August 27, 1999
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 is a copy of the Semi-Annual Report for each of the above Series of the
Exeter Fund in which you were invested as of June 30, 1999. The reports include
information about the Series' performance as well as portfolio listings as of
that date.
Please contact our Fund Services department at 1-800-466-3863 or your Client
Consultant if you have any questions about the Semi-Annual Reports or about the
Fund.
Sincerely,
/s/ Amy J. Williams
Amy J. Williams
Fund Services Manager
<PAGE>
<PAGE>
EXETER FUND, INC.
SMALL CAP SERIES
SEMI-ANNUAL REPORT
JUNE 30, 1999
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
DEAR SHAREHOLDERS:
During the second quarter of 1999, the stocks of small companies outperformed
those of large blue chip stocks as investors looked to small caps and value
stocks, two categories that have lagged the last few years. There are a few
reasons for this trend including a focus (if only temporary) on more
economically sensitive stocks, and a realization that the comparative valuations
of growth versus value and large cap versus small cap had left small cap value
investors out in the cold. Perhaps the best endorsement of our belief that
small cap stocks are undervalued is the high level of merger and acquisition
activity in the small cap area. We are encouraged by this trend in small cap
performance, and we have sought to position the portfolio to benefit from it.
As we have been saying for some time now, valuations in the small cap sector
have been very attractive relative to larger stocks. Over the last several
years, large stocks have risen virtually without interruption, and prices of
many of the blue chip stocks are at levels that are unsupported by the
fundamentals of the companies underlying the stocks. Investors in these large
companies are essentially taking a gamble that the stocks can continue to rise
without being constrained by the actual value of the companies whose stocks they
are. Obviously, this is a very risky proposition.
Small company stocks, on the other hand, have generally been left behind in the
bull market of the last several years. To illustrate, when small cap stocks
were very depressed in 1990, they traded at a discount of 25 - 30% to large
company stocks. They are currently trading at a discount of 46%, which is even
steeper than the discount during the 1973-74 bear market.
These statistics demonstrate that the small cap sector represents a compelling
investment opportunity at this time. In addition, it now appears that we are
beginning to see a turn in the performance of small company stocks. In order to
position the Series to benefit from what we see as an outstanding opportunity in
the sector, we have repositioned the portfolio over the last several months by
purchasing a well-diversified pool of small company stocks representative of the
small cap sector. These purchases were financed by reducing the Series' cash
position and by selling some holdings that we felt offered less potential than
the new holdings.
In addition to investing a portion of the portfolio in a wide variety of small
company stocks in order to get broad exposure to the market, we continue to
invest more substantial amounts in individual companies in order to take
advantage of particular opportunities. The Series' investments in basic
materials, consumer cyclicals, and consumer goods have strengthened, starting in
mid-April. One particularly strong sector for us has been energy-related
stocks. We increased exposure to this sector late in 1998 as oil prices were
falling due to oversupply in the industry. We expected the low level of oil
prices to force a reduction of the excess capacity and eventually lead to rising
prices, and we invested in several oil-related stocks when they were available
at very low prices. As of this writing, oil prices have rebounded sharply, up
over 50% from their December lows. The energy-related stocks we had purchased
are now up substantially since the beginning of the year.
In summary, we are optimistic on the outlook for the small cap sector, and we
are seeking to capture the opportunity two ways. First, by giving the Series
broad exposure to a wide range of small company stocks; second, by continuing to
focus on individual opportunities that our analysis show offer potential beyond
that of the sector taken as a whole.
As always, we appreciate the opportunity to serve you.
Sincerely,
EXETER ASSET MANAGEMENT
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
[graphic]
<pie chart>
Data for pie chart to follow:
Portfolio Composition* - As of 6/30/99
Business Services - 5.39%
Chemicals & Allied Products - 10.55%
Communications - 5.41%
Electric, Gas & Sanitary Services - 4.98%
Electronics & Other Electrical Equipment - 4.15%
Industrial & Commercial Machinery - 3.84%
Oil & Gas Extraction - 9.22%
Paper & Allied Products - 5.22%
Stone, Clay & Glass Products - 4.03%
Technical Instruments & Supplies - 3.59%
Textile Mill Products - 3.53%
Transportation - 7.48%
Miscellaneous** - 27.05%
Cash, equivalents, and other assets, less liabilities - 5.56%
* As a percent of Common Stocks.
**Miscellaneous includes:
Agricultural Production - 2.00% Amusement & Recreation Services - 0.46%
Apparel & Other Textile Products - 1.51% Depository Institutions - 3.01%
Eating Places - 1.03% Food & Kindred Products - 1.88%
Electronic Parts & Equipment - Wholesale - 0.19%
Engineering & Management Services - 3.26%
Footwear & Related Apparel - 0.50% Furniture & Fixtures - 0.70%
Heavy Construction - 0.19% Insurance Carriers - 1.01%
Investment Advice - 0.51% Linen Services - 0.21%
Lumber & Wood Products - 0.27% Metal Mining - 0.25%
Miscellaneous Petroleum & Coal Products - 0.13%
Motion Picture Services - 0.03% Operative Builders - 0.80%
Primary Metal Industries - 1.74% Printing & Publishing - 0.95%
Retail - 3.10% Skilled Nursing Care Facilities - 0.13%
Rubber & Miscellaneous Plastic Products - 1.11%
Transportation Equipment - 1.82% Unit Investment Trusts - 0.26%
2
<PAGE>
PERFORMANCE UPDATE AS OF JUNE 30, 1999 (UNAUDITED)
Exeter Fund, Inc.
Small Cap Series
<TABLE>
<CAPTION>
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . $ 8,595 -14.05% -14.05%
Five Year . $ 15,336 53.36% 8.92%
Inception 1 $ 18,498 84.98% 8.85%
</TABLE>
S&P 500 Total Return Index
<TABLE>
<CAPTION>
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . $ 12,277 22.77% 22.77%
Five Year . $ 34,167 241.67% 27.84%
Inception 1 $ 38,958 289.58% 20.88%
</TABLE>
Russell 2000 Index
<TABLE>
<CAPTION>
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . $ 10,150 1.50% 1.50%
Five Year . $ 20,461 104.61% 15.39%
Inception 1 $ 25,984 159.84% 14.25%
</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 (06/30/99) as compared to the
Standard & Poor's (S&P) 500 Total Return and the Russell 2000 Total Return
Index. 2
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. S&P 500 Total Russell
Date Small Cap Series Return Index 2000 Index
<S> <C> <C> <C>
04/30/92 10,000 10,000 10,000
12/31/92 11,610 10,725 11,415
12/31/93 13,317 11,799 13,574
12/31/94 14,383 11,959 13,327
12/31/95 16,497 16,437 17,117
12/31/96 18,156 20,206 19,940
12/31/97 20,388 26,944 24,399
12/31/98 17,603 34,666 23,778
06/30/99 18,498 38,958 25,984
</TABLE>
1 The Series and Index performance numbers are calculated from April 30, 1992,
the Series' current activation date. The Series' performance is historical and
may not be indicative of future results.
2 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
Series returns, do not reflect any fees or expenses. The Russell 2000 Total
Return Index is an unmanaged index that consists of approximately 2000
small-capitalization stocks. Members of the Index represent only U.S. common
stocks that are invested in the U.S. equity markets. The Index returns are
based on a market capitalization weighted average of relative price changes of
the component stocks plus dividends whose reinvestments are compounded daily.
Unlike Series returns, the Index returns do not reflect any fees or expenses.
3
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
------- -----------
COMMON STOCK - 94.44%
<S> <C> <C>
AGRICULTURAL PRODUCTION - 2.00%
Sylvan, Inc.* . . . . . . . . . . . . . . 165,000 $1,918,125
-----------
AMUSEMENT & RECREATION SERVICES - 0.46%
Anchor Gaming*. . . . . . . . . . . . . . 5,300 254,731
Cedar Fair, L.P.. . . . . . . . . . . . . 7,300 182,044
-----------
436,775
-----------
APPAREL & OTHER TEXTILE PRODUCTS - 1.51%
Nautica Enterprises, Inc.*. . . . . . . . 16,000 270,000
Novel Denim Holdings, Ltd.* (Note 6). . . 116,000 938,881
Oshkosh B'Gosh, Inc. - Class A. . . . . . 11,500 242,937
-----------
1,451,818
-----------
BUSINESS SERVICES - 5.39%
MISCELLANEOUS - 0.74%
ADVO, Inc.. . . . . . . . . . . . . . . . 10,900 226,175
Fair Isaac & Company, Inc.. . . . . . . . 5,700 199,856
True North Communications, Inc. . . . . . 9,500 285,000
-----------
711,031
-----------
COMPUTER INTEGRATED SYSTEM DESIGN - 0.41%
Jack Henry & Associates, Inc. . . . . . . 4,600 180,550
Technology Solutions Co.* . . . . . . . . 19,400 209,763
-----------
390,313
-----------
COMPUTER RELATED SERVICES - 0.41%
Cambridge Technology Partners, Inc.*. . . 12,700 223,044
Computer Task Group, Inc. . . . . . . . . 10,200 173,400
-----------
396,444
-----------
HELP SUPPLY SERVICES - 0.65%
Computer Horizons Corp.*. . . . . . . . . 12,500 172,656
Interim Services, Inc.* . . . . . . . . . 9,200 189,750
Metamor Worldwide, Inc.*. . . . . . . . . 10,800 259,875
-----------
622,281
-----------
SOFTWARE - 3.18%
Autodesk, Inc.. . . . . . . . . . . . . . 7,400 218,763
Bea Systems, Inc.*. . . . . . . . . . . . 11,600 331,325
Clarify, Inc.*. . . . . . . . . . . . . . 5,100 210,375
Documentum, Inc.* . . . . . . . . . . . . 13,200 172,425
Harbinger Corp.*. . . . . . . . . . . . . 17,000 212,500
IDX Systems Corp.*. . . . . . . . . . . . 14,300 322,644
JDA Software Group, Inc.* . . . . . . . . 18,200 169,488
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
--------- ------------
<S> <C> <C>
BUSINESS SERVICES (continued)
SOFTWARE (continued)
Manugistics Group, Inc.*. . . . . . . . . . . . . 24,700 $ 358,150
Remedy Corp.* . . . . . . . . . . . . . . . . . . 9,200 247,250
Structural Dynamics Research Corp.* . . . . . . . 9,900 183,769
Symantec Corp.* . . . . . . . . . . . . . . . . . 7,800 198,900
Transaction Systems Architects, Inc.* . . . . . . 5,600 218,400
Visio Corp.*. . . . . . . . . . . . . . . . . . . 5,500 209,344
------------
3,053,333
------------
5,173,402
------------
CHEMICALS & ALLIED PRODUCTS - 10.55%
MISCELLANEOUS - 5.72%
Agrium, Inc. (Note 6) . . . . . . . . . . . . . . 12,200 107,512
Crompton & Knowles Corp.. . . . . . . . . . . . . 6,000 117,375
Cypress Bioscience, Inc.* . . . . . . . . . . . . 1,315,050 4,150,692
Ethyl Corp. . . . . . . . . . . . . . . . . . . . 22,500 135,000
Human Genome Sciences, Inc.*. . . . . . . . . . . 6,000 237,000
McWhorter Technologies, Inc.* . . . . . . . . . . 15,000 216,562
RPM, Inc. . . . . . . . . . . . . . . . . . . . . 16,000 227,000
Stepan Co.. . . . . . . . . . . . . . . . . . . . 4,800 121,800
Tetra Technologies, Inc.* . . . . . . . . . . . . 19,000 174,562
------------
5,487,503
------------
PHARMACEUTICAL PREPARATIONS - 4.83%
Alkermes, Inc.* . . . . . . . . . . . . . . . . . 9,900 228,937
Alpharma, Inc. Class A. . . . . . . . . . . . . . 8,000 284,500
Dura Pharmaceuticals, Inc.* . . . . . . . . . . . 20,200 241,137
Orion-Yhthma Oyj - B Shares (Finland) (Note 6). . 154,000 3,661,544
Penwest Pharmaceuticals Co.*. . . . . . . . . . . 27,000 216,000
------------
4,632,118
------------
10,119,621
------------
COMMUNICATIONS - 5.41%
Granite Broadcasting Corp.*. . . . . . . . . . 290,000 2,265,625
Grupo Radio Centro S.A. de C.V. - ADR (Note 6) 22,225 116,681
Hearst-Argyle Television, Inc.*. . . . . . . . 3,500 84,000
Microcell Telecommunications, Inc.* (Note 6) . 329,000 2,570,313
Star Telecommunications, Inc.* . . . . . . . . 19,500 152,344
------------
5,188,963
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
------ -----------
<S> <C> <C>
DEPOSITORY INSTITUTIONS - 3.01%
FEDERAL SAVINGS INSTITUTIONS - 0.58%
Catskill Financial Corp.. . . . . . . . . . . . 11,600 $ 189,950
Niagara Bancorp, Inc. . . . . . . . . . . . . . 17,500 185,938
Timberland Bancorp, Inc.. . . . . . . . . . . . 15,700 184,475
-----------
560,363
-----------
FUNCTIONS RELATED TO DEPOSITORY BANKING - 0.10%
Ace Cash Express, Inc.* . . . . . . . . . . . . 7,000 98,875
-----------
NATIONAL COMMERCIAL BANKS - 1.10%
First Financial Bankshares, Inc.. . . . . . . . 6,000 190,500
First Merchants Corp. . . . . . . . . . . . . . 8,200 194,750
Grand Premier Financial, Inc. . . . . . . . . . 4,500 55,688
National Bancorp of Alaska, Inc.. . . . . . . . 4,500 119,250
National City Bancshares, Inc.. . . . . . . . . 6,800 217,175
Old Second Bancorp, Inc.. . . . . . . . . . . . 7,300 197,100
South Alabama Bancorporation, Inc.. . . . . . . 3,500 45,063
Southside Bancshares Corp.. . . . . . . . . . . 3,400 38,463
-----------
1,057,989
-----------
NON-FEDERAL SAVINGS INSTITUTIONS - 0.58%
Brookline Bancorp, Inc. . . . . . . . . . . . . 15,700 181,531
First Sentinel Bancorp, Inc.. . . . . . . . . . 22,200 197,025
Roslyn Bancorp, Inc.. . . . . . . . . . . . . . 10,300 177,031
-----------
555,587
-----------
STATE COMMERCIAL BANKS - 0.65%
German American Bancorp . . . . . . . . . . . . 10,300 183,469
Letchworth Independent Bancshares Corp. . . . . 6,500 91,000
Northern States Financial Corp. . . . . . . . . 2,000 47,250
United Security Bancorporation* . . . . . . . . 14,000 182,000
VRB Bancorp . . . . . . . . . . . . . . . . . . 16,000 116,000
-----------
619,719
-----------
2,892,533
-----------
EATING PLACES - 1.03%
Bob Evans Farms, Inc. . . . . . . . . . . . . . 12,500 248,438
CBRL Group, Inc.. . . . . . . . . . . . . . . . 12,300 212,944
Ryan's Family Steak Houses, Inc.* . . . . . . . 20,500 238,313
VICORP Restaurants, Inc.* . . . . . . . . . . . 15,000 260,625
-----------
960,320
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
------- -----------
<S> <C> <C>
ELECTRIC, GAS & SANITARY SERVICES - 4.98%
MISCELLANEOUS - 2.05%
Newpark Resources, Inc.. . . . . . . . . . . . 200,000 $1,775,000
Thermo Ecotek Corp.* . . . . . . . . . . . . . 24,000 192,000
-----------
1,967,000
-----------
ELECTRIC & OTHER COMBINED SERVICES - 0.41%
Madison Gas & Electric Co. . . . . . . . . . . 9,700 198,850
Rochester Gas & Electric Corp. . . . . . . . . 7,200 191,250
-----------
390,100
-----------
ELECTRIC SERVICES - 0.85%
CMP Group, Inc.. . . . . . . . . . . . . . . . 9,600 251,400
El Paso Electric Co. . . . . . . . . . . . . . 19,200 171,600
Hawaiian Electrical Industries, Inc. . . . . . 5,300 188,150
The United Illuminating Co.. . . . . . . . . . 4,800 203,700
-----------
814,850
-----------
GAS TRANSMISSION & DISTRIBUTION - 1.24%
Cascade Natural Gas Corp.. . . . . . . . . . . 14,600 277,400
Laclede Gas Co.. . . . . . . . . . . . . . . . 11,000 255,750
Nui Corp.. . . . . . . . . . . . . . . . . . . 10,500 262,500
Ocean Energy, Inc.*. . . . . . . . . . . . . . 12,500 120,312
ONEOK, Inc.. . . . . . . . . . . . . . . . . . 8,500 269,875
-----------
1,185,837
-----------
WATER SUPPLY - 0.43%
American States Water Co.. . . . . . . . . . . 7,300 207,137
California Water Service Group . . . . . . . . 7,700 201,162
408,299
-----------
4,766,086
-----------
ELECTRONICS & OTHER ELECTRICAL EQUIPMENT - 4.15%
BROADCASTING & COMMUNICATION EQUIPMENT - 0.39%
Glenayre Technologies, Inc.* . . . . . . . . . 47,000 168,909
Tekelec* . . . . . . . . . . . . . . . . . . . 17,100 208,406
-----------
377,315
-----------
ELECTRONIC COMPONENTS & ACCESSORIES - 0.31%
Sipex Corp.* . . . . . . . . . . . . . . . . . 1,300 26,650
Vishay Intertechnology, Inc.*. . . . . . . . . 13,000 273,000
-----------
299,650
-----------
ELECTRONIC EQUIPMENT - 2.20%
The Carbide/Graphite Group, Inc.*. . . . . . . 130,000 1,860,625
Woodward Governor Co.. . . . . . . . . . . . . 9,700 252,200
-----------
2,112,825
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
------- -----------
<S> <C> <C>
ELECTRONICS & OTHER ELECTRICAL EQUIPMENT (continued)
TELEPHONE & TELEGRAPH APPARATUS - 0.73%
ADTRAN, Inc.* . . . . . . . . . . . . . . . . . . . . 7,500 $ 272,813
Inter-Tel, Inc. . . . . . . . . . . . . . . . . . . . 11,900 217,175
PairGain Technologies, Inc.*. . . . . . . . . . . . . 17,900 205,850
-----------
695,838
-----------
MISCELLANEOUS ELECTRICAL EQUIPMENT & SUPPLIES - 0.52%
Standard Motor Products, Inc. . . . . . . . . . . . . 11,000 269,500
United Industrial Corp. . . . . . . . . . . . . . . . 20,500 226,781
-----------
496,281
-----------
3,981,909
-----------
ELECTRONIC PARTS & EQUIPMENT - WHOLESALE - 0.19%
Avnet, Inc. . . . . . . . . . . . . . . . . . . . . . 4,000 186,000
-----------
ENGINEERING & MANAGEMENT SERVICES - 3.26%
Billing Concepts Corp.* . . . . . . . . . . . . . . . 14,600 163,338
Forrester Research, Inc.* . . . . . . . . . . . . . . 7,400 185,000
Meta Group, Inc.* . . . . . . . . . . . . . . . . . . 16,700 256,763
Morrison Knudsen Corp.* . . . . . . . . . . . . . . . 18,400 189,750
Paradigm Geophysical, Ltd.* . . . . . . . . . . . . . 312,350 2,127,884
Whittman-Hart, Inc.*. . . . . . . . . . . . . . . . . 6,300 200,025
-----------
3,122,760
-----------
FOOD & KINDRED PRODUCTS - 1.88%
American Italian Pasta Co.* . . . . . . . . . . . . . 8,600 261,225
Canandaigua Brands, Inc. - Class A* . . . . . . . . . 4,500 235,969
Corn Products International, Inc. . . . . . . . . . . 7,800 237,412
International Home Foods, Inc.* . . . . . . . . . . . 14,000 258,125
Omega Protein Corp.*. . . . . . . . . . . . . . . . . 39,200 205,800
Ralcorp Holdings, Inc.* . . . . . . . . . . . . . . . 12,000 192,750
Smithfield Foods, Inc.* . . . . . . . . . . . . . . . 8,500 284,219
Whitman Corp. . . . . . . . . . . . . . . . . . . . . 6,800 122,400
-----------
1,797,900
-----------
FOOTWEAR & RELATED APPAREL - 0.50%
The Stride Rite Corp. . . . . . . . . . . . . . . . . 21,000 216,562
Wolverine World Wide, Inc.. . . . . . . . . . . . . . 18,500 259,000
-----------
475,562
-----------
FURNITURE & FIXTURES - 0.70%
Kimball International, Inc. - Class B . . . . . . . . 11,000 185,625
LADD Furniture, Inc.. . . . . . . . . . . . . . . . . 12,500 262,500
The Rowe Companies. . . . . . . . . . . . . . . . . . 21,000 219,187
-----------
667,312
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
------- -----------
<S> <C> <C>
HEAVY CONSTRUCTION - 0.19%
Foster Wheeler Corp. . . . . . . . . . . . . 13,000 $ 183,625
-----------
INDUSTRIAL & COMMERCIAL MACHINERY - 3.84%
Cirrus Logic, Inc.*. . . . . . . . . . . . . 30,600 271,575
Gardner Denver, Inc.*. . . . . . . . . . . . 14,000 225,750
Gleason Corp.. . . . . . . . . . . . . . . . 12,800 215,200
Lam Research Corp.*. . . . . . . . . . . . . 8,400 392,175
Moog, Inc. Class A*. . . . . . . . . . . . . 7,700 264,688
NN Ball & Roller, Inc. . . . . . . . . . . . 360,000 2,070,000
The Gorman-Rupp Co.. . . . . . . . . . . . . 15,000 247,500
-----------
3,686,888
-----------
INSURANCE CARRIERS - 1.01%
LIFE INSURANCE - 0.28%
Liberty Financial Companies, Inc.. . . . . . 9,400 273,775
-----------
TITLE INSURANCE - 0.73%
Chicago Title Corp.. . . . . . . . . . . . . 6,300 224,831
LandAmerica Financial Group, Inc.. . . . . . 8,300 238,625
The First American Financial Corp. . . . . . 13,000 232,375
-----------
695,831
-----------
969,606
-----------
INVESTMENT ADVICE - 0.51%
United Asset Management Corp.. . . . . . . . 10,800 245,700
Value Line, Inc. . . . . . . . . . . . . . . 6,300 245,700
491,400
-----------
LINEN SERVICES - 0.21%
Angelica Corp. . . . . . . . . . . . . . . . 11,300 199,163
-----------
LUMBER & WOOD PRODUCTS - 0.27%
TJ International, Inc. . . . . . . . . . . . 8,400 260,400
-----------
METAL MINING - 0.25%
Cyprus Amax Minerals Co. . . . . . . . . . . 15,800 239,963
-----------
MISCELLANEOUS PETROLEUM & COAL PRODUCTS - 0.13%
Quaker Chemical Corp.. . . . . . . . . . . . 7,500 121,875
-----------
MOTION PICTURE SERVICES - 0.03%
Four Media Co.*. . . . . . . . . . . . . . . 5,000 32,500
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
--------- -----------
<S> <C> <C>
OIL & GAS EXTRACTION - 9.22%
CRUDE PETROLEUM & NATURAL GAS - 8.78%
Callon Petroleum Co.* . . . . . . . . 6,600 $ 68,062
Comstock Resources, Inc*. . . . . . . 25,000 82,812
EEX Corp. . . . . . . . . . . . . . . 13,500 93,656
Gulf Canada Resources, Ltd.* (Note 6) 1,900,000 7,956,250
Nuevo Energy Co.* . . . . . . . . . . 6,000 79,500
Remington Oil & Gas Corp.*. . . . . . 28,000 136,500
-----------
8,416,780
-----------
DRILLING OIL & GAS WELLS - 0.21%
Pride International, Inc.*. . . . . . 19,300 203,856
-----------
EXPLORATION SERVICES - 0.23%
Veritas DGC, Inc.*. . . . . . . . . . 12,000 219,750
-----------
8,840,386
-----------
OPERATIVE BUILDERS - 0.80%
Engle Homes, Inc. . . . . . . . . . . 17,000 233,750
M.D.C. Holdings, Inc. . . . . . . . . 12,500 268,750
NVR, Inc.*. . . . . . . . . . . . . . 5,000 260,937
-----------
763,437
-----------
PAPER & ALLIED PRODUCTS - 5.22%
American Business Products, Inc.. . . 7,500 114,375
Buckeye Technologies, Inc.* . . . . . 16,000 243,000
Greif Bros. Corp. - Class A . . . . . 9,200 234,600
Potlatch Corp.. . . . . . . . . . . . 5,700 250,444
Smurfit-Stone Container Corp.*. . . . 202,600 4,165,962
-----------
5,008,381
-----------
PRIMARY METAL INDUSTRIES - 1.74%
Andrew Corp.* . . . . . . . . . . . . 14,500 274,594
Commercial Metals Co. . . . . . . . . 10,000 285,000
Intermet Corp.. . . . . . . . . . . . 17,000 257,125
Kaiser Aluminum Corp. . . . . . . . . 25,000 221,875
Olin Corp.. . . . . . . . . . . . . . 8,000 105,500
Steel Technologies, Inc.. . . . . . . 25,000 235,937
Worthington Industries, Inc.. . . . . 17,800 292,587
-----------
1,672,618
-----------
PRINTING & PUBLISHING - 0.95%
BOOKS - 0.20%
Thomas Nelson, Inc. . . . . . . . . . 17,300 192,462
-----------
CONSULTING SERVICES - 0.14%
Franklin Covey Co.* . . . . . . . . . 18,900 139,387
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
------- -----------
<S> <C> <C>
PRINTING & PUBLISHING (continued)
MANIFOLD BUSINESS FORMS - 0.38%
Ennis Business Forms, Inc. . . . . . . . . . 13,000 $ 111,312
The Standard Register Co.. . . . . . . . . . 3,900 119,925
Wallace Computer Services, Inc.. . . . . . . 5,200 130,000
-----------
361,237
-----------
NEWSPAPERS - 0.23%
Hollinger International, Inc.. . . . . . . . 13,500 160,312
Journal Register Co.*. . . . . . . . . . . . 2,500 56,250
216,562
-----------
909,648
-----------
RETAIL - 3.10%
APPAREL & ACCESSORY STORES - 0.63%
The Dress Barn, Inc.*. . . . . . . . . . . . 15,000 240,000
Just For Feet, Inc.* . . . . . . . . . . . . 21,000 135,188
Payless ShoeSource, Inc.*. . . . . . . . . . 4,300 230,050
-----------
605,238
-----------
DEPARTMENT STORES - 0.21%
The Neiman Marcus Group, Inc.. . . . . . . . 7,900 202,931
-----------
FURNITURE & HOME FURNISHING STORES - 0.40%
CompUSA, Inc.* . . . . . . . . . . . . . . . 17,000 126,438
Pier 1 Imports, Inc. . . . . . . . . . . . . 23,000 258,750
-----------
385,188
-----------
MISCELLANEOUS RETAIL - 1.86%
Borders Group, Inc.* . . . . . . . . . . . . 7,500 118,594
Brookstone, Inc.*. . . . . . . . . . . . . . 16,000 248,000
Duane Reade, Inc.* . . . . . . . . . . . . . 7,700 235,813
Hancock Fabrics, Inc.. . . . . . . . . . . . 213,500 934,063
OfficeMax, Inc.* . . . . . . . . . . . . . . 20,500 246,000
-----------
1,782,470
-----------
2,975,827
-----------
RUBBER & MISCELLANEOUS PLASTIC PRODUCTS - 1.11%
Applied Extrusion Technologies, Inc.*. . . . 76,800 585,600
AptarGroup, Inc. . . . . . . . . . . . . . . 8,100 243,000
Safeskin Corp.*. . . . . . . . . . . . . . . 20,000 240,000
-----------
1,068,600
-----------
SKILLED NURSING CARE FACILITIES - 0.13%
Genesis Health Ventures, Inc.* . . . . . . . 42,000 126,000
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
------- -----------
<S> <C> <C>
STONE, CLAY & GLASS PRODUCTS - 4.03%
Libbey, Inc.. . . . . . . . . . . . . . . 125,000 $3,625,000
Lone Star Industries, Inc.. . . . . . . . 6,300 236,644
-----------
3,861,644
-----------
TECHNICAL INSTRUMENTS & SUPPLIES - 3.59%
MISCELLANEOUS - 2.73%
Mine Safety Appliances Co.. . . . . . . . 3,600 230,400
Orbital Sciences Corp.* . . . . . . . . . 101,200 2,390,850
-----------
2,621,250
-----------
ELECTROMEDICAL EQUIPMENT - 0.86%
Acuson Corp.* . . . . . . . . . . . . . . 15,100 259,531
Spacelabs Medical, Inc.*. . . . . . . . . 14,200 268,025
Thermo Cardiosystems, Inc.* . . . . . . . 27,500 299,063
-----------
826,619
-----------
3,447,869
-----------
TEXTILE MILL PRODUCTS - 3.53%
Albany International Corp. - Class A. . . 159,684 3,313,443
Burlington Industries, Inc.*. . . . . . . 7,300 66,156
-----------
3,379,599
-----------
TRANSPORTATION - 7.48%
AIR - 0.40%
Airborne Freight Corp.. . . . . . . . . . 7,600 210,425
Offshore Logistics, Inc.. . . . . . . . . 15,500 172,438
-----------
382,863
-----------
RAILROAD - 3.82%
Guangshen Railway Co. Ltd. - ADR (Note 6) 480,000 3,660,000
-----------
TRUCKING - 0.92%
Consolidated Freightways Corp.* . . . . . 16,600 213,207
J.B. Hunt Transport Services, Inc.. . . . 12,400 201,500
Roadway Express, Inc. . . . . . . . . . . 12,000 232,500
Yellow Corp.* . . . . . . . . . . . . . . 13,100 232,525
-----------
879,732
-----------
WATER - 2.34%
Trico Marine Services, Inc.*. . . . . . . 342,000 2,244,375
-----------
7,166,970
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
--------- ------------
<S> <C> <C>
TRANSPORTATION EQUIPMENT - 1.82%
MOTOR VEHICLE PARTS & ACCESSORIES - 0.75%
Amcast Industrial Corp. . . . . . . . . . 14,000 $ 228,375
Arvin Industries, Inc.. . . . . . . . . . 6,000 227,250
Dura Automotive Systems, Inc.*. . . . . . 7,900 262,675
------------
718,300
------------
TRUCK TRAILERS - 0.28%
Wabash National Corp. . . . . . . . . . . 14,000 271,250
------------
MOTOR HOMES - 0.54%
Coachmen Industries, Inc. . . . . . . . . 7,600 176,700
Winnebago Industries, Inc.. . . . . . . . 15,000 337,500
------------
514,200
------------
GUIDED MISSILES & SPACE VEHICLES - 0.25%
GenCorp, Inc. . . . . . . . . . . . . . . 9,500 239,875
------------
1,743,625
------------
UNIT INVESTMENT TRUSTS - 0.26%
Medallion Financial Corp. . . . . . . . . 13,300 253,531
------------
TOTAL COMMON STOCK
(IDENTIFIED COST $97,656,271) 90,542,641
------------
SHORT-TERM INVESTMENTS - 2.21%
Dreyfus Treasury Cash Management Fund
(Identified Cost $2,117,249). . . . . 2,117,249 2,117,249
------------
TOTAL INVESTMENTS - 96.65%
(Identified Cost $99,773,520) 92,659,890
OTHER ASSETS, LESS LIABILITIES - 3.35% 3,208,212
------------
NET ASSETS - 100% $95,868,102
============
</TABLE>
* Non-income producing security
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At June 30, 1999, the net unrealized depreciation based on identified cost
for federal income tax purposes of $99,773,520 was as follows:
<S> <C>
Unrealized appreciation. . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,326,618
Unrealized depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . (16,440,248)
-------------
UNREALIZED DEPRECIATION - NET. . . . . . . . . . . . . . . . . . . . . . . ($7,113,630)
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value (identified cost $99,773,520)(Note 2). . $ 92,659,890
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Foreign currency, at value (cost $254,317) . . . . . . . . . . 249,988
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 343,284
Receivable for fund shares sold. . . . . . . . . . . . . . . . 22,060
-------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 93,275,247
-------------
LIABILITIES:
Accrued management fee (Note 3). . . . . . . . . . . . . . . . 74,958
Accrued Directors' fees (Note 3) . . . . . . . . . . . . . . . 4,398
Payable for fund shares repurchased. . . . . . . . . . . . . . 291,466
Accrued registration and filing fees . . . . . . . . . . . . . 11,698
Audit fee payable. . . . . . . . . . . . . . . . . . . . . . . 10,813
Custodian fee payable. . . . . . . . . . . . . . . . . . . . . 7,213
Other payables and accrued expenses. . . . . . . . . . . . . . 6,599
-------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 407,145
-------------
NET ASSETS FOR 9,170,591 SHARES
OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . . . $ 92,868,102
=============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . $ 91,706
Additional paid-in-capital . . . . . . . . . . . . . . . . . . 106,620,360
Undistributed net investment income. . . . . . . . . . . . . . 1,170,097
Accumulated net realized loss on investments . . . . . . . . . (7,896,102)
Net unrealized depreciation on investments, foreign currency,
and other assets and liabilities. . . . . . . . . . . . . (7,117,959)
-------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $ 92,868,102
=============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE - CLASS A
($92,868,102/9,170,591 shares). . . . . . . . . . . . . . . $ 10.13
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Dividends (net of foreign tax withheld, $27,140). . . . $ 713,909
Interest. . . . . . . . . . . . . . . . . . . . . . . . 441,770
------------
Total Investment Income . . . . . . . . . . . . . . . . 1,155,679
------------
EXPENSES:
Management fee (Note 3). . . . . . . . . . . . . . . . 467,127
Directors' fees (Note 3). . . . . . . . . . . . . . . . 2,755
Custodian fee . . . . . . . . . . . . . . . . . . . . . 14,876
Audit fee . . . . . . . . . . . . . . . . . . . . . . . 11,778
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 14,211
------------
Total Expenses. . . . . . . . . . . . . . . . . . . . . 510,747
------------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . . 644,932
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on -
Investments (identified cost basis). . . . . . . . . (6,413,564)
Foreign currency and forward foreign currency
exchange contracts. . . . . . . . . . . . . . . . (1,650)
------------
Net realized gain (loss) on investments . . . . . . . . (6,415,214)
------------
Net change in unrealized depreciation on-
Investments. . . . . . . . . . . . . . . . . . . . . 10,287,330
Foreign currency, forward foreign currency exchange
contracts, and other assets and liabilities. . . (4,335)
------------
Net change in unrealized depreciation on investments. . 10,282,995
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS . . . . . . . . . . . . . . . . . . . 3,867,781
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . . $ 4,512,713
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED 6/30/99 FOR THE YEAR
(UNAUDITED) ENDED 12/31/98
-------------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income. . . . . . . . . . . . . . . . $ 644,932 $ 508,214
Net realized loss on investments . . . . . . . . . . (6,415,214) (1,433,638)
Net change in unrealized appreciation (depreciation)
on investments . . . . . . . . . . . . . . . . . 10,282,995 (15,675,699)
-------------------- ----------------
Net increase (decrease) from operations. . . . . . . 4,512,713 (16,601,123)
-------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net realized gain on investments. . . . . . . . -- (6,778,592)
-------------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital share
transactions (Note 5) . . . . . . . . . . . . . . (11,310,783) 1,445,861
-------------------- ----------------
Net decrease in net assets . . . . . . . . . . . . . (6,798,070) (21,933,854)
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . 99,666,172 121,600,026
-------------------- ----------------
END OF PERIOD (including undistributed net investment
income of $1,170,097 and $525,165, respectively). $ 92,868,102 $ 99,666,172
==================== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS
ENDED
6/30/99 FOR THE YEARS ENDED
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95
------------- --------------------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD. . . . $ 9.64 $ 12.05 $ 12.09 $ 11.95 $ 12.92
------------- --------------------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) . . . . . . . 0.077 0.049 (0.015) 0.045 (0.004)
Net realized and unrealized gain(loss)
on investments. . . . . . . . . . . . . . 0.413 (1.774) 1.502 1.112 1.934
------------- --------------------- ---------- ---------- ----------
Total from investment operations. . . . . . . 0.490 (1.725) 1.487 1.157 1.930
------------- --------------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income . . . . . . . . -- -- (0.009) (0.035) --
From net realized gain on investments. . . -- (0.685) (1.518) (0.889) (2.900)
In excess of net realized gain
on investments . . . . . . . . . . . -- -- -- (0.093) --
------------- --------------------- ---------- ---------- ----------
Total distributions to shareholders . . . . . -- (0.685) (1.527) (1.017) (2.900)
------------- --------------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD . . . . . . . $ 10.13 $ 9.64 $ 12.05 $ 12.09 $ 11.95
============= ===================== ========== ========== ==========
Total return1 . . . . . . . . . . . . . . . . 5.08% (13.59)% 12.29% 10.06% 14.70%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses. . . . . . . . . . . . . . . . . 1.09%2 1.09% 1.07% 1.08% 1.07%
Net investment income (loss). . . . . . . 1.38%2 0.44% (0.12)% 0.29% (0.03)%
Portfolio turnover. . . . . . . . . . . . 53% 81% 94% 31% 77%
NET ASSETS - END OF PERIOD
(000'S OMITTED). . . . . . . . . . . . . . $ 92,868 $ 99,666 $ 121,600 $ 100,688 $ 143,003
============= ===================== ========== ========== ==========
12/31/94
----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
<S> <C>
NET ASSET VALUE - BEGINNING OF PERIOD. . . . $ 12.52
----------
Income from investment operations:
Net investment income (loss) . . . . . . . (0.066)
Net realized and unrealized gain(loss)
on investments. . . . . . . . . . . . . . 1.051
----------
Total from investment operations. . . . . . . 0.985
----------
Less distributions to shareholders:
From net investment income . . . . . . . . --
From net realized gain on investments. . . (0.585)
In excess of net realized gain
on investments . . . . . . . . . . . --
----------
Total distributions to shareholders . . . . . (0.585)
----------
NET ASSET VALUE - END OF PERIOD . . . . . . . $ 12.92
==========
Total return1 . . . . . . . . . . . . . . . . 8.01%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses. . . . . . . . . . . . . . . . . 1.10%
Net investment income (loss). . . . . . . (0.58)%
Portfolio turnover. . . . . . . . . . . . 31%
NET ASSETS - END OF PERIOD
(000'S OMITTED). . . . . . . . . . . . . . $ 105,522
==========
</TABLE>
1Represents aggregate total return for the period indicated.
2 Annualized.
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION
Small Cap Series (the "Series") is a no-load diversified series of Exeter Fund,
Inc. (the "Fund"). The Fund 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 Series resumed sales of shares to advisory clients and
employees of Manning & Napier Advisors, Inc. (the "Advisor") and its affiliates.
On July 8, 1993, the Series began offering shares directly to investors.
Previously, the Series was available from time to time to Manning & Napier
employees and advisory clients of Manning & Napier Advisors, Inc.
The Series 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 Fund consists of one billion shares of
common stock each having a par value of $0.01. As of June 30, 1999, 1,550
million shares have been designated in total among 31 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 provided by the Fund's pricing service.
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.
Most expenses of the Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series 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.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES (CONTINUED)
The Series 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 made annually. An additional distribution may be necessary
to avoid taxation of the Series.
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 Series may periodically make
reclassifications among its capital accounts without impacting the Series' net
asset value.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Series are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars on the following basis: a)
investment securities, other assets and liabilities are converted to U.S.
dollars based upon current exchange rates; and b) purchase and sales of
securities and income and expenses are converted into U.S. dollars based upon
the currency exchange rates prevailing on the respective dates of such
transactions.
Gains and losses attributable to foreign currency exchange rates are recorded
for financial statement purposes as net realized gains and losses on
investments. The portion of both realized and unrealized gains and losses on
investment that result from fluctuations in foreign currency exchange rates is
not separately stated.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Series 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 Series 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 Series 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.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS (CONTINUED)
At June 30, 1999 the Series 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
Series pays a fee, computed daily and payable monthly, at an annual rate of 1%
of the Series' average daily net assets. The fee amounted to $467,127 for the
six months ended June 30, 1999.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' 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
Series.
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 Series.
The compensation of the non-affiliated Directors totaled $2,755 for the six
months ended June 30, 1999.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1999, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$46,686,938 and $40,748,278, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Small Cap Series Class A Shares were:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR
ENDED 6/30/99 ENDED 12/31/98
------------------- ---------------
Shares Amount Shares Amount
------------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Sold. . . . 395,845 $ 3,764,949 842,778 $ 9,931,958
Reinvested. -- -- 782,160 6,679,645
Repurchased (1,562,569) (15,075,732) (1,375,248) (15,165,742)
------------------- ------------- --------------- -------------
Total . . . (1,166,724) $(11,310,783) 249,690 $ 1,445,861
=================== ============= =============== =============
</TABLE>
20
<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.
21
<PAGE>
<PAGE>
EXETER FUND, INC.
INTERNATIONAL SERIES
SEMI-ANNUAL REPORT
JUNE 30, 1999
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
DEAR SHAREHOLDERS:
The International Series has slowed its appreciation compared to late 1998, but
it continued to outperform the Morgan Stanley Capital International All Country
World ex US Index for the twelve months ending June 30, 1999.
In managing this Series, we use a "top-down" approach designed to identify
countries and regions of the world that offer investment opportunities due to
factors such as strengthening economies or political changes that may be taking
place. Since the Series' inception in 1992, it has been invested primarily in
European stocks, and this remains the case. At the end of June 1999, over 90%
of the stocks in the portfolio were issued by companies in France, Italy, Spain,
and Germany.
When we originally invested in Europe, those countries were in recession, and
interest rates were high. We expected the economies to strengthen and interest
rates to fall, and we invested in order to take advantage of the growth that we
anticipated. This has developed as we expected, with growth first coming from
increased exports and then broadening to other areas as well. We have seen
additional benefits as governments implement policies that are more business
friendly and as companies have focused on providing returns to shareholders.
Corporate restructuring, which reached Europe well after the United States, has
also helped growth, by making companies stronger and more efficient.
Another aspect to the European story is the introduction of the common currency,
the euro. In preparing for the introduction, the countries involved had to meet
a strict set of fiscal requirements, and these have further benefited the
markets. The first stage of the introduction took place on January 1, 1999,
with additional stages to follow in 2002. The euro has fallen versus the U.S.
dollar since its introduction, but we had protected against this potential
negative by hedging the euro. In May, it appeared to us that the currency had
bottomed out (and therefore the future risk was low), so we removed the hedge.
We expect the weaker currency to help European competitiveness, therefore
increasing growth in those countries.
Another recent European news story has been the conflict in Kosovo. The conflict
held back the Series' European holdings for much of the period, but the short
length of the conflict kept the fiscal damage to relatively low level. Early
estimates show that the reconstruction plans will cost less than 0.1% of GDP,
which will mean that deficits should not worsen. Because the markets had
reflected expectations for a longer conflict and more expensive reconstruction
period, the improving situation has had a positive impact on European markets
recently.
In addition to its European holdings, the Series also holds small positions in
Hong Kong and in several Southeast Asian countries. The Series' Hong Kong
stocks represent companies in mainland China. China is somewhat insulated from
the rest of Asia and the "Asian flu". Growth did slow slightly with the Asian
crisis, although it still maintained a reasonable pace, and it is now beginning
to move higher again. The Hong Kong market has rebounded along with the other
parts of Asia, and these stocks have performed quite well.
The Series' Southeast Asian holdings have recovered as steps have been taken to
strengthen those economies and markets. Policymakers are implementing policies
to reduce inflation and to restore confidence, and there has been a dramatic
change in investor expectations, reflected in rising share prices.
Because we manage this Series with a top-down approach, an important part of our
analysis consists of monitoring the regions in which we are currently invested
and other regions that may present investment opportunities. When we identify
countries for which our overview and stock valuations are attractive, they will
be added to the portfolio. Similarly, when our analysis shows that an
investment opportunity has been captured, we will sell those shares from the
portfolio.
As always, we appreciate the opportunity to serve you.
Sincerely,
EXETER ASSET MANAGEMENT
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
[graphic]
<pie chart>
Data for pie chart to follow:
Portfolio Allocation by Country* - As of 6/30/99
France - 35%
Germany - 28%
Hong Kong - 5%
Indonesia - 1%
Italy - 18%
Malaysia - 2%
Spain - 11%
* As a percentage of common stocks.
2
<PAGE>
PERFORMANCE UPDATE AS OF JUNE 30, 1999 (UNAUDITED)
Exeter Fund, Inc.
International Series
<TABLE>
<CAPTION>
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . $ 10,532 5.32% 5.32%
Five Year . $ 21,253 112.53% 16.26%
Inception 1 $ 24,533 145.33% 14.01%
</TABLE>
S&P 500 Total Return Index
<TABLE>
<CAPTION>
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . $ 12,277 22.77% 22.77%
Five Year . $ 34,167 241.67% 27.84%
Inception 1 $ 38,657 286.57% 21.84%
</TABLE>
Morgan Stanley All Country World ex U.S. Index
<TABLE>
<CAPTION>
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . $ 11,027 10.27% 10.27%
Five Year . $ 14,558 45.58% 7.80%
Inception 1 $ 20,017 100.17% 10.67%
</TABLE>
The value of a $10,000 investment in the Exeter Fund, Inc. - International
Series from its inception (8/27/92) to present (06/30/99) as compared to the
Standard & Poor's (S&P) 500 Total Return Index and the Morgan Stanley Capital
International World All Country ex U.S. Index. 2
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. S&P 500 Total Morgan Stanley All
Date International Series Return Index Country World ex US Index
<S> <C> <C> <C>
08/27/92 10,000 10,000 10,000
12/31/92 10,598 10,643 9,510
12/31/93 13,359 11,709 12,892
12/31/94 11,425 11,868 13,808
12/31/95 11,898 16,312 14,985
12/31/96 14,557 20,052 15,981
12/31/97 18,589 26,959 16,254
12/31/98 22,983 34,398 18,544
06/30/99 24,533 38,657 20,017
</TABLE>
1 Performance numbers for the Series and Indices are calculated from August 27,
1992, the Series' inception date. The Series' performance is historical and may
not be indicative of future results.
2 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 All Country ex U.S. Index is a
market capitalization weighted measure of the total return of 2,018 companies
listed on the stock exchanges of 47 countries. The Index is denominated in U.S.
Dollars. The Indices' returns assume reinvestment of dividends and, unlike
Series returns, do not reflect any fees or expenses.
3
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
------ -----------
<S> <C> <C>
COMMON STOCK - 97.64%
FRANCE - 33.96%
AEROSPACE & MILITARY TECHNOLOGY - 0.27%
Thomson CSF . . . . . . . . . . . . . . 14,389 $ 501,493
-----------
AUTOMOBILES - 0.65%
PSA Peugeot Citroen . . . . . . . . . . 7,545 1,193,865
-----------
BANKING - 1.65%
Banque Nationale de Paris . . . . . . . 9,050 756,248
Compagnie Financiere de Paribas . . . . 9,867 1,109,224
Societe Generale. . . . . . . . . . . . 6,578 1,162,627
-----------
3,028,099
-----------
BEVERAGE & TOBACCO - 2.07%
LVMH (Louis Vuitton Moet Hennessy). . . 11,764 3,454,021
LVMH bonus rights (Exp. 9/21/1999). . . 11,764 344,915
-----------
3,798,936
-----------
BUILDING MATERIALS & COMPONENTS - 0.69%
Lafarge SA. . . . . . . . . . . . . . . 13,327 1,270,773
-----------
BUSINESS & PUBLIC SERVICES - 2.31%
Vivendi . . . . . . . . . . . . . . . . 51,747 4,203,741
Vivendi warrants (Exp. 5/2/2001). . . . 16,992 45,690
-----------
4,249,431
-----------
CHEMICALS - 2.03%
L'Air Liquide . . . . . . . . . . . . . 16,356 2,579,595
Rhone-Poulenc - SA. . . . . . . . . . . 25,300 1,159,383
-----------
3,738,978
-----------
ELECTRICAL & ELECTRONICS - 1.64%
Alcatel Alsthom . . . . . . . . . . . . 21,353 3,014,367
-----------
ENERGY SOURCES - 4.77%
Elf Aquitaine SA. . . . . . . . . . . . 37,335 5,494,467
Total Fina SA - B . . . . . . . . . . . 25,288 3,271,722
-----------
8,766,189
-----------
FINANCIAL SERVICES - 0.27%
Societe Eurafrance SA . . . . . . . . . 780 485,619
-----------
FOOD & HOUSEHOLD PRODUCTS - 1.46%
Groupe Danone . . . . . . . . . . . . . 10,381 2,684,008
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
------ ------------
<S> <C> <C>
FRANCE (CONTINUED)
HEALTH & PERSONAL CARE - 4.77%
Sanofi-Synthelabo SA . . . . . . . 46,668 $ 1,986,065
L'Oreal. . . . . . . . . . . . . . 10,013 6,787,994
------------
8,774,059
------------
INDUSTRIAL COMPONETS - 0.34%
Michelin-B . . . . . . . . . . . . 15,313 628,242
------------
LEISURE & TOURISM - 0.66%
Accor SA . . . . . . . . . . . . . 4,809 1,211,039
------------
MACHINERY & ENGINEERING - 0.42%
Schneider SA . . . . . . . . . . . 13,595 765,564
------------
MATERIALS & COMMODITIES - 1.38%
Compagnie de Saint-Gobain. . . . . 15,911 2,542,322
------------
MERCHANDISING - 4.76%
Carrefour Supermarche SA . . . . . 36,288 5,347,890
Casino Guichard-Perrachon SA . . . 10,600 931,814
Pinault-Printemps-Redoute SA . . . 7,500 1,290,681
Promodes . . . . . . . . . . . . . 1,800 1,184,883
------------
8,755,268
------------
MULTI-INDUSTRY - 3.82%
AXA. . . . . . . . . . . . . . . . 27,573 3,373,442
Chargeurs SA . . . . . . . . . . . 1,235 68,971
Pathe SA . . . . . . . . . . . . . 3,705 446,011
Suez Lyonnaise des Eaux. . . . . . 17,368 3,141,551
------------
7,029,975
------------
TOTAL FRENCH SECURITIES
(Identified Cost $29,136,582) 62,438,227
------------
GERMANY - 27.14%
AIRLINES - 0.24%
Deutsche Lufthansa AG. . . . . . . 23,700 432,611
------------
BANKING - 2.79%
HypoVereinsbank AG . . . . . . . . 49,730 3,173,278
Dresdner Bank AG . . . . . . . . . 50,000 1,949,467
------------
5,122,745
------------
BUSINESS & PUBLIC SERVICES - 1.28%
SAP AG . . . . . . . . . . . . . . 6,850 2,355,520
------------
CHEMICALS - 1.90%
Bayer AG . . . . . . . . . . . . . 83,750 3,494,885
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
--------- ------------
<S> <C> <C>
GERMANY (CONTINUED)
ELECTRICAL & ELECTRONICS - 5.05%
Siemens AG . . . . . . . . . . . . . 120,000 $ 9,282,979
------------
INSURANCE - 3.52%
Allianz AG . . . . . . . . . . . . . 23,070 6,465,787
------------
MACHINERY & ENGINEERING - 5.21%
Mannesmann AG. . . . . . . . . . . . 57,250 8,585,153
MAN AG . . . . . . . . . . . . . . . 29,020 990,412
------------
9,575,565
------------
MATERIALS & COMMODITIES - 0.40%
Degussa-Huels AG . . . . . . . . . . 17,900 743,264
------------
MULTI-INDUSTRY - 0.85%
Viag AG. . . . . . . . . . . . . . . 3,356 1,561,849
------------
TELECOMMUNICATIONS - 1.60%
Deutsche Telekom AG. . . . . . . . . 70,000 2,950,056
------------
UTILITIES - GAS & ELECTRIC - 4.30%
RWE AG . . . . . . . . . . . . . . . 75,810 3,520,281
VEBA AG. . . . . . . . . . . . . . . 74,150 4,386,435
------------
7,906,716
------------
TOTAL GERMAN SECURITIES
(Identified Cost $23,714,735) 49,891,977
------------
HONG KONG - 4.46%
BROADCAST SERVICES - 1.28%
Television Broadcasts Ltd. . . . . . 500,000 2,345,798
------------
ENERGY SOURCES - OIL/GAS - 0.99%
Shanghai Petrochemical Co. Ltd.. . . 7,750,000 1,827,982
------------
INVESTMENT HOLDING COMPANIES - 1.30%
Hutchison Whampoa Ltd. . . . . . . . 265,000 2,399,449
------------
MULTI-INDUSTRY - 0.87%
Citic Pacific Ltd. . . . . . . . . . 500,000 1,595,014
------------
WHOLESALE - 0.02%
Goldlion Holdings Ltd. . . . . . . . 200,000 31,191
------------
TOTAL HONG KONG SECURITIES
(Identified Cost $6,882,952) 8,199,434
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
--------- -----------
<S> <C> <C>
INDONESIA - 0.88%
BUILDING MATERIAL & COMPONENTS - 0.20%
PT Barito Pacific Timber. . . . . . . . . . . . 3,425,000 $ 372,983
-----------
TEXTILES & APPAREL - 0.68%
Great River International . . . . . . . . . . . 8,600,000 1,248,720
-----------
TOTAL INDONESIAN SECURITIES
(Identified Cost $3,765,253) 1,621,703
-----------
ITALY - 17.83%
BUILDING MATERIAL & COMPONENTS - 0.58%
Italcementi S.p.A.. . . . . . . . . . . . . . . 83,600 1,063,447
-----------
CONSTRUCTION & HOUSING - 0.23%
Sirti S.p.A.. . . . . . . . . . . . . . . . . . 86,500 418,665
-----------
ENERGY SOURCES - 3.49%
Edison S.p.A. . . . . . . . . . . . . . . . . . 104,000 903,477
ENI S.p.A.. . . . . . . . . . . . . . . . . . . 921,940 5,520,593
-----------
6,424,070
-----------
FINANCIAL SERVICES - 3.83%
Banca Commerciale Italiana. . . . . . . . . . . 350,000 2,577,392
Banca Intesa S.p.A. . . . . . . . . . . . . . . 120,1000 578,807
Uncredito Italiano S.p.A. . . . . . . . . . . . 489,000 2,154,383
Istituto Bancario San Paolo di Torina . . . . . 126,800 1,731,003
-----------
7,041,585
-----------
FOOD & HOUSEHOLD PRODUCTS - 0.20%
Parmalat Finanziaria S.p.A. . . . . . . . . . . 280,080 367,867
-----------
INSURANCE - 2.93%
Assicurazioni Generali. . . . . . . . . . . . . 143,104 4,972,738
SAI S.p.A.. . . . . . . . . . . . . . . . . . . 40,400 417,817
-----------
5,390,555
-----------
MULTI-INDUSTRY - 0.52%
Pirelli S.p.A.. . . . . . . . . . . . . . . . . 348,000 950,140
-----------
RETAIL - SPECIALTY STORES - 0.23%
La Rinascente S.p.A.. . . . . . . . . . . . . . 55,000 417,507
La Rinascente S.p.A. warrants (Exp. 11/30/1999) 2,250 2,629
-----------
420,136
-----------
TELECOMMUNICATIONS - 5.12%
Telecom Italia S.p.A. . . . . . . . . . . . . . 294,445 3,069,511
Telecom Italia Mobile S.p.A.. . . . . . . . . . 1,060,000 6,347,299
-----------
9,416,810
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
--------- ------------
<S> <C> <C>
ITALY (CONTINUED)
TEXTILES & APPAREL - 0.36%
Benetton Group S.p.A.. . . . . . . . . . . . . . . 332,520 $ 656,834
------------
UTILITIES - GAS & ELECTRIC - 0.34%
Italgas S.p.A. . . . . . . . . . . . . . . . . . . 150,000 631,379
------------
TOTAL ITALIAN SECURITIES
(Identified Cost $18,373,036) 32,781,488
------------
MALAYSIA - 2.33%
BUILDING MATERIALS & COMPONENTS - 0.85%
Jaya Tiasa Holdings Bhd**. . . . . . . . . . . . . 850,000 1,560,210
------------
MULTI-INDUSTRY - 1.48%
Kumpulan Guthrie Bhd** . . . . . . . . . . . . . . 2,277,000 1,359,020
Sime Darby Bhd** . . . . . . . . . . . . . . . . . 1,160,000 1,368,201
------------
2,727,221
------------
TOTAL MALAYSIAN SECURITIES
(Identified Cost $5,708,601) 4,287,431
------------
SPAIN - 11.04%
BEVERAGE & TOBACCO - 0.23%
Tabacalera SA. . . . . . . . . . . . . . . . . . . 21,330 432,366
------------
CONSTRUCTION & HOUSING - 0.51%
Fomento de Construcciones y Contratas SA . . . . . 9,108 522,782
Grupo Dragados SA. . . . . . . . . . . . . . . . . 35,964 422,895
------------
945,677
------------
FINANCIAL SERVICES - 4.86%
Banco Bilbao Vizcaya SA. . . . . . . . . . . . . . 254,610 3,689,080
Banco Santander Central Hispano SA . . . . . . . . 365,854 3,821,499
Corporacion Bancaria de Espana SA (Argentaria) . . 62,048 1,417,516
------------
8,928,095
------------
METAL - STEEL - 0.19%
Acerinox SA. . . . . . . . . . . . . . . . . . . . 11,715 343,479
------------
MULTI-INDUSTRY - 0.21%
Autopistas Concesionaria Espanola SA . . . . . . . 31,358 368,086
Autopistas Concesionaria Espanola SA bonus rights
(Exp. 7/12/1999). . . . . . . . . . . . . . . . 31,358 18,161
------------
386,247
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES/
PRINCIPAL VALUE
AMOUNT (NOTE 2)
---------- -------------
<S> <C> <C>
SPAIN (CONTINUED)
REAL ESTATE - 0.03%
Inmobiliaria Metropolitana Vasco Central SA . . . . 2,368 $ 46,506
Inmobiliaria Metropolitana Vasco Central SA rights
(Exp. 7/26/1999) . . . . . . . . . . . . . . . . 2,368 2,302
-------------
48,808
-------------
TELECOMMUNICATIONS - 1.47%
Telefonica SA . . . . . . . . . . . . . . . . . . . 56,105 2,710,291
-------------
UTILITIES - GAS & ELECTRIC - 3.54%
Endesa SA . . . . . . . . . . . . . . . . . . . . . 116,840 2,498,887
Gas Natural SDG - E SA. . . . . . . . . . . . . . . 19,972 1,456,181
Iberdrola SA. . . . . . . . . . . . . . . . . . . . 122,474 1,870,807
Union Electrica Fenosa SA . . . . . . . . . . . . . 52,126 683,562
-------------
6,509,437
-------------
TOTAL SPANISH SECURITIES
(Identified Cost $7,353,147) 20,304,400
-------------
THAILAND - 0.00%
FOOD & HOUSEHOLD PRODUCTS - 0.00%
Songkla Canning Public Co. Ltd.** (Identified
Cost $24,030). . . . . . . . . . . . . . . . . . 38,100 0
-------------
TOTAL COMMON STOCK
(Identified Cost $94,958,336) 179,524,660
-------------
SHORT-TERM INVESTMENTS - 1.39%
Federal National Mortgage Association Discount
Note, 7/8/1999 . . . . . . . . . . . . . . . . . $2,000,000 1,998,145
Dreyfus Treasury Cash Management Fund . . . . . . . 558,751 558,751
-------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $2,556,896) 2,556,896
-------------
TOTAL INVESTMENTS - 99.03%
(Identified Cost $97,515,232) 182,081,556
OTHER ASSETS, LESS LIABILITIES - 0.97% 1,779,037
-------------
NET ASSETS - 100% $183,860,593
=============
</TABLE>
* Non-income producing security
** Securities have been determined to be illiquid, and have been valued at fair
value by the Advisor.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At June 30, 1999, the net unrealized appreciation based on identified
cost for federal income tax purposes of $97,515,232 was as follows:
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . $89,020,860
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . (4,454,536)
------------
UNREALIZED APPRECIATION - NET . . . . . . . . . . . . . . . . . . . . $84,566,324
============
</TABLE>
<TABLE>
<CAPTION>
INDUSTRY CONCENTRATION (AS A PERCENT OF NET ASSETS) Percent
of Net Assets
--------------
<S> <C>
Aerospace & Military Technology . . . . . . . . . . 0.27%
Airlines. . . . . . . . . . . . . . . . . . . . . . 0.24%
Automobiles . . . . . . . . . . . . . . . . . . . . 0.65%
Banking . . . . . . . . . . . . . . . . . . . . . . 4.44%
Beverage & Tobacco. . . . . . . . . . . . . . . . . 2.30%
Broadcast Services. . . . . . . . . . . . . . . . . 1.28%
Building Materials & Components . . . . . . . . . . 2.32%
Business & Public Services. . . . . . . . . . . . . 3.59%
Chemicals . . . . . . . . . . . . . . . . . . . . . 3.93%
Construction & Housing. . . . . . . . . . . . . . . 0.74%
Electrical & Electronics. . . . . . . . . . . . . . 6.69%
Energy Sources. . . . . . . . . . . . . . . . . . . 9.25%
Financial Services. . . . . . . . . . . . . . . . . 8.96%
Food & Household Products . . . . . . . . . . . . . 1.66%
Health & Personal Care. . . . . . . . . . . . . . . 4.77%
Industrial Components . . . . . . . . . . . . . . . 0.34%
Insurance . . . . . . . . . . . . . . . . . . . . . 6.45%
Investment Holding Companies. . . . . . . . . . . . 1.30%
Leisure & Tourism . . . . . . . . . . . . . . . . . 0.66%
Machinery & Engineering . . . . . . . . . . . . . . 5.63%
Materials & Commodities . . . . . . . . . . . . . . 1.78%
Merchandising . . . . . . . . . . . . . . . . . . . 4.76%
Metals-Steel. . . . . . . . . . . . . . . . . . . . 0.19%
Multi-Industry. . . . . . . . . . . . . . . . . . . 7.75%
Real Estate . . . . . . . . . . . . . . . . . . . . 0.03%
Retail. . . . . . . . . . . . . . . . . . . . . . . 0.23%
Telecommunications. . . . . . . . . . . . . . . . . 8.19%
Textiles & Apparel. . . . . . . . . . . . . . . . . 1.04%
Utilities - Gas & Electric. . . . . . . . . . . . . 8.18%
Wholesale - Special Lines . . . . . . . . . . . . . 0.02%
--------------
TOTAL COMMON STOCK. . . . . . . . . . . . . . . . . 97.64%
==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value (identified cost $97,515,232)(Note 2). . $182,081,556
Foreign currency, at value (cost $1,697,837) . . . . . . . . . 1,676,655
Foreign tax reclaims receivable. . . . . . . . . . . . . . . . 664,365
Payable for securities sold. . . . . . . . . . . . . . . . . . 132,458
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 45,287
Receivable for fund shares sold. . . . . . . . . . . . . . . . 32,410
------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 184,632,731
------------
LIABILITIES:
Accrued management fee (Note 3). . . . . . . . . . . . . . . . 149,321
Accrued Directors' fees (Note 3) . . . . . . . . . . . . . . . 4,398
Payable for fund shares repurchased. . . . . . . . . . . . . . 572,968
Custodian fee payable. . . . . . . . . . . . . . . . . . . . . 20,289
Audit fee payable. . . . . . . . . . . . . . . . . . . . . . . 10,522
Other payables and accrued expenses. . . . . . . . . . . . . . 14,640
------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 772,138
------------
NET ASSETS FOR 11,060,829 SHARES
OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . . . $183,860,593
============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . $ 110,609
Additional paid-in-capital . . . . . . . . . . . . . . . . . . 81,637,436
Undistributed net investment income. . . . . . . . . . . . . . 929,542
Accumulated net realized gain on investments . . . . . . . . . 16,667,545
Net unrealized appreciation on investments, foreign currency,
and other assets and liabilities . . . . . . . . . . . . 84,515,461
------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $183,860,593
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($183,860,593/11,060,829 shares) . . . . . . . . . . . . . . . $ 16.62
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Dividends (net of foreign tax withheld $745,516). . . . . . . $ 2,143,828
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 165,233
------------
Total Investment Income . . . . . . . . . . . . . . . . . . . 2,309,061
------------
EXPENSES:
Management fee (Note 3) . . . . . . . . . . . . . . . . . . . 932,746
Directors' fees (Note 3). . . . . . . . . . . . . . . . . . . 2,755
Custodian fee . . . . . . . . . . . . . . . . . . . . . . . . 60,453
Audit fee . . . . . . . . . . . . . . . . . . . . . . . . . . 16,030
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 24,023
------------
Total Expenses. . . . . . . . . . . . . . . . . . . . . . . . 1,036,007
------------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . . . . . 1,273,054
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on -
Investments (identified cost basis) . . . . . . . . . . . 7,911,648
Foreign currency and forward foreign currency
exchange contracts and other assets and liabilities. 7,955,963
------------
Net realized gain on investments. . . . . . . . . . . . . . . 15,867,611
------------
Net change in unrealized appreciation (depreciation) on -
Investments. . . . . . . . . . . . . . . . . . . . . . . . (5,343,143)
Foreign currency, forward foreign currency exchange
contracts, and other assets and liabilities. . . . . . 225,006
------------
Net change in unrealized appreciation on investments. . . . . (5,118,137)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . 10,749,474
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . . $12,022,528
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED FOR THE
6/30/99 YEAR ENDED
(UNAUDITED) 12/31/98
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income . . . . . . . . . . . $ 1,273,054 $ 1,229,518
Net realized gain on investments. . . . . . 15,867,611 4,256,342
Net change in unrealized appreciation
(depreciation) on investments. . . . . . (5,118,137) 40,147,416
------------- -------------
Net increase from operations. . . . . . . . 12,022,528 45,633,276
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 2):
From net investment income. . . . . . . . . -- (1,375,610)
From net realized gain on investments . . . -- (5,728,238)
------------- -------------
Total distributions to shareholders . . . . -- (7,103,848)
------------- -------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase (decrease) from capital share
transactions (Note 5). . . . . . . . . . (27,420,759) (38,526,473)
------------- -------------
Net increase (decrease) in net assets . . . (15,398,231) 2,955
NET ASSETS:
Beginning of period. . . . . . . . . . . .. 199,258,824 199,255,869
------------- -------------
END OF PERIOD (including undistributed net
investment income of $929,542 and
($343,512), respectively) . . . . . . . $183,860,593 $199,258,824
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
6/30/99 FOR THE YEARS
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
-------------- ---------- --------------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD. $ 15.57 $ 13.08 $ 11.54 $ 9.57 $ 9.54 $ 11.33
-------------- ---------- --------------- ---------- ---------- ----------
Income from investment operations:
Net investment income . . . . . . . . 0.111 0.097 0.154 0.156 0.123 0.143
Net realized and unrealized gain
(loss) on investments. . . . . . . 0.939 2.948 2.992 1.976 0.262 (1.784)
-------------- ---------- --------------- ---------- ---------- ----------
Total from investment operations . . . . 1.050 3.045 3.146 2.132 0.385 (1.641)
-------------- ---------- --------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income. . . . . . -- (0.109) (0.150) (0.143) (0.118) --
From paid-in-capital. . . . . . . . . -- -- -- -- (0.160) --
From net realized gain on
investments . . . . . . . . . . . -- (0.446) (1.456) (0.019) (0.077) (0.149)
-------------- ---------- --------------- ---------- ---------- ----------
Total distributions to shareholders. . . -- (0.555) (1.606) (0.162) (0.355) (0.149)
-------------- ---------- --------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD. . . . . $ 16.62 $ 15.57 $ 13.08 $ 11.54 $ 9.57 $ 9.54
============== ========== =============== ========== ========== ==========
Total return1. . . . . . . . . . . . . . 6.74% 23.63% 27.70% 22.35% 4.14% (14.48)%
Ratios to average net assets
Supplemental Data:
Expenses . . . . . . . . . . . . . . 1.11%2 1.12% 1.08% 1.12% 1.20% 1.18%
Net investment income. . . . . . . . 1.36%2 0.59% 1.18% 1.46% 1.42% 1.38%
Portfolio turnover . . . . . . . . . . . 0% 0% 10% 2% 14% 31%
NET ASSETS - END OF PERIOD
(000'S OMITTED) . . . . . . . . . . . . $ 183,861 $ 199,259 $ 199,256 $ 149,331 $ 128,294 $ 85,964
============== ========== =============== ========== ========== ==========
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION
International Series (the "Series") is a no-load non-diversified series of
Exeter Fund, Inc. (the "Fund"). The Fund 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 Series are offered to investors, clients, and employees of Manning
& Napier Advisors, Inc. (the "Advisor") and its affiliates. The total authorized
capital stock of the Fund consists of one billion shares of common stock each
having a par value of $0.01. As of June 30, 1999, 1,550 million shares have
been designated in total among 31 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 provided by the Fund's pricing service.
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 Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series 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 Series 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 Series.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DISTRIBUTIONS OF INCOME AND GAINS (continued)
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 Series may periodically make
reclassifications among its capital accounts without impacting the Series' net
asset value.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Series are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars on the following basis: a)
investment securities, other assets and liabilities are converted to U.S.
dollars based upon current exchange rates; and b) purchase and sales of
securities and income and expenses are converted into U.S. dollars based upon
the currency exchange rates prevailing on the respective dates of such
transactions.
Gains and losses attributable to foreign currency exchange rates are recorded
for financial statement purposes as net realized gains and losses on
investments. The portion of both realized and unrealized gains and losses on
investment that result from fluctuations in foreign currency exchange rates is
not separately stated.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Series 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 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 Series 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 Series 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, 1999, the Series 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.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with the Advisor, for which the
Series pays a fee, computed daily and payable monthly, at an annual rate of 1%
of the Series' average daily net assets. The fee amounted to $932,746 for the
six months ended June 30, 1999.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' 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
Series.
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 Series.
The compensation of the non-affiliated Directors totaled $2,755 for the six
months ended June 30, 1999.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1999, purchases and sales of securities, other
than United States Government securities and short-term securities, were $0 and
$14,048,004, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of International Series were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 6/30/99 Ended 12/31/98
--------------------------------- -------------------------------
Shares Amount Shares Amount
------------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Sold. . . . 162,487 $ 2,534,006 1,300,678 $ 19,592,425
Reinvested. -- -- 480,490 6,973,915
Repurchased (1,896,520) (29,954,765) (4,221,337) (65,092,813)
------------------- ------------- --------------- -------------
Total . . . (1,734,033) $(27,420,759) (2,440,169) $(38,526,473)
=================== ============= =============== =============
</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.
17
<PAGE>
<PAGE>
EXETER FUND, INC.
WORLD OPPORTUNITIES SERIES
SEMI-ANNUAL REPORT
JUNE 30, 1999
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
DEAR SHAREHOLDERS:
We are pleased to report that investments we made late last summer and fall have
helped the Series turn in very strong returns for the first half of 1999.
As you may recall from the discussion in the Series' Annual Report, we
significantly increased the Series' investments in Asia and Latin America when
those markets suffered sharp declines during the third quarter of 1998. At that
time, we purchased the stocks of companies that we felt were good companies with
good prospects at very low prices.
Even prior to this increase, a significant portion of the Series' portfolio was
invested in these two regions. Rather than being the result of a particular
investment theme, this was simply because we had identified many of the types of
stocks we look for in those regions. These were good companies with strong
market positions that make it difficult for competitors to take market share.
In the late summer of 1998, economic problems in Asia led to sharp decreases in
the markets there. The trouble started in Thailand, but quickly spread to other
Asian countries as well, leading many to refer to it as the "Asian Flu". Many
economic problems, including high levels of non-performing debt, large current
account deficits, and pegged currencies, led to the meltdown. The flu spread to
Latin America, amid fears that those economies would also become depressed.
We believed that the extreme declines suffered in the Asian markets presented
opportunities to increase our holdings in the region by purchasing the stocks of
some very strong companies at bargain basement prices. In addition, we didn't
believe that the Latin American situation was as severe as that in Asia. The
economies there did have problems, but they did not suffer from the same high
debt and high levels of excess capacity. Therefore, we used this opportunity to
add to positions in both Asian and Latin American stocks, significantly
increasing the Series' investments in these regions.
The panic conditions that allowed us to buy in to these securities is now
beginning to subside. Policymakers in both regions are implementing reforms
that are having a positive effect. There has been a dramatic change in
expectations, and this has begun to show up in increasing share prices, with the
trend accelerating over the last few months. Because of the Series' heavy
weighting in stocks in these two regions, these changes have had a large impact
on the Series' return for the period.
The success of an investment strategy is demonstrated not only by its success in
choosing investments but also in its success in selling them. In keeping with
our investment philosophy, we have sold some holdings that have reached fair
value. At this time, our new purchases still include stocks of companies in
Asia and Latin America, as we continue to find attractive opporunities in these
areas. And as these markets continue to strengthen, we expect that these stocks
will also turn in substantial returns over time.
As always, we appreciate the opportunity to serve you.
Sincerely,
EXETER ASSET MANAGEMENT
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDTED)
[graphic]
<pie chart>
Data for pie chart to follow:
Portfolio Allocation by Country* - As of June 30, 1999
Argentina - 2.2%
Australia - 2.6%
Brazil - 17.0%
Canada - 10.1%
Chile - 0.5%
China - 3.7%
Finland - 2.2%
Hong Kong - 19.9%
Indonesia - 1.3%
Malaysia - 2.2%
Mexico - 14.2%
Peru - 1.0%
Singapore - 6.5%
South Africa - 1.2%
Venezuela - 1.4%
United Kingdom - 12.6%
United States - 1.4%
* As a percentage of common stock.
2
<PAGE>
PERFORMANCE UPDATE AS OF JUNE 30, 1999 (UNAUDITED)
Exeter Fund, Inc.
World Opportunities Series
<TABLE>
<CAPTION>
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . $ 12,748 27.48% 27.48%
Inception 1 $ 14,598 45.98% 14.38%
</TABLE>
Morgan Stanley Capital
International World Index
<TABLE>
<CAPTION>
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . $ 11,567 15.67% 15.67%
Inception 1 $ 16,970 69.70% 20.66%
</TABLE>
Morgan Stanley Capital International
All Country World ex US Index
<TABLE>
<CAPTION>
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . $ 11,027 10.27% 10.27%
Inception 1 $ 13,024 30.24% 9.83%
</TABLE>
The value of a $10,000 investment in the Exeter Fund, Inc. - World Opportunities
Series from its inception (9/6/96) to present (06/30/99) as compared to the
Morgan Stanley Capital International World Index and the Morgan Stanley Capital
International All Country World ex U.S Index. 2
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. Morgan Stanley Capital Morgan Stanley Capital
World Opportunities International International All Country
Date Series World Index World ex US Index
<S> <C> <C> <C>
09/06/96 10,000 10,000 10,000
12/31/96 10,482 10,865 10,398
12/31/97 11,301 12,578 10,576
12/31/98 10,806 15,639 12,066
06/30/99 14,598 16,970 13,024
</TABLE>
1 Performance numbers for the Series and Indices are calculated from September
6, 1996, the Series' inception date. The Series' performance is historical and
may not be indicative of future results.
2 The Morgan Stanley Capital International World Index is an market
capitalization-weighted measure of the total return of 1,441 companies listed on
the stock exchanges of the United States, Europe, Canada, Australia, New Zealand
and the Far East. The Morgan Stanley Capital International All Country World ex
U.S. Index is a market capitalization weighted measure of the total return of
2,018 companies listed on the stock exchanges of 47 countries. The Indices are
denominated in U.S. Dollars. The Indices' returns assume reinvestment of
dividends and unlike Series returns, do not reflect any fees or expenses.
3
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
----------- ------------
COMMON STOCK - 88.19%
<S> <C> <C>
AMUSEMENT & RECREATIONAL SERVICES - 1.97%
Resorts World Bhd. (Malaysia)** . . . . . . . . . . . 2,050,000 $ 4,345,495
------------
APPLIANCES - 1.35%
Brasmotor S.A. (Brazil) . . . . . . . . . . . . . . . 38,800,000 2,969,263
------------
BROADCAST SERVICES - 3.24%
Television Broadcasts Ltd. (Hong Kong). . . . . . . . 1,525,000 7,154,684
------------
CHEMICALS & ALLIED PRODUCTS - 3.54%
Celltech plc* (United Kingdom). . . . . . . . . . . . 450,000 3,478,608
Orion-Yhtyma Oyj - B Shares (Finland) . . . . . . . . 182,000 4,327,279
------------
7,805,887
------------
COMPUTER EQUIPMENT - 6.61%
Founder Hong Kong Ltd. (Hong Kong) . . . . . . . . . 24,246,000 9,218,947
Varitronix International Ltd. (Hong Kong). . . . . . 2,578,000 5,366,297
------------
14,585,244
------------
CONCRETE PRODUCTS - 3.52%
Cemex S.A. - ADR (Mexico). . . . . . . . . . . . . . 785,000 7,760,510
------------
CRUDE PETROLEUM & NATURAL GAS - 6.59%
Gulf Canada Resources Ltd. - ADR (Canada). . . . . . 2,862,000 11,984,625
Petroleo Brasileiro S.A. (Petrobras) - ADR
(Brazil) . . . . . . . . . . . . . . . . . . . . . . 165,000 2,540,687
------------
14,525,312
------------
DAIRY FARMS - 1.26%
Dairy Farm International Holding Ltd. -
ADR (Hong Kong) . . . . . . . . . . . . . . . . . 2,314,000 2,776,800
------------
DIAMONDS - 1.76%
De Beers Consolidated Mines - ADR (South Africa). . . 100,000 2,387,500
Fertilizantes Fosfatados S.A. - (Fosfertil) (Brazil). 451,100,000 1,494,215
------------
3,881,715
------------
FOOD & BEVERAGE - 20.47%
Coca-Cola Amatil (Australia) . . . . . . . . . . . . 1,236,370 5,022,100
Coca-Cola Femsa S.A. - ADR (Mexico) . . . . . . . . . 360,000 6,975,000
Compania Cervejaria Brahma - S.A. (Brazil). . . . . . 550,000 6,221,875
Diageo plc (United Kingdom) . . . . . . . . . . . . . 829,475 8,669,341
NG Fung Hong Ltd. (Hong Kong). . . . . . . . . . . . 2,704,000 2,247,945
Panamerican Beverages, Inc. - ADR (Mexico) . . . . . 260,000 6,191,250
Vitasoy International Holdings Ltd. (Hong Kong). . . 4,508,000 1,583,323
Unilever plc - ADR (United Kingdom). . . . . . . . . 221,249 8,241,525
------------
45,152,359
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- ------------
<S> <C> <C>
HOLDING COMPANIES - 1.90%
Invensys plc. - ADR (United Kingdom). . . . . . . . . . . . . . . 443,056 $ 4,197,291
------------
INDUSTRIAL & COMMERCIAL MACHINERY - 2.59%
Creative Technology Ltd. - ADR* (Singapore). . . . . . . . . . . . 425,000 5,710,938
------------
PAPER & ALLIED PRODUCTS - 10.48%
Aracruz Celulose S.A. - ADR (Brazil) . . . . . . . . . . . . . . . 470,000 10,340,000
Asia Pulp & Paper Co. Ltd. - ADR (Singapore) . . . . . . . . . . . 725,000 6,978,125
Industrias Klabin de Papel e Celulose S.A. (Brazil) . . . . . . . 6,670,000 3,390,221
Votorantim Celulose e Papel S.A. (Brazil). . . . . . . . . . . . . 82,900,000 2,414,554
------------
23,122,900
------------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 1.26%
Eastman Kodak Co. (United States). . . . . . . . . . . . . . . . . 41,000 2,777,750
------------
PLASTICS MATERIALS - 3.75%
Beijing Yanhua Petrochemical Co. Ltd. (China). . . . . . . . . . 11,778,000 2,656,616
Beijing Yanhua Petrochemical Co. Ltd. - ADR (China) . . . . . . . 37,300 424,287
Shanghai Petrochemical Co. Ltd. (China) . . . . . . . . . . . . . 13,612,000 3,210,645
Shanghai Petrochemical Co. Ltd. - ADR (China) . . . . . . . . . . 86,000 1,983,375
------------
8,274,923
------------
PRINTING & PUBLISHING - 2.02%
South China Morning Post - ADR (Holdings) Ltd. (China). . . . . . 1,589,800 4,456,686
------------
TELECOMMUNICATION SERVICES - 9.58%
Compania Anonima Nacional Telefonos de
Venezuela (CANTV) - ADR (Venezuela) . . . . . . . . . . . . . . 100,000 2,725,000
Grupo Radio Centro S.A. - ADR (Mexico) . . . . . . . . . . . . . . 890,000 4,672,500
Microcell Telecommunications, Inc. - ADR* (Canada) . . . . . . . . 240,000 1,875,000
Telecommunicacoes Brasileiras S.A. (Telebras) - ADR PFD * (Brazil) 40,000 3,607,500
Telecommunicacoes Brasileiras S.A. (Telebras) - ADR * (Brazil) . . 40,000 2,500
Telecom Argentina S.A. - ADR (Argentina). . . . . . . . . . . . . 70,000 1,872,500
Telefonica de Argentina S.A - ADR (Argentina) . . . . . . . . . . 75,000 2,353,125
Telefonica del Peru S.A.A. - ADR (Peru) . . . . . . . . . . . . . 125,000 1,890,625
TV Azteca S.A. - ADR (Mexico) . . . . . . . . . . . . . . . . . . 410,000 2,126,875
------------
21,125,625
------------
TOBACCO - 1.11%
PT Hanjaya Mandala Sampoerna (Indonesia) . . . . . . . . . . . . . 1,070,000 2,454,751
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES/
PRINCIPAL VALUE
AMOUNT (NOTE 2)
----------- -------------
<S> <C> <C>
TRANSPORTATION-RAILROAD - 4.74%
Canadian National Railway Co. - ADR (Canada). . . . . 85,000 $ 5,695,000
Guangshen Railway Co. Ltd. - ADR (China). . . . . . . 625,000 4,765,625
-------------
10,460,625
-------------
UTILITIES-ELECTRIC - 0.45%
Enersis S.A. - ADR (Chile). . . . . . . . . . . . . . 42,925 981,909
-------------
TOTAL COMMON STOCK
(Identified Cost $166,634,845) 194,520,667
-------------
SHORT-TERM INVESTMENTS - 8.61%
Federal Mortgage Corporation Discount Note, 1/4/1999. $ 9,000,000 8,966,120
U.S. Treasury Bill, 7/29/1999. . . . . . . . . . . . 10,000,000 9,967,333
Dreyfus Treasury Cash Management Fund . . . . . . . . 56,777 56,777
-------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $18,990,230) 18,990,230
-------------
TOTAL INVESTMENTS - 96.80%
(Identified Cost $185,625,075) 213,510,897
OTHER ASSETS, LESS LIABILITIES - 3.20% 7,068,056
-------------
NET ASSETS -100% $220,578,953
=============
</TABLE>
*Non-income producing security.
** Securities have been determined to be illiquid and have been valued at fair
value by the Advisor.
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At June 30, 1999, the net unrealized appreciation based on identified cost for
federal income tax purposes of $185,625,075 was as follows:
<S> <C>
Unrealized appreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,463,824
Unrealized depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,578,002)
-------------
UNREALIZED APPRECIATION - NET. . . . . . . . . . . . . . . . . . . . . . . . . $ 27,885,822
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value (identified cost $185,625,075)
(Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . $213,510,897
Foreign currency, at value (cost $1,097,746) . . . . . . . . . 1,054,369
Receivable for securities sold . . . . . . . . . . . . . . . . 6,238,935
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 544,966
Receivable for fund shares sold. . . . . . . . . . . . . . . . 27,920
------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 221,377,087
------------
LIABILITIES:
Accrued management fees (Note 3) . . . . . . . . . . . . . . . 187,556
Accrued Directors' fees (Note 3) . . . . . . . . . . . . . . . 4,288
Payable for fund shares repurchased. . . . . . . . . . . . . . 549,245
Custodian fee payable. . . . . . . . . . . . . . . . . . . . . 34,230
Audit fee payable. . . . . . . . . . . . . . . . . . . . . . . 4,163
Other payables and accrued expenses. . . . . . . . . . . . . . 18,652
------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 798,134
------------
NET ASSETS FOR 19,123,829 SHARES
OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . . . $220,578,953
============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . $ 191,240
Additional paid-in-capital . . . . . . . . . . . . . . . . . . 157,487,090
Undistributed net investment income. . . . . . . . . . . . . . 3,981,811
Accumulated net realized gain on investments . . . . . . . . . 31,076,377
Net unrealized appreciation on investments, foreign currency,
and other assets and liabilities . . . . . . . . . . . . 27,842,435
------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $220,578,953
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE - CLASS A
($220,578,953/19,123,829 shares) . . . . . . . . . . . . . . $ 11.53
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Dividends (net of foreign tax withheld $322,466) . . . . . . . . . . . $ 4,242,849
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278,260
------------
Total Investment Income. . . . . . . . . . . . . . . . . . . . . . . . 4,521,109
------------
EXPENSES:
Management fees (Note 3) . . . . . . . . . . . . . . . . . . . . . . . 1,073,443
Directors' fees (Note 3) . . . . . . . . . . . . . . . . . . . . . . . 2,755
Custodian fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,260
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,736
Registration and filing fees . . . . . . . . . . . . . . . . . . . . . 8,559
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,131
------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,202,884
------------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . . . . . . 3,318,225
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on -
Investments (identified cost basis). . . . . . . . . . . . . . . . 34,617,052
Foreign currency, forward foreign currency exchange contracts and
other assets and liabilities . . . . . . . . . . . . . . . . . (40,241)
------------
Net realized gain on investments . . . . . . . . . . . . . . . . . . . 34,576,811
------------
Net change in unrealized appreciation (depreciation) on -
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . 28,339,386
Foreign currency, forward foreign currency exchange contracts
and other assets and liabilities. . . . . . . . . . . . . . . (23,103)
------------
Net change in unrealized appreciation on investments . . . . . . . . . 28,316,283
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 62,893,094
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . $66,211,319
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED 6/30/99 FOR THE YEAR
(UNAUDITED) ENDED 12/31/98
-------------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income. . . . . . . . . . . . . . . . . $ 3,318,225 $ 3,145,769
Net realized gain on investments . . . . . . . . . . . 34,576,811 10,471,176
Net change in unrealized appreciation
on investments. . . . . . . . . . . . . . . . . . 28,316,283 4,242,212
-------------------- ----------------
Net increase from operations . . . . . . . . . . . . . 66,211,319 17,859,157
-------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income . . . . . . . . . . . . . . -- (3,194,797)
From net realized gain on investments. . . . . . . . . -- (14,305,423)
-------------------- ----------------
Total distributions to shareholders. . . . . . . . . . -- (17,500,220)
-------------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital share
transactions (Note 5) . . . . . . . . . . . . . . . (61,410,834) 120,204,580
-------------------- ----------------
Net increase in net assets . . . . . . . . . . . . . . 4,800,485 120,563,517
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . 215,778,468 95,214,951
-------------------- ----------------
END OF PERIOD (including undistributed net investment
income of $3,981,811 and $663,586, respectively). . $ 220,578,953 $ 215,778,468
==================== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the
FOR THE SIX PERIOD 9/6/96
MONTHS (COMMENCEMENT OF
ENDED 6/30/99 FOR THE YEAR FOR THE YEAR OPERATIONS)
(UNAUDITED) ENDED 12/31/98 ENDED 12/31/97 TO 12/31/96
--------------- ---------------- ---------------- ------------------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD)
NET ASSET VALUE - BEGINNING OF PERIOD $8.55 $9.76 $10.42 $10.00
--------------- ---------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Income from investment operations:
Net investment income . . . . . . . . . 0.182 0.121 0.086 0.051
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . 2.798 (0.593)1 0.669 0.429
--------------- ---------------- ---------------- ------------------
Total from investment operations . . . . . 2.980 (0.472) 0.755 0.480
--------------- ---------------- ---------------- ------------------
Less distributions to shareholders:
From net investment income. . . . . . . -- (0.135) (0.086) (0.051)
From net realized gain on investments . -- (0.603) (1.329) (0.009)
--------------- ---------------- ---------------- ------------------
Total distributions to shareholders. . . . -- (0.738) (1.415) (0.060)
--------------- ---------------- ---------------- ------------------
NET ASSET VALUE - END OF PERIOD. . . . . . $ 11.53 $ 8.55 $ 9.76 $ 10.42
=============== ================ ================ ==================
Total return2. . . . . . . . . . . . . . . 35.09% (4.38)% 7.81% 4.82%
Ratios of expenses (to average net assets)
Supplemental Data:
Expenses. . . . . . . . . . . . . . . . 1.12%3 1.13% 1.15% 1.17%3
Net investment income . . . . . . . . . 3.09%3 2.30% 0.79% 1.54%3
Portfolio turnover . . . . . . . . . . . . 9% 52% 62% 1%
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 220,579 $ 215,778 $ 95,215 $ 77,338
=============== ================ ================ ==================
</TABLE>
1 The amount shown for a share outstanding does not correspond with the
aggregate net gain on investments for the period due to timing of sales and
repurchases of Series shares in relation to fluctuating market values of the
investments of the Series.
2 Represents aggregate total return for the period indicated.
3 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 "Series") is a no-load non-diversified series of
Exeter Fund, Inc. (the "Fund"). The Fund is organized in Maryland and is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
The Series 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 Series are offered to investors, employees, and clients of Manning
& Napier Advisors, Inc. (The "Advisor") and its affiliates. The total
authorized capital stock of the Fund consists of one billion shares of common
stock each having a par value of $0.01. As of June 30, 1999, 1,550 million
shares have been designated in total among 31 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 provided by the Fund's pricing service.
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 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 Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series 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 Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 Series.
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 Series may periodically make
reclassifications among its capital accounts without impacting the Series' net
asset value.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Series are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars on the following basis: a)
investment securities, other assets and liabilities are converted to U.S.
dollars based upon current exchange rates; and b) purchase and sales of
securities and income and expenses are converted into U.S. dollars based upon
the currency exchange rates prevailing on the respective dates of such
transactions.
Gains and losses attributable to foreign currency exchange rates are recorded
for financial statement purposes as net realized gains and losses on
investments. The portion of both realized and unrealized gains and losses on
investment that result from fluctuations in foreign currency exchange rates is
not separately stated.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Series may purchase or sell forward foreign currency contracts in order to
hedge a portfolio position or specific transaction. Risks may arise if the
counterparties to a contract are unable to meet the terms of the contract or if
the value of the foreign currency moves unfavorably.
All forward foreign currency contracts are adjusted daily by the exchange rate
of the underlying currency and, for financial statement purposes, any gain or
loss is recorded as unrealized gain or loss until a contract has been closed 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 currency exchange contracts.
The Series 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 Series 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, 1999 the Series had no open forward foreign currency exchange
contracts.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. SIGNIFICANT ACCOUNTING POLICES (CONTINUED)
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of 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
Series pays a fee, computed daily and payable monthly, at an annual rate of 1%
of the Series' average daily net assets. The fee amounted to $1,073,443 for the
six months ended June 30, 1999.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' 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
Series.
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 Series.
The compensation of the non-affiliated Directors totaled $2,755 for the six
months ended June 30, 1999.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1999, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$18,924,741 and $96,462,544, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of World Opportunities Series Class A Shares were:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR
ENDED 6/30/99 ENDED 12/31/98
------------------- ---------------
Shares Amount Shares Amount
------------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Sold. . . . 388,297 $ 3,330,984 15,718,371 $124,416,600
Reinvested. -- -- 2,113,935 17,233,683
Repurchased (6,513,710) (64,741,818) (2,338,228) (21,445,703)
------------------- ------------- --------------- -------------
Total . . . (6,125,413) $(61,410,834) 15,494,078 $120,204,580
=================== ============= =============== =============
</TABLE>
13
<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.
14
<PAGE>
<PAGE>
EXETER FUND, INC.
GLOBAL FIXED INCOME SERIES
SEMI-ANNUAL REPORT
JUNE 30, 1999
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
DEAR SHAREHOLDERS:
The Global Fixed Income Series has been open since October of 1997. While it
was the Latin American financial crisis that acted as the investment catalyst
behind the activation on the Series, access to the greatest number of fixed
income investment opportunities is the true reason for the Series' existence.
For more than a decade, Manning & Napier has acted upon an investment overview
that inflation, and therefore interest rates, would move lower as the world's
economies became increasingly interrelated. The so-called "globalization" of
the world's economy increased the competitive environment and created a
worldwide disinflationary environment. That has, in turn, pushed down inflation
and interest rates around the world. Traditionally, international fixed income
securities are introduced into a portfolio for diversification reasons.
However, with interest rates converging around the world, diversification as an
investment rationale may be losing some of its luster. Beyond diversification,
however, there will always be individual opportunities in the global fixed
income marketplace, and the Global Fixed Income Series provides a vehicle for us
to take advantage of them.
As was mentioned earlier, the catalyst behind the activation of the Global Fixed
Income Series was the sell-off of Latin American debt (specifically Brazil,
Argentina, and Mexico). In our opinion, the increase in Latin American bond
yields at the end of 1997 occurred in sympathy with the problems in the Pacific
Rim. At that time, Manning & Napier was of the opinion that Latin America was
different from the Pacific Rim. It became apparent, however, that while Latin
America's problems were different from those of the Pacific Rim, the region had
problems nonetheless.
Brazil was under the greatest pressure with currency reserves fleeing the
country. Ultimately, Brazil was forced to abandon the controlled devaluation of
its currency in January of 1999. The sharp decline of the Brazilian currency
and the dramatic increase in Brazilian interest rates has pushed its economy
into a recession, and given Brazil's economic relationship with Argentina, it
too has seen its economy roll over. That caused the value of the bonds that we
held in the Series to fall during the first quarter of 1999. However, when it
became apparent that the recessions in Brazil and Argentina were not going to be
as severe as originally anticipated, the Series' holdings in both countries
bounced back nicely. While Mexican bonds also struggled during the first
quarter of this year, their market value declines were nowhere near as
pronounced. That can be traced to Mexico's economic relationship with the U.S.
It is much greater than that of either Brazil or Argentina. By the end of the
second quarter, Mexican bonds had more than recovered and were adding to, rather
than subtracting from, the performance of the Series.
During the first six months of 1999, the Global Fixed Income Series posted a
positive return (+1.45%), which was quite good given the negative performance of
Merrill Lynch's U.S. Treasury Index (-2.41%) and their Global Government Bond
Index (-5.68%). This positive return can be traced to more than the performance
of the Mexican bonds. A bit more than 80% of the Series' assets were invested
outside of Latin America. These investments included a Pacific Rim company,
which lagged badly in 1998 but has performed nicely in 1999, and seven different
developed countries. Investments in developed countries include U.S.securities.
This can be traced to a positive overview on the U.S. dollar, plus the
opportunity to invest in non-U.S. Treasury securities such as "putable"
corporate bonds, yankee bonds, and selected mortgaged-backed securities.
Outside of the U.S., the Series has invested in four other "English-speaking
countries", Canada, the U.K., Australia, and New Zealand, as well as the
relatively higher yielding government bonds of the European Monetary Union,
Spain and Italy. The currency exposures associated with these latter two
positions had been partially hedged to mitigate the currency risk, but those
hedges were taken off during the first quarter of this year when our analysis
showed that the risk of a further drop versus the dollar was very low. The
bonds of Australia and New Zealand had also been hedged when they were first
purchased, but those hedges have been taken off as well.
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
We at Manning & Napier are excited about the prospects of the Global Fixed
Income Series because of the investment opportunities that it has opened up for
us. While the performance of the Latin American investments has been decidedly
mixed, we still believe that over a three to five year investment horizon, the
Brazilian and Argentine securities will be strong contributors to the Series'
overall performance. Our other investments have performed pretty much as
expected because they have been based upon the same fixed income processes that
have been so successful within the U.S. markets.
As always, we appreciate the opportunity to serve you.
Sincerely,
EXETER ASSET MANAGEMENT
[graphic]
<pie chart>
Portfolio Composition * - As of June 30, 1999
Argentina - 1.71%
Australia - 7.83%
Brazil - 7.21%
Canada - 14.37%
Spain - 3.17%
Italy - 7.25%
Mexico - 4.20%
New Zealand - 3.08%
United Kingdom - 4.66%
Corporate Bonds - 30.85%
U.S. Government Securities - 7.86%
Cash, short-term investments, and other assets, less liabilities - 7.81%
* As a percentage of net assets.
2
<PAGE>
PERFORMANCE UPDATE AS OF JUNE 30, 1999 (UNAUDITED)
Exeter Fund, Inc.
Global Fixed Income Series
<TABLE>
<CAPTION>
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . $ 10,234 2.34% 2.34%
Inception 1 $ 10,635 6.35% 3.76%
</TABLE>
Merrill Lynch Global Government Bond Index
<TABLE>
<CAPTION>
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . $ 10,493 4.93% 4.93%
Inception 1 $ 10,593 5.93% 3.52%
</TABLE>
Merrill Lynch U.S. Treasury Index
<TABLE>
<CAPTION>
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . $ 10,305 3.05% 3.05%
Inception 1 $ 10,910 9.10% 5.37%
</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 (06/30/99) as compared to the
Merrill Lynch Global Government Bond Index and the Merrill Lynch U.S. Treasury
Bond Index. 2
[graphic]
<line chart>
Data for line graph to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. Merrill Lynch
Global Fixed Global Government Merrill Lynch
Date Income Series Bond Index U.S. Treasury Index
<S> <C> <C> <C>
10/31/97 10,000 10,000 10,000
12/31/97 10,200 9,841 10,161
12/31/98 10,483 11,231 11,180
06/30/99 10,635 10,593 10,910
</TABLE>
1 Performance numbers for the Series and Indices are calculated from October
31,1997, the Series' inception date. The Series' performance is historical and
may not be indicative of future results.
2 The unmanaged Merrill Lynch Global Government Bond Index is a market value
weighted measure of approximately 514 Global Government bonds. The unmanaged
Merrill Lynch U.S. Treasury Bond Index is a market value market value weighted
measure of approximately 155 U.S. Treasury bonds. The Indices' returns assume
reinvestment of coupons and, unlike Series returns, do not reflect any fees or
expenses.
3
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Principal Value
Currency Amount (Note 2)
-------- ---------- ------------
<S> <C> <C> <C>
ARGENTINA - 1.71%
Republic of Argentina, 11.375%, 1/30/2017
(Identified Cost $2,058,127). . . . . . . . . . USD 2,000,000 $ 1,747,500
------------
AUSTRALIA - 7.83%
Australian Government, 8.75%, 1/15/2001 . . . . AUD 5,320,000 3,736,393
Australian Government, 6.75%, 11/15/2006. . . . AUD 6,140,000 4,245,703
------------
TOTAL AUSTRALIAN SECURITIES
(Identified Cost $8,411,906) 7,982,096
------------
BRAZIL - 7.21%
Federal Republic of Brazil, 10.125%, 5/15/2027
(Identified Cost $8,275,000). . . . . . . . . . USD 10,000,000 7,344,000
------------
CANADA - 14.37%
Canadian Government, 4.75%, 9/15/1999 . . . . . CAD 1,875,000 1,281,479
Canadian Government, 5.50%, 9/1/2002. . . . . . CAD 1,845,000 1,265,428
Canadian Government, 7.25%, 6/1/2007. . . . . . CAD 11,745,000 8,910,653
Canadian Government, 6.00%, 6/1/2008. . . . . . CAD 4,500,000 3,184,053
------------
TOTAL CANADIAN SECURITIES
(Identified Cost $14,864,270) 14,641,613
------------
ITALY - 7.25%
Buoni Poliennali del Tesoro, 7.50%, 10/1/1999 . EUR 3,421,521 3,578,877
Buoni Poliennali del Tesoro, 6.25%, 3/1/2002. . EUR 3,460,255 3,815,141
------------
TOTAL ITALIAN SECURITIES
(Identified Cost $7,975,131) 7,394,018
------------
MEXICO - 4.20%
United Mexican States, 11.50%, 5/15/2026
(Identified Cost $3,451,500) . . . . . . . . . USD 3,900,000 4,279,080
------------
NEW ZEALAND - 3.08%
New Zealand Government, 6.50%, 2/15/2000. . . . NZD 3,065,000 1,657,657
New Zealand Government, 8.00%, 11/15/2006 . . . NZD 2,550,000 1,479,788
------------
TOTAL NEW ZEALAND SECURITIES
(Identified Cost $3,651,007) 3,137,445
------------
SPAIN - 3.17%
Bonos Y Oblig Del Estado, 7.90%, 2/28/2002
(Identified Cost $3,416,851). . . . . . . . . . EUR 2,812,736 3,233,016
------------
UNITED KINGDOM - 4.66%
United Kingdom Bond, 8.00%, 12/07/2000
(Identified Cost $5,008,025). . . . . . . . . . BP 2,900,000 4,746,604
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Principal Value
Currency Amount (Note 2)
-------- ---------- -------------
<S> <C> <C> <C>
UNITED STATES - 42.83%
U.S. GOVERNMENT AGENCIES - 7.86%
Federal Home Loan Mortgage Corp. Discount
Note, 5.125%, 10/15/2008 . . . . . . . . . . . . USD $2,000,000 $ 1,814,668
GNMA, POOL #417346, 6.00%, 4/15/2026. . . . . . . . USD 5,534,366 5,187,234
GNMA, POOL #441545, 9.00%, 3/15/2027. . . . . . . . USD 952,195 1,010,601
-------------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $8,300,423) 8,012,503
-------------
CORPORATE BONDS - 30.85%
Asia Pulp & Paper, 3.50%, 4/30/2003 . . . . . . . . USD 5,140,000 3,855,000
Bayer Corp., 6.20%, 2/15/2028 . . . . . . . . . . . USD 2,000,000 1,945,360
Canadian National Railway, 6.90%, 7/15/2028 . . . . USD 3,000,000 2,754,036
General Electric, 7.44%, 12/11/2002 . . . . . . . . USD 2,300,000 2,377,503
Gulf Canada Resources, 8.375%, 11/15/2005 . . . . . USD 2,000,000 1,965,000
Merrill Lynch & Co., Stock Linked Note (Telebras),
11/28/2003 . . . . . . . . . . . . . . . . . . . USD 5,000,000 4,532,500
Motorola, Inc., 6.50%, 9/1/2025 . . . . . . . . . . USD 3,000,000 2,963,268
Oracle Corp., 6.91%, 2/15/2007. . . . . . . . . . . USD 2,000,000 1,922,452
PDVSA Finance Ltd., 8.75%, 2/15/2004. . . . . . . . USD 2,000,000 2,005,480
Pemex Finance Ltd., 5.72%, 11/15/2003 . . . . . . . USD 2,500,000 2,469,025
Pemex Finance Ltd., 6.125%, 11/15/2003. . . . . . . USD 500,000 500,655
Tembec Industries, Inc., 8.625%, 6/30/2009. . . . . USD 250,000 248,750
Xerox Corp., 6.25%, 11/15/2026. . . . . . . . . . . USD 3,990,000 3,904,151
-------------
TOTAL CORPORATE BONDS
(Identified Cost $33,966,794) 31,443,180
-------------
SHORT-TERM INVESTMENTS - 4.12%
Federal National Mortgage Corp. Discount Note,
9/15/1999. . . . . . . . . . . . . . . . . . . . USD 3,800,000 3,759,407
Dreyfus Treasury Cash Management Fund . . . . . . . USD 436,535 436,535
-------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $4,195,942) 4,195,942
-------------
TOTAL INVESTMENTS - 96.31%
(Identified Cost $103,574,976) 98,156,997
OTHER ASSETS, LESS LIABILITIES - 3.69% 3,763,981
-------------
NET ASSETS -100% $101,920,978
=============
</TABLE>
KEY:
AUD- Australian Dollar BP- British Pound
CAD- Canadian Dollar EUR- Euro
NZD- New Zealand Dollar USD- United States Dollar
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At June 30, 1999, the net unrealized depreciation based on identified cost
for federal tax purposes of $103,574,976 was as follows:
<S> <C>
Unrealized appreciation. . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,087,333
Unrealized depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . (6,505,312)
------------
UNREALIZED DEPRECIATION - NET. . . . . . . . . . . . . . . . . . . . . . . $(5,417,979)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATEMENT OF ASSETS & LIABILITIES (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value (identified cost $103,574,976)(Note 2) . $98,156,997
Foreign currency, at value (cost $2,737,622) . . . . . . . . . 2,578,284
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 571,854
Interest receivable . . . . . . . . . . . . . . . . . . . . . . 1,334,788
Receivable for fund shares sold . . . . . . . . . . . . . . . . 5,450
-------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 102,647,373
-------------
LIABILITIES:
Accrued management fee (Note 3) . . . . . . . . . . . . . . . . 84,480
Accrued Directors' fees (Note 3) . . . . . . . . . . . . . . . 4,389
Payable for fund shares repurchased . . . . . . . . . . . . . . 585,664
Registration and filing fees payable . . . . . . . . . . . . . 22,492
Payable for closed forward foreign currency exchange
contracts (Note 2). . . . . . . . . . . . . . . . . . . . 8,060
Audit fee payable. . . . . . . . . . . . . . . . . . . . . . . 9,452
Custodian fee payable . . . . . . . . . . . . . . . . . . . . . 6,643
Other payables and accrued expenses . . . . . . . . . . . . . . 5,215
-------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 726,395
-------------
NET ASSETS FOR 10,400,513 SHARES
OUTSTANDING. . . . . . . . . . . . . . . . . . . . . . . . . . $101,920,978
=============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . $ 104,005
Additional paid-in-capital . . . . . . . . . . . . . . . . . . 103,851,180
Undistributed net investment income . . . . . . . . . . . . . . 3,149,150
Accumulated net realized gain on investments . . . . . . . . . 281,340
Net unrealized depreciation on investments, foreign currency,
and other assets and liabilities . . . . . . . . . . . . . . (5,464,697)
-------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . $101,920,978
=============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($101,920,978/10,400,513 shares) $ 9.80
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . $ 3,643,052
------------
EXPENSES:
Management fees (Note 3) . . . . . . . . . . . . . . . . 549,333
Directors' fees (Note 3) . . . . . . . . . . . . . . . . 2,755
Custodian fee. . . . . . . . . . . . . . . . . . . . . . 14,876
Registration and filing fees . . . . . . . . . . . . . . 16,639
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . 13,898
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 9,893
------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . 607,394
------------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . 3,035,658
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on-
Investments (identified cost method) . . . . . . . . 28,037
Foreign currency and forward foreign currency
exchange contracts . . . . . . . . . . . . . . . 683,377
------------
Net realized gain on investments . . . . . . . . . . . . 711,414
------------
Net change in unrealized depreciation on-
Investments. . . . . . . . . . . . . . . . . . . . . (1,899,275)
Foreign currency, forward foreign currency exchange
contracts, and other assets and liabilities . . (145,314)
------------
Net unrealized depreciation on investments . . . . . . . (2,044,589)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (1,333,175)
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 1,702,483
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED 6/30/99 FOR THE YEAR
(UNAUDITED) ENDED 12/31/98
-------------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income . . . . . . . . . . . . . . . . . . $ 3,035,658 $ 6,953,613
Net realized gain on investments. . . . . . . . . . . . . 711,414 1,263,097
Net change in unrealized depreciation on investments and
forward foreign currency contracts . . . . . . . . (2,044,589) (4,861,731)
---------------- -------------
Net increase from operations . . . . . . . . . . . . . . 1,702,483 3,354,979
---------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE2):
From net investment income. . . . . . . . . . . . . . . . -- (7,343,129)
From realized gain on investments . . . . . . . . . . . . -- (1,231,571)
---------------- ----------------
Total distribution to shareholders. . . . . . . . . . . . -- (8,574,700)
---------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net decrease from capital share
transactions (Note 5) . . . . . . . . . . . . . . . . (18,574,222) (3,159,203)
---------------- ----------------
Net decrease in net assets. . . . . . . . . . . . . . . . (16,871,739) (8,378,924)
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . 118,792,717 127,171,641
---------------- ----------------
END OF PERIOD (including undistributed net investment
income of $3,149,150 and $113,492) . . . . . . . . $ 101,920,978 $ 118,792,717
================ ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Six Months
Ended 6/30/99 For the Year For the Period
(unaudited) Ended 12/31/98 10/31/97 to 12/31/97
-------------------- ---------------- ----------------------
Per share data (for a share outstanding
<S> <C> <C> <C>
throughout each period):
NET ASSET VALUE - BEGINNING OF PERIOD. . . . $ 9.66 $ 10.12 $ 10.00
-------------------- ---------------- ----------------------
Income from investment operations:
Net investment income . . . . . . . . . . . 0.294 0.597 0.081
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . (0.154) (0.322) 0.118
-------------------- ---------------- ----------------------
Total from investment operations. . . . . . . 0.140 0.275 0.199
-------------------- ---------------- ----------------------
Less distributions to shareholders:
From net investment income. . . . . . . . . -- (0.629) (0.079)
From realized gain on investments . . . . . -- (0.106) --
-------------------- ---------------- ----------------------
From distributions to shareholders. . . . . . -- (0.735) (0.079)
-------------------- ---------------- ----------------------
NET ASSET VALUE- END OF PERIOD. . . . . . . . $ 9.80 $ 9.66 $ 10.12
==================== ================ ======================
Total return 1. . . . . . . . . . . . . . . . 1.45% 2.78% 2.00%
Ratios to average net assets
Supplemental Data:
Expenses . . . . . . . . . . . . . . . . . 1.11%2 1.10% 1.09%2
Net investment income. . . . . . . . . . . 5.53%2 5.75% 4.75%2
Portfolio turnover. . . . . . . . . . . . . . 5% 29% 3%
NET ASSETS-END OF PERIOD (000'S OMITTED). . . $ 101,921 $ 118,793 $ 127,172
==================== ================ ======================
</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
Global Fixed Income Series (the "Series") is a no-load non-diversified series of
Exeter Fund Inc. (the "Fund"). The Fund 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 Series are offered to clients and employees of Manning & Napier
Advisors, Inc. (the "Advisor") and its affiliates. The total authorized capital
stock of the Fund consists of one billion shares of common stock each having a
par value of $0.01. As of June 30, 1999, 1,550 million shares have been
designated in total among 31 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 provided by
the Fund's pricing service.
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 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. Interest income and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series 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 Series 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 Series.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
DISTRIBUTION OF INCOME AND GAINS (continued)
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 Series may periodically make
reclassifications among its capital accounts without impacting the Series' net
asset value.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Series are maintained in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars on the following basis: a)
investment securities, other assets and liabilities are converted to U.S.
dollars based upon current exchange rates; and b) purchase and sales of
securities and income and expenses are converted into U.S. dollars based upon
the currency exchange rates prevailing on the respective dates of such
transactions.
Gains and losses attributable to foreign currency exchange rates are recorded
for financial statement purposes as net realized gains and losses on
investments. The portion of both realized and unrealized gains and losses on
investment that result from fluctuations in foreign currency exchange rates is
not separately stated.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Series 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 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 Series 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 Series 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, 1999, the Series 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.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with the Advisor, for which the
Series pays a fee, computed daily and payable monthly, at an annual rate of 1%
of the Series' average daily net assets. The fee amounted to $549,333 for the
six months ended June 30, 1999.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' 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
Series.
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 Series.
The compensation of the non-affiliated Directors totaled $2,755 for the six
months ended June 30, 1999.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1999, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$5,234,367 and $0, respectively. Purchases and sales of United States
Government securities, other than short-term securities were $0 and $21,967,740,
respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Global Fixed Income Series were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 6/30/99 Ended 12/31/98
-------------------
Shares Amount Shares Amount
------------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Sold. . . . 266,615 $ 2,586,910 787,498 $ 8,046,051
Reinvested. -- -- 860,110 8,297,448
Repurchased (2,169,485) (21,161,132) (1,912,940) (19,502,702)
------------------- ------------- --------------- -------------
Total . . . (1,902,870) $(18,574,222) (265,332) $ (3,159,203)
=================== ============= =============== =============
</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.
13
<PAGE>
<PAGE>
EXETER FUND, INC.
NEW YORK TAX EXEMPT SERIES
SEMI-ANNUAL REPORT
JUNE 30, 1999
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
DEAR SHAREHOLDERS:
Looking back to the start of the year, the fortunes of the municipal bond market
appeared quite good. At that time, the consensus forecast for the economy was
that its growth rate would probably moderate from the fourth quarter's frothy
levels. Inflation pressures were non-existent, and with long-term municipal bond
yields on par with U.S. Treasuries, municipal bond demand was expected to be
very robust. Unfortunately the financial markets are in a perpetual state of
flux, and what was expected to be a friendly market environment became decidedly
unfriendly during the second quarter of the year.
Starting with the economic fundamentals, after stumbling during the second and
third quarter of last year, the economy bounced backed nicely during the fourth
quarter. That has carried over into the first two quarters of this year, driven
primarily by consumer spending. A business community that continues to invest in
itself has also helped. There have even been promising signs of growth in the
Pacific Rim region, Russia, and to a lesser extent Latin America. That has
allayed some of the fears surrounding the possible impact of net exports on the
overall rate of domestic economic growth.
As for the inflation environment, what had been a positive six months ago has
now become a negative. Last fall, and into the winter, commodity prices had
fallen so far that in many instances they were below their cost of production.
While that helped pull down the rate of inflation, prices were so low, they had
nowhere to go but up -- especially with the modest improvement in the economies
of some of the emerging markets. The current fear is that rising commodity
prices will translate into higher inflation, and that has negatively impacted
all bond markets.
The relative value of municipal bonds held up quite nicely during the first
quarter of the year when U.S. Treasury yields were moving higher. Demand and
supply in the municipal market was such that it was one of the few fixed income
markets that posted positive total returns during the first quarter.
Unfortunately, that changed during the second quarter as the fundamentals and
the supply-demand situation combined to push municipal bond yields higher.
With the change in the municipal bond market environment, interest rates moved
higher. For example, one-year AAA-rated general obligation bond yields rose from
3.10% to 3.50%, a 40 basis point increase, since the beginning of the year.
Intermediate-term bond yields rose even more with 5-year AAA-rated general
obligation bond yields going from 3.80% to 4.40% (a 60 basis point increase) and
15-year yields going from 4.60% to 5.10% (a 50 basis point increase). Long term
municipal yields rose as well with 30-year AAA-rated general obligation bond
yields beginning the year at 4.90% and finishing the month of June 40 basis
points higher at 5.30%. The net effect of these rate increases was a negative
total return in most sectors of the municipal market. Merrill Lynch's long-term
municipal bond index was down about 1.75% during the first six months of this
year, while their intermediate index was down about 1.00%. Short-term munis
(i.e. those with maturities of 1 to 3 years) posted modestly positive returns of
just over 1.00%.
The New York Tax Exempt Series was not immune from the adverse bond market
environment. Our emphasis on high quality and extended duration has been a
winning strategy in recent years, but did not help over the past six months.
Periods of underperformance will happen as the cyclical factors exert their
influence. Investors should always remember that growth, inflation, and
municipal bond yields will never move lower and simply stay there. On the
contrary, there have been, and will continue to be cyclical pressures that push
all three higher and lower. However, the secular factors that drove inflation
lower over the last 15+ years remain in firmly place. As a result, long-term
investment decisions should continue to be based on the expectation of a benign
inflation environment. That means cyclical increases in inflation and the
associated spikes in interest rates may buying opportunities. Conversely,
significant dips in rates will be viewed as opportunities to sell. That is the
long-term investment perspective that has driven, and continues to drive, our
fixed income investment process.
As always, we appreciate the opportunity to serve you.
Sincerely,
EXETER ASSET MANAGEMENT
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
[graphic]
<pie chart>
Data for pie chart to follow:
Portfolio Composition 1 - As of 6/30/99
General Obligation Bonds - 59%
Revenue Bonds - 39%
Pre-Refunded Bonds - 2%
1 As a percentage of municipal securities.
[graphic]
<pie chart>
Quality Ratings 2 - As of 6/30/99
Aaa - 81%
Aa - 15%
A - 4%
2 Using Moody's Ratings, as a percentage of municipal securities.
2
<PAGE>
PERFORMANCE UPDATE AS OF JUNE 30, 1999 (UNAUDITED)
Exeter Fund, Inc.
New York Tax Exempt Series
<TABLE>
<CAPTION>
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . $ 10,134 1.34% 1.34%
Five Years. $ 13,338 33.38% 5.93%
Inception 1 $ 12,618 26.18% 4.36%
</TABLE>
Merrill Lynch
Intermediate Municipal Index
<TABLE>
<CAPTION>
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . $ 10,271 2.71% 2.71%
Five Years. $ 13,521 35.21% 6.21%
Inception 1 $ 13,064 30.64% 5.02%
</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 (06/30/99) as compared to the
Merrill Lynch Intermediate Municipal Index. 2
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. Merrill Lynch
Date New York Tax Exempt Series Intermediate Municipal Index
<S> <C> <C>
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
12/31/98 12,853 13,197
06/30/99 12,618 13,064
</TABLE>
1 The Series and Index performance numbers are calculated from January 17, 1994,
the Series' inception date. The Series' performance is historical and may not
be indicative of future results.
2 The unmanaged Merrill Lynch Intermediate Municipal Index is a market value
weighted measure of approximately 110 municipal bonds issued across the United
States. The Index is comprised of investment grade securities. Index returns
assume reinvestment of coupons and, unlike Series returns, do not reflect any
fees or expenses.
3
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- ---------
NEW YORK MUNICIPAL SECURITIES - 98.40%
<S> <C> <C> <C>
Albany County, G.O. Bond, 5.75%, 6/1/2010 . . . . . . . . . Aaa $ 200,000 $208,792
Amherst Public Improvement, G.O. Bond, 4.625%, 3/1/2007 . . Aaa 200,000 198,270
Auburn Central School District, G.O. Bond, 4.55%
12/1/2006 . . . . . . . . . . . . . . . . . . . . . . . . Aaa 385,000 382,401
Bayport-Blue Point Union Free School District, G.O. Bond,
5.60%, 6/15/2012. . . . . . . . . . . . . . . . . . . . Aaa 250,000 262,745
Brighton Central School District, G.O. Bond, 5.40%
6/1/2012. . . . . . . . . . . . . . . . . . . . . . . . Aaa 250,000 255,383
Brockport Central School District, G.O. Bond, 5.50%
6/15/2015. . . . . . . . . . . . . . . . . . . . . . . Aaa 300,000 304,665
Broome County Public Safety, Certificate Participation,
5.00%, 4/1/2006 . . . . . . . . . . . . . . . . . . . . Aaa 250,000 254,567
Buffalo General Improvement, G.O. Bond, Series A,
4.75%, 2/1/2004 . . . . . . . . . . . . . . . . . . . Aaa 500,000 505,730
Buffalo Municipal Water Authority, Revenue Bond, Series A,
5.00%, 7/1/2019 . . . . . . . . . . . . . . . . . . . Aaa 1,000,000 946,760
Buffalo Municipal Water Authority, Revenue Bond, Series B,
5.00%, 7/1/2028. . . . . . . . . . . . . . . . . . . . Aaa 750,000 698,003
Buffalo Schools, G.O. Bond, Series B, 5.05%, 2/1/2009. . . Aaa 250,000 251,520
Buffalo, G.O. Bond, 5.00%, 12/1/2009. . . . . . . . . . . . Aaa 150,000 150,915
Buffalo, G.O. Bond, Series A, 5.20%, 2/1/2010 . . . . . . . Aaa 250,000 253,000
Cattaraugus County Public Improvement, G.O. Bond, 5.00%,
8/1/2007. . . . . . . . . . . . . . . . . . . . . . . . Aaa 300,000 304,974
Chittenango Central School District, G.O. Bond, 5.375%,
6/15/2016 . . . . . . . . . . . . . . . . . . . . . . . Aaa 200,000 201,090
Colonie, G.O. Bond, 5.20%, 8/15/2008. . . . . . . . . . . . Aaa 100,000 103,203
Cortlandville, G.O. Bond, 5.40%, 6/15/2013. . . . . . . . . Aaa 155,000 158,968
Dryden Central School District, G.O. Bond, 5.50%,
6/15/2011. . . . . . . . . . . . . . . . . . . . . . . Aaa 200,000 203,864
East Aurora Union Free School District, G.O. Bond,
5.20%, 6/15/2011 . . . . . . . . . . . . . . . . . . . Aaa 300,000 306,699
East Hampton, G.O. Bond, 4.625%, 1/15/2007. . . . . . . . . Aaa 175,000 174,611
East Hampton, G.O. Bond, 4.625%, 1/15/2008. . . . . . . . . Aaa 175,000 173,838
Eastchester Public Improvement, G.O. Bond, Series B,
4.9%, 10/15/2011. . . . . . . . . . . . . . . . . . . . Aaa 385,000 386,378
Ellenville Central School District, G.O. Bond, 5.375%,
5/1/2009 . . . . . . . . . . . . . . . . . . . . . . . Aaa 210,000 219,213
Ellenville Central School District, G.O. Bond, Series B,
5.70%, 5/1/2011. . . . . . . . . . . . . . . . . . . . Aaa 700,000 734,216
Erie County, G.O. Bond, Series B, 5.50%, 6/15/2009 . . . . Aaa 100,000 103,513
Erie County, G.O. Bond, Series B, 5.50%, 6/15/2025. . . . . Aaa 400,000 401,268
Fillmore Central School District, G.O. Bond, 5.25%,
6/15/2015 . . . . . . . . . . . . . . . . . . . . . . Aaa 300,000 302,601
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
NEW YORK MUNICIPAL SECURITIES (continued)
<S> <C> <C> <C>
Gloversville City School District, G.O. Bond, 5.00%,
6/15/2005 . . . . . . . . . . . . . . . . . . . . . . . Aaa $ 350,000 $ 358,131
Greene Central School District, G.O. Bond, 5.25%,
6/15/2012 . . . . . . . . . . . . . . . . . . . . . . Aaa 195,000 198,748
Guilderland School District, G.O. Bond, 4.90%, 6/15/2008. . Aaa 370,000 370,314
Guilderland School District, G.O. Bond, 5.00%, 5/15/2014. . Aaa 505,000 492,557
Guilderland School District, G.O. Bond, 5.00%, 5/15/2016. . Aaa 400,000 385,404
Hamburg Central School District, G.O. Bond, 5.375%,
6/1/2014. . . . . . . . . . . . . . . . . . . . . . . . Aaa 600,000 607,566
Hempstead Town, G.O. Bond, Series B, 5.625%, 2/1/2010 . . . Aaa 200,000 208,772
Holland Central School District, G.O. Bond, 6.125%,
6/15/2010 . . . . . . . . . . . . . . . . . . . . . . . Aaa 245,000 265,737
Huntington, G.O. Bond, 5.90%, 1/15/2007 . . . . . . . . . . Aaa 300,000 321,042
Huntington, G.O. Bond, 5.875%, 9/1/2009 . . . . . . . . . . Aaa 250,000 264,568
Indian River Central School District, G.O. Bond, Second
Series, 4.30%, 12/15/2003. . . . . . . . . . . . . . . . Aaa 475,000 475,755
Irvington Union Free School District, G.O. Bond, Series B,
5.10%, 7/15/2005 . . . . . . . . . . . . . . . . . . . . Aaa 275,000 282,466
Jamesville-Dewitt Central School District, G.O. Bond,
5.75%, 6/15/2009. . . . . . . . . . . . . . . . . . . . Aaa 420,000 447,174
Jordan-El Bridge Central School District, G.O. Bond,
5.875%, 6/15/2008 . . . . . . . . . . . . . . . . . . . Aaa 500,000 533,480
Le Roy Central School District, G.O. Bond, 0.10%,
6/15/2008 . . . . . . . . . . . . . . . . . . . . . . . Aaa 350,000 229,516
Middletown City School District, G.O. Bond, Series A,
5.50%, 11/15/2005 . . . . . . . . . . . . . . . . . . . Aaa 175,000 184,002
Monroe County Public Improvement - Pre-refunded, G.O.
Bond, 6.00%, 3/1/2002. . . . . . . . . . . . . . . . . . Aaa 95,000 99,375
Monroe County Public Improvement - Pre-refunded, G.O.
Bond, 6.00%, 3/1/2002. . . . . . . . . . . . . . . . . . Aaa 390,000 409,964
Monroe County Public Improvement - Pre-refunded, G.O.
Bond, 6.10%, 6/1/2015. . . . . . . . . . . . . . . . . . Aaa 20,000 21,811
Monroe County Public Improvement - Unrefunded Balance,
G.O. Bond, 6.00%, 3/1/2002 . . . . . . . . . . . . . . . Aaa 15,000 15,670
Monroe County Public Improvement - Unrefunded Balance,
G.O. Bond, 6.10%, 6/1/2015 . . . . . . . . . . . . . . . Aaa 180,000 196,303
Monroe County Public Improvement, G.O. Bond, 4.90%,
6/1/2005. . . . . . . . . . . . . . . . . . . . . . . . Aaa 250,000 254,488
Monroe County Water Authority, Revenue Bond, Series B,
5.25%, 8/1/2011. . . . . . . . . . . . . . . . . . . . . Aa3 500,000 503,600
Monroe County Water Authority, Revenue Bond,
5.00%, 8/1/2019. . . . . . . . . . . . . . . . . . . . . Aa3 1,700,000 1,615,170
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
INVESTMENT PORTFOLIO- JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
NEW YORK MUNICIPAL SECURITIES (continued)
<S> <C> <C> <C>
Monroe County Water Improvement, G.O. Bond, 5.25%,
2/1/2017 . . . . . . . . . . . . . . . . . . . . . . Aa2 $ 320,000 $ 318,170
Nassau County, G.O. Bond, Series S, 5.00%, 3/1/2005 . . . Aaa 300,000 305,310
Nassau County General Improvement, G.O. Bond, Series U,
5.25%, 11/1/2014 . . . . . . . . . . . . . . . . . . . Aaa 335,000 333,231
Nassau County General Improvement, G.O. Bond, Series V,
5.25%, 3/1/2015. . . . . . . . . . . . . . . . . . . . Aaa 385,000 381,728
New Castle, G.O. Bond, 4.75%, 6/1/2010. . . . . . . . . . Aa1 450,000 442,089
New Rochelle, G.O. Bond, Series C, 6.20%, 3/15/2007 . . . Aaa 175,000 189,079
New York City Municipal Water Authority, Revenue Bond,
Series B, 5.375%, 6/15/2019. . . . . . . . . . . . . . Aaa 250,000 249,538
New York City Municipal Water Finance Authority, Revenue
Bond, Series B, 5.50%, 6/15/2019 . . . . . . . . . . . Aaa 1,000,000 1,002,490
New York City Municipal Water Finance Authority, Revenue
Bond, Series B, 5.125%, 6/15/2030. . . . . . . . . . . Aaa 1,000,000 944,500
New York City, G.O. Bond, Series K, 5.50%, 4/1/2007. . . Aaa 500,000 519,770
New York City, G.O. Bond, Series 1, 5.00%, 5/15/2028. . . Aaa 1,900,000 1,768,387
New York Government Assistance Corp., Revenue Bond,
Series A, 5.90%, 4/1/2013. . . . . . . . . . . . . . . Aaa 500,000 528,320
New York Government Assistance Corp., Revenue Bond,
Series A, 6.00%, 4/1/2024. . . . . . . . . . . . . . . A3 250,000 260,822
New York State Dorm Authority, Revenue Bond, 5.00%,
7/1/2022. . . . . . . . . . . . . . . . . . . . . . . Aaa 2,000,000 1,882,800
New York State Environmental Facilities Corp. Pollution
Control, Revenue Bond, Series A, 4.65%, 6/15/2007 . . Aaa 250,000 248,060
New York State Environmental Facilities Corp. Pollution
Control, Revenue Bond, Series A, 5.20%, 6/15/2015 . . Aaa 250,000 248,655
New York State Environmental Pollution Control, Revenue
Bond Pooled LN-B, 6.65%, 9/15/2013 . . . . . . . . . . Aaa 500,000 539,785
New York State Environmental Facilities Corp. Pollution
Control, Revenue Bond, Series E, 5.00%, 6/15/2012. . . Aaa 200,000 197,370
New York State Housing Finance Agency, State University
Construction, Revenue Bond, Series A, 8.00%, 5/1/2011. Aaa 250,000 309,858
New York State Local Government Assistance Corp.,
Revenue Bond, Series C, 5.00%, 4/1/2021. . . . . . . . Aaa 750,000 711,818
New York State Local Government Assistance Corp.,
Revenue Bond, Series D, 5.00%, 4/1/2023. . . . . . . . Aaa 1,375,000 1,296,501
New York State Medical Care Facility, Financial Agency,
Revenue Bond, 7.75%, 2/15/2020 . . . . . . . . . . . . Aaa 380,000 397,640
New York State Mortgage Agency, Homeowners Mortgage,
Revenue Bond, Series 31A, 5.375%, 10/1/2017. . . . . . Aa2 500,000 495,655
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
INVESTMENT PORTFOLIO- JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
NEW YORK MUNICIPAL SECURITIES (continued)
<S> <C> <C> <C>
New York State Power Authority, Revenue Bond, Series CC,
5.00%, 1/1/2014 . . . . . . . . . . . . . . . . . . . . Aaa $ 500,000 $ 520,215
New York State Power Authority, Revenue Bond, Series CC,
5.25%, 1/1/2018. . . . . . . . . . . . . . . . . . . . Aaa 250,000 262,122
New York State Power Authority Revenue & General
Purpose, Revenue Bond, Ref-Series CC, 4.80%, 1/1/2005 . Aaa 250,000 258,565
New York State Thruway Authority, Highway & Bridge,
Revenue Bond, Series B, 5.75%, 4/1/2006 . . . . . . . . Aaa 100,000 105,889
New York State Thruway Authority, Highway & Bridge,
Revenue Bond, Series C, 5.00%, 4/1/2016 . . . . . . . . A3 950,000 900,343
New York State Thruway Authority, Highway & Bridge,
Revenue Bond, Series A, 5.25%, 4/1/2017 . . . . . . . . Aaa 555,000 546,764
New York State Thruway Authority, Revenue Bond, Series
A, 5.50%, 1/1/2023 . . . . . . . . . . . . . . . . . . Aaa 1,020,000 1,052,416
New York State Thruway Authority, Revenue Bond, Series
B, 4.90%, 1/1/2007. . . . . . . . . . . . . . . . . . . Aaa 450,000 452,736
New York State Urban Development Correctional Capital
Facilities, Revenue Bond, Series A, 5.25%, 1/1/2014. . Aaa 500,000 503,535
New York State Urban Development Corp. Correctional
Facility, Revenue Bond, Series G, 7.00%, 1/1/2017 . . . Aaa 50,000 51,906
New York State Urban Development, Revenue Bond,
5.375%, 7/1/2022. . . . . . . . . . . . . . . . . . . Aaa 400,000 391,984
New York, G.O. Bond, 8.00%, 3/15/2016. . . . . . . . . . . Aaa 500,000 523,425
New York, G.O. Bond, Series B, 5.125%, 3/1/2018. . . . . . A2 1,000,000 964,410
Niagara County, G.O. Bond, Series B, 5.20%, 1/15/2011. . . Aaa 400,000 403,076
Niagara County, G.O. Bond, 5.90%, 7/15/2014. . . . . . . . Aaa 350,000 365,750
North Syracuse Central School District, G.O. Bond, 5.50%,
6/15/2011. . . . . . . . . . . . . . . . . . . . . . Aaa 295,000 304,446
Onondaga County, G.O. Bond, 5.85%, 2/15/2002 . . . . . . . Aa2 300,000 311,862
Penfield Central School District, G.O. Bond, 5.20%,
6/15/2010. . . . . . . . . . . . . . . . . . . . . . Aaa 560,000 572,975
Queensbury, G O. Bond, Series A, 5.50%, 4/15/2011. . . . . Aaa 150,000 157,366
Queensbury, G.O. Bond, Series A, 5.50%, 4/15/2012. . . . . Aaa 350,000 365,918
Rochester, G.O. Bond, Series A, 4.70%, 8/15/2006 . . . . . Aaa 250,000 250,707
Rochester, G.O. Bond, Series A, 5.00%, 8/15/2020 . . . . . Aaa 250,000 241,445
Rochester, G.O. Bond, Series A, 5.00%, 8/15/2022 . . . . . Aaa 95,000 91,343
Rome, G.O. Bond, 5.20%, 12/1/2010. . . . . . . . . . . . . Aaa 390,000 395,105
Sands Point, G.O. Bond, 6.70%, 11/15/2014. . . . . . . . . A2a 700,000 775,264
Schenectady, G.O. Bond, 5.30%, 2/1/2011. . . . . . . . . . Aaa 250,000 254,007
South County Central School District Brookhaven, G.O.
Bond, 5.50%, 9/15/2007. . . . . . . . . . . . . . . . . Aaa 380,000 394,934
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- --------- ----------
NEW YORK MUNICIPAL SECURITIES (continued)
<S> <C> <C> <C>
South Huntington Union Free School District, G.O. Bond,
5.00%, 9/15/2016 . . . . . . . . . . . . . . . . . . Aaa $325,000 $314,769
South Huntington Union Free School District, G.O. Bond,
5.10%, 9/15/2017 . . . . . . . . . . . . . . . . . . . Aaa 100,000 97,560
Steuben County Public Improvement, G.O. Bond, 5.60%,
5/1/2006 . . . . . . . . . . . . . . . . . . . . . . Aaa 500,000 517,845
Suffolk County Water Authority, Revenue Bond, 5.10%,
6/1/2009 . . . . . . . . . . . . . . . . . . . . . . Aaa 250,000 252,900
Suffolk County, G.O. Bond, Series G, 5.40%, 4/1/2013. . . Aaa 400,000 400,960
Suffolk County, G.O. Bond, Series A, 4.75%, 8/1/2019 . . . Aaa 895,000 813,958
Suffolk County Water Authority, Series A, Revenue Bond,
5.00%, 6/1/2017. . . . . . . . . . . . . . . . . . . . Aaa 400,000 384,420
Sullivan County Public Improvement, G.O. Bond, 5.125%,
3/15/2013 . . . . . . . . . . . . . . . . . . . . . . Aaa 330,000 328,495
Three Village Central School District, G.O. Bond, 5.375%,
6/15/2007 . . . . . . . . . . . . . . . . . . . . . . Aaa 230,000 239,430
Tioga County Public Improvement, G.O. Bond, 5.25%,
3/15/2005 . . . . . . . . . . . . . . . . . . . . . . Aaa 250,000 257,005
Tompkins County, G.O. Bond, Series B, 5.625%, 9/15/2011. . Aa2 135,000 140,982
Tompkins County, G.O. Bond, Series B, 5.625%, 9/15/2013. . Aa2 300,000 308,910
Tompkins County, G.O. Bond, Series B, 5.625%, 9/15/2014. . Aa2 300,000 307,305
Tompkins County Public Improvement, G.O. Bond, Series B,
5.10%, 4/1/2020 . . . . . . . . . . . . . . . . . . . Aa2 400,000 385,580
Triborough Bridge & Tunnel Authority, Revenue Bond,
Series A, 5.00%, 1/1/2012 . . . . . . . . . . . . . . . Aa3 500,000 491,340
Triborough Bridge & Tunnel Authority - General Purpose,
Revenue Bond, 5.00%, 1/1/2017 . . . . . . . . . . . . . Aa3 250,000 238,225
Triborough Bridge & Tunnel Authority - General Purpose,
Revenue Bond, Series A, 4.75%, 1/1/2019. . . . . . . . Aaa 300,000 272,622
Triborough Bridge & Tunnel Authority - General Purpose,
Revenue Bond, Series A, 5.125%, 1/1/2022 . . . . . . . Aa3 1,700,000 1,622,497
Tri-Valley Central School District, G.O. Bond, 5.60%,
6/15/2008. . . . . . . . . . . . . . . . . . . . . . . Aaa 120,000 126,199
Westchester County, G.O. Bond, Series A, 4.75%,
12/15/2008. . . . . . . . . . . . . . . . . . . . . . . Aaa 250,000 249,805
Westchester County, G.O. Bond, Series A, 4.75%,
12/15/2009. . . . . . . . . . . . . . . . . . . . . . Aaa 250,000 248,772
Westchester County, G.O. Bond, Series B, 4.30%,
12/15/2010. . . . . . . . . . . . . . . . . . . . . . Aaa 215,000 201,739
Westchester County, G.O. Bond, Series B, 4.30%,
12/15/2011. . . . . . . . . . . . . . . . . . . . . . Aaa 100,000 92,740
White Plains, G.O. Bond, 4.50%, 9/1/2005 . . . . . . . . . Aa1 180,000 180,374
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CREDIT PRINCIPAL
RATING* AMOUNT/ VALUE
(UNAUDITED) SHARES (NOTE 2)
----------- ---------- ------------
NEW YORK MUNICIPAL SECURITIES (continued)
<S> <C> <C> <C>
White Plains, G.O. Bond, 4.50%, 9/1/2007 . . . . . . . . . Aa1 $ 315,000 $ 311,381
William Floyd Union Free School District, G.O. Bond,
5.70%, 6/15/2008. . . . . . . . . . . . . . . . . . . Aaa 405,000 428,559
Williamsville Central School District, G.O. Bond, 5.375%,
5/1/2004. . . . . . . . . . . . . . . . . . . . . . . Aaa 800,000 832,184
Wyandanch Union Free School District, G.O. Bond, 5.60%,
4/1/2017. . . . . . . . . . . . . . . . . . . . . . . Aaa 500,000 512,795
------------
TOTAL MUNICIPAL SECURITIES
(Identified Cost $52,506,345) 52,738,235
------------
SHORT-TERM INVESTMENTS - 0.28%
Dreyfus Basic New York Tax Free Money Market
Fund (Identified Cost $152,613) 152,613 152,613
------------
TOTAL INVESTMENTS - 98.68%
(Identified Cost $52,658,958) 52,890,848
OTHER ASSETS, LESS LIABILITIES - 1.32% 706,516
------------
NET ASSETS - 100% $53,597,364
============
</TABLE>
KEY-
G.O. Bond - General Obligation Bond
Ref. - Referendum
* Credit Ratings from Moody's (unaudited)
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At June 30, 1999, the net unrealized appreciation based on identified
cost for federal income tax purposes of $52,658,958 was as follows:
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . $1,170,645
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . (938,755)
-----------
UNREALIZED APPRECIATION - NET . . . . . . . . . . . . . . . . . . . . $ 231,890
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments, at value (identified cost $52,658,958)(Note 2) $52,890,848
Interest receivable . . . . . . . . . . . . . . . . . . . . 735,694
Receivable for fund shares sold . . . . . . . . . . . . . . 12,560
-----------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . 53,639,102
-----------
LIABILITIES:
Accrued management fees (Note 3). . . . . . . . . . . . . . 22,203
Accrued Directors' fees (Note 3). . . . . . . . . . . . . . 4,366
Audit fee payable . . . . . . . . . . . . . . . . . . . . . 8,665
Payable for fund shares redeemed. . . . . . . . . . . . . . 605
Other payables and accrued expenses . . . . . . . . . . . . 5,899
-----------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . 41,738
-----------
NET ASSETS FOR 5,292,079 SHARES
OUTSTANDING. . . . . . . . . . . . . . . . . . . . . . . $53,597,364
===========
NET ASSETS CONSIST OF:
Capital stock . . . . . . . . . . . . . . . . . . . . . . . $ 52,920
Additional paid-in-capital. . . . . . . . . . . . . . . . . 52,905,137
Undistributed net investment income . . . . . . . . . . . . 365,393
Accumulated net realized gain on investments. . . . . . . . 42,024
Net unrealized appreciation on investments. . . . . . . . . 231,890
-----------
TOTAL NET ASSETS. . . . . . . . . . . . . . . . . . . . . . $53,597,364
===========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($53,597,364 / 5,292,079 shares). . . . . . . . . . . . . $ 10.13
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . $ 1,417,211
------------
EXPENSES:
Management fees (Note 3) . . . . . . . . . . . . . . . . 143,011
Directors' fees (Note 3) . . . . . . . . . . . . . . . . 2,755
Transfer agent fees (Note 3) . . . . . . . . . . . . . . 6,864
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . 7,439
Custodian fee. . . . . . . . . . . . . . . . . . . . . . 5,093
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 5,945
------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . 171,107
------------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . 1,246,104
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on investments (identified cost basis) 61,874
Net change in unrealized appreciation on investments . . (2,316,277)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS . . . . . . . . . . . . . . . . . . . . . (2,254,403)
------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . . $(1,008,299)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED 6/30/99 FOR THE YEAR
(UNAUDITED) ENDED 12/31/98
-------------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . $ 1,246,104 $ 2,092,347
Net realized gain (loss) on investments . . . . 61,874 (38)
Net change in unrealized appreciation
on investments . . . . . . . . . . . . . . . (2,316,277) 556,299
-------------------- ----------------
Net increase (decrease) from operations . . . . (1,088,299) 2,648,608
-------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 2):
From net investment income. . . . . . . . . . . (1,020,481) (2,050,623)
-------------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital share
transactions (Note 5) . . . . . . . . . . . (5,146,290) 14,493,132
-------------------- ----------------
Net increase (decrease) in net assets . . . . . (7,175,070) 15,091,117
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . 60,772,434 45,681,317
-------------------- ----------------
END OF PERIOD (including undistributed net
investment income of $365,393 and $139,770,
respectively). . . . . . . . . . . . . . . . $ 53,597,364 $ 60,772,434
==================== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE
SIX
MONTHS
ENDED
6/30/99 FOR THE YEARS ENDED
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95
------------ --------------------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD. . . . $ 10.51 $ 10.37 $ 9.98 $ 10.07 $ 8.98
------------ --------------------- ---------- ---------- ----------
Income from investment operations:
Net investment income. . . . . . . . . . . 0.235 0.427 0.431 0.422 0.404
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . (0.425) 0.138 0.384 (0.102) 1.086
------------ --------------------- ---------- ---------- ----------
Total from investment operations. . . . . . . (0.190) 0.565 0.815 0.320 1.490
------------ --------------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income . . . . . . . . (0.190) (0.425) (0.425) (0.410) (0.400)
------------ --------------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD . . . . . . . $ 10.13 $ 10.51 $ 10.37 $ 9.98 $ 10.07
============ ===================== ========== ========== ==========
Total return1 . . . . . . . . . . . . . . . . (1.83)% 5.53% 8.33% 3.32% 16.78%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses. . . . . . . . . . . . . . . . . 0.60%2 0.61% 0.61% 0.61% 0.65%
Net investment income . . . . . . . . . . 4.36%2 4.17% 4.36% 4.41% 4.36%
Portfolio turnover. . . . . . . . . . . . . . 0% 3% 2% 6% 0%
NET ASSETS - END OF PERIOD
(000'S OMITTED) . . . . . . . . . . . . . $ 53,597 $ 60,772 $ 45,681 $ 37,325 $ 28,817
============ ===================== ========== ========== ==========
FOR THE
PERIOD
1/17/94
(COMM. OF
OPERATIONS)
TO 12/31/94
-------------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
<S> <C>
NET ASSET VALUE - BEGINNING OF PERIOD. . . . $ 10.00
-------------
Income from investment operations:
Net investment income. . . . . . . . . . . 0.338
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
=============
</TABLE>
1 Represents aggregate total return for the period indicated.
2 Annualized.
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 "Series") is a no-load diversified series of
Exeter Fund, Inc. (the "Fund"). The Fund 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 Series are offered to investors, employees and clients of Manning
& Napier Advisors, Inc. (the "Advisor") and its affiliates. The total
authorized capital stock of the Fund consists of one billion shares of common
stock each having a par value of $0.01. As of June 30, 1999, 1,550 million
shares have been designated in total among 31 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 Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series 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 Series 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 Series.
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
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
DISTRIBUTION OF INCOME AND GAINS (continued)
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 Series may periodically make
reclassifications among its capital accounts without impacting the Series' 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
Series pays a fee, computed daily and payable monthly, at an annual rate of
0.50% of the Series' average daily net assets. The fee amounted to $143,011 for
the six months ended June 30, 1999.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' organization. The Advisor also provides the Fund with necessary
office space and portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are "affiliated persons" of
the Fund or of the Advisor, and all personnel of the Fund or of the Advisor
performing services relating to research, statistical and investment activities
are paid by the Advisor.
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. For these services, the Series pays a fee which is
calculated as a percentage of the average daily net assets at an annual rate of
0.024%; this fee amounted to $6,864 for the six months ended June 30, 1999.
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 Series.
The compensation of the non-affiliated Directors totaled $2,755 for the six
months ended June 30, 1999.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1999, purchases and sales of securities, other
than United States Government securities and short-term securities, were $0 and
$4,020,573, respectively.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of New York Tax Exempt Series were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 6/30/99 Ended 12/31/98
------------------- -----------------
Shares Amount Shares Amount
------------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
Sold. . . . 114,814 $ 1,196,906 1,763,211 $18,531,432
Reinvested. 95,568 983,999 191,072 2,000,958
Repurchased (698.880) (7,327,195) (577,357) (6,039,258)
------------------- ------------ --------------- ------------
Total . . . (488,498) $(5,146,290) 1,376,926 $14,493,132
=================== ============ =============== ============
</TABLE>
6. FINANCIAL INSTRUMENTS
The Series 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 Series on June 30, 1999.
7. CONCENTRATION OF CREDIT
The Series 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 Series 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 exte
16
<PAGE>
<PAGE>
EXETER FUND, INC.
OHIO TAX EXEMPT SERIES
SEMI-ANNUAL REPORT
JUNE 30, 1999
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
DEAR SHAREHOLDERS:
Looking back to the start of the year, the fortunes of the municipal bond market
appeared quite good. At that time, the consensus forecast for the economy was
that its growth rate would probably moderate from the fourth quarter's frothy
levels. Inflation pressures were non-existent, and with long-term municipal bond
yields on par with U.S. Treasuries, municipal bond demand was expected to be
very robust. Unfortunately the financial markets are in a perpetual state of
flux, and what was expected to be a friendly market environment became decidedly
unfriendly during the second quarter of the year.
Starting with the economic fundamentals, after stumbling during the second and
third quarter of last year, the economy bounced backed nicely during the fourth
quarter. That has carried over into the first two quarters of this year, driven
primarily by consumer spending. A business community that continues to invest in
itself has also helped. There have even been promising signs of growth in the
Pacific Rim region, Russia, and to a lesser extent Latin America. That has
allayed some of the fears surrounding the possible impact of net exports on the
overall rate of domestic economic growth.
As for the inflation environment, what had been a positive six months ago has
now become a negative. Last fall, and into the winter, commodity prices had
fallen so far that in many instances they were below their cost of production.
While that helped pull down the rate of inflation, prices were so low, they had
nowhere to go but up -- especially with the modest improvement in the economies
of some of the emerging markets. The current fear is that rising commodity
prices will translate into higher inflation, and that has negatively impacted
all bond markets.
The relative value of municipal bonds held up quite nicely during the first
quarter of the year when U.S. Treasury yields were moving higher. Demand and
supply in the municipal market was such that it was one of the few fixed income
markets that posted positive total returns during the first quarter.
Unfortunately, that changed during the second quarter as the fundamentals and
the supply-demand situation combined to push municipal bond yields higher.
With the change in the municipal bond market environment, interest rates moved
higher. For example, one-year AAA-rated general obligation bond yields rose from
3.10% to 3.50%, a 40 basis point increase, since the beginning of the year.
Intermediate-term bond yields rose even more with 5-year AAA-rated general
obligation bond yields going from 3.80% to 4.40% (a 60 basis point increase) and
15-year yields going from 4.60% to 5.10% (a 50 basis point increase). Long term
municipal yields rose as well with 30-year AAA-rated general obligation bond
yields beginning the year at 4.90% and finishing the month of June 40 basis
points higher at 5.30%. The net effect of these rate increases was a negative
total return in most sectors of the municipal market. Merrill Lynch's long-term
municipal bond index was down about 1.75% during the first six months of this
year, while their intermediate index was down about 1.00%. Short-term munis
(i.e. those with maturities of 1 to 3 years) posted modestly positive returns of
just over 1.00%.
The Ohio Tax Exempt Series was not immune from the adverse bond market
environment. Our emphasis on high quality and extended duration has been a
winning strategy in recent years, but did not help over the past six months.
Periods of underperformance will happen as the cyclical factors exert their
influence. Investors should always remember that growth, inflation, and
municipal bond yields will never move lower and simply stay there. On the
contrary, there have been, and will continue to be cyclical pressures that push
all three higher and lower. However, the secular factors that drove inflation
lower over the last 15+ years remain in firmly place. As a result, long-term
investment decisions should continue to be based on the expectation of a benign
inflation environment. That means cyclical increases in inflation and the
associated spikes in interest rates may buying opportunities. Conversely,
significant dips in rates will be viewed as opportunities to sell. That is the
long-term investment perspective that has driven, and continues to drive, our
fixed income investment process.
As always, we appreciate the opportunity to serve you.
Sincerely,
EXETER ASSET MANAGEMENT
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
[graphic]
<pie chart>
Data for Pie Chart to follow:
Portfolio Composition 1 - As of 6/30/99
General Obligation Bonds - 60%
Revenue Bonds - 40%
1 As a percentage of municipal securities.
[graphic]
<pie chart>
Data for pie chart to follow:
Quality Ratings 2 - As of 6/30/99
Aaa - 90%
Aa - 8%
A - 2%
2 Using Moody's Ratings, as a percentage of municipal securities.
2
<PAGE>
PERFORMANCE UPDATE AS OF JUNE 30, 1999 (UNAUDITED)
Exeter Fund, Inc.
Ohio Tax Exempt Series
<TABLE>
<CAPTION>
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . $ 10,112 1.12% 1.12%
Five Years. $ 13,234 32.34% 5.76%
Inception 1 $ 12,625 26.25% 4.43%
</TABLE>
Merrill Lynch
Intermediate Municipal Index
<TABLE>
<CAPTION>
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . $ 10,271 2.71% 2.71%
Five Years. $ 13,521 35.21% 6.21%
Inception 1 $ 13,050 30.50% 5.07%
</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 (06/30/99) as compared to the
Merrill Lynch Intermediate Municipal Index. 2
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
<S> <C> <C>
Exeter Fund, Inc. Merrill Lynch Intermediate
Date . . Ohio Tax Exempt Series Municipal Index
02/14/94 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
12/31/98 12,882 13,183
06/30/99 12,625 13,050
</TABLE>
1 The Series and Index performance numbers are calculated from February 14,
1994, the Series' inception date. The Series' performance is historical and may
not be indicative of future results.
2 The unmanaged Merrill Lynch Intermediate Municipal Index is a market value
weighted measure of approximately 110 municipal bonds issued across the United
States. The Index is comprised of investment grade securities. Index returns
assume reinvestment of coupons and, unlike Series returns, do not reflect any
fees or expenses.
3
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- ---------
OHIO MUNICIPAL SECURITIES - 95.99%
<S> <C> <C> <C>
Akron Limited Tax, G.O. Bond, 4.10%, 12/1/2001 . . . . . . . . . Aaa $ 65,000 $ 65,043
Akron Waterworks, Revenue Management Bond, 5.70%,
3/1/2007. . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 100,000 104,960
Allen County, G.O. Bond, 5.30%, 12/1/2007. . . . . . . . . . . . Aaa 100,000 102,309
Amherst Police & Jail Facility, G.O. Bond, 5.375%,12/1/2012. . . Aaa 50,000 51,209
Avon Lake, G.O. Bond, 5.70%, 12/1/2006 . . . . . . . . . . . . . A 60,000 62,350
Avon Lake, G.O. Bond, 6.00%, 12/1/2009 . . . . . . . . . . . . . A 40,000 42,090
Barberton City School District, G.O. Bond, 5.125%, 11/1/2022 . . Aaa 500,000 481,200
Bedford Heights, G.O. Bond, Series A, 5.65%, 12/1/2014 . . . . . Aaa 60,000 63,755
Belmont County, G.O. Bond, 5.15%, 12/1/2010. . . . . . . . . . . Aaa 100,000 101,420
Canton City School District, G.O. Bond, 5.85%, 12/1/2007 . . . . Aaa 40,000 43,279
Chagrin Falls Exempt Village School District, G.O. Bond,
5.55%, 12/1/2022. . . . . . . . . . . . . . . . . . . . . . . Aa3 100,000 101,091
Cincinnati, G.O. Bond, 4.60%, 12/1/2003. . . . . . . . . . . . . Aal 50,000 50,536
Cleveland City School District, G.O. Bond, 5.875%, 12/1/2011 . . Aaa 125,000 132,296
Cleveland Public Power Systems Ref., G.O. Bond, 5.00%,
11/15/2024 . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 500,000 471,195
Cleveland Waterworks Ref & Impt., Revenue Bond, Series I,
5.00% ,1/1/2028. . . . . . . . . . . . . . . . . . . . . . . Aaa 265,000 248,936
Columbus Sewer Improvement Number 28, G.O. Bond,
6.00%, 5/1/2011 . . . . . . . . . . . . . . . . . . . . . . . Aaa 155,000 166,564
Columbus, G.O. Bond, Series D, 5.50%, 9/15/2008. . . . . . . . . Aaa 50,000 52,046
Crawford County, G.O. Bond, 6.75%, 12/1/2019 . . . . . . . . . . Aaa 175,000 197,215
Delaware City School District, G.O. Bond, 5.00%, 12/01/2025. . . Aaa 450,000 423,599
Delaware City School District, Construction & Impt., G.O.
Bond, Series B, 5.20%, 12/1/2016. . . . . . . . . . . . . . . Aaa 100,000 99,362
Erie County Revenue Ref & Impt., G.O. Bond, 4.75%, 10/1/2019 . . Aaa 175,000 160,274
Franklin County, G.O. Bond, 4.95%, 12/1/2004 . . . . . . . . . . Aaa 50,000 51,263
Franklin County, G.O. Bond, 5.50%, 12/1/2013 . . . . . . . . . . Aaa 100,000 101,724
Genoa Local School District, G.O. Bond, 5.40%, 12/1/2027 . . . . Aaa 150,000 151,953
Greene County Sewer System, Revenue Bond, 5.50%,
12/1/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 30,000 30,224
Hilliard School District, G.O. Bond, Series A, 5.00%, 12/1/2020. Aaa 225,000 215,021
</TABLE>
The accompanying notes are nan integral part of the financial statements.
4
<PAGE>
INVESTMENT PORTOFLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- ---------
OHIO MUNICIPAL SECURITIES (CONTINUED)
<S> <C> <C> <C>
Kettering City School District, G.O. Bond, 5.25%, 12/1/2022 . Aaa $ 60,000 $ 58,887
Kings Local School District, G.O. Bond, 5.50%, 12/1/2021. . . Aaa 115,000 115,673
Lakewood City School District, G.O. Bond, 5.55%,
12/1/2013 . . . . . . . . . . . . . . . . . . . . . . . . . . A1 100,000 102,929
Lakota Local School District, G.O. Bond, 5.75%, 12/1/2006 . . Aaa 50,000 52,822
Mahoning County, G.O. Bond, 5.70%, 12/1/2009. . . . . . . . . Aaa 150,000 157,763
Mentor, G.O. Bond, 5.25%, 12/01/2017. . . . . . . . . . . . . Aa3 100,000 98,144
Montgomery County, G.O. Bond, 5.30%, 9/1/2007 . . . . . . . . Aa3 65,000 66,527
Montgomery County, Moraine-Beaver Creek Sewers, Revenue
Bond, 5.60%, 9/1/2011. . . . . . . . . . . . . . . . . . . Aaa 100,000 103,469
North Olmstead, G.O. Bond, 5.00%, 12/1/2016 . . . . . . . . . Aaa 125,000 121,179
Northwood Local School District, G.O. Bond, 5.55%, 12/1/2006. Aaa 65,000 68,716
Northwood Local School District, G.O. Bond, 6.20%, 12/1/2013. Aaa 40,000 43,142
Ohio, G.O. Bond, 6.50%, 8/1/2011. . . . . . . . . . . . . . . Aal 50,000 52,864
Ohio Building Authority, State Facilities - Administration
Building, Revenue Bond, 5.50%, 10/1/2005 . . . . . . . . . Aaa 50,000 52,362
Ohio Higher Education Facility, University of Dayton
Project, Revenue Bond, 5.80%, 12/1/2019 . . . . . . . . . . . Aaa 100,000 102,795
Ohio State Infrastructure Improvement, G.O. Bond, 5.20%,
8/1/2010 . . . . . . . . . . . . . . . . . . . . . . . . . Aal 250,000 253,895
Ohio State Turnpike, Revenue Bond, Series A, 5.40%,
2/15/2009. . . . . . . . . . . . . . . . . . . . . . . . . Aaa 250,000 257,415
Ohio State Turnpike, Revenue Bond, Series A, 5.70%,
2/15/2017. . . . . . . . . . . . . . . . . . . . . . . . . Aaa 125,000 134,246
Ohio State Water Development Authority Ref. & Impt. -
Pure Water, Revenue Bond, 5.75%, 12/1/2005 . . . . . . . . Aaa 60,000 63,146
Ohio State Water Development Authority Pure Water,
Revenue Bond, Series I, 6.00%, 12/1/2016 . . . . . . . . Aaa 40,000 43,008
Ohio State Water Development Authority, Pollution Control
Facility, Revenue Bond, 5.25%, 12/1/2014 . . . . . . . . . Aaa 100,000 99,890
Ohio State Water Development Authority, Revenue Bond,
5.125%, 12/01/2023. . . . . . . . . . . . . . . . . . . . Aaa 300,000 288,081
Ontario Local School District, G.O. Bond, 5.00%, 12/1/2023 . Aaa 500,000 473,670
Ottawa County, G.O. Bond, 5.45%, 9/1/2006 . . . . . . . . . . Aaa 30,000 31,499
Pickerington Local School District Construction & Impt.,
G.O. Bond, 5.375%, 12/1/2019 . . . . . . . . . . . . . . . Aaa 150,000 149,716
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
OHIO MUNICIPAL SECURITIES (CONTINUED)
<S> <C> <C> <C>
Pickerington Water Systems Improvements, G.O. Bond,
5.85%, 12/1/2013 . . . . . . . . . . . . . . . . . . . Aaa $ 50,000 $ 52,281
Reynoldsburg City School District, G.O. Bond, 6.55%,
12/1/2017. . . . . . . . . . . . . . . . . . . . . . . Aaa 175,000 190,885
Rural Lorain Water Authority Ref. & Impt., Revenue Bond,
5.30%, 10/1/2012 . . . . . . . . . . . . . . . . . . . Aaa 110,000 110,118
South-Western City School District, Franklin & Pickway
Counties, G.O. Bond, 4.80%, 12/1/2006. . . . . . . . . Aaa 100,000 100,490
Stark County, G.O. Bond, 5.70%, 11/15/2017. . . . . . . . Aaa 100,000 102,546
Summit County, G.O. Bond, 5.75%, 12/1/2008. . . . . . . . Aaa 175,000 184,084
Toledo Sewer System, Revenue Bond, 6.35%, 11/15/2017. . . Aaa 185,000 200,803
Toledo, G.O. Bond, 5.95%, 12/1/2015 . . . . . . . . . . . Aaa 175,000 185,957
Trumbull County, G.O. Bond, 6.20%, 12/1/2014. . . . . . . Aaa 100,000 107,606
Warren, G.O. Bond, 5.20%, 11/15/2013. . . . . . . . . . . Aaa 50,000 51,778
Warren County Waterworks, Revenue Bond, 5.45%, 12/1/2015. Aaa 140,000 141,442
Westlake Ref. & Impt., G.O. Bond, 5.50%, 12/1/2020. . . . Aal 295,000 297,475
Wood County, G.O. Bond, 5.40%, 12/1/2013. . . . . . . . . Aa3 50,000 50,348
Youngstown, G.O. Bond, 6.125%, 12/1/2014. . . . . . . . . Aaa 50,000 53,528
-----------
TOTAL MUNICIPAL SECURITIES
(Identified Cost $8,423,393) 8,592,093
-----------
SHORT-TERM INVESTMENTS - 5.23%
Dreyfus Municipal Reserves
(Identified Cost $468,279) 468,279 468,279
-----------
TOTAL INVESTMENTS - 101.22%
(Identified Cost $8,891,672) 9,060,372
LIABILITIES, LESS OTHER ASSETS - (1.22)% (108,957)
-----------
NET ASSETS - 100% $8,951,415
===========
</TABLE>
Key - G.O. Bond - General Obligation Bond
Hos. - Hospital
Med. Ctr. - Medical Center
Impt. - Improvement
Ref. - Refunding
*Credit Ratings from Moody's (unaudited)
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At June 30, 1999 the net unrealized appreciation based on identified cost for
federal income tax purposes of $8,891,672 was as follows:
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 325,122
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . (156,422)
----------
UNREALIZED APPRECIATION - NET . . . . . . . . . . . . . . . . . . . . . . . . $ 168,700
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value (identified cost $8,891,672)(Note 2) $9,060,372
Interest receivable. . . . . . . . . . . . . . . . . . . . 66,810
----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . 9,127,182
----------
LIABILITIES:
Accrued management fee (Note 3). . . . . . . . . . . . . . 3,702
Accrued Directors' fees (Note 3) . . . . . . . . . . . . . 4,367
Transfer agent fees payable (Note 3) . . . . . . . . . . . 178
Payable for securities purchased . . . . . . . . . . . . . 150,135
Audit fee payable. . . . . . . . . . . . . . . . . . . . . 12,841
Other payables and accrued expenses. . . . . . . . . . . . 4,544
----------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . 175,767
----------
NET ASSETS FOR 872,245 SHARES OUTSTANDING. . . . . . . . . $8,951,415
==========
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . $ 8,722
Additional paid-in-capital . . . . . . . . . . . . . . . . 8,659,044
Undistributed net investment income. . . . . . . . . . . . 60,312
Accumulated net realized gain on investments . . . . . . . 54,637
Net unrealized appreciation on investments . . . . . . . . 168,700
----------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . $8,951,415
==========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($8,951,415/872,245 shares). . . . . . . . . . . . . . . . $ 10.26
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest . . . . . . . . . . . . . . . . . . . . . . . . $ 279,020
----------
EXPENSES:
Management fee (Note 3). . . . . . . . . . . . . . . . . 27,454
Directors' fees (Note 3) . . . . . . . . . . . . . . . . 2,755
Transfer agent fees (Note 3) . . . . . . . . . . . . . . 1,318
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . 6,248
Custodian fee. . . . . . . . . . . . . . . . . . . . . . 1,488
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 3,746
----------
Total Expenses . . . . . . . . . . . . . . . . . . . . . 43,009
----------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . 236,011
----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments (identified cost basis) 54,990
Net change in unrealized appreciation on investments . . (452,034)
----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS . . . . . . . . . . . . . . . . . . . . (397,044)
----------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $(161,033)
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED 6/30/99 FOR THE YEAR
(UNAUDITED) ENDED 12/31/98
-------------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . $ 236,011 $ 414,097
Net realized gain on investments. . . . . . . . . . . 54,990 426
Net change in unrealized appreciation on investments. (452,034) 85,980
-------------------- ----------------
Net increase (decrease) from operations . . . . . . . (161,033) 500,503
-------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income. . . . . . . . . . . . . . (191,585) (405,764)
-------------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital share. . . . . . (3,265,253) 3,168,569
-------------------- ----------------
Net increase (decrease) in net assets . . . . . . . . (3,617,871) 3,263,308
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . 12,569,286 9,305,978
-------------------- ----------------
END OF PERIOD(including undistributed net investment
income of $60,312 and $15,886, respectively) . . . $ 8,951,415 $ 12,569,286
==================== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
6/30/99 FOR THE YEARS ENDED
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95
-------------- ---------- --------------------- ---------- ----------
THROUGHOUT EACH PERIOD):
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD. . . . $ 10.66 $ 10.53 $ 10.18 $ 10.31 $ 9.18
-------------- ---------- --------------------- ---------- ----------
Income from investment operations:
Net investment income* . . . . . . . . . . 0.246 0.430 0.446 0.439 0.419
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . (0.456) 0.125 0.344 (0.129) 1.136
-------------- ---------- --------------------- ---------- ----------
Total from investment operations. . . . . . . (0.210) 0.555 0.790 0.310 1.555
-------------- ---------- --------------------- ---------- ----------
Less distributions to shareholders:
From net investment income . . . . . . . . (0.190) (0.425) (0.440) (0.438) (0.425)
From net realized gain on investments. . . -- -- -- (0.002) --
-------------- ---------- --------------------- ---------- ----------
Total distributions to shareholders . . . . . (0.190) (0.425) (0.440) (0.440) (0.425)
-------------- ---------- --------------------- ---------- ----------
NET ASSET VALUE - END OF PERIOD . . . . . . . $ 10.26 $ 10.66 $ 10.53 $ 10.18 $ 10.31
============== ========== ===================== ========== ==========
Total return 1. . . . . . . . . . . . . . . . (1.99)% 5.35% 7.92% 3.16% 17.14%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses*. . . . . . . . . . . . . . . . . 0.78%2 0.79% 0.79% 0.85% 0.85%
Net investment income* . . . . . . . . . . 4.29%2 4.10% 4.37% 4.40% 4.50%
Portfolio turnover. . . . . . . . . . . . . . 1% 5% 12% 2% 1%
NET ASSETS - END OF PERIOD (000's omitted). . $ 8,951 $ 12,569 $ 9,306 $ 7,698 $ 6,144
============== ========== ===================== ========== ==========
FOR THE PERIOD
2/14/94
(COMMENCEMENT
OF OPERATIONS)
TO 12/31/94
----------------
THROUGHOUT EACH PERIOD):
<S> <C>
NET ASSET VALUE - BEGINNING OF PERIOD. . . . $ 10.00
----------------
Income from investment operations:
Net investment income* . . . . . . . . . . 0.205
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . (0.828)
----------------
Total from investment operations. . . . . . . (0.623)
----------------
Less distributions to shareholders:
From net investment income . . . . . . . . (0.197)
From net realized gain on investments. . . --
----------------
Total distributions to shareholders . . . . . (0.197)
----------------
NET ASSET VALUE - END OF PERIOD . . . . . . . $ 9.18
================
Total return 1. . . . . . . . . . . . . . . . (6.23)%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses*. . . . . . . . . . . . . . . . . 0.85%2
Net investment income* . . . . . . . . . . 4.03%2
Portfolio turnover. . . . . . . . . . . . . . 2%
NET ASSETS - END OF PERIOD (000's omitted). . $ 3,901
================
</TABLE>
* The investment advisor did not impose all or a portion of its management fee
and in some periods paid a ortion 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> <C>
Net investment income . . . . . . . . . . . . . . . . . . . . N/A N/A N/A $0.437 $0.411 $ 0.141
Ratios (to average net assets):
Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . N/A N/A N/A 0.87% 0.94% 2.07%2
Net investment income . . . . . . . . . . . . . . . . . . . . N/A N/A N/A 4.38% 4.41% 2.81%2
1 Represents aggregate total return for the period indicated.
2 Annualized.
</TABLE>
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 "Series") is a no-load diversified series of Exeter
Fund, Inc. (the "Fund"). The Fund 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 Series are offered to investors, employees and clients of Manning
& Napier Advisors, Inc. (the "Advisor") and its affiliates. The total
authorized capital stock of the Fund consists of one billion shares of common
stock each having a par value of $0.01. As of June 30, 1999, 1,550 million
shares have been designated in total among 31 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 Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series 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 Series 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 made annually. An additional distribution may be necessary
to avoid taxation of the Series.
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
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DISTRIBUTION OF INCOME AND GAINS (continued)
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 Series may periodically make
reclassifications among its capital accounts without impacting the Series' 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
Series pays a fee, computed daily and payable monthly, at an annual rate of
0.50% of the Series' average daily net assets. The fee amounted to $27,454 for
the six months ended June 30, 1999.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' organization. The Advisor also provides the Fund with necessary
office space and portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are "affiliated persons" of
the Fund or of the Advisor, and all personnel of the Fund or of the Advisor
performing services relating to research, statistical and investment activities
are paid by the Advisor.
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. For these services, the Series 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 $1,318 for the six months ended June 30, 1999.
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 Series.
The compensation of the non-affiliated Directors totaled $2,755 for the six
months ended June 30, 1999.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1999, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$150,000 and $3,378,883, respectively.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Ohio Tax Exempt Series were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 6/30/99 Ended 12/31/98
------------------- ---------------
Shares Amount Shares Amount
------------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
Sold. . . . 14,549 $ 154,090 406,999 $ 4,339,586
Reinvested. 17,902 187,242 36,480 393,729
Repurchased (339,276) (3,606,585) (148,132) (1,564,746)
------------------- ------------ --------------- ------------
Total . . . (306,825) $(3,265,253) 295,347 $ 3,168,569
=================== ============ =============== ============
</TABLE>
6. FINANCIAL INSTRUMENTS
The Series 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 Series on June 30, 1999.
7. CONCENTRATION OF CREDIT
The Series 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 Series 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>
<PAGE>
EXETER FUND, INC.
DIVERSIFIED TAX EXEMPT SERIES
SEMI-ANNUAL REPORT
JUNE 30, 1999
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
DEAR SHAREHOLDERS:
Looking back to the start of the year, the fortunes of the municipal bond market
appeared quite good. At that time, the consensus forecast for the economy was
that its growth rate would probably moderate from the fourth quarter's frothy
levels. Inflation pressures were non-existent, and with long-term municipal bond
yields on par with U.S. Treasuries, municipal bond demand was expected to be
very robust. Unfortunately the financial markets are in a perpetual state of
flux, and what was expected to be a friendly market environment became decidedly
unfriendly during the second quarter of the year.
Starting with the economic fundamentals, after stumbling during the second and
third quarter of last year, the economy bounced backed nicely during the fourth
quarter. That has carried over into the first two quarters of this year, driven
primarily by consumer spending. A business community that continues to invest in
itself has also helped. There have even been promising signs of growth in the
Pacific Rim region, Russia, and to a lesser extent Latin America. That has
allayed some of the fears surrounding the possible impact of net exports on the
overall rate of domestic economic growth.
As for the inflation environment, what had been a positive six months ago has
now become a negative. Last fall, and into the winter, commodity prices had
fallen so far that in many instances they were below their cost of production.
While that helped pull down the rate of inflation, prices were so low, they had
nowhere to go but up -- especially with the modest improvement in the economies
of some of the emerging markets. The current fear is that rising commodity
prices will translate into higher inflation, and that has negatively impacted
all bond markets.
The relative value of municipal bonds held up quite nicely during the first
quarter of the year when U.S. Treasury yields were moving higher. Demand and
supply in the municipal market was such that it was one of the few fixed income
markets that posted positive total returns during the first quarter.
Unfortunately, that changed during the second quarter as the fundamentals and
the supply-demand situation combined to push municipal bond yields higher.
With the change in the municipal bond market environment, interest rates moved
higher. For example, one-year AAA-rated general obligation bond yields rose from
3.10% to 3.50%, a 40 basis point increase, since the beginning of the year.
Intermediate-term bond yields rose even more with 5-year AAA-rated general
obligation bond yields going from 3.80% to 4.40% (a 60 basis point increase) and
15-year yields going from 4.60% to 5.10% (a 50 basis point increase). Long term
municipal yields rose as well with 30-year AAA-rated general obligation bond
yields beginning the year at 4.90% and finishing the month of June 40 basis
points higher at 5.30%. The net effect of these rate increases was a negative
total return in most sectors of the municipal market. Merrill Lynch's long-term
municipal bond index was down about 1.75% during the first six months of this
year, while their intermediate index was down about 1.00%. Short-term munis
(i.e. those with maturities of 1 to 3 years) posted modestly positive returns of
just over 1.00%.
The Diversified Tax Exempt Series was not immune from the adverse bond market
environment. Our emphasis on high quality and extended duration has been a
winning strategy in recent years, but did not help over the past six months.
Periods of underperformance will happen as the cyclical factors exert their
influence. Investors should always remember that growth, inflation, and
municipal bond yields will never move lower and simply stay there. On the
contrary, there have been, and will continue to be cyclical pressures that push
all three higher and lower. However, the secular factors that drove inflation
lower over the last 15+ years remain in firmly place. As a result, long-term
investment decisions should continue to be based on the expectation of a benign
inflation environment. That means cyclical increases in inflation and the
associated spikes in interest rates may buying opportunities. Conversely,
significant dips in rates will be viewed as opportunities to sell. That is the
long-term investment perspective that has driven, and continues to drive, our
fixed income investment process.
As always, we appreciate the opportunity to serve you.
Sincerely,
EXETER ASSET MANAGEMENT
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
[Graphic]
<Pie Chart>
Data for pie chart to follow:
Portfolio Composition 1 - As of 6/30/99
General Obligation Bonds - 78%
Revenue Bonds - 21%
Pre-Refunded Bonds - 1%
1 As a percentage of municipal serucities.
[Graphic]
<Pie Chart>
Data for pie chart to follow:
Quality Ratings 2 - As of 6/30/99
Aaa - 79%
Aa - 19%
A - 2%
2 Using Moody's Ratings, as a percentage of municipal Securities
2
<PAGE>
PERFORMANCE UPDATE AS OF JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Exeter Fund, Inc.
Diversified Tax Exempt Series
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ----------------------------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year. . . . . . . . . . . $ 10,120 1.20% 1.20%
Five Years. . . . . . . . . . $ 13,217 32.17% 5.73%
Inception 1 . . . . . . . . . $ 12,688 26.88% 4.53%
</TABLE>
<TABLE>
<CAPTION>
Merrill Lynch
Intermediate Municipal Index
Total Return
-------------
Through Growth of $10,000 Average
06/30/99 Investment Cumulative Annual
- ---------------------------- ------------------ ------------- --------
<S> <C> <C> <C>
One Year . . . . . . . . . . $ 10,271 2.71% 2.71%
Five Years . . . . . . . . . $ 13,521 35.21% 6.21%
Inception 1. . . . . . . . . $ 13,050 30.50% 5.07%
</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 (06/30/99) as compared to
the Merrill Lynch Intermediate Municipal Index. 2
[graphic]
<line chart>
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. - Merrill Lynch Intermediate
Date Diversified Tax Exempt Series Municipal Index
<S> <C> <C>
2/14/94. 10,000 10,000
12/31/94 9,461 9,709
12/31/95 11,003 11,009
12/31/96 11,370 11,520
12/31/97 12,270 12,406
12/31/98 12,944 13,183
6/30/99. 12,688 13,050
</TABLE>
1 The Series and Index performance numbers are calculated from February 14,
1994, the Series' inception date. The Series' performance is historical and may
not be indicative of future results.
2 The unmanaged Merrill Lynch Intermediate Municipal Index is a market value
weighted measure of approximately 110 municipal bonds issued across the United
States. The Index is comprised of investment grade securities. Index returns
assume reinvestment of coupons and, unlike Series returns, do not reflect any
fees or expenses.
3
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CREDIT
RATING * PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
MUNICIPAL SECURITIES - 96.41%
<S> <C> <C> <C>
ALABAMA - 1.57%
Bessemer Water Supply, Revenue Bond, 5.20%, 6/01/2024 . . . . . Aaa $ 500,000 $ 480,415
-----------
ALASKA - 1.03%
Anchorage, G.O. Bond, 6.10%, 8/1/2004 . . . . . . . . . . . . . Aaa 300,000 316,059
-----------
ARIZONA - 0.83%
Maricopa County School District No. 097 Deer Valley, G.O.
Bond, Series A, 5.20%, 7/1/2007 . . . . . . . . . . . . . . Aaa 250,000 255,888
-----------
CALIFORNIA - 3.38%
California State, G.O. Bond, 4.75%, 12/1/2028 . . . . . . . . . Aa3 795,000 706,413
Wiseburn School District, G.O. Bond, Series A, 5.25%, 8/1/2016. Aaa 330,000 329,614
-----------
1,036,027
-----------
COLORADO - 0.57%
El Paso County School District No. 020, G.O. Bond, Series A,
6.20%, 12/15/2007 . . . . . . . . . . . . . . . . . . . . . Aaa 160,000 174,861
-----------
FLORIDA - 6.18%
Florida State Board of Education Capital Outlay Public Ed.,
G.O. Bond Series A, 5.00%, 6/1/2027 . . . . . . . . . . . . Aa2 750,000 703,883
Florida State Board of Education Capital Outlay Public Ed.,
G.O. Bond Series C, 5.60%, 6/1/2025 . . . . . . . . . . . . Aaa 135,000 136,380
Florida State Senior Lien - Jacksonville Trans, G.O. Bond,
5.00%, 7/1/2027. . . . . . . . . . . . . . . . . . . . . . Aa2 710,000 666,314
Hillsborough County Capital Improvement Program, Revenue
Bond, 5.125%, 7/1/2022. . . . . . . . . . . . . . . . . . . Aaa 400,000 385,100
-----------
1,891,677
-----------
GEORGIA - 3.24%
Atlanta, G. O. Bond, 5.60%, 12/1/2018 . . . . . . . . . . . . . Aa3 350,000 355,306
Georgia, G.O. Bond, Series B, 5.65%, 3/1/2012 . . . . . . . . . Aaa 200,000 211,498
Rockdale County Water & Sewer Authority, Revenue Bond,
5.00%, 7/1/2022 . . . . . . . . . . . . . . . . . . . . . . Aaa 450,000 427,018
-----------
993,822
-----------
HAWAII - 0.91%
Hawaii, G.O. Bond, Series CH, 6.00%, 11/1/2007. . . . . . . . . A1 260,000 277,527
-----------
IDAHO - 0.34%
Ada & Canyon Counties Joint School District No. 2
Meridian, G.O. Bond, 5.10%, 7/30/2005 . . . . . . . . . . . Aa2 100,000 103,493
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CREDIT
RATING * PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
<S> <C> <C> <C>
ILLINOIS - 5.70%
Aurora, G.O. Bond, 5.80%, 1/1/2012 . . . . . . . . . . . . . . . . . Aaa $ 190,000 $ 201,258
Chicago Schools Financial Authority, G.O. Bond, Series A,
5.00%, 6/1/2007. . . . . . . . . . . . . . . . . . . . . . . . . Aaa 200,000 200,510
Chicago, G.O. Bond, Series A, 5.875%, 1/1/2022 . . . . . . . . . . . Aaa 100,000 105,693
Chicago, G.O. Bond, 5.25%, 1/1/2027. . . . . . . . . . . . . . . . . Aaa 250,000 240,165
Cook County, G.O. Bond, Series A, 5.00%, 11/15/2022. . . . . . . . . Aaa 750,000 700,950
Illinois, Certificate Participation, Series 1995A, 5.60%, 7/1/2010. Aaa 100,000 103,325
Rock Island County School District No. 041-Rock Island,
G.O. Bond, 5.125%, 12/1/2015. . . . . . . . . . . . . . . . . . Aaa 200,000 194,052
-----------
1,745,953
-----------
INDIANA - 0.97%
Bloomington Sewer Works, Revenue Bond, 5.80%, 1/1/2011 . . . . . . . Aaa 150,000 156,459
Lafayette Waterworks, Revenue Bond, 4.90%, 7/1/2006. . . . . . . . . Aaa 140,000 140,505
-----------
296,964
-----------
IOWA - 2.05%
Cedar Rapids, G. O. Bond, 6.45%, 6/1/2014. . . . . . . . . . . . . . Aaa 350,000 372,190
Iowa City Sewer, Revenue Bond, 5.75%, 7/1/2021 . . . . . . . . . . . Aaa 250,000 255,075
-----------
627,265
-----------
KANSAS - 1.58%
Derby, Series A, G.O. Bond, 5.00%, 6/1/2015. . . . . . . . . . . . . Aaa 275,000 268,210
Johnson County Unified School District No. 229, G.O. Bond,
Series A, 5.00%, 10/1/2014 . . . . . . . . . . . . . . . . . . . Aa1 220,000 216,069
-----------
484,279
-----------
KENTUCKY - 1.88%
Jefferson County School District Finance Corp. School
Building, Revenue Bond, Series A, 5.00%, 2/1/2011. . . . . . . . Aaa 300,000 297,903
Kentucky State Turnpike Authority Revitalization Projects,
Revenue Bond, 6.50%, 7/1/2008. . . . . . . . . . . . . . . . . . Aaa 250,000 279,030
-----------
576,933
-----------
LOUISIANA - 0.98%
New Orleans Sewer Service, Revenue Bond, 5.25%, 6/1/2012 . . . . . . Aaa 300,000 300,216
-----------
MAINE - 3.30%
Hermon, G.O. Bond, 5.60%, 11/1/2013. . . . . . . . . . . . . . . . . Aaa 75,000 76,916
Kennebec Water District, Revenue Bond, 5.125%, 12/1/2021 . . . . . . Aaa 750,000 717,705
Portland, G.O. Bond, 6.20%, 4/1/2006 . . . . . . . . . . . . . . . . Aa1 200,000 217,534
-----------
1,012,155
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CREDIT
RATING * PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
<S> <C> <C> <C>
MARYLAND - 2.17%
Baltimore Water Project, Revenue Bond, Series A,
5.55%, 7/1/2009. . . . . . . . . . . . . . . . . . . . Aaa $ 260,000 $ 270,982
Prince Georges County Public Improvement, G.O. Bond,
5.00%, 3/15/2014 . . . . . . . . . . . . . . . . . . . Aaa 200,000 196,714
Washington County Public Improvement, G.O. Bond,
4.875%, 1/1/2010 . . . . . . . . . . . . . . . . . . . Aaa 200,000 198,460
-----------
666,156
-----------
MASSACHUSETTS - 4.81%
Martha's Vineyard Regional High School District No. 100,
G.O. Bond, 6.70%, 12/15/2014 . . . . . . . . . . . . . Aaa 200,000 221,160
Massachusetts Bay Transit Authority, G.O. Bond, Series B,
5.25%, 3/1/2026. . . . . . . . . . . . . . . . . . . . Aaa 500,000 483,260
Massachusetts Municipal Electric Supply System, Revenue
Bond, Series A, 5.00%, 7/1/2017. . . . . . . . . . . . Aaa 200,000 189,100
Massachusetts State, G.O. Bond, Series C, 5.75%, 8/1/2010. Aaa 400,000 425,276
Massachusetts Water Resource Authority General Ref.,
Revenue Bond, Series B, 5.25%, 3/1/2013. . . . . . . . Aaa 155,000 153,943
-----------
1,472,739
-----------
MICHIGAN - 3.62%
Comstock Park Public Schools, G.O. Bond, 5.50%, 5/1/2011 . Aaa 150,000 154,025
Hudsonville Public Schools, G.O. Bond, 5.15%, 5/01/2027. . Aaa 225,000 213,827
Lincoln Park School District, G.O. Bond, 5.00%, 5/1/2026 . Aaa 480,000 448,411
Pinckney Community Schools, G.O. Bond, 5.00%, 5/1/2014 . . Aaa 200,000 194,476
St. Joseph County Sewer Disposal Systems - Constantine,
G.O. Bond, 5.00%, 4/1/2012 . . . . . . . . . . . . . . Aaa 100,000 99,341
-----------
1,110,080
-----------
MINNESOTA - 2.29%
Minneapolis, G.O. Bond, Series B, 5.20%, 3/1/2013 . . . . Aaa 300,000 300,918
Minnesota Various Purpose, G.O. Bond, 6.60%, 8/1/1999. . . Aaa 200,000 200,546
Western Minnesota Municipal Power Agency, Revenue
Bond, 6.625%, 1/1/2016 . . . . . . . . . . . . . . . . Aaa 175,000 199,229
-----------
700,693
-----------
MISSISSIPPI - 0.71%
Mississippi, G.O. Bond, 6.30%, 12/1/2006 . . . . . . . . . Aa3 200,000 216,934
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CREDIT
RATING * PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
<S> <C> <C> <C>
MISSOURI - 0.83%
Missouri State Ref.- Third Street Building, G.O. Bond,
Series A, 5.125%, 8/1/2009. . . . . . . . . . . . . . . . Aaa $ 250,000 $ 254,013
-----------
MONTANA - 0.65%
Montana Long Range Building Project, G.O. Bond, Series A,
4.875%, 8/1/2010. . . . . . . . . . . . . . . . . . . . . Aa3 200,000 199,398
-----------
NEBRASKA - 1.75%
Douglas County School District No. 17, G.O. Bond, 5.00%,
10/1/2012 . . . . . . . . . . . . . . . . . . . . . . . . Aaa 545,000 535,637
-----------
NEVADA - 4.34%
Clark County School District, G.O. Bond,
6.00%, 6/15/2002. . . . . . . . . . . . . . . . . . . . . Aaa 100,000 104,616
Henderson Water, G.O. Bond, Series A, 5.65%,
12/1/2003 . . . . . . . . . . . . . . . . . . . . . . . . Aaa 300,000 314,358
Nevada State Project No. 42, G.O. Bond, 5.70%, 9/1/2008. . . Aa2 200,000 212,250
Nevada State Project Nos. 66 & 67, G.O. Bond
Series A, 5.00%, 5/15/2028. . . . . . . . . . . . . . . . Aaa 750,000 699,075
-----------
1,330,299
-----------
NEW HAMPSHIRE - 0.72%
New Hampshire, G.O. Bond, 6.60%, 9/1/2014 . . . . . . . . . . Aa2 200,000 220,656
-----------
NEW JERSEY - 2.42%
Jersey City Water, G.O. Bond, 5.50%, 3/15/2011. . . . . . . . Aaa 225,000 231,806
North Hudson Sewer Authority, Revenue Bond, 5.25%, 8/1/2016. Aaa 250,000 249,988
West Windsor Plainsboro, G.O. Bond, 5.25%, 12/1/2004. . . . . Aaa 250,000 259,892
-----------
741,686
-----------
NEW YORK - 3.93%
Monroe County Community School Corporation First
Meeting, Revenue Bond, 5.25%, 7/1/2016. . . . . . . . . . Aaa 125,000 122,386
New York State Thruway Authority, Revenue Bond,
Series A, 5.50%, 1/1/2023 . . . . . . . . . . . . . . . . Aaa 200,000 206,356
Sands Point, G.O. Bond, 6.70%, 11/15/2013 . . . . . . . . . . Aa2 350,000 387,632
Spencerport Central School District, G.O. Bond, 5.00%,
11/15/2012. . . . . . . . . . . . . . . . . . . . . . . . Aaa 350,000 347,284
Westchester County, G.O. Bond, 4.75%, 11/15/2016. . . . . . . Aaa 150,000 140,861
-----------
1,204,519
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CREDIT
RATING * PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
<S> <C> <C> <C>
NORTH CAROLINA - 1.38%
North Carolina State Prison Facilities, G.O. Bond, 4.80%,
3/1/2009 . . . . . . . . . . . . . . . . . . . . . . . . . Aaa $ 200,000 $ 199,528
Raleigh North Carolina, G.O. Bond, 4.40%, 6/1/2017 . . . . . . Aaa 250,000 221,935
-----------
421,463
-----------
OHIO - 3.70%
Cleveland Water & Sewer, G.O. Bond, 5.35%, 9/1/2023 . . . . . Aaa 450,000 446,949
Oak Hills Local School District, G.O. Bond, 5.125%, 12/1/2025. Aaa 490,000 469,802
Summit County Various Purpose, G.O. Bond, 6.625%, 12/1/2012. . Aaa 200,000 215,522
-----------
1,132,273
-----------
OKLAHOMA - 2.35%
Oklahoma State Turnpike Authority, Revenue Bond,
Series A, 5.00%, 1/1/2023 . . . . . . . . . . . . . . . . . Aaa 750,000 719,962
-----------
OREGON - 0.86%
Salem Pedestrian Safety Impts., G.O. Bond, 5.50%, 5/1/2010 . . Aaa 255,000 262,436
-----------
PENNSYLVANIA - 5.02%
Beaver County, G.O. Bond, 5.15%, 10/01/2017. . . . . . . . . . Aaa 300,000 292,425
Cambria County, G.O. Bond, Series A, 6.10%, 8/15/2016 . . . . Aaa 350,000 378,532
Philadelphia Water & Waste, Revenue Bond, 5.60%, 8/1/2018. . . Aaa 150,000 151,603
Pittsburgh Water & Sewer Authority, G.O. Bond, Series C,
5.125%, 9/1/2023 . . . . . . . . . . . . . . . . . . . . Aaa 750,000 714,030
-----------
1,536,590
-----------
RHODE ISLAND - 1.05%
Rhode Island State Pre-refunded Balance, G.O. Bond,
Series A, 6.20%, 6/15/2004 . . . . . . . . . . . . . . . . Aaa 115,000 123,301
Rhode Island State Unrefunded Balance, G.O. Bond,
Series A, 6.20%, 6/15/2004 . . . . . . . . . . . . . . . . Aaa 185,000 197,082
-----------
320,383
-----------
SOUTH CAROLINA - 1.20%
South Carolina State Highway, G.O. Bond, Series B,
5.625%, 7/1/2010 . . . . . . . . . . . . . . . . . . . . . Aaa 350,000 368,553
-----------
SOUTH DAKOTA - 1.93%
Rapid City Area School District, G.O. Bond, 4.75%, 1/1/2018. . Aaa 650,000 592,436
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CREDIT
RATING * PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- ------------
<S> <C> <C> <C>
TENNESSEE - 1.63%
Johnson City School Sales Tax, G.O. Bond, 6.70%, 5/1/2021 . . Aaa $ 350,000 $ 391,797
Lawrence County, G.O. Bond, 6.60%, 3/1/2013 . . . . . . . . . Aaa 100,000 106,760
------------
498,557
------------
TEXAS - 3.70%
Brazoria County, G.O. Bond, 4.75%, 9/1/2011. . . . . . . . . Aaa 445,000 427,080
Dallas Waterworks & Sewer, Revenue Bond, 5.625%, 4/1/2009 . . Aa2 200,000 207,992
North Texas Municipal Water District, Revenue Bond,
5.00%, 6/1/2012 . . . . . . . . . . . . . . . . . . . . . Aaa 150,000 146,096
Southlake Waterwork & Sewer System, G.O. Bond, 5.30%,
2/15/2011 . . . . . . . . . . . . . . . . . . . . . . . . Aaa 350,000 353,167
------------
1,134,335
------------
UTAH - 2.42%
Alpine School District, G.O. Bond, 5.375%, 3/15/2009. . . . . Aaa 250,000 255,900
Nebo School District, G.O. Bond, 6.00%, 6/15/2018 . . . . . . Aaa 450,000 485,474
------------
741,374
------------
VIRGINIA - 1.29%
Franklin County Capital Improvement , G.O. Bond, 6.60%,
7/15/2013 . . . . . . . . . . . . . . . . . . . . . . . . Aaa 250,000 265,490
Spotsylvania County Water & Sewer Systems, Revenue
Bond, 5.25%, 6/1/2016 . . . . . . . . . . . . . . . . . . Aaa 130,000 128,844
------------
394,334
------------
WASHINGTON - 3.58%
Kitsap County School District, G.O. Bond, 6.625%, 12/1/2008. A1 350,000 378,283
Seattle, G.O. Bond, Series A, 5.75%, 1/15/2020. . . . . . . . Aa1 230,000 234,634
Seattle Met. Municipality, G.O. Bond, 5.65%, 1/1/2020 . . . . Aa3 100,000 101,034
Washington State, G.O. Bond, Series A, 5.00%, 1/1/2023. . . . Aa1 410,000 381,607
------------
1,095,558
------------
WISCONSIN - 3.55%
East Troy School District, G.O. Bond, Series A, 4.625%,
10/1/2011 . . . . . . . . . . . . . . . . . . . . . . . . Aaa 400,000 377,932
Merrill Public School District, G.O. Bond, 5.30%, 4/1/2013. . Aaa 400,000 400,216
Wisconsin State, G.O. Bond, Series A, 5.75%, 5/1/2001 . . . . Aa2 300,000 308,688
------------
1,086,836
------------
TOTAL MUNICIPAL SECURITIES
(Identified Cost $29,426,169) 29,531,434
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
INVESTMENT PORTFOLIO - JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
------- ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS - 2.08%
Dreyfus Municipal Reserves
(Identified Cost $636,518) . . . . 636,518 $ 636,518
------------
TOTAL INVESTMENTS - 98.49%
(Identified Cost $30,062,687) 30,167,952
OTHER ASSETS, LESS LIABILITIES - 1.51% 462,307
------------
NET ASSETS - 100% $30,630,259
============
</TABLE>
Key -
G.O. Bond - General Obligation Bond
Met. - Metropolitan
Impt. - Improvement
Ed. - Education
Ref. - Referendum
*Credit Ratings from Moody's (unaudited)
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At June 30, 1999, the net unrealized appreciation based on identified cost for
federal income tax purposes of $30,062,687 was as follows:
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 703,954
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . (598,689)
----------
UNREALIZED APPRECIATION - NET . . . . . . . . . . . . . . . . . . . . . . . . . $ 105,265
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, 1999
<S> <C>
ASSETS:
Investments, at value (identified cost $30,062,687)(Note 2) $30,167,952
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,396
Interest receivable . . . . . . . . . . . . . . . . . . . . 438,588
-----------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . 30,670,936
-----------
LIABILITIES:
Accrued management fee (Note 3) . . . . . . . . . . . . . . 12,543
Accrued Directors' fees (Note 3). . . . . . . . . . . . . . 4,366
Transfer agent fees payable (Note 3). . . . . . . . . . . . 602
Audit fee payable . . . . . . . . . . . . . . . . . . . . . 15,021
Other payables and accrued expenses . . . . . . . . . . . . 8,145
-----------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . 40,677
-----------
NET ASSETS FOR 2,963,957 SHARES
OUTSTANDING. . . . . . . . . . . . . . . . . . . . . . . $30,630,259
===========
NET ASSETS CONSIST OF:
Capital stock . . . . . . . . . . . . . . . . . . . . . . . $ 29,640
Additional paid-in-capital. . . . . . . . . . . . . . . . . 30,223,359
Undistributed net investment income . . . . . . . . . . . . 231,984
Accumulated net realized gain on investments. . . . . . . . 40,011
Net unrealized appreciation on investments. . . . . . . . . 105,265
-----------
TOTAL NET ASSETS. . . . . . . . . . . . . . . . . . . . . . $30,630,259
===========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($30,630,259/2,963,957 shares). . . . . . . . . . . . . $ 10.33
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1999
INVESTMENT INCOME:
<S> <C>
Interest . . . . . . . . . . . . . . . . . . . . . . . . $ 816,566
------------
EXPENSES:
Management fee (Note 3). . . . . . . . . . . . . . . . . 80,603
Directors' fees (Note 3) . . . . . . . . . . . . . . . . 2,755
Transfer agent fees (Note 3) . . . . . . . . . . . . . . 3,869
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . 6,744
Registration and filing fees . . . . . . . . . . . . . . 6,558
Custodian fee. . . . . . . . . . . . . . . . . . . . . . 2,844
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 4,180
------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . 107,553
------------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . 709,013
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on investments (identified cost basis) 39,972
Net change in unrealized appreciation on investments . . (1,322,797)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . (1,282,825)
------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $ (573,812)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED 6/30/99 FOR THE YEAR
(UNAUDITED) ENDED 12/31/98
-------------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 709,013 $ 1,139,715
Net realized gain on investments. . . . . . . . . . . . . . . . . . . . . 39,972 35,973
Net unrealized appreciation (depreciation) on investments . . . . . . . . (1,322,797) 251,930
-------------------- ----------------
Net increase (decrease) from operations . . . . . . . . . . . . . . . . . (573,812) 1,427,618
-------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income. . . . . . . . . . . . . . . . . . . . . . . . (572,463) (1,089,090)
From net realized gain on investments . . . . . . . . . . . . . . . . . . -- (27,563)
-------------------- ----------------
Total distributions to shareholders . . . . . . . . . . . . . . . . . . . (572,463) (1,116,653)
-------------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital share transactions (Note 5). . . . . (2,793,473) 10,607,836
-------------------- ----------------
Net increase (decrease) in net assets . . . . . . . . . . . . . . . . . . (3,939,748) 10,918,801
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,570,007 23,651,206
-------------------- ----------------
END OF PERIOD including undistributed net investment
income of $231,984 and $95,434, respectively). . . . . . . . . . . . . $ 30,630,259 $ 34,570,007
==================== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS
ENDED
6/30/99 FOR THE YEARS ENDED
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95
------------- ---------- --------------------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD . . . $ 10.73 $ 10.59 $ 10.23 $ 10.32 $ 9.26
------------- ---------- --------------------- ---------- ----------
Income from investment operations:
Net investment income . . . . . . . . . . 0.238 0.435 0.434 0.434 0.428
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . (0.448) 0.139 0.361 (0.104) 1.062
------------- ---------- --------------------- ---------- ----------
Total from investment operations . . . . . . (0.210) 0.574 0.795 0.330 1.490
------------- ---------- --------------------- ---------- ----------
Less distributions to shareholders:
From net investment income. . . . . . . . (0.190) (0.425) (0.435) (0.420) (0.430)
From net realized gain on investments . . -- (0.009) -- -- --
------------- ---------- --------------------- ---------- ----------
Total distributions to shareholders. . . . . (0.190) (0.434) (0.435) (0.420) (0.430)
------------- ---------- --------------------- ---------- ----------
NET ASSET VALUE - END OF PERIOD. . . . . . . $ 10.33 $ 10.73 $ 10.59 $ 10.23 $ 10.32
============= ========== ===================== ========== ==========
Total return1. . . . . . . . . . . . . . . . (1.98)% 5.49% 7.92 % 3.33% 16.29%
Ratios of expenses (to average net assets)/
Supplemental Data:
Expenses . . . . . . . . . . . . . . . . 0.67 %2 0.69% 0.69% 0.70% 0.79%
Net investment income. . . . . . . . . . 4.40%2 4.19% 4.41% 4.44% 4.52%
Portfolio turnover . . . . . . . . . . . . . 0% 5% 1% 2% 5%
NET ASSETS-END OF PERIOD (000'S OMITTED) . . $ 30,630 $ 34,570 $ 23,651 $ 16,949 $ 12,452
============= ========== ===================== ========== ==========
FOR THE PERIOD
2/14/94
(COMMENCEMENT
OF OPERATIONS)
TO 12/31/94
----------------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
<S> <C>
NET ASSET VALUE - BEGINNING OF PERIOD . . . $ 10.00
----------------
Income from investment operations:
Net investment income . . . . . . . . . . 0.210
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . (0.749)
----------------
Total from investment operations . . . . . . (0.539)
----------------
Less distributions to shareholders:
From net investment income. . . . . . . . (0.201)
From net realized gain on investments . . --
----------------
Total distributions to shareholders. . . . (0.201)
----------------
NET ASSET VALUE - END OF PERIOD. . . . . . . $ 9.26
================
Total return1. . . . . . . . . . . . . . . . (5.39)%
Ratios of expenses (to average net assets)/
Supplemental Data:
Expenses . . . . . . . . . . . . . . . . 0.85%2,3
Net investment income. . . . . . . . . . 3.71%2,3
Portfolio turnover . . . . . . . . . . . . . 4%
NET ASSETS-END OF PERIOD (000'S OMITTED) . . $ 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 "Series") is a no-load diversified series of
Exeter Fund, Inc. (the "Fund"). The Fund 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 Series 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 Fund consists of one billion shares of
common stock each having a par value of $0.01. As of June 30, 1999, 1,550
million shares have been designated in total among 31 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 Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series 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 Series 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 made annually. An additional distribution may be necessary
to avoid taxation of the Series.
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
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DISTRIBUTION OF INCOME AND GAINS (continued)
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 Series may
periodically make reclassifications among its capital accounts without impacting
the Series' 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
Series pays a fee, computed daily and payable monthly, at an annual rate of
0.50% of the Series' average daily net assets. The fee amounted to $80,603 for
the six months ended June 30, 1999.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' organization. The Advisor also provides the Fund with necessary
office space and portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are "affiliated persons" of
the Fund or of the Advisor, and all personnel of the Fund or of the Advisor
performing services relating to research, statistical and investment activities
are paid by the Advisor.
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. For these services, the Series pays a fee which is
calculated as a percentage of the average daily net assets at an annual rate of
0.024%; this fee amounted to $3,869 for the six months ended June 30, 1999.
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 Series.
The compensation of the non-affiliated Directors totaled $2,755 for the six
months ended June 30, 1999.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1999, purchases and sales of securities, other
than United States Government securities and short-term securities, were $0 and
$2,502,479, respectively.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Diversified Tax Exempt Series were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 6/30/99 Ended 12/31/98
------------------- ---------------
Shares Amount Shares Amount
------------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
Sold. . . . 229,259 $ 2,437,335 1,391,383 $14,935,106
Reinvested. 52,425 551,429 101,391 1,085,235
Repurchased (539,717) (5,782,237) (504,283) (5,412,505)
------------------- ------------ --------------- ------------
Total . . . (258,033) $(2,793,473) 988,491 $10,607,836
=================== ============ =============== ============
</TABLE>
6. FINANCIAL INSTRUMENTS
The Series 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 Series on June 30, 1999.
17
<PAGE>
<PAGE>
[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-31-1999
[PERIOD-START] JAN-01-1999
[PERIOD-END] JUN-3O-1999
[PERIOD-TYPE] 6-MONTH
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 185625075
[INVESTMENTS-AT-VALUE] 213510897
[RECEIVABLES] 6811821
[ASSETS-OTHER] 1054369
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 221377087
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 798134
[TOTAL-LIABILITIES] 798134
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 157678330
[SHARES-COMMON-STOCK] 19123829
[SHARES-COMMON-PRIOR] 25249242
[ACCUMULATED-NII-CURRENT] 3981811
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 31076377
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 27842435
[NET-ASSETS] 220578953
[DIVIDEND-INCOME] 4242849
[INTEREST-INCOME] 278260
[OTHER-INCOME] 0
[EXPENSES-NET] 1202884
[NET-INVESTMENT-INCOME] 3318225
[REALIZED-GAINS-CURRENT] 34576811
[APPREC-INCREASE-CURRENT] 28316283
[NET-CHANGE-FROM-OPS] 66211319
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 388297
[NUMBER-OF-SHARES-REDEEMED] 6513710
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 4800485
[ACCUMULATED-NII-PRIOR] 663586
[ACCUMULATED-GAINS-PRIOR] (3500434)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1073443
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1202884
[AVERAGE-NET-ASSETS] 214453863
[PER-SHARE-NAV-BEGIN] 8.55
[PER-SHARE-NII] 0.182
[PER-SHARE-GAIN-APPREC] 2.798
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.53
[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] SMALL CAP SERIES
[NUMBER] 1
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-START] JAN-01-1999
[PERIOD-END] JUN-30-1999
[PERIOD-TYPE] 6-MONTH
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 99773520
[INVESTMENTS-AT-VALUE] 92659890
[RECEIVABLES] 365344
[ASSETS-OTHER] 250013
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 93275247
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 407145
[TOTAL-LIABILITIES] 407145
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 106712066
[SHARES-COMMON-STOCK] 9170591
[SHARES-COMMON-PRIOR] 10337315
[ACCUMULATED-NII-CURRENT] 1170097
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (7896102)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (7117959)
[NET-ASSETS] 92868102
[DIVIDEND-INCOME] 713909
[INTEREST-INCOME] 441770
[OTHER-INCOME] 0
[EXPENSES-NET] 510747
[NET-INVESTMENT-INCOME] 644932
[REALIZED-GAINS-CURRENT] (6415214)
[APPREC-INCREASE-CURRENT] 10282995
[NET-CHANGE-FROM-OPS] 4512713
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 8395845
[NUMBER-OF-SHARES-REDEEMED] 1562569
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] (6798070)
[ACCUMULATED-NII-PRIOR] 525165
[ACCUMULATED-GAINS-PRIOR] (1480888)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 467127
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 510747
[AVERAGE-NET-ASSETS] 94319765
[PER-SHARE-NAV-BEGIN] 9.64
[PER-SHARE-NII] 0.077
[PER-SHARE-GAIN-APPREC] 0.413
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.13
[EXPENSE-RATIO] 1.09
[AVG-DEBT-OUTSTANDING] 0
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[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-31-1999
[PERIOD-START] JAN-01-1999
[PERIOD-END] JUN-30-1999
[PERIOD-TYPE] 6-MONTH
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 8891672
[INVESTMENTS-AT-VALUE] 9060372
[RECEIVABLES] 66810
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 9127182
[PAYABLE-FOR-SECURITIES] 150135
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 25632
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[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 8667766
[SHARES-COMMON-STOCK] 872245
[SHARES-COMMON-PRIOR] 1179070
[ACCUMULATED-NII-CURRENT] 60312
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[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 168700
[NET-ASSETS] 8951415
[DIVIDEND-INCOME] 0
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[EXPENSES-NET] 43009
[NET-INVESTMENT-INCOME] 236011
[REALIZED-GAINS-CURRENT] 54990
[APPREC-INCREASE-CURRENT] (452034)
[NET-CHANGE-FROM-OPS] (161033)
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[DISTRIBUTIONS-OF-INCOME] 191585
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[NUMBER-OF-SHARES-SOLD] 14549
[NUMBER-OF-SHARES-REDEEMED] 339276
[SHARES-REINVESTED] 17902
[NET-CHANGE-IN-ASSETS] (3617871)
[ACCUMULATED-NII-PRIOR] 15886
[ACCUMULATED-GAINS-PRIOR] (353)
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[GROSS-ADVISORY-FEES] 27454
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[GROSS-EXPENSE] 43009
[AVERAGE-NET-ASSETS] 11154337
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[EXPENSE-RATIO] 0.78
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[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-31-1999
[PERIOD-START] JAN-01-1999
[PERIOD-END] JUN-30-1999
[PERIOD-TYPE] 6-MONTH
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 52658958
[INVESTMENTS-AT-VALUE] 52890848
[RECEIVABLES] 748254
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 53639102
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 41738
[TOTAL-LIABILITIES] 41738
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 52958057
[SHARES-COMMON-STOCK] 5292079
[SHARES-COMMON-PRIOR] 5780577
[ACCUMULATED-NII-CURRENT] 365393
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 42024
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 231890
[NET-ASSETS] 53597364
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 1417211
[OTHER-INCOME] 0
[EXPENSES-NET] 171107
[NET-INVESTMENT-INCOME] 1246104
[REALIZED-GAINS-CURRENT] 61874
[APPREC-INCREASE-CURRENT] (2316277)
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[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1020481
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[NUMBER-OF-SHARES-SOLD] 114814
[NUMBER-OF-SHARES-REDEEMED] 698880
[SHARES-REINVESTED] 95568
[NET-CHANGE-IN-ASSETS] (7175070)
[ACCUMULATED-NII-PRIOR] 139770
[ACCUMULATED-GAINS-PRIOR] (19850)
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[GROSS-ADVISORY-FEES] 143011
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[GROSS-EXPENSE] 171107
[AVERAGE-NET-ASSETS] 57671826
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[RETURNS-OF-CAPITAL] 0
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[EXPENSE-RATIO] 0.60
[AVG-DEBT-OUTSTANDING] 0
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[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] INTERNATIONAL SERIES
[NUMBER] 7
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-START] JAN-01-1999
[PERIOD-END] JUN-30-1999
[PERIOD-TYPE] 6-MONTH
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 97515232
[INVESTMENTS-AT-VALUE] 182081556
[RECEIVABLES] 874520
[ASSETS-OTHER] 1676655
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 184632731
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 772138
[TOTAL-LIABILITIES] 772138
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 81748045
[SHARES-COMMON-STOCK] 11060829
[SHARES-COMMON-PRIOR] 12794862
[ACCUMULATED-NII-CURRENT] 929542
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 16667545
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 84515461
[NET-ASSETS] 183860593
[DIVIDEND-INCOME] 2143828
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[OTHER-INCOME] 0
[EXPENSES-NET] 1036007
[NET-INVESTMENT-INCOME] 1273054
[REALIZED-GAINS-CURRENT] 15867611
[APPREC-INCREASE-CURRENT] (5118137)
[NET-CHANGE-FROM-OPS] 12022528
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
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[NUMBER-OF-SHARES-SOLD] 162487
[NUMBER-OF-SHARES-REDEEMED] 1896520
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] (15398231)
[ACCUMULATED-NII-PRIOR] (343512)
[ACCUMULATED-GAINS-PRIOR] 799934
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 932746
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1036007
[AVERAGE-NET-ASSETS] 187798824
[PER-SHARE-NAV-BEGIN] 15.57
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[EXPENSE-RATIO] 1.11
[AVG-DEBT-OUTSTANDING] 0
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[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-31-1999
[PERIOD-START] JAN-01-1999
[PERIOD-END] JUN-30-1999
[PERIOD-TYPE] 6-MONTH
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 103574976
[INVESTMENTS-AT-VALUE] 98156997
[RECEIVABLES] 1340238
[ASSETS-OTHER] 3150138
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 102647373
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 726395
[TOTAL-LIABILITIES] 726395
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 103955185
[SHARES-COMMON-STOCK] 10400513
[SHARES-COMMON-PRIOR] 12303383
[ACCUMULATED-NII-CURRENT] 3149150
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 281340
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (5464697)
[NET-ASSETS] 101920978
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 3643052
[OTHER-INCOME] 0
[EXPENSES-NET] 607394
[NET-INVESTMENT-INCOME] 3035658
[REALIZED-GAINS-CURRENT] 711414
[APPREC-INCREASE-CURRENT] (2044589)
[NET-CHANGE-FROM-OPS] 1702483
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 266615
[NUMBER-OF-SHARES-REDEEMED] 2169485
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] (16871739)
[ACCUMULATED-NII-PRIOR] 113492
[ACCUMULATED-GAINS-PRIOR] (4300704)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 549333
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 607394
[AVERAGE-NET-ASSETS] 110517131
[PER-SHARE-NAV-BEGIN] 9.66
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[PER-SHARE-GAIN-APPREC] (0.154)
[PER-SHARE-DIVIDEND] 0
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[RETURNS-OF-CAPITAL] 0
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[EXPENSE-RATIO] 1.11
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[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-31-1999
[PERIOD-START] JAN-01-1999
[PERIOD-END] JUN-30-1999
[PERIOD-TYPE] 6-MONTH
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 30062687
[INVESTMENTS-AT-VALUE] 30167952
[RECEIVABLES] 435588
[ASSETS-OTHER] 64396
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 30670936
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 40677
[TOTAL-LIABILITIES] 40677
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 30252999
[SHARES-COMMON-STOCK] 2963957
[SHARES-COMMON-PRIOR] 3221990
[ACCUMULATED-NII-CURRENT] 231984
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 40011
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 105265
[NET-ASSETS] 30630259
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 816566
[OTHER-INCOME] 0
[EXPENSES-NET] 107553
[NET-INVESTMENT-INCOME] 709013
[REALIZED-GAINS-CURRENT] 39972
[APPREC-INCREASE-CURRENT] (1322797)
[NET-CHANGE-FROM-OPS] (573812)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 572463
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[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 229259
[NUMBER-OF-SHARES-REDEEMED] 539717
[SHARES-REINVESTED] 52425
[NET-CHANGE-IN-ASSETS] (3939748)
[ACCUMULATED-NII-PRIOR] 95434
[ACCUMULATED-GAINS-PRIOR] 39
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[GROSS-ADVISORY-FEES] 80603
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[AVG-DEBT-PER-SHARE] 0
