December 23, 1998
To Shareholders of the following Series of the Exeter Fund:
Defensive Series
Blended Asset Series I
Blended Asset Series II
Maximum Horizon Series
Flexible Yield Series I, II, and III
Tax Managed Series
Dear Shareholder:
Enclosed is a copy of the Annual Report for each of the above Series of the
Exeter Fund in which you were invested as of October 31, 1998. The reports
include information about the Series performance as well as portfolio listings
as of that date.
Please contact our Fund Services department at 1-800-466-3863 or your Client
Consultant if you have any questions about the Annual Reports or about the
Fund.
Sincerely,
Amy J. Williams
Fund Services Manager
<PAGE>
<PAGE>
Exeter Fund, Inc.
Defensive Series
Annual Report
October 31, 1998
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
The U.S. economy has continued to slow over the past six months as domestic
corporate profits are estimated to be growing at the second slowest pace since
the 1990-91 recession, due to the continued financial problems in Asia and an
increase in domestic wages. Weak demand for U.S. exports and global
deflationary pressures continued to limit earnings growth, while high
valuation levels for large capitalization U.S. stocks contributed to
disappointments for equity investors. Meanwhile, the Pacific Rim crisis has
spread across one-third of the world Gross Domestic Product, leaving no
country unaffected.
Even the U.S. market was not immune. The worst of the volatility hit in
August, by the end of which the average stock listed on the New York Stock
Exchange was down 16.23% for the year, while one out of every three NYSE
stocks was down 30% or more. Perhaps of most concern looking forward, the
spread between the overvaluation of the narrow, large cap U.S. stock market
and the broader stock market became even wider. As a result of the high
valuations and potential for sustained weakness in U.S. stock prices, we have
positioned the portfolio's stock allocation away from blue chips and toward
foreign stocks and other sectors that have already experienced significant
declines from their highs.
On the bond side, the unsettled condition of the world's stock market has
resulted in a "flight to quality," as interest rates fell. We have maintained
the portfolio's significant holding in high quality, long-term bonds and are
beginning to realize gains as opportunities arise.
Naturally, the difficult stock environment influenced the Defensive Series,
resulting in a total return of 6.54% over the last 12 months. While our
portfolio has experienced some volatility as the crisis has unfolded, we
believe that our current focus on stocks with lower valuations has positioned
the portfolio
1
<PAGE>
Management Discussion and Analysis
to benefit in the future.
As always, it has been a pleasure helping you meet your investment objectives,
and we look forward to helping you meet those goals in the future. We hope
you and your family have a safe and happy holiday season.
Sincerely,
Exeter Asset Management
[graphic]
<pie chart>
Data for pie chart to follow:
<TABLE>
<CAPTION>
<S> <C>
Asset Allocation - As of 10/31/98
Bonds 83%
Stocks 15%
Cash equivalents, and other
assets, less liabilities 2%
</TABLE>
2
<PAGE>
Performance Update as of October 31, 1998
<TABLE>
<CAPTION>
Exeter Fund, Inc. - Defensive Series
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
One Year $ 10,654 6.54% 6.54%
Inception 2 $ 12,157 21.57% 6.72%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Lehman Brothers Intermediate Bond Index
Total Return
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
One Year $ 10,912 9.12% 9.12%
Inception 2 $ 12,411 24.11% 7.46%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
15-85 Blended Index
Total Return
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
One Year $ 11,129 11.29% 11.29%
Inception 2 $ 13,398 33.98% 10.23%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - Defensive
Series from its inception (11/1/95) to present
(10/31/98) as compared to the Lehman
Brothers Intermediate Bond Index and a
15-85 Blended Index. 1
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Lehman Brothers
Exeter, Fund Inc. Intermediate 15-85
Defensive Series Bond Index Blended Index
11/01/95 10,000 10,000 10,000
04/30/96 10,116 10,116 10,301
10/31/96 10,494 10,581 10,847
04/30/97 10,704 10,765 11,243
10/31/97 11,411 11,374 12,052
04/30/98 11,910 11,728 12,768
10/31/98 12,157 12,411 13,398
</TABLE>
1 The Lehman Brothers Intermediate Bond Index is a market value weighted
measure of approximately 4,322 corporate and government securities. The Index
is comprised of investment grade securities with maturities greater than one
year but less than ten years. The 15-85 Blended Index is 15% Standard & Poor's
(S&P) 500 Total Return Index and 85% Lehman Brothers Intermediate Bond Index.
The S&P 500 Total Return Index is an unmanaged capitalization-weighted measure
of 500 widely held common stocks listed on the New York Stock Exchange, American
Stock Exchange, and Over-the-Counter market. Both Indices returns assume
reinvestment of income and, unlike Fund returns, do not reflect any fees or
expenses.
2 Performance numbers for the Fund and Indices are calculated from November 1,
1995, the Fund's inception date. The Fund's performance is historical and may
not be indicative of future results.
3
<PAGE>
Investment Portofolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
COMMON STOCK - 14.93%
AGRICULTURAL PRODUCTION - 0.02%
Sylvan, Inc.* 75 $ 1,003
---------
AMUSEMENT & RECREATIONAL SERVICES - 0.06%
Resorts World Bhd. - ADR (Note 7)** 1,150 3,432
---------
APPAREL - 0.71%
Liz Claiborne, Inc. 1,350 39,656
Novel Denim Holdings Ltd.* 75 1,144
---------
40,800
---------
BUSINESS SERVICES - 0.46%
National Data Corp. 775 26,253
---------
CHEMICAL & ALLIED PRODUCTS - 1.77%
BIOLOGICAL PRODUCTS - 0.55%
Cypress Bioscience, Inc.* 175 514
Sigma-Aldrich Corp. 1,000 30,906
---------
31,420
---------
PHARMACEUTICAL PREPARATIONS - 1.22%
Pharmacia & Upjohn, Inc. 725 38,380
Teva Pharmaceutical Industries Ltd.- ADR (Note 7) 800 31,550
---------
69,930
---------
101,350
---------
COMMUNICATIONS - 0.01%
Granite Broadcasting Corp.* 125 641
---------
COMPUTER EQUIPMENT - 0.68%
Bell & Howell Co.* 75 1,988
International Game Technology 1,650 37,228
---------
39,216
---------
COMPUTER INTEGRATED SYSTEMS DESIGN - 0.01%
Apache Medical Systems, Inc.* 300 356
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Shares Value
(note2)
CRUDE PETROLEUM & NATURAL GAS - 1.05%
Gulf Canada Resources Ltd.- ADR (Note 7) 5,100 $ 19,125
Petroleo Brasileiro S.A. (Petrobras) -
ADR (Note 7) 3,275 41,182
--------
60,307
--------
DIAMONDS - 0.48%
De Beers Centenary AG - ADR (Note 7) 1,900 27,313
--------
ELECTRONICS & ELECTRICAL EQUIPMENT - 2.47%
Gold Peak Industries Ltd. (Hong Kong)(Note 7) 3,000 804
Motorola, Inc. 825 42,900
Philips Electronics N.V. - ADR (Note 7) 1,275 69,966
Scientific-Atlanta, Inc. 75 1,120
Texas Instruments, Inc. 400 25,575
The Carbide/Graphite Group, Inc.* 50 625
Ultralife Batteries, Inc.* 125 668
--------
141,658
--------
GLASS PRODUCTS - 0.55%
Corning, Inc. 850 30,866
Libbey, Inc. 25 775
--------
31,641
--------
HEALTH SERVICES - 0.44%
MedPartners, Inc.* 7,100 25,294
--------
INDUSTRIAL & COMMERCIAL MACHINERY - 0.05%
Comfort Systems USA, Inc.* 50 950
Lam Research Corp.* 50 722
NN Ball & Roller, Inc. 150 1,012
--------
2,684
--------
JEWELRY - 0.03%
Jostens, Inc. 75 1,692
--------
PAPER & ALLIED PRODUCTS - 0.03%
Schweitzer-Mauduit International, Inc. 50 909
Stone Container Corp. 100 956
--------
1,865
--------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Shares Value
(note2)
PRINTING & PUBLISHING - 0.02%
Scholastic Corp.* 25 $ 986
--------
REFUSE SYSTEMS - 0.01%
Newpark Resources, Inc. 75 708
--------
RETAIL - SPECIALTY STORES - 0.27%
Hancock Fabrics, Inc. 1,550 13,466
Talbots, Inc. 100 2,269
--------
15,735
--------
SOFTWARE - 0.92%
Oracle Corp.* 1,775 52,473
--------
TECHNICAL INSTRUMENTS & SUPPLIES - 3.34%
MEASURING & CONTROLLING DEVICES - 2.16%
Millipore Corp. 2,625 64,640
Teradyne, Inc.* 1,825 59,313
--------
123,953
--------
OPTICAL SUPPLIES - 0.02%
Sola International Inc.* 50 959
--------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 1.15%
Eastman Kodak Co. 850 65,875
--------
SURGICAL & MEDICAL INSTRUMENTS - 0.01%
CardioGenesis Corp.* 75 384
--------
191,171
--------
TELECOMMUNICATION SERVICES - 0.42%
Microcell Telecommunications, Inc. - ADR* (Note 7) 175 908
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR* (Note 7) 305 23,161
--------
24,069
--------
TESTING LABORATORIES - 0.01%
Paradigm Geophysical Ltd.* 125 695
--------
TEXTILE MILL PRODUCTS - 0.02%
Albany International Corp. - Class A 75 1,369
--------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Shares/Principal Value
Amount (note2)
TRANSPORTATION - 1.10%
RAILROAD - 1.08%
Canadian National Railway Co. Ltd. - ADR (Note 7) 1,200 $ 60,525
Guangshen Raiway - ADR (Note 7) 200 1,500
---------
62,025
---------
WATER - 0.02%
Trico Marine Services, Inc.* 150 1,069
---------
63,094
---------
TOTAL COMMON STOCK
(Identified Cost $959,181) 855,805
---------
U.S. TREASURY SECURITIES - 75.26%
U.S. TREASURY BONDS - 18.14%
U.S. Treasury Bond, 6.50%, 5/15/2005 $ 625,000 695,313
U.S. Treasury Bond, 7.50%, 11/15/2024 20,000 25,956
U.S. Treasury Bond, 6.875%, 8/15/2025 210,000 254,822
U.S. Treasury Bond, 6.50%, 11/15/2026 55,000 63,989
---------
TOTAL U.S. TREASURY BONDS
(Identified Cost $947,719) 1,040,080
---------
U.S. TREASURY NOTES - 57.12%
U.S. Treasury Note, 6.00%, 8/15/1999 295,000 298,411
U.S. Treasury Note, 7.50%, 10/31/1999 30,000 30,872
U.S. Treasury Note, 5.50%, 3/31/2000 125,000 126,914
U.S. Treasury Note, 6.125%, 9/30/2000 660,000 681,657
U.S. Treasury Note, 5.625%, 2/28/2001 960,000 987,300
U.S. Treasury Note, 7.50%, 11/15/2001 50,000 54,391
U.S. Treasury Note, 6.25%, 6/30/2002 150,000 159,328
U.S. Treasury Note, 5.875%, 9/30/2002 275,000 289,523
U.S. Treasury Note, 6.25%, 2/15/2003 215,000 230,588
U.S. Treasury Note, 5.875%, 2/15/2004 75,000 80,250
U.S. Treasury Note, 7.25%, 8/15/2004 65,000 74,039
U.S. Treasury Note, 6.125%, 8/15/2007 5,000 5,513
U.S. Treasury Note, 5.50%, 2/15/2008 240,000 256,200
TOTAL U.S. TREASURY NOTES
(Identified Cost $3,183,066) 3,274,986
---------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $4,130,785) 4,315,066
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Investment Portoflio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Shares/Principal Value
Amount (note2)
U.S. GOVERNMENT AGENCIES - 7.35%
MORTGAGE BACKED SECURITIES
GNMA, Pool #365225, 9.00%, 11/15/2024 $ 40,105 $ 42,712
GNMA, Pool #398655, 6.50%, 5/15/2026 44,779 45,269
GNMA, Pool #473373, 9.00%, 2/15/2027 32,074 34,159
GNMA, Pool #452826, 9.00%, 1/15/2028 188,021 200,243
GNMA, Pool #460820, 6.00%, 6/15/2028 99,606 98,736
----------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $420,930) 421,119
----------
SHORT-TERM INVESTMENTS - 1.51%
Dreyfus Treasury Cash Management Fund 86,627 86,627
(Identified Cost $86,627) ----------
TOTAL INVESTMENTS - 99.05%
(Identified Cost $5,597,523) 5,678,617
OTHER ASSETS, LESS LIABILITIES - 0.95% 54,542
----------
NET ASSETS - 100% $5,733,159
==========
</TABLE>
* Non-income producing security
** Security priced by the Advisor
<TABLE>
<CAPTION>
<S> <C>
FEDERAL TAX INFORMATION:
At October 31, 1998, the net unrealized appreciation based on
identified cost for Federal income tax purposes
of $5,611,130 was as follows:
Aggregate gross unrealized appreciation for all
Investments in which there was an excess of
Value over tax cost $ 221,007
Aggregate gross unrealized depreciation for all
Investments in which there was an excess of tax
Cost over value (153,520)
----------
UNREALIZED APPRECIATION - NET $ 67,487
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
<S> <C>
OCTOBER 31, 1998
ASSETS:
Investments, at value (identified cost $5,597,523)(Note 2) $5,678,617
Cash 45,817
Interest receivable 59,112
Dividends receivable 851
----------
TOTAL ASSETS 5,784,397
----------
LIABILITIES:
Accrued management fees 2,742
Accrued Directors' fees (Note 3) 6,773
Transfer agent fees payable (Note 3) 911
Payable for fund shares repurchases 20,915
Audit fee payable 9,631
Other payables and accrued expenses 10,266
----------
TOTAL LIABILITIES 51,238
----------
NET ASSETS FOR 528,593 SHARES OUTSTANDING $5,733,159
==========
NET ASSETS CONSIST OF:
Capital stock $ 5,286
Additional paid-in-capital 5,539,624
Undistributed net investment income 99,985
Accumulated net realized gain on investments 7,170
Net unrealized appreciation on investments 81,094
----------
TOTAL NET ASSETS $5,733,159
==========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($5,733,159/528,593 shares) $ 10.85
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
<S> <C>
FOR THE YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME:
Interest $185,863
Dividends (Net of foreign taxes withheld, $307) 11,587
---------
Total Investment Income 197,450
---------
EXPENSES:
Management fees (Note 3) 30,356
Directors' fees (Note 3) 7,696
Transfer agent fees (Note 3) 911
Audit fee 11,250
Custodian fee 6,500
Registration and filing fees 6,100
Miscellaneous 2,746
---------
Total Expenses 65,559
Less Reduction of Expenses (Note 3) (27,614)
---------
Net Expenses 37,945
---------
NET INVESTMENT INCOME 159,505
---------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments (identified cost basis) 13,980
Net change in unrealized appreciation on investments 55,114
---------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 69,094
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $228,599
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
For the For the
Year Ended Year Ended
10/31/98 10/31/97
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income 159,505 $ 62,693
Net realized gain on investments 13,980 27,310
Net change in unrealized appreciation on investments 55,114 27,116
------------- -------------
Net increase from operations 228,599 117,119
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income (91,449) (41,851)
From net realized gain on investments (34,079) (6,511)
------------- -------------
Total distribution to shareholders (125,528) (48,362)
------------- -------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share
transactions (Note 5) 3,886,052 950,074
------------- -------------
Net increase in net assets 3,969,123 1,018,831
NET ASSETS:
Beginning of period 1,764,036 745,205
------------- -------------
END OF PERIOD (including undistributed net investment
income of $99,985 and $31,890, respectively)
$ 5,733,159 $ 1,764,036
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C>
For the For the For the
Year Ended Year Ended Year Ended
10/31/98 10/31/97 10/31/96
------------- ------------- -------------
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.71 $ 10.29 $ 10.00
------------- ------------- -------------
Income from investment operations:
Net investment income* 0.347 0.426 0.349
Net realized and unrealized gain on
investments 0.327 0.447 0.137
------------- ------------- -------------
Total from investment operations 0.674 0.873 0.486
------------- ------------- -------------
Less distributions to shareholders:
From net investment income (0.352) (0.385) (0.196)
From net realized gain on investments (0.182) (0.068) --
------------- ------------- -------------
Total distributions to shareholders (0.534) (0.453) (0.196)
------------- ------------- -------------
NET ASSET VALUE - END OF PERIOD $ 10.85 $ 10.71 $ 10.29
============= ============= =============
Total return1 6.54% 8.74% 4.94%
Ratios (to average net assets)
/Supplemental Data:
Expenses* 1.00% 1.00% 1.00%
Net investment income* 4.20% 4.45% 4.26%
Portfolio turnover 15% 60% 30%
NET ASSETS - END OF PERIOD (000's omitted) $ 5,733 $ 1,764 $ 745
============= ============= =============
</TABLE>
*The investment advisor did not impose all or a portion of its management fee
and in some periods paid a portion of the Fund's Expenses. If these expenses
had been incurred by the Fund, and had 1994 and 1993 expenses been limited to
that allowed by state securities law, the net investment income per share and
the ratios would be as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Net investment income $0.287 $0.274 $0.226
Ratios (to average net assets):
Expenses 1.73% 2.59% 2.50%
Net investment income 3.47% 2.86% 2.76%
1 Represents aggregate total return for the period indicated.
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Defensive Series (the "Fund") is a no-load diversified series of Exeter Fund,
Inc. (the "Corporation"), formerly known as Manning & Napier Fund, Inc. 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.
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 October 31,
1998, 940 million shares have been designated in total among 19 series, of
which 37.5 million have been designated as Defensive 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 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 provided by the
Fund's pricing service.
Securities for which representative valuations or 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 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 that 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.
13
<PAGE>
Notes to Fianacial Statements
2. SIGNIFICANT ACCOUNTING POLICIES(continued)
FEDERAL INCOME TAX (continued)
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.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made semi-annually.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, foreign denominated investments,
character reclassification between net income and net gains, or other tax
adjustments. As a result, net investment income (loss) and net investment
gain (loss) on investment transactions for a reporting period may differ
significantly from distributions to shareholders during such period. As a
result, the Fund may periodically make reclassifications among its capital
accounts without impacting the Fund's net asset value.
MULTIPLE CLASSES OF SHARES OF COMMON STOCK
The Fund is authorized to issue five classes of shares (Class A, Class B,
Class C, Class D, and Class E shares). Currently, only Class A shares have
been issued. The five classes of shares differ in their respective
distribution and service fees. All shareholders bear the common expenses of
the Fund pro rata based on the average daily net assets of each class, without
distinction between share classes. Dividends are declared separately for each
class. No class has preferential dividend rights; differences in per share
dividend rates are generally due to differences in separate class expenses.
14
<PAGE>
Notes to Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES(continued)
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 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 0.80%of the Fund's average
daily net assets. The fee amounted to $30,356 for the year ended October 31,
1998.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Fund with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise
maintain the Fund's organization. The Advisor also provides the Fund with
necessary office space and portfolio accounting and bookkeeping services. The
salaries of all officers of the Fund and of all Directors who are "affiliated
persons" of the Fund or of the Advisor, and all personnel of the Fund or of
the Advisor performing services relating to research, statistical and
investment activities are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary, pay
other expenses of the Fund in order to maintain total expenses for the Fund at
no more than 1.0% of average daily net assets each year. Accordingly, the
Advisor waived fees of $27,614 for the year ended October 31, 1998, which is
reflected as a reduction of expenses on the Statement of Operations. The fee
waiver and assumption of expenses by the Advisor is voluntary and may be
terminated at any time.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $911 for the year ended October 31, 1998.
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 $7,696 for the year
ended October 31, 1998.
15
<PAGE>
Notes to Financial Statements
4. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1998, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$1,024,312 and $369,523, respectively. Purchases and sales of United States
Government securities, other than short-term securities, were $3,318,891 and
$132,813, respectively.
Transactions in shares of Defensive Series Class A Common Stock were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Year For the Year
Ended 10/31/98 Ended 10/31/97
Shares Amount Shares Amount
---------------- ---------- ---------------- -----------
Sold 442,590 4,709,666 166,901 $1,715,330
Reinvested 12,005 125,528 4,719 48,362
Repurchased (90,651) (969,142) (79,413) (813,618)
---------------- ---------- ---------------- -----------
Net increase 363,944 3,866,052 92,207 $ 950,074
================ ========== ================ ===========
</TABLE>
The Advisor owned 35,663 shares on October 31, 1998 and 33,910 shares on
October 31, 1997.
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 October 31, 1998.
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. These
risks include revaluation of currencies and potential adverse political and
economic developments. Moreover, securities of foreign companies and foreign
governments may be less liquid and their prices more volatile than those of
securities of comparable domestic companies and the United States Government.
16
<PAGE>
Independent Auditors' Report
To the Directors of Exeter Fund, Inc.
and Shareholders of Defensive Series:
We have audited The accompanying statement of assets and liabilities including
the investment portfolio, of Defensive Series (one of the series constituting
Exeter Fund, Inc., formerly Manning & Napier Fund, Inc.) as of October 31,
1998, the related statement of operations for the year then ended, the
statements of changes in net assets for the years ended October 31, 1998 and
1997, and the financial highlights for each of the years in the three-year
period ended October 31, 1998. These financial statements and financial
highlights are the responsibility of the Fund's 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 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 investments owned as of October 31, 1998
by correspondence with the custodian. An audit also includes assessing The
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Defensive
Series at October 31, 1998, the results of its operations, the changes in its
net assets and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
December 4, 1998
17
<PAGE>
<PAGE>
EXETER FUND, INC.
Blended Asset Series I
Annual Report
October 31, 1998
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
DEAR SHAREHOLDERS:
The U.S. economy has continued to slow over the past six months as domestic
corporate profits are estimated to be growing at the second slowest pace since
the 1990-91 recession, due to the continued financial problems in Asia and an
increase in domestic wages. Weak demand for U.S. exports and global
deflationary pressures continued to limit earnings growth, while high
valuation levels for large capitalization U.S. stocks contributed to
disappointments for equity investors. Meanwhile, the Pacific Rim crisis has
spread across one-third of the world Gross Domestic Product, leaving no
country unaffected.
Even the U.S. market was not immune. The worst of the volatility hit in
August, by the end of which the average stock listed on the New York Stock
Exchange was down 16.23% for the year, while one out of every three NYSE
stocks was down 30% or more. Perhaps of most concern looking forward, the
spread between the overvaluation of the narrow, large cap U.S. stock market
and the broader stock market became even wider. As a result of the high
valuations and potential for sustained weakness in U.S. stock prices, we have
positioned the portfolios' stock allocation away from blue chips and toward
foreign stocks and other sectors that have already experienced significant
declines from their highs.
On the bond side, the unsettled condition of the world's stock market has
resulted in a "flight to quality," as interest rates fell. We have maintained
the portfolio's significant holding in high quality, long-term bonds and are
beginning to realize gains as opportunities arise.
Naturally, the difficult stock environment influenced the Blended Asset Series
I, resulting in a total return of 6.29% over the last 12 months. While our
portfolio has experienced some volatility as the crisis has unfolded, we
believe that our current focus on stocks with lower valuations has positioned
the
1
<PAGE>
Management Discussion and Analysis
portfolio to benefit in the future.
As always, it has been a pleasure helping you meet your investment objectives,
and we look forward to helping you meet those goals in the future. We hope
you and your family have a safe and happy holiday season.
Sincerely,
EXETER ASSET MANAGEMENT
[graphic]
<pie chart>
Data for pie chart to follow:
<TABLE>
<CAPTION>
<S> <C>
Asset Allocation - As of 10/31/98
Bonds 54%
Stocks 41%
Cash, equivalents, and
other assets less liabilities 5%
</TABLE>
2
<PAGE>
Performance Update as of October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exeter Fund, Inc. - Blended Asset Series I
Total Return
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
One Year $ 10,629 6.29% 6.29%
Five Year $ 15,337 53.37% 8.92%
Inception 2 $ 15,383 53.83% 8.75%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Lehman Brothers Intermediate Bond Index
Total Return
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
One Year $ 10,912 9.12% 9.12%
Five Year $ 13,698 39.98% 6.49%
Inception 2 $ 13,755 37.55% 6.41%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
30 - 70 Blended Index
Total Return
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
One Year $ 11,339 13.39% 13.39%
Five Year $ 16,807 68.07% 10.94%
Inception 2 $ 16,937 69.37% 10.81%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - Blended
Asset Series I from its inception (9/15/93)
to present (10/31/98) as compared to the
Lehman Brothers Intermediate Bond Index
and a 30-70 Blended Index. 1
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exeter, Fund Inc. Lehman Brothers
Blended Asset Intermediate 30-70
Date Series I Bond Index Blended Index
09/15/93 10,000 10,000 10,000
12/31/93 10,092 10,032 10,081
12/31/94 10,012 9,838 9,986
12/31/95 12,123 11,347 12,151
10/31/96 12,806 11,728 13,040
10/31/97 14,472 12,606 14,965
10/31/98 15,383 13,755 16,937
</TABLE>
1 The Lehman Brothers Intermediate Bond Index is a market value weighted
measure of approximately 4,322 corporate and government securities. The
Index is comprised of investment grade securities with maturities greater than
one year but less than ten years. The 30-70 Blended Index is 30% Standard &
Poor's (S&P) 500 Total Return Index and 70% Lehman Brothers Intermediate Bond
Index. The S&P 500 Total Return Index is an unmanaged capitalization-
weighted measure of 500 widely held common stocks listed on the New York
Stock Exchange, American Stocks Exchange, and Over-the-Counter market.
Both Indices' returns assume reinvestment of income and, unlike Fund returns,
do not reflect any fees or expenses.
2 Performance numbers for the Fund and Indices are calculated from
September 15, 1993, the Fund's inception date. The Fund's performance is
historical and may not be indicative of future results.
3
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
COMMON STOCK - 41.21%
AGRICULTURAL PRODUCTION - 0.05%
Sylvan, Inc.* 1,250 $ 16,719
-----------
AMUSEMENT & RECREATIONAL SERVICES - 0.18%
Resorts World Bhd. - ADR (Note 7)** 19,100 56,998
-----------
APPAREL - 1.49%
Liz Claiborne, Inc. 15,750 462,656
Novel Denim Holdings Ltd* 1,225 18,681
-----------
481,337
-----------
BUSINESS SERVICES - 1.33%
National Data Corp. 12,700 430,213
-----------
CHEMICAL & ALLIED PRODUCTS - 5.15%
BIOLOGICAL PRODUCTS - 1.53%
Cypress Bioscience, Inc.* 3,100 9,106
Sigma-Aldrich Corp. 15,775 487,547
-----------
496,653
PHARMACEUTICAL PREPARATIONS - 3.62% -----------
Orion-Yhtyma OY - B Shares (Finland) (Note 7) 630 15,151
Pharmacia & Upjohn, Inc. 11,470 607,193
Teva Pharmaceutical Industries Ltd. - ADR (Note 7) 13,800 544,238
-----------
1,166,582
-----------
1,663,235
-----------
COMMUNICATIONS - 0.03%
Granite Broadcasting Corp.* 2,200 11,275
-----------
COMPUTER EQUIPMENT - 1.93%
Bell & Howell Co.* 950 25,175
International Game Technology 26,450 596,778
-----------
621,953
-----------
COMPUTER INTEGRATED SYSTEMS DESIGN - 0.01%
Apache Medical Systems, Inc.* 700 831
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
CRUDE PETROLEUM & NATURAL GAS - 3.03% 78,500 $ 294,375
Gulf Canada Resources Ltd. - ADR (Note 7)
Petroleo Brasileiro S.A. (Petrobras) - 54,475 685,007
ADR (Note 7) ----------
979,382
----------
DIAMONDS - 1.21%
De Beers Centenary AG - ADR (Note 7) 27,085 389,347
----------
ELECTRONICS & ELECTRICAL EQUIPMENT - 6.28%
Gold Peak Industries Ltd. (Hong Kong)(Note 7) 48,000 12,858
Motorola, Inc. 12,400 644,800
Philips Electronics N.V.- ADR (Note 7) 18,075 991,866
Scientific-Atlanta, Inc. 1,100 16,431
Texas Instruments, Inc. 5,300 338,869
The Carbide/Graphite Group, Inc.* 975 12,187
Ultralife Batteries, Inc.* 2,075 11,088
----------
2,028,099
----------
GLASS PRODUCTS - 1.52%
Corning, Inc. 13,100 475,694
Libbey, Inc. 500 15,500
----------
491,194
----------
HEALTH SERVICES - 1.01%
MedPartners, Inc.* 91,663 326,549
----------
INDUSTRIAL & COMMERCIAL MACHINERY - .12%
Comfort Systems USA, Inc.* 975 18,525
Lam Research Corp.* 725 10,467
NN Ball & Roller, Inc. 1,350 9,113
----------
38,105
----------
JEWELRY - 0.07%
Jostens, Inc. 1,000 22,562
----------
PAPER & ALLIED PRODUCTS - 0.11%
Schweitzer-Mauduit International, Inc. 1,000 18,188
Stone Container Corp. 1,800 17,212
----------
35,400
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Value
Shares (note 2)
PRINTING & PUBLISHING - 0.06%
Scholastic Corp.* 500 $ 19,719
----------
REFUSE SYSTEMS - 0.04%
Newpark Resources, Inc.* 1,500 14,156
----------
RETAIL-SPECIALTY STORES - 0.50%
Hancock Fabrics, Inc. 14,525 126,186
Talbots, Inc. 1,500 34,031
----------
160,217
----------
SOFTWARE - 2.25%
Oracle Corp.* 24,650 728,716
----------
TECHNICAL INSTRUMENTS & SUPPLIES - 9.71%
MEASURING & CONTROLLING DEVICES - 7.13%
Millipore Corp. 49,450 1,217,706
Teradyne, Inc.* 33,375 1,084,688
----------
2,302,394
----------
OPTICAL SUPPLIES - 0.05%
Sola International, Inc.* 825 15,830
----------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 2.51%
Eastman Kodak Co. 10,450 809,875
----------
SURGICAL & MEDICAL INSTRUMENTS - 0.02%
CardioGenesis Corp.* 1,575 8,072
----------
3,136,171
----------
TELECOMMUNICATION SERVICES - 1.52%
Microcell Telecommunications, Inc. -
ADR* (Note 7) 3,150 16,341
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR* (Note 7) 6,255 474,989
----------
491,330
----------
TESTING LABORATORIES - 0.04%
Paradigm Geophysical Ltd.* 2,350 13,072
----------
TEXTILE MILL PRODUCTS - 0.07%
Albany International Corp. - Class A 1,181 21,553
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Shares/Principal Value
Amount (note 2)
TRANSPORTATION - 3.50%
RAILROAD - 3.44%
Canadian National Railway Co. - ADR (Note 7) 21,475 $ 1,083,145
Guangshen Railway Co. Ltd. - ADR (Note 7) 3,625 27,187
-----------
1,110,332
-----------
WATER - 0.06%
Trico Marine Services, Inc.* 2,575 18,347
-----------
1,128,679
-----------
TOTAL COMMON STOCK
(Identified Cost $14,867,812) 13,306,812
-----------
U.S. TREASURY SECURITIES - 53.81%
U.S. TREASURY BONDS - 17.12%
U.S. Treasury Bond, 9.875%, 11/15/2015 $ 20,000 30,331
U.S. Treasury Bond, 7.25%, 5/15/2016 45,000 54,844
U.S. Treasury Bond, 8.75%, 5/15/2017 40,000 55,925
U.S. Treasury Bond, 8.75%, 5/15/2020 455,000 648,233
U.S. Treasury Bond, 7.25%, 8/15/2022 265,000 330,422
U.S. Treasury Bond, 7.50%, 11/15/2024 3,290,000 4,269,805
U.S. Treasury Bond, 6.50%, 11/15/2026 120,000 139,613
-----------
TOTAL U.S. TREASURY BONDS
(Identified Cost $4,670,229) 5,529,173
-----------
U.S. TREASURY NOTES - 36.69%
U.S. Treasury Note, 5.50%, 3/31/2000 1,140,000 1,157,457
U.S. Treasury Note, 5.25%, 1/31/2001 15,000 15,300
U.S. Treasury Note, 6.25%, 4/30/2001 4,170,000 4,356,349
U.S. Treasury Note, 6.625%, 7/31/2001 3,480,000 3,683,364
U.S. Treasury Note, 6.375%, 9/30/2001 15,000 15,816
U.S. Treasury Note, 6.25%, 6/30/2002 120,000 127,462
U.S. Treasury Note, 5.875%, 9/30/2002 1,205,000 1,268,640
U.S. Treasury Note, 5.50%, 3/31/2003 45,000 47,095
U.S. Treasury Note, 5.375%, 6/30/2003 750,000 783,282
U.S. Treasury Note, 6.50%, 5/15/2005 350,000 389,375
-----------
TOTAL U.S. TREASURY NOTES
(Identified Cost $11,446,226) 11,844,140
-----------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $16,116,455) 17,373,313
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Shares/Principal Value
Amount (note 2)
U.S. GOVERNMENT AGENCIES - 0.21%
MORTGAGE BACKED SECURITIES
GNMA, Pool #174225, 9.50%, 8/15/2016 $ 901 972
GNMA, Pool #286310, 9.00%, 2/15/2020 18,293 19,483
GNMA, Pool #288873, 9.50%, 8/15/2020 3,590 3,873
GNMA, Pool #385753, 9.00%, 7/15/2024 40,043 42,646
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $65,466) 66,974
-----------
SHORT-TERM INVESTMENTS - 3.02%
Dreyfus Treasury Cash Management Fund
(Identified Cost $976,273) 976,273 976,273
-----------
TOTAL INVESTMENTS - 98.24%
(Identified Cost $32,026,006) 31,723,372
OTHER ASSETS, LESS LIABILITIES - 1.76% 567,845
-----------
NET ASSETS - 100% $32,291,217
===========
</TABLE>
*Non-income producing security
**Security priced by the Advisor
<TABLE>
<CAPTION>
<S> <C>
FEDERAL TAX INFORMATION:
At October 31, 1998, the net unrealized depreciation based on
identified cost for Federal income tax purposes of $32,107,876
Was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $ 1,920,075
Aggregate gross unrealized depreciation for all investments
in Which there was an excess of tax cost over value (2,304,579)
------------
UNREALIZED DEPRECIATION - NET $ (384,504)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
<S> <C>
OCTOBER 31, 1998
ASSETS:
Investments, at value (identified cost
$32,026,006)(Note 2) $31,723,372
Cash 61,798
Interest receivable 372,719
Receivable for securities sold 244,277
Dividends receivable 10,969
------------
TOTAL ASSETS 32,413,135
------------
LIABILITIES:
Accrued management fees (Note 3) 34,189
Accrued Directors' fees (Note 3) 1,707
Transfer agent fees payable (Note 3) 626
Payable for fund shares repurchased 67,919
Audit fee payable 14,045
Other payables and accrued expenses 3,432
------------
TOTAL LIABILITIES 121,918
------------
NET ASSETS FOR 2,785,586 SHARES OUTSTANDING $32,291,217
============
NET ASSETS CONSIST OF:
Capital stock $ 27,856
Additional paid-in-capital 30,295,926
Undistributed net investment income 502,925
Accumulated net realized gain on investments 1,767,144
Net unrealized depreciation on investments (302,634)
------------
TOTAL NET ASSETS $32,291,217
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($32,291,217/2,785,586 shares) $ 11.59
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
<S> <C>
FOR THE YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME:
Interest $ 974,806
Dividends (net of foreign taxes withheld, $6,103) 280,752
------------
Total Investment Income 1,255,558
------------
EXPENSES:
Management fees (Note 3) 281,928
Directors' fees (Note 3) 7,696
Transfer agent fees (Note 3) 6,766
Audit fee 18,750
Custodian fee 13,249
Registration and filing fees 11,351
Miscellaneous 7,083
------------
Total Expenses 346,823
Less Reduction of Expenses (Note 3) (7,453)
------------
Net Expenses 339,370
------------
NET INVESTMENT INCOME 916,188
------------
REALIZED AND UNREALIZED GAIN(LOSS)
ON INVESTMENTS:
Net realized gain on investments (identified cost
basis) 1,773,717
Net change in unrealized depreciation on
investment (1,033,391)
------------
NET REALIZED AND UNREALIZED (GAIN)LOSS
ON INVESTMENTS 740,326
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 1,656,514
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
For the For the
Year Ended Year Ended
10/31/98 10/31/97
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 916,188 $ 682,532
Net realized gain on investments 1,773,717 1,431,876
Net change in unrealized appreciation
depreciation on investments (1,033,391) 342,311
------------- -------------
Net increase from operations 1,656,514 2,456,719
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income (693,293) (730,167)
From net realized gain on investments (1,427,315) (296,105)
------------- -------------
Total distributions to shareholders (2,120,608) (1,026,272)
------------- -------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share
transactions (Note 5) 10,824,821 2,706,535
------------- -------------
Net increase in net assets 10,360,727 4,136,982
NET ASSETS:
Beginning of period 21,930,490 17,793,508
------------- -------------
END OF PERIOD (including undistributed net
investment income of $502,925 and
$274,768, respectively) $ 32,291,217 $ 21,930,490
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
For the For the Period
For the For the Ten For the For the 9/15/93
Year Year Months Year Year (commencement
Ended Ended Ended Ended Ended of operations)
10/31/98 10/31/97 10/31/96 12/31/95 12/31/94 to 12/31/93
---------- ---------- ---------- ---------- ---------- ---------------
Per share data (for a share
Outstanding Throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 11.97 $ 11.20 $ 10.72 $ 9.72 $ 10.05 $ 10.00
---------- ---------- ---------- ---------- ---------- ---------------
Income from investment operations:
Net investment income* 0.357 0.390 0.293 0.342 0.200 0.045
Net realized and unrealized gain
(loss)on investments 0.349 1.010 0.307 1.698 (0.280) 0.045
---------- ---------- ---------- ---------- ---------- ---------------
Total from investment operations 0.706 1.400 0.600 2.040 (0.080) 0.090
---------- ---------- ---------- ---------- ---------- ---------------
Less distributions to shareholders:
From net investment income (0.328) (0.442) (0.092) (0.342) (0.203) (0.040)
in excess of net investment income - - - (0.005) - -
From net realized gain on investment (0.758) (0.188) (0.028) (0.693) (0.040) -
in excess of net realized gain on
investments - - - - (0.007) -
---------- ---------- ---------- ---------- ---------- ---------------
Total distributions to shareholders (1.086) (0.630) (0.120) (1.040) (0.250) (0.040)
---------- ---------- ---------- ---------- ---------- ---------------
NET ASSET VALUE - END OF PERIOD $ 11.59 $ 11.97 $ 11.20 $ 10.72 $ 9.72 10.05
========== ========== ========== ========== ========== ===============
Total return 1 6.29% 13.01% 5.64% 21.08% (0.80%) 0.93%
Ratios (to average net assets) /
Supplemental Data:
Expenses * 1.20% 1.20% 1.20%2 1.20% 1.20% 1.20%2
Net investment income * 3.25% 3.39% 3.69%2 3.64% 3.40% 2.47%2
Portfolio turnover 60% 50% 85% 72% 45% 1%
NET ASSETS - END OF PERIOD (000'S
OMITTED) $ 32,291 $ 21,930 $ 17,794 $ 9,518 $ 4,519 475
========== ========== ========== ========== ========== ================
</TABLE>
*The investment advisor did not impose all or a portion of its management fee
and in some periods paid a portion of the Fund's expenses. If these expenses
had been incurred by the Fund, and had 1994 and 1993 expenses been limited to
that allowed by state securities law, the net investment income per share and
the ratios would be as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net investment income $0.354 $0.385 $ 0.284 $0.311 $0.124 $ 0.021
Ratios (to average net assets):
Expenses 1.23% 1.24% 1.31%2 1.53% 2.50% 2.50%2
Net investment income 3.22% 3.35% 3.58%2 3.31% 2.10% 1.17%2
1 Represents aggregate total return for the period indicated.
2 Annualized.
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Notes to Financial Statements
1. ORGANIZATION
Blended Asset Series I (the "Fund") is a no-load diversified series of Exeter
Fund, Inc. (the "Corporation"), formerly known as Manning & Napier Fund, Inc.
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.
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 October 31,
1998, 940 million shares have been designated in total among 19 series, of
which 37.5 million have been designated as Blended Asset Series I 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 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 provided by the
Fund's pricing service.
Securities for which representative valuations or 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 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 that 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.
13
<PAGE>
Notes to Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES(continued)
FEDERAL INCOME TAXES(continued)
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.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made semi-annually.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, foreign denominated investments,
character reclassification between net income and net gains, or other tax
adjustments. As a result, net investment income (loss) and net investment
gain (loss) on investment transactions for a reporting period may differ
significantly from distributions to shareholders during such period. As a
result, the Fund may periodically make reclassifications among its capital
accounts without impacting the Fund's net asset value.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars on the following basis: a)
investment securities, other assets and liabilities are converted to U.S.
dollars based upon current exchange rates; and b) purchases and sales of
securities and income and expenses are converted into U.S. dollars based upon
the currency exchange rates prevailing on the respective dates of such
transactions.
Gains and losses attributable to foreign currency exchange rates are recorded
for financial statement purposes as net realized gains and losses on
investments. The portion of both realized and unrealized gains and losses on
investments that result from fluctuations in foreign currency exchange rates
is not separately stated.
MULTIPLE CLASSES OF SHARES OF COMMON STOCK
The Fund is authorized to issue five classes of shares (Class A, Class B,
Class C, Class D, and Class E). Currently, only Class A shares have been
issued. The five classes of shares differ in their respective distribution
and service fees. All shareholders bear the common expenses of the Fund pro
rata based on the average daily net assets of each class, without distinction
between share classes. Dividends are declared separately for each class. No
class has preferential dividend rights; differences in per share dividend
rates are generally due to differences in separate class expenses.
14
<PAGE>
Notes to Financial Statements
SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)
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 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 1.0% of the Fund's
average daily net assets. The fee amounted to $281,928 for the year ended
October 31, 1998.
Under the Fund's Investment Advisory Agreement (the "Agreement"),
personnel of the Advisor provide the Fund with advice and assistance in the
choice of investments and the execution of securities transactions, and
otherwise maintain the Fund's organization. The Advisor also provides the
Fund with necessary office space and portfolio accounting and bookkeeping
services. The salaries of all officers of the Fund and of all Directors who
are "affiliated persons" of the Fund or of the Advisor, and all personnel of
the Fund or of the Advisor performing services relating to research,
statistical and investment activities are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary,
pay other expenses of the Fund in order to maintain total expenses for the
Fund at no more than 1.20% of average daily net assets each year.
Accordingly, the Advisor waived fees of $7,453 for the year ended October 31,
1998, which is reflected as a reduction of expenses on the Statement of
Operations. The fee waiver and assumption of expenses by the Advisor is
voluntary and may be terminated at any time.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $6,766 for the year ended October 31,
1998.
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 $7,696 for the
year ended October 31, 1998.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1998, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$15,235,237 and $11,266,115, respectively. Purchases and sales of United
States Government securities, other than short-term securities, were
$9,044,292 and $4,790,620, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Blended Asset Series I Class A Common Stock
were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Year For the Year
Ended 10/31/98 Ended 10/31/97
---------------- ----------------
Shares Amount Shares Amount
---------------- ------------ ---------------- ------------
Sold 1,438,207 $16,430,050 514,345 $ 5,851,791
Reinvested 187,108 2,098,928 91,051 1,011,493
Repurchased (671,472) (7,704,157) (362,106) (4,156,749)
---------------- ------------ ---------------- ------------
Net increase 953,843 $10,824,821 243,290 $ 2,706,535
================ ============ ================ ============
</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 October 31, 1998.
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. These
risks include revaluation of currencies and future adverse political and
economic developments. Moreover, securities of foreign companies and foreign
governments may be less liquid and their prices more volatile than those of
securities of comparable domestic companies and the United States Government.
16
<PAGE>
Independent Auditors' Report
TO THE DIRECTORS OF EXETER FUND, INC.
AND SHAREHOLDERS OF BLENDED ASSET SERIES I:
We have audited the accompanying statement of assets and liabilities,
including the investment portfolio, of Blended Asset Series I (one of the
series constituting Exeter Fund Inc., formerly Manning & Napier Fund, Inc.)
as of October 31, 1998, the related statement of operations for the year
then ended, the statements of changes in net assets for the years ended October
31, 1998 and 1997, and the financial highlights for each of the years in
the three-year period ended October 31, 1998 and the three-year period ended
December 31, 1995. These financial statements and financial highlights are
the responsibility of the Fund's 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 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 investments owned at October 31, 1998 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Blended Asset
Series I at October 31, 1998, the results of its operations, the changes in
its net assets and its financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
BOSTON, MASSACHUSETTS
DECEMBER 4, 1998
17
<PAGE>
<PAGE>
Exeter Fund, Inc.
Blended Asset Series II
Annual Report
October 31,1998
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
The U.S. economy has continued to slow over the past six months as domestic
corporate profits are estimated to be growing at the second slowest pace since
the 1990-91 recession, due to the continued financial problems in Asia and an
increase in domestic wages. Weak demand for U.S. exports and global
deflationary pressures continued to limit earnings growth, while high
valuation levels for large capitalization U.S. stocks contributed to
disappointments for equity investors. Meanwhile, the Pacific Rim crisis has
spread across one-third of the world Gross Domestic Product, leaving no
country unaffected.
Even the U.S. market was not immune. The worst of the volatility hit in
August, by the end of which the average stock listed on the New York Stock
Exchange was down 16.23% for the year, while one out of every three NYSE
stocks was down 30% or more. Perhaps of most concern looking forward, the
spread between the overvaluation of the narrow, large cap U.S. stock market
and the broader stock market became even wider. As a result of the high
valuations and potential for sustained weakness in U.S. stock prices, we have
positioned the portfolio's stock allocation away from blue chips and toward
foreign stocks and other sectors that have already experienced significant
declines from their highs.
On the bond side, the unsettled condition of the world's stock market has
resulted in a "flight to quality," as interest rates fell. We have maintained
the portfolio's significant holding in high quality, long-term bonds and are
beginning to realize gains as opportunities arise.
Naturally, the difficult stock environment influenced the Blended Asset Series
II, resulting in a total return of - 0.56% over the last 12 months. While our
portfolio has experienced some volatility as the crisis has unfolded, we
believe that our current focus on stocks with lower valuations has positioned
the
1
<PAGE>
Management Discussion and Analysis
portfolio to benefit in the future.
As always, it has been a pleasure helping you meet your investment objectives,
and we look forward to helping you meet those goals in the future. We hope
you and your family have a safe and happy holiday season.
Sincerely,
Exeter Asset Management
[graphic]
<pie chart>
Data for pie chart to follow:
Asset Allocation - As of 10/31/98
Stocks - 54%
Bonds - 40%
Cash, equivalents, and other assets, less liabilities - 6%
2
<PAGE>
Performance Updates as of October 31, 1998
Exeter Fund, Inc. - Blended Asset Series II
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
-------------
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
One Year $ 9,944 -0.56% -0.56%
Five Years $ 18,037 80.37% 12.51%
Inception2 $ 17,947 79.47% 12.26%
</TABLE>
Lehman Brothers Intermediate Bond Index
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
---------------
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
One Year $ 10,912 9.12% 9.12%
Five Years $ 13,698 36.98% 6.49%
Inception2 $ 13.651 36.51% 6.35%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
50-50 Blended Index
Total Return
-------------
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
One Year $ 11,510 15.10% 15.10%
Five Years $ 19,411 94.11% 14.18%
Inception2 $ 19,525 95.25% 14.15%
</TABLE>
The value of a $10,000 investment in the Exeter Fund, Inc. - Blended Assets
Series II from its inception (10/12/93) to present (10/31/98) as compared to
the Lehman Brothers Intermediate Bond Index and a 50-50 Blended Index.1
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exeter Fund, Inc. Lehman Brothers Intermediate
Date Blended Asset Series II Bond Index 50-50 Blended Index
10/12/93 $ 10,000 $ 10,000 $ 10,000
12/31/93 $ 9,982 $ 9,956 $ 10,056
12/31/94 $ 10,333 $ 9,764 $ 9,978
12/31/95 $ 13,707 $ 11,261 $ 12,743
10/31/96 $ 15,078 $ 11,639 $ 13,978
10/31/97 $ 18,047 $ 12,510 $ 16,832
10/31/98 $ 17,947 $ 13,651 $ 19,525
</TABLE>
1 The Lehman Brothers Intermediate Bond Index is a market value weighted
measure of approximately 4,322 corporate and government securities. The Index
is comprised of investment grade securities with maturities greater than one
year but less than ten years. The 50-50 Blended Index is 50% Standard &
Poor's (S&P) 500 Total Return Index and 50% Lehman Brothers Aggregate Bond
Index. The S&P 500 Total Return Index is an unmanaged capitalization-weighted
measure of 500 widely held common stocks listed on the New York Stock
Exchange, American Stock Exchange, and Over-the-Counter market. The Lehman
Brothers Aggregate Bond Index is a market value weighted measure of
approximately 6,602 corporate, government, and mortgage backed securities.
The Index is comprised of investment grade securities with maturities greater
than one year. Both Indices' returns assume reinvestment of income and,
unlike Fund returns, do not reflect any fees or expenses.
2 Performance numbers for the Fund and Indices are calculated from October 12,
1993, the Fund's inception date. The Fund's performance is historical and may
not be indicative of future results.
3
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
COMMON STOCK - 54.01%
AGRICULTURAL PRODUCTION - 0.05%
Sylvan, Inc.* 2,400 $ 32,100
-----------
AMUSEMENT & RECREATIONAL SERVICES - 0.30%
Resorts World Bhd. - ADR (Note 7)** 66,200 197,554
-----------
APPAREL - 2.15%
Liz Claiborne, Inc. 47,000 1,380,625
Novel Denim Holdings Ltd.* 2,400 36,600
-----------
1,417,225
-----------
BUSINESS SERVICES - 2.19%
National Data Corp. 42,500 1,439,687
-----------
CHEMICAL & ALLIED PRODUCTS - 6.54%
BIOLOGICAL PRODUCTS - 1.91%
Cypress Bioscience, Inc.* 6,000 17,625
Sigma-Aldrich Corp. 40,300 1,245,524
-----------
1,263,149
-----------
PHARMACEUTICAL PREPARATIONS - 4.63%
Orion-Yhtyma OY - B Shares (Finland) (Note 7) 2,320 55,793
Pharmacia & Upjohn, Inc. 30,230 1,600,301
Teva Pharmaceutical Industries Ltd. - ADR
(Note 7) 35,500 1,400,031
-----------
3,056,125
-----------
4,319,274
-----------
COMMUNICATIONS - 0.04%
Granite Broadcasting Corp.* 4,900 25,112
-----------
COMPUTER EQUIPMENT - 3.52%
Bell & Howell Co.* 31,150 825,475
International Game Technology 66,400 1,498,150
-----------
2,323,625
-----------
COMPUTER INTEGRATED SYSTEMS DESIGN - 0.02%
Apache Medical Systems, Inc.* 10,550 12,528
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
CRUDE PETROLEUM & NATURAL GAS - 4.53%
Gulf Canada Resources Ltd. - ADR (Note 7) 165,300 $ 619,875
Petroleo Brasileiro S.A. (Petrobras) -
ADR (Note 7) 143,550 1,805,098
YPF Sociedad Anonima - ADR (Note 7) 19,550 565,728
-----------
2,990,701
-----------
DIAMONDS - 2.17%
De Beers Centenary AG - ADR (Note 7) 99,470 1,429,881
-----------
ELECTRONICS & ELECTRICAL EQUIPMENT - 8.71%
Gold Peak Industries Ltd. (Hong Kong)(Note 7) 94,000 25,181
Motorola, Inc. 34,350 1,786,200
Philips Electronics NV - ADR (Note 7) 43,075 2,363,741
Scientific-Atlanta, Inc. 3,000 44,813
Texas Instruments, Inc. 23,100 1,476,956
The Carbide/Graphite Group, Inc.* 1,900 23,750
Ultralife Batteries, Inc.* 4,700 25,116
-----------
5,745,757
-----------
GLASS PRODUCTS - 2.29%
Corning, Inc. 40,350 1,465,209
Libbey, Inc. 1,400 43,400
-----------
1,508,609
-----------
HEALTH SERVICES - 1.13%
MedPartners, Inc.* 209,797 747,402
-----------
HOTELS & LODGING PLACES - 0.01%
CDL Hotels International Ltd. - ADR (Note 7) 2,300 5,879
-----------
INDUSTRIAL & COMMERCIAL MACHINERY - 0.16%
Comfort Systems USA, Inc.* 2,400 45,600
Lam Research Corp.* 1,400 20,212
NN Ball & Roller, Inc. 5,425 36,619
-----------
102,431
-----------
JEWELRY - 0.09%
Josten, Inc. 2,600 58,662
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
PAPER & ALLIED PRODUCTS - 1.16%
Asia Pulp & Paper Co. Ltd. - ADR (Note 7) 83,900 $ 697,419
Schweitzer-Mauduit International, Inc. 1,850 33,647
Stone Container Corp. 3,600 34,425
-----------
765,491
-----------
PRINTING & PUBLISHING - 0.09%
Scholastic Corp.* 1,500 59,156
-----------
Refuse Systems - 0.05%
Newpark Resources, Inc.* 3,400 32,087
-----------
RETAIL SPECIALTY STORES - 0.57%
Hancock Fabrics, Inc. 32,050 278,434
Talbots, Inc. 4,225 95,855
-----------
374,289
-----------
SOFTWARE - 3.34%
Oracle Corp.* 74,600 2,205,363
-----------
TECHNICAL INSTRUMENTS & SUPPLIES - 10.00%
MEASURING & CONTROLLING DEVICES - 4.59%
Millipore Corp. 64,025 1,576,616
Teradyne, Inc.* 44,700 1,452,750
-----------
3,029,366
-----------
OPTICAL SUPPLIES - 0.05%
Sola International, Inc.* 1,625 31,180
-----------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 5.34%
Eastman Kodak Co. 45,450 3,522,375
-----------
SURGICAL & MEDICAL INSTRUMENTS - 0.02%
CardioGenesis Corp.* 3,025 15,503
-----------
6,598,424
-----------
TELECOMMUNICATION SERVICES - 1.73%
Microcell Telecommunications, Inc. - ADR*
(Note 7) 5,300 27,494
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR* (Note 7) 14,710 1,117,041
-----------
1,144,535
-----------
TESTING LABORATORIES - 0.04%
Paradigm Geophysical Ltd.* 4,500 25,031
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES/ VALUE
PRINCIPAL AMOUNT (NOTE 2)
TEXTILE MILL PRODUCTS - 0.06%
Albany International Corp. - Class A 2,347 $ 42,833
-----------
TRANSPORTATION - 3.07%
RAILROAD - 3.01%
Canadian National Railway Co. - ADR (Note 7) 38,250 1,929,235
Guangshen Railway Co. Ltd. (Note 7) 7,900 59,250
-----------
1,988,485
-----------
WATER - 0.06%
Trico Marine Services, Inc.* 5,600 39,900
-----------
2,028,385
-----------
TOTAL COMMON STOCK
(Identified Cost $42,532,087) 35,632,021
-----------
U.S. TREASURY SECURITIES - 40.20%
U.S. TREASURY BONDS - 21.96%
U.S. Treasury Bond, 6.50%, 5/15/2005 $ 105,000 116,813
U.S. Treasury Bond, 8.75%, 5/15/2020 125,000 178,086
U.S. Treasury Bond, 7.25%, 8/15/2022 65,000 81,047
U.S. Treasury Bond, 7.50%, 11/15/2024 3,395,000 4,406,075
U.S. Treasury Bond, 6.875%, 8/15/2025 6,200,000 7,523,316
U.S. Treasury Bond, 6.50%, 11/15/2026 1,875,000 2,181,446
-----------
TOTAL U.S. TREASURY BONDS
(Identified Cost $12,129,824) 14,486,783
-----------
U.S. TREASURY NOTES - 18.24%
U.S. Treasury Note, 6.25%, 6/30/2002 1,050,000 1,115,297
U.S. Treasury Note, 5.875%, 9/30/2002 2,370,000 2,495,167
U.S. Treasury Note, 5.625%, 12/31/2002 5,815,000 6,087,578
U.S. Treasury Note, 5.50%, 3/31/2003 2,230,000 2,333,835
-----------
TOTAL U.S. TREASURY NOTES
(Identified Cost $11,460,355) 12,031,877
-----------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $23,590,179) 26,518,660
-----------
SHORT-TERM INVESTMENTS - 1.37%
Dreyfus Treasury Cash Management Fund
(Identified Cost $904,461) 904,461 904,461
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C>
VALUE
(NOTE 2)
TOTAL INVESTMENTS - 95.58%
(Identified Cost $67,026,727) $63,055,142
OTHER ASSETS, LESS LIABILITIES - 4.42% 2,917,880
------------
NET ASSETS - 100% $65,973,022
============
</TABLE>
* Non-income producing security
** Security priced by the Advisor
<TABLE>
<CAPTION>
<S> <C>
FEDERAL TAX INFORMATION:
At October 31, 1998, the net unrealized depreciation based on
identified cost for Federal income tax purposes of
$ 67,261,072 was as follows:
Aggregate gross unrealized appreciation for all investments in
which there was an excess of value over tax cost $ 4,397,261
Aggregate gross unrealized depreciation for all investments in (8,603,191)
------------
which there was an excess of tax cost over value
UNREALIZED DEPRECIATION - NET $(4,205,930)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
<S> <C>
October 31, 1998
ASSETS:
Investments, at value (identified cost $67,026,727)(Note 2) $63,055,142
Cash 116,924
Receivable for securities sold 2,634,679
Interest receivable 428,830
Dividends receivable 29,581
------------
TOTAL ASSETS 66,265,156
------------
LIABILITIES:
Accrued management fees (Note 3) 53,959
Accrued Directors' fees (Note 3) 1,707
Transfer Agent fees payable (Note 3) 1,295
Payable for fund shares repurchased 216,378
Audit fee payable 13,071
Other payables and accrued expenses 5,724
------------
TOTAL LIABILITIES 292,134
------------
NET ASSETS FOR 5,234,961 SHARES OUTSTANDING $65,973,022
============
NET ASSETS CONSIST OF:
Capital stock $ 52,350
Additional paid-in-capital 65,133,419
Undistributed net investment income 798,686
Accumulated net realized gain on investments 3,960,153
Net unrealized depreciation on investments (3,971,586)
------------
TOTAL NET ASSETS $65,973,022
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($65,973,022/5,234,961 shares) $ 12.60
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
<S> <C>
FOR THE YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME:
Interest $ 1,509,035
Dividends (net of foreign taxes withheld, $23,544) 772,650
------------
Total Investment Income 2,281,685
------------
EXPENSES:
Management fees (Note 3) 633,708
Directors' fees (Note 3) 7,696
Transfer agent fees (Note 3) 15,209
Custodian fee 21,502
Audit fee 20,751
Registration and filing fees 13,950
Miscellaneous 16,782
------------
Total Expenses 729,598
------------
NET INVESTMENT INCOME 1,552,087
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on investments (identified cost basis) 3,960,798
Net change in unrealized depreciation on investments (6,481,268)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (2,520,470)
------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ (968,383)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
For the For the
Year Year
Ended Ended
10/31/98 10/31/97
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,552,087 $ 1,034,045
Net realized gain on investments 3,960,798 6,250,473
Net change in unrealized appreciation
(depreciation) on investments (6,481,268) 48,699
------------ ------------
Net increase (decrease) from operations (968,383) 7,333,217
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income (1,191,632) (1,092,397)
From net realized gain on investments (6,231,121) (1,048,673)
------------ ------------
Total distributions to shareholders (7,422,753) (2,141,070)
------------ ------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share
transactions (Note 5) 23,441,792 12,731,521
------------ ------------
Net increase in net assets 15,050,656 17,923,668
NET ASSETS:
Beginning of period 50,922,366 32,998,698
------------ ------------
END OF PERIOD (including undistributed net investment
Income of $798,686 and $437,931, respectively) $65,973,022 $50,922,366
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
For the
For the For the Ten For the For the
Year Year Months Year Year
Ended Ended Ended Ended Ended
10/31/98 10/31/97 10/31/96 12/31/95 12/31/94
---------- ---------- ---------- ---------- ----------
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 14.69 $ 13.04 $ 11.95 $ 10.12 $ 9.98
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.312 0.325 0.227* 0.238* 0.108*
Net realized and unrealized gain (loss)
on investments (0.385) 2.130 0.963 3.052 0.243
---------- ---------- ---------- ---------- ----------
Total from investment operations (0.073) 2.455 1.190 3.290 0.351
---------- ---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.286) (0.393) (0.040) (0.237) (0.119)
From net realized gain on investments (1.731) (0.412) (0.060) (1.223) (0.092)
---------- ---------- ---------- ---------- ----------
Total distributions to shareholders (2.017) (0.805) (0.100) (1.460) (0.211)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 12.60 $ 14.69 $ 13.04 $ 11.95 $ 10.12
========== ========== ========== ========== ==========
Total return1 (0.56%) 19.69% 10.01% 32.64% 3.52%
Ratios (to average net assets)
/Supplemental Data:
Expenses 1.15% 1.15% 1.20%2* 1.20%* 1.20%*
Net investment income 2.45% 2.45% 2.51%2* 2.53%* 2.12%*
Portfolio turnover 61% 63% 57% 63% 19%
NET ASSETS - END OF PERIOD (000's omitted) $ 65,973 $ 50,922 $ 32,999 $ 20,519 $ 7,214
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
For the Period
10/12/93
(commencement
of operations) to
12/31/93
--------------------
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 0.014*
Net realized and unrealized gain (loss)
on investments (0.032)
--------------------
Total from investment operations (0.018)
--------------------
Less distributions to shareholders:
From net investment income (0.002)
From net realized gain on investments -
--------------------
Total distributions to shareholders (0.002)
--------------------
NET ASSET VALUE - END OF PERIOD $ 9.98
====================
Total return1 (0.18%)
Ratios (to average net assets) / Supplemental Data:
Expenses 1.20%2*
Net investment income 1.94%2*
Portfolio turnover 0%
NET ASSETS - END OF PERIOD (000's omitted) $ 475
====================
</TABLE>
* The investment advisor did not impose all or a portion of its management fee
and in some periods paid a portion of the Fund's expenses. If these expenses
had been incurred by the Fund, and had 1993 expenses been limited to that
allowed by state securities law, the net investment income per share and the
ratios would have been as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net investment income N/A N/A $ 0.225 $0.226 $0.051 $ 0.005
Ratios (to average net assets):
Expenses N/A N/A 1.22%2 1.33% 2.31% 2.50%2
Net investment income N/A N/A 2.49%2 2.40% 1.01% 0.64%2
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Notes to Financial Statements
1. ORGANIZATION
Blended Asset Series II (the "Fund") is a no-load diversified series of Exeter
Fund, Inc. (the "Corporation"), formerly known as Manning & Napier Fund, Inc.
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.
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 October 31,
1998, 940 million shares have been designated in total among 19 series, of
which 37.5 million have been designated as Blended Asset Series II 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 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 provided by the
Fund's pricing service.
Securities for which representative valuations or 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 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.
13
<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 that 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.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made semi-annually.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, foreign denominated investments,
character reclassification between net income and net gains, or other tax
adjustments. As a result, net investment income (loss) and net investment
gain (loss) on investment transactions for a reporting period may differ
significantly from distributions to shareholders during such period. As a
result, the Fund may periodically make reclassifications among its capital
accounts without impacting the Fund's net asset value.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars on the following basis: a)
investment securities, other assets and liabilities are converted to U.S.
dollars based upon current exchange rates; and b) purchases and sales of
securities and income and expenses are converted into U.S. dollars based upon
the currency exchange rates prevailing on the respective dates of such
transactions.
Gains and losses attributable to foreign currency exchange rates are recorded
for financial statement purposes as net realized gains and losses on
investments. The portion of both realized and unrealized gains and losses on
investments that result from fluctuations in foreign currency exchange rates
is not separately stated.
14
<PAGE>
Notes to Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
MULTIPLE CLASSES OF SHARES OF COMMON STOCK
The Fund is authorized to issue five classes of shares (Class A, Class B,
Class, C, Class D, and Class E shares). Currently, only Class A shares have
been issued. The five classes of shares differ in their respective
distribution and service fees. All shareholders bear the common expenses of
the Fund pro rata based on the average daily net assets of each class, without
distinction between share classes. Dividends are declared separately for each
class. No class has preferential dividend rights; differences in per share
dividend rates are generally due to differences in separate class expenses.
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 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 1.0% of the Fund's
average daily net assets. The fee amounted to $633,708 for the year ended
October 31, 1998.
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 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 $15,209 for the year ended October 31,
1998.
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 $7,696 for the year
ended October 31, 1998.
15
<PAGE>
Notes to Financial Statements
4. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1998, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$40,455,480 and $31,288,676, respectively. Purchases and sales of United
States Government securities, other than short-term securities were,
$10,845,880 and $5,619,539, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Blended Asset Series II Class A Common Stock
were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the For the
Year Ended Year Ended
10/31/98 10/31/97
------------ ------------
Shares Amount Shares Amount
------------ ------------- ------------ ------------
Sold 2,076,628 $ 27,526,886 1,218,144 $16,655,310
Reinvested 579,237 7,393,436 163,874 2,138,523
Repurchased (887,579) (11,478,530) (445,116) (6,062,312)
------------ ------------- ------------ ------------
Net increase 1,768,286 $ 23,441,792 936,902 $12,731,521
============ ============= ============ ============
</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 October 31, 1998.
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. 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.
16
<PAGE>
Independent Auditors' Report
TO THE DIRECTORS OF EXETER FUND, INC.
AND SHAREHOLDERS OF BLENDED ASSET SERIES II:
We have audited the accompanying statement of assets and liabilities,
including the investment portfolio, of Blended Asset Series II (one of the
series constituting Exeter Fund, Inc., formerly Manninng & Napier Fund, Inc.)
as of October 31, 1998, the related statements of operations for the year
then ended, the statement of changes in net assets for the year ended October
31, 1998 and 1997, and the financial highlights for each of the years in
the three-year period ended October 31, 1998 and the three-year period ended
December 31, 1995. These financial statements and financial highlights are
the responsibility of the Fund's 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 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 investments owned at October 31, 1998 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Blended Asset
Series II at October 31, 1998, the results of its operations, the changes in
its net assets and its financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
BOSTON, MASSACHUSETTS
DECEMBER 4, 1998
17
<PAGE>
<PAGE>
Exeter Fund, Inc.
Maximum Horizon Series
Annual Report
October 31, 1998
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
The U.S. economy has continued to slow over the past six months as domestic
corporate profits are estimated to be growing at the second slowest pace since
the 1990-91 recession, due to the continued financial problems in Asia and an
increase in domestic wages. Weak demand for U.S. exports and global
deflationary pressures continued to limit earnings growth, while high
valuation levels for large capitalization U.S. stocks contributed to
disappointments for equity investors. Meanwhile, the Pacific Rim crisis has
spread across one-third of the world Gross Domestic Product, leaving no
country unaffected.
Even the U.S. market was not immune. The worst of the volatility hit in
August, by the end of which the average stock listed on the New York Stock
Exchange was down 16.23% for the year, while one out of every three NYSE
stocks was down 30% or more. Perhaps of most concern looking forward, the
spread between the overvaluation of the narrow, large cap U.S. stock market
and the broader stock market became even wider. As a result of the high
valuations and potential for sustained weakness in U.S. stock prices, we have
positioned the portfolio's stock allocation away from blue chips and toward
foreign stocks and other sectors that have already experienced significant
declines from their highs.
On the bond side, the unsettled condition of the world's stock market has
resulted in a "flight to quality," as interest rates fell. The bond portion
of the portfolio is invested in high quality, long-term bonds, and we are
beginning to realize gains in this area as opportunities arise.
Naturally, the difficult stock environment influenced the Maximum Horizon
Series, resulting in a total return of - 5.99% over the last 12 months. While
our portfolio has experienced some volatility as the crisis has unfolded, we
believe that our current focus on stocks with lower valuations has positioned
1
<PAGE>
the portfolio to benefit in the future.
Management Discussion and Analysis
As always, it has been a pleasure helping you meet your investment objectives,
and we look forward to helping you meet those goals in the future. We hope
you and your family have a safe and happy holiday season.
Sincerely,
Exeter Asset Management
[graphic]
<pie chart>
Data for pie chart to follow:
<TABLE>
<CAPTION>
<S> <C>
Asset Allocation - As of 10/31/98
Stocks 85%
Bonds 7%
Cash & equivalents and other
assets, less liabilities 8%
</TABLE>
2
<PAGE>
Performance Update as of October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exeter Fund, Inc. Maximum Horizon Series
Total Return
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
One Year $ 9,401 -5.99% -5.99%
Inception 2 $ 13,730 37.30% 11.13%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Standard & Poor's (S&P) 500 Total Return Index
Total Return
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
One Year $ 12,199 21.99% 21.99%
Inception 2 $ 19,996 99.96% 25.98%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Value Line Index
Total Return
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
One Year $ 9,147 -8.53% -8.53%
Inception 2 $ 12,805 28.05% 8.58%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - Maximum
Horizon Series from its inception (11/1/95)
to present (10/31/98) as compared to the
Standard & Poor's (S&P) 500 Total Return
Index and the Value Line Index.1
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Date Exeter Fund, Inc. - Maximum Horizon Series Standard & Poor's (S&P) 500 Value Line Index Total Return Index
11/01/95 10,000 10,000 10,000
04/30/96 10,753 11,376 11,154
10/31/96 11,521 12,408 11,198
04/30/97 12,589 14,233 11,780
10/31/97 14,604 16,392 13,998
04/30/98 16,365 20,076 15,708
10/31/98 13,730 19,996 12,805
</TABLE>
1 The Standard & Poor's (S&P) 500 Total Return Index is an unmanaged
capitalization-weighted measure of approximately 500 widely held common
stocks listed on the New York Stock Exchange, American Stock Exchange, and
Over-the-Counter market. The Indices returns assume reinvestment of income
and, unlike Fund returns, do not reflect any fees or expenses. The Value Line
Index is an unmanaged index that consists of approximately 1700 securities
that are traded on the New York Stock Exchange, the NASDAQ Stock Market, and
the American Stock Exchange. The index returns are based on a geometric
average of relative price changes of the component stocks and do not include
income, and unlike Fund returns, do not reflect any fees or expenses.
2 Performance numbers for Indices are calculated from November 1, 1995, the
Fund's inception date. The Fund's performance is historical and may not be
indicative of future results.
3
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
------- -----------
COMMON STOCK - 84.50%
AGRICULTURAL PRODUCTION - 0..09%
Sylvan, Inc.* 1,325 $ 17,722
-----------
AMUSEMENT & RECREATIONAL SERVICES - 0.28%
Resorts World Bhd - ADR (Note 7)** 17,050 50,881
-----------
APPAREL - 2.40%
Liz Claiborne, Inc. 14,600 428,875
Novel Denim Holdings Ltd.* 1,300 19,825
-----------
448,700
-----------
BUSINESS SERVICES - 1.83%
National Data Corp. 10,100 342,138
-----------
CHEMICAL & ALLIED PRODUCTS - 10.54%
BIOLOGICAL PRODUCTS - 2.61%
Cypress Bioscience, Inc.* 3,300 9,694
Sigma-Aldrich Corp. 15,500 479,048
-----------
488,742
-----------
PHARMACEUTICAL PREPARATIONS - 7.93%
Celltech plc* (United Kingdom) (Note 7) 99,525 624,992
Orion-Yhtyma OY - B Shares (Finland) (Note 7) 700 16,834
Pharmacia & Upjohn, Inc. 9,625 509,523
Teva Pharmaceutical Industries Ltd. - ADR
(Note 7) 8,400 331,275
-----------
1,482,624
-----------
1,971,366
-----------
COMMUNICATIONS - 0.06%
Granite Broadcasting Corp. * 2,300 11,788
-----------
COMPUTER EQUIPMENT - 7.40%
Bell & Howell Co.* 29,125 771,812
International Game Technology 27,150 612,571
-----------
1,384,383
-----------
COMPUTER INTEGRATED SYSTEMS DESIGN - 3.29%
Apache Medical Systems, Inc.* 4,600 5,462
HBO & Co. 23,200 609,000
-----------
614,462
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
------- -----------
CRUDE PETROLEUM & NATURAL GAS - 6.50%
Gulf Canada Resources Ltd. - ADR (Note 7) 121,400 $ 455,250
Petroleo Brasileiro S.A. (Petrobras) -
ADR (Note 7) 47,925 602,643
YPF Sociedad Anonima - ADR (Note 7) 5,425 156,986
-----------
1,214,879
-----------
DIAMONDS - 0.62%
De Beers Centenary AG - ADR (Note 7) 8,045 115,647
-----------
ELECTRONICS & ELECTRICAL EQUIPMENT - 10.57%
Gold Peak Industries Ltd. (Hong Kong)(Note 7) 51,000 13,662
Motorola, Inc. 14,145 735,540
Philips Electronics N.V.-ADR (Note 7) 11,200 614,600
Scientific-Atlanta, Inc. 1,300 19,419
Texas Instruments, Inc. 8,900 569,044
The Carbide/Graphite Group, Inc. * 1,050 13,125
Ultralife Batteries, Inc.* 2,225 11,890
-----------
1,977,280
-----------
GLASS PRODUCTS - 2.46%
Corning, Inc. 12,400 450,275
Libbey, Inc. 300 9,300
-----------
459,575
-----------
HEALTH SERVICES - 1.31%
MedPartners, Inc.* 68,940 245,599
-----------
HOTELS & LODGING PLACES - 1.47%
CDL Hotels International Ltd. - ADR (Note 7) 107,700 275,303
-----------
INDUSTRIAL & COMMERCIAL MACHINERY - 0.24%
Comfort Systems USA, Inc.* 975 18,525
Lam Research Corp. * 750 10,828
NN Ball & Roller, Inc. 2,375 16,031
-----------
45,384
-----------
JEWELRY - 0.13%
Jostens, Inc. 1,100 24,819
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
------- -----------
PAPER & ALLIED PRODUCTS - 10.13%
Aracruz Celulose S.A. - ADR (Note 7) 46,600 $ 390,275
Asia Pulp & Paper Co. Ltd. - ADR (Note 7) 41,200 342,475
Fort James Corp. 13,200 532,125
Kimberly-Clark Corp. 12,275 592,269
Schweitzer-Mauduit International, Inc. 1,075 19,552
Stone Container Corp. 1,925 18,408
-----------
1,895,104
-----------
PRINTING & PUBLISHING - 2.76%
Scholastic Corp.* 650 25,634
South China Morning Post (Holdings) Ltd.-ADR (Note 7) 183,425 491,359
-----------
516,993
-----------
REFUSE SYSTEMS - 0.08%
Newpark Resources, Inc. * 1,625 15,336
-----------
RESTAURANTS - 3.43%
McDonald's Corp. 9,585 640,997
-----------
RETAIL SPECIALTY STORES - 0.68%
Hancock Fabrics, Inc. 10,000 86,875
Talbots, Inc. 1,800 40,838
-----------
127,713
SOFTWARE - 3.00% -----------
Oracle Corp. * 19,000 561,688
-----------
TECHNICAL INSTRUMENTS & SUPPLIES - 10.50%
MEASURING & CONTROLLING DEVICES - 5.80%
Millipore Corp. 26,350 648,867
Teradyne, Inc.* 13,400 435,500
-----------
1,084,367
-----------
OPTICAL SUPPLIES - 0.04%
Sola International, Inc.* 425 8,155
-----------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 4.61%
Eastman Kodak Co. 11,140 863,350
-----------
SURGICAL & MEDICAL INSTRUMENTS - 0.05%
CardioGenesis Corp.* 1,675 8,584
-----------
1,964,456
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<C> <C>
<S>
VALUE
SHARES/PRINCIPAL (NOTE 2)
AMOUNT
--------------
TELECOMMUNICATION SERVICES - 0.98%
Microcell Telecommunications, Inc. - ADR*(Note 7) 3,375 $ 17,508
Telecomunicacoes Brasileiras S.A.(Telebras) -
ADR*(Note 7) 2,175 165,164
------------
182,672
------------
TESTING LABORATORIES - 0.08%
Paradigm Geophysical Ltd. * 2,525 14,045
------------
TEXTILE MILL PRODUCTS - 0.12%
Albany International Corp. - Class A 1,260 22,995
------------
TRANSPORTATION - 3.55%
RAILROAD - 3.45%
Canadian National Railway Co. - ADR (Note 7) 12,275 619,120
Guangshen Railway Co., - Ltd. - ADR (Note 7) 3,400 25,500
------------
644,620
WATER - 0.10% ------------
Trico Marine Services, Inc.* 2,600 18,525
------------
663,145
------------
TOTAL COMMON STOCK
(Identified Cost $18,376,149) 15,805,070
------------
U.S. TREASURY SECURITIES - 6.71%
U.S. Treasury Note, 5.50%, 3/31/2003 $ 5,000 5,233
U.S. Treasury Bond, 6.875%, 8/15/2025 210,000 254,822
U.S. Treasury Bond, 6.50%, 11/15/2026 855,000 994,739
------------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $1,157,911) 1,254,794
------------
SHORT-TERM INVESTMENTS - 4.62%
Dreyfus Treasury Cash Management Fund
(Identified Cost $864,245) 864,245 864,245
------------
TOTAL INVESTMENTS - 95.83%
(Identified Cost $20,398,305) 17,924,109
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C>
VALUE
(NOTE 2)
OTHER ASSETS, LESS LIABILITIES - 4.17% $ 780,448
------------
NET ASSETS - 100% $18,704,557
============
</TABLE>
*Non-income producing security
**Security Priced by Advisor
<TABLE>
<CAPTION>
<S> <C>
<C>
FEDERAL TAX INFORMATION:
At October 31, 1998, the net unrealized depreciation based on identified cost for
federal income tax purposes of $20,563,642 was as follows:
Aggregate gross unrealized appreciation for all investments in $ 998,706
which there was an excess of value over tax cost
Aggregate gross unrealized depreciation for all investments in
which there was an excess of tax cost over value (3,638,239)
-------------
UNREALIZED DEPRECIATION - NET ($2,639,533)
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
<S> <C>
OCTOBER 31, 1998
ASSETS:
Investments, at value (identified cost $20,398,305)(Note 2) $17,924,109
Cash 53,874
Receivable for securities sold 755,657
Interest receivable 28,758
Dividends receivable 25,438
------------
TOTAL ASSETS 18,787,836
------------
LIABILITIES:
Accrued management fees (Note 3) 17,521
Accrued Directors' fees (Note 3) 1,707
Transfer agent fees payable (Note 3) 347
Payable for fund shares repurchased 51,416
Audit fee payable 10,238
Other payables and accrued expenses 2,050
------------
TOTAL LIABILITIES 83,279
------------
NET ASSETS FOR 1,546,424 SHARES OUTSTANDING. $18,704,557
============
NET ASSETS CONSIST OF:
Capital stock $ 15,464
Additional paid-in-capital 20,173,439
Undistributed net investment income 107,296
Accumulated net realized gain on investments 882,554
Net unrealized depreciation on investments (2,474,196)
------------
TOTAL NET ASSETS $18,704,557
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($18,704,557/1,546,424 shares) $ 12.10
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
<S> <C>
FOR THE YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld, $6,964) $ 272,330
Interest 111,518
------------
Total Investment Income 383,848
------------
EXPENSES:
Management fees (Note 3) 156,797
Directors' fees (Note 3) 7,696
Transfer agent fees (Note 3) 3,763
Audit fee 13,499
Registration and filing fees 10,000
Custodian fee 9,164
Miscellaneous 6,513
------------
Total Expenses 207,432
Less Reduction of Expenses (Note 3) (19,276)
------------
Net Expenses 188,156
------------
NET INVESTMENT INCOME 195,692
------------
REALIZED AND UNREALIZED GAIN(LOSS) ON
INVESTMENTS:
Net realized gain on investments (identified cost basis) 983,037
Net change in unrealized depreciation on investments (2,448,394)
------------
NET REALIZED AND UNREALIZED GAIN(LOSS)
ON INVESTMENTS (1,465,357)
------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS $(1,269,665)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
For the For the
Year Ended Year Ended
10/31/98 10/31/97
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 195,692 $ 52,531
Net realized gain on investments 983,037 1,008,486
Net change in unrealized depreciation on investments
(2,448,394) (64,888)
------------- -------------
Net increase (decrease) from operations
(1,269,665) 996,129
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income (141,415) (26,434)
From net realized gain on investments (1,010,011) (11,941)
------------- -------------
Total distributions to shareholders (1,151,426) (38,375)
------------- -------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share
transactions (Note 5) 11,273,954 7,319,949
------------- -------------
Net increase in net assets 8,852,863 8,277,703
NET ASSETS:
Beginning of period 9,851,694 1,573,991
------------- -------------
END OF PERIOD (Including undistributed net
Investment income of $107,296 and $29,439, respectively)
$ 18,704,557 $ 9,851,694
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C>
For the For the For the
Year Year Ended Year
Ended Ended
10/31/98 10/31/97 10/31/96
---------- ------------- ----------
Per share data (for a share outstanding throughout
each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 14.24 $ 11.38 $ 10.00
---------- ------------- ----------
Income from investment operations:
Net investment income* 0.134 0.101 0.155
Net realized and unrealized gain (loss) on investments (0.935) 2.919 1.356
---------- ------------- ----------
Total from investment operations (0.801) 3.020 1.511
---------- ------------- ----------
Less distributions to shareholders:
From net investment income (0.123) (0.082) (0.131)
From net realized gain on investments (1.216) (0.078) --
---------- ------------- ----------
Total distributions to shareholders (1.339) (0.160) (0.131)
---------- ------------- ----------
NET ASSET VALUE - END OF PERIOD $ 12.10 $ 14.24 $ 11.38
========== ============= ==========
Total return 1 (5.99%) 26.77% 15.21%
Ratios (to average net assets) / Supplemental Data:
Expenses* 1.20% 1.20% 1.20%
Net investment income* 1.25% 0.94% 1.71%
Portfolio turnover 60% 115% 95%
NET ASSETS - END OF PERIOD (000's omitted) $ 18,705 $ 9,852 $ 1,574
========== ============= ==========
</TABLE>
* The investment advisor did not impose all or a portion of its management fee
and in some periods paid a portion of the Fund's expenses. If these expenses
had been incurred by the Fund, and had 1996 expenses been limited to that
allowed by state securities law, the net investment income per share and the
ratios would have been as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Net investment income $0.121 $0.063 $0.037
Ratios (to average net assets):
Expenses 1.32% 1.55% 2.50%
Net investment income 1.13% 0.59% 0.41%
1 Represents aggregate total return for the period indicated.
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Notes to Financial Statements
1. ORGANIZATION
Maximum Horizon Series (the "Fund") is a no-load diversified series of
Exeter Fund, Inc. (the "Corporation"), formerly known as Manning & Napier
Fund, Inc. 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.
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
October 31, 1998, 940 million shares have been designated in total among 19
series, of which 75 million have been designated as Maximum Horizon 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 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
provided by the Fund's pricing service.
Securities for which representative valuations or 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 days or less are valued at
amortized cost, which approximate 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 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.
13
<PAGE>
Notes to Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL INCOME TAXES (continued)
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.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made semi-annually.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, foreign denominated investments,
character reclassification between net income and net gains, or other tax
adjustments. As a result, net investment income (loss) and net investment
gain (loss) on investment transactions for a reporting period may differ
significantly from distributions to shareholders during such period. As a
result, the Fund may periodically make reclassifications among its capital
accounts without impacting the Fund's net asset value.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars on the following basis: a)
investment securities, other assets and liabilities are converted to U.S.
dollars based upon current exchange rates; and b) purchases and sales of
securities and income and expenses are converted into U.S. dollars based upon
the currency exchange rates prevailing on the respective dates of such
transactions.
Gains and losses attributable to foreign currency exchange rates are recorded
for financial statement purposes as net realized gains and losses on
investments. The portion of both realized and unrealized gains and losses on
investments that result from fluctuations in foreign currency exchange rates
is not separately stated.
MULTIPLE CLASSES OF SHARES OF COMMON STOCK
The Fund is authorized to issue five classes of shares (Class A, Class B,
Class C, Class D, and Class E shares). Currently, only Class A shares have
been issued. The five classes of shares differ in their respective
distribution and service fees. All shareholders bear the common expenses of
the Fund pro rata based on the average daily net assets of each class, without
distinction between share classes. Dividends are declared separately for each
class. No class has preferential dividend rights; differences in per share
dividend rates are generally due to differences in separate class expenses.
14
<PAGE>
Notes to Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
OTHER
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
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 1.0% of the Fund's average
daily net assets. The fee amounted to $156,797 for the year ended October 31,
1998.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Fund with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise
maintain the Fund's organization. The Advisor also provides the Fund with
necessary office space and portfolio accounting and bookkeeping services. The
salaries of all officers of the Fund and of all Directors who are "affiliated
persons" of the Fund or of the Advisor, and all personnel of the Fund or of
the Advisor performing services relating to research, statistical and
investment activities are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary, pay
other expenses of the Fund in order to maintain total expenses for the Fund at
no more than 1.20% of average daily net assets each year. Accordingly, the
Advisor waived fees of $19,276 for the year ended October 31, 1998, which is
reflected as a reduction of expenses on the Statement of Operations. The fee
waiver and assumption of expenses by the Advisor is voluntary and may be
terminated at any time.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $3,763 for the year ended October 31,
1998.
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 $7,696 for the year
ended October 31, 1998.
15
<PAGE>
Notes to Financial Statements
4. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1998, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$15,919,937 and $8,200,054, respectively. Purchases and sales of United
States Government securities, other than short-term securities, were
$1,695,816 and $610,049, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Maximum Horizon Series Class A Common Stock
were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Year For the Year
Ended 10/31/98 Ended 10/31/97
---------------- ----------------
Shares Amount Shares Amount
---------------- ----------- ---------------- -----------
Sold 1,001,792 13,203,479 604,488 $8,008,694
Reinvested 90,611 1,148,470 2,983 38,375
Repurchased (237,720) (3,077,995) (54,012) (727,120)
---------------- ----------- ---------------- -----------
Net increase 854,683 11,273,954 553,459 $7,319,949
================ =========== ================ ===========
</TABLE>
The Advisor owned 14,184 shares on October 31, 1998 and 12,820 shares on
October 31, 1997.
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 October 31, 1998.
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. These risks include revaluation of currencies and future adverse
political and economic developments. Moreover, securities of foreign
companies and foreign governments may be less liquid and their prices more
volatile than those of securities of comparable domestic companies and the
United States Government.
16
<PAGE>
Independent Auditors' Report
To the Directors of Exeter Fund Inc.
and Shareholders of Maximum Horizon Series:
We have audited the accompanying statement of assets and liabilities including
the investment portfolio, of Maximum Horizon Series (one of the series
constituting Exeter Fund, Inc., formerly Manning & Napier Fund, Inc.) as of
October 31, 1998, the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended October 31, 1998,
and 1997, and the financial highlights for each of the years in the three-year
period ended October 31, 1998. These financial statements and financial
highlights are the responsibility of the Fund's 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 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 investments owned as of October 31, 1998
by correspondence with the custodian. An audit also includes assessing The
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Maximum
Horizon Series at October 31, 1998, the results of its operations, the changes
in its net assets and its financial highlights for the respective stated
periods in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
December 4, 1998
17
<PAGE>
<PAGE>
Exeter Fund, Inc.
Flexible Yield Series I
Annual Report
October 31, 1998
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
Fixed income management is primarily an economic exercise. With the growth of
global trade, the ability of electronic commerce to connect geographically
diverse regions, and the development of highly efficient, fully integrated
financial markets, in an economic sense, the world has shrunk. That means
fixed income managers can no longer rely on a domestic economic perspective.
They must think globally, since global factors will dictate how their
portfolios perform.
With that in mind, this letter will discuss some of the global events that
have affected your fixed income portfolios over the last few months. The
proverbial "watershed" event occurred in August of this year when Russia
effectively defaulted on its internal debt and the rest of the world concluded
that the Russian economy was about to implode. That triggered a reassessment
of all emerging market debt and what followed was a general flight to quality.
One of the primary beneficiaries of this was the U.S. fixed income market.
However, not all sectors of the market benefited equally. The vast majority
of the money flowed into U.S. Treasuries, causing their yields to move down
much faster than all other fixed income sectors (i.e., agencies, corporate
bonds, mortgages, and asset-backed securities).
Longer-term U.S. Treasuries performed the best at first. Shorter-term U.S.
Treasury securities are much more dependent on the actions of the Federal
Reserve, and the Fed did not cut short-term rates until the beginning of
October. The Fed's focus was a touch different. It was more concerned with
the growing credit crunch conditions that were associated with the problems in
Russia, the spread of the Asian contagion to Latin America, and the collapse
of a number of high-profile hedge funds. The problems at the hedge funds were
due to over-leverage during a period when emerging market securities, and most
non-Treasury securities, were under duress. The combination of these events
and the defaults they engendered caused banks to reassess their lending
standards. As a result, banks reigned in their standards, and made credit a
touch more difficult to get. That concerned the Fed, and it cut short-term
interest rates on two separate occasions.
By the end of October, interest rates were down more than 100 basis points
(1.00%) for the twelve months at all maturity levels, with three-quarters of
that decline coming over the last six months. Because lower interest rates
lead to higher bond prices, the performance of the Flexible Yield Series I
reflects the decline in rates, and the Series posted a solid return for the
fiscal year ending October 31. Flexible Yield Series I had a total return of
7.57% over the last 12 months. By comparison,
1
<PAGE>
Management Discussion and Analysis
the Merrill Lynch Short-Term Government Index did a touch better at 7.70%.
Although the Series benefited from a longer average maturity relative to the
benchmark and from an underweighting in bonds other than Treasuries, the index
returns do not reflect any fees or expenses, and therefore the index return
was slightly higher than the Series. The Series continues to be positioned
slightly longer than its benchmark and underweighted in corporates, mortgages,
and other non-U.S. Treasury securities.
Even domestically, global events have dictated how the financial markets have
performed. As some investors have learned, failure to account for global
forces can be expensive.
As always, it has been a pleasure helping you meet your investment objectives,
and we look forward to helping you meet those goals in the future. We hope
you and your family have a safe and happy holiday season.
Sincerely,
Exeter Asset Management
[graphic]
<pie chart>
Data for pie chart to follow:
Effective Maturity - As of 10/31/98
Less than 1 Year - 17%
1-2 Years - 21%
2-3 Years - 3%
3-4 Years - 32%
More than 4 Years - 27%
2
<PAGE>
Performance Update as of October 31, 1998
Exeter Fund, Inc. - Flexible Yield Series I
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
One Year $ 10,757 7.57% 7.57%
Inception 2 $ 12,935 29.35% 5.61%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Merrill Lynch U.S. Treasury Short-Term Index
Total Return
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
One Year $ 10,770 7.70% 7.70%
Inception 2 $ 13,302 33.02% 6.24%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - Flexible Yield
Series I from its inception (2/15/94) to
present (10/31/98) as compared to the Merrill
Lynch U.S. Treasury Short-Term Index.1
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C>
Exeter Fund, Inc. Flexible Merril Lynch U.S. Treasury
Date Yield Series I Short-Term Index
02/15/94 10,000 10,000
12/31/94 9,924 10,030
12/31/95 10,995 11,133
10/31/96 11,441 11,598
10/31/97 12,025 12,350
10/31/98 12,935 13,302
</TABLE>
1 The Merrill Lynch U.S. Treasury Short-Term Index is a market
value weighted measure of approximately 58 U.S. Treasury Securities.
The Index is comprised of U.S. Treasury securities with maturities
greater than one year but less than three years. The Index returns assume
reinvestment of coupons and, unlike Fund returns, do not reflect any fees or
expenses.
2 The Fund and Index performance are calculated from February 15, 1994, the
Fund's inception date. The Fund's performance is historical and may not be
indicative of future results.
3
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL VALUE
AMOUNT/SHARES (NOTE 2)
U.S. TREASURY SECURITIES - 89.8%
U.S. TREASURY NOTES
U.S. Treasury Note, 6.50%, 4/30/1999 $ 65,000 $ 65,650
U.S. Treasury Note, 6.00%, 6/30/1999 40,000 40,400
U.S. Treasury Note, 5.625%, 12/31/1999 20,000 20,269
U.S. Treasury Note, 6.875%, 3/31/2000 30,000 31,013
U.S. Treasury Note, 6.75%, 4/30/2000 20,000 20,681
U.S. Treasury Note, 5.375%, 6/30/2000 20,000 20,331
U.S. Treasury Note, 5.875%, 6/30/2000 40,000 40,975
U.S. Treasury Note, 4.50%, 9/30/2000 100,000 100,500
U.S. Treasury Note, 6.25%, 4/30/2001 15,000 15,670
U.S. Treasury Note, 5.625%, 5/15/2001 20,000 20,663
U.S. Treasury Note, 6.625%, 6/30/2001 40,000 42,263
U.S. Treasury Note, 6.25%, 10/31/2001 155,000 163,138
U.S. Treasury Note, 6.25%, 1/31/2002 40,000 42,237
U.S. Treasury Note, 6.25%, 6/30/2002 15,000 15,932
U.S. Treasury Note, 6.00%, 7/31/2002 80,000 84,400
U.S. Treasury Note, 5.625%, 12/31/2002 75,000 78,516
U.S. Treasury Note, 5.50%, 3/31/2003 25,000 26,164
U.S. Treasury Note, 5.375%, 6/30/2003 190,000 198,430
-----------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $1,013,219) 1,027,232
-----------
SHORT-TERM INVESTMENTS - 8.7%
U.S. Treasury Bill, 3/04/1999 40,000 39,337
U.S. Treasury Bill, 10/14/1999 40,000 38,539
Dreyfus Treasury Cash Management Fund 22,164 22,164
-----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $100,040) 100,040
-----------
TOTAL INVESTMENTS - 98.5%
(Identified Cost $1,113,259) 1,127,272
OTHER ASSETS, LESS LIABILITIES - 1.5% 16,597
-----------
NET ASSETS - 100% $1,143,869
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
FEDERAL TAX INFORMATION:
At October 31, 1998, the net unrealized appreciation based on identified cost for
Federal income tax purposes of $1,113,975 was as follows:
Aggregate gross unrealized appreciation for all investments in which
There was an excess of value over tax cost $ 14,581
Aggregate gross unrealized depreciation for all investments in which
There was an excess of tax cost over value (1,284)
----------
UNREALIZED APPRECIATION - NET $13,297
==========
</TABLE>
5
<PAGE>
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
<S> <C>
OCTOBER 31, 1998
ASSETS:
Investments, at value (identified cost $1,113,259)(Note 2) $1,127,272
Interest receivable 19,621
Receivable from investment advisor (Note 3) 20,248
----------
TOTAL ASSETS 1,167,141
----------
LIABILITIES:
Accrued Directors' fees (Note 3) 6,774
Transfer agent fees payable (Note 3) 141
Audit fee payable 8,725
Other payables and accrued expenses 7,632
----------
TOTAL LIABILITIES 23,272
----------
NET ASSETS FOR 108,126 SHARES OUTSTANDING $1,143,869
==========
NET ASSETS CONSIST OF:
Capital stock $ 1,081
Additional paid-in-capital 1,117,633
Undistributed net investment income 8,180
Accumulated net realized gain on investments 2,962
Net unrealized appreciation on investments 14,013
----------
TOTAL NET ASSETS $1,143,869
==========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($1,143,869/108,126 shares) $ 10.58
==========
</TABLE>
The accompanying notes are an integral part of the financial statement.
6
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
<S> <C>
FOR THE YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME:
Interest $ 33,731
---------
EXPENSES:
Management fees (Note 3) 2,058
Directors' fees (Note 3) 7,694
Transfer agent fees (Note 3) 141
Audit fee 9,250
Registration and filing fees 4,250
Legal fees 1,850
Custodian fee 490
Miscellaneous 690
---------
Total Expenses 26,423
Less Reduction of Expenses (Note 3) (22,306)
---------
Net Expenses 4,117
---------
NET INVESTMENT INCOME 29,614
---------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments (identified cost basis) 5,788
Net change in unrealized appreciation on investments 6,173
---------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 11,961
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 41,575
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
For the For the
Year Ended Year Ended
10/31/98 10/31/97
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 29,614 $ 33,077
Net realized gain (loss) on investments 5,788 (2,250)
Net change in unrealized appreciation
on investments 6,173 4,259
------------- -------------
Net increase from operations 41,575 35,086
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income (32,409) (28,418)
From net realized gain on investments -- (1,988)
------------- -------------
Total distributions to shareholders (32,409) (30,406)
------------- -------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase assets from
capital share transactions (Note 5) 484,871 152,255
------------- -------------
Net increase in net assets 494,037 156,935
NET ASSETS:
Beginning of period 649,832 492,897
------------- -------------
END OF PERIOD (including undistributed net
Investment income of $8,180, and $10,842
respectively) $ 1,143,869 $ 649,832
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
For the
Period
For the 2/15/94
For the For the For the Ten Year (commencement
Year Ended Year Ended Months Ended Ended of operations)
10/31/98 10/31/97 10/31/96 12/31/95 to 12/31/94
---------- ------------- --------------- ---------- --------------
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.39 $ 10.27 $ 10.26 $ 9.69 $ 10.00
---------- ------------- --------------- ---------- --------------
Income from investment operations:
Net investment income* 0.468 0.505 0.411 0.464 0.241
Net realized and unrealized gain (loss)
on investments 0.289 0.099 (0.101) 0.566 (0.317)
---------- ------------- --------------- ---------- --------------
Income from investment operations:
Total from investment operations 0.757 0.604 0.310 1.030 (0.076)
---------- ------------- --------------- ---------- --------------
Income from investment operations:
Less distributions to shareholders:
From net investment income (0.567) (0.456) (0.300) (0.460) (0.234)
From net realized gain on investments -- (0.028) -- -- --
---------- ------------- --------------- ---------- --------------
Income from investment operations:
Total distributions to shareholders (0.567) (0.484) (0.300) (0.460) (0.234)
---------- ------------- --------------- ---------- --------------
Income from investment operations:
NET ASSET VALUE - END OF PERIOD $ 10.58 $ 10.39 $ 10.27 $ 10.26 $ 9.69
========== ============= =============== ========== ==============
Income from investment operations:
Total return 1 7.57% 6.07% 3.11% 10.79% (0.76)%
Ratios (to average net assets)
/Supplemental Data:
Expenses* 0.70% 0.70% 0.70%2 0.70% 0.70%
Net investment income* 5.04% 5.29% 5.25%2 4.99% 4.41%
Portfolio turnover 53% 77% 36% 60% 38%
NET ASSETS - END OF PERIOD
(000's omitted) $ 1,144 $ 650 $ 493 $ 256 $ 231
========== ============= =============== ========== ==============
Income from investment operations:
</TABLE>
* The investment advisor did not impose its management fee and paid a portion
of the Fund's expenses. If these expenses had been incurred by the Fund,
and had 1994, 1995, and 1996 expenses been limited to that allowed by state
securities law, the net investment income per share and the ratios would have
been as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net investment income $0.116 $0.206 $ 0.270 $0.297 $ 0.143
Ratios (to average net assets):
Expenses 4.49% 3.83% 2.50%2 2.50% 2.50%2
Net investment income 1.25% 2.16% 3.45%2 3.19% 2.61%2
1 Represents aggregate total return for the period indicated.
2 Annualized.
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Notes to Financial Statements
1.ORGANIZATION
Flexible Yield Series I (the "Fund") is a no-load diversified series of
Exeter Fund, Inc. (the "Corporation"), formerly Manning & Napier Fund, Inc.
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.
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
October 31, 1998, 940 million shares have been designated in total among 19
series, of which 37.5 million have been designated as Flexible Yield Series I
Class A Common Stock.
2.SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities listed on an exchange are valued at the latest
quoted sales price of the exchange on which the security is traded most
extensively. Securities not traded on valuation date or securities not
listed on an exchange are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed
securities, will normally be valued on the basis of evaluated bid prices
provided by the Fund's pricing service.
Securities for which representative valuations or 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 days or less are valued at
ammortized 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 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.
10
<PAGE>
Notes to Financial Statements
2.SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL INCOME TAXES (continued)
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.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made
quarterly. Distributions are recorded on the ex-dividend date. Distributions
of net realized gains are distributed annually. An additional distribution
may be necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, character reclassification between net
income and net gains, or other required tax adjustments. As a result, net
investment income (loss) and net investment gain (loss) on investment
transactions for a reporting period may differ significantly from
distributions to shareholders during such period. As a result, the Fund may
periodically make reclassifications among its capital accounts without
impacting the Fund's net asset value.
MULTIPLE CLASSES OF SHARES OF COMMON STOCK
The Fund is authorized to issue five classes of shares (Class A, Class B,
Class, C, Class D, and Class E shares). Currently, only Class A shares have
been issued. The five classes of shares differ in their respective
distribution and service fees. All shareholders bear the common expenses of
the Fund pro rata based on the average daily net assets of each class,
without distinction between share classes. Dividends are declared separately
for each class. No class has preferential dividend rights; differences in
per share dividend rates are generally due to differences in separate class
expenses.
OTHER
The preparation of the 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 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 0.35% of the Fund's
average daily net assets. The fee amounted to $2,058 for the year ended
October 31, 1998.
11
<PAGE>
Notes to Financial Statements
3.TRANSACTIONS WITH AFFILIATES(continued)
Under the Fund's Investment Advisory Agreement (the "Agreement"),
personnel of the Advisor provide the Fund with advice and assistance in the
choice of investments and the execution of securities transactions, and
otherwise maintain the Fund's organization. The Advisor also provides the
Fund with necessary office space and portfolio accounting and bookkeeping
services. The salaries of all officers of the Fund and of all Directors who
are "affiliated persons" of the Fund or of the Advisor, and all personnel of
the Fund or of the Advisor performing services relating to research,
statistical and investment activities are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary,
pay other expenses of the Fund in order to maintain total expenses for the
Fund at no more than 0.70% of average daily net assets each year.
Accordingly, the Advisor did not impose any of its fee and paid expenses
amounting to $20,248 for the year ended October 31, 1998, which is reflected
as a reduction of expenses on the Statement of Operations. The fee waiver
and assumption of expenses by the Advisor is voluntary and may be terminated
at any time.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $141 for the year ended October 31,
1998.
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 $7,694 for the
year ended October 31, 1998.
4.PURCHASES AND SALES OF SECURITIES
Purchases and sales of United States Government securities, other than
short-term securities, were $749,225 and $333,115, respectively, for the year
ended October 31, 1998.
12
<PAGE>
Notes to Financial Statements
5.CAPITAL STOCK TRANSACTIONS
Transactions in shares of Flexible Yield Series I Class A Common Stock
were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Year For the Year
Ended 10/31/1998 Ended 10/31/1997
Shares Amount Shares Amount
-------- ------------ -------- ----------
Sold 139,912 $ 1,458,457 53,796 $ 552,351
Reinvested 3,160 32,409 2,812 28,563
Repurchased (97,485) (1,005,995) (42,043) (428,659)
-------- ------------ -------- ----------
Net increase 45,587 $ 484,871 14,565 $ 152,255
======== ============ ======== ==========
</TABLE>
The Advisor owned 12,971 shares on October 31, 1998 and 12,280 shares on
October 31, 1997.
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 October 31, 1998.
13
<PAGE>
Independent Auditors' Report
TO THE DIRECTORS OF EXETER FUND, INC.
AND SHAREHOLDERS OF FLEXIBLE YIELD SERIES I:
We have audited the accompanying statement of assets and liabilities,
including the investment portfolio, of Flexible Yield Series I (one of the
series constituting Exeter Fund, Inc., formerly Manning & Napier Fund, Inc.)
as of October 31, 1998, the related statements of operations for the year
then ended, the statement of changes in net assets for the year ended October
31, 1998 and 1997, and the financial highlights for each of the years in
the three-year period ended October 31, 1998 and the two-year period
ended December 31, 1995. These financial statements and financial highlights
are the responsibility of the Fund's 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 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 investments owned at October 31, 1998 by
correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Flexible Yield
Series I at October 31, 1998, the results of its operations, the changes in
its net assets and its financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
BOSTON, MASSACHUSETTS
DECEMBER 4, 1998
14
<PAGE>
<PAGE>
Exeter Fund, Inc.
Flexible Yield Series II
Annual Report
October 31,1998
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
Fixed income management is primarily an economic exercise. With the growth
of global trade, the ability of electronic commerce to connect geographically
diverse regions, and the development of highly efficient, fully integrated
financial markets, in an economic sense, the world has shrunk. That means
fixed income managers can no longer rely on a domestic economic perspective.
They must think globally, since global factors will dictate how their
portfolios perform.
With that in mind, this letter will discuss some of the global events that
have affected your fixed income portfolio over the last few months. The
proverbial "watershed" event occurred in August of this year when Russia
effectively defaulted on its internal debt and the rest of the world concluded
that the Russian economy was about to implode. That triggered a reassessment
of all emerging market debt and what followed was a general flight to quality.
One of the primary beneficiaries of this was the U.S. fixed income market.
However, not all sectors of the market benefited equally. The vast majority
of the money flowed into U.S. Treasuries, causing their yields to move down
much faster than all other fixed income sectors (i.e., agencies, corporate
bonds, mortgages, and asset backed securities).
Longer term U.S. Treasuries performed the best. Shorter_term U.S. Treasury
securities are much more dependent on the actions of the Federal Reserve, and
the Fed did not cut short term rates until the beginning of October. The
Fed's focus was a touch different. It was more concerned with the growing
credit crunch conditions that were associated with the problems in Russia, the
spread of the Asian contagion to Latin America, and the collapse of a number
of high profile hedge funds. The problems at the hedge funds were due to
over leverage during a period when emerging market securities, and most
non Treasury securities, were under duress. The combination of these events
and the defaults they engendered caused banks to reassess their lending
standards. As a result, banks reigned in their standards, and made credit a
touch more difficult to get. That concerned the Fed, and it cut short term
interest rates on two separate occasions.
By the end of October, interest rates were down more than 100 basis points
(1.00%) for the twelve months at all maturity levels, with three_quarters of
that decline coming over the last six months. Because lower interest rates
lead to higher bond prices, the performance of the Flexible Yield Series II
reflects the decline in rates, and the Series posted a strong return for the
fiscal year ending October 31. Flexible
1
<PAGE>
Management Discussion and Analysis
Yield Series II had a total return of 9.78% over the last 12 months,
outperforming its index, the Merrill Lynch Corporate/ Government Intermediate
Index, which had a total return of 9.19%. The solid return was a function of
relatively longer average maturities and durations compared to the benchmark.
The Series also benefited from an underweighting in the non U.S. Treasury
sectors; those sectors struggled over the last few months. The Series'
portfolio continues to be positioned slightly longer than its benchmark and
underweighted when it comes to corporate bonds, mortgages, and other non U.S.
Treasury securities.
Even domestically, global events have dictated how the financial markets have
performed. As some investors have learned, failure to account for global
forces can be expensive.
As always, it has been a pleasure helping you meet your investment objectives,
and we look forward to helping you meet those goals in the future. We hope
you and your family have a safe and happy holiday season.
Sincerely,
EXETER ASSET MANAGEMENT
[Graphic]
<pie chart>
Data for pie chart to follow:
<TABLE>
<CAPTION>
<S> <C>
Effective Maturity - As of 10/31/98
- -----------------------------------
Less than 1 year 9%
1-2 years 16%
2-3 years 14%
3-5 years 25%
5-7 years 17%
More than 7 years 19%
</TABLE>
2
<PAGE>
Performance Update as of October 31,1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exeter Fund, Inc.-Flexible Yield Series II
- -------------------------------------------
Total Return
---------------
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
----------- ----------------- ---------- ---------
One Year $ 10,978 9.78% 9.78%
Inception 2 $ 13,392 33.92% 6.39%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Merrill Lynch Corporate/Government Intermediate Index
- -----------------------------------------------------
Total Return
---------------
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
----------- ----------------- ---------- ---------
One Year $ 10,919 9.19% 9.19%
Inception 2 $ 13,715 37.15% 6.93%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. _ Flexible Yield
Series II from its inception (2/15/94) to
present (10/31/98) as compared to the Merrill
Lynch Corporate/Government Intermediate
Index. 1
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C>
Exeter Fund, Inc. Merrill Lynch Corporate/Government
Date Flexible Yield Series II Intermediate Index
- -------- ------ ------
02/15/94 10,000 10,000
12/31/94 9,531 9,799
12/31/95 11,182 11,301
10/31/96 11,336 11,672
10/31/97 12,199 12,560
10/31/98 13,392 13,715
</TABLE>
1 The Merrill Lynch Corporate/Government Intermediate Index is a market value
weighted measure of approximately 4,561 corporate and government bonds.
The Index is comprised of investment grade bonds with maturities greater than
one year but less than ten years. The Index returns assume reinvestment of
coupons and, unlike Fund returns, do not reflect any fees or expenses.
2 The Fund and Index performance are calculated from February 15, 1994, the
Fund's inception date. The Fund's performance is historical and may not be
indicative of future results.
3
<PAGE>
Investment Portfolio- October 31,1998
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL AMOUNT/ VALUE
SHARES (NOTE 2)
------------------ ---------
U.S. TREASURY SECURITIES - 92.52 %
U.S. TREASURY NOTES - 92.52%
U.S. Treasury Note, 5.875%, 1/31/1999 $ 35,000 $ 35,109
U.S. Treasury Note, 6.00%, 6/30/1999 20,000 20,200
U.S. Treasury Note, 5.50%, 3/31/2000 20,000 20,306
U.S. Treasury Note, 5.375%, 6/30/2000 25,000 25,414
U.S. Treasury Note, 6.125%, 9/30/2000 55,000 56,805
U.S. Treasury Note, 5.625%, 5/15/2001 55,000 56,822
U.S. Treasury Note, 7.875%, 8/15/2001 30,000 32,728
U.S. Treasury Note, 6.25%, 1/31/2002 50,000 52,797
U.S. Treasury Note, 6.25%, 6/30/2002 45,000 47,798
U.S. Treasury Note, 6.25%, 2/15/2003 40,000 42,900
U.S. Treasury Note, 5.375%, 6/30/2003 20,000 20,888
U.S. Treasury Note, 7.25%, 5/15/2004 100,000 113,500
U.S. Treasury Note, 6.50%, 10/15/2006 75,000 84,047
U.S. Treasury Note 5.625%, 5/15/2008 35,000 37,702
------------------ ---------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $601,061) 647,016
---------
SHORT-TERM INVESTMENTS - 6.39%
Dreyfus Treasury Cash Management Fund
(Identified Cost $44,719) 44,719 44,719
---------
TOTAL INVESTMENTS - 98.91%
(Identified Cost $645,780) 691,735
OTHER ASSETS, LESS LIABILITIES - 1.09% 7,594
---------
NET ASSETS - 100% $699,329
=========
</TABLE>
FEDERAL TAX INFORMATION:
At October 31, 1998, the net unrealized appreciation based on identified cost
for federal income tax purposes of $646,000 was as follows:
<TABLE>
<CAPTION>
<S> <C>
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $ 45,735
---------
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value 0
---------
UNREALIZED APPRECIATION - NET $ 45,735
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
<S> <C>
OCTOBER 31,1998
ASSETS:
Investments, at value (identified cost $645,780)(Note 2) $691,735
Cash 40
Interest receivable 10,817
Receivable from investment advisor (Note 3) 20,228
--------
TOTAL ASSETS 722,820
--------
LIABILITIES:
Accrued Directors' fees (Note 3) 6,774
Transfer agent fees payable (Note 3) 141
Audit fee payable 9,219
Other payables and accrued expenses 7,357
--------
TOTAL LIABILITIES 23,491
--------
NET ASSETS FOR 66,606 SHARES OUTSTANDING $699,329
========
NET ASSETS CONSIST OF:
Capital stock $ 666
Additional paid-in-capital 640,161
Undistributed net investment income 7,807
Accumulated net realized gain on investments 4,740
Net unrealized appreciation on investments 45,955
--------
TOTAL NET ASSETS $699,329
========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($699,329/66,609 shares) $ 10.50
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
<S> <C>
FOR THE YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME:
Interest $ 35,263
---------
EXPENSES:
Management fees (Note 3) 2,639
Directors' fees (Note 3) 7,696
Transfer agent fees (Note 3) 141
Audit fee 9,750
Registration and filing fees 4,249
Legal Fees 1,850
Custodian fee 551
Miscellaneous 684
---------
Total Expenses 27,560
Less Reduction of Expenses (Note 3) (22,867)
---------
Net Expenses 4,693
---------
NET INVESTMENT INCOME 30,570
---------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments (identified cost basis) 5,805
Net change in unrealized appreciation on investments 18,765
---------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 24,570
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 55,140
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
10/31/98 10/31/97
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income 30,570 35,136
Net realized gain on investments 5,805 5,404
Net change in unrealized appreciation
on investments 18,765 11,090
------------ ------------
Net increase from operations 55,140 51,630
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income (31,969) (36,179)
From net realized gain on investments (4,875) (382)
------------ ------------
Total distributions to shareholders (36,844) (36,561)
------------ ------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital
share transactions (Note 5) (37,191) 221,861
------------ ------------
Net increase(decrease) in net assets (18,895) 236,930
------------ ------------
NET ASSETS:
Beginning of period 718,224 481,294
------------ ------------
END OF PERIOD (including undistributed net investment
income of $7,807 and $8,569, respectively) $ 699,329 $ 718,224
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<7>
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR THE FOR THE FOR THE FOR THE
ENDED ENDED ENDED ENDED
10/31/98 10/31/97 10/31/96 12/31/95
---------- ---------- ------------ ----------
Per share data (for a share outstanding throughout
each period):
NET ASSET VALUE -
BEGINNING OF PERIOD $ 10.23 $ 10.10 $ 10.30 $ 9.27
---------- ---------- ------------ ----------
Income from investment operations:
Net investment income* 0.575 0.523 0.445 0.561
Net realized and unrealized gain (loss)
on investments 0.378 0.212 (0.315) 1.019
---------- ---------- ------------ ----------
Total from investment operations 0.953 0.735 0.130 1.580
---------- ---------- ------------ ----------
Less distributions to shareholders:
From net investment income (0.589) (0.597) (0.270) (0.550)
From net realized gain on investments (0.094) (0.008) (0.060) -
---------- ---------- ------------ ----------
Total distributions to shareholders (0.683) (0.605) (0.330) (0.550)
---------- ---------- ------------ ----------
NET ASSET VALUE - END OF PERIOD $ 10.50 $ 10.23 $ 10.10 $ 10.30
========== ========== ============ ==========
Total return 1 9.78% 7.61% 1.38% 17.33%
Ratios (to average net assets) / Supplemental Data:
Expenses* 0.80% 0.80% 0.80%2 0.80%
Net investment income* 5.21% 5.46% 5.55%2 5.38%
Portfolio turnover 31% 58% 5% 35%
NET ASSETS - END OF PERIOD
(000's omitted) $ 699 $ 718 $ 481 $ 438
========== ========== ============ ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FOR THE PERIOD
2/15/94 (COMMENCEMENT
OF OPERATIONS) TO
12/31/94
-------------------
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* 0.269
Net realized and unrealized gain (loss)
on investments (0.738)
-------------------
Total from investment operations (0.469)
-------------------
Less distributions to shareholders:
From net investment income (0.261)
From net realized gain on investments -
-------------------
Total distributions to shareholders (0.261)
-------------------
NET ASSET VALUE - END OF PERIOD $ 9.27
===================
Total return 1 (4.69%)
Ratios (to average net assets) / Supplemental Data:
Expenses* 0.80%2
Net investment income* 5.40%2
Portfolio turnover 0%
NET ASSETS - END OF PERIOD
(000's omitted) $ 396
===================
</TABLE>
* The investment advisor did not impose its management fee and paid a portion
of the Fund's expenses. If these expenses had been incurred by the Fund, and
had 1994, 1995, and 1996 expenses been limited to that allowed by
state securities law, the net investment income per share and the ratios would
have been as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net investment income $0.145 $0.243 $ 0.309 $0.384 $ 0.184
Ratios (to average net assets):
Expenses 4.70% 3.72% 2.50%2 2.50% 2.50%2
Net investment income 1.31% 2.54% 3.85%2 3.68% 3.70%2
1 Represents aggregate total return for the period indicated.
2 Annualized.
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Notes to Financial Statements
1. ORGANIZATION
Flexible Yield Series II (the "Fund") is a no-load diversified series of
Exeter Fund, Inc. (the "Corporation"), formerly known as Manning & Napier
Fund, Inc. 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.
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 October 31,
1998 , 940 million shares have been designated in total among 19 series, of
which 37.5 million have been designated as Flexible Yield Series II Class A
Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities listed on an exchange are valued at the latest quoted
sales price of the exchange on which the security is traded most extensively.
Securities not traded on valuation date or securities not listed on an
exchange are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed securities,
will normally be valued on the basis of evaluated bid prices provided by the
Funds pricing service.
Securities for which representative valuations or 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 Funds Board of Directors.
Short-term investments that mature in sixty 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 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.
9
<PAGE>
Notes to Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL INCOME TAXES(continued)
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
DISTRIBUTION OF INCOME AND GAINS
Distributions to shareholders of net investment income are made quarterly.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, or character reclassification between
net income and net gains, or other required tax adjustments. As a result, net
investment income (loss) and net investment gain (loss) on investment
transactions for a reporting period may differ significantly from
distributions to shareholders during such period. As a result, the Fund may
periodically make reclassifications among its capital accounts without
impacting the Fund's net asset value.
MULTIPLE CLASSES OF SHARES OF COMMON STOCK
The Fund is authorized to issue five classes of shares (Class A, Class B,
Class C, Class D, and Class E). Currently, only Class A shares have been
issued. The five classes of shares differ in their respective distribution
and service fees. All shareholders bear the common expenses of the Fund pro
rata based on the average daily net assets of each class, without distinction
between share classes. Dividends are declared separately for each class. No
class has preferential dividend rights; differences in per share dividend
rates are generally due to differences in separate class expenses.
OTHER
The preparation of the 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 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 0.45% of the Fund's average daily
net assets. The fee amounted to $2,639 for the year ended October 31, 1998.
10
<PAGE>
Notes to Financial Statements
3. TRANSACTIONS WITH AFFILIATES (continued)
Under the Fund's Investment Advisory Agreement (the "Agreement"),
personnel of theAdvisor 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 0.80% of average daily net assets each year. Accordingly, the
Advisor did not impose any of its fee and paid expenses amounting to $20,228
for the year ended October 31, 1998, which is reflected as a reduction of
expenses on the Statement of Operations. The fee waiver and assumption of
expenses by the Advisor is voluntary and may be terminated at any time.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $141 for the year ended October 31, 1998.
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 $7,696 for the year
ended October 31, 1998.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of United States Government securities, other than
short-term securities, were $176,836 and $235,253, respectively, for the year
ended October 31, 1998.
11
<PAGE>
Notes to Financial Statements
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Flexible Yield Series II Class A Common Stock were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Year For the Year
Ended 10/31/98 Ended 10/31/97
--------------- ---------------
Shares Amount Shares Amount
--------------- ---------- --------------- -----------
Sold 21,299 $ 218,417 46,530 $ 461,689
Reinvested 3,668 36,844 3,696 36,561
Repurchased (28,563) (292,452) (27,676) (276,389)
--------------- ---------- --------------- -----------
Net increase(decrease) (3,596) ($37,191) 22,550 $ 221,861
=============== ========== =============== ===========
</TABLE>
The Advisor owned 15,723 shares on October 31, 1998 and 14,700 shares on
October 31, 1997.
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 October 31, 1998.
12
<PAGE>
Independent Auditors' Report
TO THE DIRECTORS OF EXETER FUND, INC.
AND SHAREHOLDERS OF FLEXIBLE YIELD SERIES II:
We have audited the accompanying statement of assets and liabilities,
including the investment portfolio, of Flexible Yield Series II (one of the
series constituting Exeter Fund, Inc., formerly Manning & Napier Fund, Inc.)
as of October 31, 1998, the related statement of operations for the year
then ended, the statement of changes in net assets for the year ended October
31, 1998 and 1997, and the financial highlights for each of the years in
the three-year period ended October 31, 1998 and the two-year period ended
December 31, 1995. These financial statements and financial highlights are
the responsibility of the Fund's 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 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 investments owned at October 31, 1998 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Flexible Yield
Series II at October 31, 1998, the results of its operations, the changes in
its net assets and its financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
BOSTON, MASSACHUSETTS
DECEMBER 4, 1998
13
<PAGE>
<PAGE>
Exeter Fund, Inc.
Flexible Yield Series III
Annual Report
October 31, 1998
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
Fixed income management is primarily an economic exercise. With the growth of
global trade, the ability of electronic commerce to connect geographically
diverse regions, and the development of highly efficient, fully integrated
financial markets, in an economic sense, the world has shrunk. That means
fixed income managers can no longer rely on a domestic economic perspective.
They must think globally, since global factors will dictate how their
portfolios perform.
With that in mind, this letter will discuss some of the global events that
have affected your fixed income portfolio over the last few months. The
proverbial "watershed" event occurred in August of this year when Russia
effectively defaulted on its internal debt and the rest of the world concluded
that the Russian economy was about to implode. That triggered a reassessment
of all emerging market debt and what followed was a general flight to quality.
One of the primary beneficiaries of this was the U.S. fixed income market.
However, not all sectors of the market benefited equally. The vast majority
of the money flowed into U.S. Treasuries, causing their yields to move down
much faster than all other fixed income sectors (i.e., agencies, corporate
bonds, mortgages, and asset-backed securities).
Longer-term U.S. Treasuries performed the best at first. Shorter-term U.S.
Treasury securities are much more dependent on the actions of the Federal
Reserve, and the Fed did not cut short-term rates until the beginning of
October. The Fed's focus was a touch different. It was more concerned with
the growing credit crunch conditions that were associated with the problems in
Russia, the spread of the Asian contagion to Latin America, and the collapse
of a number of high-profile hedge funds. The problems at the hedge funds were
due to over-leverage during a period when emerging market securities, and most
non-Treasury securities, were under duress. The combination of these events
and the defaults they engendered caused banks to reassess their lending
standards. As a result, banks reigned in their standards, and made credit a
touch more difficult to get. That concerned the Fed, and it cut short-term
interest rates on two separate occasions.
By the end of October, interest rates were down more than 100 basis points
(1.00%) for the year at all maturity levels, with three-quarters of that
decline coming over the last six months. Because lower interest rates lead to
higher bond prices, the performance of the Flexible Yield Series III reflects
the decline in rates, and the Series posted a strong return for the fiscal
year ending October 31. The Flexible Yield Series III had a total return of
12.15% over the last 12 months, outperforming
1
<PAGE>
Management Discussion and Analysis
its index, the Merrill Lynch Corporate/Government Bond index, which had a
total return of 10.33%, by a sizable margin. The strong return was a function
of relatively longer average maturities and durations than the benchmark. The
Series also benefited from an underweighting in the non-U.S. Treasury sectors;
those sectors struggled over the last few months. The Series' portfolio
continues to be positioned in bonds with slightly longer maturities than its
benchmark and underweighted when it comes to corporates, mortgages, and other
non-U.S. Treasury securities.
Even domestically, global events have dictated how the financial markets have
performed. As some investors have learned, failure to account for global
forces can be expensive.
As always, it has been a pleasure helping you meet your investment objectives,
and we look forward to helping you meet those goals in the future. We hope
you and your family have a safe and happy holiday season.
Sincerely,
Exeter Asset Management
[graphic]
<pie chart>
Data for pie chart to follow:
Effective Maturity - As of 10/31/98
Less Than 1 year - 6%
1-2 Years - 11%
2-3 Years - 16%
3-5 Years - 15%
5-7 Years - 16%
7-10 Years - 17%
More than 10 Years - 19%
[graphic]
<pie chart>
Data for pie chart to follow:
Portfolio Composition - As of 10/31/98
U.S. Treasury Securities - 82%
Mortgage Backed Securities - 7%
Cash, equivalents, and other assets, less liabilities - 11%
2
<PAGE>
Performance Update as of October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exeter Fund, Inc. - Flexible Yield Series III
Total Return
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
------------------- ------------- -------
One Year $ 11,215 12.15% 12.15%
Inception2 $ 14,066 40.66% 7.26%
</TABLE>
<TABLE>
<CAPTION>
Merrill Lynch Corporate/Government Bond Index
<S> <C> <C> <C>
Total Return
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
------------------- ------------- -------
One Year $ 11,033 10.33% 10.33%
Inception2 $ 14,158 41.58% 7.40%
</TABLE>
The value of a $10,000 Investment in the Exeter Fund, Inc. - Flexible Yield
Series III from its inception (12/20/93) to present (10/31/98) as compared to
the Merrill Lynch Corporate/Government Bond Index.1
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C>
Date Exeter Fund, Inc. - Flexible Yield Series III Merrill Lynch Corporate/Government Bond Index
- ----------- ----------------------------------------------- ----------------------------------------------
12/20/93 10,000 10,000
12/31/93 9,960 10,013
12/31/94 9,380 9,686
12/31/95 11,451 11,532
12/31/96 11,431 11,778
12/31/97 12,542 12,832
12/31/98 14,066 14,158
</TABLE>
1 The Merrill Lynch Corporate/Government Bond Index is a market value
weighted measure of approximately 6,378 corporate and government bonds. The
Index is comprised of investment grade securities with maturities greater than
one year. The Index returns assume reinvestment of coupons and, unlike Fund
returns, do not reflect any fees or expenses.
2 The Fund and Index performance are calculated from December 20, 1993, the
Fund's inception date. The Fund's performance and may not be indicative of
future results.
3
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
U.S. TREASURY SECURITIES - 81.58%
U.S. TREASURY BONDS - 18.60%
U.S. Treasury Bond, 5.625%, 2/15/2006 $ 70,000 $ 74,856
U.S. Treasury Bond, 7.25%, 8/15/2022 50,000 62,344
U.S. Treasury Bond, 6.875%, 8/15/2025 155,000 188,083
-----------
TOTAL U.S. TREASURY BONDS
(Identified Cost $262,649) 325,283
-----------
U.S. TREASURY NOTES - 62.98%
U.S. Treasury Note, 5.125%, 11/30/1998 35,000 35,011
U.S. Treasury Note, 6.00%, 6/30/1999 35,000 35,350
U.S. Treasury Note, 6.375%, 7/15/1999 15,000 15,192
U.S. Treasury Note, 7.75%, 11/30/1999 20,000 20,688
U.S. Treasury Note, 5.50%, 3/31/2000 40,000 40,613
U.S. Treasury Note, 6.25%, 8/31/2000 30,000 31,003
U.S. Treasury Note, 4.50%, 9/30/2000 75,000 75,375
U.S. Treasury Note, 5.375%, 2/15/2001 90,000 92,025
U.S. Treasury Note, 5.625%, 5/15/2001 40,000 41,325
U.S. Treasury Note, 6.625%, 7/31/2001 40,000 42,338
U.S. Treasury Note, 6.25%, 6/30/2002 50,000 53,109
U.S. Treasury Note, 6.375%, 8/15/2002 100,000 106,812
U.S. Treasury Note, 5.625%, 12/31/2002 75,000 78,516
U.S. Treasury Note, 5.875%, 2/15/2004 170,000 181,900
U.S. Treasury Note, 6.50%, 8/15/2005 55,000 61,359
U.S. Treasury Note, 6.50%, 10/15/2006 60,000 67,237
U.S. Treasury Note, 6.25%, 2/15/2007 50,000 55,406
U.S. Treasury Note, 6.625%, 5/15/2007 60,000 68,044
-----------
TOTAL U.S. TREASURY NOTES
(Identified Cost $1,029,943) 1,101,303
-----------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $1,292,592) 1,426,586
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount/Shares (Note 2)
U.S. GOVERNMENT AGENCIES - 6.89%
MORTGAGE BACKED SECURITIES - 2.62%
GNMA, Pool #224199, 9.50%, 7/15/2018 $ 5,944 $ 6,413
GNMA, Pool #299164, 9.00%, 12/15/2020 9,425 10,038
GNMA, Pool #376345, 6.50%, 12/15/2023 29,126 29,446
----------
TOTAL MORTGAGE BACKED SECURITIES
(Identified Cost $41,425) 45,897
----------
OTHER AGENCIES - 4.27%
Federal National Mortgage Association Medium
Term Note, 4.625%, 10/15/2001 75,000 74,660
----------
(Identified Cost $75,234)
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $116,658) 120,557
----------
SHORT-TERM INVESTMENTS - 4.25%
Dreyfus Treasury Cash Management Fund
(Identified Cost $74,256) 74,256 74,256
----------
TOTAL INVESTMENTS - 92.72%
(Identified Cost $1,483,506) 1,621,399
OTHER ASSETS, LESS LIABILITIES - 7.28% 127,272
----------
NET ASSETS - 100% $1,748,671
==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FEDERAL TAX INFORMATION:
At October 31, 1998, the net unrealized appreciation based on identified cost for
federal income tax purposes of $1,483,506 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $138,829
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value (936)
---------
UNREALIZED APPRECIATION - NET $137,893
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
<S> <C>
OCTOBER 31, 1998
ASSETS:
Investments, at value (identified cost $1,483,506)(Note 2) $1,621,399
Cash 116,974
Interest receivable 19,575
Receivable from investment advisor (Note 3) 14,494
----------
TOTAL ASSETS 1,772,442
----------
LIABILITIES:
Accrued Directors' fees (Note 3) 6,772
Transfer agent fees payable (Note 3) 347
Audit fee payable 9,250
Other payables and accrued expenses 7,402
----------
TOTAL LIABILITIES 23,771
----------
NET ASSETS FOR 158,052 SHARES OUTSTANDING $1,748,671
==========
NET ASSETS CONSIST OF:
Capital stock $ 1,581
Additional paid-in-capital 1,552,433
Undistributed net investment income 16,515
Accumulated net realized gain on investments 40,249
Net unrealized appreciation on investments 137,893
----------
TOTAL NET ASSETS $1,748,671
==========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($1,748,671/158,052 shares) $ 11.06
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
<S> <C>
FOR THE YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME:
Interest $ 88,119
---------
EXPENSES:
Management fees (Note 3) 7,221
Directors' fees (Note 3) 7,694
Transfer agent fees (Note 3) 347
Audit fee 9,850
Registration and filing fees 4,250
Custodian fee 2,000
Legal fee 1,850
Miscellaneous 778
---------
Total Expenses 33,990
Less Reduction of Expenses (Note 3) (21,715)
---------
Net Expenses 12,275
---------
NET INVESTMENT INCOME 75,844
---------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments (identified cost basis) 41,155
Net change in unrealized appreciation on investments 51,301
---------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 92,456
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $168,300
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
For the For the
Year Ended Year Ended
10/31/98 10/31/97
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income 75,844 $ 72,788
Net realized gain on investments 41,155 1,966
Net change in unrealized appreciation on investments 51,301 48,709
------------- -------------
Net increase from operations 168,300 123,463
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income (77,682) (73,237)
From net realized gain on investments (763) (4,865)
------------- -------------
Total distributions to shareholders (78,445) (78,102)
------------- -------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase in net assets from capital
share transactions (Note 5) 313,535 202,056
------------- -------------
Net increase 403,390 247,417
NET ASSETS:
Beginning of period 1,345,281 1,097,864
------------- -------------
END OF PERIOD (including undistributed net
investment income of $16,515 and $17,515, respectively) $ 1,748,671 $ 1,345,281
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
For the For the For the For the For the
Year Year Ten Months Year Year
Ended Ended Ended Ended Ended
10/31/98 10/31/97 10/31/96 12/31/95 12/31/94
---------- ---------- ------------- ---------- ----------
Per share data (for a share outstanding
Throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.41 $ 10.13 $ 10.51 $ 9.11 $ 9.95
---------- ---------- ------------- ---------- ----------
Income from investment operations:
Net investment income* 0.531 0.580 0.497 0.582 0.262
Net realized and unrealized gain (loss)
on investments 0.692 0.355 (0.532) 1.393 (0.841)
---------- ---------- ------------- ---------- ----------
Total from investment operations 1.223 0.935 (0.035) 1.975 (0.579)
---------- ---------- ------------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.567) (0.610) (0.345) (0.575) (0.261)
From net realized gain on investments (0.006) (0.045) -- -- --
---------- ---------- ------------- ---------- ----------
Total distributions to shareholders (0.573) (0.655) (0.345) (0.575) (0.261)
---------- ---------- ------------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 11.06 $ 10.41 $ 10.13 $ 10.51 $ 9.11
========== ========== ============= ========== ==========
Total return 1 12.15% 9.73% (0.18%) 22.09% (5.83%)
Ratios (to average net assets)/Supplemental Data:
Expenses* 0.85% 0.85% 0.85%2 0.85% 0.85%
Net investment income* 5.25% 5.82% 5.98%2 6.13% 6.22%
Portfolio turnover 20% 51% 5% 6% 1%
NET ASSETS - END OF PERIOD (000's omitted) $ 1,749 $ 1,345 $ 1,098 $ 1,159 $ 748
========== ========== ============= ========== ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
For the Period
12/20/93
(commencement
of operations)
TO 12/31/93
-----------------
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* 0.010
Net realized and unrealized gain (loss)
on investments (0.050)
-----------------
Total from investment operations (0.040)
-----------------
Less distributions to shareholders:
From net investment income (0.010)
From net realized gain on investments --
-----------------
Total distributions to shareholders (0.010)
-----------------
NET ASSET VALUE - END OF PERIOD $ 9.95
=================
Total return 1 (0.40%)
Ratios (to average net assets)/Supplemental Data:
Expenses* 0.85%2
Net investment income* 3.85%2
Portfolio turnover 0%
NET ASSETS - END OF PERIOD (000's omitted) $ 75
=================
</TABLE>
* The investment advisor did not impose its management fee and paid a portion
of the Fund's expenses. If these expenseshad been incurred by the Fund, and
had 1993, 1994 and 1996 expenses been limited to that allowed by state
securities law, the net investment income per share and the ratios would have
been as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net investment income $0.379 $0.437 $ 0.360 $0.429 $0.192 $ 0.010
Ratios(to average net assets):
Expenses 2.35% 2.28% 2.50%2 2.46% 2.50% 2.50%2
Net investment income 3.75% 4.39% 4.33%2 4.52% 4.57% 2.20%2
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Notes to financial Statements
1. ORGANIZATION
Flexible Yield Series III (the "Fund") is a no-load diversified series of
Exeter Fund, Inc. (the "Corporation"), formerly known as Manning & Napier
Fund, Inc. 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.
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 October 31,
1998, 940 million shares have been designated in total among 19 series, of
which 37.5 million have been designated as Flexible Yield Series III Class A
Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities listed on an exchange are valued at the latest quoted
sales price of the exchange on which the security is traded most extensively.
Securities not traded on valuation date or securities not listed on an
exchange are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed securities,
will normally be valued on the basis of evaluated bid prices provided by the
Fund's pricing service.
Securities for which representative valuations or 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 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 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.
10
<PAGE>
Notes to Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL INCOME TAXES (continued)
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.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made quarterly.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, character reclassification between net
income and net gains, or other tax adjustments. As a result, net investment
income (loss) and net investment gain (loss) on investment transactions for a
reporting period may differ significantly from distributions to shareholders
during such period. As a result, the Fund may periodically make
reclassifications among its capital accounts without impacting the Fund's net
asset value.
MULTIPLE CLASSES OF SHARES OF COMMON STOCK
The Fund is authorized to issue five classes of shares (Class A, Class B,
Class C, Class D, and Class E). Currently, only Class A shares have been
issued. The five classes of shares differ in their respective distribution
and service fees. All shareholders bear the common expenses of the Fund pro
rata based on the average daily net assets of each class, without distinction
between share classes. Dividends are declared separately for each class. No
class has preferential dividend rights; differences in per share dividend
rates are generally due to differences in separate class expenses.
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 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 $7,221 for the year ended
October 31, 1998.
11
<PAGE>
Notes to Financial Statements
3. TRANSACTIONS WITH AFFILIATES (continued)
Under the Fund's Investment Advisory Agreement (the "Agreement"),
personnel of the Advisor provide the Fund with advice and assistance in the
choice of investments and the execution of securities transactions, and
otherwise maintain the Fund's organization. The Advisor also provides the
Fund with necessary office space and portfolio accounting and bookkeeping
services. The salaries of all officers of the Fund and of all Directors who
are "affiliated persons" of the Fund or of the Advisor, and all personnel of
the Fund or of the Advisor performing services relating to research,
statistical and investment activities are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary,
pay other expenses of the Fund in order to maintain total expenses for the
Fund at no more than 0.85% of average daily net assets each year.
Accordingly, the Advisor did not impose any of its fee and paid expenses
amounting to $14,494 for the year ended October 31, 1998, which is reflected
as a reduction of expenses on the Statement of Operations. The fee waiver and
assumption of expenses by the Advisor is voluntary and may be terminated at
any time.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $347 for the year ended October 31, 1998.
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 $7,694 for the
year ended October 31, 1998.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of United States Government securities, other than
short-term securities, were $438,013 and $275,215, respectively, for the year
ended October 31, 1998.
12
<PAGE>
Notes to Financial Statements
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Flexible Yield Series III Class A Common Stock were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Year For the Year
Ended 10/31/98 Ended 10/31/97
---------------- ----------------
Shares Amount Shares Amount
---------------- ---------- ---------------- ----------
Sold 64,913 $ 701,793 76,364 $ 754,896
Reinvested 6,198 65,259 6,790 67,166
Repurchased (42,333) (453,517) (62,307) (620,006)
---------------- ---------- ---------------- ----------
Net increase 28,778 $ 313,535 20,847 $ 202,056
================ ========== ================ ==========
</TABLE>
The Advisor owned 12,153 shares on October 31, 1998 and 11,513 shares on
October 31, 1997.
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 October 31, 1998.
13
<PAGE>
Independent Auditors' Report
TO THE DIRECTORS OF EXETER FUND, INC.
AND SHAREHOLDERS OF FLEXIBLE YIELD SERIES III:
We have audited the accompanying statement of assets and liabilities,
including the investment portfolio, of Flexible Yield Series III(one of the
series constituting Exeter Fund, Inc., formerly Manning & Napier Fund, Inc.)
as of October 31, 1998, the related statement of operations for the year
then ended, the statement of changes in net assets for the year ended October
31, 1998 and 1997, and the financial highlights for each of the years in the
three-year period ended October 31, 1998 and the three-year period ended
December 31, 1995. These financial statements and financial highlights are
the responsibility of the Fund's 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 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 investments owned at October 31, 1998 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Flexible Yield
Series III at October 31, 1998, the results of its operations, the changes in
its net assets and its financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
BOSTON, MASSACHUSETTS
DECEMBER 4, 1998
14
<PAGE>
<PAGE>
Exeter Fund, Inc.
Tax Managed Series
Annual Report
October 31, 1998
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
The U.S. economy has continued to slow over the past six months as domestic
corporate profits are estimated to be growing at the second slowest pace since
the 1990-91 recession, due to the continued financial problems in Asia and an
increase in domestic wages. Weak demand for U.S. exports and global
deflationary pressures continued to limit earnings growth, while high
valuation levels for large capitalization U.S. stocks contributed to
disappointments for equity investors. Meanwhile, the Pacific Rim crisis has
spread across one-third of the world Gross Domestic Product, leaving no
country unaffected.
Even the U.S. market was not immune. The worst of the volatility hit in
August, by the end of which the average stock listed on the New York Stock
Exchange was down 16.23% for the year, while one out of every three NYSE
stocks was down 30% or more. Perhaps of most concern looking forward, the
spread between the overvaluation of the narrow, large cap market and the
broader market became even wider. As a result of the high valuations and
potential for sustained weakness in U.S. stock prices, we have positioned the
portfolios' stock allocation away from blue chips and toward foreign stocks
and other sectors that have already experienced significant declines from
their highs.
Naturally, the difficult stock environment influenced the Tax Managed Series,
resulting in a total return of -2.27% over the last 12 months. While our
portfolio has experienced some volatility as the crisis has unfolded, we
believe that our current focus on stocks with lower valuations has positioned
the portfolio to benefit in the future.
We took advantage of the stock market volatility over the past six months both
by selling some holdings in order to generate losses to offset gains in the
portfolio and by buying stocks at reduced prices. We will continue to utilize
such management techniques which help minimize the taxable distributions made
by the Series.
As always, it has been a pleasure helping you meet your investment objectives,
and we look forward to helping you meet those goals in the future. We hope
you and your family have a safe and happy holiday season.
Sincerely,
Exeter Asset Management
1
<PAGE>
[graphic]
<pie chart>
Data for pie chart to follow:
<TABLE>
<CAPTION>
<S> <C>
Portfolio Composition - As of 10/31/98
Apparel 3%
Software 5%
Chemical & Allied Products 9%
Computer Equipment 7%
Crude Petroleum & Natural Gas 5%
Electronics & Electrical Equipment 7%
Food & Beverages 7%
Glass Products 5%
Nondurable Goods 4%
Paper & Allied Products 10%
Restaurants 6%
Retail-Specialty Stores 5%
Technical Instruments & Supplies 8%
Telecommunication Service 3%
Cash equivalents, and liabilities,
less other assets 4%
Miscellaneous* 12%
*Miscellaneous
Air Transportation
Business Services
Computer Integrated Systems Design
Credit Institutions
Leather and Leather Products
Transportation - Railroad
Utilities- Electric
</TABLE>
2
<PAGE>
Performance Update as of October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exeter Fund, Inc. - Tax Managed Series
Total Return
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
One Year $ 9,773 -2.27% -2.27%
Inception 2 $ 14,855 48.55% 14.09%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Standard & Poor's 500 Total Return
Total Return
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
One Year $ 12,199 21.99% 21.99%
Inception 2 $ 19,996 99.96% 25.98%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Value Line Index
------------------
Total Return
-------------
Through Growth of $10,000 Average
10/31/98 Investment Cumulative Annual
------------------ ------------- --------
One Year $ 9,147 -8.53% -8.53%
Inception 2 $ 12,805 28.05% 8.58%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - Tax Managed
Series from its inception (11/1/95) to present
(10/31/98) as compared to the Standard &
Poor's (S&P) 500 Total Return Index and
the Value Line Index. 1
[graphic]
<line chart>
Data for chart to follow:
<TABLE>
<CAPTION>
<C> <S> <C> <C>
Exeter Fund, Inc. Standard & Poor's 500
Tax Managed Series Total Return Index Value Line Index Total Return Index
11/01/95 10,000 10,000 10,000
04/30/96 10,980 11,376 11,154
10/31/96 11,630 12,408 11,198
04/30/97 13,170 14,233 11,780
10/31/97 15,200 16,392 13,998
04/30/98 17,228 20,076 15,708
10/31/98 14,855 19,996 12,805
</TABLE>
1 The Standard & Poor's (S&P) 500 Total Return Index is an unmanaged
Capitalization-weighted measure of approximately 500 widely held common stocks
listed on the New York Stock Exchange, American Stock Exchange, and
Over-the-Counter market. The Index returns assume reinvestment of income and,
unlike Fund returns, do not reflect any fees or expenses. The value line
index is an unmanaged index that consists of approximately 1,700 securities
that are traded on the New York Stock Exchange, the NASDAQ stock Market, and
the American Stock Exchange. The index returns are based on a geometric
average of relative price changes of the component stocks and do not reflect
any fees or expenses.
2 The Fund and Index performance are calculated from November 1, 1995, the
Fund's inception date. The Fund's performance is historical and may not be
indicative of future results.
3
<PAGE>
Investment Portfolio- October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE
SHARES (NOTE 2)
COMMON STOCK - 96.54%
AIR TRANSPORTATION - 1.36%
FDX Corp.* 200 $ 10,512
---------
APPAREL - 3.24%
Liz Claiborne, Inc. 850 24,969
---------
BUSINESS SERVICES - 1.53%
National Data Corp. 348 11,789
---------
CHEMICAL & ALLIED PRODUCTS - 9.47%
Celltech plc* (United Kingdom) (Note 7) 3,500 21,979
Johnson & Johnson 175 14,263
Pharmacia & Upjohn, Inc. 375 19,851
Sigma-Aldrich Corp. 550 16,998
---------
73,091
---------
COMPUTER EQUIPMENT - 6.78%
Bell & Howell Co.* 1,250 33,125
International Game Technology 850 19,178
---------
52,303
---------
Computer Integrated Systems Design - 2.21%
HBO & Co. 650 17,062
---------
CREDIT INSTITUTIONS - 0.68%
Metris Companies 159 5,227
---------
CRUDE PETROLEUM & NATURAL GAS - 4.82%
Gulf Canada Resources Ltd. - ADR (Note 7) 6,900 25,875
Petroleo Brasileiro S.A. (Petrobras) -
ADR (Note 7) 900 11,317
---------
37,192
---------
ELECTRONICS & ELECTRICAL EQUIPMENT - 7.38%
Motorola, Inc. 700 36,400
Philips Electronics NV - ADR (Note 7) 375 20,578
---------
56,978
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Shares Value
(Note 2)
FOOD & BEVERAGES - 6.54%
Allied Domecq plc - ADR (Note 7) 2,000 18,321
Diageo plc- ADR (Note 7) 453 19,904
Unilever plc - ADR (Note 7) 300 12,244
------
50,469
------
GLASS PRODUCTS - 5.09%
Corning, Inc. 975 35,405
Libbey, Inc. 125 3,875
------
39,280
------
LEATHER AND LEATHER PRODUCTS - 2.72%
Gucci Group-ADR (Note 7) 550 20,969
------
NONDURABLE GOODS - 4.36%
Cardinal Health, Inc. 356 33,664
------
PAPER & ALLIED PRODUCTS - 9.69%
Asia Pulp & Paper Co. Ltd. - ADR (Note 7) 2,800 23,275
Fort James Corp. 740 29,831
Kimberly-Clark Corp. 450 21,713
------
74,819
------
RESTAURANTS - 5.63%
McDonald's Corp. 650 43,469
------
RETAIL - SPECIALTY STORES - 4.81%
Fingerhut Companies, Inc. 500 4,218
Home Depot, Inc. 300 13,050
Tandy Corp. 400 19,825
------
37,093
------
SOFTWARE - 5.36%
Oracle Corp.* 1,400 41,388
------
TECHNICAL INSTRUMENTS & SUPPLIES - 7.55%
Eastman Kodak Co. 450 34,875
Millipore Corp. 950 23,394
------
58,269
------
TELECOMMUNICATION SERVICES - 3.20%
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR*(Note 7) 325 24,680
------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - October 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Shares Value
(Note 2)
TRANSPORTATION - RAILROAD - 1.96%
Canadian National Railway Co. - ADR (Note 7) 300 $15,131
UTILITIES-ELECTRIC - 2.16%
Enersis SA - ADR (Note 7) 800 16,700
---------
TOTAL COMMON STOCK
(Identified Cost $692,581) 745,054
---------
SHORT-TERM INVESTMENTS - 4.29%
Dreyfus Treasury Cash Management Fund
(Identified Cost $33,134) 33,134 33,134
---------
TOTAL INVESTMENTS - 100.83%
(Identified Cost $725,715) 778,188
LIABILITIES, LESS OTHER ASSETS - (0.83)% (6,442)
---------
NET ASSETS - 100% $771,746
=========
</TABLE>
*Non-income producing security
<TABLE>
<CAPTION>
<S> <C>
FEDERAL TAX INFORMATION:
At October 31, 1998, the net unrealized appreciation based on identified cost for
Federal income tax purposes of $733,803 was as follows:
Aggregate gross unrealized appreciation for all investments
In which there was an excess of value over tax cost $100,229
Aggregate gross unrealized depreciation for all investments in
Which there was an excess of tax cost over value (55,844)
---------
UNREALIZED APPRECIATION - NET $44,385
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
<S> <C>
October 31, 1998
ASSETS:
Investments, at value (identified cost $725,715)(Note 2) $778,188
Cash 575
Dividends receivable 481
Receivable from investment advisor (Note 3) 20,843
---------
TOTAL ASSETS 800,087
---------
LIABILITIES:
Accrued Directors' fees (Note 3) 6,772
Transfer agent fees payable (Note 3) 168
Audit fee payable 9,246
Other payables and accrued expenses 12,155
---------
TOTAL LIABILITIES 28,341
---------
NET ASSETS FOR 53,364 SHARES OUTSTANDING $771,746
=========
NET ASSETS CONSIST OF:
Capital stock $ 534
Additional paid-in-capital 714,468
Undistributed net investment income 5,151
Accumulated net realized loss on investments (880)
Net unrealized appreciation on investments 52,473
---------
TOTAL NET ASSETS $771,746
=========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($771,746/53,364 shares) $ 14.46
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
<S> <C>
FOR THE YEAR ENDED OCTOBER 31, 1998
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld, $339) $ 11,029
Interest 2,535
----------
Total Investment Income 13,564
----------
EXPENSES:
Management fees (Note 3) 7,011
Directors' fees (Note 3) 7,696
Transfer agent fees (Note 3) 168
Audit fee 10,730
Registration and filing fees 5,736
Custodian fee 2,248
Legal fees 1,850
Miscellaneous 828
----------
Total Expenses 36,267
Less Reduction of Expenses (Note 3) (27,854)
----------
Net Expenses 8,413
----------
NET INVESTMENT INCOME 5,151
----------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS:
Net realized loss on investments (identified cost basis) (878)
Net change in unrealized appreciation on investments (37,135)
----------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS (38,013)
----------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS ($32,862)
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
For the For the
Year Year
Ended Ended
10/31/98 10/31/97
---------- ----------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) 5,151 ($289)
Net realized gain(loss) on investments (878) 14,448
Net change in unrealized appreciation on investments (37,135) 58,457
---------- ----------
Net increase(decrease) from operations (32,862) 72,616
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net realized gain on investments (14,205) --
---------- ----------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase from capital share
transactions (Note 5) 294,616 227,201
---------- ----------
Net increase in net assets 247,549 299,817
NET ASSETS:
Beginning of period 524,197 224,380
---------- ----------
END OF PERIOD (including undistributed net investment
Income of $5,151 and $0, respectively) $ 771,746 $ 524,197
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C>
For the For the For the Year
Year Ended Year Ended Ended
10/31/98 10/31/97 10/31/96
-------------- -------------- ---------------
Per share data (for a share outstanding throughout
each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 15.20 $ 11.63 $ 10.00
-------------- -------------- ---------------
Income from investment operations:
Net investment income (loss)* 0.097 (0.008) (0.020)
Net realized and unrealized gain (loss)
on investments (0.440) 3.578 1.650
-------------- -------------- ---------------
Total from investment operations (0.343) 3.570 1.630
-------------- -------------- ---------------
Less distributions to shareholders:
From net realized gain on investments (0.397) -- --
-------------- -------------- ---------------
NET ASSET VALUE - END OF PERIOD $ 14.46 $ 15.20 $ 11.63
============== ============== ===============
Total return 1 (2.27%) 30.70% 16.30%
Ratios (to average net assets) / Supplemental Data:
Expenses* 1.20% 1.20% 1.20%
Net investment income (loss)* 0.73% (0.09%) (0.21%)
Portfolio turnover 65% 103% 78%
NET ASSETS - END OF PERIOD (000's omitted) $ 772 $ 524 $ 224
============== ============== ===============
</TABLE>
*The investment advisor did not impose its management fee and paid a portion
of the Fund's expenses. If these expenses had been incurred by the Fund, and
had 1996 expenses been limited to that allowed by state securities law, the
net investment loss per share and the ratios would have been as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Net investment income (loss) ($0.431) ($0.620) ($0.144)
Ratios (to average net assets):
Expenses 5.17% 8.08% 2.50%
Net investment loss (3.24%) (6.97%) (1.51%)
1 Represents aggregate total return for the period indicated.
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Notes to Financial Statements
1. ORGANIZATION
Tax Managed Series (the "Fund") is a no-load diversified series of Exeter
Fund, Inc. (the "Corporation"), formerly known as Manning & Napier Fund, Inc.
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.
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 October 31,
1998, 940 million shares have been designated in total among 19 series, of
which 37.5 million have been designated as Tax Managed 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 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 provided by the
Fund's pricing service.
Securities for which representative valuations or 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 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 that 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.
11
<PAGE>
Notes to Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES(continued)
FEDERAL INCOME TAXES(continued)
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.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made annually.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, character reclassification between net
income and net gains, or other tax adjustments. As a result, net investment
income (loss) and net investment gain (loss) on investment transactions for a
reporting period may differ significantly from distributions to shareholders
during such period. As a result, the Fund may periodically make
reclassifications among its capital accounts without impacting the Fund's net
asset value.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars on the following basis: a)
investment securities, other assets and liabilities are converted to U.S.
dollars based upon current exchange rates; and b) purchases and sales of
securities and income and expenses are converted into U.S. dollars based upon
the currency exchange rates prevailing on the respective dates of such
transactions.
MULTIPLE CLASSES OF SHARES OF COMMON STOCK
The Fund is authorized to issue five classes of shares (Class A, Class B,
Class C, Class D, and Class E shares). Currently, only Class A shares have
been issued. The five classes of shares differ in their respective
distribution and service fees. All shareholders bear the common expenses of
the Fund pro rata based on the average daily net assets of each class, without
distinction between share classes. Dividends are declared separately for each
class. No class has preferential dividend rights; differences in per share
dividend rates are generally due to differences in separate class expenses.
12
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES(continued)
OTHER
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
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 1.0% of the Fund's average
daily net assets. The fee amounted to $7,011 for the year ended October 31,
1998.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Fund with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise
maintain the Fund's organization. The Advisor also provides the Fund with
necessary office space and portfolio accounting and bookkeeping services. The
salaries of all officers of the Fund and of all Directors who are "affiliated
persons" of the Fund or of the Advisor, and all personnel of the Fund or of
the Advisor performing services relating to research, statistical and
investment activities are paid by the Advisor.
The Advisor has voluntarily agreed to waive its fee and, if necessary, pay
other expenses of the Fund in order to maintain total expenses for the Fund at
no more than 1.2% of average daily net assets each year. Accordingly, the
Advisor did not impose any of its fee and paid expenses amounting to $20,843
for the year ended October 31, 1998, which is reflected as a reduction of
expenses on the Statement of Operations. The fee waiver and assumption of
expenses by the Advisor is voluntary and may be terminated at any time.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $168 for the year ended October 31, 1998.
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 $7,696 for the year
ended October 31, 1998.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1998, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$748,175 and $428,217, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Tax Managed Series Class A Common Stock were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Year For the Year
Ended 10/31/98 Ended 10/31/97
-------------- ----------------
Shares Amount Shares Amount
-------------- ---------- ---------------- ---------
Sold 33,205 $ 509,255 16,041 $239,934
Reinvested 962 13,996 - -
Repurchased (15,294) (228,635) (850) (12,733)
-------------- ---------- ---------------- ---------
Net increase 18,873 $ 294,616 15,191 $227,201
============== ========== ================ =========
</TABLE>
The Advisor owned 12,841 shares on October 31, 1998 and 12,500 shares on
October 31, 1997.
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 October 31, 1998.
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. These risks include revaluation of currencies and future adverse
political and economic developments. Moreover, securities of foreign
companies and foreign governments may be less liquid and their prices more
volatile than those of securities of comparable domestic companies and the
United States Government.
14
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE DIRECTORS OF EXETER FUND, INC.
AND SHAREHOLDERS OF TAX MANAGED SERIES:
We have audited the accompanying statement of assets and liabilities including
the investment portfolio, of Tax Managed Series (one of the series
constituting Exeter Fund, Inc., formerly Manning & Napier Fund, Inc.) as of
October 31, 1998, the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended October 31, 1998
and 1997, and the financial highlights for each of the three years in the
three year period ended October 31, 1998. These financial statements and
financial highlights are the responsibility of the Fund's 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 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 investments owned as of October 31, 1998
by correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Tax Managed
Series at October 31, 1998, the results of its operations, the changes in its
net assets and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
BOSTON, MASSACHUSETTS
DECEMBER 4, 1998
15
<PAGE>
<PAGE>
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] DEFENSIVE SERIES
[NUMBER] 2
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] OCT-31-1998
[PERIOD-START] NOV-01-1997
[PERIOD-END] OCT-31-1998
[PERIOD-TYPE] YEAR
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 5,597,523
[INVESTMENTS-AT-VALUE] 5,678,617
[RECEIVABLES] 59,963
[ASSETS-OTHER] 45,817
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 5,784,397
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 51,238
[TOTAL-LIABILITIES] 51,238
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 5,544,910
[SHARES-COMMON-STOCK] 528,593
[SHARES-COMMON-PRIOR] 164,649
[ACCUMULATED-NII-CURRENT] 99,985
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 7,170
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 81,094
[NET-ASSETS] 5,733,159
[DIVIDEND-INCOME] 11,587
[INTEREST-INCOME] 185,863
[OTHER-INCOME] 0
[EXPENSES-NET] 37,945
[NET-INVESTMENT-INCOME] 159,505
[REALIZED-GAINS-CURRENT] 13,980
[APPREC-INCREASE-CURRENT] 55,114
[NET-CHANGE-FROM-OPS] 228,599
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 91,449
[DISTRIBUTIONS-OF-GAINS] 34,079
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 442,590
[NUMBER-OF-SHARES-REDEEMED] 90,651
[SHARES-REINVESTED] 12,005
[NET-CHANGE-IN-ASSETS] 3,969,123
[ACCUMULATED-NII-PRIOR] 31,890
[ACCUMULATED-GAINS-PRIOR] 27,308
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 30,356
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 65,559
[AVERAGE-NET-ASSETS] 3,794,542
[PER-SHARE-NAV-BEGIN] 10.71
[PER-SHARE-NII] 0.347
[PER-SHARE-GAIN-APPREC] 0.327
[PER-SHARE-DIVIDEND] 0.352
[PER-SHARE-DISTRIBUTIONS] 0.182
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 10.85
[EXPENSE-RATIO] 1.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] BLENDED ASSET SERIES I
[NUMBER] 11
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] OCT-31-1998
[PERIOD-START] NOV-01-1997
[PERIOD-END] OCT-31-1998
[PERIOD-TYPE] YEAR
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 32,026,006
[INVESTMENTS-AT-VALUE] 31,723,372
[RECEIVABLES] 616,996
[ASSETS-OTHER] 72,767
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 32,413,135
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 121,918
[TOTAL-LIABILITIES] 121,918
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 30,323,782
[SHARES-COMMON-STOCK] 2,785,586
[SHARES-COMMON-PRIOR] 1,831,743
[ACCUMULATED-NII-CURRENT] 502,925
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 1,767,144
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (302,634)
[NET-ASSETS] 32,291,217
[DIVIDEND-INCOME] 280,752
[INTEREST-INCOME] 974,806
[OTHER-INCOME] 0
[EXPENSES-NET] 339,370
[NET-INVESTMENT-INCOME] 916,188
[REALIZED-GAINS-CURRENT] 1,773,717
[APPREC-INCREASE-CURRENT] (1,033,391)
[NET-CHANGE-FROM-OPS] 1,656,514
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 693,293
[DISTRIBUTIONS-OF-GAINS] 1,427,315
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1,438,207
[NUMBER-OF-SHARES-REDEEMED] 671,472
[SHARES-REINVESTED] 187,108
[NET-CHANGE-IN-ASSETS] 10,360,727
[ACCUMULATED-NII-PRIOR] 274,768
[ACCUMULATED-GAINS-PRIOR] 1,426,004
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 281,928
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 346,823
[AVERAGE-NET-ASSETS] 28,192,798
[PER-SHARE-NAV-BEGIN] 11.97
[PER-SHARE-NII] 0.357
[PER-SHARE-GAIN-APPREC] 0.349
[PER-SHARE-DIVIDEND] 0.328
[PER-SHARE-DISTRIBUTIONS] 0.758
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.59
[EXPENSE-RATIO] 1.20
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] BLENDED ASSET SERIES II
[NUMBER] 12
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] OCT-31-1998
[PERIOD-START] NOV-01-1997
[PERIOD-END] OCT-30-1998
[PERIOD-TYPE] YEAR
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 67,026,727
[INVESTMENTS-AT-VALUE] 63,055,142
[RECEIVABLES] 3,093,090
[ASSETS-OTHER] 116,924
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 66,265,156
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 292,134
[TOTAL-LIABILITIES] 292,134
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 65,185,769
[SHARES-COMMON-STOCK] 5,234,961
[SHARES-COMMON-PRIOR] 3,466,675
[ACCUMULATED-NII-CURRENT] 798,686
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 3,960,153
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (3,971,586)
[NET-ASSETS] 65,973,586
[DIVIDEND-INCOME] 772,650
[INTEREST-INCOME] 1,509,035
[OTHER-INCOME] 0
[EXPENSES-NET] 729,598
[NET-INVESTMENT-INCOME] 1,552,087
[REALIZED-GAINS-CURRENT] 3,960,798
[APPREC-INCREASE-CURRENT] (6,481,268)
[NET-CHANGE-FROM-OPS] (968,383)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1,191,632
[DISTRIBUTIONS-OF-GAINS] 6,231,121
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 2,076,628
[NUMBER-OF-SHARES-REDEEMED] 887,579
[SHARES-REINVESTED] 579,237
[NET-CHANGE-IN-ASSETS] 15,050,656
[ACCUMULATED-NII-PRIOR] 437,931
[ACCUMULATED-GAINS-PRIOR] 6,230,776
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 633,708
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 729,598
[AVERAGE-NET-ASSETS] 63,370,804
[PER-SHARE-NAV-BEGIN] 14.69
[PER-SHARE-NII] 0.312
[PER-SHARE-GAIN-APPREC] (0.385)
[PER-SHARE-DIVIDEND] 0.286
[PER-SHARE-DISTRIBUTIONS] 1.731
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 12.60
[EXPENSE-RATIO] 1.15
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] MAXIMUM HORIZON SERIES
[NUMBER] 5
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] OCT-31-1998
[PERIOD-START] NOV-01-1997
[PERIOD-END] OCT-31-1998
[PERIOD-TYPE] YEAR
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 20,398,305
[INVESTMENTS-AT-VALUE] 17,924,109
[RECEIVABLES] 809,853
[ASSETS-OTHER] 53,874
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 18,787,836
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 83,279
[TOTAL-LIABILITIES] 83,279
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 20,188,903
[SHARES-COMMON-STOCK] 1,546,424
[SHARES-COMMON-PRIOR] 691,741
[ACCUMULATED-NII-CURRENT] 107,296
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 882,554
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (2,474,196)
[NET-ASSETS] 18,704,557
[DIVIDEND-INCOME] 272,330
[INTEREST-INCOME] 111,518
[OTHER-INCOME] 0
[EXPENSES-NET] 188,156
[NET-INVESTMENT-INCOME] 195,692
[REALIZED-GAINS-CURRENT] 983,037
[APPREC-INCREASE-CURRENT] (2,448,394)
[NET-CHANGE-FROM-OPS] (1,269,665)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 141,415
[DISTRIBUTIONS-OF-GAINS] 1,010,011
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1,001,792
[NUMBER-OF-SHARES-REDEEMED] 237,720
[SHARES-REINVESTED] 90,611
[NET-CHANGE-IN-ASSETS] 8,852,863
[ACCUMULATED-NII-PRIOR] 29,439
[ACCUMULATED-GAINS-PRIOR] 1,006,980
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 156,797
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 207,432
[AVERAGE-NET-ASSETS] 15,679,652
[PER-SHARE-NAV-BEGIN] 14.24
[PER-SHARE-NII] 0.134
[PER-SHARE-GAIN-APPREC] (0.935)
[PER-SHARE-DIVIDEND] 0.123
[PER-SHARE-DISTRIBUTIONS] 1.216
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 12.10
[EXPENSE-RATIO] 1.20
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] FLEXIBLE YIELD SERIES I
[NUMBER] 13
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] OCT-31-1998
[PERIOD-START] NOV-01-1997
[PERIOD-END] OCT-31-1998
[PERIOD-TYPE] YEAR
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 1,113,259
[INVESTMENTS-AT-VALUE] 1,127,272
[RECEIVABLES] 19,621
[ASSETS-OTHER] 20,248
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,167,141
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 23,272
[TOTAL-LIABILITIES] 23,272
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1,118,714
[SHARES-COMMON-STOCK] 108,126
[SHARES-COMMON-PRIOR] 62,539
[ACCUMULATED-NII-CURRENT] 8,180
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 2,962
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 14,013
[NET-ASSETS] 1,143,869
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 33,731
[OTHER-INCOME] 0
[EXPENSES-NET] 4,117
[NET-INVESTMENT-INCOME] 29,614
[REALIZED-GAINS-CURRENT] 5,788
[APPREC-INCREASE-CURRENT] 6,173
[NET-CHANGE-FROM-OPS] 41,575
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 32,409
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 139,912
[NUMBER-OF-SHARES-REDEEMED] 97,485
[SHARES-REINVESTED] 3,160
[NET-CHANGE-IN-ASSETS] 494,037
[ACCUMULATED-NII-PRIOR] 10,842
[ACCUMULATED-GAINS-PRIOR] (2,963)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2,058
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 26,423
[AVERAGE-NET-ASSETS] 588,088
[PER-SHARE-NAV-BEGIN] 10.39
[PER-SHARE-NII] 0.468
[PER-SHARE-GAIN-APPREC] 0.289
[PER-SHARE-DIVIDEND] 0.567
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.58
[EXPENSE-RATIO] 0.70
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] FLEXIBLE YIELD SERIES II
[NUMBER] 14
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] OCT-31-1998
[PERIOD-START] NOV-01-1997
[PERIOD-END] OCT-30-1998
[PERIOD-TYPE] YEAR
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 645,780
[INVESTMENTS-AT-VALUE] 691,735
[RECEIVABLES] 10,817
[ASSETS-OTHER] 20,268
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 722,820
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 23,491
[TOTAL-LIABILITIES] 23,491
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 640,827
[SHARES-COMMON-STOCK] 66,609
[SHARES-COMMON-PRIOR] 70,205
[ACCUMULATED-NII-CURRENT] 7,807
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 4,740
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 45,955
[NET-ASSETS] 699,329
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 35,263
[OTHER-INCOME] 0
[EXPENSES-NET] 4,693
[NET-INVESTMENT-INCOME] 30,570
[REALIZED-GAINS-CURRENT] 5,805
[APPREC-INCREASE-CURRENT] 18,765
[NET-CHANGE-FROM-OPS] 55,140
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 31,969
[DISTRIBUTIONS-OF-GAINS] 4,875
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 21,299
[NUMBER-OF-SHARES-REDEEMED] 28,563
[SHARES-REINVESTED] 3,668
[NET-CHANGE-IN-ASSETS] (18,895)
[ACCUMULATED-NII-PRIOR] 8,569
[ACCUMULATED-GAINS-PRIOR] 4,447
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2,639
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 27,560
[AVERAGE-NET-ASSETS] 586,543
[PER-SHARE-NAV-BEGIN] 10.23
[PER-SHARE-NII] 0.575
[PER-SHARE-GAIN-APPREC] 0.378
[PER-SHARE-DIVIDEND] 0.589
[PER-SHARE-DISTRIBUTIONS] 0.094
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.50
[EXPENSE-RATIO] 0.80
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] FLEXIBLE YIELD SERIES III
[NUMBER] 15
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] OCT-31-1998
[PERIOD-START] NOV-01-1997
[PERIOD-END] OCT-31-1998
[PERIOD-TYPE] YEAR
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 1,483,506
[INVESTMENTS-AT-VALUE] 1,621,399
[RECEIVABLES] 19,575
[ASSETS-OTHER] 131,468
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,772,442
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 23,771
[TOTAL-LIABILITIES] 23,771
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1,554,014
[SHARES-COMMON-STOCK] 158,052
[SHARES-COMMON-PRIOR] 129,274
[ACCUMULATED-NII-CURRENT] 16,515
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 40,249
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 137,893
[NET-ASSETS] 1,748,671
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 88,119
[OTHER-INCOME] 0
[EXPENSES-NET] 12,275
[NET-INVESTMENT-INCOME] 75,844
[REALIZED-GAINS-CURRENT] 41,155
[APPREC-INCREASE-CURRENT] 51,301
[NET-CHANGE-FROM-OPS] 168,300
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 77,682
[DISTRIBUTIONS-OF-GAINS] 763
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 64,913
[NUMBER-OF-SHARES-REDEEMED] 42,333
[SHARES-REINVESTED] 6,198
[NET-CHANGE-IN-ASSETS] 403,390
[ACCUMULATED-NII-PRIOR] 17,515
[ACCUMULATED-GAINS-PRIOR] 695
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 7,221
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 33,990
[AVERAGE-NET-ASSETS] 1,444,152
[PER-SHARE-NAV-BEGIN] 10.41
[PER-SHARE-NII] 0.531
[PER-SHARE-GAIN-APPREC] 0.692
[PER-SHARE-DIVIDEND] 0.567
[PER-SHARE-DISTRIBUTIONS] 0.006
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.06
[EXPENSE-RATIO] 0.85
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] TAX MANAGED SERIES
[NUMBER] 8
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] OCT-31-1998
[PERIOD-START] NOV-01-1997
[PERIOD-END] OCT-31-1998
[PERIOD-TYPE] YEAR
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 725,715
[INVESTMENTS-AT-VALUE] 778,188
[RECEIVABLES] 481
[ASSETS-OTHER] 21,418
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 800,087
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 28,341
[TOTAL-LIABILITIES] 28,341
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 715,002
[SHARES-COMMON-STOCK] 53,364
[SHARES-COMMON-PRIOR] 34,491
[ACCUMULATED-NII-CURRENT] 5,151
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (880)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 52,473
[NET-ASSETS] 771,746
[DIVIDEND-INCOME] 11,029
[INTEREST-INCOME] 2,535
[OTHER-INCOME] 0
[EXPENSES-NET] 8,413
[NET-INVESTMENT-INCOME] 5,151
[REALIZED-GAINS-CURRENT] (878)
[APPREC-INCREASE-CURRENT] (37,135)
[NET-CHANGE-FROM-OPS] (32,862)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 14,205
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 33,205
[NUMBER-OF-SHARES-REDEEMED] 15,294
[SHARES-REINVESTED] 962
[NET-CHANGE-IN-ASSETS] 247,549
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 14,203
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 7,011
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 36,267
[AVERAGE-NET-ASSETS] 701,391
[PER-SHARE-NAV-BEGIN] 15.20
[PER-SHARE-NII] 0.097
[PER-SHARE-GAIN-APPREC] (0.440)
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] 0.397
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 14.46
[EXPENSE-RATIO] 1.20
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
