Staples, Microsoft, and Cytec.
Ebay rose, following a strong 1st quarter, as investors
continued to believe in the growth potential of this
internet auction company. Valero Energy also rose after a
strong first quarter, as rising oil prices boosted refining
margins. Staples, a recent addition to the Fund, rose on
revenue and earnings gains, while Microsoft rebounded from a
weak 1st quarter on the expectation of stronger operating
margins. Cytec, a maker of medical testing devices, rose on
stronger revenue and earnings growth.
The Fund was hurt by declines in Forest Labs, Xilinx,
Vishay Intertec, Mohawk and Hospitality Properties. Forest
Labs declined on investor concern regarding the potential
for additional applications for several of its drugs,
including Celexa. Xilinx and Vishay, both in the
semiconductor industry declined as investors worried that
rising inventories are a precursor for revenue declines.
Mohawk, a carpet manufacturer, fell in sympathy with the
homebuilders. Hospitality Properties, a manager of hotel
properties, declined on investor concerns that rising
interest rates will increase financing expenses and reduce
travel.
During the quarter we sold T. Rowe Price and purchased
Capital One Financial. We also added to positions in Bed,
Bath & Beyond, Dell Computer, Intel, Microsoft, and Quest
Diagnostics.
The Bond Fund
The Bond Fund declined 1.40% during the quarter
outperforming both the Lehman Intermediate Government Index
and the Lipper US Government mutual fund index. The fund
portfolio is managed to preserve principal in this volatile
market so as to provide shareholders with a low risk
alternative to stocks. The Fund's investment portfolio of
US Treasury securities is very conservative, with an average
maturity for the entire portfolio of only 1.6 years, an
average duration of 1.33 years, and an average yield to
maturity of 2.23%.
Son of Range Ball
I believe that the markets will struggle with the
uncertainty of domestic politics, rising interest rates, and
slowing corporate profit growth over the next several
months. At the Manor Funds we will continue to invest in
those beat-up nuggets that will serve us well in this
difficult market environment, and position our fund
portfolios to participate in future market rallies.
Sincerely,
Daniel A. Morris
MANOR INVESTMENT FUNDS, INC.
MANOR FUND
Schedule of Investments
June 30, 2004
(Unaudited)
Market
Description Shares Value
- ------------------------------------------------
Common Stocks 94.5%
Consumer Staples 5.9%
Pepsico Inc 1,560 $ 84,053
Reebok Int'l Ltd 2,090 75,198
--------
159,251
Retail 6.2%
Best Buy Co., Inc 1,550 78,647
Cardinal Health Inc 1,305 91,415
--------
170,062
Medical 11.8%
Anthem* 920 82,395
Johnson & Johnson 1,350 75,195
Manor Care 2,590 84,641
Pfizer 2,350 80,558
--------
322,789
Automobile 2.0%
General Motors 1,190 55,442
--------
55,442
Basic Materials 3.0%
Alcan Inc 1,940 80,316
--------
80,316
Industrial Products 5.5%
Deere 980 68,737
Tyco Intl Ltd 2,240 80,862
--------
149,599
Construction 2.6%
KB Home 1,020 70,003
--------
70,003
Multi-Industry 2.7%
General Electric 2,270 73,548
--------
73,548
Computer 11.6%
Cisco* 2,350 55,695
Citrix Systems* 2,570 52,325
Hewlett-Packard 1,960 41,356
Intel 2,980 82,248
IBM 950 83,743
--------
315,367
Aerospace 2.3%
Boeing 1,230 62,841
--------
62,841
Oil 8.4%
Devon Energy 1,220 80,520
Nabors* 1,310 59,238
Occidental Petrol 1,820 88,106
--------
227,864
Finance 22.1%
Allstate Corp 1,830 85,186
Citigroup 1,969 91,559
Fed Nat Mtg Assoc 1,120 79,923
Freddie Mac 1,440 91,152
MBNA Corp 3,070 79,175
Shurguard Storage 2,060 77,303
Vornado Realty Tr 1,710 97,658
--------
601,956
Utilities 2.4%
Exelon 1,940 64,583
--------
64,583
Transportation 2.3%
Norfolk Southern 2,410 63,913
--------
63,913
Miscellaneous 5.7%
Barra Value Idx 1,340 76,755
SPDR Trust 690 79,026
--------
155,781
--------
Total Common Stock 94.5% 2,573,315
(Cost $2,193,431)
Short-Term Investments 5.6%
Money Market Fund 152,636
--------
152,636
--------
Total Value
Of Investments 100.1% 2,725,951
Other Assets
(Liabilities), Net -0.1% (1,721)
--------
TOTAL NET ASSETS 100.0% $ 2,724,230
===========
*Non-income producing during the period.
The accompanying notes are an integral part of these financial statements.
MANOR FUND
Fund and Performance Information
June 30, 2004
(Unaudited)
TOP FIVE HOLDINGS
Company Industry % of Net
Assets
- ---------------------------------------------
Vornado Rlty Trst Finance 3.6 %
Citigroup Finance 3.4 %
Cardinal Health Medical 3.4 %
Freddie Mac Finance 3.3 %
Occidental Petrol Oil 3.2 %
TOP FIVE INDUSTRIES
Industry % of Net Assets
- ---------------------------------------------
Finance 22.1 %
Medical 11.8 %
Computer 11.6 %
Oil 8.4 %
Retail 6.2 %
FUND PERFORMANCE
Total Return
2nd Quarter Year Ended Annualized
2004 6/30/2004 Since
Inception
------------------------------------------
Manor Fund -0.70 % 17.46 % 4.47 %
Lipper Large-Cap
Core Index 1.23 % 15.84 % 5.97 %
S&P 500 Index 1.71 % 19.10 % 9.68 %
MANOR INVESTMENT FUNDS, INC.
GROWTH FUND
Schedule of Investments
June 30, 2004
(Unaudited)
Market
Description Shares Value
- -----------------------------------------------
Common Stocks 91.9%
Consumer Staples 1.8%
Jones Apparel Grp 1,270 $ 50,139
-------
50,139
Consumer Disc. 9.7%
Barnes & Noble* 1,980 67,280
Cendent Corp* 3,910 95,717
InterActive Corp* 1,570 47,320
Mohawk* 920 67,464
-------
277,781
Retail 15.8%
Amerisource Berg 1,050 62,769
Bed, Bath, Beyond* 1,700 65,365
Ebay* 1,520 139,765
Gap, Inc 4,020 97,485
Staples* 2,890 84,995
-------
450,379
Medical 16.5%
Andrx Group* 1,120 31,282
Cytyc Corp* 3,230 81,945
Express Scripts* 1,230 97,453
Forest Labs* 940 53,232
Ivax Corp* 2,843 68,204
Quest Diagnostics* 950 80,702
Universl Hlth Svc* 1,120 58,280
-------
471,098
Computer 22.4%
Cisco* 620 14,694
Dell* 2,630 94,206
First Data Corp* 635 28,270
Intel 3,200 88,320
Microsoft Corp 3,260 92,510
Qualcomm Inc 1,320 96,334
Tech Select SPDR* 2,400 49,680
Vishay Intertec* 4,170 77,479
Xilinx* 2,930 97,598
-------
639,091
Oil 3.6%
Valero Energy 1,380 101,788
-------
101,788
Finance 17.9%
Ace Limited 2,130 90,056
American Int'l Grp 1,160 82,685
Capital One 1,290 88,210
Chelsea Prop Grp 1,460 95,221
Hospitality Prop Tr 2,020 85,446
Washington Mutual 1,800 69,552
-------
511,170
Transportation 0.9%
Tidewater 830 24,734
-------
24,734
Business Services 0.9%
Monster Wrldwde* 1,000 25,720
-------
25,720
Miscellaneous 2.4%
Barra Growth Idx 1,220 69,308
-------
69,308
---------
Total Common Stock 91.9% 2,621,208
(Cost $2,317,276)
Short-Term Investments 8.2%
Money Market Fund 234,425
-------
234,425
Total Value ---------
Of Investments 100.1% 2,855,633
Other Assets
(Liabilities), Net -0.1% (3,302)
---------
TOTAL NET ASSETS 100.0% $ 2,852,331
===========
*Non-income producing during the period.
The accompanying notes are an integral part of these financial statements.
GROWTH FUND
Fund and Performance Information
June 30, 2004
(Unaudited)
TOP FIVE HOLDINGS
Company Industry % of Net
Assets
- ---------------------------------------------
Ebay Retail 4.9 %
Valero Energy Oil 3.6 %
Xilinx Computer 3.4 %
Gap, Inc Retail 3.4 %
Express Scripts Medical 3.4 %
TOP FIVE INDUSTRIES
Industry % of Net Assets
- ---------------------------------------------
Computer 22.4 %
Finance 17.9 %
Medical 16.5 %
Retail 15.8 %
Consumer Discretionary 9.7 %
FUND PERFORMANCE
Total Return
2nd Quarter Year Ended Annualized
2004 6/30/2004 Since
Inception
------------------------------------------
Growth Fund 2.19 % 23.27 % -0.40 %
Lipper Large-Cap
Growth Index 0.95 % 16.08 % -8.31 %
S&P 500 Index 1.71 % 19.10 % -2.18 %
MANOR INVESTMENT FUNDS, INC.
BOND FUND
Schedule of Investments
June 30, 2004
(Unaudited)
Face Value
Description Amount
- ------------------------------------------------------------------------
Government Bonds 89.8%
U.S. Treasury 6.000% Due 08-15-04 100,000 100,563
U.S. Treasury 2.000% Due 11-30-04 300,000 300,469
U.S. Treasury 1.500% Due 02-28-05 200,000 199,625
U.S. Treasury 5.875% Due 11-15-05 50,000 52,359
U.S. Treasury 1.875% Due 11-30-05 300,000 297,875
U.S. Treasury 2.250% Due 02-15-07 100,000 98,093
U.S. Treasury 3.250% Due 08-15-07 200,000 200,313
U.S. Treasury 3.125% Due 10-15-08 200,000 196,187
---------
Total US Government Bonds
(Cost $1,451,305) $ 1,445,484
---------
Short-Term Investments 9.7%
Money Market Funds 156,481
---------
Other Assets Less Liabilities, Net 0.5% 8,864
---------
TOTAL NET ASSETS 100.0%
$ 1,610,829
=========
The accompanying notes are an integral part of these financial statements.
BOND FUND
Fund and Performance Information
June 30, 2004
(Unaudited)
TOP FIVE HOLDINGS
Security % of Net
Assets
- -----------------------------------------------
US Treasury 2.000% due 11/30/04 18.6 %
US Treasury 1.875% due 11/30/05 18.5 %
US Treasury 3.250% due 8/15/07 12.4 %
US Treasury 1.500% due 2/28/05 12.4 %
US Treasury 3.125% due 10/15/08 12.2 %
FUND PERFORMANCE
Total Return
2nd Year Ended Annualized
Quarter 6/30/2004 Since
2004 Inception
- ---------------------------------------------------------------
Bond Fund -1.40 % -0.82 % 4.28 %
Lipper US Government -2.48 % -0.88 % 5.99 %
Lehman Inter. Gov't Index -2.27 % 0.39 % 6.18 %
MANOR INVESTMENT FUNDS, INC.
Statements of Assets and Liabilities
June 30, 2004
(Unaudited)
Manor Growth Bond
Fund Fund Fund
--------- --------- ---------
ASSETS
Investments in Securities $ 2,573,315 $ 2,621,208 $ 1,445,484
(cost of $2,193,431,
$2,317,276 and
$1,451,305, respectively)
Cash and cash equivalents 152,636 234,425 156,481
Receivables: Dividends 1,959 1,336 -
Interest 144 208 9,225
--------- --------- ---------
Total Assets 2,728,054 2,857,177 1,611,190
--------- --------- ---------
LIABILITIES
Accrued expenses 3,824 4,846 361
--------- --------- ---------
Total Liabilities 3,824 4,846 361
--------- --------- ---------
NET ASSETS $ 2,724,230 $ 2,852,331 $ 1,610,829
========= ========= =========
NET ASSETS CONSIST OF:
Capital stock - par value
$ 193 $ 291 $ 152
Paid in capital 2,539,937 2,874,238 1,596,117
Undistributed net investment (9,974) (48,973) 21,958
income
Accumulated net realized (185,810) (277,157) (1,578)
(loss) gain
Net unrealized appreciation 379,884 303,932 (5,820)
--------- --------- ---------
NET ASSETS $ 2,724,230 $ 2,852,331 $ 1,610,829
========= ========= =========
CAPITAL SHARES OUTSTANDING 192,743 291,079 152,753
(10,000,000 authorized shares; --------- --------- ---------
$.001 par value)
NET ASSET VALUE PER SHARE $ 14.13 $ 9.80 $ 10.55
========= ========= =========
The accompanying notes are an integral part of these financial statements.
MANOR INVESTMENT FUNDS, INC.
Statements of Operations
June 30, 2004
(Unaudited)
Manor Growth Bond
Fund Fund Fund
------ ------ ------
Investment Income
Dividends, net of foreign taxes withheld
Of $88, $ - , and $ - , respectively $ 23,472 $ 11,697 $ -
Interest 422 619 37,673
------ ------ ------
Total investment income 23,894 12,316 37,673
Expenses
Advisory and management fee (Note 2) 13,296 13,319 4,214
Professional fees 1,181 1,181 1,181
Custodian fee 2,001 1,510 1,520
Insurance 755 736 497
Registration 200 267 450
Taxes 237 150 150
Other 2,710 3,480 410
------ ------ ------
Total expenses 20,380 20,643 8,422
------ ------ ------
Net expenses 20,380 20,643 8,422
------ ------ ------
Net Investment Income (Loss) 3,514 (8,327) 29,251
------ ------ ------
Realized & Unrealized Gain (Loss) on Investments
(Note 4)
Net realized gain (loss) on Investments (61,895) 29,395 (2,419)
Net change in unrealized
appreciation/ depreciation on
investments 112,950 142,058 (36,852)
-------- -------- --------
Net realized and unrealized gain
(loss) on investments 51,055 171,453 (39,271)
-------- -------- --------
Net Increase (Decrease) in Net Assets
Resulting from Operations $ 54,569 $ 163,126 $(10,020)
======== ======== ========
The accompanying notes are an integral part of these financial statements.
MANOR INVESTMENT FUNDS, INC.
Statements of Changes In Net Assets
June 30, 2004
(Unaudited)
Manor Fund Growth Fund
--------------------- -------------------
6 Months Year 6 Months Year
Ending Ended Ending Ended
June 30 Dec. 31 June 30 Dec. 31
2004 2003 2004 2003
---------- ---------- --------- ---------
Increase (decrease) in Net Assets from Operations
Net investment income (loss)
$ 3,514 $ 967 $ (8,327)$(12,882)
Net realized gain (loss) on
investments (61,895) 3,292 29,395 (58,098)
Net change in unrealized
appreciation/ depreciation on
investments 112,950 579,503 142,058 607,361
-------- ------- ------- -------
Net increase (decrease) in net
assets resulting from operations 54,569 583,762 163,126 536,381
-------- ------- ------- -------
Distributions to Shareholders from
Net investment income (loss) - - - -
Net realized gain (loss) - - - -
-------- ------- ------- -------
Total Distributions - - - -
-------- ------- ------- -------
Capital Share Transactions
Proceeds from shares sold 142,916 384,827 169,828 458,285
Reinvestment of distributions - - - -
Payment for shares redeemed (87,997) (103,388) (36,342) (75,630)
-------- ------- ------- -------
Net increase in net assets from
capital share transactions 54,919 281,439 133,486 382,655
-------- ------- ------- -------
Total Increase in Net Assets 109,488 865,201 296,612 919,036
Net Assets
Beginning of Year 2,614,742 1,749,541 2,555,719 1,636,683
--------- --------- --------- --------
End of Year $2,724,230 $2,614,742 $2,852,331 $2,555,719
Transactions in Shares of Fund
Sold 10,115 31,318 17,629 55,777
Issued in reinvestment of
distributions - - - -
Redeemed (6,292) (8,732) (3,797) (9,606)
-------- ------- ------- -------
Net increase (decrease) in
outstanding shares of the Fund 3,823 22,586 13,832 (46,171)
======== ======= ======= ========
The accompanying notes are an integral part of these financial statements.
Bond Fund
----------------------------
6 Months Year
Ending Ended
June 30 Dec. 31
2004 2003
-------- --------
Increase (decrease) in Net Assets from Operations
Net investment income (loss) $ 29,251 $ 41,863
Net realized gain (loss) on investments (2,419) 37,918
Net change in unrealized
appreciation/depreciation on investments (36,852) (63,072)
-------- --------
Net increase (decrease) in net assets
resulting from operations (10,020) 16,709
-------- --------
Distributions to Shareholders from
Net investment income (loss) - (40,658)
Net realized gain (loss) - (37,777)
-------- --------
Total Distributions - (78,435)
-------- --------
Capital Share Transactions
Proceeds from shares sold 881,241 240,290
Reinvestment of distributions - -
Payment for shares redeemed (1,029,662) (371,299)
-------- --------
Net (decrease) increase in net assets from (148,421) (131,009)
capital share transactions ---------- ----------
Total (Decrease) Increase in Net Assets (158,441) (192,735)
Net Assets
Beginning of Year 1,769,270 1,962,005
----------- -----------
End of Year $ 1,610,829 $ 1,769,270
=========== ===========
Transactions in Shares of Fund
Sold 83,009 14,687
Issued in reinvestment of distributions - 7,414
Redeemed (97,377) (33,746)
----------- -----------
Net (decrease) increase in outstanding
shares of the Fund (14,368) (11,645)
=========== ===========
The accompanying notes are an integral part of these financial statements.
MANOR INVESTMENT FUNDS, INC.
Notes to Financial Statements
June 30, 2004
(Unaudited)
1.ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization: Manor Investment Funds, Inc. (the "Company") is a
non-diversified, open-ended regulated investment company and
was incorporated in the Commonwealth of Pennsylvania on
September 13, 1995. The primary investment objective of
each of the Funds follows: Manor Fund - conservative
capital appreciation and current income, investing primarily
in common stocks of large corporations in the United States;
Growth Fund - long-term capital appreciation, investing
primarily in common stocks of U.S. corporations; Bond Fund -
intermediate-term fixed income, investing primarily in U.S.
Government obligations. The following is a summary of the
Funds' significant accounting policies.
Security Valuations: Equity securities generally are valued by
using market quotations, but may be valued on the basis of
prices furnished by a pricing service when the Advisor
believes such prices accurately reflect the fair market
value of such securities. Securities that are traded on
any stock exchange or on the NASDAQ over-the-counter market
are generally valued by the pricing service at the last
quoted sale price. Lacking a last sale price, an equity
security is generally valued by the pricing service at its
last bid price. When market quotations are not readily
available, when the Advisor determines that the market
quotation or the price provided by the pricing service does
not accurately reflect the current market value, or when
restricted or illiquid securities are being valued, such
securities are valued as determined in good faith by the
Board of Directors. The Board has adopted guidelines for
good faith pricing, and has delegated to the Advisor the
responsibility for determining fair value prices, subject to
review by the Board of Directors.
Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices
furnished by a pricing service when the Advisor believes
such prices accurately reflect the fair market value of such
securities. A pricing service utilizes electronic data
processing techniques based on yield spreads relating to
securities with similar characteristics to determine prices
for normal institutional-size trading units of debt
securities without regard to sale or bid prices. If the
Advisor decides that a price provided by the pricing service
does not accurately reflect the fair market value of the
securities, when prices are not readily available from a
pricing service, or when restricted or illiquid securities
are being valued, securities are valued at fair value as
determined in good faith by the Advisor, subject to review
by the Board of Directors. Short term investments in fixed
income securities with maturities of less than 60 days when
acquired, or which subsequently are within 60 days of
maturity, are valued by using the amortized cost method of
valuation, which the Board has determined will represent
fair value.
Federal Income Taxes: The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are
applicable to regulated investment companies and to
distribute all its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
Distributions to Shareholders: The Fund intends to distribute to
its shareholders substantially all of its net realized
capital gains and net investment income, if any, at year-
end. Distributions will be recorded on ex-dividend date.
Other: The Fund follows industry practice and records security
transactions on the trade date. The specific identification
method is used for determining gains or losses for financial
statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is
recorded on an accrual basis. Discounts and premiums are
amortized over the useful lives of the respective securities
when determined to be material. Withholding taxes on foreign
dividends will be provided for in accordance with the Fund's
understanding of the applicable country's tax rules and
rates.
Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the year. Actual results could
differ from these estimates.
2. INVESTMENT ADVISORY AGREEMENT
The Fund has an investment advisory agreement (the "agreement")
with Morris Capital Advisors, Inc. (the "Advisor"), with
whom certain officers and directors of the Funds are
affiliated, to furnish investment management services to
the Funds. Under the terms of the agreement, the Funds will
pay the Advisor a monthly fee based on the Funds' average
daily net assets at the annual rate of 1.00% for Manor Fund
and Growth Fund and 0.5% for Bond Fund.
Under the terms of the agreement if the aggregate expenses of the
Funds are equal to or greater than 1.5% for Manor Fund and
Growth Fund and 1.00% for Bond Fund of the Funds' net assets
the Advisor will reimburse the Funds for these expenses.
3. INVESTMENT TRANSACTIONS
Investment transactions, excluding short-term investments, for the
six months ended June 30, 2004, were as follows:
Manor Growth Bond
Fund Fund Fund
---------- ---------- ----------
Purchases $ 193,228 $ 358,903 $ 801,375
Proceeds from sales $ 83,297 $ 169,398 $ 980,391
4. FEDERAL INCOME TAXES
Income and long-term capital gain distributions are determined in
accordance with Federal income tax regulations, which may
differ from accounting principles generally accepted in the
United States.
Manor Growth Bond
Fund Fund Fund
------------ ------------ ------------
Federal tax cost of investments
$ 2,193,431 $ 2,317,276 $ 1,451,305
Gross tax appreciation of investments
$ 458,093 $ 526,603 $ 3,804
Gross tax depreciation of investments
( 78,209) ( 222,671) ( 9,625)
Net tax appreciation
$ 379,884 $ 303,932 $ (5,821)
Undistributed ordinary income
$ 3,514 $ - $ 29,251
Undistributed capital gain income
$ - $ - $ -
Accumulated capital losses
$ (185,810) $ (277,157) $ -
The accumulated capital loss carryovers listed above
expire as follows:
Manor Fund Growth Fund
------------ -----------
2007 $ 40,300 $ 3,668
2008 $ - $ 151,266
2009 $ 78,780 $ 45,013
2010 $ 4,835 $ 48,507
2011 $ - $ 58,098
The tax character of distributions paid during the years
ended December 31, 2003 and 2002 were as follows:
Manor Fund Growth Fund Bond Fund
------------- ------------- -------------
2002 2003 2002 2003 2002 2003
------------- ------------- -------------
Ordinary Income - - - - $40,658 $44,818
Long-term capital gain
- - - - $37,777 $ 7,381
MANOR INVESTMENT FUNDS, INC.
FINANCIAL HIGHLIGHTS
AS OF JUNE 30, 2004
MANOR INVESTMENT FUNDS, INC.
MANOR FUND
Financial Highlights
For a share of capital stock outstanding throughout the period
Un-
Audited For the years ended Dec 31,
------- -----------------------------------
2004! 2003 2002 2001 2000 1999
------- -----------------------------------
PER SHARE DATA
Net asset value, beginning of
period $13.84 $10.52 $13.20 $15.76 $17.08 $15.46
Income from investment
operations:
Net investment income (loss) 0.02 - (0.01) (0.02) (0.06) 0.07
Net realized and unrealized
gain (loss) on investments 0.27 3.32 (2.67) (2.54) (1.26) 1.62
---- ---- ---- ---- ---- ----
Total from investment operations 0.29 3.32 (2.68) (2.56) (1.32) 1.69
---- ---- ---- ---- ---- ----
Less distributions from:
Net investment income - - - - - (0.07)
Realized capital gains - - - - - -
---- ---- ---- ---- ---- ----
Total distributions - - - - - (0.07)
---- ---- ---- ---- ---- ----
Net asset value, end of period $14.13 $13.84 $10.52 $13.20 $15.76 $17.08
---- ---- ---- ---- ---- ----
Total Return 2.10% 31.56% -20.30% -16.24% -7.73% 10.95%
---- ---- ---- ---- ---- ----
Ratios and Supplemental Data:
Net assets,
end of period (000) $2,724 $2,615 $1,750 $2,087 $2,569 $2,956
Ratio of expenses to
average net assets 1.50 % 1.50 % 1.50 % 1.50 % 1.50 % 1.50 %
Ratio of net investment income to
average net assets 0.14 % 0.04 % -0.08% -0.11% -0.32% 0.44 %
Portfolio Turnover Rate 3.11 % 4.26 % 26.0 % 28.0 % 16.0 % 19.0 %
------ ------ ------ ------ ------ ------
!6 months ended 6/30/2004
The accompanying notes are an integral part of these financial statements.
MANOR INVESTMENT FUNDS, INC.
GROWTH FUND
Financial Highlights
For a share of capital stock outstanding throughout the period
Un-
Audited For the years ended Dec 31,
------- ------------------------------------
2004! 2003 2002 2001 2000 1999
------- ------------------------------------
PER SHARE DATA
Net asset value, beginning of
period $9.22 $7.08 $8.95 $9.54 $11.72 $10.00
----- ----- ----- ----- ----- -----
Income from investment from operations:
Net investment (loss) (0.03) (0.05) (0.06) (0.05) (0.05) -
Net realized and unrealized 0.61 2.19 (1.81) (0.54) (2.13) 1.72
gain (loss) on investments
----- ----- ----- ----- ----- -----
Total from investment operations 0.58 2.14 (1.87) (0.59) (2.18) 1.72
Less distributions from:
Net investment income - - - - - -
Realized capital gains - - - - - -
----- ----- ----- ----- ----- -----
Total distributions - - - - - -
----- ----- ----- ----- ----- -----
Net asset value, end of period
$9.80 $9.22 $7.08 $8.95 $9.54 $11.72
----- ----- ----- ----- ----- -----
Total Return 6.29% 30.23% -20.89% -18.60% -6.18% -17.20%
----- ----- ----- ----- ----- -----
Ratios and Supplemental Data:
Net assets,
end of period (000) $2,852 $2,556 $1,637 $1,522 $1,528 $1,137
Ratio of expenses to
average net assets 1.50% 1.50% 1.50% 1.50% 1.52% 1.49%(a
Ratio of net investment
income to average net assets -0.43% -0.66% -0.70% -0.53% -0.44% 0.01%(a
Portfolio Turnover Rate 6.14 % 6.53 % 13.2 % 33.6 % 16.0 % 4.0 %
----- ----- ----- ----- ----- -----
*For the period from July 1, 1999 (commencement of operations) to
December 31, 1999
!6 months ended 6/30/2004
(a) Annualized
The accompanying notes are an integral part of these financial statements.
MANOR INVESTMENT FUNDS, INC.
BOND FUND
Financial Highlights
For a share of capital stock outstanding throughout the period
Un-
Audited For the years ended Dec 31,
------- ------------------------------------
2004! 2003 2002 2001 2000 1999
------- ------------------------------------
PER SHARE DATA
Net asset value, beginning of
period $10.58 $10.98 $10.63 $10.39 $9.90 $10.00
----- ----- ----- ----- ----- -----
Income from investment
operations:
Net investment income 0.17 0.26 0.32 0.43 0.46 0.18
Net realized and unrealized
gain (loss) on investments (0.20) (0.17) 0.39 0.23 0.47 (0.11)
----- ----- ----- ----- ----- -----
Total from investment operations (0.03) 0.09 0.71 0.66 0.93 0.07
----- ----- ----- ----- ----- -----
Less distributions from:
Net investment income - (0.25) (0.33) (0.42) (0.44) (0.17)
Realized capital gains - (0.24) (0.03) - - -
----- ----- ----- ----- ----- -----
Total distributions - (0.49) (0.36) (0.42) (0.44) (0.17)
Net asset value, end of period $10.55 $10.58 $10.98 $10.63 $10.39 $9.90
----- ----- ----- ----- ----- -----
Total Return -0.28% 0.82% 6.69% 6.35% 9.39% 0.70%
----- ----- ----- ----- ----- -----
Ratios and Supplemental Data:
Net assets,
end of period (000) $1,611 $1,769 $1,962 $1,476 $803 $427
Ratio of expenses to
average net assets 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%(a
Ratio of net investment
income to average net assets 1.60% 2.30% 2.96% 4.01% 4.45% 3.58%(a
Portfolio Turnover Rate 43.72% 50.61% 26.3% 0.0% 0.0% 0.0%
----- ----- ----- ----- ----- -----
*For the period from July 1, 1999 (commencement of operations) to
December 31, 1999
!6 months ended 6/30/04
(a) Annualized
The accompanying notes are an integral part of these financial statements.
PROXY VOTING PROCEDURES
The Company's Board of Directors has approved proxy voting procedures
for the Company, setting forth guidelines and procedures for the
voting of proxies relating to securities held by the Fund. Records of
the Fund's proxy voting records are maintained and are available for
inspection. The Board is responsible for overseeing the
implementation of the procedures. The proxy voting record of the Fund
can be reviewed on the web site of the Fund at www.ManorFunds.com.
The Proxy voting history is located under Fund Information, Proxy
Voting.
MANOR INVESTMENT FUNDS, INC.
BOARD OF DIRECTORS INFORMATION
June 30, 2004
The business and affairs of the Fund are managed under the direction of
the Funds' Board of Directors. Information pertaining to the Directors
of the Fund are set forth below. The Statement of Additional
Information includes addition information about the Funds' Directors,
and is available without charge, by calling 1-800-787-3334. Each
director may be contacted by writing to the director c/o Manor
Investment Funds, Inc., 15 Chester Commons, Malvern, PA 19355.
Independent Directors
JAMES MCFADDEN
James McFadden is a Director of the Fund, and Chairman of the Audit
Committee. He serves a one-year term, and stands for reelection
annually. He has been a Director since 9/25/1995.
Mr. McFadden is Vice President of Marketing for MBNA Corporation. He
is not a Director for any other public companies.
JOHN MCGINN
John McGinn is a Director of the Fund, and serves on the Audit
Committee. He serves a one-year term, and stands for reelection
annually. He has been a Director since 11/5/2002.
Mr. McGinn is head of Credit Review for Vertex, Inc. He is not a
Director for any other public companies.
FRED MYERS
Fred Myers is a Director of the Fund. He serves a one-year term, and
stands for reelection annually. He has been a Director since
9/25/1995.
Mr. Myers is founding Partner of the accounting firm of Myers &
Associates, CPA's. He is not a Director for any other public
companies.
EDWARD SZKUDLAPSKI
Edward Szkudlapski is a Director of the Fund. He serves a one-year
term, and stands for reelection annually. He has been a Director
since 5/15/2000.
Mr. Szkudlapski is President of Eclipse Business Systems. He is not a
Director for any other public companies.
DONALD THOMPSON
Donald Thompson is a Director of the Fund. He serves a one-year term,
and stands for reelection annually. He has been a Director since
4/20/1999.
Mr. Thompson is a Network Administrator and Healthcare Consultant. He
is not a Director for any other public companies.
ALAN WEINTRAUB
Alan Weintraub is a Director of the Fund. He serves a one-year term,
and stands for reelection annually. He has been a Director since
9/25/1995.
Mr. Weintraub is a Chief Technical Officer with Qumas, Cork, Ireland.
He is not a Director for any other public companies.
Interested Directors
DANIEL A. MORRIS
Daniel A. Morris is a Director of the Fund, and President of Morris
Capital Advisors, Inc., advisor to the Fund. He serves a one-year
term, and stands for reelection annually. He has been a Director
since 9/25/1995.
Mr. Morris is President of the Fund and President of Morris Capital
Advisors, Inc., investment adviser to 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. As President
of the Fund, he is considered an Interested Director. He is not a
Director for any other public companies.
BRUCE LAVERTY
Bruce Laverty is a Director of the Fund, and serves as legal counsel
to the Fund. He serves a one-year term, and stands for reelection
annually. He has been a Director since 9/25/1995.
Mr. Laverty is a Partner of the law firm Valocchi, Fischer & Laverty
legal counsel to the Fund. He is not a Director for any other public
companies.
Manor Investment Funds, Inc.
Fund Office:
15 Chester County Commons
Malvern, PA 19355
610-722-0900 800-787-3334
www.manorfunds.com
ITEM 2. CODE OF ETHICS.
Not applicable for semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTAS.
Not applicable for semi-annual reports.
ITEM 6. [RESERVED.]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED.]
ITEM 9. CONTROLS AND PROCEDURES.
ITEM 10. EXHIBITS.
(a) (1) Code of Ethics - Not applicable for semi-annual reports.
(a) (2) Certifications persuant to Section 302 of the Sarbanes-Oxley
Act of 2002 are attached hereto.
(b) Certification pursuant ot Section 906 of the Sarbanes-Oxley
Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undershgned, thereunto duly authorized.
Manor Investment Funds, Inc.
By /s/ Daniel A. Morris
President
Date 7/30/2004
Pursuant to the requirements of the securities Exchange Act of 1934 and the
Investment Company Act of 1940, this reort has been signed below by the
following persons on hehalf of the registrant and in the capacities and on the
dates indicated.
By /s/ Daniel A. Morris
Daniel A. Morris
President
Date 7/30/2004