August 26, 1998
To Shareholders of the following Series of the Exeter Fund:
Small Cap Series
International Series
World Opportunities Series
Global Fixed Income Series
New York Tax Exempt Series
Ohio Tax Exempt Series
Diversified Tax Exempt Series
Dear Shareholder:
Enclosed are copies of the Semi-Annual Reports for each of the above Series of
the Exeter Fund in which you were invested as of June 30, 1998. These reports
include information about the Series performance as well as portfolio listings
as of that date.
We would be happy to answer any questions you may have about the Semi-Annual
Reports or about your account. Please contact our Fund Services department or
your Client Consultant if we can be of assistance.
Sincerely,
/s/Amy J. Williams
Amy J. Williams
Fund Services Manager
<PAGE>
Exeter Fund, Inc.
Small Cap Series
Semi-Annual Report
June 30, 1998
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
Though the first half of 1998 produced mediocre results for investors in small
cap stocks, the Small Cap Series outperformed the Russell 2000 Total Return
Index, a widely used small cap index during this period. The Series'
performance was led by several stocks within the communications and retail
sectors. Although small cap stocks have recently underperformed larger
company stocks, we expect them to offer strong returns over the long term as
the markets recognize the opportunities in this sector and valuations
relative to larger stocks return to levels closer to their historical
averages. In the meantime, we have identified several attractive opportunities
in the small cap sector.
As the majority of Asian economies continue to weaken, the worldwide demand
for commodities and basic materials has slowed significantly. In many cases,
this has led to significant excess supply and rapidly falling commodity
prices. Share prices for many securities within the basic materials and
energy sectors have fallen dramatically in sympathy with the underlying
commodities. In our opinion, this has led to several attractive buying
opportunities. Historically, natural economic forces have led to the closing
of excess capacity when commodity prices fall too low. This continues until
demand exceeds supply, leading to a cyclical upturn. During the second
quarter, we purchased a number of issues within the energy sector and added to
our positions within the paper sector to capitalize on these trends.
Continued weakness in Asia has delayed the cyclical upturns, but we believe
the long-term outlook for these holdings remains positive.
During the first half of 1998, several stocks in the communications and retail
sectors demonstrated strong performance. While many of these stocks were
eventually sold, we continue to maintain our exposure to retail due to
our belief that the outlook remains positive for this area of the economy.
Retail stocks in general have benefited from the Asian crisis, as the
companies' costs for materials and labor have fallen. At the same time, a
strong U.S. economy has led to continued strength in demand. Though our
exposure to the communications sector declined as several stocks were sold
after appreciating significantly, we remain attracted to this area of
dynamic growth and continue to seek out values within the communications
sector.
One condition of maintaining a strict value-oriented approach to investing is
the possibility that we will move into a position too early. This was the case
during the second quarter of 1998. While many investors wait until there has
been a clear turn in fundamentals, these investors miss a significant portion
of the stock's return. As discussed above, our strategies have led us to
several securities that are attractive and appeared to be undervalued. While
we've outperformed the small cap benchmark so far this year, the
undervaluation of the portfolio is the most significant strength for the
Small Cap Series looking forward.
As always, it is a privilege to serve you.
Sincerely,
Exeter Asset Management
1
<PAGE>
Portfolio Composition (unaudited)
[graphic]
<pie chart>
Data for pie chart to follow:
<TABLE>
<CAPTION>
<S> <C>
Portfolio Composition*- As of 6/30/98
Apparel 3.3%
Chemicals & Allied Products 5.3%
Computer Equipment 4.4%
Electronics & Electrical Equipment 8.1%
Glass Products 3.7%
Industrial & Commercial Machinery 7.7%
Paper & Allied Products 5.9%
Primary Metal Industries 6.0%
Printing & Publishing 4.7%
Retail 6.3%
Computer Integrated Systems Design 5.0%
Technical Instruments & Supplies 5.4%
Transportation 4.5%
Cash, equivalents, other assets, less liabilities 13.9%
Miscellaneous ** 15.8%
** Miscellaneous includes:
Agricultural Production
Distribution - Wholesale
Refuse Systems
Software
Telecommunications
Testing Laboratories
Textile Mill Products
* As a Percentage of net assets
</TABLE>
2
<PAGE>
Performance Update as of June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exeter Fund, Inc. - Small Cap Series
Total Return
Through Growth of $10,000 Average
06/30/98 Investment Cumulative Annual
One Year $ 10,071 0.71% 0.71%
Five Year $ 18,504 85.04% 13.09%
Inception 2 $ 21,521 115.21% 13.22%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
S&P 500 Total Return Index
Total Return
Through Growth of $10,000 Average
06/30/98 Investment Cumulative Annual
One Year $ 13,015 30.15% 30.15%
Five Year $ 28,216 182.16% 23.04%
Inception 2 $ 31,713 217.13% 20.56%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - Small Cap
Series from its current activation (4/30/92)
to present (6/30/98) as compared to the
Standard & Poor's (S&P) 500 Total Return
Index. 1
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C>
Date Exeter Fund, Inc. - Small Cap Series S&P 500 Total Return Index
04/30/92 10,000 10,000
12/31/92 11,610 10,725
12/31/93 13,317 11,799
12/31/94 14,383 11,959
12/31/95 16,497 16,437
12/31/96 18,156 20,206
12/31/97 20,388 26,944
06/30/98 21,521 31,713
</TABLE>
1 The Standard and Poor's (S&P) 500 Total Return Index is an unmanaged
capitalization-weighted measure of 500 widely held common stocks listed on the
New York Stock Exchange, American Stock Exchange, and Over-the-Counter
Market. S&P 500 Total Return Index returns assume reinvestment of dividends
and, unlike Fund returns, do not reflect any fees or expenses.
2 Performance numbers for the Fund and Index are calculated from April 30,
1992, the Fund's current activation date. The Fund's performance is historical
and may not be indicative of future results.
3
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Value
Shares (Note 2)
COMMON STOCK - 86.18%
AGRICULTURAL PRODUCTION - 2.03%
Sylvan, Inc.* 165,000 $ 2,598,750
------------
APPAREL - 3.30%
Novel Denim Holdings, Ltd.* 162,000 4,212,000
------------
CHEMICALS & ALLIED PRODUCTS - 5.31%
Cypress Bioscience, Inc.* 410,000 1,217,208
Orion-Yhtyma OY - B Shares (Finland) (Note 6) 154,000 4,735,951
PT Tri Polyta Indonesia - ADR (Note 6) 746,950 840,319
------------
6,793,478
------------
COMPUTER EQUIPMENT - 4.40%
Bell & Howell Co.* 218,000 5,627,125
------------
COMPUTER INTEGRATED SYSTEMS DESIGN - 5.06%
Apache Medical Systems, Inc.* 725,000 1,404,687
DAOU Systems, Inc. 222,000 5,078,250
------------
6,482,937
------------
DISTRIBUTION - WHOLESALE- 1.66%
Philip Services Corp.* 517,175 2,133,347
------------
ELECTRONICS & ELECTRICAL EQUIPMENT - 8.14%
The Carbide/Graphite Group, Inc. 130,000 3,615,625
Firearms Training Systems, Inc.* 924,700 2,311,750
Gold Peak Industries, Ltd. (Hong Kong)(Note 6) 6,300,000 2,154,657
Ultralife Batteries, Inc.* 275,000 2,337,500
------------
10,419,532
------------
GLASS PRODUCTS - 3.74%
Libbey, Inc. 125,000 4,789,063
------------
INDUSTRIAL & COMMERCIAL MACHINERY - 7.69%
Comfort Systems USA, Inc.* 160,000 3,740,000
Lam Research, Corp. 94,400 1,805,400
NN Ball & Roller, Inc. 360,000 4,297,500
------------
9,842,900
------------
PAPER & ALLIED PRODUCTS - 5.94%
Schweitzer-Mauduit International, Inc. 132,850 3,852,650
Stone Container Corp. 240,000 3,750,000
------------
7,602,650
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Value
Shares (Note 2)
PRIMARY METAL INDUSTRIES - 6.02%
Gibraltar Steel Corp.* 183,000 $ 3,751,500
Wolverine Tube, Inc.* 104,000 3,952,000
-------------
7,703,500
-------------
PRINTING & PUBLISHING - 4.67%
Scholastic Corp.* 150,000 5,981,250
-------------
REFUSE SYSTEMS - 1.74%
Newpark Resources, Inc. 200,000 2,225,000
-------------
RETAIL - 6.29%
Hancock Fabrics, Inc. 213,500 2,668,750
Loehmann's, Inc.* 275,000 1,323,437
Talbots, Inc. 155,000 4,059,063
-------------
8,051,250
-------------
SOFTWARE - 2.81%
HCIA, Inc.* 280,000 3,605,000
-------------
TECHNICAL INSTRUMENTS & SUPPLIES - 5.37%
CardioGenesis Corp.* 207,925 1,104,601
Physio-Control International Corp.* 85,000 2,236,563
Sola International, Inc.* 108,000 3,530,250
-------------
6,871,414
-------------
TELECOMMUNICATION SERVICES - 2.93%
Microcell Telecommunications, Inc.- ADR (Note 6) 417,000 3,753,000
-------------
TESTING LABORATORIES - 1.71%
Paradigm Geophysical, Ltd. 312,350 2,196,226
-------------
TEXTILE MILL PRODUCTS - 2.91%
Albany International Corp. - Class A 155,775 3,728,864
-------------
TRANSPORTATION - 4.46%
Miller Industries, Inc.* 389,500 3,018,625
Trico Marine Services, Inc.* 197,000 2,696,438
-------------
5,715,063
-------------
TOTAL COMMON STOCK
(Identified Cost $116,608,065) 110,332,349
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Amount/ Value
Shares (Note 2)
SHORT-TERM INVESTMENTS - 13.80%
Federal Home Loan Bank Discount Note,
8/03/1998 $ 6,000,000 $ 5,970,410
Federal National Mortgage Association
Discount Note, 8/14/1998 6,000,000 5,960,033
Dreyfus Treasury Cash Management Fund 5,732,995 5,732,995
-------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $17,663,438) 17,663,438
-------------
TOTAL INVESTMENTS - 99.98%
(Identified Cost $134,271,503) 127,995,787
OTHER ASSETS, LESS LIABILITIES - 0.02% 22,593
-------------
NET ASSETS - 100% $128,018,380
=============
</TABLE>
* Non-income producing security
<TABLE>
<CAPTION>
<S> <C>
FEDERAL TAX INFORMATION:
At June 30, 1998, the net unrealized depreciation based on identified cost for federal
income tax purposes of $134,271,503 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $ 12,775,394
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value (19,051,110)
-------------
UNREALIZED DEPRECIATION - NET $ (6,275,716)
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
<S> <C>
JUNE 30, 1998
ASSETS:
Investments, at value (identified cost $134,271,503)(Note 2) $127,995,787
Foreign currency, at value (identified cost $181,317) 178,948
Receivable for fund shares sold 23,190
Dividends receivable 21,350
-------------
TOTAL ASSETS 128,219,275
-------------
LIABILITIES:
Accrued management fees (Note 3) 105,462
Accrued Directors' fees (Note 3) 3,332
Payable for fund shares repurchased 47,864
Payable for closed forward foreign currency exchange
contracts (Note 2) 18,797
Audit fee payable 9,357
Other payables and accrued expenses 16,083
-------------
TOTAL LIABILITIES 200,895
-------------
NET ASSETS FOR 10,054,884 SHARES
OUTSTANDING $128,018,380
=============
NET ASSETS CONSIST OF:
Capital stock $ 100,549
Additional paid-in-capital 115,983,006
Undistributed net investment income 309,154
Accumulated net realized gain on investments 17,903,756
Net unrealized depreciation on investments, foreign currency,
forward foreign currency exchange contracts, and other
assets and liabilities (6,278,085)
-------------
TOTAL NET ASSETS $128,018,380
=============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE - CLASS A
($128,018,380/10,054,884 shares) $ 12.73
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
<S> <C>
FOR THE SIX MONTHS ENDED JUNE 30, 1998
INVESTMENT INCOME:
Dividends (net of withholding) $ 559,059
Interest 454,249
------------
Total Investment Income 1,013,308
------------
EXPENSES:
Management fees (Note 3) 659,115
Directors' fees (Note 3) 3,322
Custodian fee 13,637
Audit fee 11,491
Registration and filing fees 6,590
Printing and postage fees 5,108
Miscellaneous 4,891
------------
Total Expenses 704,154
------------
NET INVESTMENT INCOME 309,154
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on -
Investments (identified cost basis) 11,107,311
Foreign currency and forward foreign currency
exchange contracts 48,046
------------
Net realized gain on investments 11,155,357
------------
Net change in unrealized depreciation on -
Investments (4,521,105)
Foreign currency, forward foreign currency exchange
contracts, and other assets and liabilities (31,725)
------------
Net change in unrealized depreciation on investments (4,552,830)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS 6,602,527
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 6,911,681
============
</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 Six Months
Ended 6/30/98 For the Year
(unaudited) Ended 12/31/97
--------------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) $ 309,154 $ (141,498)
Net realized gain on investments 11,155,357 21,344,730
Net change in unrealized depreciation
on investments (4,552,830) (8,858,291)
--------------------- -----------------
Net increase in net assets from operations 6,911,681 12,344,941
--------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income -- (105,557)
From net realized gain on investments -- (13,616,840)
--------------------- -----------------
Total distributions to shareholders -- (13,722,397)
--------------------- -----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease)from capital share
transactions (Note 5) (493,327) 22,289,055
--------------------- -----------------
Net increase in net assets 6,418,354 20,911,599
NET ASSETS:
Beginning of period 121,600,026 100,688,427
--------------------- -----------------
END OF PERIOD (including undistributed net investment
income of $309,154 and $0, respectively) $ 128,018,380 $ 121,600,026
===================== =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C>
For the Six
Months Ended
06/30/98
(unaudited)
---------------
Per share data (for a share outstanding
throughout each period ):
NET ASSET VALUE - BEGINNING OF PERIOD $ 12.05
---------------
Income from investment operations:
Net investment income (loss) 0.045
Net realized and unrealized gain
on investments 0.635
---------------
Total from investment operations 0.680
---------------
Less distributions to shareholders:
From net investment income --
From net realized gain on investments --
In excess of net realized gain on investment --
---------------
Total distributions to shareholders --
---------------
NET ASSET VALUE - END OF PERIOD $ 12.73
===============
Total return1 5.64%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses 1.07%3
Net investment income (loss) 0.47%3
Portfolio turnover 47%
Average commission rate paid2 $ 0.0102
NET ASSETS - END OF PERIOD
(000'S OMITTED) $ 128,018
===============
1Represents aggregate total return for the period indicated.
2Average commission rate is calculated for Funds with fiscal years
beginning on or after January 1, 1995.
3Annualized.
<S> <C> <C> <C> <C> <C> <C>
For the Years Ended
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
---------- ---------- ---------- ---------- ----------
Per share data (for a share outstanding
throughout each period ):
NET ASSET VALUE - BEGINNING OF PERIOD $ 12.09 $ 11.95 $ 12.92 $ 12.52 $ 11.24
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) (0.015) 0.045 (0.004) (0.066) (0.040)
Net realized and unrealized gain
on investments 1.502 1.112 1.934 1.051 1.700
---------- ---------- ---------- ---------- ----------
Total from investment operations 1.487 1.157 1.930 0.985 1.660
---------- ---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.009) (0.035) -- -- --
From net realized gain on investments (1.518) (0.889) (2.900) (0.585) (0.380)
In excess of net realized gain on investment -- (0.093) -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions to shareholders (1.527) (1.017) (2.900) (0.585) (0.380)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 12.05 $ 12.09 $ 11.95 $ 12.92 $ 12.52
========== ========== ========== ========== ==========
Total return1 12.29% 10.06% 14.70% 8.01% 14.64%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses 1.07% 1.08% 1.07% 1.10% 1.13%
Net investment income (loss) (0.12)% 0.29% (0.03)% (0.58)% (0.43)%
Portfolio turnover 94% 31% 77% 31% 12%
Average commission rate paid2 $ 0.0224 $ 0.0291 $ 0.0500 - -
NET ASSETS - END OF PERIOD
(000'S OMITTED) $ 121,600 $ 100,688 $ 143,003 $ 105,522 $ 70,734
========== ========== ========== ========== ==========
1Represents aggregate total return for the period indicated.
2Average commission rate is calculated for Funds with fiscal years beginning on or after January 1, 1995.
3Annualized.
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Small Cap 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.
On April 30, 1992, the Fund resumed sales of shares to advisory clients and
employees of Manning & Napier Advisors, Inc. (the "Advisor") and its
affiliates. On July 8, 1993, the Fund began offering shares directly to
investors. Previously, the Fund was available from time to time to Manning &
Napier employees and advisory clients of Manning & Napier Advisors, Inc.
The Fund is authorized to issue five classes of shares (Class A, B, C, D, E).
Currently, only Class A shares have been issued. Each class of shares is
substantially the same, except that class-specific distribution and
shareholder servicing expenses are borne by the specific class of shares to
which they relate.
The total authorized capital stock of the Corporation consists of one billion
shares of common stock each having a par value of $0.01. As of June 30, 1998,
940 million shares have been designated in total among 19 series, of which
37.5 million have been designated as Small Cap Series Class A Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities, options
and corporate bonds, listed on an exchange are valued at the latest quoted
sales price of the exchange on which the security is primarily traded.
Securities not traded on valuation date or securities not listed on an
exchange are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed securities,
will normally be valued on the basis of evaluated bid prices 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 approved 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.
11
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES (continued)
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.
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, foreign denominated investments or
character reclassification between net income and net gains. As a result,
net investment income (loss) and net investment gain (loss) on investment
transactions for a reporting period may differ significantly from distributions
to shareholders during such period. As a result, the Fund may periodically
make 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
investment that result from fluctuations in foreign currency exchange rates is
not separately stated.
12
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may purchase or sell forward foreign currency exchange contracts in
order to hedge a portfolio position or specific transaction. Risks may arise
if the counterparties to a contract are unable to meet the terms of the
contract or if the value of the foreign currency moves unfavorably.
All forward foreign currency exchange contracts are adjusted daily by the
exchange rate of the underlying currency and, for financial statement
purposes, any gain or loss is recorded as unrealized gain or loss until a
contract has been closed. Realized and unrealized gain or loss arising from a
transaction is included in net realized and unrealized gain (loss) from
foreign currency and forward foreign currency exchange contracts.
The Fund regularly trades forward foreign currency exchange contracts with
off-balance sheet risk in the normal course of its investing activities to
assist in managing exposure to changes in foreign currency exchange rates.
The notional or contractual amount of these instruments represents the
investment the Fund has in forward foreign currency exchange contracts and
does not necessarily represent the amounts potentially at risk. The
measurement of the risks associated with forward foreign currency exchange
contracts is meaningful only when all related and offsetting transactions
are considered.
At June 30, 1998 the fund had no open forward foreign currency exchange
contracts.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of the revenues and expenses during the reporting
period. Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with the Advisor, for which the
Fund pays a fee, computed daily and payable monthly, at an annual rate of 1%
of the Fund's average daily net assets. The fee amounted to $659,115 for the
six months ended June 30, 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
13
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
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. These services are provided at no additional
cost to the Fund.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Fund.
The compensation of the non-affiliated Directors totaled $3,322 for the six
months ended June 30, 1998.
4.PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1998, purchases and sales of securities,
other than United States Government securities and short-term securities, were
$53,025,203 and $69,579,236 respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Small Cap Series Class A Shares were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Six Months For the Year
Ended 6/30/98 Ended 12/31/97
-------------------- --------------
Shares Amount Shares Amount
-------------------- ------------ -------------- ------------
Sold 490,018 $ 6,438,516 1,150,766 $15,559,488
Reinvested -- -- 1,119,486 13,610,375
Repurchased (522,759) (6,931,843) (509,007) (6,880,808)
-------------------- ------------ -------------- ------------
Total (32,741) $ (493,327) 1,761,245 $22,289,055
==================== ============ ============== ============
</TABLE>
6. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of domestic companies and the United States Government. These
risks include revaluation of currencies and future adverse political and
economic developments. Moreover, securities of foreign companies and foreign
governments and their markets may be less liquid and their prices more volatile
than those of securities of comparable domestic companies and the United
States Government.
14
<PAGE>
Exeter Fund, Inc.
Ohio Tax Exempt Series
Semi-Annual Report
June 30, 1998
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
Given the roller coaster action of the municipal bond market over the past few
years, the first six months of this year have been unique in that municipal
interest rates have remained remarkably steady. The tax-exempt yields on
short, high quality municipal bonds have hovered around 3.65%, yields on
two-year munis have held steady in the 3.75% to 3.85% range, intermediate-term
munis (i.e., ten year notes) have remained at 4.40%, and long-term munis have
barely budged from the 5.0% level. Just as roller coasters may level out for a
moment to let riders catch their breath, the markets seem to have hit an
uneventful stretch. Even so, considering the somewhat conflicting underlying
economic fundamentals, it is safe to say that the tension level of the market
has started to rise.
On the economic front, strong consumer spending and business investment has
been countered by limited government spending and a deteriorating U.S. trade
balance. On the inflation front, accelerating monetary growth and tight labor
markets have raised concerns that have so far been calmed by declining
commodity prices
and solid productivity gains.
The big international story has been the renewed collapse of the Pacific Rim's
financial markets and the resulting economic contractions in that part of the
world. The so-called "Asian Flu" has spread outside the region, affecting a
geographically diverse set of countries including Latin America, Russia, and
South Africa. In total, the countries impacted by the Pacific Rim crisis make
up about one-third of the world's GDP, and their problems are acting as a drag
on the rest of the world. The bond market thrives when growth slows. In the
municipal market, a slight increase in the supply of bonds has offset the
benefits that market would normally have received from the Pacific Rim crisis.
The net outcome of the mixed signals has been relatively stable municipal
interest rates. As was mentioned earlier, rates barely changed over the last
six months. But don't let the calm on the surface lull you into a false sense
of security. Just when the ride seems calm, the roller coaster is most likely
to surprise you.
1
<PAGE>
Management Discussion and Analysis
The magic of roller coasters is that they allow you to experience sensations
that can be found nowhere else. However, rational people only ride them
because they come equipped with a restraining device to keep the rider from
flying out as they rocket you along the way. Investing also offers safety
devices, although they are less apparent. Investors who want to survive the
quarterly and annual fluctuations that are part and parcel of the financial
markets, have to invest based on an understanding of the long-term investment
dynamics. The global economy, its impact on the level of competition, and the
disciplining force of the financial markets are what has allowed us to smooth
the ride for bond investors.
As always, it is a privilege to serve you.
Sincerely,
Exeter Asset Management
[graphic]
<pie chart>
Data for pie chart to follow:
Portfolio Composition 1 - As of 06/30/98
General Obligation Bonds - 72%
Revenue Bonds - 26%
Pre-Refunded Bonds - 2%
1 As a percentage of municipal securities.
[graphic]
<pie chart>
Data for pie chart to follow:
Quality Ratings 2 - As of 06/30/98
Aaa - 83%
Aa - 14%
A - 2%
Not Rated - 1%
2 Using Moody's Ratings, as a percentage of municipal securities.
2
<PAGE>
Performance Update as of June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exeter Fund, Inc.
Ohio Tax Exempt Series
Total Return
Through Growth of $10,000 Average
06/30/98 Investment Cumulative Annual
One Year $ 10,752 7.52% 7.52%
Inception 2 $ 12,485 24.85% 5.20%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Merrill Lynch Intermediate Municipal Index
Total Return
Through Growth of $10,000 Average
06/30/98 Investment Cumulative Annual
One Year $ 10,726 7.26% 7.26%
Inception 2 $ 12,706 27.06% 5.62%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - Ohio
Tax Exempt Series from its inception
(2/14/94) to present (6/30/98) as
compared to the Merrill Lynch Intermediate
Municipal Index.1
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C>
Date Exeter Fund Inc. - Merrill Lynch Intermediate
Ohio Tax Exempt Series Municipal Index
2/14/94 10,000 10,000
12/31/94 9,377 9,709
12/31/95 10,985 11,009
12/31/96 11,331 11,520
12/31/97 12,228 12,406
06/30/98 12,485 12,706
</TABLE>
1 The unmanaged Merrill Lynch Intermediate Municipal Index is a
market value weighted measure of approximately 139 municipal
bonds issued across the United States. The Index is comprised of
investment grade securities. Index returns assume reinvestment of
coupons and, unlike Fund returns, do not reflect any fees or
expenses.
2 The Fund and Index performance numbers are calculated from
February 14, 1994, the Fund's inception date. The Fund's
performance is historical and may not be indicative of future results.
3
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount (Note 2)
OHIO MUNICIPAL SECURITIES - 95.6%
Akron Bath Copley Joint Twnshp. Children's Hos. Med. Ctr.,
Revenue Bond, 7.45%, 11/15/2020 $ 50,000 $ 54,844
Akron Limited Tax, G.O. Bond, 4.10%, 12/1/2001 65,000 65,204
Akron Waterworks, Revenue Management Bond, 5.70%,
3/1/2007 100,000 107,754
Allen County, G.O. Bond, 5.30%, 12/1/2007 100,000 104,697
Amherst Police & Jail Facility, G.O. Bond, 5.375%, 12/1/2012 50,000 52,091
Avon Lake, G.O. Bond, 5.70%, 12/1/2006 60,000 64,111
Avon Lake, G.O. Bond, 6.00%, 12/1/2009 40,000 42,920
Bedford Heights, G.O. Bond, Series A, 5.65%, 12/1/2014 60,000 65,603
Belmont County, G.O. Bond, 5.15%, 12/1/2010 100,000 102,967
Brecksville-Broadview Heights City School District, G.O.
Bond, 5.25%, 12/1/2021 115,000 115,178
Chagrin Falls Exempt Village School District, G.O. Bond,
5.55%, 12/01/2022 100,000 103,762
Cincinnati, G.O. Bond, 4.60%, 12/1/2003 50,000 51,129
Cleveland City School District, G.O. Bond, 5.875%, 12/1/2011 125,000 134,599
Cleveland Waterworks Revenue Ref. & Impt. - First Meeting,
Revenue Bond, Series H, 5.50%, 1/1/2010 170,000 180,863
Cleveland Waterworks, Revenue Bond, 1st Meeting, Series G,
5.50%, 1/1/2013 100,000 107,362
Columbus, G.O. Bond, Series 1, 5.25%, 9/15/2018 195,000 197,083
Columbus Sewer Improvement Number 28, G.O. Bond,
6.00%, 5/1/2011 155,000 169,979
Columbus, G.O. Bond, Series D, 5.50%, 9/15/2008 50,000 53,353
Crawford County, G.O. Bond, 6.75%, 12/1/2019 175,000 199,470
Cuyahoga County, G.O. Bond, Series A, 4.30%, 10/1/1999 50,000 50,373
Cuyahoga Falls, G.O. Bond, 7.20%, 12/1/2010 75,000 80,024
Delaware City School District, Construction & Impt., G.O.
Bond, Series B, 5.20%, 12/1/2016 100,000 100,717
Dublin City School District, G.O. Bond, 5.00%, 12/1/2019 300,000 294,570
Fairfield County Hospital Impt., Lancaster-Fairfield Community
Hospital, Revenue Bond, 7.00%, 6/15/2012 50,000 54,963
Findlay Water, Revenue Bond, 5.45%, 11/1/2008 100,000 105,124
Franklin County, G.O. Bond, 4.95%, 12/1/2004 50,000 52,090
Franklin County, G.O. Bond, 5.50%, 12/1/2013 100,000 104,259
Gahanna-Jefferson City School District, G.O. Bond, 4.75%,
12/1/1999 50,000 50,675
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount (Note 2)
OHIO MUNICIPAL SECURITIES (continued)
Greene County Sewer System, Revenue Bond, 5.50%,
12/1/2018 $ 30,000 $ 30,938
Hamilton County Building Impt. - Museum Center, G.O.
Bond, 5.85%, 12/1/2001 50,000 52,910
Hamilton County Sewer System Ref. & Impt. - Metro Sewer
District, Revenue Bond, Series A, 4.75%, 12/1/2000 50,000 50,971
Hamilton County Sewer System Ref. & Impt. - Metro Sewer
District, Revenue Bond, Series A, 5.00%, 12/1/2014 125,000 124,856
Hilliard School District, G.O. Bond, 6.35%, 12/1/2003 60,000 66,131
Hilliard School District, G.O. Bond, Series A, 5.00%, 12/1/2020 225,000 220,534
Indian Lake Local School District Construction & Impt.,
G.O. Bond, 5.375%, 12/1/2023 220,000 224,140
Kettering City School District School Impt., G.O. Bond,
5.30%, 12/1/2014 125,000 128,306
Kettering City School District, G.O. Bond, 4.85%, 12/1/2006 40,000 41,339
Kettering City School District, G.O. Bond, 5.25%, 12/1/2022 60,000 60,078
Kings Local School District, G.O. Bond, 5.50%, 12/1/2021 115,000 118,307
Lakewood City School District, G.O. Bond, 5.55%, 12/1/2013 100,000 104,188
Lakota Local School District, G.O. Bond, 5.75%, 12/1/2006 50,000 54,232
Lakota Local School District, G.O. Bond, 7.00%, 12/1/2008 100,000 121,072
Lakota Local School District, G.O. Bond, 7.90%, 12/1/2011 45,000 45,808
Mahoning County Limited Tax, G.O. Bond, 5.65%, 12/1/1998 20,000 20,174
Mahoning County, G.O. Bond, 5.70%, 12/1/2009 150,000 161,061
Mason City School District, G.O. Bond, 5.00%, 12/1/2007 120,000 124,128
Mentor, G.O. Bond, 5.25%, 12/01/2017 100,000 101,520
Montgomery County, G.O. Bond, 5.30%, 9/1/2007 65,000 68,055
Montgomery County, Moraine-Beaver Creek Sewers, Revenue
Bond, 5.60%, 9/1/2011 100,000 106,124
North Canton City School District, G.O. Bond, 5.85%,
12/1/2007 40,000 44,220
North Olmstead, G.O. Bond, 6.20%, 12/1/2011 200,000 226,820
Northwood Local School District, G.O. Bond, 5.55%, 12/1/2006 65,000 70,734
Northwood Local School District, G.O. Bond, 6.20%, 12/1/2013 40,000 44,378
Ohio, G.O. Bond, 6.50%, 8/1/2011 50,000 53,990
Ohio Building Authority, Local Jail Grant, Revenue Bond,
Series A, 4.65%, 10/1/2005 50,000 50,922
Ohio Building Authority, State Facilities - Administration
Building, Revenue Bond, 5.50%, 10/1/2005 50,000 53,540
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount (Note 2)
OHIO MUNICIPAL SECURITIES (continued)
Ohio Higher Education Facility, University of Dayton Project,
Revenue Bond, 5.80%, 12/1/2019 $ 100,000 $106,073
Ohio Public Facilities, Higher Education, Revenue Bond,
Series II-A, 4.25%, 12/1/2002 50,000 50,258
Ohio State Infrastructure Improvement, G.O. Bond, 5.20%,
8/1/2010 250,000 261,780
Ohio State Turnpike, Revenue Bond, Series A, 5.40%,
2/15/2009 250,000 265,638
Ohio State Turnpike, Revenue Bond, Series A, 5.70%,
2/15/2017 125,000 132,160
Ohio State Water Development Authority Ref. & Impt. -
Pure Water, Revenue Bond, 5.75%, 12/1/2005 60,000 64,359
Ohio State Water Development Authority Pure Water, Revenue
Bond, Series I, 6.00%, 12/1/2016 40,000 44,291
Ohio State Water Development Authority, Pollution Control
Facility, Revenue Bond, 5.25%, 12/1/2014 100,000 101,031
Ottawa County, G.O. Bond, 5.45%, 9/1/2006 30,000 32,295
Pickerington Local School District Construction & Impt.,
G.O. Bond, 5.375%, 12/1/2019 150,000 152,583
Pickerington Water Systems Improvements, G.O. Bond,
5.85%, 12/1/2013 50,000 54,214
Reynoldsburg City School District, G.O. Bond, 6.55%,
12/1/2017 175,000 195,163
Rocky River City School District, G.O. Bond, Series A,
6.375%, 12/1/1998 25,000 25,290
Rocky River City School District, G.O. Bond, Series A,
6.90%, 12/1/2011 50,000 54,292
Rural Lorain Water Authority Ref. & Impt., Revenue Bond,
5.30%, 10/1/2012 110,000 113,001
South-Western City School District, Franklin & Pickway
Counties, G.O. Bond, 4.80%, 12/1/2006 100,000 102,505
Stark County, G.O. Bond, 5.70%, 11/15/2017 100,000 104,681
Summit County, G.O. Bond, 5.75%, 12/1/2008 175,000 189,305
Toledo Sewer System, Revenue Bond, 6.35%, 11/15/2017 185,000 206,669
Toledo, G.O. Bond, 5.95%, 12/1/2015 175,000 190,006
Trumbull County, G.O. Bond, 6.20%, 12/1/2014 100,000 110,945
Warren, G.O. Bond, 5.20%, 11/15/2013 50,000 52,913
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount/Shares (Note 2)
OHIO MUNICIPAL SECURITIES (continued)
Warren County Waterworks, Revenue Bond, 6.00%, 12/1/2014 $ 100,000 $ 108,855
Warren County Waterworks, Revenue Bond, 5.45%, 12/1/2015 140,000 144,087
Westlake Ref. & Impt., G.O. Bond, 5.50%, 12/1/2020 295,000 305,195
Wood County, G.O. Bond, 5.40%, 12/1/2013 50,000 52,106
Youngstown, G.O. Bond, 6.125%, 12/1/2014 50,000 55,265
-----------
TOTAL MUNICIPAL SECURITIES
(Identified Cost $8,184,188) 8,710,200
-----------
SHORT-TERM INVESTMENTS - 3.9%
Dreyfus Municipal Reserves (Identified Cost $353,837) 353,837 353,837
-----------
TOTAL INVESTMENTS - 99.5%
(Identified Cost $8,538,025) 9,064,037
OTHER ASSETS, LESS LIABILITIES - 0.5% 48,344
-----------
NET ASSETS - 100% $9,112,381
===========
Key -
G.O. Bond - General Obligation Bond
Hos. - Hospital
Med. Ctr. - Medical Center
Impt. - Improvement
Ref. - Referendum
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FEDERAL TAX INFORMATION:
At June 30, 1998, the net unrealized appreciation based on identified cost for
federal income tax purposes of $8,538,025 was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value
over tax cost $533,327
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax
cost over value (7,315)
---------
UNREALIZED APPRECIATION - NET $526,012
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
<S> <C>
June 30, 1998
ASSETS:
Investments, at value (identified cost $8,538,025)(Note 2) $9,064,037
Interest receivable 66,789
-----------
TOTAL ASSETS 9,130,826
-----------
LIABILITIES:
Accrued management fees (Note 3) 3,725
Accrued Directors' fees (Note 3) 3,300
Transfer agent fees payable (Note 3) 179
Audit fee payable 9,175
Other payables and accrued expenses 2,066
-----------
TOTAL LIABILITIES 18,445
-----------
NET ASSETS FOR 863,037 SHARES OUTSTANDING $9,112,381
===========
NET ASSETS CONSIST OF:
Capital stock $ 8,630
Additional paid-in-capital 8,539,520
Undistributed net investment income 39,406
Accumulated net realized loss on investments (1,187)
Net unrealized appreciation on investments 526,012
-----------
TOTAL NET ASSETS $9,112,381
===========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($9,112,381/863,037 shares) $ 10.56
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
<S> <C>
FOR THE SIX MONTHS ENDED JUNE 30, 1998
INVESTMENT INCOME:
Interest $232,678
---------
EXPENSES:
Management fees (Note 3) 22,838
Directors' fees (Note 3) 3,322
Transfer agent fees (Note 3) 1,096
Audit fee 6,248
Custodian fee 1,488
Miscellaneous 1,718
---------
Total Expenses 36,710
---------
NET INVESTMENT INCOME 195,968
---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized loss on investments (identified cost basis) (408)
Net change in unrealized appreciation on investments (8,742)
---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (9,150)
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $186,818
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
For the Six Months
Ended 6/30/98 For the Year
(unaudited) Ended 12/31/97
---------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 195,968 $ 380,786
Net realized gain (loss) on investments (408) (779)
Net change in unrealized appreciation on investments (8,742) 296,013
---------------- -----------------
Net increase in net assets from operations 186,818 676,020
---------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income (164,115) (375,341)
---------------- -----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital share
transactions (Note 5) (216,300) 1,307,744
---------------- -----------------
Net increase (decrease) in net assets (193,597) 1,608,423
NET ASSETS:
Beginning of period 9,305,978 7,697,555
---------------- -----------------
eND OF PERIOD (including undistributed net investment
income of $39,406 and $7,553, respectively) $ 9,112,381 $ 9,305,978
================ =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
For the Period
For the Six 2/14/94
Months Ended (commencement
6/30/98 For the Years Ended of operations)
(unaudited) 12/31/97 12/31/96 12/31/95 to 12/31/94
--------------- ---------------------- ---------- ---------- -----------------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.53 $ 10.18 $ 10.31 $ 9.18 $ 10.00
--------------- ---------------------- ---------- ---------- -----------------
Income from investment operations:
Net investment income 0.227 0.446 0.439 0.419 0.205
Net realized and unrealized gain (loss)
on investments (0.007) 0.344 (0.129) 1.136 (0.828)
--------------- ---------------------- ---------- ---------- -----------------
Total from investment operations 0.220 0.790 0.310 1.555 (0.623)
--------------- ---------------------- ---------- ---------- -----------------
Less distributions to shareholders:
From net investment income (0.190) (0.440) (0.438) (0.425) (0.197)
From net realized gain on investments -- -- (0.002) -- --
--------------- ---------------------- ---------- ---------- -----------------
Total distributions to shareholders (0.190) (0.440) (0.440) (0.425) (0.197)
--------------- ---------------------- ---------- ---------- -----------------
NET ASSET VALUE - END OF PERIOD $ 10.56 $ 10.53 $ 10.18 $ 10.31 $ 9.18
=============== ====================== ========== ========== =================
Total return 1 2.10% 7.92% 3.16% 17.14% (6.23)%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses* 0.80%2 0.79% 0.85% 0.85% 0.85%2
Net investment income* 4.29%2 4.37% 4.40% 4.50% 4.03%2
Portfolio turnover 0% 12% 2% 1% 2%
NET ASSETS - END OF PERIOD (000's omitted) $ 9,112 $ 9,306 $ 7,698 $ 6,144 $ 3,901
=============== ====================== ========== ========== =================
</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, 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 N/A N/A $0.437 $0.411 $ 0.141
Ratios (to average net assets):
Expenses N/A N/A 0.87% 0.94% 2.07%2
Net investment income N/A N/A 4.38% 4.41% 2.81%2
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Ohio Tax Exempt 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.
Shares of the Fund are offered directly to investors and to employees and
clients of Manning & Napier Advisors, Inc. (the "Advisor") and its affiliates.
The total authorized capital stock of the Corporation consists of one billion
shares of common stock each having a par value of $0.01. As of June 30, 1998,
940 million shares have been designated in total among 19 series, of which 50
million have been designated as Ohio Tax Exempt Series Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Municipal securities will normally be valued on the basis of market valuations
provided by an independent pricing service (the "Service"). The Service
utilizes the latest price quotations and a matrix system (which considers such
factors as security prices of similar securities, yields, maturities, and
ratings). The Service has been approved by the Fund's Board of Directors.
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 approved by and under the general
supervision 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.
12
<PAGE>
Notes to Financial Statements (unaudited)
2.SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL INCOME TAXES (continued)
At June 30, 1998, the Fund, for federal income tax purposes, had a capital
loss carry forward of $779 that will expire December 31, 2005.
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 tax exempt income are made quarterly.
Distributions are recorded on the ex-dividend date. Distributions of net
realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. The differences may be a
result of deferral of certain losses or character reclassification between net
income and net gains. As a result, net investment income (loss) and net
investment gain (loss) on investment transactions for a reporting period may
differ significantly from distributions to shareholders during such period.
As a result, the Fund may periodically make reclassifications among its
capital accounts without impacting the Fund's net asset value.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of the revenues and expenses during the reporting
period. Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with the Advisor, for which the
Fund pays 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 $22,838 for
the six months ended June 30, 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.
13
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $1,096 for the six months ended June 30,
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 $3,322 for the six
months ended June 30, 1998.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1998, purchases and sales of securities,
other than United States Government securities and short-term securities, were
$0 and $206,114, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Ohio Tax Exempt Series were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Six
Months Ended For the Year
6/30/98 Ended 12/31/97
--------------- -----------------
Shares Amount Shares Amount
--------------- ---------- ----------------- ------------
Sold 57,738 $ 609,279 312,374 $ 3,225,466
Reinvested 14,804 156,092 34,046 351,939
Repurchased (93,228) (981,671) (219,088) (2,269,661)
--------------- ---------- ----------------- ------------
Total (20,686) $(216,300) 127,332 $ 1,307,744
=============== ========== ================= ============
</TABLE>
6. FINANCIAL INSTRUMENTS
The Fund may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options and
futures contracts and may involve, to a varying degree, elements of risk in
excess of the amounts recognized for financial statement purposes. No such
investments were held by the Fund on June 30, 1998.
7. CONCENTRATION OF CREDIT
The Fund primarily invests in debt obligations issued by the State of Ohio and
its political subdivisions, agencies, and public authorities to obtain funds
for various public purposes. The Fund is more susceptible to factors
adversely affecting issues of Ohio municipal securities than is a municipal
bond fund that is not concentrated in these issues to the same extent.
14
<PAGE>
Exeter Fund, Inc.
New York Tax Exempt Series
Semi-Annual Report
June 30, 1998
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
Given the roller coaster action of the municipal bond market over the past few
years, the first six months of this year have been unique in that municipal
interest rates have remained remarkably steady. The tax-exempt yields on
short, high quality municipal bonds have hovered around 3.65%, yields on
two-year munis have held steady in the 3.75% to 3.85% range, intermediate-term
munis (i.e., ten year notes) have remained at 4.40%, and long-term munis have
barely budged from the 5.0% level. Just as roller coasters may level out for a
moment to let riders catch their breath, the markets seem to have hit an
uneventful stretch. Even so, considering the somewhat conflicting underlying
economic fundamentals, it is safe to say that the tension level of the market
has started to rise.
On the economic front, strong consumer spending and business investment has
been countered by limited government spending and a deteriorating U.S. trade
balance. On the inflation front, accelerating monetary growth and tight labor
markets have raised concerns that have so far been calmed by declining
commodity prices and solid productivity gains.
The big international story has been the renewed collapse of the Pacific Rim's
financial markets and the resulting economic contractions in that part of the
world. The so-called "Asian Flu" has spread outside the region, affecting a
geographically diverse set of countries including Latin America, Russia, and
South Africa. In total, the countries impacted by the Pacific Rim crisis make
up about one-third of the world's GDP, and their problems are acting as a drag
on the rest of the world. The bond market thrives when growth slows. In the
municipal market, a slight increase in the supply of bonds has offset the
benefits that market would normally have received from the Pacific Rim crisis.
The net outcome of the mixed signals has been relatively stable municipal
interest rates. As was mentioned earlier, rates barely changed over the last
six months. But don't let the calm on the surface lull you into a false sense
of security. Just when the ride seems calm, the roller coaster is most likely
to surprise you.
The magic of roller coasters is that they allow you to experience sensations
that can be found nowhere else. However, rational people only ride them
because they come equipped with a restraining device to keep the rider from
flying out as they rocket you along the way. Investing also offers safety
devices, although they are
1
<PAGE>
Management Discussion and Analysis
less apparent. Investors who want to survive the quarterly and annual
fluctuations that are part and parcel of the financial markets, have to invest
based on an understanding of the long-term investment dynamics. The global
economy, its impact on the level of competition, and the disciplining force of
the financial markets are what has allowed us to smooth the ride for bond
investors.
As always, it is a privilege to serve you.
Sincerely,
Exeter Asset Management
[graphic]
<pie chart>
Data for pie chart to follow:
Portfolio Composition 1 - As of 6/30/98
General Obligation Bonds - 70%
Revenue Bonds - 26%
Pre-Refunded Bonds - 4%
1 As a percentage of municipal securities.
[graphic]
<pie chart>
Data for pie chart to follow:
Quality Ratings 2 - As of 6/30/98
Aaa - 85%
Aa - 14%
A - 1%
2 Using Moody's Ratings, as a percentage of municipal securities.
2
<PAGE>
Performance Update as of June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exeter Fund, Inc.
New York Tax Exempt Series
Total Return
Through Growth of $10,000 Average
06/30/98 Investment Cumulative Annual
One Year $ 10,791 7.91% 7.91%
Inception 2 $ 12,451 24.51% 5.04%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Merrill Lynch Intermediate Municipal Index
Total Return
Through Growth of $10,000 Average
06/30/98 Investment Cumulative Annual
One Year $ 10,726 7.26% 7.26%
Inception 2 $ 12,719 27.19% 5.55%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - New York
Tax Exempt Series from its inception
(1/17/94) to present (6/30/98) as
compared to the Merrill Lynch Intermediate
Municipal Index.1
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C>
Exeter Fund, Inc. - Merrill Lynch Intermediate
New York Tax Exempt Series Municipal Index
Date
01/17/94 10,000 10,000
12/31/94 9,318 9,719
12/31/95 10,882 11,020
12/31/96 11,243 11,532
12/31/97 12,180 12,419
06/30/98 12,451 12,719
</TABLE>
1 The unmanaged Merrill Lynch Intermediate Municipal Index is a
market value weighted measure of approximately 139 municipal
bonds issued across the United States. The Index is comprised of
investment grade securities. Index returns assume reinvestment of
coupons and, unlike Fund returns, do not reflect any fees or
expenses.
2 The Fund and Index performance numbers are calculated from
January 17, 1994, the Fund's inception date. The Fund's
performance is historical and may not be indicative of future results.
3
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount (Note 2)
NEW YORK MUNICIPAL SECURITIES - 96.2%
Albany City School District, G.O. Bond, 4.35%, 2/1/2001 $ 475,000 $479,033
Albany City School District, G.O. Bond, 4.35%, 2/1/2002 150,000 151,235
Albany County, G.O. Bond, 5.75%, 6/1/2010 200,000 215,930
Amherst Public Improvement, G.O. Bond, 4.625%, 3/1/2004 250,000 254,918
Amherst Public Improvement, G.O. Bond, 4.625%, 3/1/2007 200,000 202,914
Auburn Central School District, G.O. Bond, 4.55%, 12/1/2006 385,000 389,824
Battery Park City Authority, Revenue Bond, 7.70%, 5/1/2015 500,000 526,405
Bayport-Blue Point Union Free School District, G.O. Bond,
5.60%, 6/15/2012 250,000 268,837
Brighton Central School District, G.O. Bond, 5.40%, 6/1/2012 250,000 262,200
Brockport Central School District, G.O. Bond, 5.50%, 6/15/2015 300,000 311,538
Broome County Public Safety, Certificate Participation, 5.00%,
4/1/2006 250,000 259,748
Buffalo General Improvement, G.O. Bond, Series A, 4.75%, 2/1/2004
2/1/2004 500,000 512,050
Buffalo Schools, G.O. Bond, Series B, 5.05%, 2/1/2009 250,000 257,030
Buffalo, G.O. Bond, 5.00%, 12/1/2009 150,000 154,770
Buffalo, G.O. Bond, Series A, 5.20%, 2/1/2010 250,000 260,532
Cattaraugus County Public Improvement, G.O. Bond, 5.00%,
8/1/2007 300,000 312,894
Chittenango Central School District, G.O. Bond, 5.375%,
6/15/2016 200,000 204,474
Colonie, G.O. Bond, 5.20%, 8/15/2008 100,000 106,186
Cortlandville, G.O. Bond, 5.40%, 6/15/2013 155,000 161,691
Dryden Central School District, G.O. Bond, 5.50%, 6/15/2011 200,000 209,646
East Aurora Union Free School District, G.O. Bond, 5.20%,
6/15/2011 300,000 312,150
East Hampton, G.O. Bond, 4.625%, 1/15/2007 175,000 177,258
East Hampton, G.O. Bond, 4.625%, 1/15/2008 175,000 176,829
Eastchester Public Improvement, G.O. Bond, Series B, 4.90%,
10/15/2011 385,000 390,194
Ellenville Central School District, G.O. Bond, 5.375%, 5/1/2009 210,000 226,365
Ellenville Central School District, G.O. Bond, Series B,
5.70%, 5/1/2011 700,000 759,976
Erie County Public Improvement, G.O. Bond, 5.80%, 1/15/2003 230,000 245,263
Erie County, G.O. Bond, Series B, 5.50%, 6/15/2009 100,000 106,583
Erie County, G.O. Bond, Series B, 5.50%, 6/15/2025 400,000 412,540
Fillmore Central School District, G.O. Bond, 5.25%, 6/15/2015 300,000 306,447
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount (Note 2)
NEW YORK MUNICIPAL SECURITIES (continued)
Gloversville City School District, G.O. Bond, 5.00%, 6/15/2005 $ 350,000 $364,165
Greene Central School District, G.O. Bond, 5.25%, 6/15/2012 195,000 201,786
Guilderland School District, G.O. Bond, 4.90%, 6/15/2008 370,000 377,652
Guilderland School District, G.O. Bond, 5.00%, 5/15/2014 505,000 504,424
Guilderland School District, G.O. Bond, 5.00%, 5/15/2016 400,000 395,784
Hamburg Central School District, G.O. Bond, 5.375%, 6/1/2014 600,000 623,340
Hempstead Town, G.O. Bond, Series B, 5.625%, 2/1/2010 200,000 215,738
Holland Central School District, G.O. Bond, 6.125%, 6/15/2010 245,000 272,305
Huntington, G.O. Bond, 5.90%, 1/15/2007 300,000 329,487
Huntington, G.O. Bond, 5.875%, 9/1/2009 250,000 273,185
Indian River Central School District, G.O. Bond, Second Series,
4.30%, 12/15/2003 475,000 479,826
Irvington Union Free School District, G.O. Bond, Series B,
5.10%, 7/15/2005 275,000 287,389
Jamesville-Dewitt Central School District, G.O. Bond, 5.75%,
6/15/2009 420,000 464,633
Jordan-El Bridge Central School District, G.O. Bond, 5.875%,
6/15/2008 500,000 548,955
Le Roy Central School District, G.O. Bond, 0.10%, 6/15/2008 350,000 224,427
Middletown City School District, G.O. Bond, Series A, 5.50%,
11/15/2005 175,000 187,913
Monroe County Public Improvement - Pre-refunded, G.O. Bond,
6.00%, 3/1/2002 95,000 101,342
Monroe County Public Improvement - Pre-refunded, G.O. Bond,
6.00%, 3/1/2002 390,000 417,070
Monroe County Public Improvement - Pre-refunded, G.O. Bond,
6.10%, 6/1/2015 20,000 22,319
Monroe County Public Improvement - Unrefunded Balance,
G.O. Bond, 6.00%, 3/1/2002 15,000 15,971
Monroe County Public Improvement - Unrefunded Balance,
G.O. Bond, 6.10%, 6/1/2015 180,000 200,869
Monroe County Public Improvement, G.O. Bond, 4.90%,
6/1/2005 250,000 258,585
Monroe County Water Authority, Revenue Bond, Series B,
5.25% 8/1/2011 500,000 514,570
Monroe County Water Improvement, G.O. Bond, 5.25%,
2/1/2017 320,000 324,134
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount (Note 2)
NEW YORK MUNICIPAL SECURITIES (continued)
Nassau County, G.O. Bond, Series A, 4.00%, 5/1/1999 $ 100,000 $ 100,326
Nassau County, G.O. Bond, Series S, 5.00%, 3/1/2005 300,000 311,166
Nassau County General Improvement, G.O. Bond, Series U,
5.25%, 11/1/2014 335,000 341,944
Nassau County General Improvement, G.O. Bond, Series V,
5.25%, 3/1/2015 385,000 391,264
New Castle, G.O. Bond, 4.75%, 6/1/2010 450,000 452,750
New Rochelle City School District, G.O. Bond, Series A, 4.30%,
2/1/2003 500,000 502,880
New Rochelle, G.O. Bond, Series C, 6.20%, 3/15/2007 175,000 193,933
New York City Municipal Water Authority, Revenue Bond,
Series B, 5.00%, 6/15/2003 400,000 413,276
New York City Municipal Water Authority, Revenue Bond,
Series B, 5.375%, 6/15/2019 250,000 253,248
New York City Municipal Water Finance Authority, Revenue
Bond, Series B, 5.50%, 6/15/2019 1,000,000 1,026,690
New York City, G.O. Bond, Series K, 5.50%, 4/1/2007 500,000 535,435
New York Government Assistance Corp., Revenue Bond,
Series A, 5.90%, 4/1/2013 500,000 540,915
New York Government Assistance Corp., Revenue Bond,
Series A, 6.00%, 4/1/2024 250,000 268,782
New York State Environmental Facilities Corp. Pollution Control,
Revenue Bond, Series A, 4.65%, 6/15/2007 250,000 254,025
New York State Environmental Facilities Corp. Pollution Control,
Revenue Bond, Series A, 5.20%, 6/15/2015 250,000 253,585
New York State Environmental Pollution Control, Revenue Bond,
Pooled LN-B, 6.65%, 9/15/2013 500,000 552,500
New York State Environmental Facilities Corp. Pollution Control,
Revenue Bond, Series E, 5.00%, 6/15/2012 200,000 201,400
New York State Housing Finance Agency, State University
Construction, Revenue Bond, Series A, 8.00%, 5/1/2011 250,000 321,057
New York State Local Government Assistance Corp.,
Revenue Bond, Series C, 5.00%, 4/1/2021 750,000 732,022
New York State Medical Care Facility, Financial Agency,
Revenue Bond, 7.75%, 2/15/2020 380,000 410,278
New York State Mortgage Agency, Homeowners Mortgage,
Revenue Bond, Series 31A, 5.375%, 10/1/2017 500,000 503,985
New York State Power Authority, Revenue Bond, Series CC,
5.00%, 1/1/2014 500,000 525,605
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount (Note 2)
NEW YORK MUNICIPAL SECURITIES (continued)
New York State Power Authority, Revenue Bond, Series CC,
5.25%, 1/1/2018 $ 250,000 $ 266,090
New York State Power Authority Revenue & General Purpose,
Revenue Bond, Ref-Series CC, 4.80%, 1/1/2005 250,000 260,852
New York State Thruway Authority, Highway & Bridge, Revenue
Bond, Series B, 5.75%, 4/1/2006 100,000 108,711
New York State Thruway Authority, Highway & Bridge, Revenue
Bond, Series A, 5.25%, 4/1/2017 555,000 560,406
New York State Thruway Authority, Revenue Bond, Series A,
5.50%, 1/1/2023 1,020,000 1,069,205
New York State Thruway Authority, Revenue Bond, Series B,
4.90%, 1/1/2007 450,000 463,086
New York State Urban Development Correctional Capital Facilities,
Revenue Bond, Series A, 5.25%, 1/1/2014 500,000 521,620
New York State Urban Development Corp. Correctional Facility,
Revenue Bond, Series G, 7.00%, 1/1/2017 50,000 53,261
New York State Urban Development, Revenue Bond, 5.375%,
7/1/2022 400,000 406,652
New York, G.O. Bond, 8.00%, 3/15/2016 500,000 541,200
Niagara County, G.O. Bond, Series B, 5.20%, 1/15/2011 400,000 411,748
Niagara County, G.O. Bond, 5.90%, 7/15/2014 350,000 375,347
North Hempstead, G.O. Bond, Series B, 5.90%, 4/1/2004 300,000 325,323
North Hempstead, G.O. Bond, Series C, 4.90%, 8/1/2006 300,000 308,406
North Syracuse Central School District, G.O. Bond, 5.50%
6/15/2011 295,000 310,912
Onondaga County, G.O. Bond, 5.85%, 2/15/2002 300,000 317,502
Penfield Central School District, G.O. Bond, 5.20%, 6/15/2010 560,000 584,825
Queensbury, G O. Bond, Series A, 5.50%, 4/15/2011 150,000 159,718
Queensbury, G.O. Bond, Series A, 5.50%, 4/15/2012 350,000 370,989
Rochester, G.O. Bond, Series A, 4.70%, 8/15/2006 250,000 255,580
Rochester, G.O. Bond, Series A, 5.00%, 8/15/2020 250,000 250,653
Rochester, G.O. Bond, Series A, 5.00%, 8/15/2022 95,000 94,994
Rome, G.O. Bond, 5.20%, 12/1/2010 390,000 404,789
Sands Point, G.O. Bond, 6.70%, 11/15/2014 700,000 796,026
Schenectady, G.O. Bond, 4.55%, 10/1/2002 200,000 203,624
Schenectady, G.O. Bond, 5.30%, 2/1/2011 250,000 261,495
South County Central School District Brookhaven, G.O. Bond,
5.50%, 9/15/2007 380,000 404,932
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount (Note 2)
NEW YORK MUNICIPAL SECURITIES (continued)
South Huntington Union Free School District, G.O. Bond, 5.00%,
9/15/2016 $ 325,000 $322,673
South Huntington Union Free School District, G.O. Bond, 5.10%,
9/15/2017 100,000 99,810
Steuben County Public Improvement, G.O. Bond, 5.60%,
5/1/2006 500,000 525,050
Suffolk County Water Authority, Revenue Bond, 5.10%,
6/1/2009 250,000 262,600
Suffolk County, G.O. Bond, Series G, 5.40%, 4/1/2013 400,000 409,848
Suffolk County Water Authority, Series A, Revenue Bond, 5.00%,
6/1/2017 400,000 394,212
Sullivan County Public Improvement, G.O. Bond, 4.375%,
3/15/2001 300,000 302,460
Sullivan County Public Improvement, G.O. Bond, 5.125%,
3/15/2013 330,000 333,462
Three Village Central School District, G.O. Bond, 5.375%,
6/15/2007 230,000 246,098
Tioga County Public Improvement, G.O. Bond, 5.25%,
3/15/2005 250,000 261,248
Tompkins County, G.O. Bond, Series B, 5.625%, 9/15/2011 135,000 142,888
Tompkins County, G.O. Bond, Series B, 5.625%, 9/15/2013 300,000 315,282
Tompkins County, G.O. Bond, Series B, 5.625%, 9/15/2014 300,000 314,349
Tompkins County Public Improvement, G.O. Bond, Series B,
5.10%, 4/1/2020 400,000 398,560
Triborough Bridge & Tunnel Authority, Revenue Bond, Series A,
6.50%, 1/1/2004 200,000 215,268
Triborough Bridge & Tunnel Authority, Revenue Bond, Series A,
5.00%, 1/1/2012 500,000 500,995
Triborough Bridge & Tunnel Authority - General Purpose,
Revenue Bond, 5.00%, 1/1/2017 250,000 246,145
Triborough Bridge & Tunnel Authority - General Purpose,
Revenue Bond, Series A, 4.75%, 1/1/2019 300,000 284,913
Tri-Valley Central School District, G.O. Bond, 5.60%,
6/15/2008 120,000 129,259
Westchester County, G.O. Bond, Series A, 4.75%, 12/15/2008 250,000 257,290
Westchester County, G.O. Bond, Series A, 4.75%, 12/15/2009 250,000 254,960
Westchester County, G.O. Bond, Series B, 4.30%, 12/15/2010 215,000 208,851
Westchester County, G.O. Bond, Series B, 4.30%, 12/15/2011 100,000 96,100
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount/Shares (Note 2)
NEW YORK MUNICIPAL SECURITIES (continued)
White Plains, G.O. Bond, 4.50%, 9/1/2005 $ 180,000 $ 183,080
White Plains, G.O. Bond, 4.50%, 9/1/2007 315,000 318,446
William Floyd Union Free School District, G.O. Bond, 5.70%,
6/15/2008 405,000 443,653
Williamsville Central School District, G.O. Bond, 5.375%,
5/1/2004 800,000 846,888
Wyandanch Union Free School District, G.O. Bond, 5.60%,
4/1/2017 500,000 525,495
------------
TOTAL MUNICIPAL SECURITIES
(Identified Cost $42,209,603) 44,236,224
------------
SHORT-TERM INVESTMENTS - 2.7%
Dreyfus Basic New York Tax Free Money Market Fund
(Identified Cost $1,237,075) 1,237,075 1,237,075
------------
TOTAL INVESTMENTS - 98.9%
(Identified Cost $43,446,678) 45,473,299
OTHER ASSETS, LESS LIABILITIES - 1.1% 507,160
------------
NET ASSETS - 100% $45,980,459
============
KEY-
G.O. Bond - General Obligation Bond
Ref. - Referendum
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FEDERAL TAX INFORMATION:
At June 30, 1998, the net unrealized appreciation based on identified cost for
federal income tax purposes of $43,446,678 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $2,047,194
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value (20,573)
-----------
UNREALIZED APPRECIATION - NET $2,026,621
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
<S> <C>
JUNE 30, 1998
ASSETS:
Investments, at value (identified cost $43,446,678)(Note 2) $45,473,299
Cash 22,066
Interest receivable 556,978
------------
TOTAL ASSETS 46,052,343
------------
LIABILITIES:
Accrued management fees (Note 3) 18,901
Accrued Directors' fees (Note 3) 3,299
Payable for fund shares repurchased 43,058
Other payables and accrued expenses 6,626
------------
TOTAL LIABILITIES 71,884
------------
NET ASSETS FOR 4,416,069 SHARES
OUTSTANDING $45,980,459
============
NET ASSETS CONSIST OF:
Capital stock $ 44,161
Additional paid-in-capital 43,690,426
Undistributed net investment income 239,101
Accumulated net realized loss on investments (19,850)
Net unrealized appreciation on investments 2,026,621
------------
TOTAL NET ASSETS $ 45,980,459
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($45,980,459 / 4,416,069 shares) $ 10.41
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
<S> <C>
FOR THE SIX MONTHS ENDED JUNE 30, 1998
INVESTMENT INCOME:
Interest $1,109,518
-----------
EXPENSES:
Management fees (Note 3) 113,338
Directors' fees (Note 3) 3,322
Transfer agent fees (Note 3) 5,440
Audit fee 7,438
Custodian fee 3,719
Miscellaneous 3,848
-----------
Total Expenses 137,105
-----------
NET INVESTMENT INCOME 972,413
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized loss on investments (identified cost basis) (38)
Net change in unrealized appreciation on investments 34,753
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS 34,715
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 1,007,128
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
For the Six
Months
Ended 6/30/98 For the Year
(unaudited) Ended 12/31/97
---------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 972,413 $ 1,807,166
Net realized gain (loss) on investments (38) 632
Net change in unrealized appreciation
on investments 34,753 1,603,090
---------------- -----------------
Net increase in net assets from operations 1,007,128 3,410,888
---------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 2):
From net investment income (831,358) (1,768,897)
---------------- -----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share transactions (Note 5) 123,372 6,714,448
---------------- -----------------
Net increase in net assets 299,142 8,356,439
NET ASSETS:
Beginning of period 45,681,317 37,324,878
---------------- -----------------
END OF PERIOD (including undistributed net
investment income of $239,101 and $98,046,
respectively) $ 45,980,459 $ 45,681,317
================ =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the
Six Months
Ended
6/30/98 For the Years Ended
(unaudited) 12/31/97 12/31/96 12/31/95
------------- ---------------------- ---------- ----------
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.37 $ 9.98 $ 10.07 $ 8.98
------------- ---------------------- ---------- ----------
Income from investment operations:
Net investment income 0.222 0.431 0.422 0.404
Net realized and unrealized gain (loss)
on investments 0.008 0.384 (0.102) 1.086
------------- ---------------------- ---------- ----------
Total from investment operations 0.230 0.815 0.320 1.490
------------- ---------------------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.190) (0.425) (0.410) (0.400)
------------- ---------------------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 10.41 $ 10.37 $ 9.98 $ 10.07
============= ====================== ========== ==========
Total return1 2.23% 8.33% 3.32% 16.78%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses 0.60%2 0.61% 0.61% 0.65%
Net investment income 4.29%2 4.36% 4.41% 4.36%
Portfolio turnover 3% 2% 6% 0%
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 45,980 $ 45,681 $ 37,325 $ 28,817
============= ====================== ========== ==========
1 Represents aggregate total return for the period indicated.
2 Annualized.
<S> <C>
For the Period
1/17/94
(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 0.338
Net realized and unrealized gain (loss)
on investments (1.020)
-----------------
Total from investment operations (0.682)
-----------------
Less distributions to shareholders:
From net investment income (0.338)
-----------------
NET ASSET VALUE - END OF PERIOD $ 8.98
=================
Total return1 (6.82)%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses 0.79%2
Net investment income 3.82%2
Portfolio turnover 6%
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 17,301
=================
1 Represents aggregate total return for the period indicated.
2 Annualized.
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
New York Tax Exempt 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.
Shares of the Fund are offered directly to investors and to employees and
clients of Manning & Napier Advisors, Inc. (the "Advisor") and its affiliates.
The total authorized capital stock of the Corporation consists of one
billion shares of common stock each having a par value of $0.01. As of June
30, 1998, 940 million shares have been designated in total among 19 series, of
which 50 million have been designated as New York Tax Exempt Series Common
Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Municipal securities will normally be valued on the basis of market valuations
provided by an independent pricing service (the "Service"). The Service
utilizes the latest price quotations and a matrix system (which considers such
factors as security prices of similar securities, yields, maturities, and
ratings). The Service has been approved by the Fund's Board of Directors.
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 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.
14
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL INCOME TAXES (CONTINUED)
At June 30, 1998, the Fund, for federal income tax purposes, had a capital
loss carryforward of $19,812. Of this amount, $1,918 will expire on December
31, 2002, $17,559 will expire on December 31, 2003, and $335 will expire on
December 31, 2004.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
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 or character reclassification between net
income and net gains. As a result, net investment income (loss) and net
investment gain (loss) on investment transactions for a reporting period may
differ significantly from distributions to shareholders during such period.
As a result, the Fund may periodically make reclassifications among its
capital accounts without impacting the Fund's net asset value.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of the revenues and expenses during the reporting
period. Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with the Advisor, for which the
Fund pays 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 $113,338
for the six months ended June 30, 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
15
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
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 $5,440 for the six months ended June 30,
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 $3,322 for the six
months ended June 30, 1998.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1998, purchases and sales of securities,
other than United States Government securities and short-term securities, were
$1,423,036 and $1,275,064, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of New York Tax Exempt Series were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Six Months For the Year
Ended 6/30/98 Ended 12/31/97
-----------------------------------------
Shares Amount Shares Amount
----------------------------------------- ------------ -------------------------------------- ------------
Sold 259,811 $ 2,704,084 880,742 $ 8,945,358
Reinvested 78,437 814,932 171,409 1,740,404
Repurchased (325,830) (3,395,644) (389,781) (3,971,314)
----------------------------------------- ------------ -------------------------------------- ------------
Total 12,418 $ 123,372 662,370 $ 6,714,448
========================================= ============ ====================================== ============
</TABLE>
6. FINANCIAL INSTRUMENTS
The Fund may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options and
futures contracts and may involve, to a varying degree, elements of risk in
excess of the amounts recognized for financial statement purposes. No such
investments were held by the Fund on June 30, 1998.
16
<PAGE>
Notes to Financial Statements (unaudited)
7. CONCENTRATION OF CREDIT
The Fund primarily invests in debt obligations issued by the State of New York
and its political subdivisions, agencies, and public authorities to obtain
funds for various public purposes. The Fund is more susceptible to factors
adversely affecting issues of New York municipal securities than is a
municipal bond fund that is not concentrated in these issues to the same
extent.
17
<PAGE>
Exeter Fund, Inc.
World Opportunities Series
Semi-Annual Report
June 30, 1998
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
With Asian stock markets down as much as 60% from their highs, and Asian
currencies down by as much as 80%, the effect on foreign investments has
naturally been chilling. The World Opportunities Series has struggled in
this environment, but has managed a slightly positive return so far in
1998. Moreover, we believe that this Series is well positioned to take
advantage of the exceptional opportunities created by the disruption of the
Asian crisis.
The World Opportunities Series takes a bottom-up approach, in which we build
the portfolio stock-by-stock. Such a fundamental selection approach depends
on two things: strategy fit and pricing. Of the two, pricing is the more
volatile variable, and when markets are disrupted in a big way, it
increases the number of good strategy fits that are available at compelling
valuations.
Interestingly, we've found that many of the best opportunities to take
advantage of the Asian crisis actually reside in Latin America. The Asian
troubles have spilled over into the Latin American markets for a couple
reasons. First, the export of commodities is very important to these economies,
and Asian demand has dropped off, reducing sales. Second, many investors
fear that these countries will be affected by similar debt-related problems to
those now plaguing Asia. We do not share this fear. Latin American countries
have been through those problems in the past, but now they are much
stronger, more fiscally disciplined, and do not have the heavy debt loads
present in Asia. Therefore, we feel the Latin American markets will be the
first to come around once commodity prices stabilize and it becomes clear the
debt-related fears are unfounded.
We do also have some investments in Asia itself, but at 14% of the portfolio
this does not represent an overweighting in that region. In contrast, we have
30% of the portfolio in Europe, which has been a bright spot in the worldwide
markets. Economies in Europe are strengthening and corporate restructuring
has placed renewed emphasis on producing value for shareholders. We have
locked in some gains in the region, but still retain a strong weighting in the
portfolio.
1
<PAGE>
Management Discussion and Analysis
Going forward, we expect markets in Asia to begin to improve, but this
recovery will not be in a straight line. Other areas of the world should
stabilize as Asian troubles are addressed. Absent regionally-based
disruptions, the bottom-up strategies of this fund, based on company-
specific fundamentals, should be especially effective.
As always, it is a privilege to serve you.
Sincerely,
Exeter Asset Management
[graphic]
<pie chart>
Data for pie chart to follow:
<TABLE>
<CAPTION>
<S> <C>
Portfolio Allocation by Country*
Hong Kong 6.66%
United Kingdom 15.40%
Singapore 7.99%
United States 6.45%
China 0.12%
Venezuela 5.78%
Finland 7.14%
Canada 8.06%
Chile 2.22%
Indonesia 0.18%
Malaysia 2.88%
Brazil 18.35%
Netherlands 14.53%
Argentina 2.05%
South Africa 2.23%
*As a percentage of common stocks
</TABLE>
2
<PAGE>
Performance Update as of June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exeter Fund, Inc.
World Opportunities Series
Total Return
Through Growth of $10,000 Average
06/30/98 Investment Cumulative Annual
One Year $ 8,900 -11.00% -11.00%
Inception 2 $ 11,452 14.52% 7.75%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
S&P 500 Total Return Index
Total Return
Through Growth of $10,000 Average
06/30/98 Investment Cumulative Annual
One Year $ 13,015 30.15% 30.15%
Inception 2 $ 17,849 78.49% 37.57%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Morgan Stanley
Capital International World Index
Total Return
Through Growth of $10,000 Average
06/30/98 Investment Cumulative Annual
One Year $ 11,703 17.03% 17.03%
Inception 2 $ 14,671 46.71% 23.49%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - World Opportunities
Series from its inception (9/6/96) to
present (6/30/98) as compared to the
Standard & Poor's (S&P) 500 Total Return
Index and the Morgan Stanley Capital
International World Index. 1
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Date Exeter Fund, Inc. - World S&P 500 Total Morgan Stanley Capital
Opportunities Series Return Index International World Index
09/06/96 10,000 10,000 10,000
12/31/96 10,482 11,372 10,865
06/30/97 12,866 13,714 12,536
12/31/97 11,301 15,165 12,578
06/30/98 11,452 17,849 14,671
</TABLE>
1 The Standard & Poor (S&P) 500 Total Return Index is an unmanaged
capitalization-weighted measure of 500 widely held common stocks listed on the
New York Stock Exchange, American Stock Exchange, and Over-the-Counter
market. The Morgan Stanley Capital International World Index is an market
capitalization-weighted measure of the total return of 1,571 companies listed
on the stock exchanges of the United States, Europe, Canada, Australia, New
Zealand and the Far East. The Morgan Stanley Capital International World
Index is denominated in U.S. Dollars. The Indices' returns assume reinvestment
of dividends and, unlike Fund returns, do not reflect any fees or expenses.
2 Performance numbers for the Fund and Indices are calculated from
September 6, 1996, the Fund's inception date. The Fund's performance is
historical and may not be indicative of future results.
3
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Value
Shares (Note 2)
----------- -----------
COMMON STOCK - 77.2%
AMUSEMENT & RECREATIONAL SERVICES - 2.2%
Resorts World Bhd. (Malaysia) 2,050,000 $2,259,225
-----------
APPLIANCES - 1.5%
Brasmotor S.A. (Brazil) 16,800,000 1,538,441
-----------
BROADCAST SERVICES - 2.1%
Television Broadcasts Ltd. (Hong Kong) 800,000 2,116,584
-----------
CHEMICALS & ALLIED PRODUCTS - 7.9%
Celltech plc* (United Kingdom) 450,000 2,374,057
Orion-Yhtyma OY - B Shares (Finland) 182,000 5,597,033
-----------
7,971,090
-----------
COMPUTER EQUIPMENT - 3.1%
Varitronix International Ltd. (Hong Kong) 1,551,000 3,102,667
-----------
COMPUTER INTEGRATED SYSTEMS DESIGN - 2.0 %
DAOU Systems, Inc.* (United States) 90,000 2,058,750
-----------
CRUDE PETROLEUM & NATURAL GAS - 4.6%
Petroleo Brasileiro S.A. (Petrobras) - ADR
(Brazil) 165,000 3,067,152
YPF Sociedad Anonima - ADR (Argentina) 53,500 1,608,344
-----------
4,675,496
-----------
DIAMONDS - 3.4%
De Beers Centenary AG - ADR (South Africa) 100,000 1,750,000
Fertilizantes Fosfatados S.A. - (Fosfertil) (Brazil) 451,100,000 1,716,331
-----------
3,466,331
-----------
ELECTRONICS & ELECTRICAL EQUIPMENT - 4.7%
Philips Electronics N.V. -ADR (Netherlands) 56,000 4,760,000
-----------
FOOD & BEVERAGE - 4.9%
Diageo plc (United Kingdom) 419,475 4,968,354
-----------
HOLDING COMPANIES - 4.7%
BTR plc (United Kingdom) 415,625 4,722,497
-----------
INDUSTRIAL & COMMERCIAL MACHINERY - 2.2%
Creative Technology Ltd. - ADR* (Singapore) 183,000 2,264,625
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Shares/Principal Value
Amount (Note 2)
------------------ ------------
LEATHER & LEATHER PRODUCTS - 6.5%
Gucci Group N.V.- ADR (Netherlands) 125,000 $ 6,625,000
------------
PAPER & ALLIED PRODUCTS - 7.6%
Aracruz Celulose S.A. - ADR (Brazil) 200,000 2,287,500
Asia Pulp & Paper Company Ltd. - ADR
(Singapore) 355,000 3,993,750
Industrias Klabin de Papel e Celulose S.A.
(Brazil) 3,370,000 1,398,771
------------
7,680,021
------------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 3.0%
Eastman Kodak Co. (United States) 41,000 2,995,563
------------
PRINTING & PUBLISHING - 0.1%
South China Morning Post (Holdings) Ltd. - ADR
(China) 40,000 96,144
------------
TELECOMMUNICATION SERVICES - 10.5%
Compania Anonima Nacional Telefonos de
Venezuela (CANTV) - ADR (Venezuela) 180,000 4,500,000
Microcell Telecommunications, Inc. - ADR*
(Canada) 200,000 1,800,000
Telecommunicacoes Brasileiras S.A. (Telebras) -
ADR (Brazil) 40,000 4,367,500
------------
10,667,500
------------
TOBACCO - 0.1%
PT Hanjaya Mandala Sampoerna (Indonesia) 1,070,000 144,934
------------
TRANSPORTATION-RAILROAD - 4.4%
Canadian National Railway Co. - ADR (Canada) 85,000 4,515,625
------------
UTILITIES-ELECTRIC - 1.7%
Enersis S.A. - ADR (Chile) 71,000 1,735,063
------------
TOTAL COMMON STOCK
(Identified Cost $95,858,093) 78,363,910
------------
SHORT-TERM INVESTMENTS - 22.3%
Federal Mortgage Corp. Discount Note, 7/6/1998 $ 5,000,000 4,996,257
U.S. Treasury Bill, 7/23/1998 4,000,000 3,986,889
Farm Credit Discount Note, 7/28/1998 5,000,000 4,979,824
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount/Shares (Note 2)
--------------- -------------
SHORT-TERM INVESTMENTS (CONTINUED)
Federal National Mortgage Association Discount
Note, 8/14/1998 $ 5,000,000 $ 4,966,694
Dreyfus Treasury Cash Management Fund 3,690,432 3,690,432
-------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $22,620,096) 22,620,096
-------------
TOTAL INVESTMENTS - 99.5%
(Identified Cost $118,478,189) 100,984,006
OTHER ASSETS, LESS LIABILITIES - 0.5% 530,504
-------------
NET ASSETS -100% $101,514,510
=============
</TABLE>
*Non-income producing security.
<TABLE>
<CAPTION>
<S> <C>
FEDERAL TAX INFORMATION:
At June 30, 1998, the net unrealized depreciation based on identified cost for
federal income tax purposes of $118,478,189 was as follows:
Aggregate gross unrealized appreciation for all investments $ 6,306,114
in which there was an excess of value over tax cost
Aggregate gross unrealized depreciation foa all investments
in which there was an excess of tax cost over value (23,800,297)
-------------
UNREALIZED DEPRECIATION - NET $(17,494,183)
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
<S> <C>
JUNE 30, 1998
ASSETS:
Investments, at value (identified cost $118,478,189)
(Note 2) $100,984,006
Foreign currency, at value (identified cost $534,538) 532,364
U.S. currency 49,050
Dividends receivable 254,571
Receivable for fund shares sold 20,490
Foreign tax reclaims receivable 13,888
-------------
TOTAL ASSETS 101,854,369
-------------
LIABILITIES:
Accrued management fees (Note 3) 84,857
Accrued Directors' fees (Note 3) 3,221
Payable for securities purchased 102,856
Payable for closed forward foreign currency exchange
contracts (Note 2) 66,244
Payable for fund shares repurchased 55,422
Custodian fee payable 14,353
Audit fee payable 5,338
Other payables and accrued expenses 7,568
-------------
TOTAL LIABILITIES 339,859
-------------
NET ASSETS FOR 10,267,790 SHARES
OUTSTANDING $101,514,510
=============
NET ASSETS CONSIST OF:
Capital stock $ 102,678
Additional paid-in-capital 104,196,343
Undistributed net investment income 1,529,953
Accumulated net realized gain on investments 13,184,340
Net unrealized depreciation on investments, foreign currency,
forward foreign currency exchange contracts, and other
assets and liabilities (17,498,804)
-------------
TOTAL NET ASSETS $101,514,510
=============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE - CLASS A
($101,514,510/10,267,790 shares) $ 9.89
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
<S> <C>
FOR THE SIX MONTHS ENDED JUNE 30, 1998
INVESTMENT INCOME:
Dividends (net of withholding) $ 1,394,550
Interest 538,050
-------------
Total Investment Income 1,932,600
-------------
EXPENSES:
Management fees (Note 3) 519,070
Directors' fees (Note 3) 3,322
Custodian fee 33,473
Audit fee 12,683
Registration and filing fees 9,655
Miscellaneous 7,710
-------------
Total Expenses 585,913
-------------
NET INVESTMENT INCOME 1,346,687
-------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on -
Investments (identified cost basis) 11,876,551
Foreign currency and forward foreign currency exchange contracts 846,318
-------------
Net realized gain on investments 12,722,869
-------------
Net change in unrealized depreciation on -
Investments (12,980,489)
Foreign currency, forward foreign currency exchange
contracts and other assets and liabilities (454,170)
-------------
Net change in unrealized depreciation on investments (13,434,659)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (711,790)
-------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 634,897
=============
</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 Six
Months Ended For the Year
6/30/98
(unaudited) Ended 12/31/97
---------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,346,687 $ 733,858
Net realized gain on investments 12,722,869 11,636,976
Net change in unrealized depreciation
on investments (13,434,659) (7,176,949)
---------------- -----------------
Net increase in net assets from operations 634,897 5,193,885
---------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income -- (730,313)
From net realized gain on investments -- (11,273,357)
---------------- -----------------
Total distributions to shareholders -- (12,003,670)
---------------- -----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share transactions (Note 5) 5,664,662 24,686,416
---------------- -----------------
Net increase in net assets 6,299,559 17,876,631
NET ASSETS:
Beginning of period 95,214,951 77,338,320
---------------- -----------------
END OF PERIOD (including undistributed net investment
income of $1,529,953 and $183,266, respectively) $ 101,514,510 $ 95,214,951
================ =================
</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 Six Period 9/6/96
Months Ended (commencement of
6 /30/98 For the Year operations)
(unaudited) Ended 12/31/97 to 12/31/96
--------------- ----------------- ------------------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD)
NET ASSET VALUE - BEGINNING OF PERIOD $ 9.76 $ 10.42 $ 10.00
--------------- ----------------- ------------------
Income from investment operations:
Net investment income 0.130 0.086 0.051
Net realized and unrealized gain
on investments - 0.669 0.429
--------------- ----------------- ------------------
Total from investment operations 0.130 0.755 0.480
--------------- ----------------- ------------------
Less distributions to shareholders:
From net investment income - (0.086) (0.051)
From net realized gain on investments - (1.329) (0.009)
--------------- ----------------- ------------------
Total distributions to shareholders - (1.415) (0.060)
--------------- ----------------- ------------------
NET ASSET VALUE - END OF PERIOD $ 9.89 $ 9.76 $ 10.42
=============== ================= ==================
Total return1 1.33% 7.81% 4.82%
Ratios of expenses (to average net assets)/
Supplemental Data:
Expenses 1.13%2 1.15% 1.17%2
Net investment income 2.59%2 0.79% 1.54%2
Portfolio turnover 46% 62% 1%
Average commission rate paid $ 0.0077 $ 0.0101 $ 0.0065
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 101,515 $ 95,215 $ 77,338
=============== ================= ==================
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
World Opportunities Series (the "Fund") is a no-load non-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 Fund is authorized to issue five classes of shares (Class A, B, C, D, and
E). Currently, only Class A shares have been issued. Each class of shares is
substantially the same, except that class-specific distribution and
shareholder servicing expenses are borne by the specific class of shares to
which they relate.
Shares of the Fund are offered directly to investors and to employees, and
clients of Manning & Napier Advisors, Inc. (the "Advisor") and its affiliates.
The total authorized capital stock of the Corporation consists of one billion
shares of common stock each having a par value of $0.01. As of June 30, 1998,
940 million shares have been designated in total among 19 series, of which 50
million have been designated as World Opportunities Series Class A Common
Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities, options
and corporate bonds, listed on an exchange are valued at the last quoted sales
price of the exchange on which the security is primarily traded. Securities
not traded on valuation date or securities not listed on an exchange are
valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed securities,
will normally be valued on the basis of evaluated bid prices 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.
11
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL INCOME TAXES
The Fund's policy is to comply with the provisions of the Internal Revenue
Code applicable to regulated investment companies. The Fund is not subject to
federal income or excise tax to the extent the Fund distributes to
shareholders each year its taxable income, including any net realized gains on
investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made
in the financial statements.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
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, foreign denominated investments or
character reclassification between net income and net gains. As a result, net
investment income (loss) and net investment gain (loss) on investment
transactions for a reporting period may differ significantly from
distributions to shareholders during such period. As a result, the Fund may
periodically make 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
investment that result from fluctuations in foreign currency exchange rates is
not separately stated.
12
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may purchase or sell forward foreign currency exchange contracts in
order to hedge a portfolio position or specific transaction. Risks may arise
if the counterparties to a contract are unable to meet the terms of the
contract or if the value of the foreign currency moves unfavorably.
All forward foreign currency exchange contracts are adjusted daily by the
exchange rate of the underlying currency and, for financial statement
purposes, any gain or loss is recorded as unrealized gain or loss until a
contract has been closed or settled. Realized and unrealized gain or loss
arising from a transaction is included in net realized and unrealized gain
(loss) from foreign currency and forward foreign currency exchange contracts.
The Fund regularly trades forward foreign currency exchange contracts with
off-balance sheet risk in the normal course of its investing activities to
assist in managing exposure to changes in foreign currency exchange rates.
The notional or contractual amount of these instruments represents the
investment the Fund has in forward foreign currency exchange contracts and
does not necessarily represent the amounts potentially at risk. The
measurement of the risks associated with forward foreign currency exchange
contracts is meaningful only when all related and offsetting transactions are
considered.
At June 30, 1998 the fund had no open forward foreign currency exchange
contracts.
OPTION CONTRACTS
The Fund may write (sell) or buy call or put options on securities and other
financial instruments. When the Fund writes a call, the Fund gives the
purchaser the right to buy the underlying security from the Fund at the price
specified in the option contract (the "exercise price") at any time during the
option period. When the Fund writes a put option, the Fund gives the
purchaser the right to sell to the Fund the underlying security at the
exercise price at any time during the option period. The Fund will only write
options on a "covered basis." This means that the Fund will own the
underlying security when the Fund writes a call or the Fund will put aside
cash, U.S. Government securities, or other liquid assets in the amount not less
than the exercise price at all times the put option is outstanding.
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's Statement of Assets and Liabilities as an
asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the
option. The current market value of the option is the closing price or, in
the absence of a closing price, the bid price.
If a written option expires on its stipulated expiration date or if the Fund
enters into a closing transaction, a gain or loss is realized on the contract.
When a gain or loss is realized, the liability related to such option
contract is extinguished.
13
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
OPTION CONTRACTS (continued)
If a written call option is exercised, a gain or loss is realized from the
sale of the underlying security and the premium received from the option is
added to proceeds from the sale of the underlying security thereby increasing
the gain or decreasing the loss from the sale of the underlying security. If
a written put option is exercised, the cost of the underlying security
purchased by the Fund will be decreased by the premium originally received.
The Fund may also purchase options in an attempt to hedge against fluctuations
in the value of its portfolio and to protect against declines in the value of
the securities. The premium paid by the Fund for the purchase of a call or
put option is included in the Fund's Statement of Assets and Liabilities as an
investment and subsequently marked-to-market to reflect the current market
value of the option. The current market value of the option is the closing
price or, in the absence of a closing price, the bid price.
If an option the Fund has purchased expires on the stipulated expiration date,
the Fund realizes a loss in the amount of the cost of the option. If the Fund
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund exercises
a put option, it realizes a gain or loss from the sale of the underlying
security and the proceeds from such a sale are decreased by the premium
originally paid.
The measurement of the risks associated with option contracts is meaningful
only when all related and offsetting transactions are considered. A summary
of obligations for option contracts for the six months ended June 30, 1998 is
as follows.
<TABLE>
<CAPTION>
<S> <C> <C>
Written Put Options
- -----------------------------------------
Contracts Amount
----------- -----------
Options written 400 $232,992
Options terminated in closing transaction (400) (232,992)
----------- -----------
Balance, June 30, 1998 0 $0
=========== ===========
</TABLE>
OTHER
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of the revenues and expenses during the
reporting period. Actual results could differ from those estimates.
14
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with the Advisor, for which the
Fund pays a fee, computed daily and payable monthly, at an annual rate of 1%
of the Fund's average daily net assets. The fee amounted to $519,070 for the
six months ended June 30, 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. These services are provided at no additional
cost to the Fund.
Manning & Napier Investor Services, Inc., a registered broker-dealer
affiliate of the Advisor, acts as distributor for the Fund's shares. The
services of Manning & Napier Investor Services, Inc. are provided at no
additional cost to the Fund.
The compensation of the non-affiliated Directors totaled $3,322 for the six
months ended June 30, 1998.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1998, purchases and sales of securities,
other than United States Government securities and short-term securities,
were $38,836,679 and $49,330,073, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of World Opportunities Series Class A Shares were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Six Months For the Year
Ended 6/30/98 Ended 12/31/97
-------------------- ------------------------------
Shares Amount Shares Amount
-------------------- ------------- ------------------------------ -------------
Sold 1,053,591 $11,291,182 1,618,889 $19,147,297
Reinvested 0 0 1,260,495 11,848,761
Repurchased (540,965) (5,626,520) (543,078) (6,309,642)
-------------------- ------------- ------------------------------ -------------
Total 512,626 $5,664,662 2,336,306 $24,686,416
==================== ============= ============================== =============
</TABLE>
15
<PAGE>
Notes to Financial Statements (unaudited)
6. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of domestic companies and the United States Government. These
risks include revaluation of currencies and future adverse political and
economic developments. Moreover, securities of foreign companies and foreign
governments and their markets may be less liquid and their prices more
volatile than of those securities of comparable domestic companies and the
United States Government.
16
<PAGE>
Global Fixed Income Series
Semi-Annual Report
June 30, 1998
<PAGE>
Management Discussion and Analysis
DEAR SHAREHOLDERS:
While the Global Fixed Income Series has only been open for eight months, it
has been a rather eventful eight months. The Series was activated to take
advantage of the selloff in dollardenominated Latin American bonds triggered
by the first leg of the Pacific Rim crisis. The second leg of the crisis
provided the Series with and opportunity to invest in the Pacific Rim itself.
Just last May, the first phase of the European Monetary Union (EMU) was
completed with the countries that meet the EMU membership requirements having
been identified. The Series investments in Spain and Italy were based on a
belief that both would meet the EMU requirements, a belief that was not
universally held.
Some of the Series other investments were related to these events as well. The
investments in Australia and New Zealand were based upon both countries
proximity to the former Asian Tigers. That and the fact that both offered
yields comparable to those available in the United States, but carried
inflation rates close to zero, suggested to us that real interest rates in
those countries were likely to decline. As for the events in Europe, they
provided us with an opportunity to invest in short-term bonds in the United
Kingdom.
To date, however, the biggest and most important investment decision has been
the Series heavy weighting in dollar denominated securities and its hedging of
certain currency exposures. In other words, the Series was positioned to take
advantage of an investment overview that expected the dollar to appreciate
versus other currencies, especially the Japanese yen. With the strength in the
U.S. economy, the higher relative yields, and the unlikelihood of easier
monetary policies (i.e., the Federal Reserve cutting short-term rates), the
dollar has strengthened. That has allowed dollar denominated securities to
outperform the standard global fixed income indices regardless of the changes
in interest rates.
With respect to interest rates, the Series was positioned in bonds with longer
durations than the government benchmark in each of the countries in which the
Series invested, with the exception of the U.K. The longer durations, which
proved to be warranted, were based upon the same factors that have caused
Manning & Napier to extend the durations of its domestic portfolios. Those
factors are driven by a recognition of the increase in competition associated
with the globalization of the worlds economies. The globalization has affected
the policies of most countries (i.e., they have been forced to become more
conservative) because international
1
<PAGE>
Management Discussion and Analysis
financial markets have become so important that they are now capable of
enforcing fiscal and monetary discipline.
At Manning & Napier, we believe that focusing on the big picture, the secular
rather than the cyclical trends, is the key to success. It is the process that
we apply to all of our fixed income accounts. The Global Fixed Income Series
is no exception.
As always, it is a privilege to serve you.
Sincerely,
Exeter Asset Management
[graphic]
<pie chart>
Data for pie chart to follow:
[C]
Portfolio Composition1 - As of 6/30/98
Brazil 8.88%
Australia 6.08%
Argentina 1.68%
United Kingdom 2.30%
Spain 9.06%
New Zealand 2.40%
Mexico 2.70%
Italy 9.51%
Canada 9.18%
Cash, equivalents & assets, less other liabilities 8.84%
U.S. Government Securities 20.80%
Corporate Bonds 18.57%
1 As a percentage of net assets
2
<PAGE>
Performance Update as of June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exeter Fund, Inc.
Global Fixed Income Series
Total Return
Through Growth of $10,000 Average
06/30/98 Investment Cumulative Annual
Inception 2 $ 10,391 3.91% N/A
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Merill Lynch Global Government Bond Index
Total Return
Through Growth of $10,000 Average
06/30/98 Investment Cumulative Annual
Inception 2 $ 10,095 0.95% N/A
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - Global Fixed Income
Series from its inception (10/31/97) to
present (6/30/98) as compared to the
Merrill Lynch Global Government Bond Index.
[graphic]
<line chart>
Data for line chart to follow:
Exeter Fund, Inc. Merrill Lynch Global Government
Date Global Fixed Income Series Bond Index
10/31/97 10,000 10,000
12/31/97 10,200 9,841
03/31/98 10,462 9,935
06/30/98 10,391 10,095
1 The unmanaged Merrill Lynch Global Government Bond Index is a market value
weighted measure of approximately 544 Global Government bonds. Index returns
assume reinvestment of coupons and, unlike Fund returns, do not reflect any
fees or expenses.
2 The Fund and Index performance numbers are calculated from October 31, 1997,
the Fund's inception date. The Fund's performance is historical and may not be
indicative of future results.
3
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Value
Currency Amount (Note 2)
ARGENTINA - 1.68%
Republic of Argentina, 11.375%, 1/30/2017
(Identified Cost $2,059,297) USD $ 2,000,000 $ 2,125,000
------------
AUSTRALIA - 6.08%
Australian Government, 8.75%, 1/15/2001 AUD 5,320,000 3,567,352
Australian Government, 6.75%, 11/15/2006 AUD 6,140,000 4,113,443
------------
TOTAL AUSTRALIAN SECURITIES
(Identified Cost $8,529,345) 7,680,795
------------
BRAZIL - 8.88 %
Federal Republic of Brazil, 10.125%, 5/15/2027
(Identified Cost $10,757,500) USD 13,000,000 11,220,625
------------
CANADA - 9.18%
Canadian Government, 4.75%, 9/15/1999 CAD 1,875,000 1,270,399
Canadian Government, 5.50%, 9/1/2002 CAD 1,845,000 1,266,379
Canadian Government, 7.25%, 6/1/2007 CAD 11,745,000 9,063,579
------------
TOTAL CANADIAN SECURITIES
(Identified Cost $12,028,524) 11,600,357
------------
ITALY - 9.51%
Buoni Poliennali del Tesoro, 7.50%, 10/1/1999 ITL 6,625,000,000 3,853,449
Buoni Poliennali del Tesoro, 6.25%, 3/1/2002 ITL 6,700,000,000 3,967,382
Buoni Poliennali del Tesoro, 6.75%, 7/1/2007 ITL 6,645,000,000 4,193,232
------------
TOTAL ITALIAN SECURITIES
(Identified Cost $12,162,400) 12,014,063
------------
MEXICO - 2.70%
United Mexican States, 11.50%, 5/15/2026
(Identified Cost $3,406,225) USD 3,000,000 3,410,625
------------
NEW ZEALAND - 2.40%
New Zealand Government, 6.50%, 2/15/2000 NZD 3,065,000 1,574,304
New Zealand Government, 8.00%, 11/15/2006 NZD 2,550,000 1,456,648
------------
TOTAL NEW ZEALAND SECURITIES
(Identified Cost $3,661,727) 3,030,952
------------
SPAIN - 9.06%
Bonos Y Oblig Del Estado, 9.40%, 4/30/1999 SP 483,000,000 3,240,998
Bonos Y Oblig Del Estado, 7.90%, 2/28/2002 SP 468,000,000 3,395,690
Bonos Y Oblig Del Estado, 7.35%, 3/31/2007 SP 632,000,000 4,807,966
------------
TOTAL SPANISH SECURITIES
(Identified Cost $11,661,360) 11,444,654
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Value
Currency Amount (Note 2)
UNITED KINGDOM- 2.30%
United Kingdom Treasury Bond, 9.50%,
1/15/99 (Identified Cost $2,852,421) BP $ 1,726,500 $ 2,911,648
------------
UNITED STATES - 20.80%
U.S. GOVERNMENT AGENCY - 9.45%
GNMA, POOL #417346, 6.00%, 4/15/2026 USD 6,024,727 5,885,436
GNMA, POOL #441545, 9.00%, 3/15/2027 USD 5,649,586 6,045,057
------------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $11,826,437) 11,930,493
------------
U.S. TREASURY SECURITIES - 11.35%
U.S. TREASURY NOTES - 6.13%
U.S. Treasury Note, 5.75%, 9/30/1999 USD 6,000,000 6,015,000
U.S. Treasury Note, 5.875%, 9/30/2002 USD 1,700,000 1,721,250
------------
TOTAL U.S. TREASURY NOTES
(Identified Cost $7,705,363) 7,736,250
------------
U.S. TREASURY STRIPPED SECURITIES - 5.22%
Interest Stripped - Principal Payment. 11/15/2002 USD 4,000,000 3,171,400
Interest Stripped - Principal Payment. 11/15/2017 USD 10,300,000 3,415,377
------------
TOTAL U.S. TREASURY STRIPPED SECURITIES
(Identified Cost $6,343,459) 6,586,777
------------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $14,048,822) 14,323,027
------------
TOTAL UNITED STATES SECURITIES
(Identified Cost $25,875,259) 26,253,520
------------
CORPORATE BONDS - 18.57%
Asia Pulp & Paper Inc., 3.50%, 4/30/2003 USD 5,140,000 4,651,700
Bayer Corp., 6.20%, 2/15/2028 USD 2,000,000 2,007,880
General Electric Corp., 7.44%, 12/11/2002 USD 2,300,000 2,442,513
Merrill Lynch & Co., Inc. Stock Linked Note
(Telebras), 11/28/2003 USD 5,000,000 4,975,000
Motorola. Inc., 6.50%, 9/1/2025 USD 3,000,000 3,148,059
Oracle Corp., 6.91%, 2/15/2007 USD 2,000,000 2,070,542
Xerox Corp., 6.25%, 11/15/2026 USD 3,990,000 4,160,880
------------
TOTAL CORPORATE BONDS
(Identified Cost $23,750,540) $23,456,574
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Value
Currency Amount/Shares (Note 2)
SHORT-TERM INVESTMENTS - 7.44%
Federal National Mortgage Association
Discount Note, 8/24/1998 USD $ 3,000,000 $ 2,975,655
Federal Mortgage Corporation Discount Note,
8/26/1998 USD 5,000,000 4,957,844
Dreyfus Treasury Cash Management Fund 1,473,935 1,473,935
-------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $9,407,434) 9,407,434
-------------
TOTAL INVESTMENTS - 98.60%
(Identified Cost $126,152,032) 124,556,247
OTHER ASSETS, LESS LIABILITIES - 1.40% 1,768,517
-------------
NET ASSETS -100% $126,324,764
=============
</TABLE>
KEY:
AUD - Australian Dollar BP - British Pound
CAD - Canadian Dollar ITL - Italian Lira
NZD - New Zealand Dollar SP - Spanish Peseta
USD - United States Dollar
<TABLE>
<CAPTION>
<S> <C>
FEDERAL TAX INFORMATION:
At June 30, 1998 the net unrealized depreciation based on identified cost for
federal income tax purposes of $126,152,032 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $ 1,369,284
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value (2,965,069)
------------
UNREALIZED DEPRECIATION - NET $(1,595,785)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
<S> <C>
JUNE 30, 1998
ASSETS:
Investments, at value (identified cost $126,152,032) (Note 2) $124,556,247
Receivable for open forward foreign currency exchange
contracts (Note 2) 361,980
Interest receivable 1,663,590
Foreign tax reclaim receivable 27,468
Receivable for fund shares sold 14,820
-------------
TOTAL ASSETS 126,624,105
-------------
LIABILITIES:
Accrued management fees (Note 3) 103,998
Accrued Directors' fees (Note 3) 3,322
Payable for fund shares repurchased 136,010
Custodian fee payable 24,335
Accrued registration and filing fees 18,714
Audit fee payable 10,386
Other payables and accrued expenses 2,576
-------------
TOTAL LIABILITIES 299,341
-------------
NET ASSETS FOR 12,255,730 SHARES
OUTSTANDING $126,324,764
=============
NET ASSETS CONSIST OF:
Capital stock $ 122,557
Additional paid-in-capital 122,318,030
Undistributed net investment income 3,567,660
Accumulated net realized gain on investments 1,559,814
Net unrealized depreciation on investments, foreign
currency, forward foreign currency exchange contracts,
and other assets and liabilities (1,243,297)
-------------
TOTAL NET ASSETS $126,324,764
=============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($126,324,764/12,255,730 shares) $ 10.31
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
<S> <C>
FOR THE SIX MONTHS ENDED JUNE 30, 1998
INVESTMENT INCOME:
Interest $ 4,258,063
------------
EXPENSES:
Management fees (Note 3) 638,285
Directors' fees (Note 3) 3,322
Custodian fee 33,473
Registration and filing fees 18,719
Audit fee 12,683
Miscellaneous 5,287
------------
Total Expenses 711,769
------------
NET INVESTMENT INCOME 3,546,294
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on-
Investments (identified cost basis) 585,796
Foreign currency and forward foreign currency
exchange contracts 954,351
------------
Net realized gain on investments 1,540,147
------------
Net change in unrealized depreciation on -
Investments (2,120,145)
Foreign currency and forward foreign currency exchange
contracts and other assets and liabilities (564,775)
------------
Net change in unrealized depreciation on investments (2,684,920)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (1,144,773)
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 2,401,521
============
</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 Six For the Period
Months 10/31/97
Ended (commencement
6/30/98 of operations)
(unaudited) to 12/31/97
------------- ---------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 3,546,294 $ 1,011,923
Net realized gain on investments 1,540,147 11,482
Net change in unrealized appreciation (depreciation)
on investments (2,684,920) 1,441,623
------------- ---------------
Net increase in net assets from operations 2,401,521 2,465,028
------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income -- (982,372)
------------- ---------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital share
transactions (Note 5) (3,248,398) 125,688,985
------------- ---------------
Net increase (decrease) in net assets (846,877) 127,171,641
NET ASSETS:
Beginning of period 127,171,641 --
------------- ---------------
END OF PERIOD (including undistributed net investment
income of $3,567,660 and $21,366, respectively) $126,324,764 $ 127,171,641
============= ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C>
FOR THE SIX MONTHS
ENDED 6/30/98
(UNAUDITED)
--------------------------
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.12
--------------------------
Income from investment operations:
Net investment income 0.289
Net realized and unrealized gain (loss)
on investments (0.099)
--------------------------
Total from investment operations 0.190
--------------------------
Less distributions to shareholders:
From net investment income --
--------------------------
NET ASSET VALUE - END OF PERIOD $ 10.31
==========================
Total return 1 1.88%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses 1.12%2
Net investment income 5.56%2
Portfolio turnover 10%
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 126,325
==========================
1 Represents aggregate total return for the period indicated.
2 Annualized.
<S> <C>
FOR THE
PERIOD 10/31/97
(COMMENCEMENT
OF OPERATIONS) TO
12/31/97
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 0.081
Net realized and unrealized gain (loss)
on investments 0.118
----------------
Total from investment operations 0.199
-----------------
Less distributions to shareholders:
From net investment income (0.079)
----------------
NET ASSET VALUE - END OF PERIOD $ 10.12
================
Total return 1 2.00%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses 1.09%2
Net investment income 4.75%2
Portfolio turnover 3%
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 127,172
================
1 Represents aggregate total return for the period indicated.
2 Annualized.
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Global Fixed Income Series (the "Fund") is a no-load non-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.
Shares of the Fund are offered to clients and employees of Manning & Napier
Advisors, Inc. (the Advisor) and its affiliates. The total authorized capital
stock of the corporation consists of one billion shares of common stock each
having a par value of $0.01. As of June 30, 1998, 940 million shares have
been designated in total among 19 series, of which 50 million have been
designated as Global Fixed Income Series Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including 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 domestic and foreign 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 approved 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. 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.
11
<PAGE>
Notes to Financial Statements (unaudited)
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, foreign denominated investments or
character reclassification between net income and net gains. As a result, net
investment income (loss) and net investment gain (loss) on investment
transactions for a reporting period may differ significantly from
distributions to shareholders during such period. As a result, the Fund may
periodically make 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.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may purchase or sell forward foreign currency exchange contracts in
order to hedge a portfolio position or specific transaction. Risks may arise
if the counterparties to a contract are unable to meet the terms of the
contract or if the value of the foreign currency moves unfavorably.
All forward foreign currency exchange contracts are adjusted daily by the
exchange rate of the underlying currency and, for financial statement
purposes, any gain or loss is recorded as unrealized gain or loss until a
contract has been closed. Realized and unrealized gain or loss arising from a
transaction is included in net realized and unrealized gain (loss) from
foreign currency and forward currency exchange contracts.
12
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS (continued)
The Fund regularly trades forward foreign currency exchange contracts with
offbalance sheet risk in the normal course of its investing activities to
assist in managing exposure to changes in foreign currency exchange rates.
The notional or contractual amount of these instruments represents the
investment the Fund has in forward foreign currency exchange contracts and
does not necessarily represent the amounts potentially at risk. The
measurement of the risks associated with forward foreign currency exchange
contracts is meaningful only when all related and offsetting transactions are
considered. A summary of obligations for forward foreign currency exchange
contracts sold on June 30, 1998 is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Settlement Contracts In Exchange Contracts Unrealized
Date to Deliver For At Value Appreciation
- ---------- ----------------- ------------ ----------- -------------
8/04/98 Australian Dollar $ 5,208,000 $ 4,956,374 $ 251,626
8/04/98 Deutsche Marks $ 11,750,882 $11,640,528 $ 110,354
-------------
Total $ 361,980
=============
</TABLE>
On June 30, 1998, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
OTHER
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions thataffect the reported amounts of the assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of the revenues and expenses
during the reporting period. Acual results could differ from
those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with the Advisor, for which the
Fund pays a fee, computed daily and payable monthly, at an annual rate of 1%
of the Fund's average daily net assets. The fee amounted to $638,285 for the
six months ended June 30, 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.
13
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. These services are provided at no additional
cost to the Fund.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Fund.
The compensation of the non-affiliated Directors totaled $3,322 for the six
months ended June 30, 1998.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1998 purchases and sales of securities,
other than United States Government securities and short-term securities, were
$18,764,460 and $8,028,499, respectively. Purchases and sales of United
States Government securities, other than short-term securities were $0 and
$4,932,751, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Global Fixed Income Series were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Six For the Period 10/31/97
Months Ended (commencement of operations)
6/30/98 to 12/31/97
--------------------------- ----------------------------
Shares Amount Shares Amount
--------------------------- ------------ ---------------------------- -------------
Sold 473,629 $ 4,869,236 12,643,992 $126,446,410
Reinvested -- -- 96,809 967,123
Repurchased (786,614) (8,117,634) (172,086) (1,724,548)
--------------------------- ------------ ---------------------------- -------------
Total (312,985) $(3,248,398) 12,568,715 $125,688,985
=========================== ============ ============================ =============
</TABLE>
6. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of U.S. companies and the United States Government. These risks
include revaluation of currencies and future adverse political and economic
developments. Moreover, securities of foreign companies and foreign
governments and their markets may be less liquid and their prices more
volatile than of those securities of comparable U.S. companies and the United
States Government.
14
<PAGE>
Diversified Tax Exempt Series
Semi-Annual Report
June 30, 1998
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
Given the roller coaster action of the municipal bond market over the past few
years, the first six months of this year have been unique in that municipal
interest rates have remained remarkably steady. The tax-exempt yields on
short, high quality municipal bonds have hovered around 3.65%, yields on
two-year munis have held steady in the 3.75% to 3.85% range, intermediate-term
munis (i.e., ten year notes) have remained at 4.40%, and long-term munis have
barely budged from the 5.0% level. Just as roller coasters may level out for a
moment to let riders catch their breath, the markets seem to have hit an
uneventful stretch. Even so, considering the somewhat conflicting underlying
economic fundamentals, it is safe to say that the tension level of the market
has started to rise.
On the economic front, strong consumer spending and business investment has
been countered by limited government spending and a deteriorating U.S. trade
balance. On the inflation front, accelerating monetary growth and tight labor
markets have raised concerns that have so far been calmed by declining
commodity prices and solid productivity gains.
The big international story has been the renewed collapse of the Pacific Rim's
financial markets and the resulting economic contractions in that part of the
world. The so-called "Asian Flu" has spread outside the region, affecting a
geographically diverse set of countries including Latin America, Russia, and
South Africa. In total, the countries impacted by the Pacific Rim crisis make
up about one-third of the world's GDP, and their problems are acting as a drag
on the rest of the world. The bond market thrives when growth slows. In the
municipal market, a slight increase in the supply of bonds has offset the
benefits that market would normally have received from the Pacific Rim crisis.
The net outcome of the mixed signals has been relatively stable municipal
interest rates. As was mentioned earlier, rates barely changed over the last
six months. But don't let the calm on the surface lull you into a false sense
of security. Just when the ride seems calm, the roller coaster is most likely
to surprise you.
The magic of roller coasters is that they allow you to experience sensations
that can be found nowhere else. However, rational people only ride them
because they come equipped with a restraining device to keep the rider from
flying out as they rocket you along the way. Investing also offers safety
devices, although they are
1
<PAGE>
Management Discussion and Analysis
less apparent. Investors who want to survive the quarterly and annual
fluctuations that are part and parcel of the financial markets, have to invest
based on an understanding of the long-term investment dynamics. The global
economy, its impact on the level of competition, and the disciplining force of
the financial markets are
what has allowed us to smooth the ride for bond investors.
As always, it is a privilege to serve you.
Sincerely,
Exeter Asset Management
[graphic]
<pie chart>
Data for pie chart to follow:
Portfolio Composition 1 - As of 6/30/98
General Obligation Bonds - 76%
Revenue Bonds - 22%
Pre-Refunded Bonds - 2%
1 As a percentage of municipal securities.
[graphic]
<pie chart>
Data for pie chart to follow:
Quality Ratings 2 - As of 6/30/98
Aaa - 82%
Aa - 15%
A - 3%
2 Using Moody's Ratings, as a percentage of municipal securities.
2
<PAGE>
Performance Update as of June 30, 1998 (unadited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exeter Fund, Inc.
Diversified Tax Exempt Series
Total Return
Through Growth of $10,000 Average
06/30/98 Investment Cumulative Annual
One Year $ 10,763 7.63% 7.63%
Inception 2 $ 12,538 25.38% 5.30%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Merrill Lynch Intermediate Municipal Index
Total Return
Through Growth of $10,000 Average
06/30/98 Investment Cumulative Annual
One Year $ 10,726 7.26% 7.26%
Inception 2 $ 12,706 27.06% 5.62%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - Diversified
Tax Exempt Series from its inception
(2/14/94) to present (6/30/98) as
compared to the Merrill Lynch Intermediate
Municipal Index.1
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C>
<C>
Exeter Fund Inc. - Diversified
Date Tax Exempt Series
2/14/94 10,000
12/31/94 9,461
12/31/95 11,003
12/31/96 11,370
12/31/97 12,270
06/30/98 12,538
1 The unmanaged Merrill Lynch Intermediate Municipal Index is
market value weighted measure of approximately 139 municipal
bonds issued across the United States. The Index is comprised of
investment grade securities. Index returns assume reinvestment of
coupons and, unlike Fund returns, do not reflect any fees or
expenses.
2 The Fund and Index performance numbers are calculated from
February 14, 1994, the Fund's inception date. The Fund's
performance is historical and may not be indicative of future results.
3
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<S> <C>
Date Merrill Lynch Intermediate Municipal Index
Municipal Index
2/14/94 10,000
12/31/94 9,709
12/31/95 11,009
12/31/96 11,520
12/31/97 12,406
06/30/98 12,706
3
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount (Note 2)
MUNICIPAL SECURITIES - 98.1%
ALABAMA - 1.9%
Bessemer Water Supply, Revenue Bond, 5.20%, 6/01/2024 $ 500,000 $ 497,860
-----------
ALASKA - 1.2%
Anchorage, G.O. Bond, 6.10%, 8/1/2004 300,000 322,467
-----------
ARIZONA - 1.8 %
Central Arizona Water Conservation District, Revenue Bond,
4.70%, 5/1/2004 200,000 204,390
Maricopa County School District No. 097 Deer Valley, G.O.
Bond, Series A, 5.20%, 7/1/2007 250,000 262,337
-----------
466,727
-----------
CALIFORNIA - 1.3%
Wiseburn School District, G.O. Bond, Series A, 5.25%, 8/1/2016 330,000 335,534
-----------
COLORADO - 0.7%
El Paso County School District No. 020, G.O. Bond, Series A,
6.20%, 12/15/2007 160,000 181,182
-----------
DELAWARE - 0.8%
Wilmington, G.O. Bond, Series B, 5.90%, 4/1/2000 200,000 207,008
-----------
DISTRICT OF COLUMBIA - 0.8%
District of Columbia, G.O. Bond, Series A, 7.65%, 12/1/2003 200,000 207,292
-----------
FLORIDA - 3.5%
Dade County School District, G.O. Bond, 6.125%, 8/1/2008 150,000 159,207
Florida State Board of Education Capital Outlay Public Ed., G.O.
Bond, Series C, 5.60%, 6/1/2025 135,000 140,147
Florida State Dept. of Environmental Preservation 2000, Revenue
Bond, Series A, 4.50%, 7/1/2003 200,000 203,676
Hillsborough County Capital Improvement Program, Revenue
Bond, 5.125%, 7/1/2022 400,000 395,912
-----------
898,942
-----------
GEORGIA - 4.8%
Atlanta, G. O. Bond, 5.60%, 12/1/2018 350,000 366,394
Georgia, G.O. Bond, Series B, 5.65%, 3/1/2012 200,000 218,354
Glynn County Board of Education, G.O. Bond, 5.00%, 7/1/2006 200,000 208,570
Rockdale County Water & Sewer Authority, Revenue Bond,
5.00%, 7/1/2022 450,000 439,546
-----------
1,232,864
-----------
</TABLE>
The accompanying notes are an intergral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount (Note 2)
HAWAII - 1.1%
Hawaii, G.O. Bond, Series CH, 6.00%, 11/1/2007 $ 260,000 $ 287,981
-----------
IDAHO - 0.4%
Ada & Canyon Counties Joint School District No. 2- Meridian,
G.O. Bond, 5.10%, 7/30/2005 100,000 105,211
-----------
ILLINOIS - 4.8%
Aurora, G.O. Bond, 5.80%, 1/1/2012 190,000 201,136
Chicago Schools Financial Authority, G.O. Bond, Series A,
5.00%, 6/1/2007 200,000 206,234
Chicago, G.O. Bond, Series A, 5.875%, 1/1/2022 100,000 107,574
Chicago, G.O. Bond, 5.25%, 1/1/2027 250,000 249,265
Illinois, Certificate Participation, Series 1995A, 5.60%, 7/1/2010 100,000 106,502
Rock Island County School District No. 041-Rock Island,
G.O. Bond, 5.125%, 12/1/2015 200,000 200,072
Tazwell County Community High School District No. 303 -
Pekin, G.O. Bond, 5.50%, 1/1/2011 150,000 157,047
-----------
1,227,830
-----------
INDIANA - 1.2%
Bloomington Sewer Works, Revenue Bond, 5.80%, 1/1/2011 150,000 161,319
Lafayette Waterworks, Revenue Bond, 4.90%, 7/1/2006 140,000 143,501
-----------
304,820
-----------
IOWA - 2.5%
Cedar Rapids, G.O. Bond, 6.45%, 6/1/2014 350,000 378,682
Iowa City Sewer, Revenue Bond, 5.75%, 7/1/2021 250,000 262,578
-----------
641,260
-----------
KANSAS - 1.9%
Derby, Series A, G.O. Bond, 5.00%, 6/1/2015 275,000 274,678
Johnson County Unified School District No. 229, G.O. Bond,
Series A, 5.00%, 10/1/2014 220,000 221,278
-----------
495,956
-----------
KENTUCKY - 2.3%
Jefferson County School District Finance Corp. School Building,
Revenue Bond, Series A, 5.00%, 2/1/2011 300,000 305,016
Kentucky State Turnpike Authority Revitalization Projects,
Revenue Bond, 6.50%, 7/1/2008 250,000 290,575
-----------
595,591
-----------
</TABLE>
The accompanying notes are an intergral part of the financial statements.
5
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount (Note 2)
LOUISIANA - 1.2%
New Orleans Sewer Service, Revenue Bond, 5.25%, 6/1/2012 $ 300,000 $ 308,529
-----------
MAINE - 1.2%
Hermon, G.O. Bond, 5.60%, 11/1/2013 75,000 78,788
Portland, G.O. Bond, 6.20%, 4/1/2006 200,000 222,626
-----------
301,414
-----------
MASSACHUSETTS - 4.0%
Martha's Vineyard Regional High School District No. 100,
G.O. Bond, 6.70%, 12/15/2014 200,000 227,540
Massachusetts Municipal Electric Supply System, Revenue Bond,
Series A, 5.00%, 7/1/2017 200,000 195,680
Massachusetts State, G.O. Bond, Series C, 5.75%, 8/1/2010 400,000 442,660
Massachusetts Water Authority General Ref., Revenue Bond,
Series B, 5.25%, 3/1/2013 155,000 157,868
-----------
1,023,748
-----------
MARYLAND - 2.6%
Baltimore Water Project, Revenue Bond, Series A,
5.55%, 7/1/2009 260,000 278,187
Prince Georges County Public Improvement, G.O. Bond,
5.00%, 3/15/2014 200,000 200,112
Washington County Public Improvement, G.O. Bond,
4.875%, 1/1/2010 200,000 202,192
-----------
680,491
-----------
MICHIGAN - 4.2%
Comstock Park Public Schools, G.O. Bond, 5.50%, 5/1/2011 150,000 157,280
Dearborn School District, G.O. Bond, 5.10%, 5/1/2006 200,000 207,294
Farmington Hills, G.O. Bond, 5.70%, 10/1/2005 65,000 69,781
Farmington Hills, G.O. Bond, 5.80%, 10/1/2006 50,000 53,784
Farmington Hills, G.O. Bond, 5.90%, 10/1/2007 75,000 80,734
Hudsonville Public Schools, G.O. Bond, 5.15%, 5/01/2027 225,000 222,980
Pinckney Community Schools, G.O. Bond, 5.00%, 5/1/2014 200,000 199,336
St. Joseph County Sewer Disposal Systems - Constantine,
G.O. Bond, 5.00%, 4/1/2012 100,000 100,452
-----------
1,091,641
-----------
</TABLE>
The accompanying notes are an intergral part of the financial statements.
6
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount (Note 2)
MINNESOTA - 2.8%
Minneapolis, G.O. Bond, Series B, 5.20%, 3/1/2013 $ 300,000 $306,546
Minnesota Various Purpose, G.O. Bond, 6.60%, 8/1/1999 200,000 206,344
Western Minnesota Municipal Power Agency, Revenue Bond,
6.625%, 1/1/2016 175,000 205,618
---------
718,508
---------
MISSISSIPPI - 0.9%
Mississippi, G.O. Bond, 6.30%, 12/1/2006 200,000 222,578
---------
MISSOURI - 1.0%
Missouri State Ref.- Third Street Building, G.O. Bond, Series A,
5.125%, 8/1/2009 250,000 256,513
---------
MONTANA - 0.8%
Montana Long Range Building Project, G.O. Bond, Series A,
4.875%, 8/1/2010 200,000 202,674
---------
NEBRASKA - 2.1%
Douglas County School District No. 17, G.O. Bond, 5.00%,
10/1/2012 545,000 546,700
---------
NEVADA - 2.5%
Clark County School District, G.O. Bond, 6.00%, 6/15/2002 100,000 106,650
Henderson Water, G.O. Bond, Series A, 5.65%, 12/1/2003 300,000 321,117
Nevada State Project No. 42, G.O. Bond, 5.70%, 9/1/2008 200,000 214,086
---------
641,853
---------
NEW HAMPSHIRE - 0.8%
New Hampshire, G.O. Bond, 6.60%, 9/1/2014 200,000 226,568
---------
NEW JERSEY - 3.7%
Jersey City Water, G.O. Bond, 5.50%, 3/15/2011 225,000 238,824
New Jersey State Highway Authority, Garden State Parkway,
Revenue Bond, 5.50%, 1/1/2000 200,000 204,714
North Hudson Sewer Authority, Revenue Bond, 5.25%,
8/1/2016 250,000 253,705
West Windsor Plainsboro, G.O. Bond, 5.25%, 12/1/2004 250,000 264,195
---------
961,438
---------
NEW MEXICO - 0.8%
Albuquerque, G.O. Bond, Series A & B, 4.70%, 7/1/2000 200,000 203,054
---------
</TABLE>
The accompanying notes are an intergral part of the financial statements.
7
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount (Note 2)
NEW YORK - 4.8%
Monroe County Community School Corporation First Meeting,
Revenue Bond, 5.25%, 7/1/2016 $ 125,000 $ 125,904
New York State Thruway Authority, Revenue Bond, Series A,
5.50%, 1/1/2023 200,000 209,648
Sands Point, G.O. Bond, 6.70%, 11/15/2013 350,000 398,013
Spencerport Central School District, G.O. Bond, 5.00%,
11/15/2012 350,000 355,362
Westchester County, G.O. Bond, 4.75%, 11/15/2016 150,000 146,223
-----------
1,235,150
-----------
NORTH CAROLINA - 1.6%
Charlotte Public Improvement, G.O. Bond, 5.70%, 2/1/2002 200,000 210,972
North Carolina State Prison Facilities, G.O. Bond, 4.80%,
3/1/2009 200,000 205,696
-----------
416,668
-----------
OHIO - 5.3%
Cleveland Water & Sewer, G.O. Bond, 5.35%, 9/1/2023 450,000 457,137
Oak Hills Local School District, G.O. Bond, 5.125%, 12/1/2025 490,000 484,639
Ohio Public Facilities, Community Higher Education, Revenue
Bond, Series II-A, 4.25%, 12/1/2002 200,000 201,034
Summit County Various Purpose, G.O. Bond, 6.625%, 12/1/2012 200,000 218,358
-----------
1,361,168
-----------
OREGON - 1.0%
Salem Pedestrian Safety Impts., G.O. Bond, 5.50%, 5/1/2010 255,000 269,940
-----------
PENNSYLVANIA - 4.1%
Beaver County, G.O. Bond, 5.15%, 10/01/2017 300,000 300,456
Cambria County, G.O. Bond, Series A, 6.10%, 8/15/2016 350,000 385,732
Pennsylvania State, G.O. Bond, First Series, 5.30%, 5/1/2005 100,000 105,499
Pennsylvania State, G.O. Bond, Second Series, 6.00%, 7/1/2005 90,000 98,825
Philadelphia Water & Waste, Revenue Bond, 5.60%, 8/1/2018 150,000 155,238
-----------
1,045,750
-----------
RHODE ISLAND - 1.3%
Rhode Island State Pre-refunded Balance, G.O. Bond, Series A,
6.20%, 6/15/2004 115,000 125,742
Rhode Island State Unrefunded Balance, G.O. Bond, Series A,
6.20%, 6/15/2004 185,000 201,145
-----------
326,887
-----------
</TABLE>
The accompanying notes are an intergral part of the financial statements.
8
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount (Note 2)
SOUTH CAROLINA - 2.3%
South Carolina State Capital Improvement, G.O. Bond, 4.10%,
4/1/2001 $ 200,000 $ 200,766
South Carolina State Highway, G.O. Bond, Series B, 5.625%,
7/1/2010 350,000 380,377
-----------
581,143
-----------
TENNESSEE - 2.0%
Johnson City School Sales Tax, G.O. Bond, 6.70%, 5/1/2021 350,000 404,852
Lawrence County, G.O. Bond, 6.60%, 3/1/2013 100,000 109,220
-----------
514,072
-----------
TEXAS - 4.5%
Brazoria County , G.O. Bond, 4.75%, 9/1/2011 445,000 442,388
Dallas Waterworks & Sewer, Revenue Bond, 5.625%, 4/1/2009 200,000 207,822
North Texas Municipal Water District, Revenue Bond, 5.00%
6/1/2012 150,000 149,844
Southlake Waterwork & Sewer System, G.O. Bond, 5.30%
2/15/2011 350,000 361,452
-----------
1,161,506
-----------
UTAH - 2.9%
Alpine School District, G.O. Bond, 5.375%, 3/15/2009 250,000 262,930
Nebo School District, G.O. Bond, 6.00%, 6/15/2018 450,000 488,768
-----------
751,698
-----------
VIRGINIA - 1.6%
Franklin County Capital Improvement , G.O. Bond, 6.60%,
7/15/2013 250,000 270,918
Spotsylvania County Water & Sewer Systems, Revenue Bond,
5.25%, 6/1/2016 130,000 131,829
-----------
402,747
-----------
WASHINGTON - 2.8%
Kitsap County School District, G.O. Bond, 6.625%, 12/1/2008 350,000 387,405
Seattle, G.O. Bond, Series A, 5.75%, 1/15/2020 230,000 240,428
Seattle Met. Municipality, G.O. Bond, 5.65%, 1/1/2020 100,000 103,123
-----------
730,956
-----------
</TABLE>
The accompanying notes are an intergral part of the financial statements.
9
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Value
Amount/Shares (Note 2)
WISCONSIN - 4.3%
East Troy School District, G.O. Bond, Series A, 4.625%,
10/1/2011 $ 400,000 $ 391,824
Merrill Public School District, G.O. Bond, 5.30%, 4/1/2013 400,000 408,904
Wisconsin State, G.O. Bond, Series A, 5.75%, 5/1/2001 300,000 313,845
------------
1,114,573
------------
TOTAL MUNICIPAL SECURITIES
(Identified Cost $24,121,882) 25,306,492
------------
SHORT-TERM INVESTMENTS - 0.2%
Dreyfus Municipal Reserves
(Identified Cost $60,793) 60,793 60,793
------------
TOTAL INVESTMENTS - 98.3%
(Identified Cost $24,182,675) 25,367,285
OTHER ASSETS, LESS LIABILITIES - 1.7% 438,776
------------
NET ASSETS - 100% $25,806,061
============
Key - G.O. Bond - General Obligation Bond
Dist. - District Impt. - Improvement
Met. - Metropolitan Ref. - Referendum
Ed. - Education Dept. - Department
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
FEDERAL TAX INFORMATION:
At June 30, 1998, the net unrealized appreciation based on identified cost for
federal income tax purposes of $24,182,675 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $1,191,224
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value (6,614)
-----------
UNREALIZED APPRECIATION - NET $1,184,610
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
<S> <C>
JUNE 30, 1998
ASSETS:
Investments, at value (identified cost $24,182,675)(Note 2) $25,367,285
Interest receivable 403,009
Receivable for fund shares sold 61,050
------------
TOTAL ASSETS 25,831,344
------------
LIABILITIES:
Accrued management fees (Note 3) 10,631
Accrued Directors' fees (Note 3) 3,300
Other payables and accrued expenses 11,352
------------
TOTAL LIABILITIES 25,283
------------
NET ASSETS FOR 2,427,774 SHARES
OUTSTANDING $25,806,061
============
NET ASSETS CONSIST OF:
Capital stock $ 24,278
Additional paid-in-capital 24,476,082
Undistributed net investment income 129,462
Accumulated net realized loss on investments (8,371)
Net unrealized appreciation on investments 1,184,610
------------
TOTAL NET ASSETS $25,806,061
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($25,806,061/2,427,774 shares) $ 10.63
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
<S> <C>
FOR THE SIX MONTHS ENDED JUNE 30, 1998
INVESTMENT INCOME:
Interest $603,982
--------
EXPENSES:
Management fees (Note 3) 60,377
Directors' fees (Note 3) 3,323
Transfer agent fees (Note 3) 2,898
Audit fee 6,744
Registration and filing fees 2,443
Custodian fee 2,083
Miscellaneous 1,740
--------
Total Expenses 79,608
--------
NET INVESTMENT INCOME 524,374
--------
NET CHANGE IN UNREALIZED APPRECIATION
ON INVESTMENTS 8,478
--------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $532,852
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
For the Six
Months
Ended 6/30/98 For the Year
(unaudited) Ended 12/31/97
----------------- ------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 524,374 $ 853,506
Net change in unrealized appreciation on investments 8,478 670,358
----------------- ------------------
Net increase in net assets from operations 532,852 1,523,864
----------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income (439,721) (843,987)
----------------- ------------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share transactions (Note 5) 2,061,724 6,022,646
----------------- ------------------
Net increase in net assets 2,154,855 6,702,523
NET ASSETS:
Beginning of period 23,651,206 16,948,683
----------------- ------------------
END OF PERIOD (including undistributed net investment
income of $129,462 and $44,809, respectively) $ 25,806,061 $ 23,651,206
================= ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
For the For the Period
Six Months 2/14/94
Ended (commencement
06/30/98 For the Years Ended of operations)
(unaudited) 12/31/97 12/31/96 12/31/95 to 12/31/94
------------- --------------- ---------- ---------- -----------------
Per share data (for a share outstanding
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.59 $ 10.23 $ 10.32 $ 9.26 $ 10.00
------------- --------------- ---------- ---------- -----------------
Income from investment operations:
Net investment income 0.223 0.434 0.434 0.428 0.210
Net realized and unrealized gain (loss)
on investments 0.007 0.361 (0.104) 1.062 (0.749)
------------- --------------- ---------- ---------- -----------------
Total from investment operations 0.230 0.795 0.330 1.490 (0.539)
------------- --------------- ---------- ---------- -----------------
Less distributions to shareholders:
From net investment income (0.190) (0.435) (0.420) (0.430) (0.201)
------------- --------------- ---------- ---------- -----------------
NET ASSET VALUE - END OF PERIOD $ 10.63 $ 10.59 $ 10.23 $ 10.32 $ 9.26
============= =============== ========== ========== =================
Total return1 2.18% 7.92% 3.33% 16.29% (5.39)%
Ratios of expenses (to average net assets)
/Supplemental Data:
Expenses 0.66%2 0.69% 0.70% 0.79% 0.85%2,3
Net investment income 4.34%2 4.41% 4.44% 4.52% 3.71%2,3
Portfolio turnover 0% 1% 2% 5% 4%
NET ASSETS-END OF PERIOD (000'S OMITTED) $ 25,806 $ 23,651 $ 16,949 $ 12,452 $ 8,481
============= ============== ========== ========== =================
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
3 The investment advisor waived a portion of its management fee. If the full
fee had been incurred by the fund, the net investment income per share would
have been $0.186, and the annualized ratios would have been as follows:
Expenses, 1.29%; Net investment income 3.27%.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Diversified Tax Exempt Series (the "Fund") is a no-load diversified
series of 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.
Shares of the Fund are offered directly to investors and to employees and
clients of Manning & Napier Advisors, Inc. (the "Advisor") and its
affiliates. The total authorized capital stock of the Corporation consists of
one billion shares of common stock each having a par value of $0.01. As of
June 30, 1998, 940 million shares have been designated in total among 19
series, of which 50 million have been designated as Diversified Tax Exempt
Series Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Municipal securities will normally be valued on the basis of market
valuations provided by an independent pricing service (the "Service"). The
Service utilizes the last price quotations and a matrix system (which
considers such factors as security prices of similar securities, yields,
maturities, and ratings). The Service has been approved by the Fund's Board
of Directors.
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 approved by and
under the general supervision 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.
15
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL INCOME TAXES (continued)
At June 30, 1998, the Fund, for federal income tax purposes, had a
capital loss carryforward of $8,371. Of this amount, $889 will expire on
December 31, 2002, $7,390 will expire on December 31, 2003 and $92 will
expire on December 31, 2004.
The Fund uses the identified cost method for determining realized gain or
loss on investments for both financial statement and federal income tax
reporting purposes.
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 or character reclassification between
net income and net gains. As a result, net investment income (loss) and net
investment gain (loss) on investment transactions for a reporting period may
differ significantly from distributions to shareholders during such period.
As a result, the Fund may periodically make reclassifications among its
capital accounts without impacting the Fund's net asset value.
OTHER
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of the revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with the Advisor, for which
the Fund pays 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 $60,377
for the six months ended June 30, 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
16
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
personnel of the Fund or of the Advisor performing services relating to
research, statistical and investment activities are paid by the Advisor.
The Advisor also acts as the transfer, dividend paying and shareholder
servicing agent for the Fund. For these services, the Fund pays a fee which
is calculated as a percentage of the average daily net assets at an annual
rate of 0.024%; this fee amounted to $2,898 for the six months ended June 30,
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 $3,323 for the
six months ended June 30, 1998.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1998, purchases and sales of
securities, other than United States Government securities and short-term
securities, were $2,854,968 and $0, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Diversified Tax Exempt Series were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Six Months For the Year
Ended 6/30/98 Ended 12/31/97
-------------------- ----------------
Shares Amount Shares Amount
-------------------- ------------ ---------------- ------------
Sold 312,422 $ 3,328,212 643,012 $ 6,698,681
Reinvested 40,185 426,633 78,730 818,991
Repurchased (158,332) (1,693,121) (144,215) (1,495,026)
-------------------- ------------ ---------------- ------------
Total 194,275 $ 2,061,724 577,527 $ 6,022,646
==================== ============ ================ ============
</TABLE>
6. FINANCIAL INSTRUMENTS
The Fund may trade in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include
written options and futures contracts and may involve, to a varying degree,
elements of risk in excess of the amounts recognized for financial statement
purposes. No such investments were held by the Fund on June 30, 1998.
17
<PAGE>
Exeter Fund, Inc.
International Series
Semi-Annual Report
June 30, 1998
<PAGE>
Management Discussion and Analysis
Dear Shareholders:
We manage the International Series on a "top-down" basis, choosing investments
based on our analysis of the country in which they are located. Once a
country is chosen for investment, we buy stocks that we expect to benefit from
the economic or market forces we anticipate in that country. In some cases,
this entails limiting our purchases to certain types of companies, and in some
cases we purchase a basket of stocks in that country.
As of June 30, 1998, the Series' investments fell into two broad regions,
Europe and Asia, with European holdings constituting nearly 90% of the
portfolio. This large allocation in Europe once again led to strong returns
for the six months ending June 30, as European markets have earned among the
best returns in the world for this period.
We originally invested in several European countries when the economies were
very weak and interest rates were high. As we expected, the economies have
strengthened, interest rates have fallen and have stayed low, and currencies
have stabilized. This recovery has benefited our stocks, but two other
factors have also contributed to the strong returns in Europe. First, new
pro-business laws, such as those allowing companies to repurchase their shares
, have helped management focus on shareholdervalues. Second, there is a
move toward corporate restructuring, such as was seen in the U.S. a few
years ago, which has helped businesses become more competitive and
profitable. These economic, political, and company-specific changes have all
contributed to the outstanding returns in European stocks.
The Series' Asian investments, representing approximately 6% of the Series'
stock holdings, can be further divided into three categories: Hong Kong,
Japan, and Southeast Asia. In each of these cases, we limited our purchases
to certain types of companies. We originally purchased our holdings in Hong
Kong in early 1995. At that time, we purchased the stocks of companies that
were tied to growth in mainland China, because we expected them to benefit
from China's move towards a free market. The Chinese economy has performed
better than those of other Asian countries recently because is more
insulated from outside influences, such as currency trading, which have
hurt others in the region and because of the continued push by the
government to transform itself from the currently Communist economy.
Although there is still fear in the marketplace that China will enact a
major devaluation of its currency, we feel that this is unlikely to occur
and that the Chinese economy will continue to grow this year.
Our investments in Japan and Southeast Asia were made more recently, after the
onset of the Asian crisis had created values in those areas. We invested
selectively in certain types of companies that we expected to benefit from the
currency devaluations. This region has remained very weak economically;
however, we expect the financial markets to begin to improve as they see the
crisis forcing governments to make plans to reform the economies and stabilize
the currencies.
1
<PAGE>
Management Discussion and Analysis
The Japanese holdings were purchased last fall. After a long period during
which we had avoided the Japanese market because we felt it to be seriously
overvalued, we identified an opportunity to buy companies meeting specific
criteria that offered compelling value. The Japanese economy has been
troubled by large amounts of debt and weakness in the banking system, but the
government has begun to address these problems. We expect the market to turn
around as the government begins necessary reforms.
We recently sold the Series' holdings in Mexico and in the United Kingdom.
While the investments in both these areas had performed well, we do not expect
as much growth from those countries going forward. The Mexican economy is
tightly tied to the United States' economy, which is a late-cycle economy
where we believe much of the good news has already been realized. We also
believe that the United Kingdom is late in its economic cycle, and there is a
risk that growth will slow there as well, as interest rates have been moved
higher to slow inflation.
As always, it is a privilege to serve you.
Sincerely,
Exeter Asset Management
[graphic]
<pie chart>
Data for pie chart to follow:
Portfolio Allocation by Country*
France 30.00%
Germany 32.72%
Hong Kong 2.32%
Indonesia 0.13%
Italy 18.10%
Japan 2.71%
Malaysia 1.53%
Spain 12.47%
Thailand 0.02%
*As a percentage of common stocks
2
<PAGE>
Performance Update as of June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Exeter Fund, Inc.
International Series
Total Return
Through Growth of $10,000 Average
06/30/98 Investment Cumulative Annual
One Year $ 13,275 32.75% 32.75%
Five Year $ 20,932 109.32% 15.91%
Inception 2 $ 23,294 132.94% 15.56%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
S&P 500 Total Return Index
Total Return
Through Growth of $10,000 Average
06/30/98 Investment Cumulative Annual
One Year $ 13,015 30.15% 30.15%
Five Year $ 28,216 182.16% 23.04%
Inception 2 $ 31,731 217.31% 21.84%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Morgan Stanley
Capital International World Index
Total Return
Through Growth of $10,000 Average
06/30/98 Investment Cumulative Annual
One Year $ 11,703 17.03% 17.03%
Five Year $ 20,677 106.77% 15.63%
Inception 2 $ 23,523 135.23% 15.76%
</TABLE>
The value of a $10,000 investment in the
Exeter Fund, Inc. - International
Series from its inception (8/27/92) to
present (6/30/98) as compared to the
Standard & Poor's (S&P) 500 Total Return
Index and the Morgan Stanley Capital
International World Index. 1
[graphic]
<line chart>
Data for line chart to follow:
Exeter Fund, Inc. - S&P 500 Total Morgan Stanly Capital
Date International Series Return Index International World Index
08/27/92 10,000 10,000 10,000
12/31/92 10,598 10,643 9,880
12/31/93 13,359 11,709 12,103
12/31/94 11,425 11,868 12,717
12/31/95 11,898 16,312 15,351
12/31/96 14,557 20,052 17,421
12/31/97 18,589 26,959 20,167
06/30/98 23,294 31,731 23,523
1 The Standard & Poor (S&P) 500 Total Return Index is an unmanaged
capitalization-weighted measure of 500 widely held common stocks listed on the
New York Stock Exchange, American Stock Exchange, and Over-the-Counter
market. The Morgan Stanley Capital International World Index is a market
capitalization-weighted measure of the total return of 1,571 companies listed
on the stock exchanges of the United States, Europe, Canada, Australia, New
Zealand and the Far East. The Morgan Stanley Capital International World
Index is denominated in U.S. Dollars. The Indices' returns assume reinvestment
of dividends and, unlike Fund returns, do not reflect any fees or expenses.
2 Performance numbers for the Fund and Indices are calculated from
August 27, 1992, the Fund's inception date. The Fund's performance is
historical and may not be indicative of future results.
3
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Value
Shares (Note 2)
COMMON STOCK - 95.75%
FRANCE - 28.72%
AEROSPACE & MILITARY TECHNOLOGY - 0.25%
Thomson CSF 14,389 $ 545,897
-----------
AUTOMOBILES - 0.74%
PSA Peugeot Citroen 7,545 1,617,912
-----------
BANKING - 2.90%
Banque Nationale de Paris 18,100 1,474,884
Compagnie Financiere de Paribas 19,733 2,105,958
Societe Generale 13,155 2,727,586
-----------
6,308,428
-----------
BEVERAGE & TOBACCO - 1.08%
LVMH (Louis Vuitton Moet Hennessy) 11,764 2,347,971
-----------
BUILDING MATERIALS & COMPONENTS - 0.63%
Lafarge SA 13,327 1,373,931
-----------
BUSINESS & PUBLIC SERVICES - 1.70%
Vivendi 17,249 3,673,182
Vivendi warrants (exp. 5/2/2001) 16,992 33,354
-----------
3,706,536
-----------
CHEMICALS - 1.89%
L'Air Liquide 16,356 2,697,922
Rhone-Poulenc - SA 25,300 1,423,073
-----------
4,120,995
-----------
ELECTRICAL & ELECTRONICS - 1.99%
Alcatel Alsthom 21,353 4,335,800
-----------
ENERGY SOURCES - 3.91%
Elf Aquitaine SA 37,335 5,234,647
Total SA - B 25,288 3,278,607
-----------
8,513,254
-----------
FINANCIAL SERVICES - 0.21%
Societe Eurafrance SA 743 465,720
-----------
FOOD & HOUSEHOLD PRODUCTS - 1.31%
Groupe Danone 10,381 2,854,481
-----------
</TABLE>
The accompanying note are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Value
Shares (Note 2)
FRANCE (continued)
HEALTH & PERSONAL CARE - 3.18%
Sanofi SA 11,667 $ 1,368,299
L'Oreal 10,013 5,554,480
------------
6,922,779
------------
INDUSTRIAL COMPONENTS - 0.40%
Michelin-B 15,313 881,532
------------
LEISURE & TOURISM - 0.62%
Accor SA 4,809 1,342,170
------------
MACHINERY & ENGINEERING - 0.50%
Schneider SA 13,595 1,081,107
------------
MATERIALS & COMMODITIES - 1.35%
Compagnie de Saint-Gobain 15,911 2,942,086
------------
MERCHANDISING - 3.17%
Carrefour Supermarche SA 6,048 3,815,887
Casino Guichard-Perrachon SA 10,600 844,161
Pinault-Printemps-Redoute SA 1,500 1,251,971
Promodes 1,800 994,649
------------
6,906,668
------------
MULTI-INDUSTRY - 2.89%
AXA 27,573 3,092,753
Chargeurs SA 1,235 101,755
Suez Lyonnaise des Eaux 17,368 2,850,527
Pathe SA 1,235 241,400
------------
6,286,435
------------
TOTAL FRENCH SECURITIES
(Identified Cost $30,664,566) 62,553,702
------------
GERMANY - 31.34%
AIRLINES - 0.27%
Deutsche Lufthansa AG 23,700 593,814
------------
BANKING - 6.11%
Bayerische Vereinsbank AG 49,730 4,222,119
Deutsche Bank AG 44,350 3,749,408
Dresdner Bank AG 99,090 5,332,690
------------
13,304,217
------------
</TABLE>
The accompanying note are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Value
Shares (Note 2)
GERMANY (continued)
BUSINESS & PUBLIC SERVICES - 1.90%
SAP AG 6,850 $ 4,148,665
------------
CHEMICALS - 1.98%
Bayer AG 83,750 4,312,590
------------
CONSTRUCTION & HOUSING - 0.50%
Hochtief AG 22,770 1,089,388
------------
ELECTRICAL & ELECTRONICS - 3.35%
Siemens AG 120,000 7,287,646
------------
INSURANCE - 4.62%
Allianz AG 23,070 7,592,210
Muenchener Rueckversicherungs -
Gersellschaft AG 5,000 2,475,123
------------
10,067,333
------------
MACHINERY & ENGINEERING - 3.18%
Mannesmann AG 57,250 5,797,857
MAN AG 2,902 1,126,777
------------
6,924,634
------------
MATERIALS & COMMODITIES - 0.51%
Degussa AG 17,900 1,099,944
------------
MULTI-INDUSTRY - 2.06%
Viag AG 6,656 4,491,349
------------
TELECOMMUNICATIONS - 2.48%
Deutsche Telekom AG 200,250 5,393,928
------------
UTILITIES - GAS & ELECTRIC - 4.38%
RWE AG 75,810 4,486,565
VEBA AG 74,150 5,044,521
------------
9,531,086
------------
TOTAL GERMAN SECURITIES
(Identified Cost $34,240,532) 68,244,594
------------
HONG KONG - 2.22%
BROADCAST SERVICES - 0.61%
Television Broadcasts Ltd. 500,000 1,322,865
------------
ENERGY SOURCES - OIL/GAS - 0.40%
Shanghai Petrochemical Co. Ltd. 7,750,000 870,187
------------
</TABLE>
The accompanying note are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Value
Shares (Note 2)
HONG KONG (continued)
INVESTMENT HOLDING COMPANIES - 0.64%
Hutchison Whampoa Ltd. 265,000 $1,398,817
-----------
MULTI-INDUSTRY - 0.41%
Citic Pacific Ltd. 500,000 884,061
-----------
RETAIL - APPAREL - 0.15%
Giordano International Ltd. 1,650,000 334,330
-----------
WHOLESALE - SPECIAL LINES - 0.01%
Goldlion Holdings Ltd. 200,000 22,456
-----------
TOTAL HONG KONG SECURITIES
(Identified Cost $8,431,828) 4,832,716
-----------
INDONESIA - 0.13%
BUILDING MATERIAL & COMPONENTS - 0.03%
PT Barito Pacific Timber 3,425,000 57,274
-----------
TEXTILES & APPAREL - 0.10%
Great River International 8,600,000 215,720
-----------
TOTAL INDONESIAN SECURITIES
(Identified Cost $3,765,253) 272,994
-----------
ITALY - 17.33%
AUTOMOBILES - 1.12%
Fiat S.p.A. 559,900 2,444,469
-----------
BUILDING MATERIAL & COMPONENTS - 0.34%
Italcementi S.p.A. 83,600 749,683
-----------
CONSTRUCTION & HOUSING - 0.22%
Sirti S.p.A. 86,500 469,393
-----------
ENERGY SOURCES - OIL/GAS - 3.15%
Edison S.p.A. 104,000 832,529
ENI S.p.A 921,940 6,027,303
-----------
6,859,832
-----------
FINANCIAL SERVICES - 3.28%
Banca Commerciale Italiana 352,000 2,099,763
Banca Intesa S.p.A. 120,100 670,258
Credito Italiano S.p.A. 489,000 2,553,405
Istituto Bancario San Paolo di Torina 126,800 1,825,161
-----------
7,148,587
-----------
</TABLE>
The accompanying note are an integral part of the financial statements.
7
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Value
Shares (Note 2)
ITALY (continued)
FOOD & HOUSEHOLD PRODUCTS - 0.26%
Parmalat Finanziaria S.p.A. 280,080 $ 569,750
------------
INSURANCE - 2.65%
Assicurazioni Generali 143,104 4,641,668
RAS S.p.A. 47,575 618,051
SAI S.p.A. 40,400 514,638
------------
5,774,357
------------
MULTI-INDUSTRY - 0.50%
Pirelli S.p.A. 348,000 1,083,844
------------
RETAIL - SPECIALTY STORES - 0.25%
La Rinascente S.p.A. 55,000 546,299
La Rinascente S.p.A. warrants (exp. 11/30/1999) 2,250 4,836
------------
551,135
------------
TELECOMMUNICATIONS - 4.96%
Telecom Italia S.p.A. 588,890 4,324,166
Telecom Italia Mobile S.p.A. 1,060,000 6,465,913
------------
10,790,079
------------
TEXTILES & APPAREL - 0.32%
Benetton Group S.p.A. 332,520 688,555
------------
UTILITIES - GAS & ELECTRIC - 0.28%
Italgas S.p.A. 150,000 609,431
------------
TOTAL ITALIAN SECURITIES
(Identified Cost $21,800,572) 37,739,115
------------
JAPAN - 2.60%
MACHINERY - 1.26%
Aida Engineering, Ltd. 342,000 1,329,308
Amada Sonoike Co., Ltd. 515,000 1,404,922
------------
2,734,230
------------
RUBBER & PLASTICS - 0.70%
Tenma 120,000 1,517,605
------------
TEXTILES & APPAREL - 0.64%
Tokyo Style Co., Ltd. 143,000 1,399,848
------------
TOTAL JAPANESE SECURITIES
(Identified Cost $5,986,921) 5,651,683
------------
</TABLE>
The accompanying note are an integral part of the financial statements.
8
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Value
Shares (Note 2)
MALAYSIA - 1.46%
BUILDING MATERIALS & COMPONENTS - 0.49%
Jaya Tiasa Holdings Bhd 850,000 $1,057,954
-----------
MULTI-INDUSTRY - 0.97%
Kumpulan Guthrie Bhd 2,277,000 1,320,733
Sime Darby Bhd 1,160,000 801,798
-----------
2,122,531
-----------
TOTAL MALAYSIAN SECURITIES
(Identified Cost $5,708,601) 3,180,485
-----------
SPAIN - 11.93%
BEVERAGE & TOBACCO - 0.20%
Tabacalera SA 21,330 436,330
-----------
CONSTRUCTION & HOUSING - 0.39%
Dragados & Construcciones SA 11,988 383,462
Fomento de Construcciones y Contratas SA 9,108 469,347
-----------
852,809
-----------
ENERGY SOURCES - OIL/GAS - 0.97%
Repsol SA 38,365 2,111,963
-----------
FINANCIAL SERVICES - 4.50%
Banco Bilbao Vizcaya SA 84,870 4,351,343
Banco Central Hispanoamericano SA 37,776 1,186,198
Banco Santander SA 112,678 2,881,199
Corporacion Bancaria de Espana SA (Argentaria) 62,048 1,390,531
-----------
9,809,271
-----------
INSURANCE - 0.09%
Corporacion Mapfre 5,646 197,887
-----------
METAL - STEEL - 0.14%
Acerinox SA 2,343 311,690
-----------
MULTI-INDUSTRY - 0.22%
Autopistas Concesionaria Espanola SA 29,865 462,084
Autopistas Concesionaria Espanola SA Rights 29,865 22,569
-----------
(exp. 7/10/1998) 484,653
-----------
</TABLE>
The accompanying note are an integral part of the financial statements.
9
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Value
Shares (Note 2)
SPAIN (continued)
REAL ESTATE - 0.03%
Inmobiliaria Metropolitana Vasco Central SA 2,368 $ 69,575
Inmobiliaria Metropolitana Vasco Central SA
Rights (exp. 7/24/98) 2,368 3,332
-------------
72,907
-------------
TELECOMMUNICATIONS - 2.33%
Telefonica SA 110,009 5,081,230
-------------
UTILITIES - GAS & ELECTRIC - 3.06%
Endesa SA 116,840 2,553,751
Gas Natural SDG - E SA 19,972 1,441,636
Iberdrola SA 122,474 1,986,725
Union Electrica Fenosa SA 52,126 670,681
-------------
6,652,793
-------------
TOTAL SPANISH SECURITIES
(Identified Cost $9,469,933) 26,011,533
-------------
THAILAND - 0.02%
FOOD & HOUSEHOLD PRODUCTS - 0.02%
Songkla Canning Public Co. Ltd.
(Identified Cost $24,031) 38,100 43,918
-------------
TOTAL COMMON STOCK
(Identified Cost $120,092,237) 208,530,740
-------------
SHORT-TERM INVESTMENTS - 1.70%
Dreyfus Treasury Cash Management Fund
(Identified Cost $3,708,728) 3,708,728 3,708,728
-------------
TOTAL INVESTMENTS - 97.45%
(Identified Cost $123,800,965) 212,239,468
OTHER ASSETS, LESS LIABILITIES - 2.55% 5,561,824
-------------
NET ASSETS -100% $217,801,292
=============
</TABLE>
The accompanying note are an integral part of the financial statements.
10
<PAGE>
Investment Portfolio - June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C>
FEDERAL TAX INFORMATION:
At June 30, 1998, the net unrealized appreciation based on identified cost
for federal income tax purposes of $123,800,965 was as follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over tax cost $ 98,755,005
Aggregate gross unrealized depreciation for all investments
in which there was an excess of tax cost over value (10,316,502)
-------------
UNREALIZED APPRECIATION - NET $ 88,438,503
=============
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Percent
of Net Assets
---------------
Industry Concentration (as a percent of net assets)
Aerospace & Military Technology 0.25%
Airlines 0.27%
Automobiles 1.86%
Banking 9.01%
Beverage & Tobacco 1.28%
Broadcast Services 0.61%
Building Materials & Components 1.49%
Business & Public Services 3.60%
Chemicals 3.87%
Construction & Housing 1.11%
Electrical & Electronics 5.34%
Energy Sources 8.43%
Financial Services 7.99%
Food & Household Products 1.59%
Health & Personal Care 3.18%
Industrial Components 0.40%
Insurance 7.36%
Investment Holding Companies 0.64%
Leisure & Tourism 0.62%
Machinery & Engineering 4.94%
Materials & Commodities 1.86%
Merchandising 3.17%
Metals-Steel 0.14%
Multi-Industry 7.05%
Real Estate 0.03%
Retail 0.40%
Rubber & Plastics 0.70%
Telecommunications 9.77%
Textiles & Apparel 1.06%
Utilities - Gas & Electric 7.72%
Wholesale - Special Lines 0.01%
---------------
TOTAL COMMON STOCK 95.75%
===============
</TABLE>
The accompanying note are an integral part of the financial statements.
11
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
<S> <C>
JUNE 30, 1998
ASSETS:
Investments, at value (identified cost $123,800,965)(Note 2) $212,239,468
U.S. currency 2,724,821
Foreign currency, at value (cost $653,663) 646,419
Receivable for securities sold 1,454,675
Receivable for open forward foreign currency exchange contracts
(Note 2) 613,743
Foreign tax reclaims receivable 501,661
Dividends receivable 191,229
Receivable for fund shares sold 33,610
------------
TOTAL ASSETS 218,405,626
------------
LIABILITIES:
Accrued management fees (Note 3) 177,746
Accrued Directors' fees (Note 3) 3,332
Payable for fund shares repurchased 402,444
Audit fee payable 11,711
Payable for securities purchased 8,026
Other payables and accrued expenses 1,075
------------
TOTAL LIABILITIES 604,334
------------
NET ASSETS FOR 13,285,264 SHARES
OUTSTANDING $217,801,292
============
NET ASSETS CONSIST OF:
Capital stock $ 132,853
Additional paid-in-capital 116,612,772
Undistributed net investment income 1,616,005
Accumulated net realized gain on investments 10,411,274
Net unrealized appreciation on investments, foreign currency,
forward foreign currency exchange contracts, and other
assets and liabilities 89,028,388
------------
TOTAL NET ASSETS $217,801,292
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($217,801,292/13,285,264 shares) $ 16.39
============
</TABLE>
The accompanying note are an integral part of the financial statements.
12
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
<S> <C>
FOR THE SIX MONTHS ENDED JUNE 30, 1998
INVESTMENT INCOME:
Dividends (net of withholding) $ 2,608,131
Interest 292,051
------------
Total Investment Income 2,900,182
------------
EXPENSES:
Management fees (Note 3) 1,094,441
Directors' fees (Note 3) 3,323
Custodian fee 102,296
Audit fee 14,815
Miscellaneous 17,385
------------
Total Expenses 1,232,260
------------
NET INVESTMENT INCOME 1,667,922
------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on -
Investments (identified cost basis) 6,756,592
Foreign currency and forward foreign currency
exchange contracts 1,528,355
------------
Net realized gain on investments 8,284,947
------------
Net change in unrealized appreciation on -
Investments 39,694,641
Foreign currency and forward foreign currency exchange
contracts and other assets and liabilities (152,435)
------------
Net change in unrealized appreciation on investments 39,542,206
------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 47,827,153
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $49,495,075
============
</TABLE>
The accompanying note are an integral part of the financial statements.
13
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
<S> <C> <C>
For the Six
Months Ended For the
6/30/98 Year Ended
(unaudited) 12/31/97
--------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,667,922 $ 2,131,517
Net realized gain on investments 8,284,947 18,953,046
Net change in unrealized appreciation on
investments 39,542,206 20,653,854
--------------- -------------
Net increase in net assets from operations 49,495,075 41,738,417
--------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 2):
From net investment income -- (2,124,831)
From net realized gain on investments -- (19,807,200)
--------------- -------------
Total distributions to shareholders -- (21,932,031)
--------------- -------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase (decrease) from capital share
transactions (Note 5) (30,949,652) 30,118,134
--------------- -------------
Net increase in net assets 18,545,423 49,924,520
NET ASSETS:
Beginning of period 199,255,869 149,331,349
--------------- -------------
END OF PERIOD (including undistributed net
investment income (loss) of $1,616,005 and
($51,917), respectively) $ 217,801,292 $199,255,869
=============== =============
</TABLE>
The accompanying note are an integral part of the financial statements.
14
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
For the Six
Month Ended
6/30/98 For the Years
(unaudited) 12/31/97 12/31/96 12/31/95 12/31/94
-------------- ---------------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT EACH
PERIOD):
NET ASSET VALUE - BEGINNING OF
PERIOD $ 13.08 $ 11.54 $ 9.57 $ 9.54 $ 11.33
-------------- ---------------- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.119 0.154 0.156 0.123 0.143
Net realized and unrealized gain
(loss) on investments 3.191 2.992 1.976 0.262 (1.784)
-------------- ---------------- ---------- ---------- ----------
Total from investment operations 3.310 3.146 2.132 0.385 (1.641)
-------------- ---------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income -- (0.150) (0.143) (0.118) --
From paid-in-capital -- -- -- (0.160) --
From net realized gain on
investments -- (1.456) (0.019) (0.077) (0.149)
-------------- ---------------- ---------- ---------- ----------
Total distributions to shareholders -- (1.606) (0.162) (0.355) (0.149)
-------------- ---------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 16.39 $ 13.08 $ 11.54 $ 9.57 $ 9.54
============== ================ ========== ========== ==========
Total return1 25.31% 27.70% 22.35% 4.14% (14.48)%
Ratios of expenses (to average net
assets) / Supplemental Data:
Expenses 1.13%3 1.08% 1.12% 1.20% 1.18%
Net investment income 1.52%3 1.18% 1.46% 1.42% 1.38%
Portfolio turnover 0% 10% 2% 14% 31%
Average commission rate paid2 $ 0.0024 $ 0.0005 $ 0.0013 $ 0.0021 -
NET ASSETS - END OF PERIOD
(000'S OMITTED) $ 217,801 $ 199,256 $ 149,331 $ 128,294 $ 85,964
============== ================ ========== ========== ==========
<S> <C>
12/31/93
----------
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT EACH
PERIOD):
NET ASSET VALUE - BEGINNING OF
PERIOD $ 9.19
----------
Income from investment operations:
Net investment income 0.150
Net realized and unrealized gain
(loss) on investments 2.240
----------
Total from investment operations 2.390
----------
Less distributions to shareholders:
From net investment income (0.250)
From paid-in-capital --
From net realized gain on
investments --
----------
Total distributions to shareholders (0.250)
----------
NET ASSET VALUE - END OF PERIOD $ 11.33
==========
Total return1 26.00%
Ratios of expenses (to average net
assets) / Supplemental Data:
Expenses 1.16%
Net investment income 1.39%
Portfolio turnover 20%
Average commission rate paid2 -
NET ASSETS - END OF PERIOD
(000'S OMITTED) $ 92,012
==========
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Average commission rate is calculated for Funds with fiscal years
beginning on or after January 1, 1995.
3 Annualized.
The accompanying note are an integral part of the financial statements.
15
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
International Series (the "Fund") is a no-load non-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.
Shares of the Fund are offered to clients and employees of Manning & Napier
Advisors, Inc. (the "Advisor") and its affiliates. The total authorized
capital stock of the Corporation consists of one billion shares of common
stock each having a par value of $0.01. As of June 30, 1998, 940 million
shares have been designated in total among 19 series, of which 50 million have
been designated as International Series 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 primarily traded.
Securities not traded on valuation date or securities not listed on an
exchange are valued at the latest quoted bid price.
Debt securities, including government bonds and mortgage backed securities,
will normally be valued on the basis of evaluated bid prices 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 approved by and under the general
supervision 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.
16
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL INCOME TAXES
The Fund's policy is to comply with the provisions of the Internal Revenue
Code applicable to regulated investment companies. The Fund is not subject to
federal income or excise tax to the extent the Fund distributes to
shareholders each year its taxable income, including any net realized gains on
investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made
in the financial statements.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
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, foreign denominated investments or
character reclassification between net income and net gains. As a result, net
investment income (loss) and net investment gain (loss) on investment
transactions for a reporting period may differ significantly from
distributions to shareholders during such period. As a result, the Fund may
periodically make 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
investment that result from fluctuations in foreign currency exchange rates is
not separately stated.
17
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Fund may purchase or sell forward foreign currency exchange contracts in
order to hedge a portfolio position or specific transaction. Risks may arise
if the counterparties to a contract are unable to meet the terms of the
contract or if the value of the foreign currency moves unfavorably.
All forward foreign currency exchange contracts are adjusted daily by the
exchange rate of the underlying currency and, for financial statement
purposes, any gain or loss is recorded as unrealized gain or loss until a
contract has been closed. Realized and unrealized gain or loss arising from a
transaction is included in net realized and unrealized gain (loss) from
foreign currency and forward foreign currency exchange contracts.
The Fund regularly trades forward foreign currency exchange contracts with
off-balance sheet risk in the normal course of its investing activities to
assist in managing exposure to changes in forward foreign currency exchange
rates.
The notional or contractual amount of these instruments represents the
investment the Fund has in forward foreign currency exchange contracts and
does not necessarily represent the amounts potentially at risk. The
measurement of the risks associated with forward foreign currency exchange
contracts is meaningful only when all related and offsetting transactions are
considered. A summary of obligations for forward foreign currency exchange
contracts outstanding as of June 30, 1998 is as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Unrealized
Settlement Contracts In Exchange Contracts Appreciation\
Date to Deliver For At Value Depreciation
- ---------- ---------- ----------- --------- ---------------
07/29/98 Deutsche Marks $ 33,557,794 $33,413,134 $ 144,660
07/29/98 French Francs $ 30,899,576 $30,736,438 $ 163,138
07/09/98 Japanese Yen $ 5,964,139 $ 5,658,194 $ 305,945
----------------
Total $ 613,743
================
</TABLE>
On June 30, 1998, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of the revenues and expenses during the reporting
period. Actual results could differ from those estimates.
18
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with the Advisor, for which the
Fund pays a fee, computed daily and payable monthly, at an annual rate of 1%
of the Fund's average daily net assets. The fee amounted to $1,094,441 for
the six months ended June 30, 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. These services are provided at no additional
cost to the Fund.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Fund.
The compensation of the non-affiliated Directors totaled $3,323 for the six
months ended June 30, 1998.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1998, purchases and sales of securities,
other than United States Government securities and short-term securities, were
$100,323 and $23,766,234, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of International Series were:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the For the
Six Months Year
Ended 6/30/98 Ended 12/31/97
--------------- ------------------
Shares Amount Shares Amount
Sold 1,068,103 $ 16,065,555 1,557,079 $ 21,366,816
Reinvested -- -- 1,695,615 21,716,296
Repurchased (3,017,870) (47,015,207) (956,763) (12,964,978)
--------------- ------------- ------------------ -------------
Total (1,949,767) $(30,949,652) 2,295,931 $ 30,118,134
=============== ============= ================== =============
</TABLE>
19
<PAGE>
Notes to Financial Statements (unaudited)
6. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of domestic companies and the United States Government. These
risks include revaluation of currencies and future adverse political and
economic developments. Moreover, securities of foreign companies and foreign
governments and their markets may be less liquid and their prices more
volatile than those of securities of comparable domestic companies and the
United States Government.
20
<PAGE>
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] DIVERSIFIED TAX EXEMPT SERIES
[NUMBER] 18
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] JUN-30-1998
[PERIOD-TYPE] 6-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 24182675
[INVESTMENTS-AT-VALUE] 25367285
[RECEIVABLES] 464059
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 25831344
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 25283
[TOTAL-LIABILITIES] 25283
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 24500360
[SHARES-COMMON-STOCK] 2427774
[SHARES-COMMON-PRIOR] 2233499
[ACCUMULATED-NII-CURRENT] 129462
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (8371)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1184610
[NET-ASSETS] 25806061
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 603982
[OTHER-INCOME] 0
[EXPENSES-NET] 79608
[NET-INVESTMENT-INCOME] 524374
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 8478
[NET-CHANGE-FROM-OPS] 532852
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 439721
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 312422
[NUMBER-OF-SHARES-REDEEMED] 158332
[SHARES-REINVESTED] 40185
[NET-CHANGE-IN-ASSETS] 2154855
[ACCUMULATED-NII-PRIOR] 44809
[ACCUMULATED-GAINS-PRIOR] (8371)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 60377
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 79608
[AVERAGE-NET-ASSETS] 24330950
[PER-SHARE-NAV-BEGIN] 10.59
[PER-SHARE-NII] 0.223
[PER-SHARE-GAIN-APPREC] 0.007
[PER-SHARE-DIVIDEND] 0.190
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.63
[EXPENSE-RATIO] 0.66
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] GLOBAL FIXED INCOME SERIES
[NUMBER] 10
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] JUN-30-1998
[PERIOD-TYPE] 6-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 126152032
[INVESTMENTS-AT-VALUE] 124556247
[RECEIVABLES] 2067858
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 126624105
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 299341
[TOTAL-LIABILITIES] 299341
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 122440587
[SHARES-COMMON-STOCK] 12255730
[SHARES-COMMON-PRIOR] 12568715
[ACCUMULATED-NII-CURRENT] 3567660
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 1559814
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (1243297)
[NET-ASSETS] 126324764
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 4258063
[OTHER-INCOME] 0
[EXPENSES-NET] 711769
[NET-INVESTMENT-INCOME] 3546294
[REALIZED-GAINS-CURRENT] 1540147
[APPREC-INCREASE-CURRENT] (2684920)
[NET-CHANGE-FROM-OPS] 2401521
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 473629
[NUMBER-OF-SHARES-REDEEMED] 786614
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] (846877)
[ACCUMULATED-NII-PRIOR] 21366
[ACCUMULATED-GAINS-PRIOR] 19667
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 638285
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 711769
[AVERAGE-NET-ASSETS] 128419978
[PER-SHARE-NAV-BEGIN] 10.12
[PER-SHARE-NII] 0.289
[PER-SHARE-GAIN-APPREC] (0.099)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.31
[EXPENSE-RATIO] 1.12
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] INTERNATIONAL SERIES
[NUMBER] 7
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] JUN-30-1998
[PERIOD-TYPE] 6-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 123800965
[INVESTMENTS-AT-VALUE] 212239468
[RECEIVABLES] 2794918
[ASSETS-OTHER] 3371240
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 218405626
[PAYABLE-FOR-SECURITIES] 8026
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 596308
[TOTAL-LIABILITIES] 604334
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 116745625
[SHARES-COMMON-STOCK] 13285264
[SHARES-COMMON-PRIOR] 15235031
[ACCUMULATED-NII-CURRENT] 16160005
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 10411274
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 89028388
[NET-ASSETS] 217801292
[DIVIDEND-INCOME] 2608131
[INTEREST-INCOME] 292051
[OTHER-INCOME] 0
[EXPENSES-NET] 1232260
[NET-INVESTMENT-INCOME] 1667922
[REALIZED-GAINS-CURRENT] 8284947
[APPREC-INCREASE-CURRENT] 39542206
[NET-CHANGE-FROM-OPS] 49495075
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1068103
[NUMBER-OF-SHARES-REDEEMED] 3017870
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 18545423
[ACCUMULATED-NII-PRIOR] (51917)
[ACCUMULATED-GAINS-PRIOR] 2126327
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1094441
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1232260
[AVERAGE-NET-ASSETS] 219920140
[PER-SHARE-NAV-BEGIN] 13.08
[PER-SHARE-NII] 0.119
[PER-SHARE-GAIN-APPREC] 3.191
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 16.39
[EXPENSE-RATIO] 1.13
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] NEW YORK TAX EXEMPT
[NUMBER] 16
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] JUN-30-1998
[PERIOD-TYPE] 6-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 43446678
[INVESTMENTS-AT-VALUE] 45473299
[RECEIVABLES] 556978
[ASSETS-OTHER] 22066
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 46052343
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 71884
[TOTAL-LIABILITIES] 71884
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 43734587
[SHARES-COMMON-STOCK] 4416069
[SHARES-COMMON-PRIOR] 4403651
[ACCUMULATED-NII-CURRENT] 239101
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (19850)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 2026621
[NET-ASSETS] 45980459
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 1109518
[OTHER-INCOME] 0
[EXPENSES-NET] 137105
[NET-INVESTMENT-INCOME] 972413
[REALIZED-GAINS-CURRENT] (38)
[APPREC-INCREASE-CURRENT] 34753
[NET-CHANGE-FROM-OPS] 1007128
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 831358
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 259811
[NUMBER-OF-SHARES-REDEEMED] 325830
[SHARES-REINVESTED] 78437
[NET-CHANGE-IN-ASSETS] 299142
[ACCUMULATED-NII-PRIOR] 98046
[ACCUMULATED-GAINS-PRIOR] (19812)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 113338
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 137105
[AVERAGE-NET-ASSETS] 45726690
[PER-SHARE-NAV-BEGIN] 10.37
[PER-SHARE-NII] 0.222
[PER-SHARE-GAIN-APPREC] 0.008
[PER-SHARE-DIVIDEND] 0.190
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.41
[EXPENSE-RATIO] 0.60
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] OHIO EXEMPT SERIES
[NUMBER] 17
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] JUN-30-1998
[PERIOD-TYPE] 6-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 8538025
[INVESTMENTS-AT-VALUE] 9064037
[RECEIVABLES] 66789
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 9130826
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 18445
[TOTAL-LIABILITIES] 18445
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 8548150
[SHARES-COMMON-STOCK] 863037
[SHARES-COMMON-PRIOR] 883723
[ACCUMULATED-NII-CURRENT] 39406
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (1187)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 526012
[NET-ASSETS] 9112381
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 232678
[OTHER-INCOME] 0
[EXPENSES-NET] 36710
[NET-INVESTMENT-INCOME] 195968
[REALIZED-GAINS-CURRENT] (408)
[APPREC-INCREASE-CURRENT] (8742)
[NET-CHANGE-FROM-OPS] 186618
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 164115
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 57738
[NUMBER-OF-SHARES-REDEEMED] 93228
[SHARES-REINVESTED] 14804
[NET-CHANGE-IN-ASSETS] (193597)
[ACCUMULATED-NII-PRIOR] 7553
[ACCUMULATED-GAINS-PRIOR] (779)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 22838
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 36710
[AVERAGE-NET-ASSETS] 9214675
[PER-SHARE-NAV-BEGIN] 10.53
[PER-SHARE-NII] 0.227
[PER-SHARE-GAIN-APPREC] (0.007)
[PER-SHARE-DIVIDEND] 0.190
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.56
[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] SMALL CAP SERIES
[NUMBER] 1
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] JUN-30-1998
[PERIOD-TYPE] 6-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 134271503
[INVESTMENTS-AT-VALUE] 127995787
[RECEIVABLES] 44540
[ASSETS-OTHER] 178948
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 128219275
[PAYABLE-FOR-SECURITIES] 18797
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 182098
[TOTAL-LIABILITIES] 200895
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 116083555
[SHARES-COMMON-STOCK] 10054884
[SHARES-COMMON-PRIOR] 10087625
[ACCUMULATED-NII-CURRENT] 309154
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 17903756
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (6278085)
[NET-ASSETS] 128018380
[DIVIDEND-INCOME] 559059
[INTEREST-INCOME] 454249
[OTHER-INCOME] 0
[EXPENSES-NET] 704154
[NET-INVESTMENT-INCOME] 309154
[REALIZED-GAINS-CURRENT] 11155357
[APPREC-INCREASE-CURRENT] (4552830)
[NET-CHANGE-FROM-OPS] 6911681
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 490018
[NUMBER-OF-SHARES-REDEEMED] 522759
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 6418354
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 6748399
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 659115
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 704154
[AVERAGE-NET-ASSETS] 131714477
[PER-SHARE-NAV-BEGIN] 12.05
[PER-SHARE-NII] 0.045
[PER-SHARE-GAIN-APPREC] 0.635
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 12.73
[EXPENSE-RATIO] 1.07
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] WORLD OPPORTUNITIES SERIES
[NUMBER] 19
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] JUN-30-1998
[PERIOD-TYPE] 6-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 118478189
[INVESTMENTS-AT-VALUE] 100984006
[RECEIVABLES] 288949
[ASSETS-OTHER] 581414
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 101854369
[PAYABLE-FOR-SECURITIES] 169100
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 170759
[TOTAL-LIABILITIES] 339859
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 104299021
[SHARES-COMMON-STOCK] 10267790
[SHARES-COMMON-PRIOR] 9755164
[ACCUMULATED-NII-CURRENT] 1529953
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 13184340
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (17498804)
[NET-ASSETS] 101514510
[DIVIDEND-INCOME] 1394550
[INTEREST-INCOME] 538050
[OTHER-INCOME] 0
[EXPENSES-NET] 585913
[NET-INVESTMENT-INCOME] 1346687
[REALIZED-GAINS-CURRENT] 12722869
[APPREC-INCREASE-CURRENT] (13434659)
[NET-CHANGE-FROM-OPS] 634897
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1053591
[NUMBER-OF-SHARES-REDEEMED] 540965
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 6299559
[ACCUMULATED-NII-PRIOR] 183266
[ACCUMULATED-GAINS-PRIOR] 461471
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 519070
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 585913
[AVERAGE-NET-ASSETS] 103765720
[PER-SHARE-NAV-BEGIN] 9.76
[PER-SHARE-NII] 0.130
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 9.89
[EXPENSE-RATIO] 1.13
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
