August 28, 2000
To Shareholders of the following Series of the Exeter Fund:
Small Cap Series
International Series
World Opportunities Series
Global Fixed Income Series
Life Sciences 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, 2000. 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.
Semi-Annual Report
June 30, 2000
Small Cap Series
<PAGE>
<PAGE>
Management Discussion and Analysis (unaudited)
DEAR SHAREHOLDERS:
For the first half of 2000, the Small Cap Series performed well relative to both
the S&P 500, a widely-used index of large company stocks, and the Russell 2000,
a popular small company index.
The S&P 500 Index actually came in with a slightly negative return for the first
six months of the year. The stock market has been extremely volatile,
especially the technology sector, which has been the focus of much speculative
investment based on its stellar returns last year. We have been saying that
those returns were not reasonable based on the fundamental value of the
underlying companies, and it appears that other investors may be reaching that
conclusion as well.
The Small Cap Series' modest exposure to the technology sector held it back last
year when those returns were moving through the roof. This year, however, the
Series was insulated from the steep declines in technology stocks during the
second quarter due to its limited investments in the sector. The Series'
holdings in technology and biotechnology stocks fell back during the second
quarter, although they remain up significantly for the year as a whole. The
Series is significantly underweighted in technology because many stocks in the
sector do not meet our value-oriented investment discipline.
The Series didn't benefit just from what it doesn't own; several sectors helped
drive the returns of the first quarter higher than the benchmarks. One such
sector is the defense industry, in which we increased the Series' holdings
earlier this year. Defense spending has been trending down over the past few
years, but military operational requirements as well as political sentiment
suggest that we will see significant growth in defense spending over the next
few years. We purchased several stocks to position the Series to benefit from
this expected trend, and they have performed well through June 30.
Another sector that contributed to the Series' returns was energy services, a
sector in which we have been invested since last year. Oil prices have
continued to rise, and higher oil prices (i.e., above $20 per barrel) encourage
exploration and drilling, and mean more business for energy services companies.
We expect demand in the energy services industry to remain high as long as oil
prices remain high. As of the end of the quarter, crude oil was over $32 per
barrel.
The Series has also benefited from a number of acquisitions of companies held in
the portfolio. Several acquisitions have been completed, and several more are
underway. We see these acquisitions as recognition by the marketplace of the
low valuations and attractive businesses of the target companies, and the
acquisitions have led to nice gains for the Series.
Small cap stocks have bounced recently compared to blue chips, but they remain
fundamentally undervalued relative to large caps. For this reason, we believe
that they continue to provide growth potential as part of a diversified
portfolio.
We appreciate your business, and we hope that you and your families continue to
prosper as we move through the year.
Sincerely,
EXETER ASSET MANAGEMENT
1
<PAGE>
Management Discussion and Analysis (unaudited)
[graphic]
[pie chart]
Portfolio Composition* - As of 6/30/00
Commercial Services - 3.97%
Consumer Durables - 6.30%
Consumer Non-Durables - 2.27%
Consumer Services - 7.38%
Electronic Technology - 8.25%
Energy Minerals - 7.75%
Finance - 2.61%
Health Services - 1.07%
Health Technology - 12.14%
Industrial Services - 9.80%
Non-Energy Minerals - 3.52%
Process Industries - 12.11%
Producer Manufacturing - 5.93%
Retail Trade - 5.40%
Technology Services - 1.83%
Transportation - 0.83%
Utilities - 3.10%
Cash, short-term investments, and other assets, less liabilities - 5.74%
* As a percentage of net assets.
2
<PAGE>
Performance Update as of June 30, 2000 (unaudited)
Exeter Fund, Inc.
Small Cap Series
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $11,647 16.47% 16.47%
Five Year $13,113 31.13% 5.56%
Inception 1 $21,546 115.46% 9.84%
S&P 500 Total Return Index
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $10,724 7.24% 7.24%
Five Year $29,074 190.74% 23.78%
Inception 1 $41,779 317.79% 19.11%
Russell 2000 Index
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $11,434 14.34% 14.34%
Five Year $19,485 94.85% 14.27%
Inception 1 $29,710 197.10% 14.26%
The value of a $10,000 investment in the Exeter Fund, Inc. - Small Cap Series
from its current activation (4/30/92) to present (6/30/00) as compared to the
Standard & Poor's (S&P) 500 Total Return and the Russell 2000 Index. 2
[graphic]
[line chart]
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. S&P 500 Total
Date Small Cap Series Return Index Russell 2000 Index
<S> <C> <C> <C>
04/30/1992 10,000 10,000 10,000
12/31/1992 11,610 10,725 11,415
12/31/1993 13,317 11,799 13,574
12/31/1994 14,383 11,959 13,327
12/31/1995 16,497 16,437 17,117
12/31/1996 18,156 20,206 19,940
12/31/1997 20,388 26,944 24,399
12/31/1998 17,603 34,666 23,778
12/31/1999 19,341 41,958 28,833
06/30/2000 21,546 41,779 29,710
</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 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, 2000 (unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
--------- -----------
COMMON STOCK - 94.26%
<S> <C> <C>
COMMERCIAL SERVICES - 3.97%
ADVO, Inc.*. . . . . . . . . . . . . . . . . . . . 10,900 $ 457,800
Angelica Corp. . . . . . . . . . . . . . . . . . . 11,300 90,400
Bell & Howell Co.* . . . . . . . . . . . . . . . . 102,200 2,478,350
Ennis Business Forms, Inc. . . . . . . . . . . . . 13,000 104,000
Franklin Covey Co.*. . . . . . . . . . . . . . . . 18,900 131,119
Interim Services, Inc.*. . . . . . . . . . . . . . 9,200 163,300
The Standard Register Co.. . . . . . . . . . . . . 3,900 55,575
Value Line, Inc. . . . . . . . . . . . . . . . . . 6,300 242,550
Wallace Computer Services, Inc.. . . . . . . . . . 5,200 51,350
---------
3,774,444
---------
CONSUMER DURABLES - 6.30%
Coachmen Industries, Inc.. . . . . . . . . . . . . 7,600 87,400
Engle Homes, Inc.. . . . . . . . . . . . . . . . . 13,500 129,094
La-Z-Boy, Inc. . . . . . . . . . . . . . . . . . . 14,750 206,500
Libbey, Inc. . . . . . . . . . . . . . . . . . . . 85,350 2,741,869
M.D.C. Holdings, Inc.. . . . . . . . . . . . . . . 9,000 167,625
NVR, Inc.* . . . . . . . . . . . . . . . . . . . . 2,800 159,600
The Rowe Companies . . . . . . . . . . . . . . . . 22,000 83,875
Standard Motor Products, Inc.. . . . . . . . . . . 11,000 93,500
Waterford Wedgewood plc. (United Kingdom) (Note 6) 1,980,000 2,121,768
Winnebago Industries, Inc. . . . . . . . . . . . . 15,000 195,937
---------
5,987,168
---------
CONSUMER NON-DURABLES - 2.27%
American Italian Pasta Co.*. . . . . . . . . . . . 4,300 88,956
Canandaigua Brands, Inc. - Class A*. . . . . . . . 4,500 226,969
Flowers Industries, Inc. . . . . . . . . . . . . . 55,000 1,096,563
Genesee Corp.. . . . . . . . . . . . . . . . . . . 7,000 130,375
International Home Foods, Inc.*. . . . . . . . . . 7,000 146,562
Nautica Enterprises, Inc.* . . . . . . . . . . . . 8,000 85,500
OshKosh B'Gosh, Inc. - Class A . . . . . . . . . . 6,000 98,250
Ralcorp Holdings, Inc.*. . . . . . . . . . . . . . 12,000 147,000
Whitman Corp.. . . . . . . . . . . . . . . . . . . 3,400 42,075
Wolverine World Wide, Inc. . . . . . . . . . . . . 10,000 98,750
---------
2,161,000
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
--------- -----------
<S> <C> <C>
CONSUMER SERVICES - 7.38%
ACE Cash Express, Inc.* . . . . . . . . . . . . . . . . . 7,000 $ 83,125
Alliance Atlantis Communications Corp.* (Canada) (Note 6) 182,825 2,375,282
Bob Evans Farms, Inc. . . . . . . . . . . . . . . . . . . 6,300 94,106
Cedar Fair, L.P.. . . . . . . . . . . . . . . . . . . . . 7,300 140,525
CBRL Group, Inc.. . . . . . . . . . . . . . . . . . . . . 8,500 124,844
Granite Broadcasting Corp.* . . . . . . . . . . . . . . . 21,700 160,038
Hollinger International, Inc. . . . . . . . . . . . . . . 13,500 183,937
Journal Register Co.* . . . . . . . . . . . . . . . . . . 2,500 45,625
Meredith Corp.. . . . . . . . . . . . . . . . . . . . . . 4,000 135,000
Thomas Nelson, Inc. . . . . . . . . . . . . . . . . . . . 17,300 148,131
Ryan's Family Steak Houses, Inc.* . . . . . . . . . . . . 10,500 88,594
Sinclair Broadcast Group, Inc.* . . . . . . . . . . . . . 299,000 3,289,000
VICORP Restaurants, Inc.* . . . . . . . . . . . . . . . . 8,000 146,000
---------
7,014,207
---------
ELECTRONIC TECHNOLOGY - 8.25%
Alliant Techsystems, Inc.*. . . . . . . . . . . . . . . . 17,275 1,164,983
Cirrus Logic, Inc.* . . . . . . . . . . . . . . . . . . . 15,300 244,800
GenCorp, Inc. . . . . . . . . . . . . . . . . . . . . . . 9,500 76,000
GenRad, Inc.. . . . . . . . . . . . . . . . . . . . . . . 30,000 270,000
Integrated Measurement Systems, Inc.. . . . . . . . . . . 13,100 206,325
Inter-Tel, Inc. . . . . . . . . . . . . . . . . . . . . . 11,900 191,144
Lam Research Corp.* . . . . . . . . . . . . . . . . . . . 8,400 315,000
Level 8 Systems, Inc.*. . . . . . . . . . . . . . . . . . 7,170 151,018
Moog, Inc. Class A* . . . . . . . . . . . . . . . . . . . 53,700 1,416,337
Newport News Shipbuilding, Inc. . . . . . . . . . . . . . 33,275 1,222,856
PSC, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 234,500 1,905,313
SIPEX Corp.*. . . . . . . . . . . . . . . . . . . . . . . 1,300 35,994
Tekelec*. . . . . . . . . . . . . . . . . . . . . . . . . 5,150 248,166
United Industrial Corp. . . . . . . . . . . . . . . . . . 20,500 187,062
Veramark Technologies, Inc.*. . . . . . . . . . . . . . . 55,500 211,594
---------
7,846,592
---------
ENERGY MINERALS - 7.75%
Callon Petroleum Co.* . . . . . . . . . . . . . . . . . . 6,600 98,175
Comstock Resources, Inc*. . . . . . . . . . . . . . . . . 25,000 200,000
EEX Corp. . . . . . . . . . . . . . . . . . . . . . . . . 13,500 78,469
Gulf Canada Resources, Ltd.* (Note 6) . . . . . . . . . . 1,349,175 6,492,905
Nuevo Energy Co.* . . . . . . . . . . . . . . . . . . . . 6,000 113,250
Ocean Energy, Inc.* . . . . . . . . . . . . . . . . . . . 12,500 177,344
Remington Oil & Gas Corp.*. . . . . . . . . . . . . . . . 28,000 210,000
---------
7,370,143
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- -----------
<S> <C> <C>
FINANCE - 2.61%
Brookline Bankcorp, Inc. . . . . . . . . . . . 15,700 $ 179,569
Catskill Financial Corp. . . . . . . . . . . . 11,600 253,750
First Financial Bankshares, Inc. . . . . . . . 6,000 165,000
First Merchants Corp.. . . . . . . . . . . . . 8,200 173,738
First Niagara Financial Group, Inc.. . . . . . 17,500 164,062
First Sentinel Bancorp, Inc. . . . . . . . . . 22,200 182,456
German American Bancorp. . . . . . . . . . . . 10,815 156,817
Integra Bank Corp. . . . . . . . . . . . . . . 7,140 121,380
Liberty Financial Companies, Inc.. . . . . . . 9,400 206,213
Northern States Financial Corp.. . . . . . . . 2,000 38,000
Old Second Bancorp, Inc. . . . . . . . . . . . 7,300 154,669
Roslyn Bancorp, Inc. . . . . . . . . . . . . . 10,300 171,077
South Alabama Bancorporation, Inc. . . . . . . 3,500 35,437
United Asset Management Corp.. . . . . . . . . 10,800 252,450
United Security Bancorporation*. . . . . . . . 15,400 148,225
VRB Bancorp. . . . . . . . . . . . . . . . . . 16,000 78,000
----------
2,480,843
----------
HEALTH SERVICES - 1.07%
American Retirement Corp.* . . . . . . . . . . 32,560 181,115
LifePoint Hospitals, Inc.* . . . . . . . . . . 15,100 335,975
Manor Care, Inc.*. . . . . . . . . . . . . . . 18,000 126,000
Quorum Health Group, Inc.* . . . . . . . . . . 13,975 144,117
Triad Hospitals, Inc.* . . . . . . . . . . . . 9,475 229,177
----------
1,016,384
----------
HEALTH TECHNOLOGY - 12.14%
Acuson Corp.*. . . . . . . . . . . . . . . . . 145,000 1,957,500
Alkermes, Inc.*. . . . . . . . . . . . . . . . 6,600 311,025
Alpharma, Inc. - Class A . . . . . . . . . . . 8,000 498,000
Connetics Corp.* . . . . . . . . . . . . . . . 97,700 1,434,969
Cypress Bioscience, Inc.*. . . . . . . . . . . 875,050 1,750,100
Dura Pharmaceuticals, Inc.*. . . . . . . . . . 20,200 290,375
Human Genome Sciences, Inc.* . . . . . . . . . 2,670 356,111
Orion-Yhthma Oyj - B Shares (Finland) (Note 6) 102,670 2,352,200
PathoGenesis Corp.*. . . . . . . . . . . . . . 99,650 2,590,900
----------
11,541,180
----------
INDUSTRIAL SERVICES - 9.80%
Foster Wheeler Corp. . . . . . . . . . . . . . 6,500 56,063
Morrison Knudsen Corp.*. . . . . . . . . . . . 9,200 66,700
Offshore Logistics, Inc. . . . . . . . . . . . 4,000 57,500
Paradigm Geophysical, Ltd.* (Note 6) . . . . . 312,350 1,874,100
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- -----------
<S> <C> <C>
INDUSTRIAL SERVICES (continued)
Pride International, Inc.* . . . . . . . . . 19,300 $ 477,675
Stolt Comex Seaway SA - ADR* (Note 6). . . . 152,000 2,147,000
TETRA Technologies, Inc.*. . . . . . . . . . 4,500 63,844
Thermo Ecotek Corp.* . . . . . . . . . . . . 6,000 56,250
Trico Marine Services, Inc.* . . . . . . . . 342,000 4,360,500
Veritas DGC, Inc.* . . . . . . . . . . . . . 6,000 156,000
----------
9,315,632
----------
NON-ENERGY MINERALS - 3.52%
AK Steel Holding Corp. . . . . . . . . . . . 8,000 64,000
Kaiser Aluminum Corp.* . . . . . . . . . . . 25,000 100,000
Quanex Corp. . . . . . . . . . . . . . . . . 5,000 74,375
Texas Industries, Inc. . . . . . . . . . . . 102,700 2,965,462
Worthington Industries, Inc. . . . . . . . . 14,000 147,000
----------
3,350,837
----------
PROCESS INDUSTRIES - 12.11%
Albany International Corp. - Class A . . . . 162,877 2,361,716
American National Can Group, Inc.. . . . . . 150,000 2,531,250
Applied Extrusion Technologies, Inc.*. . . . 261,800 1,374,450
Quaker Chemical Corp.. . . . . . . . . . . . 15,500 217,188
RPM, Inc.. . . . . . . . . . . . . . . . . . 37,000 374,625
Smurfit - Stone Container Corp.* . . . . . . 202,600 2,608,475
Sylvan, Inc.*. . . . . . . . . . . . . . . . 165,000 1,526,250
The Carbide/Graphite Group, Inc.*. . . . . . 130,000 520,000
----------
11,513,954
----------
PRODUCER MANUFACTURING - 5.93%
Amcast Industrial Corp.. . . . . . . . . . . 14,000 122,500
Ampco-Pittsburgh Corp. . . . . . . . . . . . 5,800 64,525
Arvin Industries, Inc. . . . . . . . . . . . 4,600 79,925
Diebold, Inc.. . . . . . . . . . . . . . . . 9,700 270,387
Gibraltar Steel Corp.. . . . . . . . . . . . 7,500 105,000
The Gorman-Rupp Co.. . . . . . . . . . . . . 15,000 236,250
Intermet Corp. . . . . . . . . . . . . . . . 149,325 1,026,609
Kimball International, Inc. - Class A. . . . 11,000 162,250
Norddeutsche Affinerie AG (Germany) (Note 6) 153,000 1,660,239
Steel Technologies, Inc. . . . . . . . . . . 25,000 178,125
Wabash National Corp.. . . . . . . . . . . . 14,000 167,125
Wabtec Corp. . . . . . . . . . . . . . . . . 124,190 1,288,471
Woodward Governor Co.. . . . . . . . . . . . 9,700 274,631
----------
5,636,037
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
--------- -----------
<S> <C> <C>
RETAIL TRADE - 5.40%
Borders Group, Inc.*. . . . . . . . . . . . 7,500 $ 116,719
The Dress Barn, Inc.* . . . . . . . . . . . 15,000 331,875
Duane Reade, Inc.*. . . . . . . . . . . . . 7,700 198,275
Goody's Family Clothing, Inc.*. . . . . . . 21,300 117,150
Great Atlantic & Pacific Tea Company, Inc.. 91,250 1,517,031
Hancock Fabrics, Inc. . . . . . . . . . . . 359,500 1,527,875
The Neiman Marcus Group, Inc. . . . . . . . 7,900 238,481
OfficeMax, Inc.*. . . . . . . . . . . . . . 20,500 102,500
Payless ShoeSource, Inc.* . . . . . . . . . 4,300 220,375
Pier 1 Imports, Inc.. . . . . . . . . . . . 23,000 224,250
Syms Corp.. . . . . . . . . . . . . . . . . 136,000 535,500
---------
5,130,031
---------
TECHNOLOGY SERVICES - 1.83%
AutoDesk, Inc.. . . . . . . . . . . . . . . 3,700 128,344
Avnet, Inc. . . . . . . . . . . . . . . . . 2,000 118,500
GoAmerica, Inc.*. . . . . . . . . . . . . . 14,100 217,669
META Group, Inc.* . . . . . . . . . . . . . 6,350 122,238
Netpliance, Inc.* . . . . . . . . . . . . . 19,500 177,937
Peregrine Systems, Inc.*. . . . . . . . . . 4,162 144,387
PSINET, Inc.* . . . . . . . . . . . . . . . 9,720 244,215
Remedy Corp.* . . . . . . . . . . . . . . . 3,150 175,613
Reynolds & Reynolds - Class A . . . . . . . 6,950 126,837
Structural Dynamics Research Corp.* . . . . 5,000 75,312
Symantec Corp.* . . . . . . . . . . . . . . 1,200 64,725
Teknowledge Corp.*. . . . . . . . . . . . . 15,800 93,813
Transaction Systems Architects, Inc.* . . . 2,800 47,950
---------
1,737,540
---------
TRANSPORTATION - 0.83%
Arkansas Best Corp.*. . . . . . . . . . . . 13,600 135,150
Consolidated Freightways Corp.* . . . . . . 25,200 102,375
Genesee & Wyoming, Inc.*. . . . . . . . . . 5,000 83,750
Roadway Express, Inc. . . . . . . . . . . . 12,000 281,250
Yellow Corp.* . . . . . . . . . . . . . . . 13,100 193,225
---------
795,750
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
------------ -----------
<S> <C> <C>
UTILITIES - 3.10%
Cascade Natural Gas Corp.. . . . . . . . . . . . 7,000 $ 116,812
CH Energy Group, Inc.. . . . . . . . . . . . . . 55,850 1,895,409
El Paso Electric Co. . . . . . . . . . . . . . . 19,200 214,800
Hawaiian Electrical Industries, Inc. . . . . . . 5,300 173,906
Laclede Gas Co.. . . . . . . . . . . . . . . . . 5,000 96,250
NUI Corp.. . . . . . . . . . . . . . . . . . . . 5,000 135,000
ONEOK, Inc.. . . . . . . . . . . . . . . . . . . 4,000 103,750
The United Illuminating Co.. . . . . . . . . . . 4,800 210,000
------------
2,945,927
------------
TOTAL COMMON STOCK
(Identified Cost $93,110,464). . . . . . . . 89,617,669
------------
SHORT-TERM INVESTMENTS - 5.78%
Dreyfus Treasury Cash Management Fund. . . . . . 1,507,620 1,507,620
Fannie Mae Discount Note, 7/20/2000. . . . . . . $ 2,000,000 1,993,824
Federal Home Loan Bank Discount Note, 7/11/2000. 2,000,000 1,997,094
-----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $5,497,364). . . . . . . 5,498,538
------------
TOTAL INVESTMENTS - 100.04%
(Identified Cost $98,607,828) . . . . . . . . 95,116,207
LIABILITIES, LESS OTHER ASSETS - (0.04%) . . . . (40,878)
------------
NET ASSETS - 100%. . . . . . . . . . . . . . . . $95,075,329
============
</TABLE>
* Non-income producing security
ADR - American Depository Receipt
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At June 30, 2000, the net unrealized depreciation based on identified cost
for federal income tax purposes of $98,607,828 was as follows:
<S> <C>
Unrealized appreciation. . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,512,331
Unrealized depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . (17,003,952)
-------------
UNREALIZED DEPRECIATION - NET. . . . . . . . . . . . . . . . . . . . . . . ($3,491,621)
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
JUNE 30, 2000
ASSETS:
<S> <C>
Investments, at value (identified cost $98,607,828) (Note 2) . $95,116,207
Foreign currency, at value (cost $400,588) . . . . . . . . . . 401,298
Receivable for fund shares sold. . . . . . . . . . . . . . . . 162,010
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 44,449
Tax reclaims receivable. . . . . . . . . . . . . . . . . . . . 17,102
------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 95,741,066
------------
LIABILITIES:
Accrued management fee (Note 3). . . . . . . . . . . . . . . . 75,729
Accrued directors' fees (Note 3) . . . . . . . . . . . . . . . 3,386
Accrued fund accounting fees (Note 3). . . . . . . . . . . . . 2,831
Payable for securities purchased . . . . . . . . . . . . . . . 495,480
Payable for fund shares repurchased. . . . . . . . . . . . . . 66,881
Audit fee payable. . . . . . . . . . . . . . . . . . . . . . . 9,982
Other payables and accrued expenses. . . . . . . . . . . . . . 11,448
------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 665,737
------------
NET ASSETS FOR 8,107,733 SHARES
OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . . . $95,075,329
============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . $ 81,077
Additional paid-in-capital . . . . . . . . . . . . . . . . . . 95,517,795
Undistributed net investment income. . . . . . . . . . . . . . 755,882
Accumulated net realized gain on investments . . . . . . . . . 2,211,460
Net unrealized depreciation on investments, foreign currency,
and other assets and liabilities. . . . . . . . . . . . . (3,490,885)
------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $95,075,329
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE - CLASS A
($95,075,329/8,107,733 shares). . . . . . . . . . . . . . . $ 11.73
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 2000
INVESTMENT INCOME:
<S> <C>
Dividends (net of foreign tax withheld, $34,041). . . $ 540,641
Interest. . . . . . . . . . . . . . . . . . . . . . . 178,922
-----------
Total Investment Income . . . . . . . . . . . . . . . 719,563
-----------
EXPENSES:
Management fee (Note 3). . . . . . . . . . . . . . . 456,359
Directors' fees (Note 3). . . . . . . . . . . . . . . 3,332
Fund accounting fee (Note 3). . . . . . . . . . . . . 11,672
Custodian fee . . . . . . . . . . . . . . . . . . . . 14,918
Audit fee . . . . . . . . . . . . . . . . . . . . . . 11,810
Miscellaneous . . . . . . . . . . . . . . . . . . . . 16,047
-----------
Total Expenses. . . . . . . . . . . . . . . . . . . . 514,138
-----------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . 205,425
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on -
Investments. . . . . . . . . . . . . . . . . . . . 2,554,823
Foreign currency and other assets and liabilities. (2,762)
-----------
2,552,061
-----------
Net change in unrealized depreciation on-
Investments. . . . . . . . . . . . . . . . . . . . 7,088,931
Foreign currency other assets and liabilities. . . 8,756
-----------
7,097,687
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS . . . . . . . . . . . . . . . . . . 9,649,748
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . $9,855,173
===========
</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 6/30/00 FOR THE YEAR
(UNAUDITED) ENDED 12/31/99
-------------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income. . . . . . . . . . . . . . . . . $ 205,425 $ 553,125
Net realized gain on investments . . . . . . . . . . . 2,552,061 1,138,637
Net change in unrealized appreciation (depreciation)
on investments . . . . . . . . . . . . . . . . . . 7,097,687 6,812,382
-------------------- ----------------
Net increase from operations . . . . . . . . . . . . . 9,855,173 8,504,144
-------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income . . . . . . . . . . . . . . -- (526,183)
-------------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net decrease from capital share transactions (Note 5). (6,080,951) (16,343,026)
-------------------- ----------------
Net increase (decrease) in net assets. . . . . . . . . 3,774,222 (8,365,065)
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . 91,301,107 99,666,172
-------------------- ----------------
END OF PERIOD (including undistributed net investment
income of $755,882 and $550,165, respectively). . . $ 95,075,329 $ 91,301,107
==================== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED
6/30/00 FOR THE YEAR ENDED
(UNAUDITED) 12/31/99 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> <C>
NET ASSET VALUE - BEGINNING OF YEAR. . . . . $ 10.53 $ 9.64 $ 12.05 $ 12.09 $ 11.95 $ 12.92
Income from investment operations:
Net investment income (loss) . . . . . . . 0.03 0.07 0.05 (0.02) 0.05 (0.00)
Net realized and unrealized gain (loss)
On investments. . . . . . . . . . . . . . 1.17 0.88 (1.77) 1.50 1.11 1.93
------------ --------------------- ---------- ---------- ---------- ---------
Total from investment operations. . . . . . . 1.20 0.95 (1.72) 1.49 1.16 1.93
------------ --------------------- ---------- ---------- ---------- ---------
Less distributions to shareholders:
From net investment income . . . . . . . . -- (0.06) -- (0.01) (0.04) --
From net realized gain on investments. . . -- -- (0.69) (1.52) (0.89) (2.90)
In excess of net realized gain
on investments . . . . . . . . . . . -- -- -- (0.09) --
------------ --------------------- ---------- ---------- ----------
Total distributions to shareholders . . . . . -- (0.06) (0.69) (1.53) (1.02) (2.90)
------------ --------------------- ---------- ---------- ---------- ---------
NET ASSET VALUE - END OF YEAR . . . . . . . . $ 11.73 $ 10.53 $ 9.64 $ 12.05 $ 12.09 $ 11.95
============ ===================== ========== ========== ========== =========
Total return1 . . . . . . . . . . . . . . . . 11.40% 9.87% (13.59)% 12.29% 10.06% 14.70%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses. . . . . . . . . . . . . . . . . 1.13%2 1.09% 1.09% 1.07% 1.08% 1.07%
Net investment income (loss). . . . . . . 0.45%2 0.61% 0.44% (0.12)% 0.29% (0.03)%
Portfolio turnover. . . . . . . . . . . . 33% 92% 81% 94% 31% 77%
NET ASSETS - END OF YEAR
(000'S OMITTED). . . . . . . . . . . . . . $ 95,075 $ 91,301 $ 99,666 $ 121,600 $ 100,688 $143,003
============ ===================== ========== ========== ========== =========
</TABLE>
1Represents aggregate total return for the period indicated, and assumes
reinvestment of distributions.
2 Annualized.
The accompanying notes are an integral part of the financial statements.
13
<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.
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.
Share of the Series are offered to investors, employees and clients of Manning &
Napier Advisors, Inc. (the "Advisor") dba Exeter Asset Management, and its
affiliates. The total authorized capital stock of the Fund consists of 1.7
billion shares of common stock each having a par value of $0.01. As of June 30,
2000, 1.4 billion shares have been designated in total among 28 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.
14
<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 of net realized gains are made at least annually. An additional
distribution may be necessary to avoid taxation of the Series. Distributions
are recorded on the ex-dividend date.
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. Any such reclassifications are not reflected in the financial
highlights.
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) purchases and sales of
securities and income and expenses are converted into U.S. dollars based upon
the currency exchange rates prevailing on the respective dates of such
transactions.
Gains and losses attributable to foreign currency exchange rates are recorded
for financial statement purposes as net realized gains and losses on
investments. The portion of both realized and unrealized gains and losses on
investment that result from fluctuations in foreign currency exchange rates is
not separately stated.
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.
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 fund administration 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.
15
<PAGE>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. These services are provided at no additional cost to the
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.
Effective April 2000 the Advisor became the Fund's accounting services agent.
For these services, the Fund will pay the Advisor a fee of 0.04% of each Series'
daily net assets calculated daily and payable monthly, with a minimum annual fee
of $48,000 per Series. In addition, the Fund will pay the Advisor an additional
annual fee of $10,000 for each additional class of a Series. The Advisor has
entered into an agreement with BISYS Fund Services Ohio, Inc. under which BISYS
will serve as sub-accounting services agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2000, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$28,351,125 and $33,160,318, 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 6/30/00 ENDED 12/31/99
------------------- ----------------
Shares Amount Shares Amount
------------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold. . . . 483,071 $ 5,308,999 917,383 $ 8,959,250
Reinvested. -- -- 51,612 527,276
Repurchased (1,041,922) (11,389,950) (2,639,726) (25,823,552)
------------------- ---------------- ----------- -------------
Total . . . (558,851) $ (6,080,951) (1,670,731) $(16,343,026)
=================== ================ =========== =============
</TABLE>
A significant portion of the Series shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
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.
16
<PAGE>
<PAGE>
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2000
International Series
<PAGE>
<PAGE>
Management Discussion and Analysis (unaudited)
DEAR SHAREHOLDERS:
As has been the case since its inception almost eight years ago, the majority of
the International Series is invested in Western Europe. At this time, a small
portion of the portfolio is also invested in three Eastern European countries:
Poland, Hungary, and the Czech Republic.
We initially invested in Western Europe because we expected the economies there
to strengthen as they became unified and because we expected the business
environment to become more efficient. These expectations are being met, and
today the economic picture in Western Europe is quite favorable. Higher growth
rates are being achieved, unemployment is down, investor confidence is up, and
investment expenditures are up. Monetary policies have been tightening recently
in the face of much stronger growth, and this supports the economic changes
taking place.
Several specific factors are also supporting the Advisor's positive view of
Europe currently:
Tax cuts underway in France and Germany are expected to bolster growth.
Germany is undertaking pension reform, and other European nations are
expected to follow suit. The pension reform is spurring the creation of
fully-funded private pension plans, which should create demand for stocks.
Governments are reducing capital gain tax rates, which will allow stocks to
be traded more freely. Previously, high capital gains rates kept investors,
particularly banks that held equity in connection with corporate financing, from
selling stocks, thereby tying up capital. The benefits of improved liquidity
should more than offset any increase in supply resulting from lower capital
gains tax rates.
There has been a sharp acceleration of business expenditures on technology,
which should help boost productivity.
In the Series' Annual Report, we wrote that we had recently added investments in
Hungary and the Czech Republic late in 1999. In January, we added to the
Series' holdings in Eastern Europe by purchasing shares of companies in Poland.
These stocks offer another way to benefit from accelerating growth in Europe.
Many European countries are building production facilities in Eastern Europe to
take advantage of lower costs there. In addition, Western European companies
have been investing into Eastern European companies. For example, they have
bought into the privatization of telephone companies. We also expect the
markets in these countries to have strong returns as the countries approach
membership in the European Union. All three countries were approved for the
fast track toward membership earlier this year, and it appears it will occur by
2005.
Recently, the performance of the Series has been negatively affected by the
valuation of the euro relative to the dollar. Although the Series still
outperformed its benchmarks for the first half of the year, this currency
fluctuation did offset returns. We believe that the euro has reached bottom,
and it has started to rebound. Going forward, we expect the euro to strengthen,
and therefore we have not hedged the euro.
1
<PAGE>
Management Discussion and Analysis (unaudited)
We manage this Series with a top-down approach; therefore, 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. As we said
in our last shareholder report, we have not invested in Japan because we believe
that the Japanese economy has serious economic problems that made an investment
there too risky. So far this year the Series has benefited from its avoidance
of Japan, as it has been one of the worst-performing countries. It may be that
the problems in Japan may eventually create an attractive investment
opportunity, and we are monitoring the situation closely.
We appreciate your business, and we hope that you and your families continue to
prosper as we move through the year.
Sincerely,
EXETER ASSET MANAGEMENT
[graphic]
[pie chart]
Portfolio Allocation by Country* - As of 6/30/00
France - 36%
Germany - 27%
Czech Republic - 2%
Italy - 19%
Hungary - 4%
Spain - 9%
Poland - 3%
*As a percentage of common stocks.
2
<PAGE>
Performance Update as of June 30, 2000 (unaudited)
Exeter Fund, Inc.
International Series
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $11,993 19.93% 19.93%
Five Year $25,163 151.63% 20.24%
Inception 1 $29,423 194.23% 14.74%
S&P 500 Total Return Index
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $10,724 7.24% 7.24%
Five Year $29,074 190.74% 23.78%
Inception 1 $41,457 314.57% 19.86%
Morgan Stanley
All Country World ex U.S. Index
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $11,834 18.34% 18.34%
Five Year $16,905 69.05% 11.06%
Inception 1 $23,689 136.89% 11.61%
The value of a $10,000 investment in the Exeter Fund, Inc. - International
Series from its inception (8/27/92) to present (6/30/00) as compared to the
Standard & Poor's (S&P) 500 Total Return 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. S&P 500 Total Morgan Stanley All Country
Date International Series Return Index World ex US Index
<S> <C> <C> <C>
08/27/1992 10,000 10,000 10,000
12/31/1992 10,598 10,643 9,510
12/31/1993 13,359 11,709 12,892
12/31/1994 11,425 11,868 13,808
12/31/1995 11,898 16,312 14,985
12/31/1996 14,557 20,052 15,981
12/31/1997 18,589 26,959 16,254
12/31/1998 22,983 34,398 18,544
12/31/1999 29,289 41,634 24,441
06/30/2000 29,423 41,457 23,689
</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 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 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, 2000 (unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
--------- -----------
COMMON STOCK - 95.76%
CZECH REPUBLIC-2.19%
<S> <C> <C>
BANKING-0.21%
Ceska Sporitelna a.s.*. . . . . . . . . 48,660 $ 263,308
-----------
BROADCAST SERVICES-0.65%
Ceske Radiokomunikac a.s.*. . . . . . . 18,300 810,514
-----------
TELECOMMUNICATIONS-0.85%
Cesky Telecom a.s.* . . . . . . . . . . 62,790 1,056,474
-----------
UTILITIES-GAS AND ELECTRIC-0.48%
Ceske Energeticke Zvody a.s. (CEZ). . . 227,220 600,702
-----------
TOTAL CZECH SECURITIES
(Identified Cost $2,276,234) . . . . 2,730,998
---------
FRANCE - 34.36%
AEROSPACE & MILITARY TECHNOLOGY - 0.45%
Thomson CSF . . . . . . . . . . . . . . 14,389 569,105
-----------
AUTOMOBILES - 0.67%
PSA Peugeot Citroen . . . . . . . . . . 4,145 835,199
-----------
BANKING - 3.08%
BNP Paribas . . . . . . . . . . . . . . 23,347 2,255,924
Societe Generale. . . . . . . . . . . . 26,312 1,589,012
-----------
3,844,936
-----------
BEVERAGE & TOBACCO - 2.14%
LVMH (Louis Vuitton Moet Hennessy). . . 6,464 2,676,193
-----------
BUILDING MATERIALS & COMPONENTS - 0.46%
Lafarge SA. . . . . . . . . . . . . . . 7,327 571,720
-----------
BUSINESS & PUBLIC SERVICES - 2.03%
Vivendi SA. . . . . . . . . . . . . . . 28,650 2,539,010
-----------
CHEMICALS - 2.53%
Air Liquide SA. . . . . . . . . . . . . 10,005 1,310,176
Aventis SA. . . . . . . . . . . . . . . 25,300 1,854,090
-----------
3,164,266
-----------
ELECTRICAL & ELECTRONICS-4.22%
Alcatel . . . . . . . . . . . . . . . . 80,100 5,274,995
-----------
ENERGY SOURCES-3.92%
Total Fina Elf SA . . . . . . . . . . . 43,855 4,901,291
-----------
FOOD & HOUSEHOLD PRODUCTS - 1.22%
Groupe Danone . . . . . . . . . . . . . 11,412 1,520,580
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- -----------
<S> <C> <C>
FRANCE (continued)
HEALTH & PERSONAL CARE - 4.61%
Sanofi-Synthelabo SA. . . . . . . . 46,668 $2,232,300
L'Oreal SA. . . . . . . . . . . . . 4,063 3,532,539
----------
5,764,839
----------
INDUSTRIAL COMPONENTS-0.22%
Michelin-B. . . . . . . . . . . . . 8,413 271,052
-----------
LEISURE & TOURISM - 0.44%
Accor SA. . . . . . . . . . . . . . 13,295 547,119
-----------
MACHINERY & ENGINEERING - 0.38%
Schnieder Electric SA . . . . . . . 6,795 475,494
-----------
MERCHANDISING - 3.28%
Carrefour SA. . . . . . . . . . . . 51,776 3,553,648
Casino Guichard-Perrachon SA. . . . 5,825 541,627
----------
4,095,275
----------
MULTI-INDUSTRY - 4.71%
AXA . . . . . . . . . . . . . . . . 27,573 4,361,148
Suez Lyonnaise des Eaux SA. . . . . 8,668 1,524,712
----------
5,885,860
----------
TOTAL FRENCH SECURITIES
(Identified Cost $16,199,026). . 42,936,934
----------
GERMANY - 26.12%
AIRLINES - 0.45%
Deutsche Lufthansa AG . . . . . . . 23,700 556,605
-----------
BANKING - 4.26%
Bayerische Hypo-und Vereinsbank AG. 49,730 3,246,373
Dresdner Bank AG. . . . . . . . . . 50,000 2,080,140
----------
5,326,513
----------
BUSINESS & PUBLIC SERVICES - 2.47%
SAP AG. . . . . . . . . . . . . . . 20,550 3,082,897
-----------
CHEMICALS - 2.62%
Bayer AG. . . . . . . . . . . . . . 83,750 3,275,502
-----------
ELECTRICAL & ELECTRONICS - 4.49%
Siemens AG. . . . . . . . . . . . . 37,150 5,608,829
-----------
INSURANCE - 4.70%
Allianz AG. . . . . . . . . . . . . 16,120 5,871,938
-----------
MACHINERY & ENGINEERING - 0.36%
MAN AG. . . . . . . . . . . . . . . 14,520 446,095
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- -----------
<S> <C> <C>
GERMANY (continued)
MATERIALS & COMMODITIES - 0.40%
Degussa-Huels AG. . . . . . . . . . . . . 17,900 $ 505,325
-----------
TELECOMMUNICATIONS - 3.20%
Deutsche Telekom AG . . . . . . . . . . . 70,000 3,999,237
-----------
UTILITIES - GAS & ELECTRIC - 3.17%
RWE AG. . . . . . . . . . . . . . . . . . 37,905 1,279,004
E.On AG . . . . . . . . . . . . . . . . . 44,537 2,687,141
-----------
3,966,145
-----------
TOTAL GERMAN SECURITIES
(Identified Cost $15,591,106). . . . . 32,639,086
-----------
HUNGARY - 3.45%
BANKING - 0.56%
OTP Bank Rt.. . . . . . . . . . . . . . . 13,300 696,191
-----------
CHEMICALS - 0.18%
BorsodChem Rt.. . . . . . . . . . . . . . 7,110 220,553
-----------
ENERGY SOURCES - 0.58%
MOL Magyar Olaj-es Gazipari Rt. . . . . . 52,300 723,936
-----------
FOOD & HOUSEHOLD PRODUCTS - 0.16%
Pick Szeged Rt. . . . . . . . . . . . . . 5,529 204,935
-----------
HEALTH & PERSONAL CARE - 0.75%
EGIS Rt.. . . . . . . . . . . . . . . . . 6,857 288,156
Gedeon Richter Rt.. . . . . . . . . . . . 11,900 644,403
-----------
932,559
-----------
TELECOMMUNICATIONS - 1.22%
Magyar Tavkozlesi Rt. . . . . . . . . . . 218,900 1,529,127
-----------
TOTAL HUNGARIAN SECURITIES
(Identified Cost $4,597,592) . . . . . 4,307,301
-----------
ITALY - 17.67%
BUILDING MATERIAL & COMPONENTS - 0.33%
Italcementi S.p.A.. . . . . . . . . . . . 43,264 408,503
-----------
ENERGY SOURCES - 3.48%
Edison S.p.A. . . . . . . . . . . . . . . 50,000 475,460
ENI S.p.A.. . . . . . . . . . . . . . . . 668,440 3,876,597
-----------
4,352,057
-----------
FINANCIAL SERVICES - 4.05%
Banca Intesa S.p.A. warrants, 11/15/2002. 73,260 96,210
Banca Intesa S.p.A. . . . . . . . . . . . 580,021 2,607,651
Uncredito Italiano S.p.A. . . . . . . . . 489,000 2,348,440
-----------
5,052,301
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- -----------
<S> <C> <C>
ITALY (continued)
INSURANCE - 2.36%
Assicurazioni Generali. . . . . . . . . . . . . . . . . 85,804 $2,952,805
-----------
MULTI-INDUSTRY - 0.34%
Pirelli S.p.A.. . . . . . . . . . . . . . . . . . . . . 160,000 422,546
-----------
TELECOMMUNICATIONS - 7.12%
Telecom Italia S.p.A. . . . . . . . . . . . . . . . . . 294,445 4,064,429
Telecom Italia Mobile S.p.A.. . . . . . . . . . . . . . 470,000 4,820,749
-----------
8,885,178
-----------
TOTAL ITALIAN SECURITIES
(Identified Cost $9,882,484) . . . . . . . . . . . . 22,073,390
-----------
POLAND - 2.93%
BANKING - 0.71%
Bank Polska Kasa Opieki Grupa Pekao S.A. (Pekao Bank)*. 58,560 705,710
Wielkopolski Bank Kredytowy S.A.. . . . . . . . . . . . 32,000 186,643
-----------
892,353
-----------
BEVERAGE & TOBACCO - 0.15%
Browary Zywiec S.A. . . . . . . . . . . . . . . . . . . 2,726 187,165
-----------
ENERGY SOURCES - 0.60%
Polski Koncern Naftowy Orlen S.A. . . . . . . . . . . . 156,400 754,194
-----------
LEISURE & TOURISM - 0.17%
Orbis S.A.. . . . . . . . . . . . . . . . . . . . . . . 28,000 218,607
-----------
MINING - 0.71%
KGHM Polska Miedz S.A.. . . . . . . . . . . . . . . . . 118,000 883,338
-----------
SOFTWARE DEVELOPMENT - 0.13%
Prokom Software SA. . . . . . . . . . . . . . . . . . . 3,000 157,066
-----------
TELECOMMUNICATIONS - 0.46%
Telekomunikacja Polska S.A. . . . . . . . . . . . . . . 80,000 573,155
-----------
TOTAL POLISH SECURITIES
(Identified Cost $3,877,050) . . . . . . . . . . . . 3,665,878
-----------
SPAIN - 9.03%
BEVERAGE & TOBACCO - 0.26%
Altadis S.A.* . . . . . . . . . . . . . . . . . . . . . 21,330 327,148
-----------
CONSTRUCTION & HOUSING - 0.38%
Fomento de Construcciones y Contratas S.A.. . . . . . . 18,216 345,741
Grupo Dragados S.A. . . . . . . . . . . . . . . . . . . 17,982 129,453
-----------
475,194
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
------------ -----------
<S> <C> <C>
SPAIN (continued)
FINANCIAL SERVICES - 3.30%
Banco Bilbao Vizcaya Argentaria S.A. . . . . . 144,610 $2,169,429
Banco Santander Central Hispano S.A. . . . . . 183,854 1,947,458
-----------
4,116,887
-----------
METAL - STEEL - 0.14%
Acerinox S.A.. . . . . . . . . . . . . . . . . 5,855 170,060
-----------
MULTI-INDUSTRY - 0.24%
Autopistas, Concesionaria Espanola S.A.. . . . 32,925 287,526
Autopistas, Concesionaria Espanola S.A. Bonus
Rights, 7/6/2000 . . . . . . . . . . . . . 32,925 14,203
-----------
301,729
-----------
TELECOMMUNICATIONS - 2.18%
Telefonica S.A.. . . . . . . . . . . . . . . . 126,215 2,722,239
-----------
UTILITIES - GAS & ELECTRIC - 2.53%
Endesa S.A.. . . . . . . . . . . . . . . . . . 70,100 1,363,430
Gas Natural SDG S.A. . . . . . . . . . . . . . 29,966 540,032
Iberdrola S.A. . . . . . . . . . . . . . . . . 61,224 792,298
Union Electrica Fenosa S.A.. . . . . . . . . . 26,063 473,442
-----------
3,169,202
-----------
TOTAL SPANISH SECURITIES
(Identified Cost $4,004,577). . . . . . . . 11,282,459
-----------
TOTAL COMMON STOCK
(Identified Cost $56,428,069) . . . . . . . 119,636,046
-----------
SHORT-TERM INVESTMENTS - 2.93%
Federal Home Loan Bank, 7/11/2000. . . . . . . $ 2,000,000 1,997,094
Dreyfus Treasury Cash Management Fund. . . . . 1,661,279 1,661,279
-----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $3,657,779). . . . . . . . 3,658,373
-----------
TOTAL INVESTMENTS - 98.69%
(Identified Cost $60,085,848) . . . . . . . 123,294,419
OTHER ASSETS, LESS LIABILITIES - 1.31% . . . . 1,642,535
-----------
NET ASSETS - 100%. . . . . . . . . . . . . . . $124,936,954
============
</TABLE>
* Non-income producing security
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At June 30, 2000, the net unrealized appreciation based on identified
cost for federal income tax purposes of $60,085,848 was as follows:
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . $64,178,061
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . (969,490)
------------
UNREALIZED APPRECIATION - NET . . . . . . . . . . . . . . . . . . . . $63,208,571
============
</TABLE>
<TABLE>
<CAPTION>
INDUSTRY CONCENTRATION (AS A PERCENT OF NET ASSETS) Percent
of Net Assets
--------------
<S> <C>
Aerospace & Military Technology . . . . . . . . . . 0.45%
Airlines. . . . . . . . . . . . . . . . . . . . . . 0.45%
Automobiles . . . . . . . . . . . . . . . . . . . . 0.67%
Banking . . . . . . . . . . . . . . . . . . . . . . 8.82%
Beverage & Tobacco. . . . . . . . . . . . . . . . . 2.55%
Broadcast Services. . . . . . . . . . . . . . . . . 0.65%
Building Materials & Components . . . . . . . . . . 0.79%
Business & Public Services. . . . . . . . . . . . . 4.50%
Chemicals . . . . . . . . . . . . . . . . . . . . . 5.33%
Construction & Housing. . . . . . . . . . . . . . . 0.38%
Electrical & Electronics. . . . . . . . . . . . . . 8.71%
Energy Sources. . . . . . . . . . . . . . . . . . . 8.58%
Financial Services. . . . . . . . . . . . . . . . . 7.35%
Food & Household Products . . . . . . . . . . . . . 1.38%
Health & Personal Care. . . . . . . . . . . . . . . 5.36%
Industrial Components . . . . . . . . . . . . . . . 0.22%
Insurance . . . . . . . . . . . . . . . . . . . . . 7.06%
Leisure & Tourism . . . . . . . . . . . . . . . . . 0.61%
Machinery & Engineering . . . . . . . . . . . . . . 0.74%
Materials & Commodities . . . . . . . . . . . . . . 0.40%
Merchandising . . . . . . . . . . . . . . . . . . . 3.28%
Metals-Steel. . . . . . . . . . . . . . . . . . . . 0.14%
Mining. . . . . . . . . . . . . . . . . . . . . . . 0.71%
Multi-Industry. . . . . . . . . . . . . . . . . . . 5.29%
Software Development. . . . . . . . . . . . . . . . 0.13%
Telecommunications. . . . . . . . . . . . . . . . . 15.03%
Utilities - Gas & Electric. . . . . . . . . . . . . 6.18%
--------------
TOTAL COMMON STOCK. . . . . . . . . . . . . . . . . 95.76%
==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
JUNE 30, 2000
ASSETS:
<S> <C>
Investments, at value (identified cost $60,085,848)(Note 2). . $123,294,419
Foreign currency, at value (cost $1,288,218) . . . . . . . . . 1,325,688
Foreign tax reclaims receivable. . . . . . . . . . . . . . . . 408,639
Receivable for fund shares sold. . . . . . . . . . . . . . . . 127,000
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 25,790
------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 125,181,536
------------
LIABILITIES:
Accrued management fee (Note 3). . . . . . . . . . . . . . . . 102,149
Accrued directors' fees (Note 3) . . . . . . . . . . . . . . . 3,386
Accrued fund accounting fees (Note 3). . . . . . . . . . . . . 2,561
Payable for fund shares repurchased. . . . . . . . . . . . . . 105,850
Registration and filing fees payable . . . . . . . . . . . . . 15,186
Audit fee payable. . . . . . . . . . . . . . . . . . . . . . . 7,223
Custodian fee payable. . . . . . . . . . . . . . . . . . . . . 1,025
Other payables and accrued expenses. . . . . . . . . . . . . . 7,202
------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 244,582
------------
NET ASSETS FOR 7,136,033 SHARES
OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . . . $124,936,954
============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . $ 71,359
Additional paid-in-capital . . . . . . . . . . . . . . . . . . 11,453,498
Undistributed net investment income. . . . . . . . . . . . . . 601,172
Accumulated net realized gain on investments . . . . . . . . . 49,582,098
Net unrealized appreciation on investments, foreign currency,
and other assets and liabilities . . . . . . . . . . . . 63,228,827
------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $124,936,954
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($124,936,954/7,136,033 shares). . . . . . . . . . . . . . . . $ 17.51
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 2000
INVESTMENT INCOME:
<S> <C>
Dividends (net of foreign tax withheld $322,510) . . . . . $ 1,272,197
Interest . . . . . . . . . . . . . . . . . . . . . . . . . 135,525
-------------
Total Investment Income. . . . . . . . . . . . . . . . . . 1,407,722
-------------
EXPENSES:
Management fee (Note 3). . . . . . . . . . . . . . . . . . 681,968
Directors' fees (Note 3) . . . . . . . . . . . . . . . . . 3,332
Fund accounting fees (Note 3). . . . . . . . . . . . . . . 12,388
Custodian fee. . . . . . . . . . . . . . . . . . . . . . . 62,158
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . . 15,416
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . 21,587
-------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . 796,849
-------------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . 610,873
-------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on -
Investments. . . . . . . . . . . . . . . . . . . . . . 24,795,863
Foreign currency and other assets and liabilities. . . (37,910)
-------------
24,757,953
-------------
Net change in unrealized appreciation (depreciation) on -
Investments . . . . . . . . . . . . . . . . . . . . . . (25,768,503)
Foreign currency and other assets and liabilities . . . 74,457
-------------
(25,694,046)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . . (936,093)
-------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . $ (325,220)
=============
</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 FOR THE
ENDED 6/30/00 YEAR ENDED
(UNAUDITED) 12/31/99
--------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income . . . . . . . . . . . $ 610,873 $ 950,635
Net realized gain on investments. . . . . . 24,757,953 42,276,518
Net change in unrealized appreciation
(depreciation) on investments. . . . . . (25,694,046) (710,725)
--------------- -------------
Net increase (decrease) from operations . . (325,220) 42,516,428
--------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 2):
From net investment income. . . . . . . . . -- (1,003,470)
From net realized gain on investments . . . -- (17,865,661)
--------------- -------------
Total distributions to shareholders . . . . -- (18,869,131)
--------------- -------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net decrease from capital share
transactions (Note 5). . . . . . . . . . (35,407,960) (62,235,987)
--------------- -------------
Net decrease in net assets. . . . . . . . . (35,733,180) (38,588,690)
NET ASSETS:
Beginning of period . . . . . . . . . . . . 160,670,134 199,258,824
--------------- -------------
END OF PERIOD (including undistributed net
investment income of $601,172 and
$(9,701), respectively) . . . . . . . . $ 124,936,954 $160,670,134
=============== =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED
6/30/00 FOR THE YEARS ENDED
(UNAUDITED) 12/31/99 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> <C>
NET ASSET VALUE - BEGINNING OF YEAR. . $ 17.43 $ 15.57 $ 13.08 $ 11.54 $ 9.57 $ 9.54
------------ --------------------- ---------- ---------- ---------- ---------
Income from investment operations:
Net investment income . . . . . . . . 0.09 0.11 0.10 0.16 0.15 0.12
Net realized and unrealized gain
(loss) on investments. . . . . . . (0.01) 4.03 2.95 2.99 1.98 0.27
------------ --------------------- ---------- ---------- ---------- ---------
Total from investment operations . . . . 0.08 4.14 3.05 3.15 2.13 0.39
------------ --------------------- ---------- ---------- ---------- ---------
Less distributions to shareholders:
From net investment income. . . . . . -- (0.12) (0.11) (0.15) (0.14) (0.12)
From paid-in-capital. . . . . . . . . -- -- -- -- -- (0.16)
From net realized gain on
investments . . . . . . . . . . . -- (2.16) (0.45) (1.46) (0.02) (0.08)
------------ --------------------- ---------- ---------- ---------- ---------
Total distributions to shareholders. . . -- (2.28) (0.56) (1.61) (0.16) (0.36)
------------ --------------------- ---------- ---------- ---------- ---------
NET ASSET VALUE - END OF PERIOD. . . . . $ 17.51 $ 17.43 $ 15.57 $ 13.08 $ 11.54 $ 9.57
============ ===================== ========== ========== ========== =========
Total return1. . . . . . . . . . . . . . 0.46% 27.44% 23.63% 27.70% 22.35% 4.14%
Ratios to average net assets/
Supplemental Data:
Expenses . . . . . . . . . . . . . . 1.17%2 1.12% 1.12% 1.08% 1.12% 1.20%
Net investment income. . . . . . . . 0.90%2 0.52% 0.59% 1.18% 1.46% 1.42%
Portfolio turnover . . . . . . . . . . . 3% 4% 0% 10% 2% 14%
NET ASSETS - END OF YEAR
(000'S OMITTED) . . . . . . . . . . . . $ 124,937 $ 160,670 $ 199,259 $ 199,256 $ 149,331 $128,294
============ ===================== ========== ========== ========== =========
</TABLE>
1 Represents aggregate total return for the period indicated, and assumes
reinvestment of distributions.
2 Annualized.
The accompanying notes are an integral part of the financial statements.
13
<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") dba Exeter Asset Management, and its
affiliates. The total authorized capital stock of the Fund consists of 1.7
billion shares of common stock each having a par value of $0.01. As of June 30,
2000, 1.4 billion shares have been designated in total among 28 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 of net realized gains are made at least annually. An additional
distribution may be necessary to avoid taxation of the Series. Distributions
are recorded on the ex-dividend date.
14
<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. Any such reclassifications are not reflected in the financial
highlights.
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) purchases and sales of
securities and income and expenses are converted into U.S. dollars based upon
the currency exchange rates prevailing on the respective dates of such
transactions.
Gains and losses attributable to foreign currency exchange rates are recorded
for financial statement purposes as net realized gains and losses on
investments. The portion of both realized and unrealized gains and losses on
investment that result from fluctuations in foreign currency exchange rates is
not separately stated.
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, 2000, 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.
15
<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.
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 fund administration 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.
Effective April 2000 the Advisor became the Fund's accounting services agent.
For these services, the Fund will pay the Advisor a fee of 0.04% of each Series'
daily net assets calculated daily and payable monthly, with a minimum annual fee
of $48,000 per Series. The Advisor has entered into an agreement with BISYS
Fund Services Ohio, Inc. under which BISYS will serve as sub-accounting services
agent.
4. PURCHASES AND SALES OF SECURITIES
For the year ended June 30, 2000, purchases and sales of securities, other than
United States Government securities and short-term securities, were $3,998,461
and $37,624,749, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of International Series were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 6/30/00 Ended 12/31/99
Shares Amount Shares Amount
------------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold. . . . 352,688 $ 6,088,061 308,298 $ 4,986,379
Reinvested. -- -- 1,125,654 18,599,414
Repurchased (2,434,016) (41,496,021) (5,011,453) (85,821,780)
------------------- ---------------- ----------- -------------
Total . . . (2,081,328) $ (35,407,960) (3,577,501) $(62,235,987)
=================== ================ =========== =============
</TABLE>
A significant portion of the Series shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
16
<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.
17
<PAGE>
<PAGE>
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2000
World Opportunities Series
<PAGE>
<PAGE>
Management Discussion and Analysis (unaudited)
DEAR SHAREHOLDERS:
The World Opportunities has continued its strong performance of 1999 through the
first half of 2000. During this period, we sold many of the stocks that drove
performance in late 1998 and early 1999, and we have invested the proceeds in
new areas, which are also performing well.
For the first part of this period, growth was driven by investments we made in
emerging market companies when the Asian Crisis in late 1998 provided the
opportunity to purchase the stocks of superior companies at very low prices.
These stocks appreciated significantly as the economies began to stabilize and
as the markets began to recover from their bottoms, and we have now sold most of
these stocks from the portfolio. The Series still holds a few of these
companies because they are strong companies and continue to offer significant
growth potential.
Over the course of the past year, we have purchased a number of stocks of
companies related to commodities. These stocks were purchased under the
Advisor's "hurdle rate" strategy, under which we seek to purchase the stocks of
companies in an industry with excess capacity. We choose the stocks of the
companies with competitive advantages such that they are expected to survive,
and benefit from, the bankruptcies and capacity reductions elsewhere in the
world that necessarily follow an oversupply situation.
The opportunity in commodity-related stocks was indirectly caused by the Asian
crisis. As the Asian economies crumbled, others around the world became weaker
as well. This caused a sharp decline in the demand for many commodities, and
therefore led to an oversupply situation. We took advantage of this situation
by purchasing stocks in areas such as oil refining, paper and pulp production,
copper mining and smelting, and steel production. As we expected, market
forces led to the shutdown of excess production capacity, and commodity
production fell. In addition, lower profitability meant that some of the weaker
companies lacked the resources to maintain their facilities, and this also led
to reduced capacity. As the emerging market economies have started to recover,
and with strong growth in the U.S. and Europe, commodity demand has picked up
and the stocks in the portfolio have appreciated.
One area of concern is the U.S. economy. Although the Series does not hold any
investments in U.S. companies, the Federal Reserve Board's moves to slow the
U.S. economy could have implications abroad. A slowing in the U.S. economy
would reduce demand for commodities and this would negatively affect the
commodity-related companies in the portfolio. Because growth in the emerging
markets and in Europe remains strong, we believe demand from those areas will
continue to support commodity prices. However, we are watching this situation
closely, and we will sell these stocks if we believe they will be unable to
reach our long-term targets for them.
The portfolio also holds a number of stocks purchased under our "profile"
strategy, under which we seek to identify companies that have strong market
position and sustainable competitive advantages in their respective industries.
The Series currently holds stocks in areas such as telecommunications,
pharmaceuticals, and consumer products under this strategy.
We are very pleased with the returns of the World Opportunities Series over the
last several years. Going forward, we will continue to use our proven
investment strategies to identify investment opportunities around the world.
We appreciate your business, and we hope that you and your families continue to
prosper as we move through the year.
Sincerely,
EXETER ASSET MANAGEMENT
1
<PAGE>
Management Discussion and Analysis (unaudited)
[graphic]
[pie chart]
Portfolio Allocation by Country* - As of June 30, 2000
Brazil - 17.89%
Canada - 13.25%
Croatia - 0.94%
Germany - 8.07%
Hong Kong - 4.48%
Mexico - 4.65%
Netherlands - 1.87%
Norway - 2.33%
Philippines - 3.96%
Singapore - 5.15%
United Kingdom - 23.09%
Cash, short-term investments, and other assets, less liabilities - 14.31%
* As a percentage of net assets.
2
<PAGE>
Performance Update as of June 30, 2000 (unaudited)
Exeter Fund, Inc.-
World Opportunities Series
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $11,854 18.54% 18.54%
Inception 1 $17,304 73.04% 15.44%
Morgan Stanley
Capital International World Index
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $11,219 12.19% 12.19%
Inception 1 $19,039 90.39% 18.36%
Morgan Stanley
Capital International All Country World ex U.S. Index
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $11,834 18.34% 18.34%
Inception 1 $15,413 54.13% 11.99%
The value of a $10,000 investment in the Exeter Fund, Inc. - World Opportunities
Series from its inception (9/6/96) to present (6/30/00) 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 International
Date World Opportunities Series International World Index All Country 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
12/31/99 15,385 19,539 15,902
06/30/00 17,304 19,039 15,413
</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 30,2 000 (unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- -----------
COMMON STOCK - 85.6%
<S> <C> <C>
CHEMICALS & ALLIED PRODUCTS - 6.4%
Merck KGAA (Germany) . . . . . . . . . . . . . . 159,000 $4,846,822
Pliva d.d. (Croatia) . . . . . . . . . . . . . . 80,000 826,000
-----------
5,672,822
-----------
COMPUTER EQUIPMENT - 4.3%
Varitronix International Ltd. (Hong Kong). . . . 2,170,000 3,772,082
-----------
CRUDE PETROLEUM & NATURAL GAS - 19.8%
Enterprise Oil plc (United Kingdom). . . . . . . 354,750 2,995,433
Gulf Canada Resources Ltd. - ADR . . . . . . . . 1,141,000 5,491,063
Petroleo Brasileiro S.A. (Petrobras) - ADR . . . 165,000 4,984,897
Stolt Comex Seaway S.A. - ADR *. . . . . . . . . 283,000 3,997,375
-----------
17,468,768
-----------
ELECTRIC SERVICES - 2.6%
National Power plc (United Kingdom). . . . . . . 360,000 2,289,019
-----------
FOOD & KINDRED PRODUCTS - 16.6%
Panamerican Beverages, Inc. - ADR. . . . . . . . 130,000 1,941,875
San Miguel Corp. (Philippines ) . . . . . . . . . 2,823,200 3,494,010
South African Breweries plc (United Kingdom) . . 365,300 2,676,656
Vitasoy International Holdings Ltd. (Hong Kong). 880,000 174,984
Unilever plc - ADR . . . . . . . . . . . . . . . 252,249 6,337,756
-----------
14,625,281
-----------
GLASS PRODUCTS - 2.4%
Waterford Wedgewood plc (United Kingdom) . . . . 1,950,000 2,089,620
-----------
MINING - 2.4%
Grupo Mexico S.A. (Mexico) . . . . . . . . . . . 781,200 2,166,652
-----------
MOTION PICTURE PRODUCTION - 3.3%
Alliance Atlantis Communication Corp. * (Canada) 226,400 2,941,413
-----------
PAPER & ALLIED PRODUCTS - 13.0%
Aracruz Celulose S.A. - ADR. . . . . . . . . . . 235,000 4,538,437
Asia Pulp & Paper Co. Ltd. - ADR . . . . . . . . 899,000 4,551,188
Votarantim Celulose e Papel S.A. - ADR . . . . . 130,000 2,388,750
-----------
11,478,375
-----------
PRIMARY METAL INDUSTRIES - 4.4%
Ispat International - ADR. . . . . . . . . . . . 174,000 1,653,000
Norddeutsche Affinerie AG (Germany). . . . . . . 210,000 2,278,760
-----------
3,931,760
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
SHARES/
PRINCIPAL VALUE
AMOUNT (NOTE 2)
----------- -----------
<S> <C> <C>
TELECOMMUNICATION SERVICES - 4.4%
Telecommunicacoes Brasileiras S.A. (Telebras) - ADR PFD*. 40,000 $3,885,017
-----------
TRANSPORTATION - 6.0%
Canadian National Railway Co. - ADR . . . . . . . . . . . 112,000 3,269,000
Odfjell ASA (Norway). . . . . . . . . . . . . . . . . . . 160,000 2,059,091
-----------
5,328,091
-----------
TOTAL COMMON STOCK
(Identified Cost $75,828,318) . . . . . . . . . . . . . . 75,648,900
-----------
SHORT-TERM INVESTMENTS - 11.3%
Federal Home Loan Bank Discount Note, 7/20/2000 . . . . . $ 4,000,000 3,987,600
Federal National Mortgage Association Discount Note,
8/11/2000 . . . . . . . . . . . . . . . . . . . . . . 3,000,000 2,978,811
Farm Credit Discount Note, 8/14/2000. . . . . . . . . . . 3,000,000 2,977,200
-----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $9,941,026) . . . . . . . . . . . . . . 9,943,611
-----------
TOTAL INVESTMENTS - 96.9%
(Identified Cost $85,769,344) . . . . . . . . . . . . . . 85,592,511
OTHER ASSETS, LESS LIABILITIES - 3.1% . . . . . . . . . . 2,742,325
-----------
NET ASSETS -100%. . . . . . . . . . . . . . . . . . . . . $88,334,836
============
</TABLE>
*Non-income producing security.
ADR - American Depository Receipt
FEDERAL TAX INFORMATION:
At June 30, 2000, the net unrealized depreciation based on identified cost for
federal income tax purposes of $85,769,344 was as follows:
Unrealized appreciation $10,246,052
Unrealized depreciation (10,422,885)
------------
UNREALIZED DEPRECIATION - NET $ (176,833)
=============
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
JUNE 30, 2000
ASSETS:
<S> <C>
Investments, at value (identified cost $85,769,344)
(Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . $85,592,511
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,825,560
Foreign currency, at value (cost $818,910) . . . . . . . . . . 814,782
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 155,080
Receivable for fund shares sold. . . . . . . . . . . . . . . . 106,590
Receivable for securities sold . . . . . . . . . . . . . . . . 63,556
Foreign tax reclaim receivable . . . . . . . . . . . . . . . . 62,765
------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 88,620,844
------------
LIABILITIES:
Accrued management fee (Note 3). . . . . . . . . . . . . . . . 72,029
Accrued directors' fees (Note 3) . . . . . . . . . . . . . . . 3,161
Accrued fund accounting fees (Note 3). . . . . . . . . . . . . 3,587
Custodian fee payable. . . . . . . . . . . . . . . . . . . . . 88,363
Payable for fund shares repurchased. . . . . . . . . . . . . . 87,641
Registration and filing fees . . . . . . . . . . . . . . . . . 13,047
Audit fee payable. . . . . . . . . . . . . . . . . . . . . . . 9,541
Other payables and accrued expenses. . . . . . . . . . . . . . 8,639
------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 286,008
------------
NET ASSETS FOR 8,445,163 SHARES
OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . . . $88,334,836
============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . $ 84,451
Additional paid-in-capital . . . . . . . . . . . . . . . . . . 54,290,291
Undistributed net investment income. . . . . . . . . . . . . . 996,287
Accumulated net realized gain on investments . . . . . . . . . 33,143,169
Net unrealized appreciation on investments, foreign currency,
and other assets and liabilities . . . . . . . . . . . . (179,362)
------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $88,334,836
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE - CLASS A
($88,334,836/8,445,163 shares) . . . . . . . . . . . . . . . $ 10.46
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 2000
INVESTMENT INCOME:
<S> <C>
Dividends (net of foreign tax withheld $106,981) . . . . . $ 1,428,811
Interest . . . . . . . . . . . . . . . . . . . . . . . . . 486,216
-------------
Total Investment Income. . . . . . . . . . . . . . . . . . 1,915,027
-------------
EXPENSES:
Management fee (Note 3). . . . . . . . . . . . . . . . . . 545,618
Fund accounting fees (Note 3). . . . . . . . . . . . . . . 11,489
Directors' fees (Note 3) . . . . . . . . . . . . . . . . . 3,219
Custodian fee. . . . . . . . . . . . . . . . . . . . . . . 78,386
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . . 14,046
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . 26,524
-------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . 679,282
-------------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . 1,235,745
-------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on -
Investments. . . . . . . . . . . . . . . . . . . . . . 24,241,544
Foreign currency and other assets and liabilities. . . (23,234)
-------------
24,218,310
-------------
Net change in unrealized appreciation (depreciation) on -
Investments. . . . . . . . . . . . . . . . . . . . . (13,181,470)
Foreign currency and other assets and liabilities . (4,272)
-------------
(13,185,742)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . . 11,032,568
-------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . $ 12,268,313
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
6/30/00 FOR THE YEAR
(UNAUDITED) ENDED 12/31/99
---------------- --------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income. . . . . . . . . . . . . . . . . $ 1,235,745 $ 4,142,428
Net realized gain on investments . . . . . . . . . . . 24,218,310 51,820,227
Net change in unrealized appreciation (depreciation)
on investments. . . . . . . . . . . . . . . . . . (13,185,742) 13,480,228
---------------- --------------
Net increase from operations . . . . . . . . . . . . . 12,268,313 69,442,883
---------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income . . . . . . . . . . . . . . -- (3,093,630)
From net realized gain on investments. . . . . . . . . -- (25,346,782)
---------------- --------------
Total distributions to shareholders. . . . . . . . . . -- (28,440,412)
---------------- --------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net decrease from capital share
transactions (Note 5) . . . . . . . . . . . . . . . (41,181,639) (139,532,777)
---------------- --------------
Net decrease in net assets . . . . . . . . . . . . . . (28,913,326) (98,530,306)
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . 117,248,162 215,778,468
---------------- --------------
END OF PERIOD (including undistributed net investment
income of $996,287 and $(239,458), respectively). . $ 88,334,836 $ 117,248,162
================ ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
FOR THE
FOR THE SIX PERIOD 9/6/96
MONTHS ENDED (COMMENCEMENT OF
6/30/00 FOR THE YEARS ENDED OPERATIONS)
(UNAUDITED) 12/31/99 12/31/98 12/31/97 TO 12/31/96
------------- -------------------- ------------ ------------ -------------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD . . $ 9.30 $ 8.55 $ 9.76 $ 10.42 $ 10.00
-------------- --------------------- ------------ ------------- --------
Income from investment operations:
Net investment income . . . . . . . . . 0.14 0.39 0.12 0.09 0.05
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . 1.02 3.16 (0.59)1 0.67 0.43
-------------- --------------------- ------------ ------------- --------
Total from investment operations . . . . . 1.16 3.55 (0.47) 0.76 0.48
-------------- --------------------- ------------ ------------- --------
Less distributions to shareholders:
From net investment income. . . . . . . -- (0.28) (0.14) (0.09) (0.05)
From net realized gain on investments . -- (2.52) (0.60) (1.33) (0.01)
-------------- --------------------- ------------ ------------- --------
Total distributions to shareholders. . . . -- (2.80) (0.74) (1.42) (0.06)
-------------- --------------------- ------------ ------------- --------
NET ASSET VALUE - END OF PERIOD. . . . . . $ 10.46 $ 9.30 $ 8.55 $ 9.76 $ 10.42
============== ===================== ============ ============= ========
Total return2. . . . . . . . . . . . . . . 12.47% 42.37% (4.38)% 7.81% 4.82%
Ratios of expenses (to average net assets)
Supplemental Data:
Expenses. . . . . . . . . . . . . . . . 1.24%3 1.15% 1.13% 1.15% 1.17%3
Net investment income . . . . . . . . . 2.26%3 2.19% 2.30% 0.79% 1.54%3
Portfolio turnover . . . . . . . . . . . . 41% 23% 52% 62% 1%
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 88,335 $ 117,248 $ 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, and assumes
reinvestment of distributions.
3 Annualized.
The accompanying notes are an integral part of the financial statements.
9
<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") dba Exeter Asset Management, and its
affiliates. The total authorized capital stock of the Fund consists of 1.7
billion shares of common stock each having a par value of $0.01. As of June 30,
2000, 1.4 billion shares have been designated in total among 28 series, of which
37.5 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 the Advisor under procedures established by and under the general supervision
and responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are purchased
or sold. Dividend income is recorded on the ex-dividend date. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the 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.
10
<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 of net realized gains are made at least annually. An additional
distribution may be necessary to avoid taxation of the Series. Distributions
are recorded on the ex-dividend date.
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, use of tax
equalization, 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. Any such reclassifications are not reflected in
the financial highlights.
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) purchases and sales of
securities and income and expenses are converted into U.S. dollars based upon
the currency exchange rates prevailing on the respective dates of such
transactions.
Gains and losses attributable to foreign currency exchange rates are recorded
for financial statement purposes as net realized gains and losses on
investments. The portion of both realized and unrealized gains and losses on
investment that result from fluctuations in foreign currency exchange rates is
not separately stated.
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, 2000 the Series had no open forward foreign currency exchange
contracts.
11
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of 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.
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 fund administration 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.
Effective April 2000 the Advisor became the Fund's accounting services agent.
For these services, the Fund will pay the Advisor a fee of 0.04% of each Series'
daily net assets calculated daily and payable monthly, with a minimum annual fee
of $48,000 per Series. In addition, the Fund will pay the Advisor an additional
annual fee of $10,000 for each additional class of a Series. The Advisor has
entered into an agreement with BISYS Fund Services Ohio, Inc. under which BISYS
will serve as sub-accounting services agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2000, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$37,465,004 and $78,204,074, respectively.
12
<PAGE>
Notes to Financial Statements (unaudited)
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of World Opportunities Series Class A Shares were:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
6/30/00 ENDED 12/31/99
---------------------------- --------------------
Shares Amount Shares Amount
------------- ---------------- ------------ --------------
<S> <C> <C> <C> <C>
Sold . . . . . . 2,701,174 $ 25,500,344 777,361 $ 7,535,189
Reinvested . . . -- -- 3,035,173 28,109,237
Repurchased. . . (6,857,455) (66,681,983) (16,460,332) (175,177,203)
------------- ---------------- ------------ --------------
Total. . . . . . (4,156,281) $ (41,181,639) (12,647,798) $(139,532,777)
============= ================ ============ ==============
</TABLE>
A significant portion of the Series shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
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.
13
<PAGE>
<PAGE>
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2000
Life Sciences Series
<PAGE>
<PAGE>
Management Discussion and Analysis (unaudited)
DEAR SHAREHOLDERS:
When we reopened the Life Sciences Series in the fourth quarter of 1999, we did
so to capitalize on an exceptional investment opportunity in the healthcare
services sector. In the past thirty years, according to our research, there have
been three major revisions to Medicare reimbursement, or perceived threats to
the existing reimbursement structure. In each case the initial dislocation
among healthcare providers that followed represented an excellent investment
opportunity. Healthcare service companies were eventually able to adjust their
cost structures to lowered reimbursement rates, and when spending growth
resumed, the most efficient providers were able to prosper. The Life Sciences
Series was reactivated to take advantage of a similar rebound that we believe
will occur over the next several years as the healthcare services sector
recovers from dramatic dislocations brought on by the Balanced Budget Act of
1997.
From reactivation in November to the end of June, the Series has generated a
30.3% total return, which significantly exceeds the 7.0% total return of the S&P
500, as well as the 10.4% return of the S&P Healthcare Index during the same
time period. Consistent with our investment thesis, this outperformance has
been driven by the investment community's recognition that after several years
of pain, healthcare providers stand to benefit from an improving regulatory and
reimbursement environment. In fact, both the President and members of Congress
have gone beyond calling for a simple halt to reimbursement cuts, and are in the
process of lobbying for additional give backs and monetary relief for healthcare
providers.
As principal beneficiaries of an improving reimbursement environment, Hospital
Management companies have been the strongest performers in the Series.
For-profit hospitals have also used their financial strength to pursue
attractive acquisition opportunities among not-for-profit hospitals that remain
capital-constrained following BBA '97. In addition, these companies are
utilizing emerging information technologies to cut costs and realize greater
economies of scale, thus leveraging the improving reimbursement trends.
Medical Products and Hospital Suppliers have also been strong performers in the
Series, as these companies benefit from strengthening demand among their
healthcare provider customer base. We used volatility in this sector to add to
our position in this sector during the first half of 2000 and to take profits
following a strong rebound among healthcare information technology companies.
In addition, this sector's relatively steady, non-cyclical growth pattern has
attracted investors concerned about a potential economic slowdown.
Conditions in the Nursing Care Facilities sector remain challenging, and the
performance of the publicly traded companies has continued to deteriorate. This
is primarily due to labor cost inflation, dramatic increases in liability
insurance, and competition from alternate sites of care. While we believe this
sector will eventually benefit from increased Medicare reimbursement, we are
concerned that in the near term expenses are rising faster than revenues. As a
result, we significantly reduced our investment in this sector and await signs
that this deterioration in fundamentals has been arrested. In the Assisted
Living sector, an improvement in industry conditions has taken longer than
expected to materialize. However, continued declines in supply, along with
strong underlying demand, are sowing the seeds of recovery. Hence, we are
optimistic about the future prospects for leaders in the Assisted Living
category.
Lastly, our non-services healthcare positions also performed well, and the
Series added to its position in the Major Pharmaceutical, Generic, and Other
Pharmaceutical sectors in March when the group sold off with Proctor & Gamble's
disappointing earnings pre-announcement. We plan to continue to use the speed
and flexibility of the Series to take advantage of such opportunities that are
created by the volatility of the healthcare sector.
1
<PAGE>
Management Discussion and Analysis (unaudited)
We remain optimistic about prospects for the Life Sciences Series in the second
half of 2000. As Medicare spending reaccelerates, managed care reimbursement
trends remain robust, and healthcare providers benefit from their lowered costs,
we expect stocks in our portfolio will continue to positively reflect the
improving fundamentals within the healthcare services sector.
We appreciate your business, and we hope that you and your families continue to
prosper as we move through the year.
Sincerely,
EXETER ASSET MANAGEMENT
2
<PAGE>
Performance Update as of June 30, 2000 (unaudited)
Exeter Fund, Inc.
Life Sciences Series
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
Inception 1 $13,030 30.30% NA
S&P 500 Total Return Index
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
Inception 1 $10,699 6.99% NA
S&P Health Care Index
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
Inception 1 $11,044 10.44% NA
The value of a $10,000 investment in the Exeter Fund, Inc. - Life Sciences
Series from its current activation (11/05/99) to present (6/30/00) as compared
to the Standard & Poor's 500 Total Return and the Standard & Poor's Health Care
Index. 2
[graphic]
[line chart]
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. S&P 500 S&P Health
Date Life Science Series Total Return Index Care Index
<S> <C> <C> <C>
11/05/99 10,000 10,000 10,000
12/31/99 10,800 10,745 8,933
03/31/00 11,410 10,991 8,978
06/30/00 13,030 10,699 11,044
</TABLE>
1 The Series and Index performance numbers are calculated from November 5,
1999, the Series' current activation date. The Series' performance is
historical and may not be indicative of future results.
2 The Standard & Poor's (S&P) 500 Total Return Index is an unmanaged
capitalization-weighted measure of 500 widely held common stocks listed on the
New York Stock Exchange, American Stock Exchange, and 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 Standard & Poor's
(S&P) Health Care Index is a capitalization-weighted measure of all the stocks
in the S&P 500 that are involved in the business of healthcare related products
and services.
3
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- -----------
COMMON STOCK - 96.35%
<S> <C> <C>
ASSISTED LIVING - 6.42%
American Retirement Corp.* . . . . . . . . . . . 454,200 $2,526,487
Brookdale Living Communities, Inc.*. . . . . . . 58,000 841,000
Emeritus Corp.*. . . . . . . . . . . . . . . . . 106,000 351,125
Sunrise Assisted Living, Inc.* . . . . . . . . . 115,000 2,127,500
----------
5,846,112
----------
BIOTECHNOLOGY - 3.88%
Connetics Corp.* . . . . . . . . . . . . . . . . 82,750 1,215,391
PathoGenesis Corp.*. . . . . . . . . . . . . . . 89,350 2,323,100
----------
3,538,491
----------
HOSPITAL MANAGEMENT - 55.27%
HCA - The Healthcare Corp. . . . . . . . . . . . 283,800 8,620,425
Health Management Associates, Inc.*. . . . . . . 200,000 2,612,500
LifePoint Hospitals, Inc.* . . . . . . . . . . . 330,000 7,342,500
Province Healthcare Co.* . . . . . . . . . . . . 172,000 6,213,500
Quorum Health Group, Inc.* . . . . . . . . . . . 416,000 4,290,000
Tenet Healthcare Corp.*. . . . . . . . . . . . . 256,000 6,912,000
Triad Hospitals, Inc.* . . . . . . . . . . . . . 408,000 9,868,500
Universal Health Services, Inc.* . . . . . . . . 68,000 4,488,000
----------
50,347,425
----------
MAJOR PHARMACEUTICALS, GENERICS, AND OTHER
PHARMACEUTICALS - 8.32%
American Home Products Corp. . . . . . . . . . . 16,500 969,375
Bristol-Myers Squibb Co. . . . . . . . . . . . . 32,400 1,887,300
Merck KgaA (Germany) (Note 6). . . . . . . . . . 48,000 1,463,192
Schering-Plough Corp.. . . . . . . . . . . . . . 41,200 2,080,600
Watson Pharmaceuticals, Inc.*. . . . . . . . . . 22,000 1,182,500
----------
7,582,967
----------
<PAGE>
MEDICAL PRODUCTS AND HOSPITAL SUPPLIERS - 20.31%
Abbott Laboratories. . . . . . . . . . . . . . . 48,000 2,139,000
Acuson Corp.*. . . . . . . . . . . . . . . . . . 140,000 1,890,000
Baxter International, Inc. . . . . . . . . . . . 39,300 2,763,281
Beckman Coulter, Inc.. . . . . . . . . . . . . . 4,075 237,878
Becton, Dickinson & Co.* . . . . . . . . . . . . 112,000 3,213,000
Cerner Corp.*. . . . . . . . . . . . . . . . . . 24,000 654,000
Edwards Lifesciences Corp.*. . . . . . . . . . . 7,860 150,322
Hillenbrand Industries, Inc. . . . . . . . . . . 86,000 2,692,875
IDX Systems Corp.* . . . . . . . . . . . . . . . 75,000 1,059,375
Sybron International Corp.*. . . . . . . . . . . 187,000 3,704,938
----------
18,504,669
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
SHARES/
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------------ -----------
<S> <C> <C>
NURSING CARE FACILITIES - 2.15%
Manor Care, Inc.*. . . . . . . . . . . . 280,000 $1,960,000
-----------
TOTAL COMMON STOCK
(Identified Cost $71,677,669) . . . . . 87,779,664
-----------
SHORT-TERM INVESTMENTS - 4.36%
Dreyfus Treasury Cash Management Fund. . 979,964 979,964
Fannie Mae Discount Note, 7/20/2000. . . $ 3,000,000 2,990,736
-----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $3,969,477) . . . . . . 3,970,700
-----------
TOTAL INVESTMENTS - 100.71%
(Identified Cost $75,647,146). . . . . . 91,750,364
OTHER ASSETS, LESS LIABILITIES - (0.71)% (647,740)
-----------
NET ASSETS - 100%. . . . . . . . . . . . $91,102,624
============
</TABLE>
* Non-income producing security
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At June 30, 2000, the net unrealized appreciation based on identified
cost for federal income tax purposes of $75,647,146 was as follows:
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . $21,215,823
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . (5,112,605)
------------
UNREALIZED APPRECIATION - NET . . . . . . . . . . . . . . . . . . . . $16,103,218
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, 2000
ASSETS:
<S> <C>
Investments, at value (identified cost $75,647,146)(Note 2) $91,750,364
Foreign currency, at value (cost $27,612) . . . . . . . . . 28,838
Receivable for securities sold. . . . . . . . . . . . . . . 996,907
Dividends receivable. . . . . . . . . . . . . . . . . . . . 7,912
Foreign tax reclaim receivable. . . . . . . . . . . . . . . 6,404
------------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . 92,790,425
------------
LIABILITIES:
Accrued management fee (Note 3) . . . . . . . . . . . . . . 71,732
Accrued fund accounting fees (Note 3) . . . . . . . . . . . 3,722
Accrued director's fees (Note 3). . . . . . . . . . . . . . 3,332
Payable for securities purchased. . . . . . . . . . . . . . 1,486,440
Payable for fund shares repurchased . . . . . . . . . . . . 89,419
Audit fee payable . . . . . . . . . . . . . . . . . . . . . 12,988
Printing and postage fees payable . . . . . . . . . . . . . 9,133
Other payables and accrued expenses . . . . . . . . . . . . 11,035
------------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . 1,687,801
------------
NET ASSETS FOR 6,993,651 SHARES
OUTSTANDING. . . . . . . . . . . . . . . . . . . . . . . $91,102,624
============
NET ASSETS CONSIST OF:
Capital stock . . . . . . . . . . . . . . . . . . . . . . . $ 69,937
Additional paid-in-capital. . . . . . . . . . . . . . . . . 68,729,399
Undistributed net investment loss . . . . . . . . . . . . . (206,183)
Accumulated net realized gain on investments. . . . . . . . 6,404,680
Net unrealized appreciation on investments. . . . . . . . . 16,104,791
------------
TOTAL NET ASSETS. . . . . . . . . . . . . . . . . . . . . . $91,102,624
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($91,102,624/6,993,651 shares) . . . . . . . . . . . . . $ 13.03
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 2000
INVESTMENT INCOME:
<S> <C>
Dividends (net of foreign taxes withheld $3,672) . . . . . . . . . $ 153,995
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,724
------------
Total Investment Income. . . . . . . . . . . . . . . . . . . . . . 262,719
------------
EXPENSES:
Management fee (Note 3) . . . . . . . . . . . . . . . . . . . . . 423,161
Fund accounting fees (Note 3). . . . . . . . . . . . . . . . . . . 11,672
Director's fees (Note 3) . . . . . . . . . . . . . . . . . . . . . 3,332
Custodian fee. . . . . . . . . . . . . . . . . . . . . . . . . . . 12,432
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,811
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . 8,537
------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 470,945
------------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . . . . (208,226)
------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments and other assets and liabilities. 5,582,539
Net change in unrealized depreciation on investments
and other assets and liabilities. . . . . . . . . . . . . . . . 10,819,443
------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 16,401,982
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . $16,193,756
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX MONTHS 11/5/99 (RECOMMENCEMENT
ENDED 6/30/00 OF OPERATIONS) TO
(UNAUDITED) 12/31/99
------------------------- -----------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income. . . . . . . . . . . . . . . . . $ (208,226) $ 2,042
Net realized gain on investments . . . . . . . . . . . 5,582,539 822,141
Net change in unrealized appreciation
on investments . . . . . . . . . . . . . . . . . . 10,819,443 5,285,348
------------------------- -----------
Net increase from operations . . . . . . . . . . . . . 16,193,756 6,109,531
------------------------- -----------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase (decrease) from capital share
transactions (Note 5) . . . . . . . . . . . . . . . (7,861,290) 76,660,627
------------------------- -----------
Net increase in net assets . . . . . . . . . . . . . . 8,332,466 82,770,158
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . 82,770,158 --
------------------------- -----------
END OF PERIOD (including undistributed net investment
income of $(206,183) and $2,043, respectively). . . $ 91,102,624 $82,770,158
========================= ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE PERIOD FOR THE PERIOD
ENDED 6/30/00 11/5/99 1 1/1/95 TO
(UNAUDITED) TO 12/31/99 9/21/95 4
-------------------- ----------------- ----------------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
<S> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD. . . . $ 10.80 $ 10.00 $ 10.43
-------------------- ---------------- ----------------
Income from investment operations:
Net investment income. . . . . . . . . . . (0.03) -- 0.06
Net realized and unrealized gain
on investments. . . . . . . . . . . . . . 2.26 0.80 4.02
-------------------- ---------------- ----------------
Total from investment operations. . . . . . . 2.23 0.80 4.08
-------------------- ---------------- ----------------
Less distributions to shareholders:
From net investment income . . . . . . . . -- -- (0.06)
From net realized gain on investments. . . -- -- (6.59)
Redemption of capitalization . . . . . . . -- -- (7.86)
-------------------- ---------------- ----------------
Total distributions to shareholder. . . . . . -- -- (14.51)
-------------------- ---------------- ----------------
NET ASSET VALUE - END OF PERIOD . . . . . . . $ 13.03 $ 10.80 $ 0.00
==================== ================ ================
Total return 2. . . . . . . . . . . . . . . . 20.65% 8.00% 41.07%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses. . . . . . . . . . . . . . . . . 1.11%3 1.22%3 1.06%3
Net investment income (loss). . . . . . . (0.49%)3 0.02%3 0.57%3
Portfolio turnover. . . . . . . . . . . . 42% 10% 28%
NET ASSETS - END OF PERIOD
(000'S OMITTED). . . . . . . . . . . . . . $ 91,103 $ 82,770 --
==================== ================ ================
</TABLE>
1 Recommencement of operations.
2 Represents aggregate total return for the period indicated, and assumes
reinvestment of distributions.
3 Annualized.
4 Date of complete redemption.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Life Sciences 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 November 5, 1999, the Series resumed sales of shares to advisory clients and
employees of Manning & Napier Advisors, Inc. (the "Advisor") dba Exeter Asset
Management, and its affiliates. Previously, the Series was available from time
to time to employees and advisory clients of Manning & Napier Advisors, Inc.
The total authorized capital stock of the Fund consists of 1.7 billion shares of
common stock each having a par value of $0.01. As of June 30, 2000, 1.4 billion
shares have been designated in total among 28 series, of which 50 million have
been designated as Life Sciences 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.
10
<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 of net realized gains are made annually. An additional
distribution may be necessary to avoid taxation of the Series. Distributions
are recorded on the ex-dividend date.
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. Any such reclassifications are not reflected in the financial
highlights.
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.
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 fund administration 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.
Effective April 2000 the Advisor became the Fund's accounting services agent.
For these services, the Fund will pay the Advisor a fee of 0.04% of each Series'
daily net assets calculated daily and payable monthly, with a minimum annual fee
of $48,000 per Series. The Advisor has entered into an agreement with BISYS
Fund Services Ohio, Inc. under which BISYS will serve as sub-accounting services
agent.
11
<PAGE>
Notes to Financial Statements (unaudited)
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2000, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$33,773,553 and $40,288,598, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Life Sciences Series Class A Shares were:
<TABLE>
<CAPTION>
FOR THE PERIOD 11/5/99
(RECOMMENCEMENT OF
FOR THE SIX MONTHS OPERATIONS)
ENDED 6/30/00 TO 12/31/99
----------------------- --------------------
Shares Amount Shares Amount
----------------------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold. . . . 207,162 $ 2,321,723 7,802,706 $78,090,749
Repurchased (877,630) (10,183,013) (138,587) (1,430,122)
----------------------- ------------- ---------- ------------
Total . . . (670,468) $ (7,861,290) 7,664,119 $76,660,627
======================= ============= ========== ============
</TABLE>
A significant portion of the Series shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
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.
12
<PAGE>
<PAGE>
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2000
Global Fixed Income Series
<PAGE>
Management Discussion and Analysis (unaudited)
DEAR SHAREHOLDERS:
The Global Fixed Income Series has been open for almost three years now, and
while the Latin American financial crisis of 1997-1998 was the specific
investment catalyst that triggered the activation of the Series, the broader
reason for its existence is to allow us access to the greatest number of fixed
income investment opportunities possible.
The trigger behind the activation of the Global Fixed Income Series was the
sell-off of Latin American debt (specifically Brazil, Argentina, and Mexico) in
1997. This sell-off occurred in sympathy with the problems in the Pacific Rim,
although there were problems specific to the Latin American countries that also
affected bond values there. Many of those problems have since been addressed,
especially in Brazil. The turnaround over the last 18 months has been
remarkable. Allowing its currency to float and addressing many of its fiscal
problems set the stage for the turnaround. Today, Brazil's interest rates are
falling. The country is running a modest trade surplus, and attracting foreign
capital has become much easier. Unfortunately, an increase in risk premiums due
to tighter monetary policies in the U.S. has caused the dollar-denominated
securities of Brazil to lag through the first six months of this year.
Argentina's economy has not fared as well as Brazil's since its currency is
still pegged to the U.S. dollar. Argentina has also suffered from higher
required risk premiums, and given both factors, the Series has reduced its
exposure to dollar-denominated Argentinean debt. Mexico continues to benefit
from its proximity to the U.S. and rising oil prices. It is close to being
assigned an investment grade rating and its bonds have performed nicely through
the first half of this year. The lone concern with Mexico at this point in time
is the uncertainty surrounding the results of the recent election.
The fixed income markets were especially unfriendly in 1999, but this year the
fixed income environment has been much more hospitable. Interest rates on the
long end of the U.S. yield curve have moved lower since the start of the year.
Interest rates on securities with maturities of two to five years have remained
basically unchanged. The divergence can be traced to two factors. First, the
Federal Reserve Bank has continued to raise the Fed Funds rate, which exerts an
upward influence on rates on short-term securities. At the same time, the Fed's
actions have become more aggressive, leading the long end of the yield curve to
move lower due to the belief that the rate of economic growth will ultimately
slow. And second, the U.S. is expected to run a budget surplus in excess of $200
billion this year. That has allowed the U.S. Treasury to institute a security
buyback program that has been focused on long-term securities. For intermediate
securities, the effect of the Fed's actions on short-term interest rates has
been offset by the economic factors affecting long bonds, and rates have been
largely unchanged. Long-term interest rates fell because the reaction to the
Fed's changes and the Treasury buyback worked together to reduce rates.
Unfortunately, not all sectors of the fixed income markets have benefited. The
most notable underperformance has been in the corporate/yankee bond sector, a
sector in which the Series is heavily weighted. Issuance in that sector remains
high, and if the Fed pushes up short rates enough to cause the economy to slow,
one would expect credit quality to deteriorate. It is important to note,
however, that this sector is generating positive returns, which was not the case
in 1999, and we believe that over the longer term the securities that we hold in
this sector will outperform U.S. Treasuries. We believe that the Global Fixed
Income Series has opened investment opportunities to us that we would not
otherwise have. The performance of the Latin American holdings, while volatile,
should in the long run allow the Series to outperform its benchmarks. It due to
opportunities such as these that the Global Fixed Income Series is an important
part of the fixed income process at Manning & Napier.
We appreciate your business, and we hope that you and your families continue to
prosper as we move through the year.
Sincerely,
EXETER ASSET MANAGEMENT
1
<PAGE>
Management Discussion and Analysis (unaudited)
[graphic]
[pie chart]
Portfolio Composition* - As of June 30, 2000
Argentina Government - 2.75%
Australia Government - 8.66%
Brazil Government - 5.83%
Canada Government - 17.26%
Israel Government - 2.43%
Italy Government - 4.14%
Mexico Government - 3.79%
New Zealand Government - 1.56%
South Africa Government - 2.41%
Spain Government - 3.45%
United Kingdom Government - 5.44%
Corporate Bonds - 38.84%
Cash, short-term investments, and other assets, less liabilities - 3.44%
* As a percentage of net assets.
2
<PAGE>
Performance Update as of June 30, 2000 (unaudited)
Exeter Fund, Inc.
Global Fixed Income Series
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $10,322 3.22% 3.22%
Inception 1 $10,977 9.77% 3.55%
Merrill Lynch Global Government Bond Index
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $10,525 5.25% 5.25%
Inception 1 $11,149 11.49% 4.16%
Merrill Lynch U.S. Treasury Bond Index
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $10,536 5.36% 5.36%
Inception 1 $11,495 14.95% 5.36%
The value of a $10,000 investment in the Exeter Fund, Inc. - Global Fixed Income
Series from its inception (10/31/97) to present (6/30/00) 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 chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. Merrill Lynch Global Merrill Lynch
Date Global Fixed Income Series Government Bond Index U.S. Treasury Bond 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
12/31/99 10,977 11,045 10,913
06/30/00 10,977 11,149 11,495
</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 500 Global Government bonds
The unmanaged Merrill Lynch U.S. Treasury Bond Index is a market value weighted
measure of approximately 140 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, 2000 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
CURRENCY AMOUNT (NOTE 2)
---------- ---------- -----------
<S> <C> <C> <C>
GOVERNMENT SECURITIES - 57.72%
ARGENTINA - 2.75%
Republic of Argentina, 11.375%, 1/30/2017
(Identified Cost $2,097,500). . . . . . . . . . USD 2,500,000 $2,236,250
-----------
AUSTRALIA - 8.66%
Australian Government, 8.75%, 1/15/2001 . . . . AUD 5,320,000 3,240,737
Australian Government, 6.75%, 11/15/2006. . . . AUD 6,140,000 3,811,001
-----------
TOTAL AUSTRALIAN SECURITIES
(Identified Cost $8,269,396). . . . . . . . . . 7,051,738
-----------
BRAZIL - 5.83%
Federal Republic of Brazil, 10.125%, 5/15/2027
(Identified Cost $4,965,000). . . . . . . . . . USD 6,000,000 4,743,900
-----------
CANADA - 17.26%
Canadian Government, 5.50%, 9/1/2002. . . . . . CAD 3,745,000 2,501,774
Canadian Government, 7.25%, 6/1/2007. . . . . . CAD 11,745,000 8,496,735
Canadian Government, 6.00%, 6/1/2008. . . . . . CAD 4,500,000 3,052,423
-----------
TOTAL CANADIAN SECURITIES
(Identified Cost $14,739,167). . . . . . . . . 14,050,932
-----------
ISRAEL - 2.43%
State of Israel, 7.75%, 3/15/2010
(Identified Cost $1,990,711). . . . . . . . . . USD 2,000,000 1,974,684
-----------
ITALY - 4.14%
Buoni Poliennali del Tesoro, 6.25%, 3/1/2002
(Identified Cost $3,970,265) . . . . . . . . . . EUR 3,460,255 3,374,362
-----------
MEXICO - 3.79%
United Mexican States, 11.50%, 5/15/2026
(Identified Cost $2,301,000) . . . . . . . . . USD 2,600,000 3,084,250
-----------
NEW ZEALAND - 1.56%
New Zealand Government, 8.00%, 11/15/2006
(Identified Cost $1,723,457). . . . . . . . . . NZD 2,550,000 1,269,887
-----------
SOUTH AFRICA - 2.41%
Republic of South Africa, 9.125%, 5/19/2009
(Identified Cost $2,036,974). . . . . . . . . . USD 2,000,000 1,960,000
-----------
SPAIN - 3.45%
Bonos Y Oblig Del Estado, 7.90%, 2/28/2002
(Identified Cost $3,477,955). . . . . . . . . . EUR 2,812,737 2,812,979
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT/ VALUE
CURRENCY SHARES (NOTE 2)
----------- --------- -----------
<S> <C> <C> <C>
UNITED KINGDOM - 5.44%
United Kingdom Bond, 8.00%, 12/07/2000
(Identified Cost $4,947,671). . . . . . . . . . . . . . BP 2,900,000 $4,426,894
-----------
TOTAL GOVERNMENT SECURITIES
(Identified Cost $50,519,096) . . . . . . . . . . . . . . . 46,985,876
-----------
CORPORATE BONDS - 38.84%
Asia Pulp & Paper, 3.50%, 4/30/2003 (Mauritius) . . . . USD 5,000,000 3,675,000
Bayer Corp., 6.20%, 2/15/2028 (United States) . . . . . USD 2,000,000 1,876,420
Canadian National Railway, 6.90%, 7/15/2028 (Canada). . USD 3,000,000 2,604,654
Conseco, Inc., 6.40%, 6/15/2001 (United States) . . . . USD 2,000,000 1,580,000
General Electric, 7.44%, 12/11/2002 (United States) . . USD 1,300,000 1,306,890
Gulf Canada Resources, 8.375%, 11/15/2005 (Canada). . . USD 2,000,000 1,980,000
Merrill Lynch & Co., Stock Linked Note (Telebras),
11/28/2003 (United States) . . . . . . . . . . . . . USD 5,000,000 5,381,240
Motorola, Inc., 6.50%, 9/1/2025 (United States). . . . USD 3,000,000 2,892,735
Oracle Corp., 6.91%, 2/15/2007 (United States). . . . . USD 2,000,000 1,919,750
PDVSA Finance Ltd., 8.75%, 2/15/2004 (Cayman Islands) . USD 1,876,000 1,847,860
Pemex Finance Ltd., 5.72%, 11/15/2003 (Cayman Islands). USD 2,187,500 2,126,513
Pemex Finance Ltd., 6.125%, 11/15/2003 (Cayman Islands) USD 466,667 451,122
Tembec Industries, Inc., 8.625%, 6/30/2009 (Canada) . . USD 250,000 240,000
Xerox Corp., 6.25%, 11/15/2026 (United States). . . . . USD 3,990,000 3,742,061
-----------
TOTAL CORPORATE BONDS
(Identified Cost $33,788,454). . . . . . . . . . . . . . . . . 31,624,245
-----------
SHORT-TERM INVESTMENTS - 0.66%
Dreyfus Treasury Cash Management Fund
(Identified Cost $535,480) . . . . . . . . . . . . . . 535,480 535,480
-----------
TOTAL INVESTMENTS - 97.22%
(Identified Cost $84,843,030). . . . . . . . . . . . . . . . . 79,145,601
OTHER ASSETS, LESS LIABILITIES - 2.78% . . . . . . . . . . . . 2,264,035
-----------
NET ASSETS -100% . . . . . . . . . . . . . . . . . . . . . . . $81,409,636
===========
</TABLE>
KEY:
AUD- Australian Dollar BP- British Pound
CAD- Canadian Dollar EUR- Euro Dollar
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, 2000 (unaudited)
FEDERAL TAX INFORMATION:
At June 30, 2000, the net unrealized depreciation based on identified
cost for federal tax purposes of $84,843,030 was as follows:
Unrealized appreciation $1,443,457
Unrealized depreciation (7,140,886)
-----------
UNREALIZED DEPRECIATION - NET $(5,697,429)
============
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 2000
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value (identified cost $84,843,030)(Note 2). . $79,145,601
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,036,870
Foreign currency, at value (cost $551,268) . . . . . . . . . . 554,085
Interest receivable. . . . . . . . . . . . . . . . . . . . . . 1,143,027
Receivable for fund shares sold. . . . . . . . . . . . . . . . 173,480
Foreign tax reclaims receivable. . . . . . . . . . . . . . . . 4,619
------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 82,057,682
------------
LIABILITIES:
Accrued management fees (Note 3) . . . . . . . . . . . . . . . 66,054
Accrued directors' fees (Note 3) . . . . . . . . . . . . . . . 3,377
Accrued fund accounting fees (Note 3). . . . . . . . . . . . . 3,361
Payable for fund shares repurchased. . . . . . . . . . . . . . 515,957
Registration and filing fees payable . . . . . . . . . . . . . 33,357
Custodian fees payable . . . . . . . . . . . . . . . . . . . . 12,867
Audit fee payable. . . . . . . . . . . . . . . . . . . . . . . 10,354
Other payables and accrued expenses. . . . . . . . . . . . . . 2,719
------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 648,046
------------
NET ASSETS FOR 8,599,388 SHARES OUTSTANDING. . . . . . . . . . $81,409,636
============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . $ 85,994
Additional paid-in-capital . . . . . . . . . . . . . . . . . . 86,486,853
Undistributed net investment income. . . . . . . . . . . . . . 2,288,929
Accumulated net realized loss on investments . . . . . . . . . (1,761,646)
Net unrealized depreciation on investments, foreign currency,
and other assets and liabilities. . . . . . . . . . . . . (5,690,494)
------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $81,409,636
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($81,409,636/8,599,388 shares) . . . . . . . . . . . . . . . . $ 9.47
============
</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, 2000
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest (net of foreign tax withheld, $2,139). . $2,849,894
Dividends . . . . . . . . . . . . . . . . . . . . 6,324
------------
Total Investment Income . . . . . . . . . . . . . 2,856,218
------------
EXPENSES:
Management fees (Note 3) . . . . . . . . . . . . . 425,469
Directors' fees (Note 3) . . . . . . . . . . . . . 3,332
Fund accounting fees (Note 3) . . . . . . . . . . 11,672
Custodian fee . . . . . . . . . . . . . . . . . . 14,948
Audit fee . . . . . . . . . . . . . . . . . . . . 13,176
Miscellaneous . . . . . . . . . . . . . . . . . . 27,701
------------
Total Expenses . . . . . . . . . . . . . . . . . 496,298
------------
NET INVESTMENT INCOME . . . . . . . . . . . . . 2,359,920
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized loss on-
Investments . . . . . . . . . . . . . . . . . . . (354,596)
Foreign currency and other assets and liabilities (371,410)
------------
(726,006)
------------
Net change in unrealized depreciation on-
Investments . . . . . . . . . . . . . . . . . . . (1,741,235)
Foreign currency and other assets and liabilities 10,770
------------
(1,730,465)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS . . . . . . . . . . . . . . . . . (2,456,471)
------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . $ (96,551)
============
</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 6/30/00 FOR THE YEAR
(UNAUDITED) ENDED 12/31/99
-------------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income . . . . . . . . . . . . . . . . . . $ 2,359,920 $ 5,604,227
Net realized loss on investments. . . . . . . . . . . . . (726,006) (488,519)
Net change in unrealized depreciation on investments and
foreign currency . . . . . . . . . . . . . . . . . . (1,730,465) (539,921)
-------------------- ----------------
Net increase (decrease) from operations . . . . . . . . . (96,551) 4,575,787
-------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE2):
From net investment income. . . . . . . . . . . . . . . . -- (5,888,207)
From realized gain on investments . . . . . . . . . . . . -- (17,549)
-------------------- ----------------
Total distribution to shareholders. . . . . . . . . . . . -- (5,905,756)
-------------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net decrease from capital share
transactions (Note 5) . . . . . . . . . . . . . . . . (10,154,781) (25,801,780)
-------------------- ----------------
Net decrease in net assets. . . . . . . . . . . . . . . . (10,251,332) (27,131,749)
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . 91,660,968 118,792,717
-------------------- ----------------
END OF PERIOD (including undistributed net investment
income of $2,288,929 and $(70,991), respectively). . . 81,409,636 $ 91,660,968
==================== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE PERIOD
ENDED 06/30/00 FOR THE YEARS ENDED 10/31/97* TO
(UNAUDITED) 12/31/99 12/31/98 12/31/97
------------------- ----------------- ---------- ----------
Per share data (for a share outstanding
throughout each period):
<S> <C> <C> <C> <C>
Net asset value - Beginning of period. . . . $ 9.47 $ 9.66 $ 10.12 $ 10.00
--------------------- ---------------- ---------- ---------
Income from investment operations:
Net investment income . . . . . . . . . . . 0.26 0.61 0.60 0.08
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . (0.26) (0.16) (0.32) 0.12
--------------------- ---------------- ---------- ---------
Total from investment operations. . . . . . . -- 0.45 0.28 0.20
--------------------- ---------------- ---------- ---------
Less distributions to shareholders:
From net investment income. . . . . . . . . -- (0.64) (0.63) (0.08)
From realized gain on investments . . . . . -- (0.00) (0.11) --
--------------------- ---------------- ---------- ---------
Total distributions to shareholders . . . . . -- (0.64) (0.74) (0.08)
--------------------- ---------------- ---------- ---------
NET ASSET VALUE- END OF PERIOD. . . . . . . . $ 9.47 $ 9.47 $ 9.66 $ 10.12
===================== ================ ========== =========
Total return 1. . . . . . . . . . . . . . . . 0.00% 4.71% 2.78% 2.00%
Ratios to average net assets/
Supplemental Data:
Expenses . . . . . . . . . . . . . . . . . 1.16%2 1.10% 1.10% 1.09%2
Net investment income. . . . . . . . . . . 5.53%2 5.42% 5.75% 4.75%2
Portfolio turnover. . . . . . . . . . . . . . 7% 10% 29% 3%
NET ASSETS-END OF PERIOD (000'S OMITTED). . . $ 81,410 $ 91,661 $ 118,793 $127,172
===================== ================ ========== =========
</TABLE>
1 Represents aggregate total return for the period indicated, and assumes
reinvestment of distributions.
2 Annualized.
* Commencement of operations.
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") dba Exeter Asset Management, and its affiliates.
The total authorized capital stock of the Fund consists of 1.7 billion shares of
common stock each having a par value of $0.01. As of June 30, 2000, 1.4 billion
shares have been designated in total among 28 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.
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 of net realized gains are made at least annually. An additional
distribution may be necessary to avoid taxation of the Series. Distributions
are recorded on the ex-dividend date.
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. Any such reclassifications are not reflected in the financial
highlights.
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, 2000, the Series had no open forward foreign currency exchange
contracts.
12
<PAGE>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of 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.
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 fund administration 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.
Effective April 2000 the Advisor became the Fund's accounting services agent.
For these services, the Fund will pay the Advisor a fee of 0.04% of each Series'
daily net assets calculated daily and payable monthly, with a minimum annual fee
of $48,000 per Series. The Advisor has entered into an agreement with BISYS
Fund Services Ohio, Inc. under which BISYS will serve as sub-accounting services
agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2000, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$5,598,190 and $7,062,629, respectively. Purchases and sales of United States
Government securities, other than short-term securities were $0 and $5,307,040,
respectively.
13
<PAGE>
Notes to Financial Statements (unaudited)
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Global Fixed Income Series were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 06/30/00 Ended 12/31/99
------------------- ----------------
Shares Amount Shares Amount
------------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold. . . . 574,904 $ 5,401,117 519,125 $ 5,044,723
Reinvested. -- -- 612,441 5,746,614
Repurchased (1,655,101) (15,555,898) (3,755,364) (36,593,117)
------------------- ---------------- ----------- -------------
Total . . . (1,080,197) $ (10,154,781) (2,623,798) $(25,801,780)
=================== ================ =========== =============
</TABLE>
A significant portion of the Series shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
6. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of U.S. companies and the United States Government. These risks
include revaluation of currencies and future adverse political and economic
developments. Moreover, securities of foreign companies and foreign governments
and their markets may be less liquid and their prices more volatile than of
those securities of comparable U.S. companies and the United States Government.
14
<PAGE>
<PAGE>
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2000
New York Tax Exempt Series
<PAGE>
<PAGE>
Management Discussion and Analysis (unaudited)
DEAR SHAREHOLDERS:
Anyone who has ever invested in the fixed income markets, taxable or tax-exempt,
knows what a pivotal role the economy plays in determining how those investments
perform. Strong or accelerating growth typically hurts performance, while weak
or decelerating growth tends to help. That is what makes the first half of 2000
so intriguing. Economic growth was especially strong during the first quarter.
Nonetheless long-term interest rates fell and the yield curve inverted. Fixed
income securities performed quite well during the first quarter. During the
second quarter, growth appeared to slow, or at least lose some of its momentum,
and interest rates moved sideways. Fixed income securities simply earned their
coupons. What gives?
Let's start with the first quarter. The U.S. Treasury yield curve usually
inverts because short-term interest rates rise faster than longer-term rates.
Short rates rise as the Federal Reserve tightens monetary policy. The more the
Fed tightens, the higher short rates go. At first, long rates rise in tandem
with short rates, but at some point rising short rates increase the likelihood
of slower economic growth and begin to offset some, if not all, of the
inflationary pressures in the economy. Long rates decouple from short rates,
rising less, not rising at all, or actually falling. Municipal bond yields
typically follow suit.
That explains some of what happened during the first quarter. The Federal
Reserve began raising short-term interest rates last June. They raised them
twice more during the first quarter of this year. However, the closer the market
feels the Fed comes to achieving its goal (i.e. non-inflationary economic
growth), the more attractive longer-term bonds become. As the Fed has tightened,
the demand for long bonds has risen, causing their prices to rise and
longer-term yields to fall.
That does not, however, fully explain why longer-term yields were lower at the
end of the first quarter. Expectations regarding the supply of U.S. Treasury
securities changed as well. With the federal government running a budget surplus
in the neighborhood of $200 billion, and projections of similar if not higher
surpluses in the future, the supply of U.S. Treasury securities is expected to
fall. Not only will issuance fall, but the U.S. Treasury also announced during
the first quarter of the year that it would begin buying back U.S. Treasury
securities. Those purchases are to be concentrated on the long end of the yield
curve, reducing a maturity range that was not especially big to begin with.
Falling supply in conjunction with the already-discussed rising demand explain
why long-term interest rates fell during the first quarter. While not affected
to the same degree, longer-term municipal yields fell as well.
During the second quarter, however, a string of economic releases suggested that
growth was moderating and possibly even slowing. These releases included the
National Association of Purchasing Managers report, the Bureau of Labor
Statistics labor report, and the Commerce Department's retail sales report.
Throw in relatively benign CPI and PPI releases for the month of May, and the
tone of the market was suddenly quite different. Expectations of continued
strong growth were replaced by cautious optimism and in some instances actual
concern. While an up-tick in inflation remained a concern, the increase could be
traced to the strong growth of the prior quarters, something the potential
slower growth of future quarters would offset. The impact of the momentum shift
on the fixed income markets was mixed. Long-term interest rates, which had moved
up during the first half of the quarter, moved back down below 6.0% when the
economic momentum changed. The shift in momentum that characterized the second
quarter is an example of just how fickle the economy and the markets can be.
The net effect of the various changes in interest rates were positive. While
most sectors of the municipal market posted negative returns in 1999, all posted
positive returns through the first six months of 2000. The market's actions
over the last six months also bode well for the New York Tax Exempt Series. The
Series was positioned longer than its benchmark, the Merrill Lynch Intermediate
Index, and consequently it outperformed the index.
1
<PAGE>
Management Discussion and Analysis (unaudited)
Investors should always remember that municipal yields will fluctuate over time;
sometimes the cyclical pressures will push them higher, and other times they
will push lower. However, the secular factors that drove inflation lower over
the last 15+ years remain in firmly place. Given this environment, we have been
continuing to purchase high quality bonds with maturities over 15 years. These
bonds have yields only slightly lower than comparable U.S. Treasury securities,
and because the income they pay is free of federal tax, this difference is more
than made up by the tax savings for investors in higher tax brackets.
We appreciate your business, and we hope that you and your families continue to
prosper as we move through the year.
Sincerely,
EXETER ASSET MANAGEMENT
[graphic]
[pie chart]
Portfolio Composition 1 - As of 6/30/00
General Obligation Bonds - 67.78%
Revenue Bonds - 31.78%
Certificate of Participation - 0.44%
1 As a percentage of municipal securities.
[graphic]
[pie chart]
Quality Ratings 2 - As of 6/30/00
Aaa - 84.37%
Aa - 13.56%
A - 2.07%
2 Using Moody's Ratings, as a percentage of municipal securities (unaudited).
2
<PAGE>
Performance Update as of June 30, 2000 (unaudited)
Exeter Fund, Inc.
New York Tax Exempt Series
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $10,207 2.07% 2.07%
Five Years $12,624 26.24% 4.77%
Inception 1 $12,879 28.79% 4.00%
Merrill Lynch Intermediate Municipal Bond Index
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $10,441 4.41% 4.41%
Five Years $13,004 30.04% 5.39%
Inception 1 $13,640 36.40% 4.92%
The value of a $10,000 investment in the Exeter Fund, Inc. - New York Tax
Exempt Series from its inception (1/17/94) to present (6/30/00) as compared to
the Merrill Lynch Intermediate Municipal Bond 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 Bond Index
<S> <C> <C>
01/17/1994 10,000 10,000
12/31/1994 9,318 9,719
12/31/1995 10,882 11,020
12/31/1996 11,243 11,532
12/31/1997 12,180 12,419
12/31/1998 12,853 13,197
12/31/1999 12,349 13,196
06/30/2000 12,879 13,640
</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 Bond Index is a market
value weighted measure of approximately 120 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, 2000 (unaudited)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------------- -----------
<S> <C> <C> <C>
NEW YORK MUNICIPAL SECURITIES - 93.69%
Albany County, G.O. Bond, 5.75%, 6/1/2010. . . . . . . . . . . . . . . . . . Aaa $ 200,000 $ 207,078
Amherst Public Improvement, G.O. Bond, 4.625%, 3/1/2007. . . . . . . . . . . Aaa 200,000 195,722
Auburn Central School District, G.O. Bond, 4.55%, 12/1/2006. . . . . . . . . Aaa 385,000 375,737
Bayport-Blue Point Union Free School District, G.O. Bond, 5.60%, 6/15/2012. Aaa 250,000 255,462
Brighton Central School District, G.O. Bond, 5.40%, 6/1/2012 . . . . . . . . Aaa 250,000 253,200
Brockport Central School District, G.O. Bond, 5.50%, 6/15/2015 . . . . . . . Aaa 300,000 301,050
Broome County Public Safety, Certificate of Participation, 5.00%, 4/1/2006 . Aaa 250,000 250,972
Buffalo Municipal Water Authority, Revenue Bond, Series B,
5.00%, 7/1/2019 Aaa 1,000,000 910,750
Buffalo Municipal Water Authority, Revenue Bond, Series A,
5.00%, 7/1/2028 Aaa 750,000 661,118
Buffalo Schools, G.O. Bond, Series B, 5.05%, 2/1/2009 . . . . . . . . . . . Aaa 250,000 249,472
Buffalo, G.O. Bond, 5.00%, 12/1/2009 . . . . . . . . . . . . . . . . . . . . Aaa 150,000 149,104
Buffalo, G.O. Bond, Series A, 5.20%, 2/1/2010. . . . . . . . . . . . . . . . Aaa 250,000 251,260
Cattaraugus County Public Improvement, G.O. Bond, 5.00%, 8/1/2007 . . . . . Aaa 300,000 302,301
Chenango Forks Central School District, G.O. Bond, 5.80%, 6/15/2027. . . . . Aaa 1,100,000 1,118,524
Chittenango Central School District, G.O. Bond, 5.375%, 6/15/2016. . . . . Aaa 200,000 197,362
Colonie, G.O. Bond, 5.20%, 8/15/2008 . . . . . . . . . . . . . . . . . . . . Aaa 100,000 101,360
Cortlandville, G.O. Bond, 5.40%, 6/15/2013 . . . . . . . . . . . . . . . . . Aaa 155,000 156,094
Dryden Central School District, G.O. Bond, 5.50%, 6/15/2011. . . . . . . . . Aaa 200,000 203,344
East Aurora Union Free School District, G.O. Bond, 5.20%, 6/15/2011 . . . . Aaa 300,000 300,375
East Greenbush Central School District, G.O. Bond, 5.30%, 6/15/2015. . . . . Aaa 1,200,000 1,183,164
East Hampton, G.O. Bond, 4.625%, 1/15/2007 . . . . . . . . . . . . . . . . . Aaa 175,000 171,040
East Hampton, G.O. Bond, 4.625%, 1/15/2008 . . . . . . . . . . . . . . . . . Aaa 175,000 169,474
Eastchester Public Improvement, G.O. Bond, Series B, 4.90%, 10/15/2011. . . Aaa 385,000 374,878
Ellenville Central School District, G.O. Bond, 5.375%, 5/1/2009. . . . . . . Aaa 210,000 214,628
Ellenville Central School District, G.O. Bond, Series B, 5.70%, 5/1/2011 . . Aaa 700,000 728,819
Erie County, G.O. Bond, Series B, 5.50%, 6/15/2009. . . . . . . . . . . . . Aaa 100,000 102,669
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
<S> <C> <C> <C>
NEW YORK MUNICIPAL SECURITIES (continued)
Erie County, G.O. Bond, Series B, 5.50%, 6/15/2025 . . . . . . . . . . . . . . . . Aaa $ 400,000 $ 384,776
Fillmore Central School District, G.O. Bond, 5.25%, 6/15/2015. . . . . . . . . . . Aaa 300,000 292,413
Gloversville City School District, G.O. Bond, 5.00%, 6/15/2005 . . . . . . . . . . Aaa 350,000 354,281
Greene Central School District, G.O. Bond, 5.25%, 6/15/2012 . . . . . . . . . . . Aaa 195,000 194,653
Guilderland School District, G.O. Bond, 4.90%, 6/15/2008 . . . . . . . . . . . . . Aaa 370,000 368,498
Guilderland School District, G.O. Bond, 5.00%, 5/15/2014 . . . . . . . . . . . . . Aaa 505,000 483,517
Guilderland School District, G.O. Bond, 5.00%, 5/15/2016 . . . . . . . . . . . . . Aaa 400,000 375,752
Hamburg Central School District, G.O. Bond, 5.375%, 6/1/2014 . . . . . . . . . . . Aaa 600,000 600,600
Hempstead Town - Pre-refunded Balance, G.O. Bond, Series B, 5.625%, 2/1/2010 . . . Aaa 35,000 36,971
Hempstead Town - Unrefunded Balance, G.O. Bond, Series B, 5.625%, 2/1/2010 . . . . Aaa 165,000 170,910
Holland Central School District, G.O. Bond, 6.125%, 6/15/2010. . . . . . . . . . . Aaa 245,000 259,695
Huntington, G.O. Bond, 5.90%, 1/15/2007. . . . . . . . . . . . . . . . . . . . . . Aaa 300,000 316,953
Huntington, G.O. Bond, 5.875%, 9/1/2009. . . . . . . . . . . . . . . . . . . . . . Aaa 250,000 261,335
Indian River Central School District, G.O. Bond, Second Series, 4.30%, 12/15/2003. Aaa 475,000 467,295
Irvington Union Free School District, G.O. Bond, Series B, 5.10%, 7/15/2005. . . . Aaa 275,000 279,535
Islip - Public Improvements, G.O. Bond, 5.375%, 06/15/2015 . . . . . . . . . . . . Aaa 1,555,000 1,541,565
Jamesville-Dewitt Central School District, G.O. Bond, 5.75%, 6/15/2009 . . . . . . Aaa 420,000 442,201
Jordan-El Bridge Central School District, G.O. Bond, 5.875%, 6/15/2008 . . . . . . Aaa 500,000 528,175
Le Roy Central School District, G.O. Bond, 0.10%, 6/15/2008. . . . . . . . . . . . Aaa 350,000 233,607
Middletown City School District, G.O. Bond, Series A, 5.50%, 11/15/2005. . . . . . Aaa 175,000 181,235
Monroe County Public Improvement - Pre-refunded, G.O. Bond, 6.00%, 3/1/2002. . . . Aaa 95,000 97,198
Monroe County Public Improvement - Pre-refunded, G.O. Bond, 6.10%, 6/1/2015. . . . Aaa 20,000 21,332
Monroe County Public Improvement - Unrefunded Balance, G.O. Bond, 6.00%, 3/1/2002. Aaa 15,000 15,347
Monroe County Public Improvement - Unrefunded Balance, G.O. Bond, 6.10%, 6/1/2015. Aaa 180,000 191,984
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------------- --------- -----------
<S> <C> <C> <C>
NEW YORK MUNICIPAL SECURITIES (continued)
Monroe County Public Improvement, G.O. Bond, 4.90%, 6/1/2005 . . . . . . Aaa $ 250,000 251,858
Monroe County Water Authority, Revenue Bond, Series B,
5.25%, 8/1/2011 . . . . . . . . . . . . . . . . . . . . . . . . . . Aa3 500,000 499,560
Monroe County Water Authority, Revenue Bond, 5.00%, 8/1/2019 Aa3 1,700,000 1,538,704
Monroe County Water Improvement, G.O. Bond, 5.25%, 2/1/2017 . . . . . . Aa2 320,000 309,325
Nassau County, G.O. Bond, Series S, 5.00%, 3/1/2005 . . . . . . . . . . Aaa 300,000 302,214
Nassau County General Improvement, G.O. Bond, Series U,
5.25%, 11/1/2014 . . . . . . . . . . . . . . . . . . . . . . . . Aaa 335,000 327,067
Nassau County General Improvement, G.O. Bond, Series V,
5.25%, 3/1/2015 . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 385,000 373,104
Nassau County General Improvement, G.O.Bond, Series B, 5.25%, 6/1/2015. Aaa 1,000,000 968,800
New Castle, G.O. Bond, 4.75%, 6/1/2010. . . . . . . . . . . . . . . . . Aaa 450,000 439,551
New Rochelle, G.O. Bond, Series C, 6.20%, 3/15/2007 . . . . . . . . . . Aaa 175,000 185,600
New York City Municipal Water Authority, Revenue Bond,
Series B, 5.375%, 6/15/2019 . . . . . . . . . . . . . . . . . . . . . Aaa 250,000 240,090
New York City Municipal Water Finance Authority, Revenue
Bond, Series B, 5.125%, 6/15/2030 . . . . . . . . . . . . . . . . . . Aaa 1,000,000 895,480
New York City, G.O. Bond, Series I, 5.00%, 5/15/2028. . . . . . . . . . Aaa 1,900,000 1,670,404
New York Government Assistance Corp., Revenue Bond,
Series A, 5.90%, 4/1/2013 . . . . . . . . . . . . . . . . . . . . . . Aaa 500,000 532,385
New York Government Assistance Corp., Revenue Bond,
Series A, 6.00%, 4/1/2024 . . . . . . . . . . . . . . . . . . . . . . A3 250,000 252,457
New York State Dorm Authority, Revenue Bond, 5.00%, 7/1/2022. . . . . . Aaa 2,000,000 1,814,060
New York State Environmental Facilities Corp. Pollution Control,
Revenue Bond, Series A, 4.65%, 6/15/2007 . . . . . . . . . . . . . . Aaa 250,000 245,453
New York State Environmental Facilities Corp. Pollution Control,
Revenue Bond, Series A, 5.20%, 6/15/2015 . . . . . . . . . . . . . . Aaa 250,000 243,856
New York State Environmental Pollution Control, Revenue Bond.
Pooled LN-B, 6.65%, 9/15/2013 . . . . . . . . . . . . . . . . . . . . Aaa 500,000 527,635
New York State Environmental Facilities Corp. Pollution Control,
Revenue Bond, Series E, 5.00%, 6/15/2012. . . . . . . . . . . . . . . Aaa 200,000 194,214
New York State Housing Finance Agency, State University
Construction, Revenue Bond, Series A, 8.00%, 5/1/2011 . . . . . . . . Aaa 250,000 301,648
New York State Local Government Assistance Corp.,
Revenue Bond, Series C, 5.00%, 4/1/2021 . . . . . . . . . . . . . . . Aaa 750,000 667,290
New York State Local Government Assistance Corp.,
Revenue Bond, Series D, 5.00%, 4/1/2023 . . . . . . . . . . . . . . . Aaa 1,375,000 1,217,851
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
---------------- ---------- -----------
<S> <C> <C> <C>
NEW YORK MUNICIPAL SECURITIES (continued)
New York State Mortgage Agency, Homeowners Mortgage,
Revenue Bond, Series 31A, 5.375%, 10/1/2017 . . . . . . . . . . . . Aa1 $ 495,000 $ 458,974
New York State Power Authority, Revenue Bond, Series CC,
5.00%, 1/1/2014 . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 500,000 513,240
New York State Power Authority, Revenue Bond, Series CC,
5.25%, 1/1/2018 . . . . . . . . . . . . . . . .. . . . . . . . . . Aaa 250,000 258,083
New York State Power Authority Revenue & General Purpose,.
Revenue Bond, Ref-Series CC, 4.80%, 1/1/2005. . . . . . . . . . . . Aaa 250,000 255,405
New York State Thruway Authority, Highway & Bridge, Revenue
Bond, Series B, 5.75%, 4/1/2006 . . . . . . . . . . . . . . . . . . Aaa 100,000 104,514
New York State Thruway Authority, Highway & Bridge, Revenue
Bond, Series A, 5.25%, 4/1/2017 . . . . . . . . . . . . . . . . . . Aaa 555,000 533,433
New York State Thruway Authority, Revenue Bond, Series A,
5.50%, 1/1/2023 . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 1,020,000 1,033,627
New York State Thruway Authority, Revenue Bond, Series B,
4.90%, 1/1/2007 . . . . . . . . . . . . . . . . . . . . . . . . Aaa 450,000 447,525
New York State Urban Development Correctional Capital Facilities,
Facilities, Revenue Bond, Series A, 5.25%, 1/1/2014. . . . . . . . Aaa 500,000 495,710
New York State Urban Development, Revenue Bond, 5.375%, 7/1/2022 . . . Aaa 400,000 379,020
New York, G.O. Bond, Series B, 5.125%, 3/1/2018. . . . . . . . . . . . A2 1,000,000 929,050
New York, G.O. Bond. Series K, 5.375%, 8/1/2020. . . . . . . . . . . . Aaa 1,000,000 956,760
New York State, G.O. Bond, Series D, 5.0%, 7/15/2015. . . . . . . . . Aaa 1,750,000 1,654,363
Niagara County, G.O. Bond, Series B, 5.20%, 1/15/2011. . . . . . . . . Aaa 400,000 399,540
Niagara County, G.O. Bond, 5.90%, 7/15/2014. . . . . . . . . . . . . . Aaa 350,000 359,055
North Syracuse Central School District, G.O. Bond, 5.50%, 6/15/2011. . Aaa 295,000 300,534
Onondaga County, G.O. Bond, 5.85%, 2/15/2002 . . . . . . . . . . . . . Aa2 300,000 306,165
Pavilion Central School District, G.O. Bond, 5.625%, 6/15/2018. . . . Aaa 880,000 883,186
Penfield Central School District, G.O. Bond, 5.20%, 6/15/2010. . . . . Aaa 560,000 563,119
Queensbury, G O. Bond, Series A, 5.50%, 4/15/2011. . . . . . . . . . . Aaa 150,000 153,448
Queensbury, G.O. Bond, Series A, 5.50%, 4/15/2012. . . . . . . . . . . Aaa 350,000 355,821
Rochester, G.O. Bond, Series A, 4.70%, 8/15/2006 . . . . . . . . . . . Aaa 250,000 248,045
Rochester, G.O. Bond, Series A, 5.00%, 8/15/2020 . . . . . . . . . . . Aaa 250,000 229,470
Rochester, G.O. Bond, Series A, 5.00%, 8/15/2022 . . . . . . . . . . . Aaa 95,000 86,469
Rome, G.O. Bond, 5.20%, 12/1/2010. . . . . . . . . . . . . . . . . . . Aaa 390,000 393,241
Rome City School District, G.O. Bond, 5.50%, 6/15/2007 . . . . . . . . Aaa 1,300,000 1,344,720
Sands Point, G.O. Bond, 6.70%, 11/15/2014. . . . . . . . . . . . . . . Aa2 700,000 754,684
Schenectady, G.O. Bond, 5.30%, 2/1/2011. . . . . . . . . . . . . . . . Aaa 250,000 252,910
Scotia Glenville Central School District, G.O. Bond, 5.50%, 6/15/2020. Aaa 1,025,000 1,001,917
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------------- --------- -----------
<S> <C> <C> <C>
NEW YORK MUNICIPAL SECURITIES (continued)
South County Central School District Brookhaven, G.O. Bond,.
5.50%, 9/15/2007 . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa $ 380,000 $390,689
South Huntington Union Free School District, G.O. Bond, 5.00%, 9/15/2016. Aaa 325,000 305,035
South Huntington Union Free School District, G.O. Bond, 5.10%, 9/15/2017 . Aaa 100,000 94,241
Steuben County Public Improvement, G.O. Bond, 5.60%, 5/1/2006. . . . . . . Aaa 500,000 510,320
Suffolk County Water Authority, Revenue Bond, 5.10%, 6/1/2009. . . . . . . Aaa 250,000 251,235
Suffolk County, G.O. Bond, Series G, 5.40%, 4/1/2013. . . . . . . . . . . Aaa 400,000 401,040
Suffolk County, G.O. Bond, Series A, 4.75%, 8/1/2019 . . . . . . . . . . . Aaa 895,000 784,521
Suffolk County Water Authority, Series A, Revenue Bond, 5.00%, 6/1/2017 . Aaa 400,000 368,616
Sullivan County Public Improvement, G.O. Bond, 5.125%, 3/15/2013 . . . . . Aaa 330,000 324,083
Three Village Central School District, G.O. Bond, 5.375%, 6/15/2007 . . . Aaa 230,000 236,645
Tioga County Public Improvement, G.O. Bond, 5.25%, 3/15/2005. . . . . . . Aaa 250,000 254,270
Tompkins County, G.O. Bond, Series B, 5.625%, 9/15/2011. . . . . . . . . . Aa2 135,000 138,194
Tompkins County, G.O. Bond, Series B, 5.625%, 9/15/2013. . . . . . . . . . Aa2 300,000 304,905
Tompkins County, G.O. Bond, Series B, 5.625%, 9/15/2014. . . . . . . . . . Aa2 300,000 303,816
Tompkins County Public Improvement, G.O. Bond, Series B,
5.10%, 4/1/2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . Aa2 400,000 370,124
Triborough Bridge & Tunnel Authority - General Purpose,
Revenue Bond, Series A, 5.00%, 1/1/2012. . . . . . . . . . . . . . . . Aa3 500,000 485,945
Triborough Bridge & Tunnel Authority - General Purpose,
Revenue Bond, 5.00%, 1/1/2017 . . . . . . . . . . . . . . . . . . . . . Aa3 250,000 230,687
Triborough Bridge & Tunnel Authority - General Purpose,
Revenue Bond, Series A, 4.75%, 1/1/2019. . . . . . . . . . . . . . . . Aaa 300,000 261,771
Triborough Bridge & Tunnel Authority - General Purpose,
Revenue Bond, Series A, 5.125%, 1/1/2022 . . . . . . . . . . . . . . . Aa3 1,700,000 1,548,360
Tri-Valley Central School District, G.O. Bond, 5.60%, 6/15/2008. . . . . Aaa 120,000 123,854
Westchester County, G.O. Bond, Series A, 4.75%, 12/15/2008 . . . . . . . . Aaa 250,000 247,765
Westchester County, G.O. Bond, Series A, 4.75%, 12/15/2009 . . . . . . . . Aaa 250,000 245,515
Westchester County, G.O. Bond, Series B, 4.30%, 12/15/2010 . . . . . . . . Aaa 215,000 197,447
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
------------ ---------- ---------
<S> <C> <C> <C>
NEW YORK MUNICIPAL SECURITIES (continued)
Westchester County, G.O. Bond, Series B, 4.30%, 12/15/2011 . . . . . . Aaa $ 100,000 $ 90,562
White Plains, G.O. Bond, 4.50%, 9/1/2005 . . . . . . . . . . . . . . . Aa1 180,000 177,219
White Plains, G.O. Bond, 4.50%, 9/1/2007 . . . . . . . . . . . . . . . Aa1 315,000 304,668
William Floyd Union Free School District, G.O. Bond, 5.70%, 6/15/2008. Aaa 405,000 424,229
Wyandanch Union Free School District, G.O. Bond, 5.60%, 4/1/2017. . . Aaa 500,000 501,665
---------
TOTAL MUNICIPAL SECURITIES
(Identified Cost $58,001,658) . . . . . . . . . . . . . . . . . . . 57,012,840
---------
SHORT-TERM INVESTMENTS - 4.96%
Dreyfus Basic New York Tax Free Money Market
Fund (Identified Cost $3,020,216) . . . . . . . . . . . . . . . . . 3,020,216 3,020,216
---------
TOTAL INVESTMENTS - 98.65%
(Identified Cost $61,021,874) . . . . . . . . . . . . . . . . . . . 60,033,056
OTHER ASSETS, LESS LIABILITIES - 1.35% . . . . . . . . . . . . . . . . 822,205
---------
NET ASSETS - 100%. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 60,855,261
============
</TABLE>
KEY-
G.O. Bond - General Obligation Bond
Ref. - Referendum
*Credit ratings from Moody's (unaudited).
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At June 30, 2000, the net unrealized depreciation based on identified cost for
federal income tax purposes of $61,021,874 was as follows:
<S> <C>
Unrealized appreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 739,222
Unrealized depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,728,040)
------------
UNREALIZED DEPRECIATION - NET. . . . . . . . . . . . . . . . . . . . . . . . . $ (988,818)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Statement of Assets and Liabilities (unaudited)
<TABLE>
<CAPTION>
JUNE 30, 2000
<S> <C>
ASSETS:
Investments, at value (identified cost $61,021,874) (Note 2) $60,033,056
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,600
Interest receivable. . . . . . . . . . . . . . . . . . . . . 760,114
Receivable for fund shares sold. . . . . . . . . . . . . . . 93,930
------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . 60,894,700
------------
LIABILITIES:
Accrued management fee (Note 3). . . . . . . . . . . . . . . 22,164
Accrued directors' fees (Note 3) . . . . . . . . . . . . . . 3,353
Accrued fund accounting fees (Note 3). . . . . . . . . . . . 1,396
Transfer agent fees payable (Note 3) . . . . . . . . . . . . 1,064
Audit fee payable. . . . . . . . . . . . . . . . . . . . . . 8,220
Other payables and accrued expenses. . . . . . . . . . . . . 3,242
------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . 39,439
------------
NET ASSETS FOR 6,181,903 SHARES
OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . . $60,855,261
============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . $ 61,819
Additional paid-in-capital . . . . . . . . . . . . . . . . . 61,808,078
Undistributed net investment income. . . . . . . . . . . . . 180,787
Accumulated net realized loss on investments . . . . . . . . (206,605)
Net unrealized depreciation on investments . . . . . . . . . (988,818)
------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . $60,855,261
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($60,855,261/6,181,903 shares) . . . . . . . . . . . . . . $ 9.84
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Statement of Operations (unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 2000
<S> <C>
INVESTMENT INCOME:
Interest. . . . . . . . . . . . . . . . . . . . . . . $1,368,929
-----------
EXPENSES:
Management fee (Note 3) . . . . . . . . . . . . . . . 130,174
Directors' fees (Note 3). . . . . . . . . . . . . . . 3,332
Fund accounting fees (Note 3) . . . . . . . . . . . . 11,673
Transfer agent fees (Note 3). . . . . . . . . . . . . 6,248
Audit fee . . . . . . . . . . . . . . . . . . . . . . 7,457
Miscellaneous . . . . . . . . . . . . . . . . . . . . 10,520
-----------
Total Expenses. . . . . . . . . . . . . . . . . . . . 169,404
-----------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . 1,199,525
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized loss on investments. . . . . . . . . . . (206,767)
Net change in unrealized depreciation on investments. 1,163,376
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS. . . . . . . . . . . . . . . . . . . . 956,609
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . $2,156,134
===========
</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 06/30/00 FOR THE YEAR
(UNAUDITED) ENDED 12/31/99
-------------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . $ 1,199,525 $ 2,463,394
Net realized gain (loss) on investments. . . . . . . (206,767) 73,548
Net change in unrealized appreciation (depreciation)
on investments. . . . . . . . . . . . . . . . . . 1,163,376 (4,700,361)
-------------------- ----------------
Net increase (decrease) from operations. . . . . . . 2,156,134 (2,163,419)
-------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 2):
From net investment income . . . . . . . . . . . . . (1,086,671) (2,535,231)
From net realized gain on investments. . . . . . . . -- (53,535)
-------------------- ----------------
Total distributions to shareholders. . . . . . . . . (1,086,671) (2,588,766)
-------------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital share
transactions (Note 5). . . . . . . . . . . . . . 8,474,475 (4,708,926)
-------------------- ----------------
Net increase (decrease) in net assets. . . . . . . . 9,543,938 (9,461,111)
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . 51,311,323 60,772,434
-------------------- ----------------
END OF PERIOD (including undistributed net
investment income of $180,787 and $67,933,
respectively) . . . . . . . . . . . . . . . . . . $ 60,855,261 $ 51,311,323
==================== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED
6/30/00 FOR THE YEARS ENDED
(UNAUDITED) 12/31/99 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> <C>
NET ASSET VALUE - BEGINNING OF YEAR. . . . . $ 9.62 $ 10.51 $ 10.37 $ 9.98 $ 10.07 $ 8.98
------------ --------------------- ---------- ---------- ---------- --------
Income from investment operations:
Net investment income. . . . . . . . . . . 0.21 0.46 0.43 0.43 0.42 0.40
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . 0.20 (0.87) 0.14 0.38 (0.10) 1.09
------------ --------------------- ---------- ---------- ---------- --------
Total from investment operations. . . . . . . 0.41 (0.41) 0.57 0.81 0.32 1.49
------------ --------------------- ---------- ---------- ---------- --------
Less distributions to shareholders:
From net investment income . . . . . . . . (0.19) (0.47) (0.43) (0.42) (0.41) (0.40)
From net realized gain on investments. . . -- (0.01) -- -- -- --
------------ --------------------- ---------- ---------- ---------- --------
Total distributions to shareholders . . . . . (0.19) (0.48) (0.43) (0.42) (0.41) (0.40)
------------ --------------------- ---------- ---------- ---------- --------
NET ASSET VALUE - END OF YEAR . . . . . . . . $ 9.84 $ 9.62 $ 10.51 $ 10.37 $ 9.98 $ 10.07
============ ===================== ========== ========== ========== ========
Total return1 . . . . . . . . . . . . . . . . 4.29% (3.92)% 5.53% 8.33% 3.32% 16.78%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses. . . . . . . . . . . . . . . . . 0.65%2 0.60% 0.61% 0.61% 0.61% 0.65%
Net investment income . . . . . . . . . . 4.60%2 4.45% 4.17% 4.36% 4.41% 4.36%
Portfolio turnover. . . . . . . . . . . . . . 9% 0% 3% 2% 6% 0%
NET ASSETS - END OF YEAR
(000'S OMITTED) . . . . . . . . . . . . . $ 60,855 $ 51,311 $ 60,772 $ 45,681 $ 37,325 $28,817
============ ===================== ========== ========== ========== ========
</TABLE>
1 Represents aggregate total return for the period indicated, and assumes
reinvestment of distributions.
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") dba Exeter Asset Management, and its
affiliates. The total authorized capital stock of the Fund consists of 1.7
billion shares of common stock each having a par value of $0.01. As of June 30,
2000, 1.4 billion shares have been designated in total among 28 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 of net realized gains are made at least annually. An additional
distribution may be necessary to avoid taxation of the Series. Distributions are
recorded on the ex-dividend date.
14
<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 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. Any such
reclassifications are not reflected in the financial highlights.
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.
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 fund administration 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%.
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.
Effective April 2000 the Advisor became the Fund's accounting services agent.
For these services, the Fund will pay the Advisor a fee of 0.04% of each Series'
daily net assets calculated daily and payable monthly, with a minimum annual fee
of $48,000 per Series. The Advisor has entered into an agreement with BISYS
Fund Services Ohio, Inc. under which BISYS will serve as sub-accounting services
agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2000 purchases and sales of securities, other
than United States Government securities and short-term securities, were
$10,634,965 and $4,486,175, 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 06/30/00 Ended 12/31/99
------------------- ----------------
Shares Amount Shares Amount
------------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold. . . . 1,551,018 $ 15,228,432 497,312 $ 4,984,485
Reinvested. 108,315 1,055,774 252,084 2,503,500
Repurchased (813,554) (7,809,731) (1,193,849) (12,196,911)
------------------- ---------------- ----------- -------------
Total . . . 845,779 $ 8,474,475 (444,453) $ (4,708,926)
=================== ================ =========== =============
</TABLE>
A significant portion of the Series shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
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, 2000.
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 extent.
16
<PAGE>
<PAGE>
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2000
Ohio Tax Exempt Series
<PAGE>
Management Discussion and Analysis (unaudited)
DEAR SHAREHOLDERS:
Anyone who has ever invested in the fixed income markets, taxable or tax-exempt,
knows what a pivotal role the economy plays in determining how those investments
perform. Strong or accelerating growth typically hurts performance, while weak
or decelerating growth tends to help. That is what makes the first half of 2000
so intriguing. Economic growth was especially strong during the first quarter.
Nonetheless long-term interest rates fell and the yield curve inverted. Fixed
income securities performed quite well during the first quarter. During the
second quarter, growth appeared to slow, or at least lose some of its momentum,
and interest rates moved sideways. Fixed income securities simply earned their
coupons. What gives?
Let's start with the first quarter. The U.S. Treasury yield curve usually
inverts because short-term interest rates rise faster than longer-term rates.
Short rates rise as the Federal Reserve tightens monetary policy. The more the
Fed tightens, the higher short rates go. At first, long rates rise in tandem
with short rates, but at some point rising short rates increase the likelihood
of slower economic growth and begin to offset some, if not all, of the
inflationary pressures in the economy. Long rates decouple from short rates,
rising less, not rising at all, or actually falling. Municipal bond yields
typically follow suit.
That explains some of what happened during the first quarter. The Federal
Reserve began raising short-term interest rates last June. They raised them
twice more during the first quarter of this year. However, the closer the market
feels the Fed comes to achieving its goal (i.e. non-inflationary economic
growth), the more attractive longer-term bonds become. As the Fed has tightened,
the demand for long bonds has risen, causing their prices to rise and
longer-term yields to fall.
That does not, however, fully explain why longer-term yields were lower at the
end of the first quarter. Expectations regarding the supply of U.S. Treasury
securities changed as well. With the federal government running a budget surplus
in the neighborhood of $200 billion, and projections of similar if not higher
surpluses in the future, the supply of U.S. Treasury securities is expected to
fall. Not only will issuance fall, but the U.S. Treasury also announced during
the first quarter of the year that it would begin buying back U.S. Treasury
securities. Those purchases are to be concentrated on the long end of the yield
curve, reducing a maturity range that was not especially big to begin with.
Falling supply in conjunction with the already-discussed rising demand explain
why long-term interest rates fell during the first quarter. While not affected
to the same degree, longer-term municipal yields fell as well.
During the second quarter, however, a string of economic releases suggested that
growth was moderating and possibly even slowing. These releases included the
National Association of Purchasing Managers report, the Bureau of Labor
Statistics labor report, and the Commerce Department's retail sales report.
Throw in relatively benign CPI and PPI releases for the month of May, and the
tone of the market was suddenly quite different. Expectations of continued
strong growth were replaced by cautious optimism and in some instances actual
concern. While an up-tick in inflation remained a concern, the increase could be
traced to the strong growth of the prior quarters, something the potential
slower growth of future quarters would offset. The impact of the momentum shift
on the fixed income markets was mixed. Long-term interest rates, which had moved
up during the first half of the quarter, moved back down below 6.0% when the
economic momentum changed. The shift in momentum that characterized the second
quarter is an example of just how fickle the economy and the markets can be.
The net effect of the various changes in interest rates were positive. While
most sectors of the municipal market posted negative returns in 1999, all posted
positive returns through the first six months of 2000. The market's actions
over the last six months also bode well for the Ohio Tax Exempt Series. The
Series was positioned longer than its benchmark, the Merrill Lynch Intermediate
Index, and consequently it outperformed the index.
1
<PAGE>
Management Discussion and Analysis (unaudited)
Investors should always remember that municipal yields will fluctuate over time;
sometimes the cyclical pressures will push them higher, and other times they
will push lower. However, the secular factors that drove inflation lower over
the last 15+ years remain in firmly place. Given this environment, we have been
continuing to purchase high quality bonds with maturities over 15 years. These
bonds have yields only slightly lower than comparable U.S. Treasury securities,
and because the income they pay is free of federal tax, this difference is more
than made up by the tax savings for investors in higher tax brackets.
We appreciate your business, and we hope that you and your families continue to
prosper as we move through the year.
Sincerely,
EXETER ASSET MANAGEMENT
[graphic]
[pie chart]
Portfolio Composition 1 - As of 6/30/00
General Obligation Bonds - 74.51%
Revenue Bonds - 25.49%
1 As a percentage of municipal securities.
[graphic]
[pie chart]
Quality Ratings 2 - As of 6/30/00
Aaa - 90.90%
Aa - 7.44%
A - 1.66%
2 - Using Moody's Ratings, as a percentage of municipal securities (unaudited).
2
<PAGE>
Performance Update as of June 30, 2000 (unaudited)
Exeter Fund, Inc.
Ohio Tax Exempt Series
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $10,145 1.45% 1.45%
Five Years $12,450 24.50% 4.47%
Inception 1 $12,808 28.08% 3.95%
Merrill Lynch Intermediate Municipal Bond Index
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $10,441 4.41% 4.41%
Five Years $13,004 30.04% 5.39%
Inception 1 $13,625 36.25% 4.97%
The value of a $10,000 investment in the Exeter Fund, Inc. - Ohio Tax Exempt
Series from its inception (2/14/94) to present (6/30/00) as compared to the
Merrill Lynch Intermediate Municipal Bond Index. 2
[graphic]
[line chart]
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. Merrill Lynch
Date Ohio Tax Exempt Series Intermediate Municipal Bond Index
<S> <C> <C>
02/14/1994 10,000 10,000
12/31/1994 9,377 9,709
12/31/1995 10,985 11,009
12/31/1996 11,331 11,520
12/31/1997 12,228 12,406
12/31/1998 12,882 13,183
12/31/1999 12,229 13,182
06/30/2000 12,808 13,625
</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 Bond Index is a market
value weighted measure of approximately 120 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, 2000 (unaudited)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- ---------
<S> <C> <C> <C>
OHIO MUNICIPAL SECURITIES - 90.03%
Allen County, G.O. Bond, 5.30%, 12/1/2007 . . . . . . . . . . . . . . . . . Aaa $ 100,000 $101,528
Amherst Police & Jail Facility, G.O. Bond, 5.375%,
12/1/2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 50,000 50,266
Avon Lake, G.O. Bond, 6.00%, 12/1/2009. . . . . . . . . . . . . . . . . . . A2 40,000 41,327
Barberton City School District, G.O. Bond, 5.125%, 11/1/2022. . . . . . . . Aaa 350,000 321,913
Bedford Heights, G.O. Bond, Series A, 5.65%, 12/1/2014. . . . . . . . . . . Aaa 60,000 61,462
Belmont County, G.O. Bond, 5.15%, 12/1/2010 . . . . . . . . . . . . . . . . Aaa 100,000 100,152
Chagrin Falls Exempt Village School District, G.O. Bond,
5.55%, 12/1/2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . Aa3 100,000 97,862
Cincinnati City School District, G.O. Bond, 5.50%, 12/1/2004. . . . . . . . Aaa 135,000 138,286
Cleveland City School District, G.O. Bond, 5.875%, 12/1/2011. . . . . . . . Aaa 125,000 129,084
Cleveland Public Power Systems Ref., G.O. Bond, 5.00%, 11/15/2024. . . . . Aaa 300,000 267,438
Cleveland Waterworks Ref & Impt., Revenue Bond, Series I, 5.00%, 1/1/2028. Aaa 265,000 233,886
Columbus, G.O. Bond, Series D, 5.50%, 9/15/2008 . . . . . . . . . . . . . . Aaa 50,000 51,314
Columbus Sewer Improvement Number 28, G.O. Bond,
6.00%, 5/1/2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 155,000 162,871
Crawford County, G.O. Bond, 6.75%, 12/1/2019. . . . . . . . . . . . . . . . Aaa 175,000 191,788
Delaware City School District, G.O. Bond, 5.00%, 12/01/2025 . . . . . . . . Aaa 300,000 267,915
Delaware City School District, Construction & Impt., G.O.
Bond, Series B, 5.20%, 12/1/2016 . . . . . . . . . . . . . . . . . . . . Aaa 100,000 96,120
Erie County Revenue Ref & Impt., G.O. Bond, 4.75%, 10/1/2019. . . . . . . . Aaa 175,000 152,738
Franklin County, G.O. Bond, 4.95%, 12/1/2004. . . . . . . . . . . . . . . . Aaa 50,000 50,452
Franklin County, G.O. Bond, 5.50%, 12/1/2013. . . . . . . . . . . . . . . . Aaa 100,000 101,255
Genoa Area Local School District, G.O. Bond, 5.40%, 12/1/2027 . . . . . . . Aaa 150,000 143,369
Greene County Sewer System, Revenue Bond, 5.50%,
12/1/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 30,000 29,623
Greene County Sewer System, Revenue Bond, 5.625%, 12/1/2025 . . . . . . . . Aaa 235,000 230,472
Hilliard School District, G.O. Bond, Series A, 5.00%, 12/1/2020 . . . . . . Aaa 225,000 204,613
Kettering City School District, G.O. Bond, 5.25%, 12/1/2022 . . . . . . . . Aaa 60,000 56,243
Kings Local School District, G.O. Bond, 5.50%, 12/1/2021. . . . . . . . . . Aaa 115,000 112,170
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- --------- --------
<S> <C> <C> <C>
OHIO MUNICIPAL SECURITIES (continued)
Lakewood City School District, G.O. Bond, 5.55%,
12/1/2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1 100,000 100,738
Lakota Local School District, G.O. Bond, 5.75%, 12/1/2006. . . . . . . . . Aaa 50,000 52,144
Mahoning County, G.O. Bond, 5.70%, 12/1/2009 . . . . . . . . . . . . . . . Aaa 150,000 155,076
Mansfield City School District, G.O. Bond, 5.75%, 12/1/2022. . . . . . . . Aaa 250,000 250,548
Mentor, G.O. Bond, 5.25%, 12/01/2017 . . . . . . . . . . . . . . . . . . . Aa3 100,000 96,349
Mississinawa Valley Local School District, G.O. Bond, 5.75%, 12/1/2022 . . Aaa 205,000 205,873
Montgomery County, G.O. Bond, 5.30%, 9/1/2007. . . . . . . . . . . . . . . Aa2 65,000 65,941
Montgomery County, Moraine-Beaver Creek Sewers, Revenue
Bond, 5.60%, 9/1/2011. . . . . . . . . . . . . . . . . . . . . . . . . Aaa 100,000 101,616
North Canton City School District, G.O. Bond, 5.85%, 12/1/2007 . . . . . . Aaa 40,000 42,351
North Olmstead, G.O. Bond, 5.00%, 12/1/2016. . . . . . . . . . . . . . . . Aaa 125,000 117,265
Northwood Local School District, G.O. Bond, 5.55%, 12/1/2006 . . . . . . . Aaa 65,000 67,409
Northwood Local School District, G.O. Bond, 6.20%, 12/1/2013 . . . . . . . Aaa 40,000 42,409
Ohio, G.O. Bond, 6.50%, 8/1/2011 . . . . . . . . . . . . . . . . . . . . . Aal 50,000 51,566
Ohio, G.O. Bond, 5.20%, 8/1/2010 . . . . . . . . . . . . . . . . . . . . . Aa1 50,000 50,623
Ohio State Building Authority - Adult Correctional, Revenue Bond,
5.375%, 4/1/2013. . . . . . . . . . . . . . . . . . . . . . . . . . Aa2 225,000 225,983
Ohio Higher Education Facility, University of Dayton
Project, Revenue Bond, 5.80%, 12/1/2019 . . . . . . . . . . . . . . . . Aaa 100,000 100,761
Ohio State Turnpike, Revenue Bond, Series A, 5.70%,
2/15/2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 125,000 132,078
Ohio State Water Development Authority Pure Water,
Revenue Bond, Series I, 6.00%, 12/1/2016. . . . . . . . . . . . . . . Aaa 40,000 42,164
Ohio State Water Development Authority, Pollution Control
Facility, Revenue Bond, 5.25%, 12/1/2014. . . . . . . . . . . . . . . . Aaa 100,000 98,506
Ohio State Water Development Authority, Revenue Bond, 5.125%, 12/01/2023. Aaa 300,000 273,936
Ontario Local School District, G.O. Bond, 5.00%, 12/1/2023. . . . . . . . Aaa 350,000 314,360
Ottawa County, G.O. Bond, 5.45%, 9/1/2006. . . . . . . . . . . . . . . . . Aaa 30,000 30,916
Pickerington Local School District Construction & Impt.,
G.O. Bond, 5.375%, 12/1/2019. . . . . . . . . . . . . . . . . . . . . . Aaa 150,000 144,824
Pickerington Water Systems Improvements, G.O. Bond,
5.85%, 12/1/2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 50,000 51,456
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
------------ --------- --------
<S> <C> <C> <C>
OHIO MUNICIPAL SECURITIES (continued)
Reynoldsburg City School District, G.O. Bond, 6.55%,
12/1/2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 175,000 185,691
Rural Lorain Water Authority Ref. & Impt., Revenue Bond,
5.30%, 10/1/2012 . . . . . . . . . . . . . . . . . . . . . . . . Aaa 110,000 110,230
South-Western City School District, Franklin & Pickway
Counties, G.O. Bond, 4.80%, 12/1/2006. . . . . . . . . . . . . . Aaa 50,000 49,840
Stark County, G.O. Bond, 5.70%, 11/15/2017 . . . . . . . . . . . . . Aaa 100,000 100,663
Toledo Sewer System, Revenue Bond, 6.35%, 11/15/2017 . . . . . . . . Aaa 185,000 196,030
Toledo, G.O. Bond, 5.95%, 12/1/2005. . . . . . . . . . . . . . . . . Aaa 175,000 181,113
Trumbull County, G.O. Bond, 6.20%, 12/1/2014 . . . . . . . . . . . . Aaa 100,000 105,561
Twinsburg Local School District, G.O. Bond, 5.90%, 12/1/2021 . . . . Aaa 325,000 329,455
Upper Arlington City Schools, G.O. Bond, 5.25%, 12/1/2022. . . . . . Aaa 255,000 239,952
Warren, G.O. Bond, 5.20%, 11/15/2013 . . . . . . . . . . . . . . . . Aaa 50,000 50,934
Warren County Waterworks, Revenue Bond, 5.45%, 12/1/2015 . . . . . . Aaa 140,000 140,056
Westlake Ref. & Impt., G.O. Bond, 5.50%, 12/1/2020 . . . . . . . . . Aaa 295,000 290,014
Wood County, G.O. Bond, 5.40%, 12/1/2013 . . . . . . . . . . . . . . Aa3 50,000 49,256
Wyoming City School District, G.O. Bond, Series B, 5.15%, 12/1/2027. Aaa 300,000 273,528
Youngstown, G.O. Bond, 6.125%, 12/1/2014 . . . . . . . . . . . . . . Aaa 50,000 52,578
--------
TOTAL MUNICIPAL SECURITIES
(Identified Cost $8,605,337). . . . . . . . . . . . . . . . . . . 8,563,940
---------
SHORT-TERM INVESTMENTS - 8.33%
Dreyfus Municipal Reserves
(Identified Cost $792,396). . . . . . . . . . . . . . . . . . . . 792,396 792,396
---------
TOTAL INVESTMENTS - 98.36%
(Identified Cost $9,367,733). . . . . . . . . . . . . . . . . . . 9,356,336
OTHER ASSETS, LESS LIABILITIES - 1.64% . . . . . . . . . . . . . . . 156,021
---------
NET ASSETS - 100%. . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,512,357
============
</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
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At June 30, 2000 the net unrealized depreciation based on identified cost for
federal income tax purposes of $9,397,733 was as follows:
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . $ 197,789
Unrealized depreciation . . . . . . . . . . . . . . . . (239,186)
----------
UNREALIZED DEPRECIATION - NET . . . . . . . . . . . . . ($41,397)
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statement of Assets and Liabilities (unaudited)
JUNE 30, 2000
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value (identified cost $9,397,733)(Note 2) $ 9,356,336
Receivable for fund shares sold. . . . . . . . . . . . . . 600,000
Interest receivable. . . . . . . . . . . . . . . . . . . . 64,698
------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . 10,021,034
------------
LIABILITIES:
Accrued management fee (Note 3). . . . . . . . . . . . . . 1,545
Accrued directors' fees (Note 3) . . . . . . . . . . . . . 3,355
Accrued fund accounting fees (Note 3). . . . . . . . . . . 2,757
Transfer agent fees payable (Note 3) . . . . . . . . . . . 588
Payable for fund shares repurchased. . . . . . . . . . . . 481,584
Audit fee payable. . . . . . . . . . . . . . . . . . . . . 15,070
Other payables and accrued expenses. . . . . . . . . . . . 3,778
------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . 508,677
------------
NET ASSETS FOR 968,471 SHARES OUTSTANDING. . . . . . . . . $ 9,512,357
============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . $ 9,685
Additional paid-in-capital . . . . . . . . . . . . . . . . 9,583,732
Undistributed net investment income. . . . . . . . . . . . 34,784
Accumulated net realized loss on investments . . . . . . . (74,447)
Net unrealized depreciation on investments . . . . . . . . (41,397)
------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . $ 9,512,357
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($9,512,357/968,471 shares). . . . . . . . . . . . . . . . $ 9.82
============
</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, 2000
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest. . . . . . . . . . . . . . . . . . . . . . . $202,757
---------
EXPENSES:
Management fee (Note 3) . . . . . . . . . . . . . . . 18,284
Directors' fees (Note 3). . . . . . . . . . . . . . . 3,332
Fund accounting fees (Note 3) . . . . . . . . . . . . 11,672
Transfer agent fees (Note 3). . . . . . . . . . . . . 878
Audit fees. . . . . . . . . . . . . . . . . . . . . . 6,266
Custodian fees. . . . . . . . . . . . . . . . . . . . 1,492
Miscellaneous . . . . . . . . . . . . . . . . . . . . 2,899
---------
Total Expenses. . . . . . . . . . . . . . . . . . . . 44,823
Less Reduction of Expenses (Note 3) . . . . . . . . . (13,739)
---------
Net Expenses. . . . . . . . . . . . . . . . . . . . . 31,084
---------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . 171,673
---------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments. . . . . . . . . . . 9,092
Net change in unrealized depreciation on investments. 163,592
---------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . 172,684
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . $344,357
=========
</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 6/30/00 FOR THE YEAR
(UNAUDITED) ENDED 12/31/99
-------------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . $ 171,673 $ 426,354
Net realized gain (loss) on investments. . . . . . . . 9,092 (17,160)
Net change in unrealized appreciation (depreciation)
on investments . . . . . . . . . . . . . . . . . . 163,592 (825,723)
-------------------- ----------------
Net increase (decrease) from operations. . . . . . . . 344,357 (416,529)
-------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income . . . . . . . . . . . . . . (152,127) (427,001)
From net realized gain on investments. . . . . . . . . -- (66,026)
-------------------- ----------------
Total distributions to shareholders. . . . . . . . . . (152,127) (493,027)
-------------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital share
transactions (Note 5). . . . . . . . . . . . . . . . 1,961,451 (4,301,054)
-------------------- ----------------
Net increase (decrease) in net assets. . . . . . . . . 2,153,681 (5,210,610)
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . 7,358,676 12,569,286
-------------------- ----------------
END OF PERIOD (including undistributed net investment
income of $34,784 and $15,238, respectively). . . . $ 9,512,357 $ 7,358,676
==================== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED
6/30/00 FOR THE YEARS ENDED
(UNAUDITED) 12/31/99 12/31/98 12/31/97 12/31/96
-------------------- --------------------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF YEAR. . . . . $ 9.56 $ 10.66 $ 10.53 $ 10.18 $ 10.31
-------------------- --------------------- ---------- ---------- ----------
Income from investment operations:
Net investment income* . . . . . . . . . . 0.21 0.49 0.43 0.45 0.44
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . 0.24 (1.02) 0.13 0.34 (0.13)
-------------------- --------------------- ---------- ---------- ----------
Total from investment operations. . . . . . . 0.45 (0.53) 0.56 0.79 0.31
-------------------- --------------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income . . . . . . . . (0.19) (0.49) (0.43) (0.44) (0.44)
From net realized gain on investments. . . -- (0.08) -- -- (0.00)
-------------------- --------------------- ---------- ---------- ----------
Total distributions to shareholders . . . . . (0.19) (0.57) (0.43) (0.44) (0.44)
-------------------- --------------------- ---------- ---------- ----------
NET ASSET VALUE - END OF YEAR . . . . . . . . $ 9.82 $ 9.56 $ 10.66 $ 10.53 $ 10.18
==================== ===================== ========== ========== ==========
Total return 1. . . . . . . . . . . . . . . . 4.74% (5.07)% 5.35% 7.92% 3.16%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses*. . . . . . . . . . . . . . . . . 0.85%2 0.83% 0.79% 0.79% 0.85%
Net investment income* . . . . . . . . . . 4.70%2 4.39% 4.10% 4.37% 4.40%
Portfolio turnover. . . . . . . . . . . . . . 7% 4% 5% 12% 2%
NET ASSETS - END OF YEAR (000's omitted). . . $ 9,512 $ 7,359 $ 12,569 $ 9,306 $ 7,698
==================== ===================== ========== ========== ==========
12/31/95
---------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
<S> <C>
NET ASSET VALUE - BEGINNING OF YEAR. . . . . $ 9.18
-------
Income from investment operations:
Net investment income* . . . . . . . . . . 0.42
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . 1.14
-------
Total from investment operations. . . . . . . 1.56
-------
Less distributions to shareholders:
From net investment income . . . . . . . . (0.43)
From net realized gain on investments. . . --
-------
Total distributions to shareholders . . . . . (0.43)
-------
NET ASSET VALUE - END OF YEAR . . . . . . . . $10.31
=======
Total return 1. . . . . . . . . . . . . . . . 17.14%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses*. . . . . . . . . . . . . . . . . 0.85%
Net investment income* . . . . . . . . . . 4.50%
Portfolio turnover. . . . . . . . . . . . . . 1%
NET ASSETS - END OF YEAR (000's omitted). . . $6,144
=======
</TABLE>
* The investment advisor did not impose all or a portion of its management fee
and in some periods paid a portion of the Series' expenses. If these expenses
had been incurred by the Series, the net investment income per share and the
ratios would have been as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net investment income . . . . . $ 0.19 N/A N/A N/A $0.44 $0.41
Ratios (to average net assets):
Expenses. . . . . . . . . . . . 1.23%2 N/A N/A N/A 0.87% 0.94%
Net investment income . . . . . 4.32%2 N/A N/A N/A 4.38% 4.41%
</TABLE>
1 Represents aggregate total return for the period indicated, and assumes
reinvestment of distributions.
2 Annualized.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Ohio Tax Exempt Series (the "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") dba Exeter Asset Management, and its
affiliates. The total authorized capital stock of the Fund consists of 1.7
billion shares of common stock each having a par value of $0.01. As of June 30,
2000, 1.4 billion shares have been designated in total among 28 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 of net realized gains are made at least annually. An additional
distribution may be necessary to avoid taxation of the Series. Distributions are
recorded on the ex-dividend date.
12
<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 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. Any such
reclassifications are not reflected in the financial highlights.
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.
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 fund administration 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%.
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.
Effective April 2000 the Advisor became the Fund's accounting services agent.
For these services, the Fund will pay the Advisor a fee of 0.04% of each Series'
daily net assets calculated daily and payable monthly, with a minimum annual fee
of $48,000 per Series. The Advisor has entered into an agreement with BISYS
Fund Services Ohio, Inc. under which BISYS will serve as sub-accounting services
agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2000, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$1,653,204 and $515,291, 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 6/30/00 Ended 12/31/99
------------------- ----------------
Shares Amount Shares Amount
------------------- ---------------- --------- ------------
<S> <C> <C> <C> <C>
Sold. . . . 284,156 $ 2,781,365 73,338 $ 736,400
Reinvested. 15,605 151,796 48,995 488,024
Repurchased (100,655) (971,710) (532,038) (5,525,478)
------------------- ---------------- --------- ------------
Total . . . 199,106 $ 1,961,451 (409,705) $(4,301,054)
=================== ================ ========= ============
</TABLE>
A significant portion of the Series shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
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, 2000.
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.
Semi-Annual Report
June 30, 2000
Diversified Tax Exempt Series
<PAGE>
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
DEAR SHAREHOLDERS:
Anyone who has ever invested in the fixed income markets, taxable or tax-exempt,
knows what a pivotal role the economy plays in determining how those investments
perform. Strong or accelerating growth typically hurts performance, while weak
or decelerating growth tends to help. That is what makes the first half of 2000
so intriguing. Economic growth was especially strong during the first quarter.
Nonetheless long-term interest rates fell and the yield curve inverted. Fixed
income securities performed quite well during the first quarter. During the
second quarter, growth appeared to slow, or at least lose some of its momentum,
and interest rates moved sideways. Fixed income securities simply earned their
coupons. What gives?
Let's start with the first quarter. The U.S. Treasury yield curve usually
inverts because short-term interest rates rise faster than longer-term rates.
Short rates rise as the Federal Reserve tightens monetary policy. The more the
Fed tightens, the higher short rates go. At first, long rates rise in tandem
with short rates, but at some point rising short rates increase the likelihood
of slower economic growth and begin to offset some, if not all, of the
inflationary pressures in the economy. Long rates decouple from short rates,
rising less, not rising at all, or actually falling. Municipal bond yields
typically follow suit.
That explains some of what happened during the first quarter. The Federal
Reserve began raising short-term interest rates last June. They raised them
twice more during the first quarter of this year. However, the closer the market
feels the Fed comes to achieving its goal (i.e. non-inflationary economic
growth), the more attractive longer-term bonds become. As the Fed has tightened,
the demand for long bonds has risen, causing their prices to rise and
longer-term yields to fall.
That does not, however, fully explain why longer-term yields were lower at the
end of the first quarter. Expectations regarding the supply of U.S. Treasury
securities changed as well. With the federal government running a budget surplus
in the neighborhood of $200 billion, and projections of similar if not higher
surpluses in the future, the supply of U.S. Treasury securities is expected to
fall. Not only will issuance fall, but the U.S. Treasury also announced during
the first quarter of the year that it would begin buying back U.S. Treasury
securities. Those purchases are to be concentrated on the long end of the yield
curve, reducing a maturity range that was not especially big to begin with.
Falling supply in conjunction with the already-discussed rising demand explain
why long-term interest rates fell during the first quarter. While not affected
to the same degree, longer-term municipal yields fell as well.
During the second quarter, however, a string of economic releases suggested that
growth was moderating and possibly even slowing. These releases included the
National Association of Purchasing Managers report, the Bureau of Labor
Statistics labor report, and the Commerce Department's retail sales report.
Throw in relatively benign CPI and PPI releases for the month of May, and the
tone of the market was suddenly quite different. Expectations of continued
strong growth were replaced by cautious optimism and in some instances actual
concern. While an up-tick in inflation remained a concern, the increase could be
traced to the strong growth of the prior quarters, something the potential
slower growth of future quarters would offset. The impact of the momentum shift
on the fixed income markets was mixed. Long-term interest rates, which had moved
up during the first half of the quarter, moved back down below 6.0% when the
economic momentum changed. The shift in momentum that characterized the second
quarter is an example of just how fickle the economy and the markets can be.
The net effect of the various changes in interest rates were positive. While
most sectors of the municipal market posted negative returns in 1999, all posted
positive returns through the first six months of 2000. The market's actions
over the last six months also bode well for the Diversified Tax Exempt Series.
The Series was positioned longer than its benchmark, the Merrill Lynch
Intermediate Index, and consequently it outperformed the index.
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS (UNAUDITED)
Investors should always remember that municipal yields will fluctuate over time;
sometimes the cyclical pressures will push them higher, and other times they
will push lower. However, the secular factors that drove inflation lower over
the last 15+ years remain in firmly place. Given this environment, we have been
continuing to purchase high quality bonds with maturities over 15 years. These
bonds have yields only slightly lower than comparable U.S. Treasury securities,
and because the income they pay is free of federal tax, this difference is more
than made up by the tax savings for investors in higher tax brackets.
We appreciate your business, and we hope that you and your families continue to
prosper as we move through the year.
Sincerely,
EXETER ASSET MANAGEMENT
[graphic]
[pie chart]
Portfolio Composition 1 - As of 6/30/00
General Obligation Bonds - 77.88%
Revenue Bonds - 21.84%
Pre-Refunded Bonds - 0.28%
1 As a percentage of municipal securities.
[graphic]
[pie chart]
Quality Ratings 2 - As of 6/30/00
Aaa - 83.36%
Aa - 14.42%
A - 2.22%
2 Using Moody's Ratings, as a percentage of municipal securities (unaudited).
2
<PAGE>
Performance Update as of June 30, 2000 (unaudited)
Exeter Fund, Inc.
Diversified Tax Exempt Series
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $10,198 1.98% 1.98%
Five Years $12,549 25.49% 4.64%
Inception 1 $12,940 29.40% 4.12%
Merrill Lynch Intermediate Municipal Bond Index
Total Return
Through Growth of $10,000 Average
06/30/00 Investment Cumulative Annual
One Year $10,441 4.41% 4.41%
Five Years $13,004 30.04% 5.39%
Inception 1 $13,625 36.25% 4.97%
The value of a $10,000 investment in the Exeter Fund, Inc. - Diversified Tax
Exempt Series from its inception (2/14/94) to present (6/30/00) as compared to
the Merrill Lynch Intermediate Municipal Bond Index. 2
[graphic]
[line chart]
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. Merrill Lynch
Date Diversified Tax Exempt Series Intermediate Municipal Bond Index
<S> <C> <C>
02/14/1994 10,000 10,000
12/31/1994 9,461 9,709
12/31/1995 11,003 11,009
12/31/1996 11,370 11,520
12/31/1997 12,270 12,406
12/31/1998 12,944 13,183
12/31/1999 12,340 13,182
06/30/2000 12,940 13,625
</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 Bond Index is a
market value weighted measure of approximately 120 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, 2000 (unaudited)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- ---------
MUNICIPAL SECURITIES - 94.70%
<S> <C> <C> <C>
ALABAMA - 1.16%
Bessemer Water Supply, Revenue Bond, 5.20%, 6/01/2024 . . . . . Aaa $ 500,000 $460,275
---------
ALASKA - 0.78%
Anchorage, G.O. Bond, 6.10%, 8/1/2004 . . . . . . . . . . . . . Aaa 300,000 308,598
---------
ARIZONA - 0.64%
Maricopa County School District No. 097 Deer Valley, G.O.
Bond, Series A, 5.20%, 7/1/2007 . . . . . . . . . . . . . . Aaa 250,000 253,990
---------
CALIFORNIA - 3.73%
California State, G.O. Bond, 4.75%, 12/1/2028 . . . . . . . . . Aa3 795,000 678,405
Oak Grove School District Bond, G.O. Bond, 5.25%, 08/01/2024. . Aaa 500,000 473,825
Wiseburn School District, G.O. Bond, Series A, 5.25%, 8/1/2016. Aaa 330,000 326,453
---------
1,478,683
---------
COLORADO - 0.43%
El Paso County School District No. 020, G.O. Bond, Series A,
6.20%, 12/15/2007 . . . . . . . . . . . . . . . . . . . . . Aaa 160,000 172,653
---------
FLORIDA - 4.55%
Florida State Board of Education Capital Outlay Public Ed.,
G.O. Bond Series A, 5.00%, 6/1/2027 . . . . . . . . . . . . Aa2 750,000 668,340
Florida State Board of Education Capital Outlay Public Ed.,
G.O. Bond Series C, 5.60%, 6/1/2025 . . . . . . . . . . . . Aaa 135,000 133,032
Florida State Senior Lien - Jacksonville Trans, G.O. Bond,
5.00%, 7/1/2027. . . . . . . . . . . . . . . . . . . . . . Aa2 710,000 634,307
Hillsborough County Capital Improvement Program, Revenue
Bond, 5.125%, 7/1/2022. . . . . . . . . . . . . . . . . . . Aaa 400,000 368,544
---------
1,804,223
---------
GEORGIA - 2.43%
Atlanta, G. O. Bond, 5.60%, 12/1/2018 . . . . . . . . . . . . . Aa3 350,000 348,789
Georgia, G.O. Bond, Series B, 5.65%, 3/1/2012 . . . . . . . . . Aaa 200,000 209,032
Rockdale County Water & Sewer Authority, Revenue Bond,
5.00%, 7/1/2022. . . . . . . . . . . . . . . . . . . . . . . Aaa 450,000 405,572
---------
963,393
---------
HAWAII - 0.69%
Hawaii, G.O. Bond, Series CH, 6.00%, 11/1/2007. . . . . . . . . A1 260,000 274,152
---------
IDAHO - 0.26%
Ada & Canyon Counties Joint School District No. 2
Meridian, G.O. Bond, 5.10%, 7/30/2005 . . . . . . . . . . . Aa2 100,000 101,920
---------
</TABLE>
The accompanying notes are an integral part of the financial statements
4
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
<S> <C> <C> <C>
ILLINOIS - 4.27%
Aurora, G.O. Bond, 5.80%, 1/1/2012. . . . . . . . . . . . . . . . . . . Aaa $ 190,000 $ 197,456
Chicago Schools Financial Authority, G.O. Bond, Series A,
5.00%, 6/1/2007 . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 200,000 199,530
Chicago, G.O. Bond, Series A, 5.875%, 1/1/2022. . . . . . . . . . . . . Aaa 100,000 103,625
Chicago, G.O. Bond, 5.25%, 1/1/2027 . . . . . . . . . . . . . . . . . . Aaa 250,000 228,980
Cook County, G.O. Bond, Series A, 5.00%, 11/15/2022 . . . . . . . . . . Aaa 750,000 669,255
Illinois, Certificate of Participation, Series 1995A, 5.60%, 7/1/2010. Aaa 100,000 103,137
Rock Island County School District No. 041-Rock Island,
G.O. Bond, 5.125%, 12/1/2015 . . . . . . . . . . . . . . . . . . . A3 200,000 191,280
----------
1,693,263
----------
INDIANA - 4.47%
Avon Independent Community School Building Corp., Revenue
Bond, 5.25%, 1/1/2022. . . . . . . . . . . . . . . . . . . . . . . . Aaa 925,000 857,586
Bloomington Sewer Works, Revenue Bond, 5.80%, 1/1/2011. . . . . . . . . Aaa 150,000 154,695
Eagle-Union Middle School Building Corp., Revenue Bond, 5.90%
1/15/2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 500,000 502,090
Lafayette Waterworks, Revenue Bond, 4.90%, 7/1/2006 . . . . . . . . . . Aaa 140,000 139,539
Monroe County Community School Corporation First
Meeting, Revenue Bond, 5.25%, 7/1/2016. . . . . . . . . . . . . . . Aaa 125,000 120,160
----------
1,774,070
----------
IOWA - 4.35%
Cedar Rapids, G. O. Bond, 6.45%, 6/1/2014 . . . . . . . . . . . . . . . Aaa 350,000 365,151
Iowa City, G.O. Bond, 5.45%, 6/1/2017 . . . . . . . . . . . . . . . . . Aaa 1,125,000 1,115,629
Iowa City Sewer, Revenue Bond, 5.75%, 7/1/2021. . . . . . . . . . . . . Aaa 250,000 246,405
----------
1,727,185
----------
KANSAS - 2.47%
Derby, Series A, G.O. Bond, 5.00%, 6/1/2015 . . . . . . . . . . . . . . Aaa 275,000 259,776
Johnson County Unified School District No. 231, G.O. Bond,
Series A, 5.75%, 10/1/2016 . . . . . . . . . . . . . . . . . . . . . Aaa 500,000 509,285
Johnson County Unified School District No. 229, G.O. Bond,
Series A, 5.00%, 10/1/2014. . . . . . . . . . . . . . . . . . . . . Aa1 220,000 209,629
----------
978,690
----------
KENTUCKY - 1.43%
Jefferson County School District Finance Corp. School
Building, Revenue Bond, Series A, 5.00%, 2/1/2011 . . . . . . . . . Aaa 300,000 294,432
Kentucky State Turnpike Authority Revitalization Projects,
Revenue Bond, 6.50%, 7/1/2008 . . . . . . . . . . . . . . . . . . . Aaa 250,000 274,657
----------
569,089
----------
</TABLE>
The accompanying notes are an integral part of the financial statements
5
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- ---------
<S> <C> <C> <C>
LOUISIANA - 1.71%
New Orleans Sewer Service, Revenue Bond, 5.25%, 6/1/2012 . . . . . . . Aaa $ 300,000 $298,935
Orleans Parish School District, G.O. Bond, Series A, 5.125%, 9/1/2016. Aaa 400,000 379,196
----------
678,131
----------
MAINE - 2.46%
Hermon, G.O. Bond, 5.60%, 11/1/2013. . . . . . . . . . . . . . . . . . Aaa 75,000 76,210
Kennebec Water District, Revenue Bond, 5.125%, 12/1/2021 . . . . . . . Aaa 750,000 689,362
Portland, G.O. Bond, 6.20%, 4/1/2006 . . . . . . . . . . . . . . . . . Aa1 200,000 212,770
----------
978,342
----------
MARYLAND - 1.66%
Baltimore Water Project, Revenue Bond, Series A,
5.55%, 7/1/2009. . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 260,000 268,991
Prince Georges County Public Improvement, G.O. Bond,
5.00%, 3/15/2014 . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 200,000 192,306
Washington County Public Improvement, G.O. Bond,
4.875%, 1/1/2010 . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 200,000 196,496
----------
657,793
----------
MASSACHUSETTS - 3.64%
Martha's Vineyard Regional High School District No. 100,
G.O. Bond, 6.70%, 12/15/2014 . . . . . . . . . . . . . . . . . . . Aaa 200,000 218,660
Massachusetts Bay Transit Authority, Revenue Bond, Series B,
5.25%, 3/1/2026. . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 500,000 462,845
Massachusetts Municipal Electric Supply System, Revenue
Bond, Series A, 5.00%, 7/1/2017. . . . . . . . . . . . . . . . . . Aaa 200,000 184,474
Massachusetts State, G.O. Bond, Series C, 5.75%, 8/1/2010. . . . . . . Aaa 400,000 422,544
Massachusetts Water Resource Authority General Ref.,
Revenue Bond, Series B, 5.25%, 3/1/2013. . . . . . . . . . . . . . Aaa 155,000 154,279
----------
1,442,802
----------
MICHIGAN - 3.82%
Comstock Park Public Schools, G.O. Bond, 5.50%, 5/1/2011 . . . . . . . Aaa 150,000 152,304
Holly Area School District, G.O. Bond, 5.00%, 5/1/2022 . . . . . . . . Aaa 500,000 447,935
Hudsonville Public Schools, G.O. Bond, 5.15%, 5/01/2027. . . . . . . . Aaa 225,000 203,704
Lincoln Park School District, G.O. Bond, 5.00%, 5/1/2026 . . . . . . . Aaa 480,000 424,200
Pinckney Community Schools, G.O. Bond, 5.00%, 5/1/2014 . . . . . . . . Aaa 200,000 190,200
St. Joseph County Sewer Disposal Systems - Constantine,
G.O. Bond, 5.00%, 4/1/2012 . . . . . . . . . . . . . . . . . . . . Aaa 100,000 96,544
----------
1,514,887
----------
</TABLE>
The accompanying notes are an integral part of the financial statements
6
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
<S> <C> <C> <C>
MINNESOTA - 2.51%
Big Lake Independent School District Bond, G.O. Bond, 5.50%,
2/01/2014 . . . . . . . . . . . . . . . . . . . . . . . . Aaa $ 500,000 $ 503,540
Minneapolis, G.O. Bond, Series B, 5.20%, 3/1/2013. . . . . . Aaa 300,000 299,427
Western Minnesota Municipal Power Agency, Revenue
Bond, 6.625%, 1/1/2016. . . . . . . . . . . . . . . . . . Aaa 175,000 195,027
-----------
997,994
-----------
MISSISSIPPI - 0.53%
Mississippi, G.O. Bond, 6.30%, 12/1/2006. . . . . . . . . . . Aa3 200,000 211,728
-----------
MISSOURI - 0.63%
Missouri State Ref.- Third Street Building, G.O. Bond,
Series A, 5.125%, 8/1/2009. . . . . . . . . . . . . . . . Aaa 250,000 251,240
-----------
MONTANA - 0.49%
Montana Long Range Building Project, G.O. Bond, Series A,
4.875%, 8/1/2010. . . . . . . . . . . . . . . . . . . . . Aa3 200,000 196,014
-----------
NEBRASKA - 1.34%
Douglas County School District No. 17, G.O. Bond, 5.00%,
10/1/2012 . . . . . . . . . . . . . . . . . . . . . . . . Aaa 545,000 530,356
-----------
NEVADA - 2.44%
Clark County School District, G.O. Bond,
6.00%, 6/15/2002. . . . . . . . . . . . . . . . . . . . . Aaa 100,000 102,515
Nevada State Project No. 42, G.O. Bond, 5.70%, 9/1/2008. . . Aa2 200,000 208,278
Nevada State Project Nos. 66 & 67, G.O. Bond
Series A, 5.00%, 5/15/2028. . . . . . . . . . . . . . . . Aaa 750,000 658,073
-----------
968,866
-----------
NEW HAMPSHIRE - 0.54%
New Hampshire, G.O. Bond, 6.60%, 9/1/2014 . . . . . . . . . . Aa2 200,000 215,004
-----------
NEW JERSEY - 4.40%
East Orange Water Utility, G.O. Bond, 5.60%, 6/15/2019. . . . Aaa 1,020,000 1,018,786
Jersey City Water, G.O. Bond, 5.50%, 3/15/2011. . . . . . . . Aaa 225,000 230,769
North Hudson Sewer Authority, Revenue Bond, 5.25%, 8/1/2016. Aaa 250,000 243,112
West Windsor Plainsboro, G.O. Bond, 5.25%, 12/1/2004. . . . . Aaa 250,000 255,420
-----------
1,748,087
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements
7
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- ---------
<S> <C> <C> <C>
NEW YORK - 3.82%
New York State Thruway Authority, Revenue Bond,
Series A, 5.50%, 1/1/2023. . . . . . . . . . . . . . . . . Aaa $ 200,000 $202,672
Orange County, G.O. Bond, 5.125%, 9/1/2024 . . . . . . . . . . Aa2 500,000 457,595
Sands Point, G.O. Bond, 6.70%, 11/15/2013. . . . . . . . . . . Aa2 350,000 377,342
Spencerport Central School District, G.O. Bond, 5.00%,
11/15/2012 . . . . . . . . . . . . . . . . . . . . . . . . Aaa 350,000 342,090
Westchester County, G.O. Bond, 4.75%, 11/15/2016 . . . . . . . Aaa 150,000 137,343
---------
1,517,042
---------
NORTH CAROLINA - 1.04%
North Carolina State Prison Facilities, G.O. Bond, 4.80%,
3/1/2009 . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 200,000 197,504
Raleigh North Carolina, G.O. Bond, 4.40%, 6/1/2017 . . . . . . Aaa 250,000 213,400
---------
410,904
---------
OHIO - 2.73%
Cleveland Water & Sewer, G.O. Bond, 5.35%, 9/1/2023 . . . . . Aaa 450,000 425,425
Oak Hills Local School District, G.O. Bond, 5.125%, 12/1/2025. Aaa 490,000 447,007
Summit County Various Purpose, G.O. Bond, 6.625%, 12/1/2012. . Aaa 200,000 209,564
---------
1,081,996
---------
OKLAHOMA - 1.71%
Oklahoma State Turnpike Authority, Revenue Bond,
Series A, 5.00%, 1/1/2023 . . . . . . . . . . . . . . . . . Aaa 750,000 677,738
---------
OREGON - 0.66%
Salem Pedestrian Safety Impts., G.O. Bond, 5.50%, 5/1/2010 . . Aaa 255,000 261,237
---------
PENNSYLVANIA - 3.73%
Beaver County, G.O. Bond, 5.15%, 10/01/2017. . . . . . . . . . Aaa 300,000 283,956
Cambria County, G.O. Bond, Series A, 6.10%, 8/15/2016 . . . . Aaa 350,000 368,753
Philadelphia Water & Waste, Revenue Bond, 5.60%, 8/1/2018. . . Aaa 150,000 148,814
Pittsburgh Water & Sewer Authority, Revenue Bond, Series C,
5.125%, 9/1/2023 . . . . . . . . . . . . . . . . . . . . Aaa 750,000 679,837
---------
1,481,360
---------
</TABLE>
The accompanying notes are an integral part of the financial statements
8
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
<S> <C> <C> <C>
RHODE ISLAND - 4.48%
Rhode Island State Pre-refunded Balance, G.O. Bond,
Series A, 6.20%, 6/15/2004 . . . . . . . . . . . . . . . . . . . Aaa $ 115,000 $ 120,421
Rhode Island State Unrefunded Balance, G.O. Bond,
Series A, 6.20%, 6/15/2004 . . . . . . . . . . . . . . . . . . . Aaa 185,000 193,401
Rhode Island State Capital Development, G.O. Bond, Series A,
5.375%, 7/15/2017 . . . . . . . . . . . . . . . . . . . . . . . Aaa 1,500,000 1,464,810
----------
1,778,632
----------
SOUTH CAROLINA - 0.92%
South Carolina State Highway, G.O. Bond, Series B,
5.625%, 7/1/2010. . . . . . . . . . . . . . . . . . . . . . . . . Aaa 350,000 363,580
-----------
SOUTH DAKOTA - 1.43%
Rapid City Area School District, G.O. Bond, 4.75%, 1/1/2018. . . . . Aaa 650,000 569,095
-----------
TENNESSEE - 1.23%
Johnson City School Sales Tax, G.O. Bond, 6.70%, 5/1/2021. . . . . . Aaa 350,000 382,354
Lawrence County, G.O. Bond, 6.60%, 3/1/2013. . . . . . . . . . . . . Aaa 100,000 105,024
-----------
487,378
-----------
TEXAS - 5.26%
Brazoria County , G.O. Bond, 4.75%, 9/1/2011 . . . . . . . . . . . . Aaa 445,000 420,587
Carrollton Independent School District, G.O. Bond,
6.00%, 2/15/2019. . . . . . . . . . . . . . . . . . . . . . . . Aaa 500,000 513,150
Dallas Waterworks & Sewer, Revenue Bond, 5.625%, 4/1/2009. . . . . . Aa2 200,000 204,818
North Texas Municipal Water District, Revenue Bond,
5.00%, 6/1/2012. . . . . . . . . . . . . . . . . . . . . . . . . Aaa 150,000 145,539
Richardson Independent School District, G.O. Bond, Series A, 5.00%,
2/15/2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 500,000 451,650
Southlake Waterwork & Sewer System, G.O. Bond, 5.30%,
2/15/2011. . . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 350,000 351,971
-----------
2,087,715
-----------
UTAH - 1.84%
Alpine School District, G.O. Bond, 5.375%, 3/15/2009 . . . . . . . . Aaa 250,000 254,398
Nebo School District, G.O. Bond, 6.00%, 6/15/2018. . . . . . . . . . Aaa 450,000 476,253
-----------
730,651
-----------
VIRGINIA - 0.97%
Franklin County Capital Improvement , G.O. Bond, 6.60%,
7/15/2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 250,000 259,557
Spotsylvania County Water & Sewer Systems, Revenue
Bond, 5.25%, 6/1/2016. . . . . . . . . . . . . . . . . . . . . . Aaa 130,000 126,040
-----------
385,597
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements
9
<PAGE>
Investment Portfolio - June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
CREDIT PRINCIPAL
RATING* AMOUNT/ VALUE
(UNAUDITED) SHARES (NOTE 2)
------------ ---------- ---------
<S> <C> <C> <C>
WASHINGTON - 3.57%
King County Ref-Series B Bond, G.O. Bond, 5.00%, 1/01/2030 . . Aaa $ 400,000 $347,956
Kitsap County School District, G.O. Bond, 6.625%, 12/1/2008 . A1 350,000 368,186
Seattle, G.O. Bond, Series A, 5.75%, 1/15/2020 . . . . . . . . Aa1 230,000 230,101
Seattle Met. Municipality, G.O. Bond, 5.65%, 1/1/2020. . . . . Aa3 100,000 98,859
Washington State, G.O. Bond, Series A, 5.00%, 1/1/2023 . . . . Aa1 410,000 366,233
---------
1,411,335
---------
WEST VIRGINIA - 1.54%
West Virginia State Streets/Roads, G.O. Bond, 5.00%, 6/1/2015. Aaa 650,000 612,762
---------
WISCONSIN - 1.94%
East Troy School District, G.O. Bond, Series A, 4.625%,
a 10/1/2011. . . . . . . . . . . . . . . . . . . . . . . . . Aaa 400,000 372,004
Merrill Public School District, G.O. Bond, 5.30%, 4/1/2013 . . Aaa 400,000 397,332
---------
769,336
---------
TOTAL MUNICIPAL SECURITIES
(Identified Cost $38,178,098). . . . . . . . . . . . . . . . . 37,577,786
---------
SHORT-TERM INVESTMENTS - 6.52%
Dreyfus Municipal Reserves
(Identified Cost $2,587,219) . . . . . . . . . . . . . . . 2,587,219 2,587,219
---------
TOTAL INVESTMENTS - 101.22%
(Identified Cost $40,765,317). . . . . . . . . . . . . . . . . 40,165,005
OTHER ASSETS, LESS LIABILITIES - (1.22)% . . . . . . . . . . . (484,323)
---------
NET ASSETS - 100%. . . . . . . . . . . . . . . . . . . . . . . $39,680,682
============
</TABLE>
Key -
G.O. Bond - General Obligation Bond Met. - Metropolitan
Impt. - Improvement Ed. - Education
Ref. - Referendum
*Credit Ratings from Moody's (unaudited)
FEDERAL TAX INFORMATION:
At June 30, 2000, the net unrealized depreciation based on identified cost for
federal income tax purposes of $40,765,317 was as follows:
Unrealized appreciation $600,585
Unrealized depreciation (1,200,897)
-----------
UNREALIZED DEPRECIATION - NET $ (600,312)
=============
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (unaudited)
<TABLE>
<CAPTION>
JUNE 30, 2000
<S> <C>
ASSETS:
Investments, at value (identified cost $40,765,317)(Note 2) $40,165,005
Interest receivable . . . . . . . . . . . . . . . . . . . . 572,741
Receivable for fund shares sold . . . . . . . . . . . . . . 105,170
------------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . 40,842,916
------------
LIABILITIES:
Accrued management fee (Note 3) . . . . . . . . . . . . . . 15,132
Accrued directors' fees (Note 3). . . . . . . . . . . . . . 3,354
Accrued fund accounting fees (Note 3) . . . . . . . . . . . 1,782
Transfer agent fees payable (Note 3). . . . . . . . . . . . 726
Payable for securities purchased. . . . . . . . . . . . . . 1,115,995
Audit fee payable . . . . . . . . . . . . . . . . . . . . . 15,679
Registration and filing fees payable. . . . . . . . . . . . 5,603
Other payables and accrued expenses . . . . . . . . . . . . 3,963
------------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . 1,162,234
------------
NET ASSETS FOR 3,959,675 SHARES
OUTSTANDING. . . . . . . . . . . . . . . . . . . . . . . $39,680,682
============
NET ASSETS CONSIST OF:
Capital stock . . . . . . . . . . . . . . . . . . . . . . . $ 39,597
Additional paid-in-capital. . . . . . . . . . . . . . . . . 40,102,514
Undistributed net investment income . . . . . . . . . . . . 143,896
Accumulated net realized loss on investments. . . . . . . . (5,013)
Net unrealized depreciation on investments. . . . . . . . . (600,312)
------------
TOTAL NET ASSETS. . . . . . . . . . . . . . . . . . . . . . $39,680,682
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($39,680,682/3,959,675 shares). . . . . . . . . . . . . $ 10.02
============
</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, 2000
INVESTMENT INCOME:
<S> <C>
Interest. . . . . . . . . . . . . . . . . . . . . . . $ 902,280
-----------
EXPENSES:
Management fee (Note 3) . . . . . . . . . . . . . . . 82,965
Fund Accounting fees (Note 3) . . . . . . . . . . . . 11,673
Transfer agent fees (Note 3). . . . . . . . . . . . . 4,532
Directors' fees (Note 3). . . . . . . . . . . . . . . 2,783
Audit fee . . . . . . . . . . . . . . . . . . . . . . 6,764
Registration and filing fees. . . . . . . . . . . . . 5,932
Miscellaneous . . . . . . . . . . . . . . . . . . . . 6,498
-----------
Total Expenses. . . . . . . . . . . . . . . . . . . . 121,147
-----------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . 781,133
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized loss on investments. . . . . . . . . . . (2,061)
Net change in unrealized depreciation on investments. 845,491
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS . . . . . . . . . . . . . . . . . . 843,430
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . $1,624,563
===========
</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 6/30/00 FOR THE YEAR
(UNAUDITED) ENDED 12/31/99
-------------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income. . . . . . . . . . . . . . . . . . . . . . $ 781,133 $ 1,427,350
Net realized gain (loss) on investments. . . . . . . . . . . . . (2,061) 36,836
Net unrealized appreciation (depreciation) on investments. . . . 845,491 (2,873,865)
-------------------- ----------------
Net increase (decrease) from operations. . . . . . . . . . . . . 1,624,563 (1,409,679)
-------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income . . . . . . . . . . . . . . . . . . . (702,252) (1,457,769)
From net realized gain on investments. . . . . . . . . . . . . . -- (39,827)
Total distributions to shareholders. . . . . . . . . . . . . . . (702,252) (1,497,596)
-------------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital share transactions (Note 5) 8,997,834 (1,902,195)
-------------------- ----------------
Net increase (decrease) in net assets. . . . . . . . . . . . . . 9,920,145 (4,809,470)
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . 29,760,537 34,570,007
-------------------- ----------------
END OF PERIOD (including undistributed net investment
income of $143,896 and $65,015, respectively) . . . . . . . . $ 39,680,682 $ 29,760,537
==================== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED
6/30/00 FOR THE YEARS ENDED
(UNAUDITED) 12/31/99 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> <C>
NET ASSET VALUE - BEGINNING OF YEAR . . . . $ 9.74 $ 10.73 $ 10.59 $ 10.23 $ 10.32 $ 9.26
------------ --------------------- ---------- ---------- ---------- --------
Income from investment operations:
Net investment income . . . . . . . . . . 0.21 0.48 0.43 0.43 0.43 0.43
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . 0.26 (0.97) 0.14 0.36 (0.10) 1.06
------------ --------------------- ---------- ---------- ---------- --------
Total from investment operations . . . . . . 0.47 (0.49) 0.57 0.79 0.33 1.49
------------ --------------------- ---------- ---------- ---------- --------
Less distributions to shareholders:
From net investment income. . . . . . . . (0.19) (0.49) (0.42) (0.43) (0.42) (0.43)
From net realized gain on investments . . -- (0.01) (0.01) -- -- --
---------- --------
Total distributions to shareholders. . . . (0.19) (0.50) (0.43) (0.43) (0.42) (0.43)
------------ --------------------- ---------- ---------- ---------- --------
NET ASSET VALUE - END OF YEAR. . . . . . . . $ 10.02 $ 9.74 $ 10.73 $ 10.59 $ 10.23 $ 10.32
============ ===================== ========== ========== ========== ========
Total return1. . . . . . . . . . . . . . . . 4.86% (4.67)% 5.49% 7.92 % 3.33% 16.29%
Ratios of expenses (to average net assets)/
Supplemental Data:
Expenses . . . . . . . . . . . . . . . . 0.73%2 0.68% 0.69% 0.69% 0.70% 0.79%
Net investment income. . . . . . . . . . 4.71%2 4.50% 4.19% 4.41% 4.44% 4.52%
Portfolio turnover . . . . . . . . . . . . . 1% 6% 5% 1% 2% 5%
NET ASSETS-END OF YEAR (000'S OMITTED) . . . $ 39,681 $ 29,761 $ 34,570 $ 23,651 $ 16,949 $12,452
============ ===================== ========== ========== ========== ========
</TABLE>
1 Represents aggregate total return for the period indicated, and assumes
reinvestment of distributions.
2 Annualized.
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 to investors, employees and clients of Manning
& Napier Advisors, Inc. (the "Advisor") dba Exeter Asset Management, and its
affiliates. The total authorized capital stock of the Fund consists of 1.7
billion shares of common stock each having a par value of $0.01. As of June 30,
2000, 1.4 billion shares have been designated in total among 28 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 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 of net realized gains are made at least annually. An additional
distribution may be necessary to avoid taxation of the Series. Distributions
are recorded on the ex-dividend date.
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 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. Any such
reclassifications are not reflected in the financial highlights.
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.
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 fund administration 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%.
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.
Effective April 2000 the Advisor became the Fund's accounting services agent.
For these services, the Fund will pay the Advisor a fee of 0.04% of each Series'
daily net assets calculated daily and payable monthly, with a minimum annual fee
of $48,000 per Series. The Advisor has entered into an agreement with BISYS
Fund Services Ohio, Inc. under which BISYS will serve as sub-accounting services
agent.
16
<PAGE>
Notes to Financial Statements (unaudited)
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2000, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$7,745,517 and $303,375, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Diversified Tax Exempt Series were:
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended 6/30/00 Ended 12/31/99
------------------- ----------------
Shares Amount Shares Amount
------------------- ---------------- --------- ------------
<S> <C> <C> <C> <C>
Sold. . . . 1,250,398 $ 12,404,053 624,517 $ 6,412,323
Reinvested. 67,735 671,282 141,835 1,431,834
Repurchased (412,464) (4,077,501) (934,336) (9,746,352)
------------------- ---------------- --------- ------------
Total . . . 905,669 $ 8,997,834 (167,984) $(1,902,195)
=================== ================ ========= ============
</TABLE>
A significant portion of the Series shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
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, 2000.
17
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