August 27, 1997
To Shareholders of the following Series of the Manning & Napier Fund:
Small Cap Series
International Series
World Opportunities Series
New York Tax Exempt Series
Ohio Tax Exempt Series
Diversified Tax Exempt 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 June 30, 1997.
These reports include information about the Series performance as well as
portfolio listings as of that date.
We would be happy to answer any questions you may have about the Semi-Annual
Reports or about your account. Please contact our Fund Services department at
1-800-4MN-FUND
(1-800-466-3863) or your Client Consultant if we can be of assistance.
Sincerely,
Amy J. Williams
Fund Services Manager
<PAGE>
<PAGE>
Manning & Napier Fund, Inc.
Small Cap Series
Semi-Annual Report
June 30, 1997
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
Small company stocks (as measured by the Russell 2000 Index) turned in solid
returns in the first half of the year, but they were once again eclipsed by
the extraordinarily high returns of larger company stocks (as measured by the
S&P 500 Total Return Index). The Small Cap Series return of 17.70% for this
period was significantly better than the 10.20% return of the Russell 2000,
while coming in a few points lower than the S&P 500's return of 20.60%.
Our investment strategies occasionally lead to investments in several
companies within a given sector of the market. Although stocks are chosen
individually, industry-wide factors sometimes provide an opportunity to
purchase stocks with a strong outlook at attractive valuations. In the first
half of 1997, three such industries -- fabric retailing, consumer software,
and health care information software -- made strong contributions to the
Series return.
We originally invested in the fabric retailers in late 1995. At that time,
our analysis showed that this industry had overexpanded in the late 1980's and
early 1990's, and we expected the number of companies to shrink as they went
out of business or merged with competitors. We bought several companies which
we expected to survive the consolidation and thrive. These companies have
benefited from the improved growth in this industry. During the first quarter
of this year, we took advantage of gains in these stocks and reduced the
Series investments in them.
The consumer software companies in the Series portfolio were added in the
second half of 1996. At that time, there were too many companies in this
industry, and this had driven many stocks down significantly. As with the
fabric retailing stocks, we invested in companies which we believed were
positioned to benefit from the consolidation we expected in the industry.
These stocks have performed as we expected, and a portion of them have now
been sold.
Health care information technology stocks were added to the portfolio earlier
this year. These are stocks of companies which produce software used to
automate hospitals and health care networks. The health care industry has
changed in recent years, and health maintenance organizations and for-profit
hospitals are providing an increasing portion of health care services.
Because of this change, improved productivity and efficiency become more
important, and we believe health care technology will play a big role in this.
These stocks have already performed well, and we sold a portion of them near
the end of the second quarter.
1
<PAGE>
Management Discussion and Analysis (continued)
These stocks illustrate two of the strategies we use in selecting stocks. The
first two industries, fabric retailing and consumer software, are examples of
a strategy in which we look at troubled sectors of the market and invest in
the companies that we believe have the potential to prosper as other companies
fail. Our holdings in health care information technology stocks illustrate
another strategy, in which we seek to invest in companies that dominate their
industry and have strong growth potential. In this case, our analysis shows
the industry as a whole is poised to benefit from trends we see, and we
invested in what we felt to be the strongest companies in that industry. In
order to be added to the Series, stocks must meet one of our strategies and
adhere to our pricing discipline. We also monitor the stocks to ensure that
they continue to meet our criteria, and we will sell stocks that do not.
We would once again like to thank you for the opportunity of helping you meet
your investment goals. It is a service in which we take great pride.
Sincerely,
Manning & Napier Advisors, Inc.
<graphic>
<pie chart>
Data for chart to follow:
Portfolio Composition* - As of 6/30/97
<TABLE>
<CAPTION>
<S> <C>
Computer Equipment 6.5%
Direct Mail Advertising Service 3.8%
Electronics & Electrical Equipment 7.5%
Glass Products 4.3%
Primary Metal Industries 10.0%
Printing & Publishing 7.8%
Restaurants 4.0%
Retail 10.0%
Software 15.7%
Technical Instruments & Supplies 5.0%
Transportation Equipment 3.4%
Cash, short term investments and liabilities less other assets 8.1%
Miscellaneous ** 13.9%
** Miscellaneous includes:
Amusement & Recreation Services
Broadcast Services
Food & Beverages
Health Services
Holding Companies
Industrial & Commercial Machinery
Management Services
Miscellaneous Plastic Products
Telecommunications
</TABLE>
* As a percentage of net assets
2
<PAGE>
Performance Update as of June 30, 1997 (unaudited)
<graphic>
<line chart>
Data for chart to follow:
<TABLE>
<CAPTION>
Manning & Napier
Date Small Cap Series S&P 500 Total Return Index
<S> <C> <C>
04/30/92 10,000 10,000
12/31/92 11,610 10,725
12/31/93 13,317 11,799
12/31/94 14,383 11,959
12/31/95 16,497 16,437
12/31/96 18,156 20,206
06/30/97 21,370 24,357
</TABLE>
<TABLE>
<CAPTION>
Manning & Napier Fund, Inc. - Small Cap Series
<S> <C> <C> <C>
Total Return
-------------
Through Growth of $10,000 Average
06/30/97 Investment Cumulative Annual
One Year $ 11,711 17.11% 17.11%
Five Year $ 24,201 142.01% 19.32%
Inception 2 $ 21,370 113.70% 15.81%
</TABLE>
<TABLE>
<CAPTION>
S&P 500 Total Return Index
<S> <C> <C> <C>
Total Return
-------------
Through Growth of $10,000 Average
06/30/97 Investment Cumulative Annual
One Year $ 13,464 34.64% 34.64%
Five Year $ 24,604 146.04% 19.72%
Inception 2 $ 24,357 143.57% 18.78%
</TABLE>
The value of a $10,000 investment in the
Manning & Napier Fund, Inc. - Small Cap
Series from its current activation (4/30/92)
to present (6/30/97) as compared to the
Standard & Poor's (S&P) 500 Total Return
Index. 1
1 The Standard and 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 Over-the-Counter Market.
S&P 500 Total Return Index returns assume reinvestment of dividends and,
unlike Fund returns, do not reflect any fees or expenses.
2 The Fund and Index performance numbers are calculated from April 30, 1992,
the Fund's current activation date. The Fund's performance is historical and
may not be indicative of future results.
3
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
COMMON STOCK - 91.9%
<S> <C> <C>
AMUSEMENT & RECREATION SERVICES - 1.9%
Grand Casinos, Inc.* 155,000 $2,286,250
-----------
BROADCAST SERVICES - 2.3%
Groupe AB - ADR (Note 7) 333,000 2,830,500
-----------
COMPUTER EQUIPMENT - 6.5%
Bell & Howell Co.* 218,000 6,717,125
Varitronix International Ltd. (Note 7) 725,000 1,230,712
-----------
7,947,837
-----------
DIRECT MAIL ADVERTISING SERVICES - 3.8%
Harte-Hanks Communications 159,000 4,690,500
-----------
ELECTRONICS & ELECTRICAL EQUIPMENT - 7.5%
Coleman Company, Inc.* 314,800 5,430,300
Harman International Industries, Inc. 80,500 3,391,062
Ultralife Batteries, Inc.* 30,000 348,750
-----------
9,170,112
FOOD & BEVERAGES - 2.1%
Canandaigua Wine Co.* 75,000 2,550,000
-----------
GLASS PRODUCTS - 4.3%
Libbey, Inc. 150,000 5,250,000
-----------
HEALTH SERVICES - 0.5%
U. S. Physical Therapy, Inc.* 65,000 625,625
-----------
HOLDING COMPANIES - 0.2%
EK Chor China Motorcycle Co. Ltd. - ADR (Note 7) 41,025 220,509
-----------
INDUSTRIAL & COMMERCIAL MACHINERY - 2.1%
Memtec, Ltd. - ADR (Note 7) 27,500 742,500
Outboard Marine Corp.* 103,000 1,828,250
-----------
2,570,750
-----------
MANAGEMENT SERVICES - 1.0%
Physician Support Systems, Inc.* 105,175 1,288,394
-----------
MISCELLANEOUS PLASTIC PRODUCTS - 1.7%
Pt Tri Polyta Indonesia - ADR (Note 7) 354,750 2,039,813
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
<S> <C> <C>
PRIMARY METAL INDUSTRIES - 10.0%
American Superconductor Corp.* 186,000 $ 2,278,500
Gibraltar Steel Corp.* 193,000 4,439,000
Special Metals Corp.* 121,300 2,365,350
Wolverine Tube, Inc.* 114,000 3,177,750
-----------
12,260,600
-----------
PRINTING & PUBLISHING - 7.8%
Houghton Mifflin Co. 27,300 1,822,275
Playboy Enterprises, Inc. - Class A* 93,000 1,069,500
Playboy Enterprises, Inc. - Class B* 122,500 1,416,406
Scholastic Corp.* 150,000 5,250,000
-----------
9,558,181
-----------
RESTAURANTS - 4.0%
Morton Restaurant Group, Inc. 249,000 4,948,875
------------
RETAIL - 10.0%
RETAIL - NONDURABLE GOODS - 0.3%
Mikasa, Inc. 24,400 347,700
------------
RETAIL - SPECIALTY STORES - 9.7%
Fabri-Centers of America - Class A* 260,400 7,095,900
Hancock Fabrics, Inc. 213,500 2,948,969
Loehmanns, Holdings, Inc. 275,000 1,787,500
-----------
11,832,369
-----------
12,180,069
-----------
SOFTWARE - 15.7%
Activision, Inc.* 74,000 1,063,750
Apache Medical Systems, Inc.* 107,350 818,544
Broderbund Software, Inc.* 195,000 4,814,062
Electronic Arts, Inc.* 79,000 2,656,375
Imnet Systems, Inc.* 93,000 2,888,812
Medic Computer Systems, Inc.* 119,000 2,647,750
Spectrum Holobyte, Inc. 196,000 955,500
Symantec Corp.* 170,000 3,315,000
-----------
19,159,793
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Amount/ Value
Shares (Note 2)
<S> <C> <C>
TECHNICAL INSTRUMENTS & SUPPLIES - 5.0%
Lunar Corp.* 113,850 $ 2,476,238
Sola International, Inc.* 108,000 3,618,000
-------------
6,094,238
-------------
TELECOMMUNICATIONS - 2.1%
Vimpel-Communications - ADR* (Note 7) 68,000 2,584,000
-------------
TRANSPORTATION EQUIPMENT - 3.4%
Federal Signal Corp. 167,000 4,195,875
-------------
TOTAL COMMON STOCK
(Identified Cost $93,867,268) 112,451,921
-------------
SHORT-TERM INVESTMENTS - 8.6%
Federal Home Loan Bank Corporation Discount
Note, 7/7/1997 $ 5,000,000 4,995,533
Federal National Mortgage Association Discount
Note, 7/21/1997 2,000,000 1,994,011
Dreyfus U.S. Treasury Money Market Reserves 3,551,882 3,551,882
TOTAL SHORT-TERM INVESTMENTS -------------
(Identified Cost $10,541,426) 10,541,426
TOTAL INVESTMENTS - 100.5%
(Identified Cost $104,408,694) 122,993,347
LIABILITIES, LESS OTHER ASSETS - (0.5)% (574,005)
-------------
NET ASSETS - 100% $122,419,342
=============
</TABLE>
* Non-income producing security
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
<S> <C>
At June 30, 1997, the net unrealized appreciation based on identified cost for federal
income tax purposes of $104,408,694 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $22,509,589
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value (3,924,936)
------------
UNREALIZED APPRECIATION - NET $18,584,653
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
JUNE 30, 1997
<S> <C>
ASSETS:
Investments, at value (Identified Cost $104,408,694)(Note 2) $122,993,347
Foreign currency, at value (cost $42,109) 42,116
Cash 54,466
Receivable for forward foreign currency exchange
contracts sold (Note 2) 1,208,981
Receivable for fund shares sold 22,070
Dividends receivable 17,080
Receivable for securities sold 16,507
Prepaid expense 2,331
-------------
TOTAL ASSETS 124,356,898
-------------
LIABILITIES:
Accrued management fees (Note 3) 96,587
Accrued Directors' fees (Note 3) 1,359
Payable for forward foreign currency contracts sold, at value
(Note 2) 1,190,882
Payable for securities purchased 399,025
Payable for fund shares redeemed 223,083
Audit fee payable 11,191
Other payables and accrued expenses 15,429
-------------
TOTAL LIABILITIES 1,937,556
-------------
NET ASSETS FOR 8,604,827 SHARES OUTSTANDING $122,419,342
============
NET ASSETS CONSIST OF:
Capital stock $ 86,048
Additional paid-in-capital 97,612,338
Undistributed net investment income 195,788
Accumulated net realized gain on investments 5,922,409
Net unrealized appreciation on investments and other assets 18,602,759
------------
TOTAL NET ASSETS $122,419,342
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($122,419,342/8,604,827 shares) $ 14.23
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<S> <C>
INVESTMENT INCOME:
Interest $ 413,819
Dividends 266,615
-------------
Total Investment Income 680,434
-------------
EXPENSES:
Management fees (Note 3) 522,419
Directors' fees (Note 3) 3,076
Custodian fee 13,488
Audit fee 11,191
Registration & filing fees 4,235
Miscellaneous 12,653
-------------
Total Expenses 567,062
-------------
NET INVESTMENT INCOME 113,372
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on -
Investments (identified cost basis) 6,692,564
Foreign currency and forward foreign currency exchange contracts 44,697
-------------
Net realized gain on investments 6,737,261
-------------
Net change in unrealized appreciation on -
Investments 11,451,636
Foreign currency, forward foreign currency exchange contracts and
other assets and liabilities 18,087
-------------
Net change in unrealized appreciation on investments 11,469,723
-------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS 18,206,984
-------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $18,320,356
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Statement of Changes in Net Assets (unaudited)
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 6/30/97 Ended 12/31/96
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income $ 113,372 $ 353,895
Net realized gain on investments 6,737,261 5,120,431
Net change in unrealized appreciation on
investments 11,469,723 9,285,634
------------- -------------
Net increase in net assets from operations 18,320,356 14,759,960
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income -- (271,530)
From net realized gain on investments -- (7,753,635)
In excess of realized gain on investments -- (814,852)
------------- -------------
Total distributions to shareholders -- (8,840,017)
------------- -------------
CAPITAL STOCK ISSUED AND
REDEEMED:
Net increase (decrease) from capital share
transactions (Note 5) 3,410,559 (48,234,558)
------------- -------------
Net increase (decrease) in net assets 27,730,915 (42,314,615)
NET ASSETS:
Beginning of period 100,688,427 143,003,042
------------- -------------
End of period (including undistributed net
investment income of $195,788 and $82,416,
respectively) $ 122,419,342 $ 100,688,427
============== =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Financial Highlights (unaudited)
<TABLE>
<CAPTION>
For the Six
Months
Ended For the Year Ended
6/30/97 12/31/96 12/31/95 12/31/94 12/31/93
Per share data (for a share
outstanding throughout each
period ):*
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF
PERIOD $ 12.09 $ 11.95 $ 12.92 $ 12.52 $ 11.24
------------- ------------- --------- -------- ---------
Income from investment operations:
Net investment income (loss) 0.013 0.045 (0.004) (0.066) (0.040)
Net realized and unrealized gain (loss)
on investments 2.127 1.112 1.934 1.051 1.700
------------ ------------- --------- -------- ---------
Total from investment operations 2.140 1.157 1.930 0.985 1.660
------------ ------------- --------- -------- ---------
Less distributions to shareholders:
From net investment income -- (0.035) -- -- --
From net realized gain on
investments -- (0.889) (2.900) (0.585) (0.380)
In excess of net realized gains -- (0.093) -- -- --
------------ ------------- --------- -------- ---------
Total distributions to shareholders -- (1.017) (2.900) (0.585) (0.380)
------------ ------------- --------- -------- ---------
NET ASSET VALUE - END OF PERIOD $ 14.23 $ 12.09 $ 11.95 $ 12.92 $ 12.52
============ ============= ========= ========= ========
Total return: (4) 17.70% 10.06% 14.70% 8.01% 14.64%
Ratios of expenses (to average net
assets) / Supplemental Data:
Expenses 1.08%( 5) 1.08% 1.07% 1.10% 1.13%
Net investment income (loss) 0.22% (5) 0.29% (0.03)% (0.58)% (0.43)%
Portfolio turnover 53% 31% 77% 31% 12%
Average commission rate paid $ 0.0315 $ 0.0291 $ 0.0500 - -
NET ASSETS - END OF PERIOD
(000'S OMITTED) $ 122,419 $ 100,688 $ 143,003 $ 105,522 $ 70,734
=========== ============= ======== ======== =========
Footnotes on next page.
For the Period
4/30/92 (1 )to
12/31/92
Per share data (for a share
outstanding throughout each
period ):*
<S> <C>
NET ASSET VALUE - BEGINNING OF
PERIOD $ 10.00(2)
---------------
Income from investment operations:
Net investment income (loss) (0.020)
Net realized and unrealized gain (loss)
on investments 1.630
--------------
Total from investment operations 1.610
--------------
Less distributions to shareholders:
From net investment income --
From net realized gain on
investments (0.290)
In excess of net realized gains (0.080)(3)
-------------
Total distributions to shareholders (0.370)
-------------
NET ASSET VALUE - END OF PERIOD $ 11.24
=============
Total return: (4) 16.20%
Ratios of expenses (to average net
assets) / Supplemental Data:
Expenses 1.27%(5)
Net investment income (loss) (0.26)%(5)
Portfolio turnover 24%
Average commission rate paid -
NET ASSETS - END OF PERIOD
(000'S OMITTED) $ 33,079
=============
Footnotes on next page.
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Financial Highlights - Footnotes (unaudited)
*Prior to July 8, 1993, the investment practice of the Fund resulted in the
active operation of the investment portfolio for discrete periods. On April
30, 1992, the Fund resumed sales of shares to advisory clients and employees
of Manning & Napier Advisors, Inc. (the "Advisor") and its affiliates. On
July 8, 1993, the Fund began offering shares directly to investors.
Previously, the Fund was in active operation from November 11, 1986 to May 14,
1987 and from December 1, 1987 to April 13, 1988.
1Recommencement of operations.
2Initial offering price upon recommencement of operations on April 30,
1992.
3Distributions differ from net investment income and net realized capital
gains because of book/tax timing differences, primarily the requirements of
the excise tax regulations enacted as part of the 1986 Tax Reform Act. The
regulations required the Fund to measure capital gains through October 31,
1992. The excise tax regulations also required the Fund to distribute those
gains before December 31, 1992 to avoid payment of excise tax.
4Represents aggregate total return for the period indicated.
5Annualized.
11
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Small Cap Series (the "Fund") is a no-load diversified series of Manning &
Napier Fund, Inc. (the "Corporation"). The Corporation is organized in
Maryland and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company.
On April 30, 1992, the Fund resumed sales of shares to advisory clients and
employees of Manning & Napier Advisors, Inc. (the "Advisor") and its
affiliates. On July 8, 1993, the Fund began offering shares directly to
investors. Previously, the Fund was available from time to time to Manning &
Napier employees and advisory clients of Manning & Napier Advisors, Inc.
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 June 30, 1997,
940 million shares have been designated in total among 19 series, of which 50
million have been designated as Small Cap Series Class A 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 last quoted sales
price of the exchange on which the security is primarily traded. 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
Advisor under procedures established by and under the general supervision and
responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty (60) days or less are valued at
amortized cost, which approximates market value.
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.
12
<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, 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) purchase 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
investment that result from fluctuations in foreign currency exchange rates is
not separately stated.
13
<PAGE>
Notes to Financial statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may purchase or sell forward foreign currency contracts in order to
hedge a portfolio position or specific transaction. Risks may arise if the
counter parties to a contract are unable to meet the terms of the contract or
if the value of the foreign currency moves unfavorably.
All forward foreign currency contracts are adjusted daily by the exchange rate
of the underlying currency and, for financial statement purposes, any gain or
loss is recorded as unrealized gain or loss until a contract has been closed.
Realized and unrealized gain or loss arising from a transaction is included in
net realized and unrealized gain (loss) from foreign currency and forward
currency exchange contracts.
The Fund regularly trades forward foreign currency exchange contracts with
off-balance sheet risk in the normal course of its investing activities to
assist in managing exposure to changes in foreign currency exchange rates.
The notional or contractual amount of these instruments represents the
investment the Fund has in forward foreign currency exchange contracts and
does not necessarily represent the amounts potentially at risk. The
measurement of the risks associated with forward foreign currency exchange
contracts is meaningful only when all related and offsetting transactions are
considered. A summary of obligations for forward currency exchange contracts
sold on June 30, 1997 is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net Unrealized
Settlement Contracts In Exchange Contracts Appreciation/
Date to Deliver For At Value (Depreciation)
7/11/97 French Francs $ 1,208,981 $1,190,882 $ 18,099
</TABLE>
On June 30, 1997, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of the revenues and expenses during the reporting
period. Actual results could differ from those estimates.
14
<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% of the Fund's average daily
net assets. The fee amounted to $522,419 for the six months ended June 30,
1997.
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 agreed that, in any fiscal year, if the expenses of the Fund
(including the advisory fee but excluding interest, taxes, brokerage
commissions, and extraordinary expenses) exceed the limits set by applicable
regulation of state securities commissions, the Advisor will reduce its fee by
the amount of such excess.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. These services are provided at no additional
cost to the Fund.
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 $3,076 for the six
month ended June 30, 1997.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term securities, were
$61,903,165 and $48,391,516 respectively, for the six months ended June 30,
1997.
15
<PAGE>
Notes to Financial Statements (unaudited)
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Small Cap Series were:
<TABLE>
<CAPTION>
For the Six For the Year
Months Ended Ended
6/30/97 12/31/96
<S> <C> <C> <C> <C>
Shares Amount Shares Amount
------------- ------------ ------------ ------------
Sold 496,174 $ 6,131,780 1,521,782 $ 18,457,745
Reinvested -- -- 745,911 8,765,039
Repurchased (217,727) (2,721,221) (5,907,361) (75,457,342)
------------- ------------ ------------ ------------
Total 278,447 $ 3,410,559 (3,639,668) $(48,234,558)
</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 June 30, 1997, other than forward foreign currency exchange
contracts as explained in Note 2.
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 domestic companies and the United States government. There
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 domestic companies and the
United States government.
16
<PAGE>
<PAGE>
Manning & Napier Fund, Inc.
International Series
Semi-Annual Report
June 30, 1997
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
The International Series is designed to allow us to take advantage of
opportunities in international markets identified as attractive by the Series
portfolio management team. The team reviews economic, political, and other
information about countries around the world, and investments are made in
those countries in which we identify compelling investment opportunities. As
of June 30, 1997, the Series held investments in Germany (32.6%) of the
portfolio, France (26.6%), Italy (13.7%), Spain (9.7%), Hong Kong (3.2%),
Mexico (2.6%), and the United Kingdom (1.7%).
The European economies represented in the portfolio have been performing as we
expected. Government policies have focused on an easing of monetary policies,
and this has resulted in lower interest rates and weaker currencies, both of
which have stimulated growth. At the same time, inflation has remained low.
As has happened in the U.S. over the past few years, corporate restructuring
is helping individual companies and industries become more productive and
profitable. This trend toward restructuring adds to the growth potential
stemming from economic changes in Europe. Valuations in the European markets
remain generally favorable, especially compared to the common stock of many
U.S. companies.
The Series Hong Kong investments represent shares of Chinese companies which
trade in the Hong-Kong market. These companies are expected to benefit as the
Chinese economy moves towards a free market. Recently, these holdings have
received an additional boost from the return of Hong Kong to Chinese control
as consensus has built that the Chinese will not make radical changes in the
Hong Kong market. Also, the Chinese have purchased several Hong Kong
companies in the open market in a form of unofficial nationalization, and this
has increased demand for other Hong Kong securities, and driven the market as
a whole higher.
The Mexican economy continues to strengthen, with growth accelerating and
interest rates stable to falling. Government reforms have supported the
improved economic situation by leading to lower inflation and by increasing
the confidence of foreign investors in the Mexican market, factors which have
bolstered stocks and led to lower interest rates. Furthermore, we expect the
results of the elections which took place in early July to reinforce these
trends. This was the first truly democratic election in Mexico since 1929,
and the opposition party won several high profile positions in addition to a
number of seats in the Mexican Congress.
1
<PAGE>
Management Discussion and Analysis (continued)
In any foreign investing, currency fluctuations can be an important issue.
Analysis of the currency of each country is an important part of the portfolio
management of the International Series. In order to minimize the risk of
currency fluctuations, we hedge the currencies of countries which are
represented in the portfolio when our analysis shows that they are at risk of
falling versus the dollar. As of June 30, we have hedged the German Deutsche
Mark and the French Franc.
We would once again like to thank you for the opportunity of helping you meet
your investment goals. It is a service in which we take great pride.
Sincerely,
Manning & Napier Advisors, Inc.
<graphic>
<pie chart>
Data for chart to follow:
Portfolio Allocation by Country* - As of 6/30/97
France 30%
Germany 35%
Hong Kong 4%15%
Mexico 3%
Spain 11%
United Kingdom 2%
*As a percentage of common stocks.
2
<PAGE>
Performance Update as of June 30, 1997 (unaudited)
<graphic>
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
Manning & Napier S&P 500 Total Morgan Stanley Capital
Date International Series Return Index International World Index
<S> <C> <C> <C>
08/27/92 10,000 10,000 10,000
12/31/92 10,598 10,643 9,880
12/31/93 13,359 11,709 12,103
12/31/94 11,425 11,868 12,717
12/31/95 11,898 16,312 15,351
12/31/96 14,557 20,052 17,421
06/30/97 17,547 24,169 20,100
</TABLE>
<TABLE>
<CAPTION>
Manning & Napier Fund, Inc.
International Series
<S> <C> <C> <C>
Total Return
-------------
Through Growth of $10,000 Average
06/30/97 Investment Cumulative Annual
One Year $ 13,264 32.64% 32.64%
Inception 2 $ 17,547 75.47% 12.30%
</TABLE>
<TABLE>
<CAPTION>
S&P 500 Total Return Index
<S> <C> <C> <C>
Total Return
-------------
Through Growth of $10,000 Average
06/30/97 Investment Cumulative Annual
One Year $ 13,464 34.64% 34.64%
Inception 2 $ 24,169 141.69% 19.97%
</TABLE>
<TABLE>
<CAPTION>
Morgan Stanley
Capital International World Index
<S> <C> <C> <C>
Total Return
-------------
Through Growth of $10,000 Average
06/30/97 Investment Cumulative Annual
One Year $ 12,227 22.27% 22.27%
Inception 2 $ 20,100 101.00% 15.49%
</TABLE>
The value of a $10,000 investment in the Manning & Napier
Fund, Inc. - International Series from its inception (8/27/92) to
present (6/30/97) as compared to the Standard & Poor's (S&P)
500 Total Return Index and the Morgan Stanley Capital
International World Index. 1
1 The Standard & Poor (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 Morgan Stanley Capital International
World Index is an market capitalization-weighted measure of the total
return of 1,568 companies listed on the stock exchanges of the United
States, Europe, Canada, Australia, New Zealand and the Far East.
The Morgan Stanley Capital International Index is denominated in U.S.
Dollars. The Indices' returns assume reinvestment of dividends and,
unlike Fund returns, do not reflect any fees or expenses.
2 Performance numbers for the Fund and Indices are calculated from
August 27, 1992, the Fund's inception date. The Fund's performance is
historical and may not be indicative of future results.
3
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
<S> <C> <C>
FRANCE - 26.58%
AEROSPACE & MILITARY TECHNOLOGY - 0.20%
Thomson CSF SA* 14,389 $ 370,475
-----------
AUTOMOBILES -0 .40%
PSA Peugeot Citroen 7,545 728,802
-----------
BANKING - 2.27%
Banque National de Paris 18,100 745,512
Cie Financiere De Paribas 13,919 961,029
Compagnie de Suez SA 391,500 962,059
Societe Generale Paris 13,155 1,467,563
-----------
4,136,163
-----------
BEVERAGE & TOBACCO - 1.73%
LVMH (Louis Vuitton Moet-Hennessy) 11,764 3,160,926
-----------
BUILDING MATERIALS & COMPONENTS - 0.45%
Lafarge 13,327 828,365
-----------
BUSINESS & PUBLIC SERVICES - 1.19%
Compagnie Generale des Eaux 16,992 2,175,914
Compagnie Generale des Eaux 5/2/2001 warrants 16,992 10,172
-----------
2,186,086
-----------
CHEMICALS - 1.82%
L'Air Liquide 14,380 2,281,617
Rhone-Poulenc 25,300 1,032,604
-----------
3,314,221
CONSTRUCTION & HOUSING - 0.16%
Bouygues 3,604 296,335
-----------
ELECTRICAL & ELECTRONICS - 1.47%
Alcatel Alsthom 21,353 2,672,630
-----------
ENERGY SOURCES - 3.61%
Elf Acquitaine 37,335 4,025,387
Total SA - B 25,288 2,554,484
-----------
6,579,871
-----------
FINANCIAL SERVICES - 0.44%
Compagnie Bancaire SA 3,876 494,364
Societe Eurafrance SA 743 304,515
-----------
798,879
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
<S> <C> <C>
FOOD & HOUSEHOLD PRODUCTS - 0.94%
Groupe Danone 10,381 $ 1,714,196
------------
HEALTH & PERSONAL CARE - 2.94%
Sanofi SA 11,667 1,142,836
L'Oreal 10,013 4,216,160
------------
5,358,996
------------
INDUSTRIAL COMPONENTS - 0.50%
Michelin-B 15,025 901,713
------------
LEISURE & TOURISM - 0.40%
Accor SA 4,809 719,680
------------
MACHINERY & ENGINEERING - 1.80%
Schneider SA 13,595 723,183
Sidel SA 33,200 2,568,926
------------
3,292,109
------------
MATERIALS & COMMODITIES - 1.25%
Compagnie de Saint-Gobain 15,599 2,273,420
------------
MERCHANDISING - 3.47%
Carrefour Supermarche 6,048 4,389,736
Casino Guichard-Perrachon 10,600 524,387
Pinault Printemps Redoute SA 1,500 720,374
Promodes 1,800 700,681
------------
6,335,178
------------
MULTI-INDUSTRY - 1.54%
AXA 27,573 1,713,853
Chargeurs International SA 1,235 71,114
Lyonnaise des Eaux-Dumex 7,820 787,283
Pathe SA 1,235 244,888
------------
2,817,138
------------
TOTAL FRENCH SECURITIES
(Identified Cost $33,366,446) 48,485,183
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
<S> <C> <C>
GERMANY - 32.64%
AIRLINES - 0.25%
Deutsche Lufthansa AG* 23,700 $ 455,692
------------
AUTOMOBILES - 6.59%
Daimler Benz AG 59,540 4,841,965
Volkswagen AG 9,484 7,185,441
------------
12,027,406
------------
BANKING - 4.45%
Bayerische Vereinsbank AG 49,730 2,034,919
Deutsche Bank AG 44,350 2,602,699
Dresdner Bank AG 99,090 3,469,776
------------
8,107,394
------------
BUSINESS & PUBLIC SERVICES - 0.75%
Sap AG 6,850 1,373,222
------------
CHEMICALS - 1.77%
Bayer AG 83,750 3,225,407
------------
CONSTRUCTION & HOUSING - 0.56%
Hochtief AG 22,770 1,017,860
------------
ELECTRICAL & ELECTRONICS - 3.94%
Siemens AG 120,000 7,183,235
------------
INSURANCE -3.47%
Allianz AG Holding 23,070 4,924,978
Muencherner Rueckversicherungs 500 1,415,557
------------
6,340,535
------------
MACHINERY & ENGINEERING - 1.89%
Mannesmann AG 5,725 2,555,897
M.A.N. AG 2,902 903,083
------------
3,458,980
------------
MATERIALS & COMMODITIES - 0.52%
Degussa AG 17,900 945,833
------------
MULTI-INDUSTRY - 1.67%
Viag AG 6,656 3,038,292
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
<S> <C> <C>
TELECOMMUNICATIONS - 2.70%
Deutsche Telekom 200,250 $ 4,917,606
------------
UTILITIES - GAS & ELECTRIC - 4.08%
RWE AG 75,810 3,258,503
VEBA AG 74,150 4,185,794
------------
7,444,297
------------
TOTAL GERMAN SECURITIES
(Identified Cost $39,490,329) 59,535,759
------------
HONG KONG - 3.18%
ENERGY SOURCES - OIL/GAS - 0.33%
Zhenhai Refining & Chemical Co Ltd. 1,682,000 607,962
------------
RETAIL - APPAREL - 0.62%
Giordano International Ltd. 1,650,000 1,128,892
------------
SOFTWARE - 1.20%
Founder Hong Kong Ltd. 3,240,000 2,195,821
------------
TELECOMMUNICATIONS - 0.36%
Champion Technology Holdings 4,398,729 567,832
Champion Technology Holdings 6/30/1998
warrants 879,745 40,884
Kantone Holdings* 424,025 44,337
------------
653,053
------------
TEXTILES & APPAREL - 0.61%
Yizheng Chemical Fibre Co. Ltd. 6,224,000 1,108,770
------------
WHOLESALE - SPECIAL LINES - 0.06%
Goldlion Holdings Ltd. 200,000 111,663
------------
TOTAL HONG KONG SECURITIES
(Identified Cost $5,961,020) 5,806,161
------------
ITALY - 13.68%
AUTOMOBILES - 1.01%
Fiat S.p.A. 509,000 1,835,218
------------
BUILDING MATERIAL & COMPONENTS - 0.29%
Italcementi S.p.A. 83,600 522,072
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
<S> <C> <C>
CONSTRUCTION & HOUSING - 0.27%
Sirti S.p.A. 86,500 $ 499,669
------------
ENERGY SOURCES - OIL/GAS - 3.15%
Edison S.p.A. 104,000 518,043
Eni S.p.A 921,940 5,227,835
------------
5,745,878
FINANCIAL SERVICES - 1.59%
Banca Commerciale Italiana 352,000 729,968
Banco Ambrosiano Veneto S.p.A. 120,100 346,703
Credito Italiano S.p.A. 489,000 895,958
Istituto Bancario San Paolo di Torina S.p.A. 126,800 925,570
------------
2,898,199
------------
FOOD & HOUSEHOLD PRODUCTS - 0.22%
Parmalat Finanziaria S.p.A. 280,080 396,840
------------
INSURANCE - 1.81%
Assicurazioni Generali S.p.A. 143,104 2,605,126
R.A.S. S.p.A. 47,575 376,981
S.A.I. 40,400 313,225
------------
3,295,332
MULTI-INDUSTRY - 0.85%
Montedison S.p.A.* 1,033,140 682,921
Pirelli S.p.A.* 348,000 863,137
------------
1,546,058
------------
RETAIL - SPECIATLY STORES - 0.17%
La Rinascente S.p.A. 55,000 306,044
La Rinascente S.p.A. 7/23/97 rights 45,000 2,042
La Rinascente S.p.A. 7/23/97 rights 45,000 7,423
La Rinascente S.p.A. 11/30/1999 warrants 2,250 1,113
------------
316,622
------------
TELECOMMUNICATIONS - 3.76%
Telecom Italia S.p.A. 1,060,000 3,422,196
Telecomm Italia Mobile S.p.A.* 1,060,000 3,434,686
------------
6,856,882
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
<S> <C> <C>
TEXTILES & APPAREL - 0.29%
Benetton Group S.p.A. 33,252 $ 531,871
------------
UTILITIES - GAS & ELECTRIC - 0.27%
Italgas S.p.A. 150,000 486,041
------------
TOTAL ITALIAN SECURITIES
(Identified Cost $23,132,318) 24,930,682
------------
MEXICO - 2.57%
BEVERAGE & TOBACCO - 1.14%
Coca-Cola Femsa S.A. 400,000 2,088,050
------------
FOOD - PROCESSING - 0.65%
Grupo Industrial Maseca S.A. - Series B 1,075,000 1,179,257
------------
REAL ESTATE - 0.04%
Grupo Situr S.A. - Series B 1,575,000 71,493
------------
RETAIL - DEPARTMENT STORES - 0.74%
Cifra, SA - Series A 79,500 145,751
Cifra, SA - Series B 650,000 1,196,594
------------
1,342,345
------------
TOTAL MEXICAN SECURITIES
(Identified Cost $2,843,935) 4,681,145
------------
SPAIN - 9.73%
BEVERAGE & TOBACCO - 0.13%
Tabacalera SA - A 4,266 228,906
------------
CONSTRUCTION & HOUSING - 0.30%
Dragados & Construcciones SA 11,988 248,845
Fomento de Construcciones y Contratas SA 2,277 290,235
------------
539,080
------------
ENERGY SOURCES - OIL/GAS - 0.89%
Repsol SA 38,365 1,621,375
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
<TABLE>
<CAPTION>
Investment Portfolio - June 30, 1997 (unaudited)
Value
Shares (Note 2)
<S> <C> <C>
FINANCIAL SERVICES - 3.06%
Banco Bilbao Vizcaya 28,290 $ 2,297,139
Banco Central Hispanoamericano SA 18,888 690,614
Banco Santander SA 56,184 1,730,329
Corp. Bancaria De Espana SA (Argentaria) 15,512 868,124
------------
5,586,206
------------
INSURANCE - 0.08%
Corporacion Mapfre 2,823 150,137
-------------
METAL - STEEL - 0.24%
Acerinox SA 2,343 438,833
-------------
MULTI-INDUSTRY - 0.22%
Autopistas Concesionaria Espanola SA 29,865 405,184
------------
REAL ESTATE - 0.02%
Inmobiliaria Metropolitana Vasco Central SA 1,128 40,861
Inmobiliaria Metropolitana Vasco Central SA
7/26/1997 Rights 1,128 2,013
------------
42,874
------------
TELECOMMUNICATIONS - 1.74%
Telefonica de Espana 110,009 3,179,055
-------------
UTILITIES - GAS & ELECTRIC - 3.05%
Empresa Nacional de Electridad (ENDESA) 29,210 2,451,103
Gas Natural SDG - E 4,993 1,090,292
Iberdrola SA 122,474 1,545,315
Union Electrica Fenosa SA 52,126 473,827
------------
5,560,537
------------
TOTAL SPANISH SECURITIES
(Identified Cost $9,477,871) 17,752,187
-------------
UNITED KINGDOM - 1.72%
MERCHANDISING - 1.72%
Tesco plc 510,005 3,136,132
-------------
TOTAL UNITED KINGDOM SECURITIES
(Identified Cost $2,273,322) 3,136,132
------------
TOTAL COMMON STOCK
(Identified Cost $116,545,241) 164,327,249
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Amount/ Value
Shares (Note 2)
<S> <C> <C>
SHORT-TERM INVESTMENTS - 9.86%
Federal Home Loan Bank Discount Note,
7/14/1997 $ 6,000,000 $ 5,988,365
Federal National Mortgage Association Discount
Note, 7/15/1997 8,000,000 7,983,169
U.S. Treasury Bill, 7/10/1997 2,500,000 2,497,038
Dreyfus U.S. Treasury Money Market 1,519,058 1,519,058
------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $17,987,630) 17,987,630
------------
TOTAL INVESTMENTS - 99.96%
(Identified Cost $134,532,871) 182,314,879
OTHER ASSETS, LESS LIABILITIES - 0.04% 77,313
-------------
NET ASSETS -100% $182,392,192
=============
</TABLE>
*Non-income producing security.
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
<S> <C>
At June 30, 1997, the net unrealized appreciation based on identified cost
for federal income tax purposes of $134,532,871 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $53,301,064
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value (5,519,056)
UNREALIZED APPRECIATION - NET $47,782,008
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
<TABLE>
<CAPTION>
INDUSTRY CONCENTRATION (AS A PERCENT OF NET ASSETS) (UNAUDITED)
<S> <C>
Percent of Net Assets
Aerospace & Military Technology 0.20%
Airlines 0.25%
Automobiles 8.00%
Banking 6.72%
Beverage & Tobacco 3.00%
Building Materials & Components 0.74%
Business & Public Services 1.94%
Chemicals 3.59%
Construction & Housing 1.29%
Electrical & Electronics 5.41%
Energy Sources 7.98%
Financial Services 5.09%
Food & Household Products 1.16%
Food Processing 0.65%
Health & Personal Care 2.94%
Industrial Components 0.50%
Insurance 5.36%
Leisure & Tourism 0.40%
Machinery & Engineering 3.69%
Materials & Commodities 1.77%
Merchandising 5.19%
Metals-Steel 0.24%
Multi-Industry 4.28%
Real Estate 0.06%
Retail 1.53%
Software 1.20%
Telecommunication 8.56%
Textiles & Apparel 0.90%
Utilities - Gas & Electric 7.40%
Wholesale - Special Lines 0.06%
----------------------
TOTAL COMMON STOCK 90.10%
======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
JUNE 30, 1997
<S> <C>
ASSETS:
Investments, at value (Identified Cost $134,532,871)(Note 2) $182,314,879
Foreign currency, at value (cost $8,992,265) 8,793,759
Cash 79,595
Receivable for forward foreign currency exchange
contracts sold (Note 2) 78,358,811
Foreign tax reclaims receivable 507,624
Dividends receivable 169,417
Receivable for fund shares sold 32,700
Prepaid expense 1,120
------------
TOTAL ASSETS 270,257,905
------------
LIABILITIES:
Accrued management fees (Note 3) 146,365
Accrued Directors' fees (Note 3) 1,359
Payable for forward foreign currency contracts sold,
at value (Note 2) 77,555,700
Payable for securities purchased 9,744,712
Payable for fund shares redeemed 374,406
Custodian fee payable 28,016
Audit fee payable 13,198
Other payables and accrued expenses 1,957
------------
TOTAL LIABILITIES 87,865,713
------------
NET ASSETS FOR 13,111,040 SHARES OUTSTANDING $182,392,192
============
NET ASSETS CONSIST OF:
Capital stock $ 131,112
Additional paid-in-capital 119,569,294
Undistributed net investment income 2,035,190
Accumulated net realized gain on investments 12,203,320
Net unrealized appreciation on investments, foreign currency,
forward currency contracts, and other assets and liabilities 48,453,276
------------
TOTAL NET ASSETS $182,392,192
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($182,392,192/13,111,040 shares) $ 13.91
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<S> <C>
INVESTMENT INCOME:
Dividends (net of withholding) $ 2,129,946
Interest 686,363
-----------
Total Investment Income 2,816,309
-----------
EXPENSES:
Management fees (Note 3) 818,982
Directors' fees (Note 3) 3,076
Custodian fee 42,612
Audit fee 13,197
Registration and filing fees 2,208
Miscellaneous 11,526
-----------
Total Expenses 891,601
-----------
NET INVESTMENT INCOME 1,924,708
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on -
Investments (identified cost basis) 787,313
Foreign currency and forward foreign currency
exchange contracts 8,604,612
-----------
Net realized gain on investments 9,391,925
-----------
Net change in unrealized appreciation on-
Investments 17,930,837
Foreign currency and forward foreign currency exchange contracts
and other assets and liabilities 1,690,111
-----------
Net unrealized appreciation on investments 19,620,948
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 29,012,873
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $30,937,581
===========
</TABLE>
The accompanying notes are an integral part of financial statements.
14
<PAGE>
Statement of Changes in Net Assets (unaudited)
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 6/30/97 Ended 12/31/96
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,924,708 $ 1,991,419
Net realized gain on investments 9,391,925 6,984,916
Net change in unrealized appreciation on --------------- ---------------
investments 19,620,948 18,859,565
--------------- ---------------
Net increase in net assets from operations 30,937,581 27,835,900
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income -- (1,821,116)
From net realized gain on investments -- (241,966)
--------------- ---------------
Total distributions to shareholders -- (2,063,082)
--------------- ---------------
CAPITAL STOCK ISSUED AND REDEEMED:
Net increase (decrease) from capital share
transactions (Note 5) 2,123,262 (4,735,326)
--------------- ---------------
Net increase in net assets 33,060,843 21,037,492
NET ASSETS:
Beginning of period 149,331,349 128,293,857
--------------- ---------------
End of period (including undistributed net
investment income of $2,035,190 and
$110,482, respectively) $ 182,392,192 $ 149,331,349
============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
Financial Highlights (unaudited)
<TABLE>
<CAPTION>
For the Six
Months For the Years Ended
Ended
6/30/97 12/31/96 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C> <C> <C>
PER SHARE DATA (FOR A SHARE
OUTSTANDING THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 11.54 $ 9.57 $ 9.54 $ 11.33 $ 9.19
--------- ----------- ------- ------- ------
Income from investment operations:
Net investment income 0.146 0.156 0.123 0.143 0.150
Net realized and unrealized gain
(loss) on investments 2.224 1.976 0.262 (1.784) 2.240
--------- ----------- ------- ------- -------
Total from investment operations 2.370 2.132 0.385 (1.641) 2.390
--------- ----------- ------- ------- -------
Less distributions to shareholders:
From net investment income -- (0.143) (0.118) -- (0.250)
From paid-in-capital -- -- (0.160) -- --
From net realized gain on
investments -- (0.019) (0.077) (0.149) --
In excess of net realized gains -- -- -- -- --
--------- ----------- -------- ------- -------
Total distributions to shareholders -- (0.162) (0.355) (0.149) (0.250)
--------- ----------- -------- ------- -------
NET ASSET VALUE - END OF PERIOD $ 13.91 $ 11.54 $ 9.57 $ 9.54 $ 11.33
========= =========== ======== ======= =======
Total return 2: 20.54% 22.35% 4.14% (14.48)% 26.00%
Net Ratios of expenses (to average
net assets) /Supplemental Data:
Expenses 1.09%3 1.12% 1.20% 1.18% 1.16%
Net investment income 2.35%3 1.46% 1.42% 1.38% 1.39%
Portfolio turnover 2% 2% 14% 31% 20%
Average commission rate paid $ 0.0046 $ 0.0013 $ 0.0021 - -
NET ASSETS - END OF PERIOD (000'S
OMITTED) $ 182,392 $ 149,331 $ 128,294 $ 85,964 $ 92,012
========= =========== ======= ======== ========
For the
Period 8/27/92
(commencement
of operations)
to 12/31/92
<S> <C>
PER SHARE DATA (FOR A SHARE
OUTSTANDING THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.00
----------
Income from investment operations:
Net investment income 0.030
Net realized and unrealized gain
(loss) on investments 0.570
----------
Total from investment operations 0.600
----------
Less distributions to shareholders:
From net investment income (0.030)
From paid-in-capital --
From net realized gain on
investments (1.240)
In excess of net realized gains (0.140)1
----------
Total distributions to shareholders (1.410)
----------
NET ASSET VALUE - END OF PERIOD $ 9.19
==========
Total return 2: 6.01%
Net Ratios of expenses (to average
net assets) /Supplemental Data:
Expenses 1.33%3
Net investment income 0.85%3
Portfolio turnover 0%
Average commission rate paid -
NET ASSETS - END OF PERIOD (000'S
OMITTED) $ 72,163
</TABLE> ==========
1 Distributions differ from net investment income and net realized capital
gains because of book/tax timing differences, due to the requirements of the
Internal Revenue Code.
2 Represents aggregate total return for the period indicated.
3 Annualized.
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
International Series (the "Fund") is a no-load non-diversified series of
Manning & Napier Fund, Inc. (the "Corporation"). The Corporation is organized
in Maryland and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company.
Shares of the Fund are offered to clients and employees of Manning & Napier
Advisors, Inc. (The Advisor) and its affiliates. 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 June 30, 1997, 940 million shares have
been designated in total among 19 series, of which 50 million have been
designated as International Series Class G 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 last quoted sales
price of the exchange on which the security is primarily traded. 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
Advisor under procedures established by and under the general supervision of
the Fund's Board of Directors.
Short-term investments that mature in sixty (60) days or less are valued at
amortized cost, which approximates market value.
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.
17
<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, 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) purchase 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
investment that result from fluctuations in foreign currency exchange rates is
not separately stated.
18
<PAGE>
to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may purchase or sell forward foreign currency contracts in order to
hedge a portfolio position or specific transaction. Risks may arise if the
counter parties to a contract are unable to meet the terms of the contract or
if the value of the foreign currency moves unfavorably.
All forward foreign currency contracts are adjusted daily by the exchange rate
of the underlying currency and, for financial statement purposes, any gain or
loss is recorded as unrealized gain or loss until a contract has been closed.
Realized and unrealized gain or loss arising from a transaction is included in
net realized and unrealized gain (loss) from foreign currency and forward
currency exchange contracts.
The Fund regularly trades forward foreign currency exchange contracts with
off-balance sheet risk in the normal course of its investing activities to
assist in managing exposure to changes in foreign currency exchange rates.
The notional or contractual amount of these instruments represents the
investment the Fund has in forward foreign currency exchange contracts and
does not necessarily represent the amounts potentially at risk. The
measurement of the risks associated with forward foreign currency exchange
contracts is meaningful only when all related and offsetting transactions are
considered. A summary of obligations for forward currency exchange contracts
sold on June 30, 1997 is as follows:
<TABLE>
<CAPTION>
Net Unrealized
Settlement Contracts In Exchange Contracts Appreciation/
Date to Deliver For At Value (Depreciation)
<C> <S> <C> <C> <C>
07/30/97 Deutsche Marks $ 31,924,774 $31,590,900 $ 333,874
07/30/97 French Francs $ 46,434,037 $45,964,800 $ 469,237
</TABLE>
On June 30, 1997, the Fund had sufficient cash and/or securities to cover any
commitments under there contracts.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of the revenues and expenses during the reporting
period. Actual results could differ from those estimates.
19
<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% of the Fund's average daily
net assets. The fee amounted to $818,982 for the six months ended June 30,
1997.
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 agreed that, in any fiscal year, if the expenses of the Fund
(including the advisory fee but excluding interest, taxes, brokerage
commissions, and extraordinary expenses) exceed the limits set by applicable
regulation of state securities commissions, the Advisor will reduce its fee by
the amount of such excess.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. These services are provided at no additional
cost to the Fund.
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 $3,076 for the six
months ended June 30, 1997.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term securities, were
$20,217,687 and $2,383,976, respectively, for the six months ended June 30,
1997.
20
<PAGE>
Notes to Financial Statements (unaudited)
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of International Series were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 6/30/97 Ended 12/31/96
<S> <C> <C> <C> <C>
Shares Amount Shares Amount
-------------- ---------- --------------- -------------
Sold 610,034 $ 7,687,878 1,645,694 $ 17,300,172
Reinvested -- -- 184,488 2,044,126
Repurchased (438,094) (5,564,616) (2,297,367) (24,079,624)
--------------- ---------- --------------- -------------
Total 171,940 $ 2,123,262 (467,185) $ (4,735,326)
</TABLE> =============== =========== ================ ============
6. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of domestic companies and the United States government. These
risks include revaluation of currencies and future adverse political and
economic developments. Moreover, securities of foreign companies and foreign
governments and their markets may be less liquid and their prices more
volatile than of those securities of comparable domestic companies and the
United States government.
21
<PAGE>
<PAGE>
Manning & Napier Fund, Inc.
World Opportunities Series
Semi-Annual report
June 30, 1997
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
The World Opportunities Series is designed to provide the opportunity for
Manning & Napier to apply our time-tested investment strategies to buy the
stocks of companies throughout the world. The Series fits with our investment
overview in two ways: first, it allows us to invest globally, wherever strong
candidates are identified; second, it expands the pool of possible investments
at a time when many U.S. stocks are at extremely high valuations.
A key point of our overview is the increasing importance of the global
economy. With the spread of capitalism, removal of trade barriers, and
improved technology, national borders are not the significant hurdle to
business that they used to be. A large percentage of publicly-traded
companies are now located outside the United States. It makes sense,
therefore, to look for investment opportunities throughout the world, without
limitations to certain countries. On the other hand, differences between
financial markets and securities trading in different countries can create a
significant hurdle to foreign investing. Utilizing a mutual fund can provide
access to investment opportunities overseas while minimizing these operational
obstacles.
A second important component of our overview is that the U.S. stock market,
taken as a whole, remains overvalued. Given this situation, investors can
benefit from the wider field of potential investments provided by global
investing. Our analysts review companies throughout the world to identify
compelling investment opportunities for this Series.
As with any investment in foreign securities, currency fluctuations between
that country and the U.S. can be an important factor in the Series returns.
To help manage this risk, we have hedged the currencies of those countries
where our analysis shows that the local currency is at risk of falling
relative to the U.S. dollar. These hedges are used as a risk management tool;
they are not used for speculative investments.
We would once again like to thank you for the opportunity of helping you meet
your investment goals. It is a service in which we take great pride.
Manning & Napier Advisors, Inc.
1
<PAGE>
Performance Update as of June 30, 1997 (unaudited)
<graphic>
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
Manning & Napier S&P 500 Morgan Stanley Capital
Date World Opportunities Series Total Return Index International World Index
<S> <C> <C> <C>
09/06/96 10,000 10,000 10,000
09/30/96 10,040 10,497 10,390
12/31/96 10,482 11,372 10,865
03/31/97 11,026 11,677 10,896
06/30/97 12,866 13,714 12,536
</TABLE>
<TABLE>
<CAPTION>
Manning & Napier Fund, Inc.
World Opportunities Series
Total Return
-------------
Through Growth of $10,000 Average
06/30/97 Investment Cumulative Annual
<S> <C> <C> <C>
Inception 2 $ 12,866 28.66% N/A
</TABLE>
<TABLE>
<CAPTION>
S&P 500 Total Return Index
Total Return
-------------
Through Growth of $10,000 Average
06/30/97 Investment Cumulative Annual
<S> <C> <C> <C>
Inception 2 $13,714 37.14% N/A
</TABLE>
<TABLE>
<CAPTION>
Morgan Stanley
Capital International World Index
Total Return
-------------
Through Growth of $10,000 Average
06/30/97 Investment Cumulative Annual
<S> <C> <C> <C>
Inception 2 $ 12,536 25.36% N/A
</TABLE>
The value of a $10,000 investment in the Manning & Napier Fund, Inc. -
World Opportunities Series from its inception (9/6/96) to present
(6/30/97) as compared to the Standard & Poor's (S&P) 500 Total
Return Index and the Morgan Stanley Capital International World Index. 1
1 The Standard & Poor (S&P) 500 Total Return Index is an unmanaged
capitalization-weighted measure of 500 widely held common stocks listed the
New York Stock Exchange, American Stock Exchange, and Over-the-
Counter market. The Morgan Stanley Capital International World Index is an
market capitalization-weighted measure of the total return of 1,568 companies
listed on the stock exchanges of the United States, Europe, Canada, Australia,
New Zealand and the Far East. The Morgan Stanley Capital International Index
is denominated in U.S. Dollars. The Indices' returns assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees or expenses.
2 Performance numbers for the Fund and Indices are calculated from
September 6, 1996, the Fund's inception date. The Fund's performance is
historical and may not be indicative of future results.
2
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
<S> <C> <C>
COMMON STOCK - 89.6%
AMUSEMENT & RECREATIONAL SERVICES - 4.0%
Resorts World Bhd. (Malaysia) 1,300,000 $3,913,270
-----------
APPLIANCES - 4.0%
Brasmotor S.A. (Brazil) 16,800,000 3,979,365
-----------
BEVERAGES - 2.6%
Vitasoy International Holdings Ltd.
(Hong Kong) 5,810,000 2,606,295
-----------
BROADCAST SERVICES - 7.1%
Groupe AB SA - ADR (France) 406,500 3,455,250
Television Broadcasts Ltd. (Hong Kong) 800,000 3,593,866
-----------
7,049,116
-----------
CHEMICALS & ALLIED PRODUCTS - 5.7%
Novartis AG - ADR (Switzerland) 70,000 5,603,458
-----------
COMPUTER EQUIPMENT - 2.7%
Varitronix International Ltd. (Hong Kong) 1,551,000 2,632,874
-----------
DIAMONDS - 3.7%
De Beers Centenary AG - ADR (South Africa) 100,000 3,693,750
-----------
ELECTRONICS & ELECTRICAL PRODUCTS - 6.0%
Toshiba Corp. (Japan) 300,000 1,928,898
Vtech Holdings Ltd. (Hong Kong) 930,000 1,752,784
Coleman Company, Inc.* (United States) 134,000 2,311,500
-----------
5,993,182
-----------
FOOD - MISCELLANEOUS - 7.3%
Grand Metropolitan Plc (United Kingdom) 485,504 4,698,379
Nestle SA (Switzerland) 1,920 2,530,228
-----------
7,228,607
-----------
INDUSTRIAL & COMMERCIAL MACHINERY - 0.2%
First Tractor Company Ltd.* (Hong Kong) 250,000 164,590
-----------
PAPER & ALLIED PRODUCTS - 5.4%
Asia Pulp & Paper Company Ltd. - ADR
(Singapore) 355,000 5,369,375
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Shares/ Value
Principal Amount (Note 2)
<S> <C> <C>
PETROLEUM REFINING - 4.9%
YPF Sociedad Anonima - ADR (Argentina) 156,000 $ 4,797,000
------------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 2.8%
Eastman Kodak Co. (United States) 36,000 2,763,000
------------
SOFTWARE - 4.3%
Founder Hong Kong Ltd. (Hong Kong) 4,377,600 2,966,798
NTT Data Corp. (Japan) 32 1,236,728
-----------
4,203,526
-----------
TELECOMMUNICATIONS - 24.8%
Equipment - 4.9%
OY Nokia Ab - ADR (Finland) 65,000 4,793,750
------------
SERVICES - 19.9%
Compania Anonima Nacional Telefonica de
Venesuela (CANTV) - ADR* (Venezuela) 95,000 4,096,875
Stet Societa Finanziaria Telefonica S.p.A. - ADR
(Italy) 85,000 4,961,875
Telecommunicacoes Brasileiras SA (Telebras) -
ADR (Brazil) 40,000 6,070,000
Vimpel-Communications - ADR* (Russia) 120,000 4,560,000
-----------
19,688,750
-----------
24,482,500
-----------
TOBACCO - 4.1%
PT Hanjaya Mandala Sampoerna (Indonesia) 1,070,000 4,081,943
------------
TOTAL COMMON STOCK
(Identified Cost $71,194,520) 88,561,851
------------
SHORT-TERM INVESTMENTS - 7.6%
Federal Home Loan Bank Bond, 7/7/1997 $ 4,000,000 3,996,427
Dreyfus U.S. Treasury Money Market 3,485,638 3,485,638
-----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $7,482,065) $ 7,482,065
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Value
(Note 2)
<S> <C>
TOTAL INVESTMENTS - 97.2%
(Identified Cost $78,676,585) $96,043,916
OTHER ASSETS, LESS LIABILITIES - 2.8% 2,729,276
------------
NET ASSETS -100% $98,773,192
============
</TABLE>
*Non-income producing security.
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
<S> <C>
At June 30, 1997, the net unrealized appreciation based on identified cost for
federal income tax purposes of $78,676,585 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $19,082,837
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value (1,715,506)
------------
UNREALIZED APPRECIATION - NET $17,367,331
============
</TABLE>
<TABLE>
<CAPTION>
COUNTRY ALLOCATION (AS A PERCENT OF NET ASSETS):
<S> <C>
Argentina 4.9%
Brazil 10.2%
Finland 4.9%
France 3.5%
Hong Kong 13.9%
Indonesia 4.1%
Italy 5.0%
Japan 3.2%
Malaysia 4.0%
Russia 4.6%
Singapore 5.4%
South Africa 3.7%
Switzerland 8.2%
United Kingdom 4.8%
United States 5.1%
Venezuela 4.1%
-----
Total Common Stock 89.6%
=====
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
JUNE 30, 1997
<S> <C>
ASSETS:
Investments, at value (Identified Cost $78,676,585) (Note 2) $ 96,043,916
Foreign currency, at value (cost $3,926,249) 3,814,976
Cash 46,090
Receivable for forward foreign currency exchange contracts
sold (Note 2) 10,697,256
Receivable for securities sold 462,518
Dividends receivable 150,542
Receivable for fund shares sold 17,920
Foreign tax reclaims receivable 7,882
-----------
TOTAL ASSETS 111,241,100
-----------
LIABILITIES:
Accrued management fees (Note 3) 78,827
Accrued Directors' fees (Note 3) 1,563
Payable for forward foreign currency exchange contracts sold, at value
(Note 2) 10,836,298
Net payable on closed forward foreign currency exchange contracts 79,444
Payable for securities purchased 1,183,297
Payable for fund shares redeemed 273,448
Other payables and accrued expenses 15,031
-----------
TOTAL LIABILITIES 12,467,908
-----------
NET ASSETS FOR 7,724,661 SHARES OUTSTANDING $ 98,773,192
============
NET ASSETS CONSIST OF:
Capital stock $ 77,246
Additional paid-in-capital 77,578,111
Undistributed net investment income 462,859
Accumulated net realized gain on investments 3,536,837
Net unrealized appreciation on investments, foreign currency,
forward foreign currency exchange contracts, and other assets and liabilities 17,118,139
------------
TOTAL NET ASSETS $ 98,773,192
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($98,773,192/7,724,661 shares) $ 12.79
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<S> <C>
INVESTMENT INCOME:
Dividends (net of withholding) $ 814,900
Interest 146,700
-----------
Total Investment Income 961,690
-----------
EXPENSES:
Management fees (Note 3) 427,277
Directors' fees (Note 3) 3,306
Custodian fee 46,191
Audit fee 9,918
Miscellaneous 12,139
-----------
Total Expenses 498,831
-----------
NET INVESTMENT INCOME 462,859
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on -
Investments (identified cost basis) 1,982,382
Foreign currency and forward foreign currency exchange
contracts 1,532,824
-----------
Net realized gain on investments 3,515,206
-----------
Net change in unrealized appreciation on -
Investments 14,639,463
Foreign currency, forward foreign currency exchange
contracts, and other assets and liabilities (634,128)
-----------
Net unrealized appreciation on investments 14,005,335
-----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 17,520,541
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $17,983,400
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Changes in Net Assets (unaudited)
<TABLE>
<CAPTION>
For the Period 9/6/96
(commencement
For the Six Months of operations)
Ended 6/30/97 to 12/31/96
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income $ 462,859 $ 367,076
Net realized gain on investments 3,515,206 93,389
Net change in unrealized appreciation on
investments 14,005,335 3,112,804
--------------- ---------------
Net increase in net assets from operations 17,983,400 3,573,269
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 2):
From net investment income -- (370,123)
From net realized gain on investments -- (68,711)
--------------- ---------------
Total distributions to shareholders -- (438,834)
--------------- ---------------
CAPITAL STOCK ISSUED AND REDEEMED:
Net increase in net assets from capital share
transactions (Note 5) 3,451,472 74,203,885
--------------- ---------------
Net increase in net assets 21,434,872 77,338,320
NET ASSETS:
Beginning of period 77,338,320 --
--------------- ---------------
END OF PERIOD (including undistributed net
investment income of $462,859 and $0,
respectively $ 98,773,192 $ 77,338,320
=============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Financial Highlights (unaudited)
<TABLE>
<CAPTION>
For the Period 9/6/96
For the Six (commencement
Months Ended of operations)
6/30/97 to 12/31/96
<S> <C> <C>
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT
THE PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.42 $ 10.00
---------- -------------
Income from investment operations:
Net investment income 0.060 0.051
Net realized and unrealized gain on investments 2.310 0.429
---------- -------------
Total from investment operations 2.370 0.480
---------- -------------
Less distributions to shareholders:
From net investment income -- (0.051)
From net realized gain on investments -- (0.009)
---------- -------------
Total distributions to shareholders -- (0.060)
---------- -------------
NET ASSET VALUE - END OF PERIOD $ 12.79 $ 10.42
========== =============
Total return 1: 22.74% 4.82%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses 1.17%2 1.17%2
Net investment income 1.08%2 1.54%2
Portfolio turnover 45% 1%
Average commission rate paid $ 0.0111 $ 0.0065
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 98,773 $ 77,338
=========== ==============
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
World Opportunities Series (the "Fund") is a no-load non-diversified series of
Manning & Napier Fund, Inc. (the "Corporation"). The Corporation is organized
in Maryland and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company.
Shares of the Fund are offered to clients and employees of Manning & Napier
Advisors, Inc. (The Advisor) and its affiliates. 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 June 30, 1997, 940 million shares have
been designated in total among 19 series, of which 50 million have been
designated as World Opportunities Series Class U 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 last quoted sales
price of the exchange on which the security is primarily traded. 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
Advisor under procedures established by and under the general supervision and
responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty (60) days or less are valued at
amortized cost which approximates market value.
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.
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, 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) purchase 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
investment that result from fluctuations in foreign currency exchange rates is
not separately stated.
11
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may purchase or sell forward foreign currency contracts in order to
hedge a portfolio position or specific transaction. Risks may arise if
the counter parties to a contract are unable to meet the terms of the
contract or if the value of the foreign currency moves unfavorably.
All forward foreign currency contracts are adjusted daily by the exchange rate
of the underlying currency and, for financial statement purposes, any gain or
loss is recorded as unrealized gain or loss until a contract has been closed.
Realized and unrealized gain or loss arising from a transaction is included in
net realized and unrealized gain (loss) from foreign currency and forward
currency exchange contracts.
The Fund regularly trades forward foreign currency exchange contracts with
off-balance sheet risk in the normal course of its investing activities to
assist in managing exposure to changes in foreign currency exchange rates.
The notional or contractual amount of these instruments represents the
investment the Fund has in forward foreign currency exchange contracts and
does not necessarily represent the amounts potentially at risk. The
measurement of the risks associated with forward foreign currency exchange
contracts is meaningful only when all related and offsetting transactions are
considered. A summary of obligations for forward currency exchange contracts
sold on June 30, 1997 is as follows:
<TABLE>
<CAPTION>
Net unrealized
Settlement Contracts In Exchange Contracts Appreciation/
Date to Deliver For At Value (Depreciation)
<C> <S> <C> <C> <C>
07/11/97 French Francs $ 1,381,693 $1,361,008 $ 20,685
07/11/97 French Francs 1,339,503 1,309,970 29,533
07/11/97 Japanese Yen 4,870,909 5,150,433 (279,524)
07/11/97 Swiss Francs 3,105,151 3,014,887 90,264
</TABLE>
On June 30, 1997, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of the revenues and expenses during the reporting
period. Actual results could differ from those estimates.
12
<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% of the Fund's average daily
net assets. The fee amounted to $427,227 for the six months ended June 30,
1997.
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 agreed that, in any fiscal year, if the expenses of the Fund
(including the advisory fee but excluding interest, taxes, brokerage
commissions, and extraordinary expenses) exceed the limits set by applicable
regulation of state securities commissions, the Advisor will reduce its fee by
the amount of such excess.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. These services are provided at no additional
cost to the Fund.
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 $3,306 for the six
months ended June 30, 1997.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term securities, were
$35,802,345 and $34,571,386, respectively, for the six months ended June 30,
1997.
13
<PAGE>
to Financial Statements (unaudited)
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of World Opportunities Series were:
<TABLE>
<CAPTION>
For the Period 9/6/96
For the Six Months (commencement of
Ended 6/30/97 operations) to 12/31/96
<S> <C> <C> <C> <C>
Shares Amount Shares Amount
------------------ ------------ ------------------------ -----------
Sold 537,084 $ 6,089,976 7,582,503 $75,856,659
Reinvested -- -- 43,147 433,194
Repurchased (231,281) (2,638,504) (206,792) (2,085,968)
---------- ---------- ---------- ----------
Total 305,803 $ 3,451,472 7,418,858 $74,203,885
========== ========== ========== ==========
</TABLE>
6. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of domestic companies and the United States government. These
risks include revaluation of currencies and future adverse political and
economic developments. Moreover, securities of foreign companies and foreign
governments and their markets may be less liquid and their prices more
volatile than of those securities of comparable domestic companies and the
United States government.
14
<PAGE>
<PAGE>
Manning & Napier Fund, Inc.
Technology Series
Anual Report the Period
January 1, 1997
to April 16, 1997
(Date of Complete
Redempion)
<PAGE>
Performance Update as of April 16, 1997
<graphic>
<line chart>
Data for chart to follow:
<TABLE>
<CAPTION>
Manning & Napier S&P 500
Date Technology Series Total Return Index
<S> <C> <C>
08/29/94 10,000 10,000
12/31/94 11,350 9,773
06/30/95 14,736 11,742
12/31/95 15,918 13,433
06/30/96 16,674 14,787
12/31/96 19,244 16,514
04/16/97 19,258 17,116
</TABLE>
<TABLE>
<CAPTION>
Manning & Napier Fund, Inc. - Technology Series
Total Return
Through Growth of $10,000 Average
04/16/97 Investment Cumulative Annual
<S> <C> <C> <C>
Year to Date $ 10,007 0.07% N/A
Inception 2 $ 19,258 92.58% 28.23%
</TABLE>
<TABLE>
<CAPTION>
S&P 500 Total Return Index
Total Return
Through Growth of $10,000 Average
04/16/97 Investment Cumulative Annual
<S> <C> <C> <C>
Year to Date $ 10,363 3.63% N/A
Inception 2 $ 17,116 71.16% 22.62%
</TABLE>
The value of a $10,000 investment in the Manning & Napier Fund, Inc. -
Technology Series for the periods 1/1/97 - 4/16/97 (date of complete
redemption) and the most recent activation period 8/29/94 - 4/16/97
(date of complete redemption) as compared to the Standard & Poor's
(S&P) 500 Total Return Index. 1
1 The Standard and 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 Over-the-Counter
Market. S&P 500 Total Return Index returns assume reinvestment of dividends
and, unlike Fund returns, do not reflect any fees or
expenses.
2 The Fund and Index performance numbers are calculated from August 29,
1994, the Fund's most recent activation date. The Fund's performance is
historical and may not be indicative of future
results.
1
Investment Portfolio - April 16, 1997
Note: Shares of the Fund were completely redeemed on April 16, 1997,
therefore, there are no investments held in the portfolio.
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
APRIL 16, 1997 (DATE OF COMPLETE REDEMPTION)
<S> <C>
ASSETS:
Cash $162,537
---------
TOTAL ASSETS 162,537
---------
LIABILITIES (NOTE 8):
Accrued management fees (Note 3) 123,974
Accrued Directors' fees (Note 3) 3,322
Audit fee payable 11,980
Other payables and accrued expenses 23,261
---------
TOTAL LIABILITIES 162,537
---------
NET ASSETS FOR 0 SHARES OUTSTANDING $0
=========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($0/0 shares) $0
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations
FOR THE PERIOD JANUARY 1, 1997 TO APRIL 16, 1997 (DATE OF COMPLETE REDEMPTION)
<S> <C>
INVESTMENT INCOME:
Interest $ 441,426
Dividends 37,403
---------
Total Investment Income 478,829
---------
EXPENSES:
Management fees (Note 3) 316,536
Directors' fees (Note 3) 1,661
Custodian fee 7,260
Audit fee 14,905
Miscellaneous 19,339
---------
Total Expenses 359,701
---------
NET INVESTMENT INCOME 119,128
---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments and other assets (identified cost basis) 17,737,605
Net change in unrealized depreciation on investments and other assets (17,700,746)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS 36,859
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 155,987
=========
</TABLE>
The accompanying notes ae an integral part of the financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
For the Period
1/1/97 to 4/16/97
(date of complete For the Year
redemption) Ended 12/31/96
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income $ 119,128 $ (157,768)
Net realized gain on investments 17,737,605 7,770,819
Net change in unrealized appreciation (depreciation)
on investments (17,700,746) 12,349,434
----------- -----------
Net increase in net assets from operations 155,987 19,962,485
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (120,347) (37,295)
From net realized gains (25,220,220) (2,466,358)
----------- -----------
Total distributions to shareholders (25,340,567) (2,503,653)
----------- -----------
CAPITAL STOCK ISSUED AND REDEEMED:
Net increase (decrease) in net assets from capital share
transactions (Note 5) (87,247,477) 41,826,182
----------- -----------
Net increase (decrease) in net assets (112,432,057) 59,285,014
NET ASSETS:
Beginning of period 112,432,057 53,147,043
----------- -----------
End of period (including undistributed net investment
income of $0 and $0 respectively) $ 0 $ 112,432,057
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
For the For the For the For the For the
Period Year Year Period Period
1/1/97 Ended Ended 8/29/94 1 1/1/92 to
to 4/16/97 2 12/31/96 12/31/95 to 12/31/94 5/11/92 2
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD)*
NET ASSET VALUE - BEGINNING OF PERIOD $12.58 $10.71 $11.35 $10.00 3 $10.25
------ ------ ------ -------- --------
Income from investment operations:
Net investment income 0.016 (0.021) 0.018 (0.013) 0.010
Net realized and unrealized gain (loss)
on investments (0.007) 2.191 4.515 1.363 1.530
------ ------ ------ -------- --------
Total from investment operations 0.009 2.170 4.533 1.350 1.540
------ ------ ------ -------- --------
Less distributions to shareholders:
From net investment income (0.016) -- (0.010) -- --
From net realized gain on investments (3.353) (0.300) (5.163) -- (1.940)
Redemption of capital (9.220) -- -- -- (9.850)
------ ------ ------ -------- --------
Total distributions to shareholders (12.589) (0.300) (5.173) -- (11.790)
------ ------ ------ -------- --------
NET ASSET VALUE - END OF PERIOD $0.00 $12.58 $10.71 $11.35 $0.00
====== ====== ====== ======== ========
Total return (4): -- 5 20.90% 40.25% 13.5% -- 5
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses 1.07% 6, 5 1.04% 1.12% 1.32% 6 1.35% 6, 5
Net investment income 0.36% 6, 5 (0.17%) 0.13% (0.40)% 6 0.20% 6, 5
Portfolio turnover 48% 107% 107% 5% 0%
Average commission rate paid $0.0174 $0.0163 $0.0156 -- --
NET ASSETS - END OF PERIOD (000'S OMITTED) -- $112,432 $53,147 $51,929 --
====== ======== ====== ====== ======
Financial Highlights
For the
Year Ended
12/31/91
<S> <C>
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD)*
NET ASSET VALUE - BEGINNING OF PERIOD $8.00
-----
Income from investment operations:
Net investment income (0.040)
Net realized and unrealized gain (loss)
on investments 2.930
-----
Total from investment operations 2.890
-----
Less distributions to shareholders:
From net investment income --
From net realized gain on investments (0.640)
Redemption of capital --
-----
Total distributions to shareholders (0.640)
-----
NET ASSET VALUE - END OF PERIOD $10.25
=====
Total return (4): 36.1%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses 1.13%
Net investment income (0.33)%
Portfolio turnover 4%
Average commission rate paid --
NET ASSETS - END OF PERIOD (000'S OMITTED) $5,594
======
</TABLE>
* The investment practice of the Fund results in the active operation of the
investment portfolio for discrete period. The Fund
was in active operation from November 4, 1988 to May 11, 1992. On May 11,
1992, the Fund redeemed all shares held. The
Fund recommenced investment operations on August 29, 1994. On April 16, 1997,
the Fund redeemed all shares held.
1 Recommencement of operations.
2 Date of complete redemption.
3 Initial offering price upon recommencement of operations on August 29, 1994.
4 Total return represents aggregate total return for the period indicated.
5 The Fund ceased investment operations on April 16, 1997 and May 11, 1992;
therefore, ratios and total return would not be representative
of an actively operating fund.
6 Annualized.
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Technology Series (the "Fund") is a no-load non-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.
Shares of the Fund were offered to clients and employees of Manning & Napier
Advisors, Inc. (the Advisor) and its affiliates. The investment practice of
the Fund results in the active operation of the investment portfolio for
discrete periods. As of April 16, 1997, the Fund had been in active operation
from November 4, 1988 to May 11, 1992 and from August 29, 1994 to April 16,
1997.
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 16,
1997, 940 million shares have been designated in total among 19 series, of
which 50 million have been designated as Technology Series Class D 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
Advisor under procedures established by and under the general supervision and
responsibility of 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.
7
<PAGE>
Notes to Financial Statements
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, 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) purchase 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
investment that result from fluctuations in foreign currency exchange rates is
not separately stated.
8
<PAGE>
Notes to Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may purchase or sell forward foreign currency contracts in order to
hedge a portfolio position or specific transaction. Risks may arise if the
counterparties to a contract are unable to meet the terms of the contract or
if the value of the foreign currency moves unfavorably.
At April 16, 1997, the Fund had no open foreign currency exchange contracts.
OPTION CONTRACTS
The Fund may write (sell) or buy call or put options on securities and other
financial instruments. When the Fund writes a call, the Fund gives the
purchaser the right to buy the underlying security from the Fund at the price
specified in the option contract (the exercise price) at any time during the
option period. When the Fund writes a put option, the Fund gives the
purchaser the right to sell to the Fund the underlying security at the
exercise price at any time during the option period. The Fund will only write
options on a covered basis. This means that the Fund will own the underlying
security when the Fund writes a call or the Fund will put aside cash, U.S.
Government securities, or other liquid assets in the amount not less than the
exercise price at all times the put option is outstanding.
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Funds Statement of Assets and Liabilities as an
asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the
option. The current market value of the option is the closing price or, in
the absence of a closing price, the bid price.
If a written option expires on its stipulated expiration date or if the Fund
enters into a closing transaction, a gain or loss is realized on the contract.
When a gain or loss is realized, the liability related to such option
contract is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the premium
received from the option is added to proceeds from the sale of the underlying
security thereby increasing the gain or decreasing the loss from the sale of
the underlying security. If a written put option is exercised, the cost of
the underlying security purchased by the Fund will be decreased by the premium
originally received.
The Fund may also purchase options in an attempt to hedge against fluctuations
in the value of its portfolio and to protect against declines in the value of
the securities. The premium paid by the Fund for the purchase of a call or
put option is included in the Funds Statement of Assets and Liabilities as an
investment and subsequently marked-to-market to reflect the current market
value of the option. The current market value of the option is the closing
price or, in the absence of a closing price, the bid price.
9
<PAGE>
Notes to Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
OPTION CONTRACTS (CONTINUED)
If an option the Fund has purchased expires on the stipulated expiration date,
the Fund realizes a loss in the amount of the cost of the option. If the Fund
exercised a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund exercises
a put option, it realizes a gain or loss from the sale of the underlying
security and the proceeds from such a sale are decreased by the premium
originally paid.
The measurement of the risks associated with option contracts is meaningful
only when all related and offsetting transactions are considered. At April
16, 1997, the Fund had no open option contracts.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of the revenues and expenses during the reporting
period. Actual results could differ from those estimates.
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% of the Fund's average daily
net assets. The fee amounted to $316,536 for the period ended April 16, 1997
(date of complete redemption).
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 agreed that, in any fiscal year, if the expenses of the Fund
(including the advisory fee but excluding interest, taxes, brokerage
commissions, and extraordinary expenses) exceed the limits set by applicable
regulation of state securities commissions, the Advisor will reduce its fee by
the amount of such excess.
10
<PAGE>
Notes to Financial Statements
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. These services are provided at no additional
cost to the Fund.
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 $1,661 for the period
ended April 16, 1997 (date of complete redemption).
.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term securities, were
$30,698,090 and $129,452,583, respectively, for the period ended April 16,
1997 (date of complete redemption).
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Technology Series Class D Common Stock were:
<TABLE>
<CAPTION>
For the Period
1/1/97 to 4/16/97 For the Year
(Date of Complete Ended 12/31/96
Redemption)
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Sold 140,662 $ 1,851,722 4,212,766 $44,608,367
Reinvested 2,735,952 25,225,480 243,127 2,487,188
Repurchased (11,816,378) (114,324,679) (479,442) (5,269,373)
----------- ------------ --------- ----------
Total (8,939,764) $ (87,247,477) 3,976,451 $41,826,182
</TABLE>
6. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of domestic companies and the United States government. These
risks include revaluation of currencies and future adverse political and
economic developments. Moreover, securities of foreign companies and foreign
governments and their markets may be less liquid and their prices more
volatile than those of securities of comparable domestic companies and the
United States government.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
7. TECHNOLOGY SECURITIES
The Fund may focus its investments in certain related technology industries;
hence, the Fund may subject itself to a greater degree of risk than a fund
that is more diversified.
8. FUND REDEMPTION
The investment practice of the Fund results in the active operation of the
investment portfolio for discrete periods. The Fund was in active operation
from August 29, 1994 to April 16, 1997. On April 16, 1997, the Fund redeemed
all shares held based on the Funds net asset value on that date. Cash was
left in the Fund to satisfy liabilities outstanding as of the date of complete
redemption. Shares of the Fund were held by persons who were investment
advisory clients and employees of the Funds Advisor. The ratios presented in
the financial highlights table may not be representative of an actively traded
fund.
12
<PAGE>
Independent Auditors Report
TO THE SHAREHOLDERS AND DIRECTORS OF
MANNING & NAPIER FUND, INC.- TECHNOLOGY SERIES:
We have audited the accompanying statement of assets and liabilities of
Manning & Napier Fund, Inc.- Technology Series, including the schedule of
portfolio investments, as of April 16, 1997 (date of complete redemption), and
the related statement of operations for the period January 1, 1997 to April
16, 1997 (date of complete redemption), the statement of changes in net assets
for the period then ended and for the year ended December 31, 1996, and its
financial highlights for each of the periods indicated herein. These financial
statements and financial highlights are the responsibility of the Funds
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of April 16, 1997 (date of complete redemption) by correspondence
with the custodian. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion. In our opinion, the financial statements
and financial highlights referred to above present fairly, in all material
respects, the financial position of the Manning & Napier Fund, Inc.-
Technology Series as of April 16, 1997 (date of compete redemption), the
results of its operations, the changes in its net assets and the financial
highlights for each of the periods indicated herein in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
JUNE 30, 1997
13
<PAGE>
<PAGE>
Manning & Napier Fund, Inc.
New York Tax Exempt Series
Semi-Annual Report
June 30, 1997
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
With the summer comes the magic of little league baseball. At a recent game,
a young boy was overheard saying you have to think a lot when you play
baseball, but when the balls coming at you, you dont have a lot of time to
think. This is also a good perspective on investing.
Investing requires a great deal of background thought and research, because
like a sharp ground ball, individual pieces of economic data come quickly and
with different hops and spins. If you try to find deep meaning in any
individual economic release, that is, if you try to extrapolate a trend from a
single data point, youll find the inputs too frequent to be handled
intelligently. As the young ballplayer put it, you have to think a lot, and
that thinking must be done in advance, and not in reaction to economic
releases. Otherwise, you will find yourself changing direction constantly,
given the variability of individual pieces of data.
From this perspective, in considering the question which is most crucial to
long-term bond investors, (i.e., whats the direction of inflation) what
matters most is that inflation continues to be moderate. Sure, there are
individual pieces of data which can spook the bond market __ strong economic
growth, low unemployment, rising wage data. However, it increasingly seems to
be the case that for every area in which inflation pressures rise, there is an
equal and opposite reaction in another area. For example, recent data
supporting lower inflation are as follows:
The Employment Cost Index, which suggests that although wage growth had
increased slightly, benefit growth had decelerated. The combination of the
two means that overall labor costs have not been accelerating.
Stable to falling commodity prices, especially crude oil prices which have
fallen 20% from last winters highs.
The strengthening of the U.S. dollar relative to other currencies. This makes
imports cheaper and puts pressure on U.S. producers to keep prices down to
stay competitive.
Thinking in advance, rather than in reaction to individual economic releases,
we have formulated an overview that global competition means consumers need
not accept much in the way of price increases. No individual inflation
indicator would confirm or refute this overview, but the net total of the
evidence should suggest that:
1) Consumers are not very accepting of price increases;
2) For every increase that does pop up for a given item or sector,
consumers will demand corresponding decreases in other areas.
The weight of individual evidence confirms this overview; that is, as
discussed above, for every inflationary signal there is a disinflationary
signal. More importantly, the bottom line is the ultimate confirmation: the
Consumer Price Index was up only 2.3% year_over_year
1
<PAGE>
Management Discussion and Analysis (continued)
through the end of June, a marked decline from the 3.3% rate at the start of
the year and it is meaningfully below the rate of the past several years.
To apply this thinking to bond investing, the important factors are not the
month_to_month fluctuations in bond prices, but the long_term yields over and
above inflation. To the extent that fluctuations push those yields higher,
while inflation remains steady, the long_term bond investor can turn this into
opportunity, witness the 6% yields that were available at the end of the first
quarter __ after all, higher yields over and above inflation are literally
money in the pockets of bond investors.
The reality is the media and the bond market will overreact to short_term
data, but this is a losers game. Those who think through their approach
before the ball is hit to them can play the long_term trend and take advantage
of attractive inflation_adjusted yields.
We would once again like to thank you for the opportunity of helping you meet
your investment goals. It is a service in which we take great pride.
Sincerely,
Manning & Napier Advisors, Inc.
<graphic>
<pie chart>
Data for pie chart to follow:Composition 1 - As of 6/30/97
General Obligation Bonds - 71%
Revenue Bonds - 24%
Pre-Refunded Bonds - 5%
1 As a percentage of Municipal Securities.
<graphic>
<pie chart>
Data for chart to follow:
Quality Ratings 2 - As of 6/30/97
Aaa - 84%
Aa - 13%
A - 3%
2 Using Moodys Ratings, as a percentage of municipal securities.
2
<PAGE>
Performance Update as of June 30, 1997 (unaudited)
<graphic>
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
Manning & Napier Merrill Lynch Intermediate
Date New York Tax Exempt Series Municipal Index
<S> <C> <C>
01/17/94 10,000 10,000
06/30/94 9,460 9,662
12/31/94 9,318 9,719
06/30/95 10,202 10,489
12/31/95 10,882 11,020
06/30/96 10,733 11,080
12/31/96 11,243 11,532
06/30/97 11,538 11,858
</TABLE>
<TABLE>
<CAPTION>
Manning & Napier Fund, Inc.
New York Tax Exempt Series
Total Return
-------------
Through Growth of $10,000 Average
06/30/97 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $ 10,750 7.50% 7.50%
Inception 2 $ 11,538 15.38% 4.23%
</TABLE>
<TABLE>
<CAPTION>
Merrill Lynch Intermediate Municipal Index
Total Return
-------------
Through Growth of $10,000 Average
06/30/97 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $ 10,702 7.02% 7.02%
Inception 2 $ 11,858 18.58% 5.06%
</TABLE>
The value of a $10,000 investment in the Manning & Napier Fund,
Inc. - New York Tax Exempt Series from its inception (1/17/94) to
present (6/30/97) as compared to the Merrill Lynch IntermediateIndex.1
1 The unmanaged Merrill Lynch Intermediate Municipal Index is a market
value weighted measure of approximately 200 municipal bonds issued across
the United States. The Index is comprised of investment grade securities.
Index returns assume reinvestment of coupons and, unlike Fund returns, do not
reflect any fees or expenses.
2 The Fund and Index performance numbers are calculated from January 17,
1994, the Fund's inception date. The Fund's performance is historical and may
not be indicative of future results.
3
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
<S> <C> <C>
NEW YORK MUNICIPAL SECURITIES - 96.4%
Albany City School District, G.O. Bond, 4.35%,
2/1/2001 $ 475,000 474,174
Albany City School District, G.O. Bond, 4.35%,
2/1/2002 150,000 148,839
Albany County, G.O. Bond, 5.75%, 6/1/2010 200,000 207,472
Amherst Public Improvement, G.O. Bond,
4.625%, 3/1/2004 250,000 249,135
Amherst Public Improvement, G.O. Bond, 4.625%,
3/1/2007 200,000 196,320
Battery Park City Authority, Revenue Bond, 7.70%,
5/1/2015 500,000 540,765
Bayport-Blue Point Union Free School District,
G.O. Bond, 5.60%, 6/15/2012 250,000 258,098
Brighton Central School District, G.O. Bond, 5.40%,
6/1/2012 250,000 251,917
Brockport Central School District, G.O. Bond,
5.50%, 6/15/2015 300,000 301,890
Broome County Public Safety, Certificate
Participation, 5.00%, 4/1/2006 250,000 252,630
Buffalo General Improvement, G.O. Bond,
Series A, 4.75%, 2/1/2004 500,000 501,665
Buffalo Schools, G.O. Bond, Series B, 5.05%,
2/1/2009 250,000 248,473
Buffalo, G.O. Bond, 5.00%, 12/1/2009 150,000 148,762
Buffalo, G.O. Bond, Series A, 5.20%, 2/1/2010 250,000 248,665
Cattaraugus County Public Improvement, G.O.
Bond, 5.00%, 8/1/2007 300,000 304,980
Chittenego Central School District, G.O. Bond,
5.375%, 6/15/2016 200,000 198,702
Colonie, G.O. Bond, 5.20%, 8/15/2008 100,000 102,447
Cortlandville, G.O. Bond, 5.40%, 6/15/2013 155,000 156,685
Dryden Central School District, G.O. Bond,
5.50%, 6/15/2011 200,000 201,214
East Aurora Union Free School District, G.O. Bond,
5.20%, 6/15/2011 300,000 301,335
East Hampton, G.O. Bond, 4.625%, 1/15/2007 175,000 171,560
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
NEW YORK MUNICIPAL SECURITIES (continued)
<S> <C> <C>
East Hampton, G.O. Bond, 4.625%, 1/15/2008 $ 175,000 $169,461
Ellenville Central School District, G.O. Bond,
5.375%, 5/1/2009 210,000 218,117
Ellenville Central School District, G.O. Bond,
5.70%, 5/1/2001 700,000 724,080
Erie County Public Improvement, G.O. Bond,
5.80%, 1/15/2003 230,000 243,823
Erie County, G.O. Bond, Series B, 5.50%,
6/15/2009 100,000 103,091
Erie County, G.O. Bond, Series B, 5.50%,
6/15/2025 400,000 391,056
Fillmore Central School District, G.O. Bond,
5.25%, 6/15/2015 300,000 297,924
Gloversville City School District, G.O. Bond,
5.00%, 6/15/2005 350,000 355,271
Greene Central School District, G.O. Bond, 5.25%,
6/15/2012 195,000 195,825
Guilderland School District, G.O. Bond, 4.75%,
6/15/1998 130,000 131,049
Guilderland School District, G.O. Bond, 4.90%,
6/15/2008 370,000 365,793
Hamburg Central School District, G.O. Bond,
5.375%, 6/1/2014 600,000 597,660
Hempstead Town, G.O. Bond, Series B, 5.625%,
2/1/2010 200,000 207,008
Holland Central School District, G.O. Bond,
6.125%, 6/15/2010 245,000 265,009
Huntington, G.O. Bond, 5.875%, 9/1/2009 250,000 263,935
Huntington, G.O. Bond, 5.90%, 1/15/2007 300,000 323,352
Indian River Central School District, G.O. Bond,
Second Series, 4.30%, 12/15/2003 475,000 467,419
Irvington Union Free School District, G.O. Bond,
Series B, 5.10%, 7/15/2005 275,000 280,445
Jamesville-Dewitt Central School District, G.O.
Bond, 5.75%, 6/15/2009 420,000 448,476
Jordan-El Bridge Central School District, G.O. Bond,
5.875%, 6/15/2008 500,000 535,855
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
NEW YORK MUNICIPAL SECURITIES (continued)
<S> <C> <C>
Kingston City School District, Series B, 6.80%,
12/15/1997 $ 100,000 $101,346
Le Roy Central School District, G.O. Bond, 0.10%,
6/15/2008 350,000 202,737
Middletown City School District, G.O. Bond,
Series A, 5.50%, 11/15/2005 175,000 183,726
Monroe County Public Improvement - Prerefunded,
G.O. Bond, 6.00%, 3/1/2002 95,000 101,305
Monroe County Public Improvement - Prerefunded,
G.O. Bond, 6.10%, 6/1/2015 20,000 22,039
Monroe County Public Improvement - Unrefunded
Balance, G.O. Bond, 6.00%, 3/1/2002 405,000 431,880
Monroe County Public Improvement - Unrefunded
Balance, G.O. Bond, 6.10%, 6/1/2015 180,000 198,353
Monroe County Public Improvement, G.O. Bond,
4.90%, 6/1/2005 250,000 253,430
Monroe County Water Authority, Revenue Bond,
Series B, 5.25%, 8/1/2011 500,000 493,615
Monroe County Water Improvement, G.O. Bond,
5.25%, 2/1/2017 320,000 315,747
Nassau County, G.O. Bond, Series A, 4.00%,
5/1/1999 100,000 99,733
Nassau County, G.O. Bond, Series S, 5.00%,
3/1/2005 300,000 304,368
Nassau County, G.O. Bond, Series U, 5.25%
11/1/2014 335,000 328,993
New Castle, G.O. Bond, 4.75%, 6/1/2010 450,000 430,286
New Rochelle City School District, G.O. Bond,
Series A, 4.30%, 2/1/2003 500,000 491,220
New Rochelle, G.O. Bond, Series C, 6.20%,
3/15/2007 175,000 190,388
New York City Municipal Water Authority, Revenue
Bond, Series B, 5.00%, 6/15/2003 400,000 405,128
New York City Municipal Water Authority, Revenue
Bond, Series B, 5.375%, 6/15/2019 250,000 238,985
New York City Municipal Water, Finance Authority,
Revenue Bond, Series B, 5.50%, 6/15/2019 600,000 583,596
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
NEW YORK MUNICIPAL SECURITIES (continued)
<S> <C> <C>
New York City, G.O. Bond, Series A, 8.75%,
11/1/2016 $ 250,000 $257,785
New York City, G.O. Bond, Series K, 5.50%,
4/1/2007 500,000 518,680
New York Government Assistance Corp., Revenue
Bond, Series A, 5.90%, 4/1/2013 500,000 521,335
New York Government Assistance Corp., Revenue
Bond, Series A, 6.00%, 4/1/2024 250,000 257,223
New York State Dorm Authority, Columbia
University, Revenue Bond, 4.40%, 7/1/1997 125,000 125,001
New York State Environmental Facilities Corp.,
Pollution Control Revenue Bond, Series A,
4.65%, 6/15/2007 250,000 244,460
New York State Environmental Facilities Corp.,
Pollution Control, Revenue Bond, Series A,
5.20%, 6/15/2015 250,000 244,852
New York State Environmental Pollution Control,
Revenue Bond, Pooled LN-B, 6.65%, 9/15/2013 500,000 549,945
New York State Housing Finance Agency, State
University Construction, Revenue Bond, Series A,
8.00%, 5/1/2011 250,000 309,055
New York State Medical Care Facility, Financial
Agency, Revenue Bond, 7.75%, 2/15/2020 380,000 419,486
New York State Mortgage Agency, Homeowners
Mortgage, Revenue Bond, Series 31A, 5.375%,
10/1/2017 500,000 487,610
New York State Power Authority, Revenue Bond,
Series CC, 4.80%, 1/1/2005 250,000 249,842
New York State Power Authority, Revenue Bond,
Series CC, 5.00%, 1/1/2014 500,000 471,040
New York State Power Authority, Revenue Bond,
Series CC, 5.25%, 1/1/2018 250,000 237,365
New York State Thruway Authority, Highway &
Bridge, Revenue Bond, Series B, 5.75%, 4/1/2006 100,000 106,275
New York State Thruway Authority, Revenue Bond,
Series A, 5.50%, 1/1/2023 1,020,000 988,747
New York State Thruway Authority, Revenue Bond,
Series B, 4.90%, 1/1/2007 450,000 449,595
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
NEW YORK MUNICIPAL SECURITIES (continued)
<S> <C> <C>
New York State Urban Development Correctional
Capital Facilities, Revenue Bond, Series A,
5.25%, 1/1/2014 $ 500,000 $497,270
New York State Urban Development, Corp.
Correctional Facility, Revenue Bond, Series G,
7.00%, 1/1/2017 50,000 54,170
New York State Urban Development, Revenue
Bond, 5.375%, 7/1/2022 400,000 384,332
New York, G.O. Bond, 8.00%, 3/15/2016 500,000 554,135
Niagara County, G.O. Bond, Series B, 5.20%,
1/15/2011 400,000 397,992
Niagara County, G.O. Bond, 5.90%, 7/15/2014 350,000 362,075
North Hempstead, G.O. Bond, Series B, 5.90%,
4/1/2004 300,000 321,315
North Hempstead, G.O. Bond, Series C, 4.90%,
8/1/2006 300,000 301,413
North Syracuse Central School District, G.O.
Bond, 5.50%, 6/15/2011 295,000 300,210
Onondaga County, G.O. Bond, 5.85%, 2/15/2002 300,000 316,851
Penfield Central School District, G.O. Bond,
5.20%, 6/15/2010 560,000 565,174
Queensbury, G O. Bond, Series A, 5.50%,
4/15/2011 150,000 154,183
Queensbury, G.O. Bond, Series A, 5.50%,
4/15/2012 350,000 358,208
Rochester, G.O. Bond, Series A, 4.70%,
8/15/2006 250,000 247,430
Rochester, G.O. Bond, Series A, 5.00%,
8/15/2020 250,000 236,867
Rochester, G.O. Bond, Series A, 5.00%,
8/15/2022 95,000 89,516
Rome, G.O. Bond, 5.20%, 12/1/2010 390,000 389,684
Sands Point, G.O. Bond, 6.70%, 11/15/2014 700,000 766,794
Schenectady, G.O. Bond, 4.55%, 10/1/2002 200,000 200,822
Schenectady, G.O. Bond, 5.30%, 2/1/2011 250,000 250,117
South County Central School District Brookhaven,
G.O. Bond, 5.50%, 9/15/2007 380,000 396,009
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
NEW YORK MUNICIPAL SECURITIES (continued)
<S> <C> <C>
Steuben County Public Improvement, G.O. Bond,
5.60%, 5/1/2006 $ 500,000 $519,600
Suffolk County Water Authority, Revenue Bond,
5.10%, 6/1/2009 250,000 250,210
Suffolk County Water Authority, Revenue Bond,
7.325%, 6/1/2012 500,000 530,585
Suffolk County, G.O. Bond, Series G, 5.40%,
4/1/2013 400,000 399,124
Sullivan County Public Improvement, G.O. Bond,
4.375%, 3/15/2001 300,000 299,121
Sullivan County Public Improvement, G.O. Bond,
5.125%, 3/15/2013 330,000 322,149
Three Village Central School District, G.O. Bond,
5.375%, 6/15/2007 230,000 239,073
Tioga County Public Improvement, G.O. Bond,
5.25%, 3/15/2005 250,000 256,368
Tompkins County, G.O. Bond, Series B, 5.625%,
9/15/2011 135,000 138,420
Tompkins County, G.O. Bond, Series B, 5.625%,
9/15/2013 300,000 305,595
Tompkins County, G.O. Bond, Series B, 5.625%,
9/15/2014 300,000 304,401
Triborough Bridge & Tunnel Authority, Revenue
Bond, Series A, 3.65%, 1/1/1998 250,000 249,825
Triborough Bridge & Tunnel Authority, Revenue Bond, Series A,
5.00%, 1/1/2012 500,000 477,160
Triborough Bridge & Tunnel Authority, Revenue
Bond, Series A, 6.50%, 1/1/2004 200,000 216,592
Triborough Bridge & Tunnel Authority - General
Purpose, Revenue Bond, 5.00%, 1/1/2017 250,000 231,220
Triborough Bridge & Tunnel Authority - General
Purpose, Revenue Bond, Series A, 4.75%,
1/1/2019 300,000 265,950
Tri-Valley Central School District, G.O. Bond,
5.60%, 6/15/2008 120,000 125,940
Westchester County, G.O. Bond, Series A, 4.75%,
12/15/2008 250,000 246,953
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount/Shares (Note 2)
NEW YORK MUNICIPAL SECURITIES (continued)
<S> <C> <C>
Westchester County, G.O. Bond, Series A, 4.75%,
12/15/2009 $ 250,000 $ 243,572
Westchester County, G.O. Bond, Series B, 4.30%,
12/15/2010 215,000 194,532
Westchester County, G.O. Bond, Series B, 4.30%,
12/15/2011 100,000 89,538
White Plains, G.O. Bond, 4.50%, 9/1/2005 180,000 177,210
White Plains, G.O. Bond, 4.50%, 9/1/2007 315,000 304,249
William Floyd Union Free School District, G.O.
Bond, 5.70%, 6/15/2008 405,000 427,287
Williamsville Central School District, G.O. Bond,
5.375%, 5/1/2004 800,000 833,104
Wyandanch Union Free School District, G.O. Bond,
5.60%, 4/1/2017 500,000 505,965
-----------
TOTAL MUNICIPAL SECURITIES
(Identified Cost $38,596,451) 39,163,858
-----------
SHORT-TERM INVESTMENTS - 2.2%
Dreyfus Basic New York Tax Free Money Market Fund
(Identified Cost $872,167) 872,167 872,167
-----------
TOTAL INVESTMENTS - 98.6%
(Identified Cost $39,468,618) 40,036,025
OTHER ASSETS, LESS LIABILITIES - 1.4% 573,829
-----------
NET ASSETS - 100% $40,609,854
============
</TABLE>
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
<S> <C>
At June 30, 1997, the net unrealized appreciation based on identified cost for
federal income tax purposes of $39,468,618 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $ 775,822
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value (208,415)
----------
UNREALIZED APPRECIATION - NET $ 567,407
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
JUNE 30, 1997
<S> <C>
ASSETS:
Investments, at value (Identified Cost $39,468,618)(Note 2) $40,036,025
Cash 63,617
Interest receivable 537,494
Prepaid expense 178
------------
TOTAL ASSETS 40,637,314
------------
LIABILITIES:
Accrued management fees (Note 3) 16,633
Accrued Directors' fees (Note 3) 1,598
Transfer agent fees payable (Note 3) 798
Audit fee payable 7,761
Other payables and accrued expenses 670
------------
TOTAL LIABILITIES 27,460
------------
NET ASSETS FOR 4,041,455 SHARES
OUTSTANDING $40,609,854
============
NET ASSETS CONSIST OF:
Capital stock $ 40,415
Additional paid-in-capital 39,845,862
Undistributed net investment income 176,641
Accumulated net realized loss on investments (20,444)
Net unrealized appreciation on investments 567,407
------------
TOTAL NET ASSETS $40,609,854
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($40,609,854 / 4,041,455 shares) $ 10.05
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<S> <C>
INVESTMENT INCOME:
Interest $ 980,073
----------
EXPENSES:
Management fees (Note 3) 96,293
Directors' fees (Note 3) 3,347
Transfer agent fees (Note 3) 4,622
Audit fee 6,226
Custodian fee 3,273
Miscellaneous 3,508
----------
Total Expenses 117,269
----------
NET INVESTMENT INCOME 862,804
----------
NET CHANGE IN UNREALIZED APPRECIATION ON
INVESTMENTS 178,629
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $1,041,433
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Statement of Changes in Net Assets (unaudited)
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 6/30/97 Ended 12/31/96
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income $ 862,804 $ 1,417,569
Net realized loss on investments -- (335)
Net change in unrealized appreciation
(depreciation) on investments 178,629 (217,088)
----------- -----------
Net increase in net assets from operations 1,041,433 1,200,146
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 2):
From net investment income (745,967) (1,370,523)
----------- -----------
CAPITAL STOCK ISSUED AND
REDEEMED:
Net increase from capital share transactions
(Note 5) 2,989,510 8,678,432
----------- -----------
Net increase in net assets 3,284,976 8,508,055
NET ASSETS:
Beginning of period 37,324,878 28,816,823
----------- -----------
End of period (including undistributed net
investment income of $176,614 and
$59,777 respectively) $ 40,609,854 $ 37,324,878
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Financial Highlights (unaudited)
<TABLE>
<CAPTION>
For the Period
1/17/94
For the Six For the Years Ended (commencement
Months Ended of operations)
6/30/97 12/31/96 12/31/95 to 12/31/94
<S> <C> <C> <C> <C>
Per share data (for a share outstanding throughout
each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 9.98 $ 10.07 $ 8.98 $ 10.00
------- ------- ------ -------
Income from investment operations:
Net investment income 0.218 0.422 0.404 0.338
Net realized and unrealized gain (loss) on
investments 0.042 (0.102) 1.086 (1.020)
------- ------- ------ -------
Total from investment operations 0.260 0.320 1.490 (0.682)
------- ------- ------ -------
Less distributions to shareholders:
From net investment income (0.190) (0.410) (0.400) (0.338)
------- ------- ------ -------
NET ASSET VALUE - END OF PERIOD $ 10.05 $ 9.98 $ 10.07 $ 8.98
======= ======= ====== =======
Total return 1: 2.62% 3.32% 16.78% (6.82)%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses 0.61%2 0.61% 0.65% 0.79% 2
Net investment income 4.48%2 4.41% 4.36% 3.82% 2
Portfolio turnover 0% 6% 0% 6%
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 40,610 $ 37,325 $ 28,817 $ 17,301
======= ======= ====== =======
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
The accompanying notes are an integral part of the financial
statements.
14
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
New York Tax Exempt Series (the "Fund") is a no-load diversified series of
Manning & Napier Fund, Inc. (the "Corporation"). The Corporation is organized
in Maryland and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company.
Shares of the Fund are offered to investors, employees and clients of Manning
& Napier Advisors, Inc. (the "Advisor") and its affiliates. 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 June 30, 1997, 940
million shares have been designated in total among 19 series, of which 50
million have been designated as New York Tax Exempt Series Class P Common
Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Municipal securities will normally be valued on the basis of market valuations
provided by an independent pricing service (the Service). The Service
utilizes the latest price quotations and a matrix system (which considers such
factors as security prices of similar securities, yields, maturities, and
ratings). The Service has been approved by the Funds Board of Directors.
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
Advisor under procedures established by and under the general supervision of
the Fund's Board of Directors.
Short-term investments that mature in sixty (60) days or less are valued at
amortized cost, which approximates market value.
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.
15
<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 June 30, 1997, the Fund, for federal income tax purposes, had a capital
loss carryforward of $20,444. Of this amount, $2,550 will expire on December
31, 2002, $17,559 will expire on December 31, 2003, and $335 will expire on
December 31, 2004.
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. 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.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of the revenues and expenses during the reporting
period. Actual results could differ from those estimates.
16
<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 0.50% of the Fund's average
daily net assets. The fee amounted to $96,293 for the six months ended June
30, 1997.
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.
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 $4,622 for the six month ended June 30,
1997.
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 $3,347 for the six
months ended June 30, 1997.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of municipal securities, other than short-term securities,
were $3,364,360 and $0 respectively, for the six months ended June 30, 1997.
17
<PAGE>
Notes to Financial Statements (unaudited)
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of New York Tax Exempt Series were:
<TABLE>
<CAPTION>
For the Six
Months For the Year
Ended 6/30/97 Ended 12/31/96
----------------- ---------------
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Sold 326,547 $3,249,211 1,002,977 $ 9,923,094
Reinvested 73,560 735,641 137,887 1,351,346
Repurchased (99,933) (995,342) (260,462) (2,596,008)
----------- ----------- ----------- -----------
Total 300,174 $2,989,510 880,402 $ 8,678,432
</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 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 June 30, 1997.
7. CONCENTRATION OF CREDIT
The Fund primarily invests in debt obligations issued by the State of New York
and its political subdivisions, agencies, and public authorities to obtain
funds for various public purposes. The Fund is more susceptible to factors
adversely affecting issues of New York municipal securities than is a
municipal bond fund that is not concentrated in these issues to the same
extent.
18
<PAGE>
<PAGE>
Manning & Napier Fund, Inc.
Ohio Tax Exempt Series
Semi-Annual Report
June 30, 1997
<PAGE>
Management Discussion and Analysis
With the summer comes the magic of little league baseball. At a recent game,
a young boy was overheard saying you have to think a lot when you play
baseball, but when the balls coming at you, you dont have a lot of time to
think. This is also a good perspective on investing.
Investing requires a great deal of background thought and research, because
like a sharp ground ball, individual pieces of economic data come quickly and
with different hops and spins. If you try to find deep meaning in any
individual economic release, that is, if you try to extrapolate a trend from a
single data point, youll find the inputs too frequent to be handled
intelligently. As the young ballplayer put it, you have to think a lot, and
that thinking must be done in advance, and not in reaction to economic
releases. Otherwise, you will find yourself changing direction constantly,
given the variability of individual pieces of data.
From this perspective, in considering the question which is most crucial to
long-term bond investors, (i.e., whats the direction of inflation) what
matters most is that inflation continues to be moderate. Sure, there are
individual pieces of data which can spook the bond market __ strong economic
growth, low unemployment, rising wage data. However, it increasingly seems to
be the case that for every area in which inflation pressures rise, there is an
equal and opposite reaction in another area. For example, recent data
supporting lower inflation are as follows:
The Employment Cost Index, which suggests that although wage growth had
increased slightly, benefit growth had decelerated. The combination of the
two means that overall labor costs have not been accelerating.
Stable to falling commodity prices, especially crude oil prices which have
fallen 20% from last winters highs. strengthening of the U.S. dollar relative
to other currencies. This makes imports cheaper and puts pressure on U.S.
producers to keep prices down to stay competitive.
Thinking in advance, rather than in reaction to individual economic releases,
we have formulated an overview that global competition means consumers need
not accept much in the way of price increases. No individual inflation
indicator would confirm or refute this overview, but the net total of the
evidence should suggest that:
1) Consumers are not very accepting of price increases;
2) For every increase that does pop up for a given item or sector,
consumers will demand corresponding decreases in other areas.
1
<PAGE>
Management Discussion and Analysis (continued)
The weight of individual evidence confirms this overview; that is, as
discussed above, for every inflationary signal there is a disinflationary
signal. More importantly, the bottom line is the ultimate confirmation: the
Consumer Price Index was up only 2.3% year_over_year through the end of June,
a marked decline from the 3.3% rate at the start of the year and it is
meaningfully below the rate of the past several years.
To apply this thinking to bond investing, the important factors are not the
month_to_month fluctuations in bond prices, but the long_term yields over and
above inflation. To the extent that fluctuations push those yields higher,
while inflation remains steady, the long_term bond investor can turn this into
opportunity, witness the 6% yields that were available at the end of the first
quarter __ after all, higher yields over and above inflation are literally
money in the pockets of bond investors.
The reality is the media and the bond market will overreact to short_term
data, but this is a losers game. Those who think through their approach
before the ball is hit to them can play the long_term trend and take advantage
of attractive inflation_adjusted yields.
We would once again like to thank you for the opportunity of helping you meet
your investment goals. It is a service in which we take great pride.
Sincerely,
Manning & Napier Advisors, Inc.
<graphic>
<pie chart>
for chart to follow:
Portfolio Composition 1 - As of 6/30/97
General Obligation Bonds - 66%
Revenue Bonds - 29%
Pre-Refunded Bonds - 5%
1 As a percentage of municipal securities.
<graphic>
<pie chart>
Data for chart to follow:
Quality Ratings 2 - As of 6/30/97
Aaa - 85%
Aa - 11%
A - 3%
Not Rated - 1%
2 Using Moodys Ratings, as a percentage of municipal securities.
2
<PAGE>
Performance Update as of June 30, 1997 (unaudited)
<graphic>
<line chart>
Data for chart to follow:
<TABLE>
<CAPTION>
Manning & Napier Merrill Lynch Intermediate
Date Ohio Tax Exempt Series Municipal Index
<S> <C> <C>
02/14/94 10,000 10,000
06/30/94 9,540 9,652
12/31/94 9,377 9,709
06/30/95 10,288 10,478
12/31/95 10,985 11,009
06/30/96 10,828 11,068
12/31/96 11,331 11,520
06/30/97 11,612 11,845
</TABLE>
<TABLE>
<CAPTION>
Manning & Napier Fund, Inc.
Ohio Tax Exempt Series
Total Return
-------------
Through Growth of $10,000 Average
06/30/97 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $ 10,724 7.24% 7.24%
Inception 2 $ 11,612 16.12% 4.52%
</TABLE>
<TABLE>
<CAPTION>
Merrill Lynch Intermediate Municipal Index
Total Return
-------------
Through Growth of $10,000 Average
06/30/97 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $10,702 7.02% 7.02%
Inception 2 $11,845 18.45% 5.14%
</TABLE>
The value of a $10,000 investment in the Manning & Napier
Fund, Inc. - Ohio Tax Exempt Series from its inception (2/14/94)
to present (6/30/97) as compared to the Merrill Lynch Intermediate
Municipal Index.1
1 The unmanaged Merrill Lynch Intermediate Municipal Index is a
market value weighted measure of approximately 200 municipal bonds
issued across the United States. The Index is comprised of investment
grade securities. Index returns assume reinvestment of coupons and,
unlike Fund returns, do not reflect any fees or
expenses.
2 The Fund and Index performance numbers are calculated from
February 14, 1994, the Fund's inception date. The Fund's performance
is historical and may not be indicative of future
results.
3
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
OHIO MUNICIPAL SECURITIES - 98.2%
<S> <C> <C>
Akron Bath Copley Joint Twnshp. Childrens Hos.
Med. Ctr., Revenue Bond, 7.45%, 11/15/2020 $ 50,000 $ 55,761
Akron Limited Tax, G.O. Bond, 4.10%, 12/1/2001 65,000 64,136
Akron Waterworks, Revenue Management Bond,
5.70% 3/1/2007 100,000 105,660
Allen County, G.O. Bond, 5.30%, 12/1/2007 100,000 102,521
Amherst Police & Jail Facility, G.O. Bond,
5.375%, 12/1/2012 50,000 50,673
Avon Lake, G.O. Bond, 5.70%, 12/1/2006 60,000 62,839
Avon Lake, G.O. Bond, 6.00%,12/1/2009 40,000 41,922
Bedford Heights, G.O. Bond, Series A, 5.65%,
12/1/2014 60,000 62,477
Belmont County, G.O. Bond, 5.15%, 12/1/2010 100,000 100,301
Bexley City School District, G.O. Bond, 6.50%,
12/1/2016 20,000 22,033
Cincinnati, G.O. Bond, 4.60%,12/1/2003 50,000 50,103
Clermont County Hospital Facilities Mercy Health
Care System, Revenue Bond, Series A, 7.625%,
1/1/2015 25,000 25,964
Cleveland City School District, G.O. Bond, 5.875%,
12/1/2011 125,000 128,738
Cleveland Public Power System Improvement,
Revenue Bond, 1st Mtg., 8.375%, 8/1/2017 50,000 51,188
Cleveland Waterworks Revenue Ref. & Impt. - First
Meeting, Revenue Bond, Series H, 5.50%,
1/1/2010 170,000 173,674
Cleveland Waterworks, Revenue Bond, 1st Mtg.,
Series G, 5.50%, 1/1/2013 100,000 102,844
Columbus Limited Tax, G.O. Bond, Series A,
4.85%, 7/1/2004 50,000 50,831
Columbus Sewer Improvement Number 28, G.O.
Bond, 6.00%, 5/1/2011 155,000 163,497
Columbus, G.O. Bond, Series D, 5.50%, 9/15/2008 50,000 52,106
Crawford County, G.O. Bond, 6.75%, 12/1/2019 175,000 194,821
Cuyahoga County, G.O. Bond, Series A, 4.30%,
10/1/1999 50,000 50,146
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
OHIO MUNICIPAL SECURITIES (continued)
<S> <C> <C>
Cuyahoga Falls, G.O. Bond, 7.20%, 12/1/2010 $ 75,000 $ 81,641
Delaware City School District, Construction & Impt.,
G.O. Bond, Series B, 5.20%, 12/1/2016 100,000 95,296
Fairfield County Hospital Impt., Lancaster-Fairfield
Community Hospital, Revenue Bond, 7.00%,
6/15/2012 50,000 55,536
Findlay Water, Revenue Bond, 5.45%, 11/1/2008 100,000 102,604
Franklin County, G.O. Bond, 4.95%, 12/1/2004 50,000 51,151
Franklin County, G.O. Bond, 5.50%, 12/1/2013 100,000 101,001
Gahanna-Jefferson City School District, G.O. Bond,
4.75%, 12/1/1999 50,000 50,682
Green Local School District - Summit, G.O. Bond,
5.20%, 12/1/2003 75,000 77,516
Greene County Sewer System, Revenue Bond,
5.50%, 12/1/2018 30,000 29,664
Hamilton County Building Impt. - Museum Center,
G.O. Bond, 5.85%, 12/1/2001 50,000 52,963
Hamilton County Sewer System Ref. & Impt. - Metro
Sewer District, Revenue Bond, Series A, 4.75%,
12/1/2000 50,000 50,771
Hamilton County Sewer System Ref. & Impt. - Metro
Sewer District, Revenue Bond, Series A, 5.00%,
12/1/2014 125,000 119,259
Hilliard School District, G.O. Bond, 6.35%,
12/1/2003 60,000 65,812
Hilliard School District, G.O. Bond, Series A, 5.00%,
12/1/2020 225,000 210,557
Huber Heights Water Systems, Revenue Bond, 5.25%,
12/1/2007 200,000 206,144
Kettering City School District School Impt., G.O.
Bond, 5.30%, 12/1/2014 125,000 123,845
Kettering City School District, G.O. Bond, 4.85%,
12/1/2006 40,000 40,088
Kettering City School District, G.O. Bond, 5.25%,
12/1/2022 60,000 57,560
Kings Local School District, G.O. Bond, 5.50%,
12/1/2021 115,000 113,474
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
OHIO MUNICIPAL SECURITIES (continued)
<S> <C> <C>
Lakewood City School District, G.O. Bond, 5.55%,
12/1/2013 $ 100,000 $100,932
Lakota Local School District, G.O. Bond, 5.75%,
12/1/2006 50,000 53,114
Lakota Local School District, G.O. Bond, 7.00%,
12/1/2008 100,000 118,291
Lakota Local School District, G.O. Bond, 7.90%,
12/1/2011 45,000 47,404
Lorain Water System, Revenue Bond, 4.75%,
4/1/2005 125,000 124,831
Mahoning County Limited Tax, G.O. Bond, 5.65%,
12/1/1998 20,000 20,446
Mahoning County, G.O. Bond, 5.70%, 12/1/2006 100,000 105,940
Mahoning County, G.O. Bond, 5.70%, 12/1/2009 150,000 156,621
Mason City School District, G.O. Bond, 5.00%,
12/1/2007 120,000 120,815
Montgomery County, G.O. Bond, 5.30%, 9/1/2007 65,000 66,670
Montgomery County, Moraine-Beaver Creek
Sewers, Revenue Bond, 5.60%, 9/1/2011 100,000 101,822
North Canton City School District, G.O. Bond,
5.85%, 12/1/2007 40,000 42,838
North Olmstead, G.O. Bond, 6.20%, 12/1/2011 200,000 221,610
Northeast Ohio Regional Sewer District Waste &
Water Impt., Revenue Bond, 6.50%, 11/15/2016 100,000 109,262
Northwood Local School District, G.O. Bond,
5.55%, 12/1/2006 65,000 69,062
Northwood Local School District, G.O. Bond,
6.20%, 12/1/2013 40,000 42,855
Ohio, G.O. Bond, 6.50%, 8/1/2011 50,000 53,491
Ohio Building Authority, Local Jail Grant, Revenue
Bond, Series A, 4.65%, 10/1/2005 50,000 49,396
Ohio Building Authority, State Facilities - Admin.
Building, Revenue Bond, 5.50%, 10/1/2005 50,000 52,358
Ohio Higher Education Facility, University of Dayton
Project, Revenue Bond, 5.80%, 12/1/2019 100,000 101,590
Ohio Public Facilities, Higher Education, Revenue
Bond, Series II-A, 4.25%, 12/1/2002 50,000 49,238
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
OHIO MUNICIPAL SECURITIES (continued)
<S> <C> <C>
Ohio State Infrastructure Improvement, G.O. Bond,
5.20%, 8/1/2010 $ 250,000 $252,085
Ohio Turnpike, Revenue Bond, Series A,
5.40%, 2/15/2009 250,000 255,133
Ohio State Water Development Authority Ref. &
Impt. - Pure Water, Revenue Bond, 5.75%,
12/1/2005 60,000 63,559
Ohio State Water Development Authority Pure Water,
Revenue Bond, Series I, 6.00%, 12/1/2016 40,000 41,559
Ohio State Water Development Authority, Pollution
Control Facility, Revenue Bond, 5.25%,
12/1/2014 100,000 97,874
Ottawa County, G.O. Bond, 5.45%, 9/1/2006 30,000 31,567
Pickerington Local School District Construction &
Impt., G.O. Bond, 5.375%, 12/1/2019 150,000 145,155
Pickerington Water Systems Improvements, G.O.
Bond, 5.85%, 12/1/2013 50,000 51,746
Reynoldsburg City School District, G.O. Bond,
6.55%, 12/1/2017 175,000 191,720
Rocky River City School District, G.O. Bond,
Series A, 6.375%, 12/1/1998 25,000 25,810
Rocky River City School District, G.O. Bond,
Series A, 6.90%, 12/1/2011 50,000 54,955
Rural Lorain Water Authority Ref. & Impt., Revenue
Bond, 5.30%, 10/1/2012 110,000 109,581
South-Western City School District, Franklin &
Pickway Counties G.O. Bond, 4.80%, 12/1/2006 100,000 99,696
Stark County Hospital, Doctors Hospital, Inc.,
Revenue Bond, 8.625%, 4/1/2018 30,000 31,621
Stark County, G.O. Bond, 5.70%, 11/15/2017 100,000 101,187
Summit County, G.O. Bond, 5.75%, 12/1/2008 175,000 183,799
Toledo Sewer System, Revenue Bond, 6.35%,
11/15/2017 185,000 200,533
Toledo, G.O. Bond, 5.95%,12/1/2015 175,000 183,067
Trumbull County, G.O. Bond, 6.20%, 12/1/2014 100,000 106,296
Warren, G.O. Bond, 5.20%,11/15/2013 50,000 51,901
Warren County Waterworks, Revenue Bond, 6.00%,
12/1/2014 100,000 104,286
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount/Shares (Note 2)
OHIO MUNICIPAL SECURITIES (continued)
<S> <C> <C>
Warren County Waterworks, Revenue Bonds,
5.45%, 12/1/2015 $ 140,000 $ 140,069
Westlake, Ref. & Impt. G.O. Bond, 5.50%,
12/1/2020 295,000 293,065
Wood County, G.O. Bond, 5.40%,12/1/2013 50,000 50,333
Youngstown, G.O. Bond, 6.125%,12/1/2014 50,000 52,797
-----------
TOTAL MUNICIPAL SECURITIES
(Identified Cost $7,854,053) 8,125,779
-----------
SHORT-TERM INVESTMENTS - 1.2%
Dreyfus Municipal Reserves (Identified
Cost $102,177) 102,177 102,177
-----------
TOTAL INVESTMENTS - 99.4%
(Identified Cost $7,956,230) 8,227,956
OTHER ASSETS, LESS LIABILITIES - 0.6% 52,589
-----------
NET ASSETS - 100% $8,280,545
===========
</TABLE>
Key -
G.O. Bond - General Obligation Bond
Rev. Bond - Revenue Bond
Impt. - Improvement
Ref. - Refunding
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
<S> <C>
At June 30, 1997, the net unrealized appreciation based on identified cost for
federal income tax purposes of $7,956,230 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $288,927
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value (17,201)
---------
UNREALIZED APPRECIATION - NET $271,726
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
JUNE 30, 1997
<S> <C>
ASSETS:
Investments, at value (Identified Cost $7,956,230)
(Note 2) $8,227,956
Interest receivable 69,299
Prepaid expense 52
-----------
TOTAL ASSETS 8,297,307
-----------
LIABILITIES:
Accrued management fees (Note 3) 3,411
Accrued Directors' fees (Note 3) 1,328
Accrued Transfer Agent fees (Note 3) 164
Audit fee payable 11,556
Other payables and accrued expenses 303
-----------
TOTAL LIABILITIES 16,762
-----------
NET ASSETS FOR 808,571 SHARES OUTSTANDING $8,280,545
===========
NET ASSETS CONSIST OF:
Capital stock $ 8,086
Additional paid-in-capital 7,973,853
Undistributed net investment income 28,264
Accumulated net realized loss on investments (1,384)
Net unrealized appreciation on investments 271,726
-----------
TOTAL NET ASSETS $8,280,545
===========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($8,280,545/808,571 shares) $ 10.24
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<S> <C>
INVESTMENT INCOME:
Interest $209,910
---------
EXPENSES:
Management fees (Note 3) 19,944
Directors' fees (Note 3) 3,076
Transfer agent fees (Note 3) 957
Audit fee 5,725
Custodian fee 1,488
Miscellaneous 1,637
---------
Total Expenses 32,827
---------
NET INVESTMENT INCOME 177,083
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized loss on investments (identified cost basis) (1,384)
Net change in unrealized appreciation on investments 32,985
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS 31,601
---------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $208,684
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Statement of Changes in Net Assets (unaudited)
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 6/30/97 Ended 12/31/96
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income $ 177,083 $ 304,727
Net realized gain (loss) on investments (1,384) 3,259
Net change in unrealized appreciation on
investments 32,985 (51,282)
--------- ---------
Net increase in net assets from operations 208,684 256,704
--------- ---------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income (150,927) (303,669)
From net realized gain on investments -- (1,397)
--------- ---------
Total distributions to shareholders (150,927) (305,066)
--------- ---------
CAPITAL STOCK ISSUED AND REDEEMED:
Net increase in net assets from capital share
transactions (Note 5) 525,233 1,602,341
--------- ---------
Net increase in net assets 582,990 1,553,979
NET ASSETS:
Beginning of period 7,697,555 6,143,576
--------- ---------
End of period (including undistributed net
investment income of $28,264 and $2,108,
respectively) $ 8,280,545 $ 7,697,555
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Financial Highlights (unaudited)
<TABLE>
<CAPTION>
For the Period
2/14/94
For the Six Months For the Years Ended (commencement
Ended of operations)
6/30/97 12/31/96 12/31/95 to 12/31/94
<S> <C> <C> <C> <C>
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.18 $ 10.31 $ 9.18 $ 10.00
--------- --------- ------ --------
Income from investment operations:
Net investment income 0.222 0.439 0.419 0.205
Net realized and unrealized gain (loss)
on investments 0.028 (0.129) 1.136 (0.828)
--------- --------- ------ --------
Total from investment operations 0.250 0.310 1.555 (0.623)
--------- --------- ------ --------
Less distributions to shareholders:
From net investment income (0.190) (0.438) (0.425) (0.197)
From net realized gain on investments -- (0.002) -- --
--------- --------- ------ --------
Total distributions to shareholders (0.190) (0.440) (0.425) (0.197)
--------- --------- ------ --------
NET ASSET VALUE - END OF PERIOD $ 10.24 $ 10.18 $ 10.31 $ 9.18
========= ========= ====== ========
Total return 1: 2.48% 3.15% 17.14% (6.23)%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses 0.82% 2 0.85%** 0.85%** 0.85%*2
Net investment income 4.44% 2 4.40%** 4.50%** 4.03%*2
Portfolio turnover 1% 2% 1% 2%
NET ASSETS - END OF PERIOD (000's omitted) $ 8,281 $ 7,698 $ 6,144 $ 3,901
========= ========= ====== ========
</TABLE>
* The investment advisor did not impose its management fee and paid a portion
of the Fund's expenses
** The investment advisor waived a portion of its management fee.
If these 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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net investment income N/A $0.437 $0.411 $ 0.141
Ratios (to average net assets):
Expenses N/A 0.87% 0.94% 2.07%(2)
Net investment income N/A 4.38% 4.41% 2.81%(2)
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
The accompanying notes are an integral part of the fianacial statements.
12
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Ohio Tax Exempt Series (the "Fund") is a no-load diversified series of Manning
& Napier Fund, Inc. (the "Corporation"). The Corporation is organized in
Maryland and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company.
Shares of the Fund are offered to investors, employees and clients of Manning
& Napier Advisors, Inc. (the "Advisor") and its affiliates. 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 June 30, 1997, 940
million shares have been designated in total among 19 series, of which 50
million have been designated as Ohio Tax Exempt Series Class Q Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Municipal securities will normally be valued on the basis of market valuations
provided by an independent pricing service (the Service). The Service
utilizes the latest price quotations and a matrix system (which considers such
factors as security prices of similar securities, yields, maturities, and
ratings). The Service has been approved by the Funds Board of Directors.
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
Advisor under procedures established by and under the general supervision of
the Funds Board of Directors.
Short-term investments that mature in sixty (60) days or less are valued at
amortized cost, which approximates market value.
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.
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
13
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES (CONTINUED)
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 tax exempt 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. 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.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of the revenues and expenses during the reporting
period. Actual results could differ from those estimates.
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 $19,944 for the six months ended June
30, 1997.
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
14
<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 0.85% of average daily net assets each year. 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 $957 for the six months ended June 30,
1997.
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 $3,076 for the six
months ended June 30, 1997.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of municipal securities, other than short-term securities,
were $702,655 and $106,750, respectively, for the six months ended June 30,
1997.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Ohio Tax Exempt Series were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 6/30/97 Ended 12/31/96
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Sold 92,052 $932,750 187,378 $1,880,010
Reinvested 13,510 137,677 30,485 305,066
Repurchased (53,382) (545,194) (57,415) (582,735)
------- -------- ------- ---------
Total 52,180 $525,233 160,448 $1,602,341
</TABLE>
15
<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 June 30, 1997.
7. CONCENTRATION OF CREDIT
The Fund primarily invests in debt obligations issued by the State of Ohio and
its political subdivisions, agencies, and public authorities to obtain funds
for various public purposes. The Fund is more susceptible to factors
adversely affecting issues of Ohio municipal securities than is a municipal
bond fund that is not concentrated in these issues to the same extent.
<PAGE>
<PAGE>
Manning & Napier Fund, Inc.
Diversified Tax Exempt Series
Semi-Annual Report
June 30, 1997
Management Discussion and Analysis
Dear Shareholders:
With the summer comes the magic of little league baseball. At a recent game,
a young boy was overheard saying you have to think a lot when you play
baseball, but when the balls coming at you, you dont have a lot of time to
think. This is also a good perspective on investing.
Investing requires a great deal of background thought and research, because
like a sharp ground ball, individual pieces of economic data come quickly and
with different hops and spins. If you try to find deep meaning in any
individual economic release, that is, if you try to extrapolate a trend from a
single data point, youll find the inputs too frequent to be handled
intelligently. As the young ballplayer put it, you have to think a lot, and
that thinking must be done in advance, and not in reaction to economic
releases. Otherwise, you will find yourself changing direction constantly,
given the variability of individual pieces of data.
From this perspective, in considering the question which is most crucial to
long-term bond investors, (i.e., whats the direction of inflation) what
matters most is that inflation continues to be moderate. Sure, there are
individual pieces of data which can spook the bond market __ strong economic
growth, low unemployment, rising wage data. However, it increasingly seems to
be the case that for every area in which inflation pressures rise, there is an
equal and opposite reaction in another area. For example, recent data
supporting lower inflation are as follows:
The Employment Cost Index, which suggests that although wage growth had
increased slightly, benefit growth had decelerated. The combination of the
two means that overall labor costs have not been accelerating.
Stable to falling commodity prices, especially crude oil prices which have
fallen 20% from last winters highs.
The strengthening of the U.S. dollar relative to other currencies. This makes
imports cheaper and puts pressure on U.S. producers to keep prices down to
stay competitive.
Thinking in advance, rather than in reaction to individual economic releases,
we have formulated an overview that global competition means consumers need
not accept much in the way of price increases. No individual inflation
indicator would confirm or refute this overview, but the net total of the
evidence should suggest that:
1) Consumers are not very accepting of price increases;
2) For every increase that does pop up for a given item or sector,
consumers will demand corresponding decreases in other areas.
The weight of individual evidence confirms this overview; that is, as
discussed above, for every inflationary signal there is a disinflationary
signal. More importantly, the bottom line is the ultimate confirmation: the
Consumer Price Index was up only 2.3% year_over_year through the end of June,
a marked decline from the 3.3% rate at the start of the year and it is
meaningfully below the rate of the past several years.
1
<PAGE>
Management Discussion and Analysis (continued)
To apply this thinking to bond investing, the important factors are not the
month_to_month fluctuations in bond prices, but the long_term yields over and
above inflation. To the extent that fluctuations push those yields higher,
while inflation remains steady, the long_term bond investor can turn this into
opportunity, witness the 6% yields that were available at the end of the first
quarter __ after all, higher yields over and above inflation are literally
money in the pockets of bond investors.
The reality is the media and the bond market will overreact to short_term
data, but this is a losers game. Those who think through their approach
before the ball is hit to them can play the long_term trend and take advantage
of attractive inflation_adjusted yields.
We would once again like to thank you for the opportunity of helping you meet
your investment goals. It is a service in which we take great pride.
Sincerely,
Manning & Napier Advisors, Inc.
<graphic>
<pie chart>
Data for chart to follow:
Portfolio Composition 1 - As of 6/30/97Obligation Bonds - 76%
Revenue Bonds - 22%
Pre-Refunded Bonds - 2%
1 As a percentage of municipal securities.
<graphic>
<pie chart>
Data for chart to follow:
Quality Ratings 2 - As of 6/30/97
Aaa - 76%
Aa - 20%
A - 4%
2 Using Moodys Ratings, as a percent of municipal securities.
2
<PAGE>
Performance Update as of June 30, 1997 (unaudited)
<graphic>
<line chart>
Data for chart to follow:
<TABLE>
<CAPTION>
Manning & Napier Merrill Lynch Intermediate
Date Diversified Tax Exempt Series Municipal Index
<S> <C> <C>
02/14/94 10,000 10,000
06/30/94 9,600 9,652
12/31/94 9,461 9,709
06/30/95 10,311 10,478
12/31/95 11,003 11,009
06/30/96 10,867 11,068
12/31/96 11,370 11,520
06/30/97 11,649 11,845
</TABLE>
<TABLE>
<CAPTION>
Manning & Napier Fund, Inc.
Diversified Tax Exempt Series
Total Return
-------------
Through Growth of $10,000 Average
06/30/97 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $ 10,720 7.20% 7.20%
Inception 2 $ 11,649 16.49% 4.62%
</TABLE>
<TABLE>
<CAPTION>
Merrill Lynch Intermediate Municipal Index
Total Return
-------------
Through Growth of $10,000 Average
06/30/97 Investment Cumulative Annual
<S> <C> <C> <C>
One Year $10,702 7.02% 7.02%
Inception 2 $11,845 18.45% 5.14%
</TABLE>
The value of a $10,000 investment in the Manning & Napier
Fund, Inc. - Diversified Tax Exempt Series from its inception
(2/14/94) to present (6/30/97) as compared to the Merrill
Lynch Intermediate Municipal Index.1
1 The unmanaged Merrill Lynch Intermediate Municipal Index is avalue weighted
measure of approximately 200 municipal
bonds issued across the United States. The Index is comprised of
investment grade securities. Index returns assume reinvestment of
coupons and, unlike Fund returns, do not reflect any fees or expenses.
2 The Fund and Index performance numbers are calculated from
February 14, 1994, the Fund's inception date. The Fund's
performance is historical and may not be indicative of future results.
3
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
<S> <C> <C>
MUNICIPAL SECURITIES - 96.7%
ALASKA - 1.7%
Anchorage, G.O. Bond, 6.10%, 8/1/2004 $ 300,000 $322,155
---------
ARIZONA - 2.5%
Central Arizona Water Conservation District,
Revenue Bond, 4.70%, 5/1/2004 200,000 200,684
Maricopa County School District No. 097 Deer
Valley, G.O. Bond, Series A, 5.20%, 7/1/2007 250,000 256,505
---------
457,189
COLORADO - 1.0%
El Paso County School District No. 020, G.O.
Bond, Series A, 6.20%, 12/15/2007 160,000 178,386
---------
DELAWARE - 1.1%
Wilmington, G.O. Bond, Series B, 5.90%,
4/1/2000 200,000 208,410
---------
DISTRICT OF COLUMBIA - 1.2%
District of Columbia, G.O. Bond, Series A,
7.65%, 12/1/2003 200,000 213,554
---------
FLORIDA - 4.7%
Dade County School District, G.O. Bond,
6.125%, 8/1/2008 150,000 159,920
Florida State Board of Education Capital Outlay
Public Edu., G.O. Bond Series C, 5.60%,
6/1/2025 135,000 133,489
Florida State Dept. of Environmental Preservation
2000, Revenue Bond, Series A, 4.50%,
7/1/2003 200,000 199,064
Hillsborough County Capital Improvement
Program, Revenue Bond, 5.125%, 7/1/2022 400,000 379,232
---------
871,705
---------
GEORGIA - 4.1%
Atlanta, G. O. Bond, 5.60%, 12/1/2018 350,000 349,549
Georgia, G.O. Bond, Series B, 5.65%, 3/1/2012 200,000 209,476
Glynn County Board of Education, G.O. Bond,
5.00%, 7/1/2006 200,000 202,458
---------
761,483
</TABLE> ---------
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
<S> <C> <C>
HAWAII - 1.5%
Hawaii, G.O. Bond, Series CH, 6.00%, 11/1/2007 $ 260,000 $281,640
---------
IDAHO - 0.6%
Ada & Canyon Counties Joint School District
No. 2 Meridian, G.O. Bond, 5.10%, 7/30/2005 100,000 102,864
---------
ILLINOIS - 4.0%
Aurora, G.O. Bond, 5.80%, 1/1/2012 190,000 195,274
Chicago Schools Financial Authority, G.O.
Bond, Series A 5.00%, 6/1/2007 200,000 199,064
Chicago, G.O. Bond, Series A, 5.875%,
1/1/2022 100,000 100,455
Illinois, Certificate Participation, Series
1995A, 5.60%, 7/1/2010 100,000 101,927
Tazwell County Community High School District
No. 303 Pekin, G.O. Bond, 5.50%, 1/1/2011 150,000 150,771
---------
747,491
---------
INDIANA - 1.6%
Bloomington Sewer Works, Revenue Bond,
5.80%, 1/1/2011 150,000 155,475
Lafayette Waterworks, Revenue Bond, 4.90%,
7/1/2006 140,000 139,175
---------
294,650
---------
IOWA - 3.3%
Cedar Rapids, G. O. Bond, 6.45%, 6/1/2014 350,000 368,207
Iowa City Sewer, Revenue Bond, 5.75%,
7/1/2021` 250,000 251,570
619,777
KENTUCKY - 3.1%
Jefferson County School District Finance Corp.
School Building, Revenue Bond, Series A,
5.00%, 2/1/2011 300,000 293,334
Kentucky State Turnpike Authority Revitalization
Projects, Revenue Bond, 6.50%, 7/1/2008 250,000 281,892
---------
575,226
</TABLE> ---------
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
<S> <C> <C>
LOUISIANA - 1.6%
New Orleans Sewer Service, Revenue Bond,
5.25%, 6/1/2012 $ 300,000 $297,843
---------
MAINE - 1.6%
Hermon, G.O. Bond, 5.60%, 11/1/2013 75,000 76,111
Portland, G.O. Bond, 6.20%, 4/1/2006 200,000 219,604
---------
295,715
---------
MASSACHUSETTS - 3.0%
Martha's Vineyard Regional High School
District No. 100, G. O. Bond, 6.70%,
12/15/2014 200,000 223,448
Massachusetts Municipal Electric Supply System,
Revenue Bond, Series A, 5.00%, 7/1/2017 200,000 184,990
Massachusetts Water Authority General Ref.,
Revenue Bond, Series B, 5.25%, 3/1/2013 155,000 153,035
---------
561,473
---------
MARYLAND - 3.5%
Baltimore Water Project, Revenue Bond,
Series A, 5.55%, 7/1/2009 260,000 268,653
Prince Georges County Public Improvement,
G.O. Bond, 5.00%, 3/15/2014 200,000 191,676
Washington County Public Improvement, G.O.
Bond, 4.875%, 1/1/2010 200,000 194,436
---------
654,765
---------
MICHIGAN - 4.0%
Comstock Park Public Schools, G.O. Bond,
5.50%, 5/1/2011 150,000 151,978
Dearborn School District, G.O. Bond, 5.10%,
5/1/2006 200,000 202,564
Farmington Hills, G.O. Bond, 5.70%, 10/1/2005 65,000 68,487
Farmington Hills, G.O. Bond, 5.80%, 10/1/2006 50,000 52,765
Farmington Hills, G.O. Bond, 5.90%, 10/1/2007 75,000 79,273
Pinckney Community Schools, G.O. Bond,
5.00%, 5/1/2014 200,000 190,574
---------
745,641
</TABLE> ---------
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
<S> <C> <C>
MINNESOTA - 3.8%
Minneapolis, G.O. Bond, Series B, 5.20%,
3/1/2013 $ 300,000 $296,937
Minnesota Various Purpose, G.O. Bond, 6.60%,
8/1/1999 200,000 209,890
Western Minnesota Municipal Power Agency,
Revenue Bond, 6.625%, 1/1/2016 175,000 196,043
---------
702,870
---------
MISSISSIPPI - 1.2%
Mississippi, G.O. Bond, 6.30%, 12/1/2006 200,000 220,104
---------
MISSOURI - 1.4%
Missouri State Ref.- Third Street Building, G.O.
Bond, Series A, 5.125%, 8/1/2009 250,000 251,713
---------
MONTANA - 1.1%
Montana Long Range Building Project, G.O.
Bond, Series A, 4.875%, 8/1/2010 200,000 195,360
---------
NEVADA - 3.4%
Clark County School District, G.O. Bond,
6.00%, 6/15/2002 100,000 106,324
Henderson Water, G.O. Bond, Series A, 5.65%,
12/1/2003 300,000 319,338
Nevada State Project No. 42, G.O. Bond, 5.70%,
9/1/2008 200,000 209,122
---------
634,784
---------
NEW HAMPSHIRE - 1.2%
New Hampshire, G.O. Bond, 6.60%, 9/1/2014 200,000 224,580
---------
NEW JERSEY - 3.7%
New Jersey State Highway Authority, Garden
State Parkway, Revenue Bond, 5.50%,
1/1/2000 200,000 205,638
Jersey City Water, G.O. Bond, 5.50%, 3/15/2011 225,000 229,261
West Windsor Plainsboro, G.O. Bond, 5.25%,
12/1/2004 250,000 259,153
---------
694,052
</TABLE> ---------
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
<S> <C> <C>
NEW MEXICO - 1.1%
Albuquerque, G.O. Bond, Series A & B, 4.70%,
7/1/2000 $ 200,000 $202,456
---------
NEW YORK - 3.9%
New York State Thruway Authority, Revenue
Bond, Series A, 5.50%, 1/1/2023 200,000 193,872
Sands Point, G.O. Bond, 6.70%, 11/15/2013 350,000 384,398
Westchester County, G.O. Bond, 4.75%,
11/15/2016 150,000 138,876
---------
717,146
---------
NORTH CAROLINA - 2.2%
Charlotte Public Improvement, G.O. Bond,
5.70%, 2/1/2002 200,000 211,022
North Carolina State Prison Facilities, G.O.
Bond, 4.80%, 3/1/2009 200,000 196,726
---------
407,748
---------
OHIO - 2.2%
Ohio Public Facilities, Community Higher
Education, Revenue Bond, Series II-A,
4.25%, 12/1/2002 200,000 196,952
Summit County Various Purpose, G.O. Bond,
6.625%, 12/1/2012 200,000 218,368
---------
415,320
---------
OREGON - 1.4%
Salem Pedestrian Safety Impts, G.O. Bond,
5.50%, 5/1/2010 255,000 260,164
---------
PENNSYLVANIA - 3.8%
Cambria County, G.O. Bond, Series A, 6.10%,
8/15/2016 350,000 365,904
Pennsylvania State, G.O. Bond, Second Series,
6.00%, 7/1/2005 90,000 96,859
Pennsylvania State, G.O. Bond, First Series,
5.30%, 5/1/2005 100,000 102,963
Philadelphia Water & Waste Revenue, Revenue
Bond, 5.60%, 8/1/2018 150,000 148,345
---------
714,071
</TABLE> ---------
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
<S> <C> <C>
RHODE ISLAND - 1.74%
Rhode Island State, G.O. Bond, Series A,
6.20%, 6/15/2004 $ 300,000 $324,180
---------
SOUTH CAROLINA - 3.0%
South Carolina State Capital Improvement, G.O.
Bond, 4.10%, 4/1/2001 200,000 198,234
South Carolina State Highway, G.O. Bond,
Series B, 5.625%, 7/1/2010 350,000 365,025
---------
563,259
---------
TENNESSEE - 2.7%
Johnson City School Sales Tax, G.O. Bond,
6.70%, 5/1/2021 350,000 384,444
Lawrence County, G.O. Bond, 6.60%, 3/1/2013 100,000 108,825
---------
493,269
---------
TEXAS - 3.00%
Dallas Waterworks & Sewer, Revenue Bond,
5.625%, 4/1/2009 200,000 205,228
Southlake Waterwork & Sewer System, G.O.
Bond, 5.30%, 2/15/2011 350,000 349,909
---------
555,137
---------
UTAH - 3.8%
Alpine School District, G.O. Bond, 5.375%,
3/15/2009 250,000 253,512
Nebo School District, G.O. Bond, 6.00%,
6/15/2018 450,000 460,620
---------
714,132
---------
VIRGINIA - 2.5%
Franklin County Capital Improvement , G.O. Bond,
6.60%, 7/15/2013 250,000 271,340
Loudoun County, G.O. Bond, Series A, 4.50%,
10/1/1997 200,000 200,334
---------
471,674
</TABLE> ---------
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Investment Portfolio - June 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Principal Amount/ Value
Shares (Note 2)
<S> <C> <C>
WASHINGTON - 3.8%
Kitsap County School District, G.O. Bond,
6.625%, 12/1/2008 $ 350,000 $ 375,924
Seatle, G.O. Bond, Series A, 5.75%, 1/15/2020 230,000 230,147
Seattle Met. Municipality, G.O. Bond, 5.65%,
1/1/2020 100,000 98,746
-------
704,817
-------
WISCONSIN - 1.7%
Wisconsin State, G.O. Bond, Series A, 5.75%,
5/1/2001 300,000 314,457
-------
TOTAL MUNICIPAL SECURITIES
(Identified Cost $17,423,402) 17,971,260
----------
SHORT-TERM INVESTMENTS - 2.1%
Dreyfus Municipal Reserves
(Identified Cost $395,790) 395,790 395,790
---------
TOTAL INVESTMENTS - 98.8%
(Identified Cost $17,819,192) 18,367,050
OTHER ASSETS, LESS LIABILITIES - 1.2% 218,384
---------
NET ASSETS - 100% $18,585,434
===========
</TABLE>
Key -
G.O. Bond - General Obligation Bond
Rev. Bond - Revenue Bond
Dist. - District
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
<S> <C>
At June 30, 1997, the net unrealized appreciation based on identified cost for
federal income tax purposes of $17,819,192 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $577,291
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value (29,433)
---------
UNREALIZED APPRECIATION - NET $547,858
=========
</TABLE>
The accomapnying notes are an integral part of the financial statements.
10
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
JUNE 30, 1997
<S> <C>
ASSETS:
Investments, at value (Identified Cost $17,819,192)(Note 2) $18,367,050
Cash 334,012
Interest receivable 288,386
Prepaid Expense 108
------------
TOTAL ASSETS 18,989,556
------------
LIABILITIES:
Accrued management fees (Note 3) 7,620
Accrued Directors' fees (Note 3) 1,327
Transfer agents fees payable 366
Payable for securities purchased 302,402
Payable for fund shares redeemed 82,674
Other payables and accrued expenses 9,733
-----------
TOTAL LIABILITIES 404,122
-----------
NET ASSETS FOR 1,805,349 SHARES OUTSTANDING $18,585,434
============
NET ASSETS CONSIST OF:
Capital stock $18,053
Additional paid-in-capital 17,932,394
Undistributed net investment income 95,500
Accumulated net realized loss on investments (8,371)
Net unrealized appreciation on investments 547,858
------------
TOTAL NET ASSETS $18,585,434
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($18,585,434/ 1,805,349 shares) $10.29
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<S> <C>
INVESTMENT INCOME:
Interest $452,865
---------
EXPENSES:
Management fees (Note 3) 43,683
Directors' fees (Note 3) 3,076
Transfer agent fees (Note 3) 2,097
Audit fee 6,777
Custodian fee 1,494
Registration & filing fees 2,102
Miscellaneous 1,489
---------
Total Expenses 60,718
---------
NET INVESTMENT INCOME 392,147
---------
NET CHANGE IN UNREALIZED APPRECIATION ON
INVESTMENTS 42,084
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $434,231
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Statement of Changes in Net Assets (unaudited)
<TABLE>
<CAPTION>
For the Six For the Year
Months Ended 6/30/97 Ended 12/31/96
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income $ 392,147 $ 661,923
Net realized loss on investments - (92)
Net change in unrealized appreciation on investments 42,084 (77,279)
---------- ---------
Net increase in net assets from operations 434,231 584,552
---------- ---------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income (331,937) (634,484)
---------- ---------
CAPITAL STOCK ISSUED AND REDEEMED:
Net increase from capital share transactions (Note 5) 1,534,457 4,546,467
---------- ---------
Net increase in net assets 1,636,751 4,496,535
NET ASSETS:
Beginning of period 16,948,683 12,452,148
---------- ----------
End of period (including undistributed net investment
income of $95,500 and $35,290, respectively) $ 18,585,434 $ 16,948,683
====================== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Financial Highlights (unaudited)
<TABLE>
<CAPTION>
For the Period
For the 2/14/94
Six Months For the Years Ended (commencement of
Ended operations)
6/30/97 12/31/96 12/31/95 to 12/31/94
Per share data (for a share outstanding
throughout each period):
<S> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $10.23 $10.32 $9.26 $10.00
------ ------ ----- ------
Income from investment operations:
Net investment income 0.222 0.434 0.428 0.210
Net realized and unrealized gain (loss)
on investments 0.028 (0.104) 1.062 (0.749)
------ ------ ----- -------
Total from investment operations 0.250 0.330 1.490 (0.539)
------ ------ ----- -------
Less distributions to shareholders:
From net investment income (0.190) (0.420) (0.430) (0.201)
NET ASSET VALUE - END OF PERIOD $10.29 $10.23 $10.32 $9.26
====== ====== ====== ======
Total return: 1 2.46% 3.33% 16.29% (5.39)%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses 0.69%2 0.70% 0.79% 0.85%(2)(3)
Net investment income 4.49%2 4.44% 4.52% 3.71%(2)(3)
Portfolio turnover 0% 2% 5% 4%
NET ASSETS - END OF PERIOD (000'S OMITTED) $18,585 $16,949 $12,452 $8,481
======= ======= ======= ======
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
3 The investment advisor waived a portion of its management fee. If the full
fee had been incurred by
the Fund, the net investment income per share would have been $0.186, and the
annualized ratios would have
been as follows: Expenses - 1.29%; Net investment income - 3.27%.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Diversified Tax Exempt Series (the "Fund") is a no-load diversified
series of Manning & Napier Fund, Inc. (the "Corporation"). The Corporation is
organized in Maryland and is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company.
Shares of the Fund are offered to investors, employees and clients of
Manning & Napier Advisors, Inc. (the "Advisor") and its affiliates. 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 June 30, 1997, 940
million shares have been designated in total among 19 series, of which 50
million have been designated as Diversified Tax Exempt Series Class R Common
Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Municipal securities will normally be valued on the basis of market
valuations provided by an independent pricing service (the Service). The
Service utilizes the latest price quotations and a matrix system (which
considers such factors as security prices of similar securities, yields,
maturities, and ratings). The Service has been approved by the Funds Board of
Directors.
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 Advisor under procedures established by and under the general supervision
of the Fund's Board of Directors.
Short-term investments that mature in sixty (60) days or less are valued
at amortized cost which approximates market value.
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.
15
<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 June 30, 1997, the Fund, for federal income tax purposes, had a capital
loss carryforward of $8,371. Of this amount, $889 will expire on December 31,
2002, $7,390 will expire on December 31, 2003 and $92 will expire on December
31, 2004.
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. 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.
OTHER
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of the revenues and expenses during the
reporting period. Actual results could differ from those estimates.
16
<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 0.50% of the Fund's
average daily net assets. The fee amounted to $43,683 for the six months
ended June 30, 1997.
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. 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 $2,097 for the six months ended June 30
1997.
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 $3,076 for the
year ended June 30, 1997.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of municipal securities, other than short-term
securities, were $1,781,383 and $0, respectively, for the six months ended
June 30, 1997.
17
<PAGE>
Notes to Financial Statements (unaudited)
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Diversified Tax Exempt Series were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 6/30/97 Ended 12/31/96
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Sold 185,874 $1,905,195 535,294 $5,427,100
Reinvested 31,314 321,017 60,908 612,628
Repurchased (67,811) (691,755) (147,335) (1,493,261)
------------------- ----------- --------------- ------------
Total 149,377 $1,534,457 448,867 $4,546,467
=================== =========== =============== ============
</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 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 June 30, 1997.
18
<PAGE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 0000751173
<NAME> MANNING & NAPIER FUND, INC.
<SERIES>
<NAME> DIVERSIFIED TAX EXEMPT SERIES
<NUMBER> 18
<MULTIPLIER> 1
<CURRENCY> 1
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<PERIOD-TYPE> 6-MOS
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 17819192
<INVESTMENTS-AT-VALUE> 18367050
<RECEIVABLES> 288494
<ASSETS-OTHER> 334012
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18989556
<PAYABLE-FOR-SECURITIES> 302402
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101720
<TOTAL-LIABILITIES> 404122
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17950447
<SHARES-COMMON-STOCK> 1805349
<SHARES-COMMON-PRIOR> 1655972
<ACCUMULATED-NII-CURRENT> 95500
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8371)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 547858
<NET-ASSETS> 18585434
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 452865
<OTHER-INCOME> 0
<EXPENSES-NET> 60718
<NET-INVESTMENT-INCOME> 392147
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 42084
<NET-CHANGE-FROM-OPS> 434231
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 331937
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 185874
<NUMBER-OF-SHARES-REDEEMED> 67811
<SHARES-REINVESTED> 31314
<NET-CHANGE-IN-ASSETS> 1636751
<ACCUMULATED-NII-PRIOR> 35290
<ACCUMULATED-GAINS-PRIOR> (8371)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 43683
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 60718
<AVERAGE-NET-ASSETS> 17617187
<PER-SHARE-NAV-BEGIN> 10.23
<PER-SHARE-NII> 0.222
<PER-SHARE-GAIN-APPREC> 0.028
<PER-SHARE-DIVIDEND> 0.190
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.29
<EXPENSE-RATIO> 0.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
<RESTATED>
<CIK> 0000751173
<NAME> MANNING & NAPIER FUND, INC.
<SERIES>
<NAME> INTERNATIONAL SERIES
<NUMBER> 7
<MULTIPLIER> 1
<CURRENCY> 1
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<PERIOD-TYPE> 6-MOS
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 134532871
<INVESTMENTS-AT-VALUE> 182314879
<RECEIVABLES> 79069672
<ASSETS-OTHER> 8873354
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 270257905
<PAYABLE-FOR-SECURITIES> 87300412
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 565301
<TOTAL-LIABILITIES> 87865713
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 119700406
<SHARES-COMMON-STOCK> 13111040
<SHARES-COMMON-PRIOR> 12939100
<ACCUMULATED-NII-CURRENT> 2035190
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12203320
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 48453276
<NET-ASSETS> 182392192
<DIVIDEND-INCOME> 2129946
<INTEREST-INCOME> 686363
<OTHER-INCOME> 0
<EXPENSES-NET> 891601
<NET-INVESTMENT-INCOME> 1924708
<REALIZED-GAINS-CURRENT> 9391925
<APPREC-INCREASE-CURRENT> 19620948
<NET-CHANGE-FROM-OPS> 30937581
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 610034
<NUMBER-OF-SHARES-REDEEMED> 438094
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 33060843
<ACCUMULATED-NII-PRIOR> 110482
<ACCUMULATED-GAINS-PRIOR> 2811395
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 818982
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 891601
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