June 25, 1996
To Shareholders of the following series of the Manning & Napier Fund:
Blended Asset Series I and II
Flexible Yield Series I, II, and III
Defensive Series
Maximum Horizon Series
Tax Managed Series
Dear Shareholder:
Enclosed are copies of the Semi-Annual Reports for each of the above series of
the Manning & Napier Fund in which you were invested as of April 30, 1996.
We have changed the fiscal year end of the Blended Asset Series I and II and
the three Flexible Yield Series to October 31st, so the enclosed reports cover
the period from December 31st, when the Annual Reports were prepared, to April
30th. From now on, reports for these series will be prepared as of each April
30th and October 31st. The Defensive, Maximum Horizon, and Tax Managed Series
were introduced last November, and they also have fiscal years ending October
31st.
Please contact our Fund Services department at 1-800-4MN-FUND (1-800-466-3863)
if you have any questions about your account or about the Fund.
Sincerely,
/s/ Amy J. Williams
Amy J. Williams
Fund Services Coordinator
<PAGE>
<PAGE>
Manning & Napier Fund, Inc.
BLENDED ASSET SERIES I
Semi-Annual Report
April 30, 1996
<PAGE>
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
When we introduced two new objectives-based series of the Fund, the Defensive
Series and the Maximum Horizon Series, last November, we also changed the
fiscal year of the two existing series, the Blended Asset Series I and II.
Now all four of the objectives-based series have a fiscal year ending on
October 31st, and the schedule for the Annual and Semi-Annual Reports has
changed as well. This report will provide information for the four-month
period since the Annual Report dated December 31, 1995.
As should be expected after the unusually high stock and bond market returns
of 1995, this period has been somewhat unsettled in the markets. Indeed, the
markets have been reacting strongly and quickly to investor expectations and
fears. The specter of inflation was again spooking the markets, especially
following the Bureau of Labor Statistics release showing an unexpectedly large
increase in jobs in the month of February. Because inflation would decrease
the value of future interest payments, bond prices fall when there are fears
of increasing inflation. The employment report also scared the stock market,
as reflected in the 171-point drop in the Dow Jones Industrial Average
following its release.
For a variety of reasons, we expect inflation to remain low. Increasing
global competition provides a downward influence on wages, because companies
can look outside the U.S. for workers if wages increase domestically.
Increased competition also restricts the ability of companies to raise prices.
In addition, the sharp increases in productivity in U.S. factories in the
last few years mean that more output can be created with less labor -- this
also acts against rising wages and prices.
Another component of prices which can lead to inflation is the price of raw
materials. Food and energy prices have increased, due partly on the harsh
winter that most of the nation experienced. Grain prices have also been
affected by increased exports. We are keeping a close watch on commodity
prices, but it should be noted that prices of other commodities have not
increased, and in many cases they are actually declining.
Our long-term overview remains in place. We continue to expect long-term
interest rates to resume their decline and for inflation to remain in check,
while we continue to experience moderate growth. We have kept the allocation
between stocks, bonds, and cash relatively stable over this period, as our
long-term outlook has been steady.
In the stock portion of the portfolio, we continue to hold consumer cyclical
and foreign utilities, and we have reduced our transportation holdings. Our
holdings in technology stocks were relatively small at the beginning of the
year, but we have added technology stocks in the last few months as we
identified potential opportunities.
1
<PAGE>
Management Discussion and Analysis (continued)
In the bond portion of the portfolio, we view the spike in rates as an
opportunity to lengthen the duration of the bonds in order to benefit from
our overview of falling rates. Longer maturity bonds offer higher yields, and
they also offer the greatest opportunity for capital appreciation when
long-term interest rates fall, as we expect.
As we have discussed before, we have positioned the portfolio to benefit from
the expected trends of continued moderate growth in stocks and declining
long-term interest rates in bonds. Our holdings in cash and cash equivalents
are fairly high while we look for attractive investment opportunities.
Although investors should expect some short-term volatility going forward, we
would advise investors to focus on the longer term trends which tend to have a
more important effect on long-term investment success.
We appreciate your confidence and wish you all the best throughout the rest of
1996.
Sincerely,
Manning & Napier Advisors, Inc.
[GRAPHIC]
[Pie Chart]
Asset Allocation - As of 4/30/96
Bonds - 71%
Stocks - 25%
Cash & Equivalents - 4%
2
<PAGE>
Performance Update as of April 30, 1996 (unaudited)
The value of a $10,000 investment in the Manning & Napier Fund, Inc. - Blended
Asset Series I from its inception (9/15/93) to present (4/30/96) as compared
to the Lehman Brothers Intermediate Bond Index and a Balanced Index. 1
<TABLE>
<CAPTION>
Manning & Napier Fund, Inc. - Blended Asset Series I
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $ 11,344 13.44% 13.44%
Inception 2 $ 12,292 22.92% 8.17%
</TABLE>
<TABLE>
<CAPTION>
Lehman Brothers Intermediate Bond Index
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $ 10,785 7.85% 7.85%
Inception 2 $ 11,213 12.13% 4.45%
</TABLE>
<TABLE>
<CAPTION>
Balanced Index
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $ 11,424 14.24% 14.24%
Inception 2 $ 12,300 23.00% 8.19%
</TABLE>
1 The Lehman Brothers Intermediate Bond Index is a market value weighted
measure of approximately 3,260 corporate and government securities. The Index
is comprised of investment grade securities with maturities greater than
one year but less than ten years. The Balanced Index is 30% Standard & Poor's
(S&P) 500 Total Return Index and 70% Lehman Brothers Intermediate Bond Index.
The S&P 500 Total Return Index is an unmanaged capitalization-
weighted measure of 500 widely held common stocks listed on the New York Stock
Exchange, American Stocks Exchange, and Over-The-Counter market. Both Indices'
returns assume reinvestment of income and, unlike Fund returns, do not reflect
any fees or expenses.
2 Performance numbers for the Fund and Indices are calculated from September
15, 1993, the Fund's inception date. The Fund's performance is historical and
may not be indicative of future results.
[GRAPHIC]
LINE CHART
Data for Line Chart to follow:
<TABLE>
<CAPTION>
Manning & Napier Lehman Brothers
Blended Asset Series I Intermediate Bond Index Balanced
<S> <C> <C> <C>
09/15/93* $ 10,000 $ 10,000 $ 10,000
12/31/93 10,092 10,032 10,078
06/30/94 9,671 9,770 9,792
12/31/94 10,012 9,838 9,984
06/30/95 11,578 10,783 11,253
12/31/95 12,123 11,347 12,150
04/30/96 12,292 11,213 12,300
</TABLE>
* Inception date
3
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Value
Shares (Note 2)
<S> <C> <C>
COMMON STOCK - 24.76%
AIR TRANSPORTATION - 1.34%
Federal Express Corp.* 2,625 $211,969
AMUSEMENT & RECREATIONAL SERVICES - 0.02%
Mountasia Entertainment International, Inc. * 1,275 3,108
APPAREL - 2.42%
VF Corp. 6,725 383,325
CHEMICALS & ALLIED PRODUCTS - 0.23%
Alliance Pharmaceutical Corp.* 1,800 32,625
Varitronix International Ltd. (Note 7) 2,000 3,672
36,297
COMMUNICATIONS - 4.40%
RADIO BROADCASTING STATIONS - 0.01%
Children's Broadcasting Corp.* 137 1,147
TELEPHONE COMMUNICATIONS - 4.39%
BCE, Inc. 5,100 200,812
Cable & Wireless plc. - ADR 9,500 222,063
Telefonica de Espana - ADR 5,200 273,650
696,525
697,672
COMPUTER EQUIPMENT - 1.03%
Bay Networks, Inc.* 4,575 144,113
Cabletron Systems, Inc.* 100 7,537
Digital Equipment Corp.* 75 4,481
PSC, Inc.* 800 7,200
163,331
EDUCATIONAL SERVICES - 0.12%
Westcott Communications, Inc.* 900 19,125
ELECTRONICS & ELECTRICAL EQUIPMENT - 6.09%
HOUSEHOLD APPLIANCES - 2.30%
Sunbeam Corporation, Inc. 8,900 123,488
Whirlpool Corp. 4,000 240,500
363,988
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Value
Shares (Note 2)
<S> <C> <C>
ELECTRONICS & ELECTRICAL EQUIPMENT (CONTINUED)
LIGHTING EQUIPMENT - 0.12%
Coleman Company, Inc* 400 $ 18,350
SEMICONDUCTOR - 1.22%
Intel Corp. 2,850 193,087
TELECOMMUNICATIONS EQUIPMENT - 2.45%
ADC Telecommunications, Inc.* 275 11,550
BroadBand Technologies, Inc.* 1,525 38,888
ECI Telecommunications, Ltd. 175 4,572
General Instrument Corp.* 9,975 326,681
Northern Telecom Ltd. 125 6,438
388,129
963,554
ENGINEERING SERVICES - 0.33%
Jacobs Engineering Group, Inc.* 1,875 52,031
FABRICATED METAL PRODUCTS - 0.32%
Keystone International, Inc. 1,050 22,969
Material Sciences Corp.* 1,775 28,400
51,369
FOOD & BEVERAGES - 0.10%
Canandaigua Wine Co., Inc.* 400 12,150
Grist Mill Co.* 550 3,713
15,863
GLASS PRODUCTS - 0.11%
Libbey, Inc. 725 16,856
HEALTH SERVICES - 0.24%
Community Health Systems, Inc.* 250 10,844
Quantum Health Resources, Inc.* 550 7,838
Rehabcare Group, Inc.* 1,000 15,625
U.S. Physical Therapy, Inc.* 325 3,575
37,882
INVESTORS - 0.08%
EK Chor China Motorcycle Co. Ltd. 900 13,275
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Value
Shares (Note 2)
<S> <C> <C>
PLASTIC PRODUCTS - 0.10%
Carlisle Plastics, Inc.* 1,250 $ 6,093
Sun Coast Industries, Inc.* 1,975 9,875
15,968
PRIMARY METAL INDUSTRIES - 0.18%
American Superconductor Corp.* 575 8,266
Gibraltar Steel Corp.* 1,100 19,800
28,066
PRINTING & PUBLISHING - 0.08%
Playboy Enterprises, Inc. - Class A* 225 2,615
Playboy Enterprises, Inc. - Class B* 875 10,390
13,005
RESTAURANTS - 0.08%
Quantum Restaurant Group, Inc.* 800 12,100
RETAIL - 5.47%
DEPARTMENT STORES - 0.14%
Neiman Marcus Group, Inc.* 900 21,600
RETAIL - HOME FURNISHING STORES - 0.12%
Pier 1 Imports, Inc. 1,463 19,567
RETAIL - SHOE STORES - 0.75%
Brown Group, Inc. 7,475 119,600
RETAIL - SPECIALTY STORES - 4.34%
Fabri-Centers of America - Class A* 3,000 30,750
Fabri-Centers of America - Class B* 6,650 66,500
Fingerhut Companies, Inc. 16,350 208,463
Hancock Fabrics, Inc. 10,750 118,250
Tandy Corp. 5,100 264,562
688,525
RETAIL - VARIETY STORES - 0.12%
Family Dollar Stores, Inc. 1,275 19,444
868,736
SHOES - 0.13%
Wolverine World Wide, Inc. 675 20,841
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Shares/Principal Value
Amount (Note 2)
<S> <C> <C>
SOFTWARE - 0.71%
Black Box Corp.* 825 $ 16,500
Borland International, Inc.* 1,350 22,106
Caere Corp.* 700 6,738
Electronic Arts, Inc.* 825 22,069
Founder Hong Kong Ltd. (Note 7) 20,000 9,373
Parametric Technology Corp.* 150 6,037
Symantec Corp.* 1,875 30,234
113,057
TECHNICAL INSTRUMENTS & SUPPLIES - 1.10%
INDUSTRIAL INSTRUMENTS - 0.05%
Measurex Corp. 300 8,700
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 0.94%
Eastman Kodak Co. 1,950 149,175
SURGICAL & MEDICAL INSTRUMENTS - 0.11%
Allied Healthcare Products, Inc. 1,375 14,781
SpaceLabs Medical, Inc.* 150 3,338
18,119
175,994
TEXTILES - 0.08%
Fieldcrest Cannon, Inc.* 625 13,359
TOTAL COMMON STOCK
(Identified Cost $3,537,800) 3,926,783
U.S. TREASURY SECURITIES - 70.92%
U.S. TREASURY BONDS - 21.25%
U.S. Treasury Bond, 6.50%, 5/15/2005 $ 635,000 626,467
U.S. Treasury Bond, 7.25%, 5/15/2016 45,000 45,858
U.S. Treasury Bond, 8.75%, 5/15/2020 420,000 499,275
U.S. Treasury Bond, 7.25%, 8/15/2022 270,000 275,400
U.S. Treasury Bond, 7.50%, 11/15/2024 1,820,000 1,922,375
TOTAL U.S. TREASURY BONDS
(Identified Cost $3,411,597) 3,369,375
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Shares/Principal Value
Amount (Note 2)
<S> <C> <C>
U.S. TREASURY NOTES - 49.67%
U.S. Treasury Note, 6.50%, 4/30/1997 $ 300,000 $ 302,250
U.S. Treasury Note, 5.50%, 7/31/1997 400,000 398,500
U.S. Treasury Note, 6.125%, 8/31/1997 225,000 225,281
U.S. Treasury Note, 5.375%, 11/30/1997 1,500,000 1,486,875
U.S. Treasury Note, 5.875%, 4/30/1998 1,615,000 1,609,953
U.S. Treasury Note, 5.125%, 12/31/1998 595,000 579,939
U.S. Treasury Note, 6.75%, 6/30/1999 300,000 304,125
U.S. Treasury Note, 6.875%, 8/31/1999 450,000 457,594
U.S. Treasury Note, 7.75%, 12/31/1999 20,000 20,906
U.S. Treasury Note, 7.125%, 2/29/2000 2,200,000 2,256,375
U.S. Treasury Note, 5.25%, 1/31/2001 245,000 233,745
TOTAL U.S. TREASURY NOTES
(Identified Cost $7,929,190) 7,875,543
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $11,340,787) 11,244,918
U.S. GOVERNMENT AGENCIES - 0.93%
MORTGAGE BACKED SECURITIES
GNMA Pool #174225, 9.50%, 8/15/2016 5,993 6,418
GNMA Pool #286310, 9.00%, 2/15/2020 47,633 50,045
GNMA Pool #385753, 9.00%, 7/15/2024 86,192 90,556
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $146,098) 147,019
SHORT-TERM INVESTMENTS - 1.18%
Dreyfus U.S. Treasury Money Market Reserves
(Identified Cost $187,592) 187,592 187,592
TOTAL INVESTMENTS - 97.79%
(Identified Cost $15,212,277) 15,506,312
OTHER ASSETS, LESS LIABILITIES - 2.21% 350,206
NET ASSETS - 100% $15,856,518
*Non - income producing security
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Federal Tax Information - April 30, 1996 (unaudited)
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At April 30, 1996, the net unrealized appreciation based on identified cost for
federal income tax purposes of $15,212,277 was as follows:
<S> <C>
Aggregate gross unrealized appreciation for all investments in
which there was an excess of value over tax cost $544,077
Aggregate gross unrealized depreciation for all investments in
which there was an excess of tax cost over value _250042
UNREALIZED APPRECIATION - NET $294,035
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS & LIABILITIES (UNAUDITED)
APRIL 30, 1996
<S> <C>
ASSETS:
Investments, at value (Identified Cost $15,212,277)(Note 2) $15,506,312
Cash 1,220
Receivable for securities sold 2,758,582
Interest receivable 199,808
Receivable for fund shares sold 50,000
Dividends receivable 336
Prepaid expense 187
TOTAL ASSETS 18,516,445
LIABILITIES:
Accrued management fees (Note 3) 15,808
Accrued Directors' fees (Note 3) 4,104
Transfer agent fees payable (Note 3) 996
Payable for securities purchased 2,558,530
Payable for fund shares redeemed 70,525
Audit fee payable 5,419
Other payables and accrued expenses 4,545
TOTAL LIABILITIES 2,659,927
NET ASSETS FOR 1,458,174 SHARES OUTSTANDING $15,856,518
NET ASSETS CONSIST OF:
Capital Stock $ 14,582
Additional paid-in-capital 15,344,033
Undistributed net investment income 146,137
Accumulated net realized gain on investments 57,731
Net unrealized appreciation on investments 294,035
TOTAL NET ASSETS $15,856,518
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($15,856,518/1,458,174 shares) $ 10.87
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE FOUR MONTHS ENDED APRIL 30, 1996
<S> <C>
INVESTMENT INCOME:
Interest $183,466
Dividends 12,619
Total Investment Income 196,085
EXPENSES:
Management fees (Note 3) 41,508
Directors' fees (Note 3) 2,292
Transfer agent fees (Note 3) 996
Audit fee 4,939
Registration & filing fees 2,996
Custodian fee 1,984
Miscellaneous 933
Total Expenses 55,648
Less Waiver of Expenses (Note 3) (5,700)
Net Expenses 49,948
NET INVESTMENT INCOME 146,137
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments 24,678
Net change in unrealized appreciation on investments 11,397
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 36,075
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $182,212
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES (UNAUDITED)
For the Four For the Year
Months Ended Ended
4/30/96 12/31/95
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 146,137 $ 254,925
Net realized gain on investments 24,679 608,702
Net change in unrealized appreciation on investments 11,397 341,625
Net increase in net assets from operations 182,213 1,205,252
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income - (254,925)
In excess of net investment income - (3,886)
From net realized gains - (564,923)
Total distributions to shareholders - (823,734)
CAPITAL STOCK ISSUED AND REDEEMED:
Net increase in net assets from capital share
transactions (Note 5) 6,155,810 4,617,621
Net increase in net assets 6,338,023 4,999,139
NET ASSETS:
Beginning of period 9,518,495 4,519,356
End of period (including undistributed net investment
income of $146,137 and $0, respectively) $ 15,856,518 $ 9,518,495
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (UNAUDITED)
For the Period
9/15/93
For the Four For the Year For the Year (commencement
Months Ended Ended Ended of operations) to
4/30/96 12/31/95 12/31/94 12/31/93
Per share data (for a share outstanding throughout
each period )
<S> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.72 $ 9.72 $ 10.05 $ 10.00
Income from investment operations:
Net investment income 0.100 0.342 0.200 0.045
Net realized and unrealized gain (loss)
on investments 0.050 1.698 (0.280) 0.045
Total from investment operations 0.150 2.040 (0.080) 0.090
Less distributions to shareholders:
From net investment income - (0.342) (0.203) (0.040)
In excess of net investment income - (0.005) - -
From net realized gain on investments - (0.693) (0.040) -
In excess of net realized gains - - (0.007) -
Total distributions to shareholders - (1.040) (0.250) (0.040)
NET ASSET VALUE - END OF PERIOD $ 10.87 $ 10.72 $ 9.72 $ 10.05
Total Return 1 1.40% 21.08% (0.80%) 0.93%
Ratios (to average net assets) / Supplemental Data:
Expenses 1.20%2** 1.20%** 1.20%* 1.20%2*
Net investment income 3.51%2** 3.64%** 3.40%* 2.47%2*
Portfolio turnover 19% 72% 45% 1%
Average commission rate paid $ 0.0460 $ 0.0689 - -
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 15,857 $ 9,518 $ 4,519 $ 475
*The investment advisor did not impose its management fee and paid a portion of the Fund's expenses. If these
expenses had been incurred by the Fund, expenses would have been limited to that allowed by state securities law.
** The investment advisor waived a portion of its management fee.
If the full expenses had been incurred by the Fund in either instance above, the net investment income per share and
the ratios would be as follows:
Net investment income $ 0.096 $ 0.311 $ 0.124 $ 0.021
Ratios (to average net assets):
Expenses 1.34%2 1.53% 2.50% 2.50%2
Net investment income 3.37%2 3.31% 2.10% 1.17%2
1 Represents aggregate total return for the period indicated.
2 Annualized
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Blended Asset Series I (the "Fund") is a no-load diversified series of
Manning & Napier Fund, Inc. (the "Corporation"). The Corporation is
organized as a Maryland Corporation and is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment
company.
The total authorized capital stock of the Corporation consists of one
billion shares of common stock each having a par value of $0.01. As of April
30, 1996, 760 million shares have been designated in total among 19 series,
of which 50 million have been designated as Blended Asset Series I Class K
Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities,
options and corporate bonds, listed on an exchange are valued at the latest
quoted sales price of the exchange on which the security is traded most
extensively. Securities not traded on valuation date or securities not
listed on an exchange are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed
securities, will normally be valued on the basis of evaluated bid prices.
Securities for which representative prices are not available from the
Fund's pricing service are valued at fair value as determined in good faith
by the Fund's Board of Directors.
Short-term investments that mature in sixty (60) days or less are valued
at amortized cost.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are
purchased or sold. Dividend income is recorded on the ex-dividend date.
Interest income and expenses are recorded on an accrual basis.
Most expenses of the Corporation can be attributed to a specific fund.
Expenses which cannot be directly attributed are apportioned among the funds
in the Corporation.
14
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES
The Fund's policy is to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies. The Fund is not
subject to federal income or excise tax to the extent the Fund distributes to
shareholders each year its taxable income, including any net realized gains
on investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made
in the financial statements.
The Fund uses the identified cost method for determining realized gain or
loss on investments for both financial statement and federal income tax
reporting purposes.
DISTRIBUTION OF INCOME AND GAINS
Distributions to shareholders of net investment income are made
semi-annually. Distributions are recorded on the ex-dividend date.
Distributions of net realized gains are distributed annually. An additional
distribution may be necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, foreign denominated investments or
character reclassification between net income and net gains. As a result,
net investment income (loss) and net investment gain (loss) on investment
transactions for a reporting period may differ significantly from
distributions to shareholders during such period. As a result, the Fund may
periodically make reclassification among its capital accounts without
impacting the Fund's net asset value.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars.
Foreign currency amounts are translated into U.S. dollars on the following
basis: a) investment securities, other assets and liabilities are converted
to U.S. dollars based upon current exchange rates; and b) purchases and sales
of securities and income and expenses are converted into U.S. dollars based
upon the currency exchange rates prevailing on the respective dates of such
transactions.
Gains and losses attributable to foreign currency exchange rates are
recorded for financial statement purposes as net realized gains and losses on
investments. The portion of both realized and unrealized gains and losses on
investments that result from fluctuations in foreign currency exchange rates
is not separately stated.
15
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Manning & Napier
Advisors, Inc. (the "Advisor"), for which the Fund pays the Advisor a fee,
computed daily and payable monthly, at an annual rate of 1.0% of the Fund's
average daily net assets. The fee amounted to $41,508 for the four months
ended April 30, 1996.
Under the Fund's Investment Advisory Agreement (the "Agreement"),
personnel of the Advisor provide the Fund with advice and assistance in the
choice of investments and the execution of securities transactions, and
otherwise maintain the Fund's organization. The Advisor also provides the
Fund with necessary office space and portfolio accounting and bookkeeping
services. The salaries of all officers of the Fund and of all Directors who
are "affiliated persons" of the Fund or of the Advisor, and all personnel of
the Fund or of the Advisor performing services relating to research,
statistical and investment activities are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary,
pay other expenses of the Fund in order to maintain total expenses for the
Fund at no more than 1.20% of average daily net assets each year.
Accordingly, the Advisor waived fees of $5,700 which is reflected as a
reduction of expenses on the Statement of Operations. The fee waiver and
assumption of expenses by the Advisor is voluntary and may be terminated at
any time.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $996 the four months ended April 30,
1996.
Manning & Napier Investor Services, Inc., a registered broker-dealer
affiliate of the Advisor, acts as distributor for the Fund's shares. The
services of Manning & Napier Investor Services, Inc. are provided at no
additional cost to the Fund.
The compensation of the non-affiliated Directors totaled $2,292 for the
four months ended April 30, 1996.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term securities, were
$8,413,362 and $2,231,119, respectively, for the four months ended April 30,
1996.
16
<PAGE>
Notes to Financial Statements (unaudited)
5. CAPITAL STOCK TRANSACTIONS
<TABLE>
<CAPTION>
Transactions in shares of Blended Asset Series I Class K Common Stock were:
For the Four For the Year
Months Ended Ended
4/30/96 12/31/95
Shares Amount Shares Amount
---------------------------------------------------------------------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Sold 659,110 $7,123,600 406,586 $4,437,737
Reinvested 0 0 75,731 811,707
Redeemed (89,082) (967,790) (58,913) (631,823)
Total 570,028 $6,155,810 423,404 $4,617,621
</TABLE>
6. FINANCIAL INSTRUMENTS
The Fund may trade in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include
written options, forward foreign currency exchange contracts, and futures
contracts and may involve, to a varying degree, elements of risk in excess of
the amounts recognized for financial statement purposes. No such investments
were held by the Fund on April 30, 1996.
7. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments
involves special risks and considerations not typically associated with
investing in securities of U.S. companies and the United States government.
These risks include revaluation of currencies and future adverse political
and economic developments. Moreover, securities of many foreign companies
and foreign governments and their markets may be less liquid and their prices
more volatile than those of securities of comparable U.S. companies and the
United States government.
8. CHANGE IN FISCAL YEAR END
Effective January 1, 1996, the Fund changed its fiscal year end from
December 31 to October 31.
9. SPECIAL MEETING OF SHAREHOLDERS
On April 10, 1996, a special meeting of the Corporation was held for the
purpose of electing directors. The following directors have been elected:
Stephen B. Ashley, B. Reuben Auspitz, Martin F. Birmingham, Peter L. Faber,
and Harris H. Rusitzky.
17
<PAGE>
<PAGE>
<PAGE>
Manning & Napier Fund, Inc.
BLENDED ASSET SERIES II
Semi-Annual Report
April 30, 1996
<PAGE>
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
When we introduced two new objectives-based series of the Fund, the
Defensive Series and the Maximum Horizon Series, last November, we also
changed the fiscal year of the two existing series, the Blended Asset Series
I and II. Now all four of the objectives-based series have a fiscal year
ending on October 31st, and the schedule for the Annual and Semi-Annual
Reports has changed as well. This report will provide information for the
four-month period since the Annual Report dated December 31, 1995.
As should be expected after the unusually high stock and bond market
returns of 1995, this period has been somewhat unsettled in the markets.
Indeed, the markets have been reacting strongly and quickly to investor
expectations and fears. The specter of inflation was again spooking the
markets, especially following the Bureau of Labor Statistics release showing
an unexpectedly large increase in jobs in the month of February. Because
inflation would decrease the value of future interest payments, bond prices
fall when there are fears of increasing inflation. The employment report
also scared the stock market, as reflected in the 171-point drop in the Dow
Jones Industrial Average following its release.
For a variety of reasons, we expect inflation to remain low. Increasing
global competition provides a downward influence on wages, because companies
can look outside the U.S. for workers if wages increase domestically.
Increased competition also restricts the ability of companies to raise
prices. In addition, the sharp increases in productivity in U.S. factories
in the last few years mean that more output can be created with less labor --
this also acts against rising wages and prices.
Another component of prices which can lead to inflation is the price of
raw materials. Food and energy prices have increased, due partly on the
harsh winter that most of the nation experienced. Grain prices have also
been affected by increased exports. We are keeping a close watch on
commodity prices, but it should be noted that prices of other commodities
have not increased, and in many cases they are actually declining.
Our long-term overview remains in place. We continue to expect long-term
interest rates to resume their decline and for inflation to remain in check,
while we continue to experience moderate growth. We have kept the allocation
between stocks, bonds, and cash relatively stable over this period, as our
long-term outlook has been steady.
In the stock portion of the portfolio, we continue to hold consumer
cyclical and foreign utilities, and we have reduced our transportation
holdings. Our holdings in technology stocks were relatively small at the
beginning of the year, but we have added technology stocks in the last few
months as we identified potential opportunities.
1
<PAGE>
Management Discussion and Analysis (continued)
In the bond portion of the portfolio, we view the spike in rates as an
opportunity to lengthen the duration of the bonds in order to benefit from
our overview of falling rates. Longer maturity bonds offer higher yields,
and they also offer the greatest opportunity for capital appreciation when
long-term interest rates fall, as we expect.
As we have discussed before, we have positioned the portfolio to benefit
from the expected trends of continued moderate growth in stocks and declining
long-term interest rates in bonds. Our holdings in cash and cash equivalents
are fairly high while we look for attractive investment opportunities.
Although investors should expect some short-term volatility going forward, we
would advise investors to focus on the longer term trends which tend to have
a more important effect on long-term investment success.
We appreciate your confidence and wish you all the best throughout the
rest of 1996.
Sincerely,
Manning & Napier Advisors, Inc.
[GRAPHIC]
[Pie Chart]
Bonds - 46%
Stocks - 49%
Cash & Equivalents - 5%
2
<PAGE>
Performance Update as of April 30, 1996 (unaudited)
The value of a $10,000 investment in the Manning & Napier Fund, Inc. - Blended
Asset Series II from its inception (10/12/93) to present (4/30/96) as
compared to the Lehman Brothers Intermediate Bond Index and a Balanced
Index. 1
<TABLE>
<CAPTION>
Manning & Napier Fund, Inc. - Blended Asset Series II
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $ 12,202 22.02% 22.02%
Inception 2 $ 14,016 40.16% 14.14%
</TABLE>
<TABLE>
<CAPTION>
Lehman Brothers Intermediate Bond Index
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $ 10,785 7.85% 7.85%
Inception 2 $ 11,127 11.27% 4.27%
</TABLE>
<TABLE>
<CAPTION>
Balanced Index
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $ 11,909 19.09% 19.09%
Inception 2 $ 13,035 30.35% 10.94%
</TABLE>
1 The Lehman Brothers Intermediate Bond Index is a market value weighted
measure of approximately 3,260 corporate and government securities. The
Index is comprised of investment grade securities with maturities greater
than one year but less than ten years. The Balanced Index is 50% Standard &
Poor's (S&P) 500 Total Return Index and 50% Lehman Brothers Aggregate Bond
Index. The S&P 500 Total Return Index is an unmanaged
capitalization-weighted measure of 500 widely held common stocks listed on
the New York Stock Exchange, American Stock Exchange, and Over-The-Counter
market. The Lehman Brothers Aggregate Bond Index is a market value weighted
measure of approximately 5,400 corporate, government, and mortgage backed
securities. The Index is comprised of investment grade securities with
maturities greater than one year. Both Indices' returns assume reinvestment
of income and, unlike Fund returns, do not reflect any fees or expenses.
2 Performance numbers for the Fund and Indices are calculated from October 12,
1993, the Fund's inception date. The Fund's performance is historical and
may not be indicative of future results.
[GRAPHIC]
Line Chart
Date for Line Chart to follow:
<TABLE>
<CAPTION>
Manning & Napier Blended Asset Series II Lehman Brothers Intermediate Bond Index Balanced Index
<S> <C> <C> <C>
10/12/93* $ 10,000 $ 10,000 $ 10,000
12/31/93 9,982 9,956 10,056
06/30/94 9,662 9,695 9,693
12/31/94 10,333 9,764 9,978
06/30/95 12,621 10,701 11,550
12/31/95 13,707 11,261 12,743
04/30/96 14,016 11,127 13,035
</TABLE>
*Inception date
3
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Value
Shares (Note 2)
<S> <C> <C>
COMMON STOCK - 49.23%
AIR TRANSPORTATION - 2.29%
Federal Express Corp.* 7,475 $603,606
AMUSEMENT & RECREATIONAL SERVICES - 0.02%
Mountasia Entertainment International, Inc.* 2,000 4,875
APPAREL - 3.28%
VF Corp. 15,200 866,400
CHEMICAL & ALLIED PRODUCTS - 1.66%
BIOLOGICAL PRODUCTS - 0.58%
Alliance Pharmaceutical Corp.* 8,450 153,156
HOUSEHOLD PRODUCTS - 0.68%
Procter & Gamble Co. 2,125 179,563
INDUSTRIAL ORGANIC CHEMICALS - 0.40%
International Specialty Products, Inc.* 7,025 87,812
Varitronix International Limited (Note 7) 9,000 16,523
104,335
437,054
COMMUNICATIONS - 3.01%
TELEPHONE COMMUNICATIONS - 3.00%
BCE, Inc. 6,650 261,844
Cable & Wireless plc. - ADR 12,600 294,525
Telefonica de Espana - ADR 4,450 234,181
790,550
TELEVISION & RADIO BROADCASTING STATIONS - 0.01%
Children's Broadcasting Corp.* 312 2,613
793,163
COMPUTER EQUIPMENT - 2.08%
Bay Networks, Inc.* 14,775 465,413
Cabletron Systems, Inc.* 450 33,919
Digital Equipment Corp.* 575 34,356
PSC, Inc.* 1,725 15,525
549,213
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Value
Shares (Note 2)
<S> <C> <C>
CRUDE PETROLEUM & NATURAL GAS - 3.52%
Burlington Resources, Inc. 13,025 $ 485,181
Seagull Energy Corp.* 18,250 444,844
930,025
EDUCATIONAL SERVICES - 0.11%
Westcott Communications, Inc.* 1,350 28,688
ELECTRONICS & ELECTRICAL EQUIPMENT - 9.02%
HOUSEHOLD APPLIANCES - 2.97%
Sunbeam Corporation, Inc. 29,500 409,313
Whirlpool Corp. 6,250 375,781
785,094
LIGHTING EQUIPMENT - 0.16%
Coleman Company, Inc.* 950 43,581
SEMICONDUCTORS - 2.26%
Intel Corp. 8,800 596,200
TELECOMMUNICATION EQUIPMENT - 3.63%
ADC Telecommunications, Inc.* 1,050 44,100
BroadBand Technologies, Inc.* 3,250 82,875
ECI Telecommunications Ltd. 1,025 26,778
General Instrument Corp.* 24,175 791,731
Northern Telecom Ltd. 250 12,875
958,359
2,383,234
ENGINEERING SERVICES - 0.31%
Jacobs Engineering Group, Inc.* 3,000 83,250
FABRICATED METAL PRODUCTS - 0.31%
Keystone International, Inc. 1,725 37,734
Material Sciences Corp.* 2,850 45,600
83,334
FOOD & BEVERAGES - 0.09%
Canandaigua Wine Co., Inc.* 600 18,225
Grist Mill Co.* 950 6,413
24,638
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Value
Shares (Note 2)
<S> <C> <C>
GLASS PRODUCTS - 0.97%
Corning, Inc. 6,625 $ 30,219
Libbey, Inc. 1,150 26,737
256,956
HEALTH SERVICES - 2.36%
Caremark International, Inc. 20,075 554,572
Community Health Systems, Inc.* 600 26,025
Quantum Health Resources, Inc.* 725 10,331
Rehabcare Group, Inc.* 1,800 28,125
U.S. Physical Therapy, Inc.* 375 4,125
623,178
INVESTORS - 0.08%
EK Chor China Motorcycle Co. Ltd. 1,375 20,281
PLASTIC PRODUCTS - 0.10%
Carlisle Plastics, Inc.* 2,100 10,238
Sun Coast Industries, Inc.* 3,050 15,250
25,488
PRIMARY METAL INDUSTRIES - 0.17%
American Superconductor Corp.* 900 12,938
Gibraltar Steel Corp.* 1,775 31,950
44,888
PRINTING & PUBLISHING - 0.08%
Playboy Enterprises, Inc. - Class A* 625 7,266
Playboy Enterprises, Inc. - Class B* 1,100 13,063
20,329
RESTAURANTS - 2.07%
McDonald's Corp. 10,800 517,050
Quantum Restaurant Group, Inc.* 1,900 28,738
545,788
RETAIL - 9.77%
DEPARTMENT STORES - 0.13%
Neiman Marcus Group, Inc.* 1,400 33,600
RETAIL - HOME FURNISHING STORES - 0.17%
Pier 1 Imports, Inc. 3,386 45,288
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Value
Shares (Note 2)
<S> <C> <C>
RETAIL (continued)
RETAIL - SHOE STORES - 0.92%
Brown Group, Inc. 15,275 $ 44,400
RETAIL - SPECIALTY STORES - 8.43%
Fabri-Centers of America - Class A* 13,050 133,762
Fabri-Centers of America - Class B* 12,875 128,750
Fingerhut Companies, Inc. 24,825 316,519
Hancock Fabrics, Inc. 15,775 173,525
Home Depot, Inc. 16,900 800,637
Tandy Corp. 13,000 674,375
2,227,568
RETAIL - VARIETY STORES - 0.12%
Family Dollar Stores, Inc. 2,000 30,500
2,581,356
SHOES - 0.12%
Wolverine World Wide, Inc. 987 30,474
SOFTWARE - 4.16%
Black Box Corp.* 1,300 26,000
Borland International, Inc.* 2,775 45,441
Caere Corp.* 1,050 10,106
Electronic Arts, Inc.* 2,200 58,850
Founder Hong Kong Ltd. (Note 7) 42,000 19,684
Oracle Corp.* 25,275 853,031
Parametric Technology Corp.* 625 25,156
Symantec Corp.* 3,725 60,066
1,098,334
TECHNICAL INSTRUMENTS & SUPPLIES - 2.16%
INDUSTRIAL INSTRUMENTS - 0.15%
Measurex Corp. 1,400 40,600
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 1.87%
Eastman Kodak Co. 6,450 493,425
SURGICAL & MEDICAL INSTRUMENTS - 0.14%
Allied Healthcare Products, Inc. 2,250 24,187
SpaceLabs Medical Inc.* 550 12,238
36,425
570,450
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Shares/Principal Value
Amount (Note 2)
<S> <C> <C>
TEXTILES - 0.07%
Fieldcrest Cannon, Inc.* 925 $ 9,771
UTILITIES - ELECTRIC - 1.42%
Enersis S.A. - ADR 12,600 374,850
TOTAL COMMON STOCK
(Identified Cost $11,384,610) 12,999,623
U.S. TREASURY SECURITIES - 46.30%
U.S. TREASURY BONDS - 21.65%
U.S. Treasury Bond, 7.25%, 5/15/2016 $ 25,000 25,476
U.S. Treasury Bond, 7.875%, 2/15/2021 700,000 762,781
U.S. Treasury Bond, 7.25%, 8/15/2022 2,585,000 2,636,700
U.S. Treasury Bond, 7.50%, 11/15/2024 1,400,000 1,478,750
U.S. Treasury Bond, 6.875%, 8/15/2025 825,000 815,203
TOTAL U.S. TREASURY BONDS
(Identified Cost $5,826,085) 5,718,910
U.S. TREASURY NOTES - 22.76%
U.S. Treasury Note, 6.125%, 7/31/1996 700,000 701,312
U.S. Treasury Note, 7.50%, 12/31/1996 500,000 506,406
U.S. Treasury Note, 5.50%, 9/30/1997 40,000 39,800
U.S. Treasury Note, 5.375%, 11/30/1997 100,000 99,125
U.S. Treasury Note, 5.00%, 1/31/1998 1,250,000 1,229,296
U.S. Treasury Note, 4.75%, 10/31/1998 45,000 43,566
U.S. Treasury Note, 5.125%, 11/30/1998 15,000 14,625
U.S. Treasury Note, 6.875%, 8/31/1999 145,000 147,447
U.S. Treasury Note, 7.75%, 12/31/1999 20,000 20,906
U.S. Treasury Note, 7.125%, 2/29/2000 245,000 251,278
U.S. Treasury Note, 6.25%, 5/31/2000 2,700,000 2,687,342
U.S. Treasury Note, 6.125%, 9/30/2000 225,000 222,750
U.S. Treasury Note, 6.25%, 2/15/2003 50,000 49,109
TOTAL U.S. TREASURY NOTES
(Identified Cost $6,062,770) 6,012,962
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Shares/Principal Value
Amount (Note 2)
<S> <C> <C>
U.S. TREASURY BILLS - 1.89%
U.S. Treasury Bill, 5/16/1996 (Identified Cost $498,990) $ 500,000 $ 498,990
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $12,387,845) 12,230,862
SHORT-TERM INVESTMENTS - 2.70%
Dreyfus U.S. Treasury Money Market Reserves
(Identified Cost $713,338) 713,338 713,338
TOTAL INVESTMENTS - 98.23%
(Identified Cost $24,485,793) 25,943,823
OTHER ASSETS, LESS LIABILITIES - 1.77% 467,195
NET ASSETS - 100% $26,411,018
</TABLE>
*Non - income producing security
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At April 30, 1996, the net unrealized appreciation based on identified cost for
federal income tax purposes of $24,485,793 was as follows:
<S> <C>
<C>
Aggregate gross unrealized appreciation for all investments in which there
was an excess of value over tax cost $1,915,758
Aggregate gross unrealized depreciation for all investments in which there
was an excess of tax cost over value (457,728)
UNREALIZED APPRECIATION - NET $1,458,030
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS & LIABILITIES (unaudited)
APRIL 30, 1996
<S> <C>
ASSETS:
Investments, at value (Identified Cost $24,485,793)(Note 2) $25,943,823
Cash 276,567
Interest receivable 230,959
Dividends receivable 7,994
Prepaid expense 323
TOTAL ASSETS 26,459,666
LIABILITIES:
Accrued management fees (Note 3) 24,159
Accrued Directors' fees (Note 3) 4,109
Transfer agent fees payable (Note 3) 1,838
Payable for securities purchased 6,900
Audit fee payable 4,939
Custodian fee payable 329
Other payables and accrued expenses 6,374
TOTAL LIABILITIES 48,648
NET ASSETS FOR 2,162,008 SHARES OUTSTANDING $26,411,018
NET ASSETS CONSIST OF:
Capital Stock $ 21,620
Additional paid-in-capital 24,437,830
Undistributed net investment income 196,724
Accumulated net realized gain on investments 296,814
Net unrealized appreciation on investments 1,458,030
TOTAL NET ASSETS $26,411,018
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($26,411,018/2,162,008 shares) $ 12.22
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS (unaudited)
FOR THE FOUR MONTHS ENDED APRIL 30, 1996
INVESTMENT INCOME:
<S> <C>
Interest $244,948
Dividends 42,242
Total Investment Income 287,190
EXPENSES:
Management fees (Note 3) 76,582
Directors' fees (Note 3) 2,292
Transfer agent fees (Note 3) 1,838
Audit fee 4,939
Registration & filing fees 3,601
Custodian fee 3,174
Miscellaneous 1,764
Total Expenses 94,190
Less Waiver of Expenses (Note 3) (2,423)
Net Expenses 91,767
NET INVESTMENT INCOME 195,423
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments 162,265
Net change in unrealized appreciation on investments 206,840
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 369,105
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $564,528
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES (unaudited)
For the Four For the
Months Ended Year Ended
04/30/96 12/31/95
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income $ 195,423 $ 334,223
Net realized gain on investments 162,265 1,934,431
Net change in unrealized appreciation on investments 206,840 1,107,105
Net increase in net assets from operations 564,528 3,375,759
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income - (330,774)
From net realized gains - (1,817,057)
Total distributions to shareholders - (2,147,831)
CAPITAL STOCK ISSUED AND REDEEMED:
Net increase in net assets from capital share
transactions (Note 5) 5,327,555 12,077,417
Net increase in net assets 5,892,083 13,305,345
NET ASSETS:
Beginning of period 20,518,935 7,213,590
End of period (including undistributed net investment
income of $196,724 and $1,301, respectively) $ 26,411,018 $20,518,935
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (unaudited)
For the Period
10/12/93
For the Four For the For the (commencement
Months Ended Year Ended Year Ended of operations)
04/30/96 12/31/95 12/31/94 to 12/31/93
Per share data (for a share outstanding throughout
each period )
<S> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 11.95 $ 10.12 $ 9.98 $ 10.00
Income from investment operations:
Net investment income 0.090 0.238 0.108 0.014
Net realized and unrealized gain (loss)
on investments 0.180 3.052 0.243 (0.032)
Total from investment operations 0.270 3.290 0.351 (0.018)
Less distributions to shareholders:
From net investment income - (0.237) (0.119) (0.002)
From net realized gain on investments - (1.223) (0.092) -
Total distributions to shareholders - (1.460) (0.211) (0.002)
NET ASSET VALUE - END OF PERIOD $ 12.22 $ 11.95 $ 10.12 $ 9.98
Total Return 1 2.26% 32.64% 3.52% (0.18%)
Ratios (to average net assets) / Supplemental Data:
Expenses 1.20%2** 1.20%** 1.20%* 1.20%2*
Net investment income 2.55%2** 2.53%** 2.12%* 1.94%2*
Portfolio turnover 9% 63% 19% 0%
Average commission rate paid $ 0.0452 $ 0.0635 - -
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 26,411 $ 20,519 $ 7,214 $ 475
* The investment advisor did not impose its management fee and paid a portion of the Fund's expenses. If these expenses
had been incurred by the Fund for the period ended December 31, 1993, expenses would have been limited to that
allowed by state securities law.
** The investment advisor waived a portion of its management fee.
If the full expenses had been incurred by the Fund in either instance above, the net investment income per share and the
ratios would have been as follows:
Net investment income $ 0.089 $ 0.226 $ 0.051 $ 0.005
Ratios (to average net assets):
Expenses 1.23%2 1.33% 2.31% 2.50%2
Net investment income 2.52%2 2.40% 1.01% 0.64%2
1 Represents aggregate total return for the period indicated.
2 Annualized
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Blended Asset Series II (the "Fund") is a no-load diversified series of
Manning & Napier Fund, Inc. (the "Corporation"). The Corporation is
organized as a Maryland Corporation and is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment
company.
The total authorized capital stock of the Corporation consists of one
billion shares of common stock each having a par value of $0.01. As of April
30, 1996, 760 million shares have been designated in total among 19 series,
of which 50 million have been designated as Blended Asset Series II Class L
Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities,
options and corporate bonds, listed on an exchange are valued at the latest
quoted sales price of the exchange on which the security is traded most
extensively. Securities not traded on valuation date or securities not
listed on an exchange are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed
securities, will normally be valued on the basis of evaluated bid prices.
Securities for which representative prices are not available from the
Fund's pricing service are valued at fair value as determined in good faith
by the Fund's Board of Directors.
Short-term investments that mature in sixty (60) days or less are valued
at amortized cost.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are
purchased or sold. Dividend income is recorded on the ex-dividend date.
Interest income and expenses are recorded on an accrual basis.
Most expenses of the Corporation can be attributed to a specific fund.
Expenses which cannot be directly attributed are apportioned among the funds
in the Corporation.
14
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL INCOME TAXES
The Fund's policy is to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies. The Fund is not
subject to federal income or excise tax to the extent the Fund distributes to
shareholders each year its taxable income, including any net realized gains
on investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made
in the financial statements.
The Fund uses the identified cost method for determining realized gain or
loss on investments for both financial statement and federal income tax
reporting purposes.
DISTRIBUTION OF INCOME AND GAINS
Distributions to shareholders of net investment income are made
semi-annually. Distributions are recorded on the ex-dividend date.
Distributions of net realized gains are distributed annually. An additional
distribution may be necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, foreign denominated investments or
character reclassification between net income and net gains. As a result,
net investment income (loss) and net investment gain (loss) on investment
transactions for a reporting period may differ significantly from
distributions to shareholders during such period. As a result, the Fund may
periodically make reclassification among its capital accounts without
impacting the Fund's net asset value.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars.
Foreign currency amounts are translated into U.S. dollars on the following
basis: a) investment securities, other assets and liabilities are converted
to U.S. dollars based upon current exchange rates; and b) purchases and sales
of securities and income and expenses are converted into U.S. dollars based
upon the currency exchange rates prevailing on the respective dates of such
transactions.
Gains and losses attributable to foreign currency exchange rates are
recorded for financial statement purposes as net realized gains and losses on
investments. The portion of both realized and unrealized gains and losses on
investments that result from fluctuations in foreign currency exchange rates
is not separately stated.
15
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Manning & Napier
Advisors, Inc. (the "Advisor"), for which the Fund pays the Advisor a fee,
computed daily and payable monthly, at an annual rate of 1.0% of the Fund's
average daily net assets. The fee amounted to $76,582 for the four months
ended April 30, 1996.
Under the Fund's Investment Advisory Agreement (the "Agreement"),
personnel of the Advisor provide the Fund with advice and assistance in the
choice of investments and the execution of securities transactions, and
otherwise maintain the Fund's organization. The Advisor also provides the
Fund with necessary office space and portfolio accounting and bookkeeping
services. The salaries of all officers of the Fund and of all Directors who
are "affiliated persons" of the Fund or of the Advisor, and all personnel of
the Fund or of the Advisor performing services relating to research,
statistical and investment activities are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary,
pay other expenses of the Fund in order to maintain total expenses for the
Fund at no more than 1.20% of average daily net assets each year.
Accordingly, the Advisor waived fees of $2,423 which is reflected as a
reduction of expenses on the Statement of Operations. The fee waiver and
assumption of expenses by the Advisor is voluntary and may be terminated at
any time.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $1,838 for the four months ended April
30, 1996.
Manning & Napier Investor Services, Inc., a registered broker-dealer
affiliate of the Advisor, acts as distributor for the Fund's shares. The
services of Manning & Napier Investor Services, Inc. are provided at no
additional cost to the Fund.
The compensation of the non-affiliated Directors totaled $2,292 for the
four months ended April 30, 1996.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term securities, were
$7,341,393 and $2,008,311, respectively, for the four months ended April 30,
1996.
16
<PAGE>
Notes to Financial Statements (unaudited)
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Blended Asset Series II Class L Common Stock
were:
<TABLE>
<CAPTION>
For the Four For the Year
Months Ended Ended
4/30/96 12/31/95
Shares Amount Shares Amount
------------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Sold 516,131 $6,189,405 891,550 $10,731,657
Reinvested 0 0 180,298 2,145,684
Redeemed (71,829) (861,850) (66,963) (799,924)
Total 444,302 $5,327,555 1,004,885 $12,077,417
</TABLE>
6. FINANCIAL INSTRUMENTS
The Fund may trade in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include
written options, forward foreign currency exchange contracts, and futures
contracts and may involve, to a varying degree, elements of risk in excess of
the amounts recognized for financial statement purposes. No such investments
were held by the Fund on April 30, 1996.
7. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments
involves special risks and considerations not typically associated with
investing in securities of U.S. companies and the United States government.
These risks include revaluation of currencies and future adverse political
and economic developments. Moreover, securities of many foreign companies
and foreign governments and their markets may be less liquid and their prices
more volatile than those of securities of comparable U.S. companies and the
United States government.
8. CHANGE IN FISCAL YEAR END
Effective January 1, 1996, the Fund changed its fiscal year end from
December 31 to October 31.
9. SPECIAL MEETING OF SHAREHOLDERS
On April 10, 1996, a special meeting of the Corporation was held for the
purpose of electing directors. The following directors have been elected:
Stephen B. Ashley, B. Reuben Auspitz, Martin F. Birmingham, Peter L. Faber,
and Harris H. Rusitzky.
17
<PAGE>
<PAGE>
<PAGE>
Manning & Napier Fund, Inc.
FLEXIBLE YIELD SERIES I
Semi-Annual Report
April 30, 1996
<PAGE>
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
1995 saw a steep drop in interest rates, and this fueled an exceptionally
strong bond market. Although some back-up in rates is not a big surprise
after a move of this magnitude, we believe that the market has overreacted,
as has often been the case recently. This has hurt bond investors so far in
1996, but also created very attractive real rates (interest rates over and
above inflation) by the end of April, and in the process, what we believed to
be a good buying opportunity.
On the surface, the change in fortunes for the bond market can be traced
to the expectations that drive the market in the short-term. Late in 1995,
many investors felt that the economy could slip into recession during the
year ahead, a bullish sign for bonds. When economic indicators were stronger
than expected in the first quarter of 1996, this bullishness was replaced by
inflation fears. Of particular concern is the labor market, as the February
and March releases of the Bureau of Labor Statistics' reports on new job
creation rocked the bond market with fears of a tight labor market.
Inflation fears have spooked the market from time to time in the past few
years, notably in 1994 and recently, but it is noteworthy that nothing has
really come of these fears. In the end, inflation has held rock-steady at
moderate levels. Moreover, the real interest rates now offered by bonds
build in an expectation of higher inflation that should leave room for some
tick up in inflation. Ultimately though, the long-term factors of increased
foreign trade and generally slack labor markets around the world represent a
powerful external check on sustained inflation. It is to these fundamentals
that the bond market has consistently returned after its temporary
flirtations with inflation fears.
The reason the bond market has become more sensitive to short-term shifts
in expectations is because of the impact speculators have on the market.
Speculators operate at the margins of the bond market, bringing "hot money"
to the table. This hot money attempts to jump on-and-off the bandwagon,
causing an exaggeration in the natural fluctuations of the market. For
example, in 1995 speculators borrowed yen at very low interest rates,
1
<PAGE>
Management Discussion and Analysis (continued)
converted those yen into dollars, and invested the borrowed money in U.S.
Treasury securities. This demand for Treasuries added to the bond rally last
year. As the Japanese economy appeared to firm, it became more likely that
short-term Japanese rates were going to rise, which would increase the
speculators' borrowing costs. At the same time, the dollar began to plateau
against the yen, taking away another advantage of the borrow yen/buy
Treasuries strategy. Given the leverage these speculators use, they have
little margin for error, so they quickly unwound their trades.
This selling of Treasuries by speculators fueled a bond market correction
that also had an uncertain political environment and commodity price
increases to contend with. What this means is that we are at a point where
all these negative expectations are built into the market and exaggerated by
the movement of speculative money. When the bad news is recognized, and
positive fundamentals remain in place for the long run, the ingredients are
in place for a stronger bond market ahead. These fundamentals are:
- - A sustained trend toward fiscal responsibility;
- - Above-trend increases in U.S. productivity over the past decade;
- - Growing global competitiveness.
Speculators are at great risk not only because of the degree of leverage
they use, but because they try to follow very short-term indicators which
often follow no discernable pattern. It is only by focusing on the long-term
trends that are shaping the future of the bond market that it is possible to
discern where the bond market is going over the long run. We would add that
while temporary deviations have occurred, as long as these fundamentals have
been in place the bond market has repeatedly returned to the course of lower
long-term interest rates and higher bond prices.
We have invested the portfolio of this Series in bonds with a slightly
longer maturity than that of the Series benchmark, the Merrill Lynch U.S.
Treasury
2
<PAGE>
Management Discussion and Analysis (continued)
Short-Term Index. Working within the Series restriction of a maximum
dollar-weighted average maturity of five years or less, we have positioned
the portfolio toward the long end of this spectrum. The longer maturity
bonds offer higher interest payments, and there is also the potential for
small capital gains as long-term interest rates decline.
We appreciate your confidence and wish you all the best throughout the
rest of 1996.
Sincerely,
Manning & Napier Advisors, Inc.
[GRAPHIC]
[PIE CHART]
Effective Maturity - As of 4/30/96
More than 4 Years - 42%
3-4 Years - 20%
2-3 Years - 12%
1-2 Years - 22%
Less than 1 Year - 4%
3
<PAGE>
Performance Update as of April 30, 1996 (unaudited)
The value of a $10,000 investment in the Manning & Napier Fund, Inc. -
Flexible Yield Series I from its inception (2/15/94) to present (4/30/96)
as compared to the Merrill Lynch U.S. Treasury Short-Term Index. 1
<TABLE>
<CAPTION>
Manning & Napier Fund, Inc. - Flexible Yield Series I
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $ 10,598 5.98% 5.98%
Inception 2 $ 10,931 9.31% 4.11%
</TABLE>
<TABLE>
<CAPTION>
Merrill Lynch U.S. Treasury Short-Term Index
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $ 10,689 6.89% 6.89%
Inception 2 $ 11,179 11.79% 5.18%
</TABLE>
1 The Merrill Lynch U.S. Treasury Short-Term Index is a market value weighted
measure of approximately 59 U.S. Treasury Securities. The Index is
comprised of U.S. Treasury securities with maturities greater than one year
but less than three years. The Index returns assume reinvestment of coupons
and, unlike Fund returns, do not reflect any fees or expenses.
2 The Fund and Index performance are calculated from February 15, 1994, the
Fund's inception date. The Fund's performance is historical and may not be
indicative of future results.
[GRAPHIC]
Line Chart
Data for Line Chart to follow:
<TABLE>
<CAPTION>
Manning & Napier Merrill Lynch U.S.
Flexible Yield Series I Treasury Short-Term
Index
<S> <C> <C>
02/15/94* $ 10,000 $ 10,000
06/30/94 9,860 9,931
12/31/94 9,924 10,030
06/30/95 10,573 10,699
12/31/95 10,995 11,133
04/30/96 10,931 11,179
</TABLE>
*Inception date
4
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Principal Value
Amount/Shares (Note 2)
U.S. TREASURY SECURITIES - 100.5%
<S> <C> <C>
U.S. TREASURY NOTES
U.S. Treasury Note, 7.50%, 1/31/1997 $ 5,000 $ 5,069
U.S. Treasury Note, 4.75%, 2/15/1997 14,000 13,907
U.S. Treasury Note, 6.50%, 4/30/1997 45,000 45,337
U.S. Treasury Note, 5.125%, 2/28/1998 55,000 54,141
U.S. Treasury Note, 6.125%, 5/15/1998 35,000 35,033
U.S. Treasury Note, 5.00%, 1/31/1999 20,000 19,394
U.S. Treasury Note, 6.50%, 4/30/1999 65,000 65,467
U.S. Treasury Note, 7.75%, 1/31/2000 20,000 20,919
U.S. Treasury Note, 6.75%, 4/30/2000 70,000 70,875
U.S. Treasury Note, 5.625%, 11/30/2000 15,000 14,536
U.S. Treasury Note, 6.375%, 3/31/2001 100,000 99,844
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $445,171) 444,522
SHORT-TERM INVESTMENTS - 1.8%
Dreyfus U.S. Treasury Money Market Reserves
(Identified Cost $7,962) 7,962 7,962
TOTAL INVESTMENTS - 102.3%
(Identified Cost $453,133) 452,484
LIABILITIES, LESS OTHER ASSETS - (2.3)% (10,085)
NET ASSETS - 100% $442,399
</TABLE>
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At April 30, 1996, the net unrealized depreciation based on identified cost for
federal income tax purposes of $453,133 was as follows:
<S> <C>
Aggregate gross unrealized appreciation for all investments in which
there was an excess of value over tax cost $ 1,845
Aggregate gross unrealized depreciation for all investments in which
there was an excess of tax cost over value (2,494)
UNREALIZED DEPRECIATION - NET ($649)
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES (unaudited)
APRIL 30, 1996
ASSETS:
<S> <C>
Investments, at value (Identified Cost $453,133)(Note 2) $452,484
Interest receivable 3,085
Receivable from investment advisor (Note 3) 6,916
TOTAL ASSETS 462,485
LIABILITIES:
Accrued Directors' fees (Note 3) 9,583
Audit fee payable 4,188
Other payables and accrued expenses 6,315
TOTAL LIABILITIES 20,086
NET ASSETS FOR 43,785 SHARES OUTSTANDING $442,399
NET ASSETS CONSIST OF:
Capital Stock $ 438
Additional paid-in-capital 438,988
Undistributed net investment income 2,091
Accumulated net realized gain on investments 1,531
Net unrealized depreciation on investments (649)
TOTAL NET ASSETS $442,399
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($442,399 / 43,785 shares) $ 10.10
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS (unaudited)
FOR THE FOUR MONTHS ENDED APRIL 30, 1996
<S> <C>
INVESTMENT INCOME:
Interest $ 4,896
EXPENSES:
Management fee (Note 3) 293
Directors' fees (Note 3) 2,292
Transfer agent fees (Note 3) 20
Audit fee 3,352
Custodian fee 99
Miscellaneous 1,740
Total Expenses 7,796
Less Waiver of Expenses (Note 3) (7,209)
Net Expenses 587
NET INVESTMENT INCOME 4,309
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 2,058
Net change in unrealized depreciation on investments (7,959)
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (5,901)
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS ($1,592)
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES (unaudited)
For the Four For the
Months Ended Year Ended
4/30/96 12/31/95
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income $ 4,309 $ 17,412
Net realized gain on investments 2,058 321
Net change in unrealized appreciation (depreciation)
on investments (7,959) 12,825
Net increase (decrease) in net assets from operations (1,592) 30,558
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (2,230) (17,292)
CAPITAL STOCK ISSUED AND REDEEMED:
Net increase in net assets from capital share
transactions (Note 5) 189,767 12,347
Net increase in net assets 185,945 25,613
NET ASSETS:
Beginning of period 256,454 230,841
End of period (including undistributed net investment
income of $2,091 and $12, respectively) $ 442,399 $ 256,454
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (unaudited)
For the Four
Months Ended
4/30/96
--------------
Per share data (for a share outstanding throughout
each period )
<S> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.26
Income from investment operations:
Net investment income 0.148
Net realized and unrealized gain (loss)
on investments (0.208)
Total from investment operations (0.060)
Less distributions to shareholders:
From net investment income (0.100)
NET ASSET VALUE - END OF PERIOD $ 10.10
Total Return 1 (0.58%)
Ratios (to average net assets) / Supplemental Data:
Expenses* 0.70%2
Net investment income* 5.13%2
Portfolio turnover 16%
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 442
* The investment advisor did not impose its management fee and paid a portion of the Fund's expenses. If these
expenses had been incurred by the Fund, expenses would have been limited to that allowed by state securities
law and the net investment income per share and the ratios would have been as follows:
Net investment income $ 0.096
Ratios (to average net assets):
Expenses 2.50%2
Net investment income 3.33%2
1 Represents aggregate total return for the period indicated
2 Annualized
FINANCIAL HIGHLIGHTS (unaudited)
For the Period-
2/15/94
For the Year (commencement
Ended of operations)
12/31/95 to 12/31/94
-------------- ----------------
Per share data (for a share outstanding throughout
each period )
<S> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 9.69 $ 10.00
Income from investment operations:
Net investment income 0.464 0.241
Net realized and unrealized gain (loss)
on investments 0.566 (0.317)
Total from investment operations 1.030 (0.076)
Less distributions to shareholders:
From net investment income (0.460) (0.234)
NET ASSET VALUE - END OF PERIOD $ 10.26 $ 9.69
Total Return 1 10.79% (0.76)%
Ratios (to average net assets) / Supplemental Data:
Expenses* 0.70% 0.70%2
Net investment income* 4.99% 4.41%2
Portfolio turnover 60% 38%
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 256 $ 231
* The investment advisor did not impose its management fee and paid a portion of the Fund's expenses. If these
expenses had been incurred by the Fund, expenses would have been limited to that allowed by state securities
law and the net investment income per share and the ratios would have been as follows:
Net investment income $ 0.297 $ 0.143
Ratios (to average net assets):
Expenses 2.50% 2.50%2
Net investment income 3.19% 2.61%2
1 Represents aggregate total return for the period indicated
2 Annualized
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Flexible Yield Series I (the "Fund") is a no-load diversified series of
Manning & Napier Fund, Inc. (the "Corporation"). The Corporation is
organized as a Maryland Corporation and is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment
company.
The total authorized capital stock of the Corporation consists of one
billion shares of common stock each having a par value of $0.01. As of April
30, 1996, 760 million shares have been designated in total among 19 series,
of which 50 million have been designated as Flexible Yield Series I Class M
Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities listed on an exchange are valued at the latest
quoted sales price of the exchange on which the security is traded most
extensively. Securities not traded on valuation date or securities not
listed on an exchange are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed
securities, will normally be valued on the basis of evaluated bid prices.
Securities for which representative prices are not available from the
Fund's pricing service are valued at fair value as determined in good faith
by the Fund's Board of Directors.
Short-term investments that mature in sixty (60) days or less are valued
at amortized cost.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are
purchased or sold. Dividend income is recorded on the ex-dividend date.
Interest income and expenses are recorded on an accrual basis.
Most expenses of the Corporation can be attributed to a specific fund.
Expenses which cannot be directly attributed are apportioned among the funds
in the Corporation.
10
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES
The Fund's policy is to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies. The Fund is not
subject to federal income or excise tax to the extent the Fund distributes to
shareholders each year its taxable income, including any net realized gains
on investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made
in the financial statements.
At April 30, 1996, the Fund, for federal income tax purposes, had a capital
loss carryforward of $527. Of the amount, $452 will expire on December 31,
2002 and $75 will expire on December 31, 2003.
The Fund uses the identified cost method for determining realized gain or
loss on investments for both financial statement and federal income tax
reporting purposes.
DISTRIBUTION OF INCOME AND GAINS
Distributions to shareholders of net investment income are made
quarterly. Distributions are recorded on the ex-dividend date. Distributions
of net realized gains are distributed annually. An additional distribution
may be necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, character reclassification between net
income and net gains or other required tax adjustments. As a result, net
investment income (loss) and net investment gain (loss) on investment
transactions for a reporting period may differ significantly from
distributions to shareholders during such period. As a result, the Fund may
periodically make reclassification among its capital accounts without
impacting the Fund's net asset value.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Manning & Napier
Advisors, Inc. (the "Advisor"), for which the Fund pays the Advisor a fee,
computed daily and payable monthly, at an annual rate of 0.35% of the Fund's
average daily net assets. The fee amounted to $293 for the four months ended
April 30, 1996.
11
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
Under the Fund's Investment Advisory Agreement (the "Agreement"),
personnel of the Advisor provide the Fund with advice and assistance in the
choice of investments and the execution of securities transactions, and
otherwise maintain the Fund's organization. The Advisor also provides the
Fund with necessary office space and portfolio accounting and bookkeeping
services. The salaries of all officers of the Fund and of all Directors who
are "affiliated persons" of the Fund or of the Advisor, and all personnel of
the Fund or of the Advisor performing services relating to research,
statistical and investment activities are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary,
pay other expenses of the Fund in order to maintain total expenses for the
Fund at no more than 0.70% of average daily net assets each year.
Accordingly, the Advisor did not impose any of its fee and paid expenses
amounting to $6,916 for the four months ended April 30, 1996, which is
reflected as a reduction of expenses on the Statement of Operations. The fee
waiver and assumption of expenses by the Advisor is voluntary and may be
terminated at any time.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $20 for the four months ended April 30,
1996.
Manning & Napier Investor Services, Inc., a registered broker-dealer
affiliate of the Advisor, acts as distributor for the Fund's shares. The
services of Manning & Napier Investor Services, Inc. are provided at no
additional cost to the Fund.
The compensation of the non-affiliated Directors totaled $2,292 for the
four months ended April 30, 1996.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term securities, were
$225,644 and $47,250, respectively, for the four months ended April 30, 1996.
12
<PAGE>
Notes to Financial Statements (unaudited)
5. CAPITAL STOCK TRANSACTIONS
<TABLE>
<CAPTION>
Transactions in shares of Flexible Yield Series I Class M Common Stock were:
For the Four For the Year
Months Ended Ended
4/30/96 12/31/95
------------- -------------
Shares Amount Shares Amount
------------- --------- ------------- ----------
<S> <C> <C> <C> <C>
Sold 21,284 $215,400 42,563 $ 433,846
Reinvested 222 2,231 1,658 16,778
Redeemed (2,710) (27,864) (43,058) (438,277)
Total 18,796 189,767 1,163 12,347
</TABLE>
The Advisor owned 3,963 shares on April 30, 1996 and 3,924 on December
31, 1995.
6. FINANCIAL INSTRUMENTS
The Fund may trade in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include
written options and futures contracts and may involve, to a varying degree,
elements of risk in excess of the amounts recognized for financial statement
purposes. No such investments were held by the Fund on April 30, 1996.
7. CHANGE IN FISCAL YEAR END
Effective January 1, 1996, the Fund changed its fiscal year end from December
31 to October 31.
8. SPECIAL MEETING OF SHAREHOLDERS
On April 10, 1996, a special meeting of the Corporation was held for the
purpose of electing directors. The following directors have been elected:
Stephen B. Ashley, B. Reuben Auspitz, Martin F. Birmingham, Peter L. Faber,
and Harris H. Rusitzky.
13
<PAGE>
<PAGE>
<PAGE>
Manning & Napier Fund, Inc.
FLEXIBLE YIELD SERIES II
Semi-Annual Report
April 30, 1996
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
1995 saw a steep drop in interest rates, and this fueled an exceptionally
strong bond market. Although some back-up in rates is not a big surprise
after a move of this magnitude, we believe that the market has overreacted,
as has often been the case recently. This has hurt bond investors so far in
1996, but also created very attractive real rates (interest rates over and
above inflation) by the end of April, and in the process, what we believed to
be a good buying opportunity.
On the surface, the change in fortunes for the bond market can be traced
to the expectations that drive the market in the short-term. Late in 1995,
many investors felt that the economy could slip into recession during the
year ahead, a bullish sign for bonds. When economic indicators were stronger
than expected in the first quarter of 1996, this bullishness was replaced by
inflation fears. Of particular concern is the labor market, as the February
and March releases of the Bureau of Labor Statistics' reports on new job
creation rocked the bond market with fears of a tight labor market.
Inflation fears have spooked the market from time to time in the past few
years, notably in 1994 and recently, but it is noteworthy that nothing has
really come of these fears. In the end, inflation has held rock-steady at
moderate levels. Moreover, the real interest rates now offered by bonds
build in an expectation of higher inflation that should leave room for some
tick up in inflation. Ultimately though, the long-term factors of increased
foreign trade and generally slack labor markets around the world represent a
powerful external check on sustained inflation. It is to these fundamentals
that the bond market has consistently returned after its temporary
flirtations with inflation fears.
The reason the bond market has become more sensitive to short-term shifts
in expectations is because of the impact speculators have on the market.
Speculators operate at the margins of the bond market, bringing "hot money"
to the table. This hot money attempts to jump on-and-off the bandwagon,
1
<PAGE>
Management Discussion and Analysis (continued)
causing an exaggeration in the natural fluctuations of the market. For
example, in 1995 speculators borrowed yen at very low interest rates,
converted those yen into dollars, and invested the borrowed money in U.S.
Treasury securities. This demand for Treasuries added to the bond rally last
year. As the Japanese economy appeared to firm, it became more likely that
short-term Japanese rates were going to rise, which would increase the
speculators' borrowing costs. At the same time, the dollar began to plateau
against the yen, taking away another advantage of the borrow yen/buy
Treasuries strategy. Given the leverage these speculators use, they have
little margin for error, so they quickly unwound their trades.
This selling of Treasuries by speculators fueled a bond market correction
that also had an uncertain political environment and commodity price
increases to contend with. What this means is that we are at a point where
all these negative expectations are built into the market and exaggerated by
the movement of speculative money. When the bad news is recognized, and
positive fundamentals remain in place for the long run, the ingredients are
in place for a stronger bond market ahead. These fundamentals are:
- - A sustained trend toward fiscal responsibility;
- - Above-trend increases in U.S. productivity over the past decade;
- - Growing global competitiveness.
Speculators are at great risk not only because of the degree of leverage
they use, but because they try to follow very short-term indicators which
often follow no discernable pattern. It is only by focusing on the long-term
trends that are shaping the future of the bond market that it is possible to
discern where the bond market is going over the long run. We would add that
while temporary deviations have occurred, as long as these fundamentals have
been in place the bond market has repeatedly returned to the course of lower
long-term interest rates and higher bond prices.
2
<PAGE>
Management Discussion and Analysis (continued)
We have invested the portfolio of this Series in bonds with a slightly
longer maturity than that of the Series benchmark, the Merrill Lynch
Corporate/Government Intermediate Index. Working within the Series
restriction of a maximum dollar-weighted average maturity of ten years or
less, we have positioned the portfolio toward the long end of this spectrum.
The longer maturity bonds offer higher interest payments, and there is also
the potential for capital gains as long-term interest rates decline.
We appreciate your confidence and wish you all the best throughout the
rest of 1996.
Sincerely,
Manning & Napier Advisors, Inc.
[GRAPHIC]
[Pie Chart]
More than 7 Years - 40%
5-7 Years - 12%
3-5 Years - 23%
2-3 Years - 8%
1-2 Years - 5%
Less than 1 Year - 12%
3
<PAGE>
Performance Update as of April 30, 1996 (unaudited)
The value of a $10,000 investment in the Manning & Napier Fund, Inc. -
Flexible Yield Series II from its inception (2/15/94) to present (4/30/96)
as compared to the Merrill Lynch Corporate/Government Intermediate Index.
1
<TABLE>
<CAPTION>
Manning & Napier Fund, Inc. - Flexible Yield Series II
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $ 10,773 7.73% 7.73%
Inception 2 $ 10,889 8.89% 3.93%
</TABLE>
<TABLE>
<CAPTION>
Merrill Lynch Corporate/Government Intermediate Index
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $ 10,790 7.90% 7.90%
Inception 2 $ 11,167 11.67% 5.13%
</TABLE>
1 The Merrill Lynch Corporate/Government Intermediate Index is a market value
weighted measure of approximately 3,190 corporate and government bonds. The
Index is comprised of investment grade bonds with maturities greater than
one year but less than ten years. The Index returns assume reinvestment of
coupons and, unlike Fund returns, do not reflect any fees or expenses.
2 The Fund and Index performance are calculated from February 15, 1994, the
Fund's inception date. The Fund's performance is historical and may not be
indicative of future results.
[GRAPHIC]
Line Chart
Date for Line Chart to follow:
<TABLE>
<CAPTION>
Manning & Napier Merrill Lynch Corporate/
Flexible Yield Government Intermediate Index
Series III
<S> <C> <C>
02/15/94* $ 10,000 $ 10,000
06/30/94 9,510 9,727
12/31/94 9,531 9,799
06/30/95 10,576 10,737
12/31/95 11,182 11,301
04/30/96 10,889 11,167
</TABLE>
*Inception date
4
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Shares/Principal Value
Amount (Note 2)
U.S. TREASURY SECURITIES - 98.8%
<S> <C> <C>
U.S. TREASURY NOTES
U.S. Treasury Note, 7.50%, 1/31/1997 $ 10,000 $ 10,138
U.S. Treasury Note, 4.75%, 2/15/1997 10,000 9,934
U.S. Treasury Note, 6.875%, 2/28/1997 30,000 30,300
U.S. Treasury Note, 6.00%, 8/31/1997 20,000 20,025
U.S. Treasury Note, 5.125%, 11/30/1998 20,000 19,500
U.S. Treasury Note, 5.00%, 1/31/1999 15,000 14,545
U.S. Treasury Note, 6.50%, 4/30/1999 25,000 25,180
U.S. Treasury Note, 5.50%, 4/15/2000 45,000 43,692
U.S. Treasury Note, 6.75%, 4/30/2000 25,000 25,312
U.S. Treasury Note, 7.875%, 8/15/2001 45,000 47,827
U.S. Treasury Note, 5.875%, 2/15/2004 60,000 57,244
U.S. Treasury Note, 7.25%, 5/15/2004 100,000 103,562
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $397,795) 407,259
SHORT-TERM INVESTMENTS - 3.0%
Dreyfus U.S. Treasury Money Market Reserves
(Identified Cost $12,400) 12,400 12,400
TOTAL INVESTMENTS - 101.8%
(Identified Cost $410,195) 419,659
LIABILITIES, LESS OTHER ASSETS - (1.8%) (7,474)
NET ASSETS - 100% $412,185
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
Federal Tax Information - April 30, 1996 (unaudited)
FEDERAL TAX INFORMATION:
At April 30, 1996, the net unrealized appreciation based on identified
cost for federal income tax purposes of $410,195 was as follows:
<S> <C>
Aggregate gross unrealized appreciation for all investments in which
there was an excess of value over tax cost $10,277
Aggregate gross unrealized depreciation for all investments in which
there was an excess of tax cost over value _813
UNREALIZED APPRECIATION - NET $ 9,464
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES (unaudited)
APRIL 30, 1996
<S> <C>
ASSETS:
Investments, at value (Identified Cost $410,195)(Note 2) $419,659
Interest receivable 6,390
Receivable from investment advisor (Note 3) 6,391
TOTAL ASSETS 432,440
LIABILITIES:
Accrued Directors' fees (Note 3) 9,584
Audit fee payable 4,173
Other payables and accrued expenses 6,498
TOTAL LIABILITIES 20,255
NET ASSETS FOR 41,564 SHARES OUTSTANDING $412,185
NET ASSETS CONSIST OF:
Capital Stock $ 415
Additional paid-in-capital 395,715
Undistributed net investment income 6,013
Accumulated net realized gain on investments 578
Net unrealized appreciation on investments 9,464
TOTAL NET ASSETS $412,185
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($412,185 / 41,564 shares) $ 9.92
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS (unaudited)
FOR THE FOUR MONTHS ENDED APRIL 30, 1996
<S> <C>
INVESTMENT INCOME:
Interest $ 8,851
EXPENSES:
Management fees (Note 3) 630
Directors' fees (Note 3) 2,292
Transfer agent fees (Note 3) 34
Audit fee 3,352
Custodian fee 99
Miscellaneous 1,729
Total Expenses 8,136
Less Waiver of Expenses (Note 3) (7,021)
Net Expenses 1,115
NET INVESTMENT INCOME 7,736
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 580
Net change in unrealized appreciation on investments (19,416)
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (18,836)
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS ($11,100)
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES (unaudited)
For the Four For the
Months Ended Year Ended
4/30/96 12/31/95
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income $ 7,736 $ 25,818
Net realized gain on investments 580 2,582
Net change in unrealized appreciation on investments (19,416) 45,414
Net increase (decrease) in net assets from operations (11,100) 73,814
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (2,086) (25,351)
From net realized gains (2,503) -
Total distributions to shareholders (4,589) (25,351)
CAPITAL STOCK ISSUED AND REDEEMED:
Net decrease in net assets from capital share
transactions (Note 5) (10,152) (5,951)
Net increase (decrease) in net assets (25,841) 42,512
NET ASSETS:
Beginning of period 438,026 395,514
End of period (including undistributed net investment
income of $6,013 and $363, respectively) $ 412,185 $ 438,026
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (unaudited)
For the Four
Months Ended
4/30/96
--------------
Per share data (for a share outstanding throughout
each period )
<S> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.30
Income from investment operations:
Net investment income 0.186
Net realized and unrealized gain (loss)
on investments (0.456)
Total from investment operations (0.270)
Less distributions to shareholders:
From net investment income (0.050)
From net realized gain on investment (0.060)
Total distributions to shareholders (0.110)
NET ASSET VALUE - END OF PERIOD $ 9.92
Total Return 1 (2.62%)
Ratios (to average net assets) / Supplemental Data:
Expenses* 0.80%2
Net investment income* 5.53%2
Portfolio turnover 0%
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 412
* The investment advisor did not impose its management fee and paid a portion of the Fund's expenses.
If these expenses had been incurred by the Fund, expenses would have been limited to that allowed by state
securities law and the net investment income per share and the ratios would have been as follows:
Net investment income $ 0.129
Ratios (to average net assets):
Expenses 2.50%2
Net investment income 3.83%2
1 Represents aggregate total return for the period indicated.
2 Annualized
FINANCIAL HIGHLIGHTS (unaudited) For the Period
2/15/94
For the (commencement
Year Ended of operations) to
12/31/95 12/31/94
Per share data (for a share outstanding throughout
each period )
<S> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 9.27 $ 10.00
Income from investment operations:
Net investment income 0.561 0.269
Net realized and unrealized gain (loss)
on investments 1.019 (0.738)
Total from investment operations 1.580 (0.469)
Less distributions to shareholders:
From net investment income (0.550) (0.261)
From net realized gain on investment - -
Total distributions to shareholders (0.550) (0.261)
NET ASSET VALUE - END OF PERIOD $ 10.30 $ 9.27
Total Return 1 17.33% (4.69%)
Ratios (to average net assets) / Supplemental Data:
Expenses* 0.80% 0.80%2
Net investment income* 5.38% 5.40%2
Portfolio turnover 35% 0%
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 438 $ 396
* The investment advisor did not impose its management fee and paid a portion of the Fund's expenses.
If these expenses had been incurred by the Fund, expenses would have been limited to that allowed by state
securities law and the net investment income per share and the ratios would have been as follows:
Net investment income $ 0.384 $ 0.184
Ratios (to average net assets):
Expenses 2.50% 2.50%2
Net investment income 3.68% 3.70%2
1 Represents aggregate total return for the period indicated.
2 Annualized
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Flexible Yield Series II (the "Fund") is a no-load diversified series of
Manning & Napier Fund, Inc. (the "Corporation"). The Corporation is
organized as a Maryland Corporation and is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment
company.
The total authorized capital stock of the Corporation consists of one
billion shares of common stock each having a par value of $0.01. As of April
30, 1996, 760 million shares have been designated in total among 19 series,
of which 50 million have been designated as Flexible Yield Series II Class N
Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities listed on an exchange are valued at the latest
quoted sales price of the exchange on which the security is traded most
extensively. Securities not traded on valuation date or securities not
listed on an exchange are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed
securities, will normally be valued on the basis of evaluated bid prices.
Securities for which representative prices are not available from the
Fund's pricing service are valued at fair value as determined in good faith
by the Fund's Board of Directors.
Short-term investments that mature in sixty (60) days or less are valued
at amortized cost.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are
purchased or sold. Dividend income is recorded on the ex-dividend date.
Interest income and expenses are recorded on an accrual basis.
Most expenses of the Corporation can be attributed to a specific fund.
Expenses which cannot be directly attributed are apportioned among the funds
in the Corporation.
11
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES
The Fund's policy is to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies. The Fund is not
subject to federal income or excise tax to the extent the Fund distributes to
shareholders each year its taxable income, including any net realized gains
on investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made
in the financial statements.
The Fund uses the identified cost method for determining realized gain or
loss on investments for both financial statement and federal income tax
reporting purposes.
DISTRIBUTION OF INCOME AND GAINS
Distributions to shareholders of net investment income are made
quarterly. Distributions are recorded on the ex-dividend date. Distributions
of net realized gains are distributed annually. An additional distribution
may be necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, or character reclassification between
net income and net gains or other required tax adjustments. As a result, net
investment income (loss) and net investment gain (loss) on investment
transactions for a reporting period may differ significantly from
distributions to shareholders during such period. As a result, the Fund may
periodically make reclassification among its capital accounts without
impacting the Fund's net asset value.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Manning & Napier
Advisors, Inc. (the "Advisor"), for which the Fund pays the Advisor a fee,
computed daily and payable monthly, at an annual rate of 0.45% of the Fund's
average daily net assets. The fee amounted to $630 for the four months ended
April 30, 1996.
Under the Fund's Investment Advisory Agreement (the "Agreement"),
personnel of the Advisor provide the Fund with advice and assistance in the
choice of investments and the execution of securities transactions, and
otherwise maintain the Fund's organization. The Advisor also provides the
Fund with necessary office space and portfolio accounting and bookkeeping
services. The salaries of all officers of the Fund and of all Directors who
are "affiliated persons" of the Fund or of the Advisor, and all personnel of
the Fund or of the Advisor performing services relating to research,
statistical and investment activities are paid by the Advisor.
12
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
The Advisor has voluntarily agreed to waive its fee and, if necessary,
pay other expenses of the Fund in order to maintain total expenses for the
Fund at no more than 0.80% of average daily net assets each year.
Accordingly, the Advisor did not impose any of its fee and paid expenses
amounting to $6,391 for the four months ended April 30, 1996, which is
reflected as a reduction of expenses on the Statement of Operations. The fee
waiver and assumption of expenses by the Advisor is voluntary and may be
terminated at any time.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $34 for the four months ended April 30,
1996.
Manning & Napier Investor Services, Inc., a registered broker-dealer
affiliate of the Advisor, acts as distributor for the Fund's shares. The
services of Manning & Napier Investor Services, Inc. are provided at no
additional cost to the Fund.
The compensation of the non-affiliated Directors totaled $2,292 for the
four months ended April 30, 1996.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term securities, were
$0 and $5,528 respectively, for the four months ended April 30, 1996.
5. CAPITAL STOCK TRANSACTIONS
<TABLE>
<CAPTION>
Transactions in shares of Flexible Yield Series II Class N Common Stock were:
For the Four Months For the Year
ended 4/30/96 ended 12/31/95
-------------------- ---------------
Shares Amount Shares
-------------------- --------- ---------------
<S> <C> <C> <C>
Sold 983 $ 9,935 17,414
Reinvested 463 4,589 2,527
Redeemed (2,427) (24,676) (20,065)
Total (981) $(10,152) (124)
Transactions in shares of Flexible Yield Series II Class N Common Stock were:
Amount
----------
<S> <C>
Sold $ 173,234
Reinvested 25,352
Redeemed (204,537)
Total $ (5,951)
</TABLE>
The Advisor owned 13,532 shares on April 30, 1996 and 13,383 shares on
December 31, 1995.
13
<PAGE>
Notes to Financial Statements (unaudited)
6. FINANCIAL INSTRUMENTS
The Fund may trade in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include
written options and futures contracts and may involve, to a varying degree,
elements of risk in excess of the amounts recognized for financial statement
purposes. No such investments were held by the Fund on April 30, 1996.
7. CHANGE IN FISCAL YEAR END
Effective January 1, 1996, the Fund changed its fiscal year end from
December 31 to October 31.
8. SPECIAL MEETING OF SHAREHOLDERS
On April 10, 1996, a special meeting of the Corporation was held for the
purpose of electing directors. The following directors have been elected:
Stephen B. Ashley, B. Reuben Auspitz, Martin F. Birmingham, Peter L. Faber,
and Harris H. Rusitzky.
14
<PAGE>
<PAGE>
<PAGE>
Manning & Napier Fund, Inc.
FLEXIBLE YIELD SERIES III
Semi-Annual Report
April 30, 1996
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
1995 saw a steep drop in interest rates, and this fueled an exceptionally
strong bond market. Although some back-up in rates is not a big surprise
after a move of this magnitude, we believe that the market has overreacted,
as has often been the case recently. This has hurt bond investors so far in
1996, but also created very attractive real rates (interest rates over and
above inflation) by the end of April, and in the process, what we believed to
be a good buying opportunity.
On the surface, the change in fortunes for the bond market can be traced
to the expectations that drive the market in the short-term. Late in 1995,
many investors felt that the economy could slip into recession during the
year ahead, a bullish sign for bonds. When economic indicators were stronger
than expected in the first quarter of 1996, this bullishness was replaced by
inflation fears. Of particular concern is the labor market, as the February
and March releases of the Bureau of Labor Statistics' reports on new job
creation rocked the bond market with fears of a tight labor market.
Inflation fears have spooked the market from time to time in the past few
years, notably in 1994 and recently, but it is noteworthy that nothing has
really come of these fears. In the end, inflation has held rock-steady at
moderate levels. Moreover, the real interest rates now offered by bonds
build in an expectation of higher inflation that should leave room for some
tick up in inflation. Ultimately though, the long-term factors of increased
foreign trade and generally slack labor markets around the world represent a
powerful external check on sustained inflation. It is to these fundamentals
that the bond market has consistently returned after its temporary
flirtations with inflation fears.
The reason the bond market has become more sensitive to short-term shifts
in expectations is because of the impact speculators have on the market.
Speculators operate at the margins of the bond market, bringing "hot money"
1
<PAGE>
Management Discussion and Analysis (continued)
to the table. This hot money attempts to jump on-and-off the bandwagon,
causing an exaggeration in the natural fluctuations of the market. For
example, in 1995 speculators borrowed yen at very low interest rates,
converted those yen into dollars, and invested the borrowed money in U.S.
Treasury securities. This demand for Treasuries added to the bond rally last
year. As the Japanese economy appeared to firm, it became more likely that
short-term Japanese rates were going to rise, which would increase the
speculators' borrowing costs. At the same time, the dollar began to plateau
against the yen, taking away another advantage of the borrow yen/buy
Treasuries strategy. Given the leverage these speculators use, they have
little margin for error, so they quickly unwound their trades.
This selling of Treasuries by speculators fueled a bond market correction
that also had an uncertain political environment and commodity price
increases to contend with. What this means is that we are at a point where
all these negative expectations are built into the market and exaggerated by
the movement of speculative money. When the bad news is recognized, and
positive fundamentals remain in place for the long run, the ingredients are
in place for a stronger bond market ahead. These fundamentals are:
- - A sustained trend toward fiscal responsibility;
- - Above-trend increases in U.S. productivity over the past decade;
- - Growing global competitiveness.
Speculators are at great risk not only because of the degree of leverage
they use, but because they try to follow very short-term indicators which
often follow no discernable pattern. It is only by focusing on the long-term
trends that are shaping the future of the bond market that it is possible to
discern where the bond market is going over the long run. We would add that
while temporary deviations have occurred, as long as these fundamentals have
been in place the bond market has repeatedly returned to the course of lower
long-term interest rates and higher bond prices.
2
<PAGE>
Management Discussion and Analysis (continued)
We have invested the portfolio of this Series in bonds with a longer
maturity than that of the Series benchmark, the Merrill Lynch
Corporate/Government Index. This Series does not have a restriction as to
the maturity of the bonds in which it invests, and we have positioned the
portfolio in longer-term bonds. The longer maturity bonds offer higher
interest payments and also offer the greatest potential for capital gains as
long-term interest rates decline.
We appreciate your confidence and wish you all the best throughout the
rest of 1996.
Sincerely,
Manning & Napier Advisors, Inc.
[GRAPHIC]
[Pie Chart]
Effective Maturity - As of 4/30/96
Less than 1 Year - 9%
1-2 Years - 5%
2-3 years - 6%
3-5 Years - 12%
5-7 Years - 18%
7-10 Years - 17%
Over 10 Years - 33%
[GRAPHIC]
[Pie Chart]
Portfolio Composition - As of 4/30/96
U.S. Treasury Securities - 93%
Mortgage Backed Securities - 7%
3
<PAGE>
Performance Update as of April 30, 1996 (unaudited)
The value of a $10,000 investment in the Manning & Napier Fund, Inc. -
Flexible Yield Series III from its inception (12/20/93) to present
(4/30/96) as compared to the Merrill Lynch Corporate/Government Bond
Index. 1
<TABLE>
<CAPTION>
Manning & Napier Fund, Inc. - Flexible Yield Series III
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $ 10,875 8.75% 8.75%
Inception 2 $ 10,868 8.68% 3.58%
</TABLE>
<TABLE>
<CAPTION>
Merrill Lynch Corporate/Government Bond Index
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $ 10,870 8.70% 8.70%
Inception 2 $ 11,191 11.91% 4.87%
</TABLE>
1 The Merrill Lynch Corporate/Government Bond Index is a market value weighted
measure of approximately 4,540 corporate and government bonds. The Index is
comprised of investment grade securities with maturities greater than one
year. The Index returns assume reinvestment of coupons and, unlike Fund
returns, do not reflect any fees or expenses.
2 The Fund and Index performance are calculated from December 20, 1993, the
Fund's inception date. The Fund's performance is historical and may not be
indicative of future results.
[GRAPHIC]
Line Chart
Data for Line Chart to follow:
<TABLE>
<CAPTION>
Manning & Napier Flexible Merrill Lynch Corporate /
Yield Series III Government Bond Index
<S> <C> <C>
12/20/93* $ 10,000 $ 10,000
12/31/93 9,960 10,013
06/30/94 9,349 9,602
12/31/94 9,380 9,686
06/30/95 10,634 10,815
12/31/95 11,451 11,532
04/30/96 10,868 11,191
</TABLE>
*Inception date
4
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Principal Amount
Amount (Note 2)
U.S. TREASURY SECURITIES - 92.35%
<S> <C> <C>
U.S. TREASURY BONDS - 19.37%
U.S. Treasury Bond, 7.25%, 8/15/2022
(Identified Cost $186,166) $ 200,000 $204,000
U.S. TREASURY NOTES - 66.77%
U.S. Treasury Note, 4.375%, 11/15/1996 25,000 24,852
U.S. Treasury Note, 7.50%, 1/31/1997 40,000 40,550
U.S. Treasury Note, 6.875%, 2/28/1997 35,000 35,350
U.S. Treasury Note, 5.00%, 1/31/1998 50,000 49,172
U.S. Treasury Note, 5.125%, 11/30/1998 60,000 58,500
U.S. Treasury Note, 7.75%, 11/30/1999 40,000 41,775
U.S. Treasury Note, 5.50%, 4/15/2000 25,000 24,273
U.S. Treasury Note, 6.25%, 8/31/2000 60,000 59,681
U.S. Treasury Note, 7.50%, 11/15/2001 35,000 36,641
U.S. Treasury Note, 6.375%, 8/15/2002 150,000 148,781
U.S. Treasury Note, 5.75%, 8/15/2003 15,000 14,259
U.S. Treasury Note, 5.875%, 2/15/2004 100,000 95,406
U.S. Treasury Note, 6.50%, 8/15/2005 75,000 74,016
TOTAL U.S. TREASURY NOTES
(Identified Cost $702,170) 703,256
U.S. TREASURY STRIPPED SECURITIES - 6.21%
Interest Stripped - Principal Payment, 8/15/2014 143,000 38,527
Interest Stripped - Principal Payment, 5/15/2014 98,000 26,886
TOTAL U.S. TREASURY STRIPPED SECURITIES
(Identified Cost $71,006) 65,413
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $959,342) 972,669
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Pricipal Value
Amount/Shares (Note 2)
<S> <C> <C>
U.S. GOVERNMENT SECURITIES - 6.89%
MORTGAGE BACKED SECURITIES
GNMA, Pool #224199, 9.50%, 7/15/2018 90,000 17,664
GNMA, Pool #299164, 9.00%, 12/15/2020 129,322 20,607
GNMA, Pool #376345, 6.50%, 12/15/2023 40,000 34,293
TOTAL U.S. GOVERNMENT SECURITIES
(Identified Cost $69,026) 72,564
SHORT-TERM INVESTMENTS - 0.74%
Dreyfus U.S. Treasury Money Market Reserves
(Identified Cost $7,795) 7,795 7,795
TOTAL INVESTMENTS - 99.98%
(Identified Cost $1,036,163) 1,053,028
OTHER INVESTMENTS, LESS LIABILITIES - 0.02% 260
NET ASSETS - 100% $1,053,288
</TABLE>
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At April 30, 1996, the net unrealized appreciation based on identified cost for federal
income tax purposes of $1,036,163 was as follows:
<S> <C>
Aggregate gross unrealized appreciation for all investments in
which there was an excess of value over tax cost $ 30,879
Aggregate gross unrealized depreciation for all investments in
which there was an excess of tax cost over value (14,014)
UNREALIZED APPRECIATION - NET $ 16,865
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
APRIL 30, 1996
<S> <C>
ASSETS:
Investments, at value (Identified Cost $1,036,163)(Note 2) $1,053,028
Interest receivable 14,694
Receivable from investment advisor (Note 3) 4,593
TOTAL ASSETS 1,072,315
LIABILITIES:
Accrued Directors' fees (Note 3) 9,584
Transfer agent fees payable (Note 3) 86
Audit fee payable 2,436
Other payables and accrued expenses 6,921
TOTAL LIABILITIES 19,027
NET ASSETS FOR 106,800 SHARES OUTSTANDING $1,053,288
NET ASSETS CONSIST OF:
Capital Stock $ 1,068
Additional paid-in-capital 1,021,523
Undistributed net investment income 9,326
Accumulated net realized gain on investments 4,506
Net unrealized appreciation on investments 16,865
TOTAL NET ASSETS $1,053,288
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($1,053,288/106,800 shares) $ 9.86
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS (unaudited)
FOR THE FOUR MONTHS ENDED APRIL 30, 1996
<S> <C>
INVESTMENT INCOME:
Interest $ 24,059
EXPENSES:
Management fees (Note 3) 1,785
Directors' fees (Note 3) 2,292
Transfer agent fees (Note 3) 86
Audit fee 3,352
Custodian fee 99
Miscellaneous 1,785
Total Expenses 9,399
Less Waiver of Expenses (Note 3) (6,378)
Net Expenses 3,021
NET INVESTMENT INCOME 21,038
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 4,678
Net change in unrealized appreciation on investments (81,578)
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (76,900)
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS ($55,862)
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES (unaudited)
For the Four For the
Months Ended Year Ended
4/30/96 12/31/95
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income $ 21,038 $ 58,364
Net realized gain (loss) on investments 4,678 (132)
Net change in unrealized appreciation on investments (81,578) 128,849
Net increase (decrease) in net assets from operations (55,862) 187,081
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (12,100) (57,528)
CAPITAL STOCK ISSUED AND REDEEMED:
Net increase (decrease) in net assets from capital share
transactions (Note 5) (37,974) 282,134
Net increase (decrease) in net assets (105,936) 411,687
NET ASSETS:
Beginning of period 1,159,224 747,537
End of period (including undistributed net investment
income of $9,326 and $388, respectively) $ 1,053,288 $ 1,159,224
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (unaudited)
For the Period
For the For the For the 12/20/93
Four Months Year Year (commence-
Ended Ended Ended ment of
04/30/96 12/31/95 12/31/94 operations) to
12/31/93
Per share data (for a share outstanding
throughout each period):
<S> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.51 $ 9.11 $ 9.95 $ 10.00
Income from investment operations:
Net investment income 0.199 0.582 0.262 0.010
Net realized and unrealized gain (loss)
on investments (0.734) 1.393 (0.841) (0.050)
Total from investment operations (0.535) 1.975 (0.579) (0.040)
Less distributions to shareholders:
From net investment income (0.115) (0.575) (0.261) (0.010)
NET ASSET VALUE - END OF PERIOD $ 9.86 $ 10.51 $ 9.11 $ 9.95
Total Return 1 (5.09%) 22.09% (5.83%) (0.50%)
Ratios (to average net assets)/Supplemental Data:
Expenses* 0.85%2 0.85% 0.85% 0.85%2
Net investment income* 5.90%2 6.13% 6.22% 3.85%2
Portfolio turnover 5% 6% 1% 0%
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 1,053 $ 1,159 $ 748 $ 75
* The investment advisor did not impose its management fee and paid a portion of the Fund's expenses. If these
expenses had been incurred by the Fund for the periods ended December 31, 1993, December 31, 1994, and April 30,
1996, expenses wou.ld have been limited to that allowed by state securities law. If the full expenses allowed by state
securities law had been incurred by the Fund, the net investment income per share and the ratios would have been as
follows:
Net investment income $ 0.143 $ 0.429 $ 0.192 $ 0.010
Ratios(to average net assets):
Expenses 2.50%2 2.46% 2.50% 2.50%2
Net investment income 4.25%2 4.52% 4.57% 2.20%2
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Flexible Yield Series III (the "Fund") is a no-load diversified series of
Manning & Napier Fund, Inc. (the "Corporation"). The Corporation is
organized as a Maryland Corporation and is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment
company.
The total authorized capital stock of the Corporation consists of one
billion shares of common stock each having a par value of $0.01. As of April
30, 1996, 760 million shares have been designated in total among 19 series,
of which 50 million have been designated as Flexible Yield Series III Class O
Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities listed on an exchange are valued at the latest
quoted sales price of the exchange on which the security is traded most
extensively. Securities not traded on valuation date or securities not
listed on an exchange are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed
securities, will normally be valued on the basis of evaluated bid prices.
Securities for which representative prices are not available from the
Fund's pricing service are valued at fair value as determined in good faith
by the Fund's Board of Directors.
Short-term investments that mature in sixty (60) days or less are valued
at amortized cost.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are
purchased or sold. Dividend income is recorded on the ex-dividend date.
Interest income and expenses are recorded on an accrual basis.
Most expenses of the Corporation can be attributed to a specific fund.
Expenses which cannot be directly attributed are apportioned among the funds
in the Corporation.
11
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL INCOME TAXES
The Fund's policy is to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies. The Fund is not
subject to federal income or excise tax to the extent the Fund distributes to
shareholders each year its taxable income, including any net realized gains
on investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made
in the financial statements.
At April 30, 1996, the Fund, for federal income tax purposes, had a capital
loss carryforward of $172, which will expire on December 31, 2003.
The Fund uses the identified cost method for determining realized gain or
loss on investments for both financial statement and federal income tax
reporting purposes.
DISTRIBUTION OF INCOME AND GAINS
Distributions to shareholders of net investment income are made
quarterly. Distributions are recorded on the ex-dividend date. Distributions
of net realized gains are distributed annually. An additional distribution
may be necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, character reclassification between net
income and net gains or other tax adjustments. As a result, net investment
income (loss) and net investment gain (loss) on investment transactions for a
reporting period may differ significantly from distributions to shareholders
during such period. As a result, the Fund may periodically make
reclassification among its capital accounts without impacting the Fund's net
asset value.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Manning & Napier
Advisors, Inc. (the "Advisor"), for which the Fund pays the Advisor a fee,
computed daily and payable monthly, at an annual rate of 0.50% of the Fund's
average daily net assets. The fee amounted to $1,785 for the four months
ended April 30, 1996.
12
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
Under the Fund's Investment Advisory Agreement (the "Agreement"),
personnel of the Advisor provide the Fund with advice and assistance in the
choice of investments and the execution of securities transactions, and
otherwise maintain the Fund's organization. The Advisor also provides the
Fund with necessary office space and portfolio accounting and bookkeeping
services. The salaries of all officers of the Fund and of all Directors who
are "affiliated persons" of the Fund or of the Advisor, and all personnel of
the Fund or of the Advisor performing services relating to research,
statistical and investment activities are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary,
pay other expenses of the Fund in order to maintain total expenses for the
Fund at no more than 0.85% of average daily net assets each year.
Accordingly, the Advisor did not impose any of its fee and paid expenses
amounting to $4,593 for the four months ended April 30, 1996, which is
reflected as a reduction of expenses on the Statement of Operations. The fee
waiver and assumption of expenses by the Advisor is voluntary and may be
terminated at any time.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $86 for the four months ended April 30,
1996.
Manning & Napier Investor Services, Inc., a registered broker-dealer
affiliate of the Advisor, acts as distributor for the Fund's shares. The
services of Manning & Napier Investor Services, Inc. are provided at no
additional cost to the Fund.
The compensation of the non-affiliated Directors totaled $2,292 for the
four months ended April 30, 1996.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term securities, were
$49,234 and $68,504, respectively, for the four months ended April 30, 1996.
13
<PAGE>
Notes to Financial Statements (unaudited)
<TABLE>
<CAPTION>
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Flexible Yield Series III Class O Common Stock were:
For the Four Months For the Year
ended 4/30/96 ended 12/31/95
-------------------- ---------------
Shares Amount Shares
-------------------- --------- ---------------
<S> <C> <C> <C>
Sold 3,048 $ 30,720 23,843
Reinvested 1,000 9,891 4,597
Redeemed (7,579) (78,585) (129)
Total (3,531) $(37,974) 28,311
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Flexible Yield Series III Class O Common Stock were:
Amount
---------
<S> <C>
<C>
Sold $236,968
Reinvested 46,488
Redeemed (1,322)
Total $282,134
</TABLE>
The Advisor owned 10,533 shares on April 30, 1996 and 10,412 shares on
December 31, 1995.
6. FINANCIAL INSTRUMENTS
The Fund may trade in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include
written options and futures contracts and may involve, to a varying degree,
elements of risk in excess of the amounts recognized for financial statement
purposes. No such investments were held by the Fund on April 30, 1996.
7. CHANGE IN FISCAL YEAR END
Effective January 1, 1996, the Fund changed its fiscal year end from
December 31 to October 31.
8. SPECIAL MEETING OF SHAREHOLDERS
On April 10, 1996, a special meeting of the Corporation was held for the
purpose of electing directors. The following directors have been elected:
Stephen B. Ashley, B. Reuben Auspitz, Martin F. Birmingham, Peter L. Faber,
and Harris H. Rusitzky.
14
<PAGE>
<PAGE>
<PAGE>
Manning & Napier Fund, Inc.
MAXIMUM HORIZON SERIES
Semi-Annual Report
April 30, 1996
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
When we introduced two new objectives-based series of the Fund, the Defensive
Series and the Maximum Horizon Series, last November, we also changed the
fiscal year of the two existing series, the Blended Asset Series I and
II. Now all four of the objectives-based series have a fiscal year
ending on October 31st, and the schedule for the Annual and Semi-Annual
Reports has changed as well. This report will provide information for
the six-month period ending April 30, 1996.
As should be expected after the unusually high stock and bond market returns
of 1995, this period has been somewhat unsettled in the markets. Indeed,
the markets have been reacting strongly and quickly to investor
expectations and fears. The specter of inflation was again spooking the
markets, especially following the Bureau of Labor Statistics release
showing an unexpectedly large increase in jobs in the month of February.
Because inflation would decrease the value of future interest payments,
bond prices fall when there are fears of increasing inflation. The
employment report also scared the stock market, as reflected in the
171-point drop in the Dow Jones Industrial Average following its release.
For a variety of reasons, we expect inflation to remain low. Increasing
global competition provides a downward influence on wages, because
companies can look outside the U.S. for workers if wages increase
domestically. Increased competition also restricts the ability of
companies to raise prices. In addition, the sharp increases in
productivity in U.S. factories in the last few years mean that more output
can be created with less labor -- this also acts against rising wages and
prices.
Another component of prices which can lead to inflation is the price of raw
materials. Food and energy prices have increased, due partly on the
harsh winter that most of the nation experienced. Grain prices have
also been affected by increased exports. We are keeping a close watch
on commodity prices, but it should be noted that prices of other
commodities have not increased, and in many cases they are actually
declining.
Our long-term overview remains in place. We continue to expect long-term
interest rates to resume their decline and for inflation to remain in
check, while we continue to experience moderate growth. We have kept the
allocation between stocks, bonds, and cash relatively stable over this
period, as our long-term outlook has been steady.
In the stock portion of the portfolio, we continue to hold consumer cyclical
and foreign utilities, and we have reduced our transportation holdings.
Our holdings in technology stocks were relatively small at the beginning of
the year, but we have added technology stocks in the last few months as we
identified potential opportunities.
1
<PAGE>
Management Discussion and Analysis (continued)
In the bond portion of the portfolio, we view the spike in rates as an
opportunity to lengthen the duration of the bonds in order to benefit from
our overview of falling rates. Longer maturity bonds offer higher yields,
and they also offer the greatest opportunity for capital appreciation when
long-term interest rates fall, as we expect.
We have positioned the portfolio to benefit from the expected trends of
continued moderate growth in stocks and declining long-term interest rates
in bonds. Our holdings in cash and cash equivalents are fairly high while
we look for attractive investment opportunities. Although investors should
expect some short-term volatility going forward, we would advise investors
to focus on the longer term trends which tend to have a more important
effect on long-term investment success.
We appreciate your confidence and wish you all the best throughout the rest of
1996.
Sincerely,
Manning & Napier Advisors, Inc.
[GRAPHIC]
[PIE CHART]
Stocks - 51%
Bonds - 42%
Cash & Equivalents - 7%
2
<PAGE>
Performance Update as of April 30, 1996 (unaudited)
The value of a $10,000 investment in the Manning & Napier Fund, Inc. - Maximum
Horizon Series from its inception (11/1/95) to present (4/30/96) as
compared to the Standard & Poor's (S&P) 500 Total Return Index. 1
<TABLE>
<CAPTION>
Manning & Napier Fund, Inc. - Maximum Horizon Series
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
Inception 2 $ 10,753 7.53% N/A
</TABLE>
<TABLE>
<CAPTION>
Standard & Poor's 500 Total Return Index
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
Inception 2 $ 11,376 13.76% N/A
</TABLE>
1 The Standard & Poor's (S&P) 500 Total Return Index is an unmanaged
capitalization-weighted measure of approximately 500 widely held common
stocks listed on the New York Stock Exchange, American Stock Exchange, and
Over-The-Counter market. The Index returns assume reinvestment of income
and, unlike Fund returns, do not reflect any fees or expenses.
2 The Fund and Index performance are calculated from November 1, 1995, the
Fund's inception date. The Fund's performance is historical and may not be
indicative of future results.
[GRAPHIC]
Line Chart
Data for Line Chart to follow:
<TABLE>
<CAPTION>
Manning & Napier Maximum Standard Poors 500 Total
Horizon Series Return Index
<S> <C> <C>
11/01/95* $ 10,000 $ 10,000
01/31/96 10,492 11,001
04/30/96 10,753 11,376
</TABLE>
*Inception date
3
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Value
Shares (Note 2)
COMMON STOCK - 51.1%
<S> <C> <C>
AIR TRANSPORTATION - 1.9%
Federal Express Corp.* 100 $ 8,074
APPAREL - 3.3%
VF Corp. 250 14,250
CHEMICAL & ALLIED PRODUCTS - 5.1%
Alliance Pharmaceutical Corp.* 100 1,812
International Specialty Products, Inc.* 125 1,563
Proctor & Gamble Co. 225 19,013
22,388
COMMUNICATIONS - 6.3%
RADIO & TELEPHONE COMMUNICATIONS - 1.9%
Stet Societa' Finanziaria Telefonica S.p.A. 250 8,438
TELEPHONE COMMUNICATIONS - 4.4%
BCE, Inc. 150 5,906
Cable & Wireless plc. - ADR 225 5,259
Telefonica de Espana - ADR 150 7,894
19,059
27,497
COMPUTER EQUIPMENT - 1.8%
Bay Networks, Inc.* 250 7,875
CRUDE PETROLEUM & NATURAL GAS - 4.2%
Burlington Resources, Inc. 200 7,450
Seagull Energy Corp.* 300 7,313
YPF Sociedad Anonima - ADR 150 3,281
18,044
ELECTRONICS & ELECTRICAL EQUIPMENT - 7.0%
HOUSEHOLD APPLIANCES - 2.4%
Sunbeam Corporation, Inc. 300 4,163
Whirlpool Corp. 100 6,013
10,176
SEMICONDUCTORS - 2.0%
Intel Corp. 125 8,468
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Shares/Principal Value
Amount (Note 2)
<S> <C> <C>
Electronic & Electrical Equipment (continued)
TELECOMMUNICATIONS EQUIPMENT - 2.6%
General Instrument Corp.* 350 $ 11,463
30,107
GLASS PRODUCTS - 0.8%
Corning, Inc. 100 3,475
HEALTH SERVICES - 1.1%
Caremark International, Inc. 175 4,834
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 0.9%
Eastman Kodak Co. 50 3,825
RESTAURANTS - 2.5%
McDonald's Corp. 225 10,772
RETAIL - 9.6%
RETAIL - SHOE STORES - 0.8%
Brown Group, Inc. 225 3,600
RETAIL - SPECIALTY STORES - 8.8%
Fabri-Centers of America - Class A* 150 1,538
Fabri-Centers of America - Class B* 150 1,500
Fingerhut Companies, Inc. 425 5,418
Hancock Fabrics, Inc. 200 2,200
Home Depot, Inc. 250 11,843
Tandy Corp. 300 15,563
38,062
41,662
SOFTWARE - 5.2%
Oracle Corp.* 675 22,781
UTILITIES - ELECTRIC - 1.4%
Enersis S.A. -ADR 200 5,950
TOTAL COMMON STOCK
(Identified Cost $199,926) 221,534
U.S. TREASURY SECURITIES - 42.2%
U.S. TREASURY BONDS - 12.5%
U.S. Treasury Bond, 6.875%, 8/15/2025 (Identified Cost $60,091) 55,000 54,347
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Principal Amount/ Value
Shares (Note 2)
<S> <C> <C>
U.S. TREASURY NOTES - 27.4%
U.S. Treasury Note, 5.375%, 11/30/1997 $ 25,000 $ 24,781
U.S. Treasury Note, 6.125%, 9/30/2000 70,000 69,300
U.S. Treasury Note, 6.50%, 8/15/2005 25,000 24,672
TOTAL U.S. TREASURY NOTES
(Identified Cost $121,735) 118,753
U.S. TREASURY BILLS - 2.3%
U.S. Treasury Bill, 5/16/1996 (Identified Cost $9,980) 10,000 9,980
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $191,806) 183,080
SHORT-TERM INVESTMENTS - 1.9%
Dreyfus U.S. Treasury Money Market Reserves
(Identified Cost $8,434) 8,434 8,434
TOTAL INVESTMENTS - 95.2%
(Identified Cost $400,166) 413,048
OTHER ASSETS, LESS LIABILITIES - 4.8% 20,801
NET ASSETS - 100% $433,849
</TABLE>
*Non-income producing security
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At April 30, 1996, the net unrealized appreciation based on identified cost for federal income tax purposes
of $400,166 was as follows:
<S> <C>
Aggregate gross unrealized appreciation for all investments in which
there was an excess of value over tax cost $ 24,059
Aggregate gross unrealized depreciation for all investments in which
there was an excess of tax cost over value (11,177)
UNREALIZED APPRECIATION - NET $ 12,882
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES (unaudited)
APRIL 30, 1996
<S> <C>
ASSETS:
Investments, at value (Identified Cost $400,166)(Note 2) $413,048
Cash 17,982
Interest receivable 2,054
Dividends receivable 197
Receivable from investment advisor (Note 3) 7,805
TOTAL ASSETS 441,086
LIABILITIES:
Accrued Directors' fees (Note 3) 3,494
Audit fee payable 3,692
Other payables and accrued expenses 51
TOTAL LIABILITIES 7,237
NET ASSETS FOR 40,535 SHARES OUTSTANDING $433,849
NET ASSETS CONSIST OF:
Capital Stock $ 405
Additional paid-in-capital 415,924
Undistributed net investment income 3,035
Accumulated net realized gain on investments 1,603
Net unrealized appreciation on investments 12,882
TOTAL NET ASSETS $433,849
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($433,849/40,535 shares) $ 10.70
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS (unaudited)
FOR THE SIX MONTHS ENDED APRIL 30, 1996
<S> <C>
INVESTMENT INCOME:
Interest $ 4,361
Dividends 859
Total Investment Income 5,220
EXPENSES:
Management fees (Note 3) 1,278
Directors' fees (Note 3) 3,494
Transfer agent fees (Note 3) 31
Audit fee 3,967
Custodian fee 900
Miscellaneous 958
Total Expenses 10,628
Less Waiver of Expenses (Note 3) (9,083)
Net Expenses 1,545
NET INVESTMENT INCOME 3,675
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments 1,603
Net change in unrealized appreciation on investments 12,882
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 14,485
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $18,160
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES (unaudited)
For the Six
Months Ended
4/30/96
INCREASE (DECREASE) IN NET ASSETS:
<S> <C>
OPERATIONS:
Net investment income $ 3,675
Net realized gain on investments 1,603
Net change in unrealized appreciation on investments 12,882
Net increase in net assets from operations 18,160
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (640)
CAPITAL STOCK ISSUED AND REDEEMED:
Net increase in net assets from capital share
transactions (Note 5) 416,329
Net increase in net assets 433,849
NET ASSETS:
Beginning of period -
End of period (including undistributed net investment
income of $3,035) $ 433,849
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (unaudited)
For the Six
Months Ended
4/30/96
Per share data (for a share outstanding throughout
each period )
<S> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.00
Income from investment operations:
Net investment income 0.126
Net realized and unrealized gain (loss)
on investments 0.625
Total from investment operations 0.751
Less distributions to shareholders:
From net investment income (0.051)
NET ASSET VALUE - END OF PERIOD $ 10.70
Total Return 1 7.53%
Ratios (to average net assets) / Supplemental Data:
Expenses* 1.20%2
Net investment income* 2.85%2
Portfolio turnover 23%
Average commission rate paid $ 0.0904
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 434
* The investment advisor did not impose its management fee and paid a portion of the Fund's expenses.
If these expenses had been incurred by the Fund, expenses would have been limited to that allowed
by state securities law and the net investment income per share and the ratios would have been as
follows:
Net investment income $ 0.069
Ratios (to average net assets):
Expenses 2.50%2
Net investment income 1.55%2
1 Represents aggregate total return for the period indicated.
2 Annualized
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Maximum Horizon Series (the "Fund") is a no-load diversified series of
Manning & Napier Fund, Inc. (the "Corporation"). The Corporation is
organized as a Maryland Corporation and is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment
company.
The total authorized capital stock of the Corporation consists of one
billion shares of common stock each having a par value of $0.01. As of April
30, 1996, 760 million shares have been designated in total among 19 series,
of which 100 million have been designated as Maximum Horizon Series Class B
Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities,
options and corporate bonds, listed on an exchange are valued at the latest
quoted sales price of the exchange on which the security is traded most
extensively. Securities not traded on valuation date or securities not
listed on an exchange are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed
securities, will normally be valued on the basis of evaluated bid prices.
Securities for which representative prices are not available from the
Fund's pricing service are valued at fair value as determined in good faith
by the Fund's Board of Directors.
Short-term investments that mature in sixty (60) days or less are valued
at amortized cost.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are
purchased or sold. Dividend income is recorded on the ex-dividend date.
Interest income and expenses are recorded on an accrual basis.
Most expenses of the Corporation can be attributed to a specific fund.
Expenses which cannot be directly attributed are apportioned among the funds
in the Corporation.
11
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL INCOME TAXES
The Fund's policy is to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies. The Fund is not
subject to federal income or excise tax to the extent the Fund distributes to
shareholders each year its taxable income, including any net realized gains
on investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made
in the financial statements.
The Fund uses the identified cost method for determining realized gain or
loss on investments for both financial statement and federal income tax
reporting purposes.
DISTRIBUTION OF INCOME AND GAINS
Distributions to shareholders of net investment income are made
semi-annually. Distributions are recorded on the ex-dividend date.
Distributions of net realized gains are distributed annually. An additional
distribution may be necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, character reclassification between net
income and net gains or other tax adjustments. As a result, net investment
income (loss) and net investment gain (loss) on investment transactions for a
reporting period may differ significantly from distributions to shareholders
during such period. As a result, the Fund may periodically make
reclassification among its capital accounts without impacting the Fund's net
asset value.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Manning & Napier
Advisors, Inc. (the "Advisor"), for which the Fund pays the Advisor a fee,
computed daily and payable monthly, at an annual rate of 1.0% of the Fund's
average daily net assets. The fee amounted to $1,278 for the six months
ended April 30, 1996.
Under the Fund's Investment Advisory Agreement (the "Agreement"),
personnel of the Advisor provide the Fund with advice and assistance in the
choice of investments and the execution of securities transactions, and
otherwise maintain the Fund's organization. The Advisor also provides the
Fund with necessary office space and portfolio accounting and bookkeeping
services. The salaries of all officers of the Fund and of all Directors who
are "affiliated persons" of the Fund or of the Advisor, and all personnel
12
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
of the Fund or of the Advisor performing services relating to research,
statistical and investment activities are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary,
pay other expenses of the Fund in order to maintain total expenses for the
Fund at no more than 1.2% of average daily net assets each year.
Accordingly, the Advisor did not impose any of its fee and paid expenses
amounting to $7,805 for the six months ended April 30, 1996, which is
reflected as a reduction of expenses on the Statement of Operations. The fee
waiver and assumption of expenses by the Advisor is voluntary and may be
terminated at any time.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $31 for the six months ended April 30,
1996.
Manning & Napier Investor Services, Inc., a registered broker-dealer
affiliate of the Advisor, acts as distributor for the Fund's shares. The
services of Manning & Napier Investor Services, Inc. are provided at no
additional cost to the Fund.
The compensation of the non-affiliated Directors totaled $3,494 for the
six months ended April 30, 1996.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term securities, were
$430,817 and $50,534, respectively, for the six months ended April 30, 1996.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Maximum Horizon Series Class B Common Stock
were:
<TABLE>
<CAPTION>
For the Six Months
Ended 4/30/96
Shares Amount
------------------- ---------
<S> <C> <C>
Sold 48,561 $499,381
Reinvested 62 640
Redeemed (8,088) (83,692)
Total 40,535 $416,329
</TABLE>
The Advisor owned 12,562 shares on April 30, 1996.
13
<PAGE>
Notes to Financial Statements (unaudited)
6. FINANCIAL INSTRUMENTS
The Fund may trade in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include
written options, forward foreign currency exchange contracts, and futures
contracts and may involve, to a varying degree, elements of risk in excess of
the amounts recognized for financial statement purposes. No such investments
were held by the Fund on April 30, 1996.
7. SPECIAL MEETING OF SHAREHOLDERS
On April 10, 1996, a special meeting of the Corporation was held for the
purpose of electing directors. The following directors have been elected:
Stephen B. Ashley, B. Reuben Auspitz, Martin F. Birmingham, Peter L. Faber,
and Harris H. Rusitzky.
14
<PAGE>
<PAGE>
<PAGE>
Manning & Napier Fund, Inc.
DEFENSIVE SERIES
Semi-Annual Report
April 30, 1996
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
When we introduced two new objectives-based series of the Fund, the Defensive
Series and the Maximum Horizon Series, last November, we also changed the
fiscal year of the two existing series, the Blended Asset Series I and
II. Now all four of the objectives-based series have a fiscal year
ending on October 31st, and the schedule for the Annual and Semi-Annual
Reports has changed as well. This report will provide information for
the six-month period ending April 30, 1996.
As should be expected after the unusually high stock and bond market returns
of 1995, this period has been somewhat unsettled in the markets. Indeed,
the markets have been reacting strongly and quickly to investor
expectations and fears. The specter of inflation was again spooking the
markets, especially following the Bureau of Labor Statistics release
showing an unexpectedly large increase in jobs in the month of February.
Because inflation would decrease the value of future interest payments,
bond prices fall when there are fears of increasing inflation. The
employment report also scared the stock market, as reflected in the
171-point drop in the Dow Jones Industrial Average following its release.
For a variety of reasons, we expect inflation to remain low. Increasing
global competition provides a downward influence on wages, because
companies can look outside the U.S. for workers if wages increase
domestically. Increased competition also restricts the ability of
companies to raise prices. In addition, the sharp increases in
productivity in U.S. factories in the last few years mean that more output
can be created with less labor -- this also acts against rising wages and
prices.
Another component of prices which can lead to inflation is the price of raw
materials. Food and energy prices have increased, due partly on the
harsh winter that most of the nation experienced. Grain prices have
also been affected by increased exports. We are keeping a close watch
on commodity prices, but it should be noted that prices of other
commodities have not increased, and in many cases they are actually
declining.
Our long-term overview remains in place. We continue to expect long-term
interest rates to resume their decline and for inflation to remain in
check, while we continue to experience moderate growth. We have kept the
allocation between stocks, bonds, and cash relatively stable over this
period, as our long-term outlook has been steady.
In the stock portion of the portfolio, we continue to hold consumer cyclical
and foreign utilities, and we have reduced our transportation holdings.
Our holdings in technology stocks were relatively small at the beginning of
the year, but we have added technology stocks in the last few months as we
identified potential opportunities.
1
<PAGE>
Management Discussion and Analysis (continued)
In the bond portion of the portfolio, we view the spike in rates as an
opportunity to lengthen the duration of the bonds in order to benefit from
our overview of falling rates. Longer maturity bonds offer higher yields,
and they also offer the greatest opportunity for capital appreciation when
long-term interest rates fall, as we expect.
We have positioned the portfolio to benefit from the expected trends of
continued moderate growth in stocks and declining long-term interest rates
in bonds. Our holdings in cash and cash equivalents are fairly high while
we look for attractive investment opportunities. Although investors should
expect some short-term volatility going forward, we would advise investors
to focus on the longer term trends which tend to have a more important
effect on long-term investment success.
We appreciate your confidence and wish you all the best throughout the rest of
1996.
Sincerely,
Manning & Napier Advisors, Inc.
[GRAPHIC]
[Pie Chart]
Bonds - 86%
Stocks - 10%
Cash & Equivalents - 4%
2
<PAGE>
Performance Update as of April 30, 1996 (unaudited)
The value of a $10,000 investment in the Manning & Napier Fund, Inc. -
Defensive Series from its inception (11/1/95) to present (4/30/96) as
compared to the Lehman Brothers Intermediate Bond Index and a Balanced
Index. 1
<TABLE>
<CAPTION>
Manning & Napier Fund, Inc. - Defensive Series
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
Inception 2 $ 10,116 1.16% N/A
</TABLE>
<TABLE>
<CAPTION>
Lehman Brothers Intermediate Bond Index
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
Inception 2 $ 10,116 1.16% N/A
</TABLE>
<TABLE>
<CAPTION>
Balanced Index
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
Inception 2 $ 10,301 3.01% N/A
</TABLE>
1 The Lehman Brothers Intermediate Bond Index is a market value weighted
measure of approximately 3,260 corporate and government securities. The
Index is comprised of investment grade securities with maturities greater
than one year but less than ten years. The Balanced Index is 15% Standard
& Poor's (S&P) 500 Total Return Index and 85% Lehman Brothers Intermediate
Bond Index. The S&P 500 Total Return Index is an unmanaged
capitalization-weighted measure of 500 widely held common stocks listed on
the New York Stock Exchange, American Stock Exchange, and Over-The-Counter
market. Both Indices returns assume reinvestment of income and, unlike Fund
returns, do not reflect any fees or expenses.
2 Performance numbers for the Fund and Indices are calculated from November 1,
1995, the Fund's inception date. The Fund's performance is historical and
may not be indicative of future results.
[GRAPHIC]
Line Chart
Data for Line Chart to follow:
<TABLE>
<CAPTION>
Manning & Napier Lehman Brothers Intermediate
Defensive Series Bond Index Balanced Index
<S> <C> <C> <C>
11/01/95* $ 10,000 $ 10,000 $ 10,000
01/31/96 10,287 10,326 10,425
04/30/96 10,116 10,116 10,301
</TABLE>
* Inception date
3
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Value
Shares (Note 2)
COMMON STOCK - 9.93%
<S> <C> <C>
AIR TRANSPORTATION - 1.17%
Federal Express Corp.* 75 $ 6,056
APPAREL - 1.38%
VF Corp. 125 7,125
COMMUNICATIONS - 0.95%
BCE, Inc. 50 1,968
Cable & Wireless plc. - ADR 125 2,922
4,890
COMPUTER EQUIPMENT - 0.30%
Bay Networks, Inc.* 50 1,575
ELECTRONICS & ELECTRICAL EQUIPMENT - 2.33%
HOUSEHOLD APPLIANCES - 1.05%
Sunbeam Corporation, Inc. 175 2,429
Whirlpool Corp. 50 3,006
5,435
SEMICONDUCTORS - 0.33%
Intel Corp. 25 1,695
TELECOMMUNICATIONS EQUIPMENT - 0.95%
General Instrument Corp.* 150 4,912
12,042
ENGINEERING SERVICES - 0.13%
Jacobs Engineering Group, Inc.* 25 694
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 0.37%
Eastman Kodak Co. 25 1,912
RESTAURANTS - 0.23%
McDonald's Corp. 25 1,197
RETAIL - 2.50%
RETAIL - SHOE STORES - 0.31%
Brown Group, Inc. 100 1,600
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
<S> <C> <C>
Shares/Principal Value
Amount (Note 2)
RETAIL (CONTINUED)
RETAIL - SPECIALTY STORES - 2.19%
Fabri-Centers of America - Class B* 50 $ 500
Fingerhut Companies, Inc. 175 2,232
Hancock Fabrics, Inc. 75 825
Tandy Corp. 150 7,781
11,338
12,938
UTILITIES - ELECTRIC - 0.57%
Enersis S.A. - ADR 100 2,975
TOTAL COMMON STOCK
(Identified Cost $46,194) 51,404
U.S. TREASURY SECURITIES - 86.22%
U.S. TREASURY BONDS - 23.84%
U.S. Treasury Bond, 6.50%, 5/15/2005 $ 90,000 88,791
U.S. Treasury Bond, 6.875%, 8/15/2025 35,000 34,584
TOTAL U.S. TREASURY BONDS
(Identified Cost $130,188) 123,375
U.S. TREASURY NOTES - 56.59%
U.S. Treasury Note, 6.00%, 8/31/1997 120,000 120,150
U.S. Treasury Note, 6.125%, 9/30/2000 95,000 94,050
U.S. Treasury Note, 6.25%, 2/15/2003 80,000 78,575
TOTAL U.S. TREASURY NOTES
(Identified Cost $299,006) 292,775
U.S. TREASURY BILLS - 5.79%
U.S. Treasury Bill, 5/16/1996 (Identified Cost $29,939) 30,000 29,939
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $459,133) 446,089
SHORT-TERM INVESTMENTS - 2.66%
Dreyfus U.S. Treasury Money Market Reserves
(Identified Cost $13,758) 13,758 13,758
TOTAL INVESTMENTS - 98.81%
(Identified Cost $519,085) 511,251
OTHER ASSETS, LESS LIABILITIES - 1.19% 6,148
NET ASSETS - 100% $517,399
*Non-income producing security
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Federal Tax Information - April 30, 1995 (unaudited)
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At April 30, 1996, the net unrealized depreciation based on identified cost for federal income tax purposes of
519,085 was as follows:
<S> <C>
Aggregate gross unrealized appreciation for all investments in which there was
an excess of value over tax cost $ 5,793
Aggregate gross unrealized depreciation for all investments in which there was
an excess of tax cost over value (13,627)
UNREALIZED DEPRECIATION - NET ($7,834)
</TABLE>
The accompnaying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
APRIL 30, 1996
<S> <C>
ASSETS:
Investments, at value (Identified Cost $519,085)(Note 2) $511,251
Cash 507
Interest receivable 5,953
Dividends receivable 79
Receivable from investment advisor (Note 3) 7,429
TOTAL ASSETS 525,219
LIABILITIES:
Accrued Directors' fees (Note 3) 3,493
Audit fee payable 3,692
Other payables and accrued expenses 635
TOTAL LIABILITIES 7,820
NET ASSETS FOR 51,399 SHARES OUTSTANDING $517,399
NET ASSETS CONSIST OF:
Capital Stock $ 514
Additional paid-in-capital 515,518
Undistributed net investment income 6,407
Accumulated net realized gain on investments 2,794
Net unrealized depreciation on investments (7,834)
TOTAL NET ASSETS $517,399
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($517,399/51,399 shares) $ 10.07
</TABLE>
The accompanying notes are an integral part of the financail statements.
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 1996
<S> <C>
INVESTMENT INCOME:
Interest $10,043
Dividends 430
Total Investment Income 10,473
EXPENSES:
Management fees (Note 3) 1,654
Directors' fees (Note 3) 3,493
Transfer agent fees (Note 3) 50
Audit fee 3,967
Custodian fee 1,040
Miscellaneous 951
Total Expenses 11,155
Less Waiver of Expenses (Note 3) (9,083)
Net Expenses 2,072
NET INVESTMENT INCOME 8,401
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments 2,794
Net change in unrealized depreciation on investments (7,834)
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (5,040)
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 3,361
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES (UNAUDITED)
For the Six
Months Ended
4/30/96
INCREASE (DECREASE) IN NET ASSETS:
<S> <C>
OPERATIONS:
Net investment income $ 8,401
Net realized gain on investments 2,794
Net change in unrealized depreciation on investments (7,834)
Net increase in net assets from operations 3,361
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,994)
CAPITAL STOCK ISSUED AND REDEEMED:
Net increase in net assets from capital share
transactions (Note 5) 516,032
Net increase in net assets 517,399
NET ASSETS:
Beginning of period -
End of period (including undistributed net investment
income of $6,407 ) $ 517,399
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (UNAUDITED)
For the Six
Months Ended
4/30/96
Per share data (for a share outstanding throughout
each period )
<S> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.00
Income from investment operations:
Net investment income 0.171
Net realized and unrealized gain (loss)
on investments (0.055)
Total from investment operations 0.116
Less distributions to shareholders:
From net investment income (0.046)
NET ASSET VALUE - END OF PERIOD $ 10.07
Total Return1 1.16%
Ratios (to average net assets) / Supplemental Data:
Expenses* 1.00%2
Net investment income* 4.04%2
Portfolio turnover 8%
Average commission rate paid $ 0.0756
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 517
*The investment advisor did not impose its management fee and paid a portion of the Fund's expenses. If
these expenses had been incurred by the Fund, expenses would have been limited to that allowed by state
securities law and the net investment income per share and the ratios would have been as follows:
Net investment income $ 0.108
Ratios (to average net assets):
Expenses 2.50%2
Net investment income 2.54%2
1 Represents aggregate total return for the period indicated.
2 Annualized
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Defensive Series (the "Fund") is a no-load diversified series of Manning
& Napier Fund, Inc. (the "Corporation"). The Corporation is organized as a
Maryland Corporation and is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company.
The total authorized capital stock of the Corporation consists of one
billion shares of common stock each having a par value of $0.01. As of April
30, 1996, 760 million shares have been designated in total among 19 series,
of which 20 million have been designated as Defensive Series Class E Common
Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities,
options and corporate bonds, listed on an exchange are valued at the latest
quoted sales price of the exchange on which the security is traded most
extensively. Securities not traded on valuation date or securities not
listed on an exchange are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed
securities, will normally be valued on the basis of evaluated bid prices.
Securities for which representative prices are not available from the
Fund's pricing service are valued at fair value as determined in good faith
by the Fund's Board of Directors.
Short-term investments that mature in sixty (60) days or less are valued
at amortized cost.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are
purchased or sold. Dividend income is recorded on the ex-dividend date.
Interest income and expenses are recorded on an accrual basis.
Most expenses of the Corporation can be attributed to a specific fund.
Expenses which cannot be directly attributed are apportioned among the funds
in the Corporation.
11
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL INCOME TAXES
The Fund's policy is to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies. The Fund is not
subject to federal income or excise tax to the extent the Fund distributes to
shareholders each year its taxable income, including any net realized gains
on investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made
in the financial statements.
The Fund uses the identified cost method for determining realized gain or
loss on investments for both financial statement and federal income tax
reporting purposes.
DISTRIBUTION OF INCOME AND GAINS
Distributions to shareholders of net investment income are made
semi-annually. Distributions are recorded on the ex-dividend date.
Distributions of net realized gains are distributed annually. An additional
distribution may be necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, character reclassification between net
income and net gains or other tax adjustments. As a result, net investment
income (loss) and net investment gain (loss) on investment transactions for a
reporting period may differ significantly from distributions to shareholders
during such period. As a result, the Fund may periodically make
reclassification among its capital accounts without impacting the Fund's net
asset value.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Manning & Napier
Advisors, Inc. (the "Advisor"), for which the Fund pays the Advisor a fee,
computed daily and payable monthly, at an annual rate of 0.8% of the Fund's
average daily net assets. The fee amounted to $1,654 for the six months
ended April 30, 1996.
Under the Fund's Investment Advisory Agreement (the "Agreement"),
personnel of the Advisor provide the Fund with advice and assistance in the
choice of investments and the execution of securities transactions, and
otherwise maintain the Fund's organization. The Advisor also provides the
Fund with necessary office space and portfolio accounting and bookkeeping
services. The salaries of all officers of the Fund and of all Directors who
are "affiliated persons" of the Fund or of the Advisor, and all personnel of
the Fund or of the Advisor performing services relating to research,
statistical and investment activities are paid by the Advisor.
12
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
The Advisor has voluntarily agreed to waive its fee and, if necessary,
pay other expenses of the Fund in order to maintain total expenses for the
Fund at no more than 1.0% of average daily net assets each year.
Accordingly, the Advisor did not impose any of its fee and paid expenses
amounting to $7,429 for the six months ended April 30, 1996, which is
reflected as a reduction of expenses on the Statement of Operations. The fee
waiver and assumption of expenses by the Advisor is voluntary and may be
terminated at any time.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $50 for the six months ended April 30,
1996.
Manning & Napier Investor Services, Inc., a registered broker-dealer
affiliate of the Advisor, acts as distributor for the Fund's shares. The
services of Manning & Napier Investor Services, Inc. are provided at no
additional cost to the Fund.
The compensation of the non-affiliated Directors totaled $3,493 for the
six months ended April 30, 1996.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term securities, were
$498,886 and $25,413, respectively, for the six months ended April 30, 1996.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Defensive Series Class E Common Stock were:
<TABLE>
<CAPTION>
For the Six Months
Ended April 30, 1996
Shares Amount
--------------------- ---------
<S> <C> <C>
Sold 51,567 $517,718
Reinvested 198 1,994
Redeemed (366) (3,680)
Total 51,399 $516,032
</TABLE>
The Advisor owned 12,557 shares on April 30, 1996.
13
<PAGE>
Notes to Financial Statements (unaudited)
6. FINANCIAL INSTRUMENTS
The Fund may trade in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include
written options, forward foreign currency exchange contracts, and futures
contracts and may involve, to a varying degree, elements of risk in excess of
the amounts recognized for financial statement purposes. No such investments
were held by the Fund on April 30, 1996.
7. SPECIAL MEETING OF SHAREHOLDERS
On April 10, 1996, a special meeting of the Corporation was held for the
purpose of electing directors. The following directors have been elected:
Stephen B. Ashley, B. Reuben Auspitz, Martin F. Birmingham, Peter L. Faber,
and Harris H. Rusitzky.
14
<PAGE>
<PAGE>
<PAGE>
Manning & Napier Fund, Inc.
TAX MANAGED SERIES
Semi-Annual Report
April 30, 1996
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
This Semi-Annual Report marks the first report to shareholders of the Tax
Managed Series of the Manning & Napier Fund. While this particular
Series is new, it draws upon the investment strategies, disciplines, and
pricing techniques used by the Funds Advisor for over 25 years.
The objective of this Series is simple: it is to achieve the high levels of
return typically associated with the stock market while seeking to
minimize the impact of taxes. In striving for this objective the Series
will emphasize a buy and hold strategy which will minimize the amount of
realized gains over the short-term. The rules governing mutual funds
require us to pay out any capital gains annually, and these distributions
are considered taxable income to non-exempt investors. As a result, the
Series may have a low level of dividends while instead emphasizing the
portion of total return that comes from price appreciation. In seeking to
attain its goal the Series will seek to invest all of its assets in equity
securities. While equity securities have historically provided high total
returns, there is also a correspondingly high level of volatility over
shorter time periods.
In selecting stocks for inclusion in the Series portfolio, the Advisor will
look to purchase stocks of companies it believes have strong long-term
business prospects and attractive valuations. This very long-term view
allows the portfolio to have relatively low levels of turnover, a
characteristic designed to minimize the amount of realized gains that
result in the payment of taxes.
As with any equity investment, the shareholders of the Tax Managed Series
should have a long-term investment time horizon. Similarly, the
performance of this Series should be evaluated over a long time period,
preferably a complete market cycle which measures the performance of the
Series through periods of strong and weak market performance.
We thank you for your confidence and wish you all the best throughout the rest
of 1996.
Sincerely,
Manning & Napier Advisors, Inc.
1
<PAGE>
Portfolio Composition - As of April 30, 1996 (unaudited)
[GRAPHIC]
[PIE CHART]
Electronics & Electrical Equipment - 21%
Communications - 4%
Miscellaneous* - 15%
Textiles - 3%
Software - 12%
Retail - 18%
Chemicals & Allied Products - 7%
Apparel - 3%
Air Transportation - 4%
Restaurants - 5%
Health Services - 8%
*Miscellaneous includes:
Computer Equipment
Fabricated Metal Products
Food
Glass Products
Plastic Products
Primary Metal Industries
Printing Publishing
Surgical & Medical Instruments
Utilities - Electric
2
<PAGE>
Performance Update as of April 30, 1996 (unaudited)
The value of a $10,000 investment in the Manning & Napier Fund, Inc. - Tax
Managed Series from its inception (11/1/95) to present (4/30/96) as
compared to the Standard & Poor's (S&P) 500 Total Return Index. 1
<TABLE>
<CAPTION>
Manning & Napier Fund, Inc. - Tax Managed Series
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
Inception 2 $ 10,980 9.80% N/A
</TABLE>
<TABLE>
<CAPTION>
Standard & Poor's (S&P) 500 Total Return
Total Return
Through Growth of $10,000 Average
04/30/96 Investment Cumulative Annual
<S> <C> <C> <C>
Inception 2 $ 11,376 13.76% N/A
</TABLE>
1The Standard & Poor's (S&P) 500 Total Return Index is an unmanaged
capitalization-weighted measure of 500 widely held common stocks listed
on the New York Stock Exchange, American Stock Exchange, and the
Over-The-Counter Market. The Index returns assume reinvestment of
income and, unlike Fund returns, do not reflect any fees or expenses.
2 The Fund and Index performance are calculated from November 1, 1995, the
Fund's inception date. The Fund's performance is historical and may not be
indicative of future results.
[GRAPHIC]
Line Chart
Data for Line Chart to follow:
<TABLE>
<CAPTION>
Manning & Napier Tax Managed Standard & Poors 500 Total
Series Return Index
<S> <C> <C>
11/01/95* $ 10,000 $ 10,000
11/30/95 10,090 10,439
12/31/95 10,010 10,640
01/31/96 10,100 11,001
02/29/96 10,400 11,104
03/31/96 10,410 11,211
04/30/96 10,980 11,376
</TABLE>
*Inception date
3
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Value
Shares (Note 2)
COMMON STOCK - 97.46%
<S> <C> <C>
AIR TRANSPORTATION - 4.20%
Federal Express Corp.* 100 $ 8,075
APPAREL - 2.96%
VF Corp. 100 5,700
CHEMICAL & ALLIED PRODUCTS - 7.25%
Alliance Pharmaceutical Corp.* 325 5,890
Colgate-Palmolive Co. 50 3,831
Procter & Gamble Co. 50 4,225
13,946
COMMUNICATIONS - 3.77%
Children's Broadcasting Corp.* 237 1,985
Telefonica de Espana - ADR 100 5,262
7,247
COMPUTER EQUIPMENT - 2.46%
Bay Networks, Inc.* 150 4,725
ELECTRONICS & ELECTRICAL EQUIPMENT - 20.02%
HOUSEHOLD APPLIANCES - 7.58%
Sunbeam Corporation, Inc. 400 5,550
Whirlpool Corp. 150 9,019
14,569
SEMICONDUCTORS - 5.29%
Intel Corp. 150 10,163
TELECOMMUNICATION EQUIPMENT - 7.15%
BroadBand Technologies, Inc.* 250 6,375
General Instrument Corp.* 225 7,369
13,744
38,476
FABRICATED METAL PRODUCTS - 1.87%
Material Sciences Corp.* 225 3,600
FOOD - 0.97%
Grist Mill Co.* 275 1,856
GLASS PRODUCTS - 1.51%
Libbey, Inc. 125 2,906
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
Value
Shares (Note 2)
<S> <C> <C>
HEALTH SERVICES - 8.15%
Caremark International, Inc. 250 $ 6,906
Quantum Health Resources, Inc.* 250 3,562
Rehabcare Group, Inc.* 175 2,734
U. S. Physical Therapy, Inc.* 225 2,475
15,677
PLASTIC PRODUCTS - 1.20%
Carlisle Plastics, Inc.* 475 2,315
PRIMARY METAL INDUSTRIES - 1.87%
Gibraltar Steel Corp.* 200 3,600
PRINTING & PUBLISHING - 1.85%
Playboy Enterprises, Inc. - Class B* 300 3,563
RESTAURANTS - 4.69%
McDonald's Corp. 125 5,984
Quantum Restaurant Group, Inc.* 200 3,025
9,009
RETAIL - 17.75%
DEPARTMENT STORES - 1.87%
Neiman Marcus Group, Inc.* 150 3,600
RETAIL - HOME FURNISHING STORES - 2.43%
Pier 1 Imports, Inc. 350 4,681
RETAIL - SPECIALTY STORES - 10.67%
Fingerhut Companies, Inc. 550 7,013
Home Depot, Inc. 175 8,291
Tandy Corp. 100 5,188
20,492
RETAIL - VARIETY STORES - 2.78%
Family Dollar Stores, Inc. 350 5,338
34,111
SOFTWARE - 11.42%
Black Box Corp.* 300 6,000
Borland International, Inc.* 400 6,550
Caere Corp.* 475 4,572
Symantec Corp.* 300 4,838
21,960
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - April 30, 1996 (unaudited)
<S> <C> <C>
Value
Shares (Note 2)
SURGICAL & MEDICAL INSTRUMENTS - 0.70%
Allied Healthcare Products, Inc. 125 $ 1,344
TEXTILES - 2.50%
Fieldcrest Cannon, Inc.* 225 4,809
UTILITIES - ELECTRIC - 2.32%
Enersis S.A. - ADR 150 4,463
TOTAL COMMON STOCK
(Identified Cost $165,027) 187,382
SHORT-TERM INVESTMENTS - 2.16%
Dreyfus U.S. Money Market Reserves
(Identified Cost $4,159) 4,159 4,159
TOTAL INVESTMENTS
(Identified Cost $169,186) 191,541
OTHER ASSETS, LESS LIABILITIES - 0.38% 720
NET ASSETS - 100% $192,261
* Non-income producing security
</TABLE>
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At April 30, 1996, the net unrealized appreciation based on identified cost for federal income tax
purposes of $169,186 was as follows:
<S> <C>
Aggregate gross unrealized appreciation for all investments in which
there was an excess of value over tax cost $27,040
Aggregate gross unrealized depreciation for all investments in which
there was an excess of tax cost over value (4,685)
UNREALIZED APPRECIATION - NET $22,355
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
APRIL 30, 1996
<S> <C>
ASSETS:
Investments, at value (Identified Cost $169,186)(Note 2) $191,541
Dividends receivable 126
Receivable from investment advisor (Note 3) 8,417
TOTAL ASSETS 200,084
LIABILITIES:
Accrued Directors' fees (Note 3) 3,494
Audit fee payable 3,692
Other payables and accrued expenses 637
TOTAL LIABILITIES 7,823
NET ASSETS FOR 17,510 SHARES OUTSTANDING $192,261
NET ASSETS CONSIST OF:
Capital Stock $ 175
Additional paid-in-capital 173,398
Undistributed net investment loss (175)
Accumulated net realized loss on investments (3,492)
Net unrealized appreciation on investments 22,355
TOTAL NET ASSETS $192,261
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($192,261 / 17,510 shares) $ 10.98
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 1996
INVESTMENT INCOME:
<S> <C>
Dividends $ 610
Interest 210
Total Investment Income 820
EXPENSES:
Management fees (Note 3) 825
Directors' fees (Note 3) 3,494
Transfer agent fees (Note 3) 20
Audit fee 3,967
Custodian fee 947
Miscellaneous 984
Total Expenses 10,237
Less Waiver of Expenses (Note 3) (9,242)
Net Expenses 995
NET INVESTMENT LOSS (175)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized loss on investments (3,492)
Net change in unrealized appreciation on investments 22,355
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS 18,863
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $18,688
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES (UNAUDITED)
For the Six
Months Ended
4/30/96
--------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C>
OPERATIONS:
Net investment loss ($175)
Net realized loss on investments (3,492)
Net change in unrealized appreciation on investments 22,355
Net increase in net assets from operations 18,688
CAPITAL STOCK ISSUED AND REDEEMED:
Net increase in net assets from capital share
transactions (Note 5) 173,573
Net increase in net assets 192,261
NET ASSETS:
Beginning of period -
End of period (including undistributed net investment
loss of ($175)) $ 192,261
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (UNAUDITED)
For the Six
Months Ended
4/30/96
--------------
Per share data (for a share outstanding throughout
each period )
<S> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.00
Income from investment operations:
Net investment loss (0.010)
Net realized and unrealized gain (loss)
on investments 0.990
Total from investment operations 0.980
NET ASSET VALUE - END OF PERIOD $ 10.98
Total Return 1 9.8%
Ratios (to average net assets) / Supplemental Data:
Expenses* 1.20%2
Net investment income* (0.21%)2
Portfolio turnover 43%
Average commission rate paid $ 0.0778
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 192
* The investment advisor did not impose its management fee and paid a portion of the Fund's expenses. If
these expenses had been incurred by the Fund, expenses would have been limited to that allowed by state
securities law and the net investment income per share and the ratios would have been as follows:
Net investment income ($0.072)
Ratios (to average net assets):
Expenses 2.50%2
Net investment income (1.51%)2
1 Represents aggregate total return for the period indicated.
2 Annualized.
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Tax Managed Series (the "Fund") is a no-load diversified series of
Manning & Napier Fund, Inc. (the "Corporation"). The Corporation is
organized as a Maryland Corporation and is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment
company.
The total authorized capital stock of the Corporation consists of one
billion shares of common stock each having a par value of $0.01. As of April
30, 1996, 760 million shares have been designated in total among 19 series,
of which 20 million have been designated as Tax Managed Series Class H Common
Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities,
options and corporate bonds, listed on an exchange are valued at the latest
quoted sales price of the exchange on which the security is traded most
extensively. Securities not traded on valuation date or securities not
listed on an exchange are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed
securities, will normally be valued on the basis of evaluated bid prices.
Securities for which representative prices are not available from the
Fund's pricing service are valued at fair value as determined in good faith
by the Fund's Board of Directors.
Short-term investments that mature in sixty (60) days or less are valued
at amortized cost.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are
purchased or sold. Dividend income is recorded on the ex-dividend date.
Interest income and expenses are recorded on an accrual basis.
Most expenses of the Corporation can be attributed to a specific fund.
Expenses which cannot be directly attributed are apportioned among the funds
in the Corporation.
11
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES
The Fund's policy is to comply with the provisions of the Internal
Revenue Code applicable to regulated investment companies. The Fund is not
subject to federal income or excise tax to the extent the Fund distributes to
shareholders each year its taxable income, including any net realized gains
on investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made
in the financial statements.
The Fund uses the identified cost method for determining realized gain or
loss on investments for both financial statement and federal income tax
reporting purposes.
DISTRIBUTION OF INCOME AND GAINS
Distributions to shareholders of net investment income are made annually.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, character reclassification between net
income and net gains or other tax adjustments. As a result, net investment
income (loss) and net investment gain (loss) on investment transactions for a
reporting period may differ significantly from distributions to shareholders
during such period. As a result, the Fund may periodically make
reclassification among its capital accounts without impacting the Fund's net
asset value.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Manning & Napier
Advisors, Inc. (the "Advisor"), for which the Fund pays the Advisor a fee,
computed daily and payable monthly, at an annual rate of 1.0% of the Fund's
average daily net assets. The fee amounted to $825 for the six months ended
April 30, 1996.
Under the Fund's Investment Advisory Agreement (the "Agreement"),
personnel of the Advisor provide the Fund with advice and assistance in the
choice of investments and the execution of securities transactions, and
otherwise maintain the Fund's organization. The Advisor also provides the
Fund with necessary office space and portfolio accounting and bookkeeping
services. The salaries of all officers of the Fund and of all Directors who
are "affiliated persons" of the Fund or of the Advisor, and all
12
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
personnel of the Fund or of the Advisor performing services relating to
research, statistical and investment activities are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary,
pay other expenses of the Fund in order to maintain total expenses for the
Fund at no more than 1.2% of average daily net assets each year.
Accordingly, the Advisor did not impose any of its fee and paid expenses
amounting to $8,417 for the six months ended April 30, 1996, which is
reflected as a reduction of expenses on the Statement of Operations. The fee
waiver and assumption of expenses by the Advisor is voluntary and may be
terminated at any time.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $20 for the six months ended April 30,
1996.
Manning & Napier Investor Services, Inc., a registered broker-dealer
affiliate of the Advisor, acts as distributor for the Fund's shares. The
services of Manning & Napier Investor Services, Inc. are provided at no
additional cost to the Fund.
The compensation of the non-affiliated Directors totaled $3,494 for the
six months ended April 30, 1996.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term securities, were
$230,221 and $61,708, respectively, for the six months ended April 30, 1996.
5. CAPITAL STOCK TRANSACTIONS
<TABLE>
<CAPTION>
Transactions in shares of Tax Managed Series Class H
Common Stock were:
For the Six Months
ended 4/30/96
-------------------
Shares Amount
------------------- ---------
<S> <C> <C>
Sold 21,554 $215,635
Redeemed (4,044) (42,062)
Total 17,510 $173,573
</TABLE>
The Advisor owned 12,500 shares on April 30, 1996.
13
<PAGE>
Notes to Financial Statements (unaudited)
6. FINANCIAL INSTRUMENTS
The Fund may trade in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include
written options, forward foreign currency exchange contracts, and futures
contracts and may involve, to a varying degree, elements of risk in excess of
the amounts recognized for financial statement purposes. No such investments
were held by the Fund on April 30, 1996.
7. SPECIAL MEETING OF SHAREHOLDERS
On April 10, 1996, a special meeting of the Corporation was held for the
purpose of electing directors. The following directors have been elected:
Stephen B. Ashley, B. Reuben Auspitz, Martin F. Birmingham, Peter L. Faber,
and Harris H. Rusitzky.
14
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 0000751173
<NAME> MANNING & NAPIER FUND, INC.
<SERIES>
<NAME> BLENDED ASSET SERIES I
<NUMBER> 11
<CAPTION>
<S> <C>
<MULTIPLIER> 1
<CURRENCY> 1
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> APR-30-1996
<PERIOD-TYPE> SEMI
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 15,212,277
<INVESTMENTS-AT-VALUE> 15,506,312
<RECEIVABLES> 3,008,726
<ASSETS-OTHER> 187
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18,516,445
<PAYABLE-FOR-SECURITIES> 2,558,530
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101,397
<TOTAL-LIABILITIES> 2,659,927
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15,358,615
<SHARES-COMMON-STOCK> 1,458,174
<SHARES-COMMON-PRIOR> 888,146
<ACCUMULATED-NII-CURRENT> 146,137
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 57,731
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 294,035
<NET-ASSETS> 15,856,518
<DIVIDEND-INCOME> 12,619
<INTEREST-INCOME> 183,466
<OTHER-INCOME> 0
<EXPENSES-NET> 49,948
<NET-INVESTMENT-INCOME> 146,137
<REALIZED-GAINS-CURRENT> 24,678
<APPREC-INCREASE-CURRENT> 11,397
<NET-CHANGE-FROM-OPS> 182,212
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 659,110
<NUMBER-OF-SHARES-REDEEMED> 89,082
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 6,338,023
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 33,052
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 41,508
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 55,648
<AVERAGE-NET-ASSETS> 12,607,402
<PER-SHARE-NAV-BEGIN> 10.72
<PER-SHARE-NII> 0.1
<PER-SHARE-GAIN-APPREC> 0.05
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.87
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 000751173
<NAME> MANNING & NAPIER FUND, INC.
<SERIES>
<NAME> BLENDED ASSET SERIES II
<NUMBER> 12
<CAPTION>
<S> <C>
<MULTIPLIER> 1
<CURRENCY> 1
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> APR-30-1996
<PERIOD-TYPE> SEMI
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 24,485,793
<INVESTMENTS-AT-VALUE> 25,943,823
<RECEIVABLES> 238,953
<ASSETS-OTHER> 323
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 26,459,666
<PAYABLE-FOR-SECURITIES> 6,900
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 41,748
<TOTAL-LIABILITIES> 48,648
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,459,450
<SHARES-COMMON-STOCK> 2,162,008
<SHARES-COMMON-PRIOR> 1,717,706
<ACCUMULATED-NII-CURRENT> 196,724
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 296,814
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,458,030
<NET-ASSETS> 26,411,018
<DIVIDEND-INCOME> 42,242
<INTEREST-INCOME> 244,948
<OTHER-INCOME> 0
<EXPENSES-NET> 91,767
<NET-INVESTMENT-INCOME> 195,423
<REALIZED-GAINS-CURRENT> 162,265
<APPREC-INCREASE-CURRENT> 206,840
<NET-CHANGE-FROM-OPS> 564,528
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 516,131
<NUMBER-OF-SHARES-REDEEMED> 71,829
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,892,083
<ACCUMULATED-NII-PRIOR> 1,301
<ACCUMULATED-GAINS-PRIOR> 134,549
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 76,582
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 94,190
<AVERAGE-NET-ASSETS> 23,210,583
<PER-SHARE-NAV-BEGIN> 11.95
<PER-SHARE-NII> 0.09
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<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.22
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 0000751173
<NAME> MANNING & NAPIER FUND, INC.
<SERIES>
<NAME> FLEXIBLE YIELD SERIES I
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<CAPTION>
<S> <C>
<MULTIPLIER> 1
<CURRENCY> 1
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> APR-30-1996
<PERIOD-TYPE> SEMI
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<INVESTMENTS-AT-VALUE> 452,484
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 462,485
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<OTHER-ITEMS-LIABILITIES> 20,086
<TOTAL-LIABILITIES> 20,086
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<PAID-IN-CAPITAL-COMMON> 439,426
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<ACCUM-APPREC-OR-DEPREC> (649)
<NET-ASSETS> 442,399
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,896
<OTHER-INCOME> 0
<EXPENSES-NET> 587
<NET-INVESTMENT-INCOME> 4,309
<REALIZED-GAINS-CURRENT> 2,058
<APPREC-INCREASE-CURRENT> (7,959)
<NET-CHANGE-FROM-OPS> (1,592)
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<NUMBER-OF-SHARES-SOLD> 21,284
<NUMBER-OF-SHARES-REDEEMED> 2,710
<SHARES-REINVESTED> 222
<NET-CHANGE-IN-ASSETS> 185,945
<ACCUMULATED-NII-PRIOR> 12
<ACCUMULATED-GAINS-PRIOR> (527)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 293
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,796
<AVERAGE-NET-ASSETS> 254,030
<PER-SHARE-NAV-BEGIN> 10.26
<PER-SHARE-NII> 0.148
<PER-SHARE-GAIN-APPREC> (0.208)
<PER-SHARE-DIVIDEND> 0.100
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.100
<EXPENSE-RATIO> 0.700
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 0000751173
<NAME> MANNING & NAPIER FUND, INC.
<SERIES>
<NAME> FLEXIBLE YIELD SERIES II
<NUMBER> 14
<CAPTION>
<S> <C>
<MULTIPLIER> 1
<CURRENCY> 1
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> APR-30-1996
<PERIOD-TYPE> SEMI
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 410,195
<INVESTMENTS-AT-VALUE> 419,659
<RECEIVABLES> 12,781
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 432,440
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20,255
<TOTAL-LIABILITIES> 20,255
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 396,130
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<ACCUMULATED-NII-CURRENT> 6,013
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<ACCUMULATED-NET-GAINS> 578
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,464
<NET-ASSETS> 412,185
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,851
<OTHER-INCOME> 0
<EXPENSES-NET> 1,115
<NET-INVESTMENT-INCOME> 7,736
<REALIZED-GAINS-CURRENT> 580
<APPREC-INCREASE-CURRENT> (19,416)
<NET-CHANGE-FROM-OPS> (11,100)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,086
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<NUMBER-OF-SHARES-SOLD> 983
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<NET-CHANGE-IN-ASSETS> (25,841)
<ACCUMULATED-NII-PRIOR> 363
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 630
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,136
<AVERAGE-NET-ASSETS> 423,330
<PER-SHARE-NAV-BEGIN> 10.30
<PER-SHARE-NII> 0.186
<PER-SHARE-GAIN-APPREC> (0.456)
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.060
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.92
<EXPENSE-RATIO> 0.800
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 0000751173
<NAME> MANNING & NAPIER FUND, INC.
<SERIES>
<NAME> FLEXIBLE YIELD SERIES III
<NUMBER> 15
<CAPTION>
<S> <C>
<MULTIPLIER> 1
<CURRENCY> 1
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> APR-30-1996
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<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 1,036,163
<INVESTMENTS-AT-VALUE> 1,053,028
<RECEIVABLES> 19,287
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,072,315
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19,027
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,022,591
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16,865
<NET-ASSETS> 1,053,288
<DIVIDEND-INCOME> 0
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<OTHER-INCOME> 0
<EXPENSES-NET> 3,021
<NET-INVESTMENT-INCOME> 21,038
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<APPREC-INCREASE-CURRENT> (81,578)
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<DISTRIBUTIONS-OF-INCOME> 12,100
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<SHARES-REINVESTED> 1,000
<NET-CHANGE-IN-ASSETS> (105,936)
<ACCUMULATED-NII-PRIOR> 388
<ACCUMULATED-GAINS-PRIOR> (172)
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,785
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,399
<AVERAGE-NET-ASSETS> 1,079,013
<PER-SHARE-NAV-BEGIN> 10.51
<PER-SHARE-NII> 0.199
<PER-SHARE-GAIN-APPREC> (0.734)
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<PER-SHARE-NAV-END> 9.86
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 0000751173
<NAME> MANNING AND NAPIER FUND, INC.
<SERIES>
<NAME> TAX MANAGED SERIES
<NUMBER> 8
<CAPTION>
<S> <C>
<MULTIPLIER> 1
<CURRENCY> 1
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1996
<PERIOD-TYPE> SEMI
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<INVESTMENTS-AT-COST> 169,186
<INVESTMENTS-AT-VALUE> 191,541
<RECEIVABLES> 8,543
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 200,084
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,823
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 173,573
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<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (175)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,492)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 22,355
<NET-ASSETS> 192,261
<DIVIDEND-INCOME> 610
<INTEREST-INCOME> 210
<OTHER-INCOME> 0
<EXPENSES-NET> 995
<NET-INVESTMENT-INCOME> (175)
<REALIZED-GAINS-CURRENT> (3,492)
<APPREC-INCREASE-CURRENT> 22,355
<NET-CHANGE-FROM-OPS> 18,688
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 21,554
<NUMBER-OF-SHARES-REDEEMED> 4,044
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 192,261
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 825
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10,237
<AVERAGE-NET-ASSETS> 166,873
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.010)
<PER-SHARE-GAIN-APPREC> 0.990
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<PER-SHARE-NAV-END> 10.98
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 0000751173
<NAME> MANNING & NAPIER FUND, INC.
<SERIES>
<NAME> DEFENSIVE SERIES
<NUMBER> 2
<CAPTION>
<S> <C>
<MULTIPLIER> 1
<CURRENCY> 1
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1996
<PERIOD-TYPE> SEMI
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<RECEIVABLES> 13,461
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<OTHER-ITEMS-LIABILITIES> 7,820
<TOTAL-LIABILITIES> 7,820
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 516,032
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<ACCUMULATED-NII-CURRENT> 6,407
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<ACCUMULATED-NET-GAINS> 2,794
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (7,834)
<NET-ASSETS> 517,399
<DIVIDEND-INCOME> 430
<INTEREST-INCOME> 10,043
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<EXPENSES-NET> 2,072
<NET-INVESTMENT-INCOME> 8,401
<REALIZED-GAINS-CURRENT> 2,794
<APPREC-INCREASE-CURRENT> (7,834)
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<NET-CHANGE-IN-ASSETS> 517,399
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<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.171
<PER-SHARE-GAIN-APPREC> (0.055)
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<PER-SHARE-NAV-END> 10.07
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 0000751173
<NAME> MANNING AND NAPIER FUND, INC.
<SERIES>
<NAME> MAXIMUM HORIZON SERIES
<NUMBER> 5
<CAPTION>
<S> <C>
<MULTIPLIER> 1
<CURRENCY> 1
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 416,329
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<ACCUMULATED-NII-CURRENT> 3,035
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,603
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,882
<NET-ASSETS> 433,849
<DIVIDEND-INCOME> 859
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<EXPENSES-NET> 1,545
<NET-INVESTMENT-INCOME> 3,675
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<NUMBER-OF-SHARES-SOLD> 48,561
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<SHARES-REINVESTED> 62
<NET-CHANGE-IN-ASSETS> 433,849
<ACCUMULATED-NII-PRIOR> 0
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,278
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<GROSS-EXPENSE> 10,628
<AVERAGE-NET-ASSETS> 259,227
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.126
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<PER-SHARE-NAV-END> 10.70
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
