February 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 Annual Report for each of the above Series of the
Exeter Fund in which you were invested as of December 31, 1999. The reports
include information about the Series' performance as well as portfolio listings
as of that date.
Please contact our Fund Services department at 1-800-466-3863 or your Client
Consultant if you have any questions about the Annual Reports or about the Fund.
Sincerely,
/s/ Amy J. Williams
Amy J. Williams
Fund Services Manager
Exeter Fund, Inc.
Small Cap Series
Annual Report
December 31, 1999
<PAGE>
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
DEAR SHAREHOLDERS:
After an encouraging second quarter, during which small company stocks gained
ground on stocks of larger companies, the market returned to its pattern of the
past several years for the remainder of the year. Once again, large company
stocks outperformed small company stocks for the year, and value stocks lagged
behind growth stocks. The Small Cap Series followed these trends.
Much of the market gains in 1999 were due to the remarkable gains made in the
technology sector. Many stocks in this group fail to meet our value-oriented
criteria, and therefore the Small Cap Series does not have significant holdings
in this area. We did have small holdings in technology and biotechnology stocks
that contributed positively to the Series' return.
We have compared the Series' performance to that of the Russell 2000 since it
opened. While this is the most widely-used small company stock index, it has
serious shortcomings. The index is only reconstituted once a year at the end of
June. The stocks that are chosen then for inclusion make up the index for the
whole year, regardless of how their characteristics change. The latest
reconstitution of the index included a large weighting in technology stocks, and
these stocks rose on a wave of investor sentiment during 1999. Because of their
large increases, many of these stocks are in fact no longer small company
stocks.
With the astronomical returns in technology stocks in 1999 and with large
company stocks as represented by the S&P 500 Total Return Index in double digits
for the fifth straight year, some investors might question whether an investment
in small company stocks is worthwhile. We agree that returns have been
disappointing, but we believe strongly in the value of diversification. If a
person knew for certain which sector of the market would be favored at any given
time, it would make sense to invest in only that sector. The fact is that it is
impossible to know which sector will be the leader at any point or when the
leadership will change. For this reason, and because small company stocks have
historically outperformed large company stocks, we believe they play an
important part in a diversified portfolio.
This difficult environment provided us with the opportunity to upgrade the
portfolio over the course of the year. As long-time investors know, our
investment approach places a great deal of importance on value measures. The
markets' focus on high-flying technology stocks and a narrow band of large
company stocks has created many opportunities to purchase attractive, but less
glamorous, stocks at very low valuations.
An example of the kinds of opportunities we have been able to identify is
Jostens Inc., the largest producer and marketer of yearbooks, class rings, and
graduation products. The business also includes a sizable school photography
unit and a unit that produces customized reward and recognition materials for
organizations. We purchased this stock late in 1998 because the company
dominated an industry that we felt would benefit from a projected increase in
the number of students graduating from high school and it was available at an
extremely attractive price. The market quickly recognized the value of the
company, sending the stock price above our targeted sell price early in 1999.
We sold the stock at that time, and the stock has since fallen lower. Despite a
takeover in late 1999, the stock has not returned to the level at which we sold
it. Because we continue to find opportunities like this in the small cap
market, we remain optimistic about the opportunity available in this sector.
We wish you all the best in the new year.
Sincerely,
EXETER ASSET MANAGEMENT
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
[graphic]
[pie chart]
Data for pie chart to follow:
Portfolio Composition* - As of 12/31/99
Business Services - 7.04%
Chemicals & Allied Products - 15.35%
Communications - 4.55%
Electric, Gas & Sanitary Services - 3.00%
Industrial & Commercial Machinery - 4.21%
Oil & Gas Extraction - 7.70%
Paper & Allied Products - 5.79%
Primary Metal Industries - 7.92%
Stone, Clay & Glass Products - 3.94%
Retail - 3.39%
Transportation - 5.23%
Miscellaneous** - 24.72%
Cash, equivalents, and other assets, less liabilities - 7.14%
* As a percentage of common stocks.
** Miscellaneous includes:
Agricultural Production - 1.54% Insurance Carriers - 0.58%
Amusement & Recreation Services - 0.30% Investment Advice - 0.47%
Apparel & Other Textile Products - 0.78% Linen Services - 0.12%
Depository Institutions - 2.74% Lumber & Wood Products - 0.12%
Eating Places - 0.44% Motion Picture Services - 1.54%
Electronics & Other Electrical Equipment - 2.60% Operative Builders - 0.48%
Electronic Parts & Equipment - Wholesale - 0.27%
Printing & Publishing -1.10%
Engineering & Management Services - 2.21%
Rubber & Miscellaneous Plastic Products - 1.80%
Food & Kindred Products- 2.08% Skilled Nursing Care Facilities - 0.09%
Footwear & Related Apparel - 0.19%
Technical Instruments & Supplies -0.20%
Furniture & Fixtures - 0.67% Textile Mill Products - 2.77%
Heavy Construction - 0.06% Transportation Equipment - 1.57%
2
<PAGE>
PERFORMANCE UPDATE AS OF DECEMBER 31, 1999
Exeter Fund, Inc.-Small Cap Series
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $10,987 9.87% 9.87%
Five Year $13,448 34.48% 6.10%
Inception 1 $19,341 93.41% 8.97%
</TABLE>
S&P 500 Total Return Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $12,104 21.04% 21.04%
Five Year $35,093 250.93% 28.52%
Inception 1 $41,958 319.58% 20.54%
</TABLE>
Russell 2000 Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $12,126 21.26% 21.26%
Five Year $21,635 116.35% 16.69%
Inception 1 $28,833 188.33% 14.81%
</TABLE>
The value of a $10,000 investment in the Exeter Fund, Inc. - Small Cap Series
from its current activation (4/30/92) to present (12/31/99) as compared to the
Standard & Poor's (S&P) 500 Total Return and the Russell 2000 Total Return
Index. 2
[graphic]
[line chart]
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. S&P 500 Total
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
</TABLE>
1 The Series and Index performance numbers are calculated from April 30, 1992,
the Series' current activation date. The Series' performance is historical and
may not be indicative of future results.
2 The Standard and Poor's (S&P) 500 Total Return Index is an unmanaged
capitalization-weighted measure of 500 widely held common stocks listed on the
New York Stock Exchange, American Stock Exchange, and Over-the-Counter Market.
S&P 500 Total Return Index returns assume reinvestment of dividends and, unlike
Series returns, do not reflect any fees or expenses. The Russell 2000 Total
Return Index is an unmanaged index that consists of approximately 2000
small-capitalization stocks. Members of the Index represent only U.S. common
stocks that are invested in the U.S. equity markets. The Index returns are
based on a market capitalization weighted average of relative price changes of
the component stocks plus dividends whose reinvestments are compounded daily.
Unlike Series returns, the Index returns do not reflect any fees or expenses.
3
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- -----------
COMMON STOCK - 92.86%
<S> <C> <C>
AGRICULTURAL PRODUCTION - 1.54%
Sylvan, Inc.*. . . . . . . . . . . . . 165,000 $1,402,500
-----------
AMUSEMENT & RECREATION SERVICES - 0.30%
Anchor Gaming* . . . . . . . . . . . . 3,000 130,312
Cedar Fair, L.P. . . . . . . . . . . . 7,300 141,437
---------
271,749
---------
APPAREL & OTHER TEXTILE PRODUCTS - 0.78%
Nautica Enterprises, Inc.* . . . . . . 8,000 90,500
Novel Denim Holdings, Ltd.* (Note 6) . 116,000 496,631
OshKosh B'Gosh, Inc. - Class A . . . . 6,000 126,375
---------
713,506
---------
BUSINESS SERVICES - 7.04%
MISCELLANEOUS - 0.61%
ADVO, Inc.*. . . . . . . . . . . . . . 10,900 258,875
Fair, Isaac & Company, Inc.. . . . . . 5,700 302,100
---------
560,975
---------
COMPUTER RELATED SERVICES - 1.69%
Comptek Research, Inc.*. . . . . . . . 100,400 1,393,050
Computer Task Group, Inc.. . . . . . . 10,200 151,087
---------
1,544,137
---------
HELP SUPPLY SERVICES - 0.59%
Interim Services, Inc.*. . . . . . . . 9,200 227,700
Metamor Worldwide, Inc.* . . . . . . . 10,800 314,550
-----------
542,250
---------
SOFTWARE - 4.15%
Autodesk, Inc. . . . . . . . . . . . . 7,400 249,750
Harbinger Corp.* . . . . . . . . . . . 17,000 540,813
IDX Systems Corp.* . . . . . . . . . . 14,300 446,875
JDA Software Group, Inc.*. . . . . . . 18,200 298,025
MAPICS, Inc.*. . . . . . . . . . . . . 103,675 1,308,897
Remedy Corp.*. . . . . . . . . . . . . 9,200 435,850
Structural Dynamics Research Corp.*. . 9,900 126,225
Symantec Corp.*. . . . . . . . . . . . 3,900 228,638
Transaction Systems Architects, Inc.*. 5,600 156,800
---------
3,791,873
---------
6,439,235
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 2)
---------- -----------
<S> <C> <C>
CHEMICALS & ALLIED PRODUCTS - 15.35%
MISCELLANEOUS - 10.05%
Agrium, Inc. (Note 6) . . . . . . . . . . . . . 150,200 $1,182,825
CK Witco Corp.. . . . . . . . . . . . . . . . . 6,000 80,250
Cypress Bioscience, Inc.* . . . . . . . . . . . 1,315,050 2,383,528
Human Genome Sciences, Inc.*. . . . . . . . . . 2,675 408,272
McWhorter Technologies, Inc.* . . . . . . . . . 15,000 240,000
Mississippi Chemical Corp.. . . . . . . . . . . 147,275 911,264
PathoGenesis Corp.* . . . . . . . . . . . . . . 176,000 3,773,000
RPM, Inc. . . . . . . . . . . . . . . . . . . . 16,000 163,000
TETRA Technologies, Inc.* . . . . . . . . . . . 4,500 32,625
-----------
9,174,764
----------
PHARMACEUTICAL PREPARATIONS - 5.30%
Alkermes, Inc.* . . . . . . . . . . . . . . . . 6,600 324,225
Alpharma, Inc. Class A. . . . . . . . . . . . . 8,000 246,000
Dura Pharmaceuticals, Inc.* . . . . . . . . . . 20,200 281,537
Orion-Yhthma Oyj - B Shares (Finland) (Note 6). 154,000 3,577,774
Penwest Pharmaceuticals Co.*. . . . . . . . . . 27,000 411,750
-----------
4,841,286
----------
14,016,050
----------
COMMUNICATIONS - 4.55%
Granite Broadcasting Corp.* . . . . . . . . . . 10,000 101,250
Grupo Radio Centro S.A. de C.V. - ADR* (Note 6) 165,000 1,381,875
Sinclair Broadcast Group, Inc.* . . . . . . . . 206,000 2,513,839
STAR Telecommunications, Inc.*. . . . . . . . . 19,500 154,173
----------
4,151,137
----------
DEPOSITORY INSTITUTIONS - 2.74%
FEDERAL SAVINGS INSTITUTIONS - 0.56%
Catskill Financial Corp.. . . . . . . . . . . . 11,600 158,050
Niagara Bancorp, Inc. . . . . . . . . . . . . . 17,500 179,375
Timberland Bancorp, Inc.. . . . . . . . . . . . 15,700 176,625
-----------
514,050
----------
FUNCTIONS RELATED TO DEPOSITORY BANKING - 0.14%
ACE Cash Express, Inc.* . . . . . . . . . . . . 7,000 129,500
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- -----------
<S> <C> <C>
NATIONAL COMMERCIAL BANKS - 0.92%
First Financial Bankshares, Inc. . . . . . 6,000 $ 184,500
First Merchants Corp.. . . . . . . . . . . 8,200 215,250
National City Bancshares, Inc. . . . . . . 7,140 179,393
Old Second Bancorp, Inc. . . . . . . . . . 7,300 186,150
South Alabama Bancorporation, Inc. . . . . 3,500 42,656
Southside Bancshares Corp. . . . . . . . . 3,400 29,750
-----------
837,699
---------
NON-FEDERAL SAVINGS INSTITUTIONS - 0.57%
Brookline Bancorp, Inc.. . . . . . . . . . 15,700 153,075
First Sentinel Bancorp, Inc. . . . . . . . 22,200 173,437
Roslyn Bancorp, Inc. . . . . . . . . . . . 10,300 190,550
-----------
517,062
---------
STATE COMMERCIAL BANKS - 0.55%
German American Bancorp. . . . . . . . . . 10,815 186,559
Northern States Financial Corp.. . . . . . 2,000 45,000
United Security Bancorporation*. . . . . . 14,000 175,000
VRB Bancorp. . . . . . . . . . . . . . . . 16,000 97,000
-----------
503,559
---------
2,501,870
---------
EATING PLACES - 0.44%
Bob Evans Farms, Inc.. . . . . . . . . . . 6,300 97,256
CBRL Group, Inc. . . . . . . . . . . . . . 8,500 82,476
Ryan's Family Steak Houses, Inc.*. . . . . 10,500 89,250
VICORP Restaurants, Inc.*. . . . . . . . . 8,000 129,000
----------
397,982
---------
ELECTRIC, GAS & SANITARY SERVICES - 3.00%
MISCELLANEOUS - 1.38%
Newpark Resources, Inc.* . . . . . . . . . 200,000 1,225,000
Thermo Ecotek Corp.* . . . . . . . . . . . 6,000 31,875
-----------
1,256,875
---------
ELECTRIC & OTHER COMBINED SERVICES - 0.38%
Madison Gas & Electric Co. . . . . . . . . 9,700 195,213
RGS Energy Group, Inc. . . . . . . . . . . 7,200 148,050
-----------
343,263
---------
ELECTRIC SERVICES - 0.64%
El Paso Electric Co. . . . . . . . . . . . 19,200 188,400
Hawaiian Electrical Industries, Inc. . . . 5,300 153,038
The United Illuminating Co.. . . . . . . . 4,800 246,600
-----------
588,038
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- -----------
<S> <C> <C>
GAS TRANSMISSION & DISTRIBUTION - 0.60%
Cascade Natural Gas Corp. . . . . . . . . . . 7,000 $ 112,875
Laclede Gas Co. . . . . . . . . . . . . . . . 5,000 108,125
Nui Corp. . . . . . . . . . . . . . . . . . . 5,000 131,875
Ocean Energy, Inc.* . . . . . . . . . . . . . 12,500 96,875
ONEOK, Inc. . . . . . . . . . . . . . . . . . 4,000 100,500
-----------
550,250
---------
2,738,426
---------
ELECTRONICS & OTHER ELECTRICAL EQUIPMENT - 2.60%
The Carbide/Graphite Group, Inc.* . . . . . . 130,000 845,000
Inter-Tel, Inc. . . . . . . . . . . . . . . . 11,900 297,500
SIPEX Corp.*. . . . . . . . . . . . . . . . . 1,300 31,931
Standard Motor Products, Inc. . . . . . . . . 11,000 177,375
Tekelec*. . . . . . . . . . . . . . . . . . . 17,100 384,750
United Industrial Corp. . . . . . . . . . . . 20,500 189,625
Universal Electronics, Inc.*. . . . . . . . . 4,000 184,000
Woodward Governor Co. . . . . . . . . . . . . 9,700 266,750
----------
2,376,931
---------
ELECTRONIC PARTS & EQUIPMENT - WHOLESALE - 0.27%
Avnet, Inc. . . . . . . . . . . . . . . . . . 4,000 242,000
-----------
ENGINEERING & MANAGEMENT SERVICES - 2.21%
Billing Concepts Corp.* . . . . . . . . . . . 14,600 94,900
Meta Group, Inc.* . . . . . . . . . . . . . . 16,700 317,300
Morrison Knudsen Corp.* . . . . . . . . . . . 9,200 71,875
Paradigm Geophysical, Ltd.* (Note 6). . . . . 312,350 1,532,483
-----------
2,016,558
---------
FOOD & KINDRED PRODUCTS - 2.08%
American Italian Pasta Co.* . . . . . . . . . 4,300 132,225
Canandaigua Brands, Inc. - Class A* . . . . . 4,500 229,500
Flowers Industries, Inc.. . . . . . . . . . . 55,000 876,562
Genesee Corp. . . . . . . . . . . . . . . . . 7,000 149,187
International Home Foods, Inc.* . . . . . . . 7,000 121,625
Ralcorp Holdings, Inc.* . . . . . . . . . . . 12,000 239,250
Smithfield Foods, Inc.* . . . . . . . . . . . 4,300 103,200
Whitman Corp. . . . . . . . . . . . . . . . . 3,400 45,688
----------
1,897,237
---------
FOOTWEAR & RELATED APPAREL - 0.19%
The Stride Rite Corp. . . . . . . . . . . . . 10,000 65,000
Wolverine World Wide, Inc.. . . . . . . . . . 10,000 109,375
-----------
174,375
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- -----------
<S> <C> <C>
FURNITURE & FIXTURES - 0.67%
Kimball International, Inc. - Class B. . . . . . . . . . 11,000 $ 181,500
LADD Furniture, Inc. . . . . . . . . . . . . . . . . . . 12,500 246,875
The Rowe Companies . . . . . . . . . . . . . . . . . . . 22,000 185,625
-----------
614,000
---------
HEAVY CONSTRUCTION - 0.06%
Foster Wheeler Corp. . . . . . . . . . . . . . . . . . . 6,500 57,687
-----------
INDUSTRIAL & COMMERCIAL MACHINERY - 4.23%
Bell & Howell Co.* . . . . . . . . . . . . . . . . . . . 7,200 229,050
Cirrus Logic, Inc.*. . . . . . . . . . . . . . . . . . . 15,300 203,681
Diebold, Inc.. . . . . . . . . . . . . . . . . . . . . . 9,700 227,950
Gardner Denver, Inc.*. . . . . . . . . . . . . . . . . . 4,000 66,750
Gleason Corp.. . . . . . . . . . . . . . . . . . . . . . 12,800 297,600
Lam Research Corp.*. . . . . . . . . . . . . . . . . . . 2,800 312,375
Moog, Inc. Class A*. . . . . . . . . . . . . . . . . . . 7,700 207,900
NN Ball & Roller, Inc. . . . . . . . . . . . . . . . . . 255,000 1,848,750
PSC, Inc.. . . . . . . . . . . . . . . . . . . . . . . . 28,000 206,500
The Gorman-Rupp Co.. . . . . . . . . . . . . . . . . . . 15,000 262,500
----------
3,863,056
---------
INSURANCE CARRIERS - 0.58%
LIFE INSURANCE - 0.24%
Liberty Financial Companies, Inc.. . . . . . . . . . . . 9,400 215,613
-----------
TITLE INSURANCE - 0.34%
LandAmerica Financial Group, Inc.. . . . . . . . . . . . 8,300 152,513
The First American Financial Corp. . . . . . . . . . . . 13,000 161,687
----------
314,200
---------
529,813
---------
INVESTMENT ADVICE - 0.47%
United Asset Management Corp.. . . . . . . . . . . . . . 10,800 200,475
Value Line, Inc. . . . . . . . . . . . . . . . . . . . . 6,300 226,800
----------
427,275
---------
LINEN SERVICES - 0.12%
Angelica Corp. . . . . . . . . . . . . . . . . . . . . . 11,300 110,175
-----------
MISCELLANEOUS PETROLEUM & COAL PRODUCTS - 0.12%
Quaker Chemical Corp.. . . . . . . . . . . . . . . . . . 7,500 106,875
-----------
MOTION PICTURE SERVICES - 1.54%
Alliance Atlantis Communications Corp.* (Canada) (Note 6) 170,000 1,410,211
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- -----------
<S> <C> <C>
OIL & GAS EXTRACTION - 7.70%
CRUDE PETROLEUM & NATURAL GAS - 5.46%
Callon Petroleum Co.* . . . . . . . . 6,600 $ 97,762
Comstock Resources, Inc*. . . . . . . 25,000 70,312
EEX Corp. . . . . . . . . . . . . . . 13,500 39,656
Gulf Canada Resources, Ltd.* (Note 6) 1,349,175 4,553,466
Nuevo Energy Co.* . . . . . . . . . . 6,000 112,500
Remington Oil & Gas Corp.*. . . . . . 28,000 108,500
-----------
4,982,196
---------
DRILLING OIL & GAS WELLS - 0.31%
Pride International, Inc.*. . . . . . 19,300 282,263
-----------
EXPLORATION SERVICES - 1.93%
Stolt Comex Seaway SA - ADR* (Note 6) 152,000 1,681,500
Veritas DGC, Inc.*. . . . . . . . . . 6,000 84,000
----------
1,765,500
----------
7,029,959
---------
OPERATIVE BUILDERS - 0.48%
Engle Homes, Inc. . . . . . . . . . . 13,500 162,000
M.D.C. Holdings, Inc. . . . . . . . . 9,000 141,188
NVR, Inc.*. . . . . . . . . . . . . . 2,800 133,700
-----------
436,888
---------
PAPER & ALLIED PRODUCTS - 5.79%
American Business Products, Inc.. . . 7,500 87,656
Buckeye Technologies, Inc.* . . . . . 16,000 238,000
Smurfit-Stone Container Corp.*. . . . 202,600 4,963,700
-----------
5,289,356
---------
PRIMARY METAL INDUSTRIES - 7.92%
Gibraltar Steel Corp. . . . . . . . . 7,500 175,313
Intermet Corp.. . . . . . . . . . . . 149,325 1,735,903
Kaiser Aluminum Corp. . . . . . . . . 25,000 192,188
Olin Corp.. . . . . . . . . . . . . . 8,000 158,500
Steel Technologies, Inc.. . . . . . . 25,000 362,500
Texas Industries, Inc.. . . . . . . . 102,700 4,371,169
Worthington Industries, Inc.. . . . . 14,000 231,875
----------
7,227,448
---------
PRINTING & PUBLISHING - 1.10%
BOOKS - 0.18%
Thomas Nelson, Inc. . . . . . . . . . 17,300 160,025
-----------
CONSULTING SERVICES - 0.16%
Franklin Covey Co.* . . . . . . . . . 18,900 141,750
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- -----------
<S> <C> <C>
MANIFOLD BUSINESS FORMS - 0.53%
Ennis Business Forms, Inc. . . . . . . . . . 13,000 $ 100,750
Reynolds & Reynolds - Class A. . . . . . . . 10,000 225,000
The Standard Register Co.. . . . . . . . . . 3,900 75,563
Wallace Computer Services, Inc.. . . . . . . 5,200 86,450
----------
487,763
---------
NEWSPAPERS - 0.23%
Hollinger International, Inc.. . . . . . . . 13,500 174,656
Journal Register Co.*. . . . . . . . . . . . 2,500 38,594
-----------
213,250
----------
1,002,788
---------
RETAIL - 3.39%
APPAREL & ACCESSORY STORES - 1.36%
The Dress Barn, Inc.*. . . . . . . . . . . . 15,000 249,375
Goody's Family Clothing, Inc.* . . . . . . . 21,300 114,488
Payless ShoeSource, Inc.*. . . . . . . . . . 4,300 202,100
Sym's Corp . . . . . . . . . . . . . . . . . 136,000 680,000
-----------
1,245,963
---------
DEPARTMENT STORES - 0.24%
The Neiman Marcus Group, Inc.. . . . . . . . 7,900 220,706
-----------
FURNITURE & HOME FURNISHING STORES - 0.26%
CompUSA, Inc.* . . . . . . . . . . . . . . . 17,000 87,125
Pier 1 Imports, Inc. . . . . . . . . . . . . 23,000 146,625
----------
233,750
---------
MISCELLANEOUS RETAIL - 1.53%
Borders Group, Inc.* . . . . . . . . . . . . 7,500 120,469
Brookstone, Inc.*. . . . . . . . . . . . . . 16,000 281,000
Duane Reade, Inc.* . . . . . . . . . . . . . 7,700 212,231
Hancock Fabrics, Inc.. . . . . . . . . . . . 213,500 667,188
OfficeMax, Inc.* . . . . . . . . . . . . . . 20,500 112,750
----------
1,393,638
----------
3,094,057
---------
RUBBER & MISCELLANEOUS PLASTIC PRODUCTS - 1.80%
Applied Extrusion Technologies, Inc.*. . . . 235,800 1,444,275
AptarGroup, Inc. . . . . . . . . . . . . . . 8,100 203,513
----------
1,647,788
---------
SKILLED NURSING CARE FACILITIES - 0.09%
Genesis Health Ventures, Inc.* . . . . . . . 42,000 86,625
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- -----------
<S> <C> <C>
STONE, CLAY & GLASS PRODUCTS - 3.94%
Libbey, Inc.. . . . . . . . . . . . . . . 125,000 $3,593,750
-----------
TECHNICAL INSTRUMENTS & SUPPLIES - 0.20%
Thermo Cardiosystems, Inc.* . . . . . . . 27,500 180,469
-----------
TEXTILE MILL PRODUCTS - 2.77%
Albany International Corp. - Class A. . . 162,877 2,524,593
-----------
TRANSPORTATION - 5.23%
AIR - 0.22%
Airborne Freight Corp.. . . . . . . . . . 7,600 167,200
Offshore Logistics, Inc.. . . . . . . . . 4,000 37,500
----------
204,700
---------
RAILROAD - 1.50%
Genesee & Wyoming, Inc.*. . . . . . . . . 106,550 1,371,831
-----------
TRUCKING - 0.86%
Consolidated Freightways Corp.* . . . . . 16,600 131,762
J.B. Hunt Transport Services, Inc.. . . . 12,400 171,663
Roadway Express, Inc. . . . . . . . . . . 12,000 259,500
Yellow Corp.* . . . . . . . . . . . . . . 13,100 220,244
----------
783,169
---------
WATER - 2.65%
Trico Marine Services, Inc.*. . . . . . . 342,000 2,415,375
----------
4,775,075
---------
TRANSPORTATION EQUIPMENT - 1.57%
MOTOR VEHICLE PARTS & ACCESSORIES - 0.51%
Amcast Industrial Corp. . . . . . . . . . 14,000 229,250
Arvin Industries, Inc.. . . . . . . . . . 4,600 130,525
Dura Automotive Systems, Inc.*. . . . . . 5,900 102,881
-----------
462,656
---------
TRUCK TRAILERS - 0.23%
Wabash National Corp. . . . . . . . . . . 14,000 210,000
-----------
MOTOR HOMES - 0.45%
Coachmen Industries, Inc. . . . . . . . . 7,600 114,950
Winnebago Industries, Inc.. . . . . . . . 15,000 300,938
-----------
415,888
---------
GUIDED MISSILES & SPACE VEHICLES - 0.10%
GenCorp, Inc. . . . . . . . . . . . . . . 9,500 93,812
RAILROAD EQUIPMENT - 0.28%
Westinghouse Air Brake Co.. . . . . . . . 14,190 251,873
-----------
1,434,229
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Shares/Principal Value
Amount (Note 2)
------------------ ----------
<S> <C> <C>
TOTAL COMMON STOCK
(Identified Cost $95,362,225). . . . . . . . . . . . . $ 84,781,673
------------------
SHORT-TERM INVESTMENTS - 8.43%
Dreyfus Treasury Cash Management Fund. . . . . . . . . . . 713,758 713,758
Federal National Mortgage Assoc. Discount Note, 1/20/2000. $ 4,000,000 3,988,135
Federal Home Loan Bank Discount Note, 1/20/2000. . . . . . 3,000,000 2,991,228
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $7,693,121). . . . . . . . 7,693,121
------------------
TOTAL INVESTMENTS - 101.29%
(Identified Cost $103,055,346). . . . . . . . . . . . . 92,474,794
LIABILITIES, LESS OTHER ASSETS - (1.29%) . . . . . . . . . (1,173,687)
------------------
NET ASSETS - 100%. . . . . . . . . . . . . . . . . . . . . $ 91,301,107
==================
</TABLE>
* Non-income producing security
ADR - American Depository Receipt
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At December 31, 1999, the net unrealized depreciation based on identified
cost for federal income tax purposes of $103,055,346 was as follows:
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,529,092
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . . . (22,109,644)
--------------
UNREALIZED DEPRECIATION - NET . . . . . . . . . . . . . . . . . . . . . . ($10,580,552)
==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1999
ASSETS:
<S> <C>
Investments, at value (identified cost $103,055,346) (Note 2). $ 92,474,794
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,680
Foreign currency, at value (cost $254,317) . . . . . . . . . . 247,513
Receivable for securities sold . . . . . . . . . . . . . . . . 537,545
Receivable for fund shares sold. . . . . . . . . . . . . . . . 109,070
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 34,360
-------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 93,459,962
-------------
LIABILITIES:
Accrued management fee (Note 3). . . . . . . . . . . . . . . . 73,810
Accrued directors' fees (Note 3) . . . . . . . . . . . . . . . 1,720
Payable for securities purchased . . . . . . . . . . . . . . . 1,650,493
Payable for fund shares repurchased. . . . . . . . . . . . . . 408,852
Audit fee payable. . . . . . . . . . . . . . . . . . . . . . . 19,636
Custodian fee payable. . . . . . . . . . . . . . . . . . . . . 1,512
Other payables and accrued expenses. . . . . . . . . . . . . . 2,832
-------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 2,158,855
-------------
NET ASSETS FOR 8,666,584 SHARES
OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . . . $ 91,301,107
=============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . $ 86,665
Additional paid-in-capital . . . . . . . . . . . . . . . . . . 101,593,158
Undistributed net investment income. . . . . . . . . . . . . . 550,457
Accumulated net realized loss on investments . . . . . . . . . (340,601)
Net unrealized depreciation on investments, foreign currency,
and other assets and liabilities. . . . . . . . . . . . . (10,588,572)
-------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $ 91,301,107
=============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE - CLASS A
($91,301,107/8,666,584 shares). . . . . . . . . . . . . . . $ 10.53
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
INVESTMENT INCOME:
<S> <C>
Dividends (net of foreign tax withheld, $27,241). . . . $1,039,828
Interest. . . . . . . . . . . . . . . . . . . . . . . . 511,991
-----------
Total Investment Income . . . . . . . . . . . . . . . . 1,551,819
-----------
EXPENSES:
Management fee (Note 3). . . . . . . . . . . . . . . . 913,250
Directors' fees (Note 3). . . . . . . . . . . . . . . . 5,201
Custodian fee . . . . . . . . . . . . . . . . . . . . . 29,999
Audit fee . . . . . . . . . . . . . . . . . . . . . . . 23,751
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 26,493
-----------
Total Expenses. . . . . . . . . . . . . . . . . . . . . 998,694
-----------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . . 553,125
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on -
Investments. . . . . . . . . . . . . . . . . . . . . 1,140,287
Foreign currency, forward foreign currency exchange
contracts, and other assets and liabilities . . . (1,650)
-----------
1,138,637
-----------
Net change in unrealized depreciation on-
Investments. . . . . . . . . . . . . . . . . . . . . 6,820,408
Foreign currency, forward foreign currency exchange
contracts, and other assets and liabilities. . . (8,026)
-----------
6,812,382
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS . . . . . . . . . . . . . . . . . . . 7,951,019
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . . $8,504,144
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED 12/31/99 ENDED 12/31/98
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income. . . . . . . . . . . . . . . . $ 553,125 $ 508,214
Net realized gain (loss) on investments. . . . . . . 1,138,637 (1,433,638)
Net change in unrealized appreciation (depreciation)
on investments . . . . . . . . . . . . . . . . . 6,812,382 (15,675,699)
---------------- ----------------
Net increase (decrease) from operations. . . . . . . 8,504,144 (16,601,123)
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income . . . . . . . . . . . . . (526,183) --
From net realized gain on investments. . . . . . . . -- (6,778,592)
---------------- ----------------
Total distributions to shareholders. . . . . . . . . (526,183) (6,778,592)
---------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital share
transactions (Note 5) . . . . . . . . . . . . . . (16,343,026) 1,445,861
---------------- ----------------
Net decrease in net assets . . . . . . . . . . . . . (8,365,065) (21,933,854)
NET ASSETS:
Beginning of year. . . . . . . . . . . . . . . . . . 99,666,172 121,600,026
---------------- ----------------
END OF YEAR (including undistributed net investment
income of $550,457 and $525,165, respectively). . $ 91,301,107 $ 99,666,172
================ ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
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>
NET ASSET VALUE - BEGINNING OF YEAR. . . . . $ 9.64 $ 12.05 $ 12.09 $ 11.95 $ 12.92
Income from investment operations:
Net investment income (loss) . . . . . . . 0.072 0.049 (0.015) 0.045 (0.004)
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . 0.877 (1.774) 1.502 1.112 1.934
--------------------- ---------- ---------- ---------- ----------
Total from investment operations. . . . . . . 0.949 (1.725) 1.487 1.157 1.930
--------------------- ---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income . . . . . . . . (0.059) -- (0.009) (0.035) --
From net realized gain on investments. . . -- (0.685) (1.518) (0.889) (2.900)
In excess of net realized gain
on investments . . . . . . . . . . . -- -- -- (0.093) --
--------------------- ---------- ---------- ---------- ----------
Total distributions to shareholders . . . . . (0.059) (0.685) (1.527) (1.017) (2.900)
--------------------- ---------- ---------- ---------- ----------
NET ASSET VALUE - END OF YEAR . . . . . . . . $ 10.53 $ 9.64 $ 12.05 $ 12.09 $ 11.95
===================== ========== ========== ========== ==========
Total return1 . . . . . . . . . . . . . . . . 9.87% (13.59)% 12.29% 10.06% 14.70%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses. . . . . . . . . . . . . . . . . 1.09% 1.09% 1.07% 1.08% 1.07%
Net investment income (loss). . . . . . . 0.61% 0.44% (0.12)% 0.29% (0.03)%
Portfolio turnover. . . . . . . . . . . . 92% 81% 94% 31% 77%
NET ASSETS - END OF YEAR
(000'S OMITTED). . . . . . . . . . . . . . $ 91,301 $ 99,666 $ 121,600 $ 100,688 $ 143,003
===================== ========== ========== ========== ==========
</TABLE>
1Represents aggregate total return for the period indicated, and assumes
reinvestment of distributions.
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 one
billion shares of common stock each having a par value of $0.01. As of December
31, 1999, 1.7 million shares have been designated in total among 31 series, of
which 37.5 million have been designated as Small Cap Series Class A Common
Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities, options and
corporate bonds, listed on an exchange are valued at the latest quoted sales
price of the exchange on which the security is primarily traded. Securities not
traded on valuation date or securities not listed on an exchange are valued at
the latest quoted bid price provided by the Fund's pricing service.
Debt securities, including government bonds and mortgage backed securities, will
normally be valued on the basis of evaluated bid prices provided by the Fund's
pricing service.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value as determined in good faith
by the Advisor under procedures approved by and under the general supervision
and responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are purchased
or sold. Dividend income is recorded on the ex-dividend date. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series distributes to
shareholders each year its taxable income, including any net realized gains on
investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
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.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL INCOME TAXES (continued)
At December 31, 1999, the Series, for federal income tax purposes, had a capital
loss carryforward of $340,601 which will expire on December 31, 2006.
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.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Series may purchase or sell forward foreign currency exchange contracts in
order to hedge a portfolio position or specific transaction. Risks may arise if
the counterparties to a contract are unable to meet the terms of the contract or
if the value of the foreign currency moves unfavorably.
All forward foreign currency exchange contracts are adjusted daily by the
exchange rate of the underlying currency and, for financial statement purposes,
any gain or loss is recorded as unrealized gain or loss until a contract has
been closed. Realized and unrealized gain or loss arising from a transaction is
included in net realized and unrealized gain (loss) from foreign currency and
forward foreign currency exchange contracts.
The Series regularly trades forward foreign currency exchange contracts with
off-balance sheet risk in the normal course of its investing activities to
assist in managing exposure to changes in foreign currency exchange rates.
The notional or contractual amount of these instruments represents the
investment the Series has in forward foreign currency exchange contracts and
does not necessarily represent the amounts potentially at risk. The measurement
of the risks associated with forward foreign currency exchange contracts is
meaningful only when all related and offsetting transactions are considered.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS (continued)
At December 31, 1999 the Series had no open forward foreign currency
exchange contracts.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of the revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with the Advisor, for which the
Series pays a fee, computed daily and payable monthly, at an annual rate of 1%
of the Series' average daily net assets.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' organization. The Advisor also provides the Fund with necessary
office space and portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are "affiliated persons" of
the Fund or of the Advisor, and all personnel of the Fund or of the Advisor
performing services relating to research, statistical and investment activities
are paid by the Advisor.
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. These services are provided at no additional cost to the
Series.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
4. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1999, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$74,708,904 and $77,938,016, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Small Cap Series Class A Shares were:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED 12/31/99 ENDED 12/31/98
--------------- ----------------
Shares Amount Shares Amount
--------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold. . . . 917,383 $ 8,959,250 842,778 $ 9,931,958
Reinvested. 51,612 521,276 782,160 6,679,645
Repurchased (2,639,726) (25,823,552) (1,375,248) (15,165,742)
--------------- ---------------- ----------- -------------
Total . . . (1,670,731) $ (16,343,026) 249,690 $ 1,445,861
=============== ================ =========== =============
</TABLE>
A significant portion of the Series shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
6. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of domestic companies and the United States Government. These risks
include revaluation of currencies and future adverse political and economic
developments. Moreover, securities of foreign companies and foreign governments
and their markets may be less liquid and their prices more volatile than those
of securities of comparable domestic companies and the United States Government.
20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Exeter Fund, Inc. - Small Cap
Series:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Exeter Fund, Inc.: Small Cap
Series (the "Fund") at December 31, 1999, and the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with accounting principles generally accepted in the
United States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 18, 2000
21
<PAGE>
<PAGE>
<PAGE>
Exeter Fund, Inc.
International Series
Annual Report
December 31,1999
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
DEAR SHAREHOLDERS:
In the last six months, we have made several changes in the regions in which the
International Series is invested. The Hong Kong and Southeast Asian holdings
had appreciated as expected, and we sold them late in the year. We have
identified an attractive opportunity in Eastern Europe, and we have invested a
portion of the portfolio in that region to provide exposure to the growth we
expect there. The Series is now invested entirely in European stocks, including
the following countries: France, Italy, Germany, Spain, Hungary, and the Czech
Republic.
The Hong Kong positions represented approximately 5% of the portfolio before
their sale. These stocks were originally purchased in late 1995 and early 1996.
The securities we purchased represented companies in mainland China, and we
expected them to appreciate as Chinese moved from a state-controlled economy to
a more open one. The stocks performed well over the time we held them, and they
increased sharply late in the year as the Hong Kong market had a huge run. We
sold the shares in order to lock in their gains and to move the cash to areas
which we believe offer more potential for the future.
The Southeast Asian securities were also a small portion of the portfolio,
representing approximately 3% before they were sold. We originally invested in
this region in late 1997 when the initial phases of the Asian crisis had led to
currency devaluations and steep drops in the markets. We purchased selected
stocks that we believed would emerge from the difficult environment more quickly
than others, and they did indeed increase significantly as the economies began
to show signs of improvement and the markets began to rise. As with the Hong
Kong securities, we sold the shares to take advantage of the gains they had
realized and used the proceeds to position the Series for future growth.
Beginning in December, we purchased stocks in a new region for the Series,
Eastern Europe. These holdings now include stocks from Hungary, and the Czech
Republic. We see these stocks as another way for the Series to benefit from the
economic and market trends we are seeing in Western Europe. Specifically, the
corporate restructuring in Western Europe is directly benefiting these countries
because production costs are lower and companies are moving production to this
region. In addition, these two countries are expected to join the European
Union in the next five to seven years. We expect this to have a strong positive
effect on their economies as it has in other countries, such as Greece, Spain,
and Italy, as they neared European Union membership. Because this region holds
more risk as well as offering more growth potential, we have limited the portion
of the Series invested in Eastern European stocks to approximately 7.5%.
The majority of the Series' holdings are still in Western Europe, and the
investment environment there continues to be positive as economic growth is
accelerating, inflation has remained low, and interest rates are supportive.
Additional positive factors are the corporate restructuring taking place and the
implementation of more business-friendly government policies.
Outside of this long-term trend in Western Europe, there are several recent
factors bolstering our positive outlook. First, Germany has recently announced
a major tax reform program that will cut both corporate tax rates and personal
income tax rates. We obviously expect this to benefit the German markets, but
we also expect the rest of Europe to follow suit. The reduction in corporate
taxes will remove some constraints on corporate management, and the changes in
income tax rates should encourage investment. Second, we have seen a very high
level of merger and acquisition activity in Europe. We expect to this activity
to lead to increased efficiency for the corporations involved as they create
Europe-wide operations and eliminate duplicate structures that were in place
simply because of country borders and regulations. This trend accelerated in
1999 with the introduction of the euro as a common currency, and we expect it to
have a major effect in the next few years.
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
We compare the International Series' performance to two indices, the S&P 500
Total Return Index and the Morgan Stanley All Country World ex US Index. While
the S&P 500 reflects returns only in the United States, we use it to reflect the
difference between domestic and foreign investments. Although the S&P 500
returned over 20% for the fifth straight year, the International Series
outperformed it for the year. The Morgan Stanley All Country World ex US Index
is a broad measure of stocks outside the United States. The International
Series slightly underperformed this index in 1999 due primarily to lower
investments in Southeast Asia and to our avoidance of Japan. Japan had among
the highest returns in 1999, but we believe they have many economic problems
that make investment there too risky at this time. We will continue to evaluate
the situation there for possible future investment.
We wish you all the best in the new year.
Sincerely,
EXETER ASSET MANAGEMENT
[graphic]
[pie chart]
Data for pie chart to follow:
Portfolio Allocation by Country* - As of 12/31/99
France - 32%
Germany - 37%
Czech Republic - 2%
Italy - 16%
Hungary - 3%
Spain - 10%
* As a percentage of common stocks.
2
<PAGE>
PERFORMANCE UPDATE AS OF DECEMBER 31, 1999
Exeter Fund, Inc.
International Series
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $12,744 27.44% 27.44%
Five Year $25,636 156.36% 20.70%
Inception 1 $29,289 192.89% 15.74%
</TABLE>
S&P 500 Total Return Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $12,104 21.04% 21.04%
Five Year $35,093 250.93% 28.52%
Inception 1 $41,634 316.34% 21.41%
</TABLE>
Morgan Stanley
All Country World ex U.S. Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $13,180 31.80% 31.80%
Five Year $17,701 77.01% 12.09%
Inception 1 $24,441 144.41% 12.93%
</TABLE>
The value of a $10,000 investment in the Exeter Fund, Inc. - International
Series from its inception (8/27/92) to present (12/31/99) 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
</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 - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- -----------
COMMON STOCK - 96.00%
CZECH REPUBLIC-1.54%
<S> <C> <C>
BANKING-0.14%
Ceska Sporitelna as*. . . . . . . . . . 48,660 $ 225,309
-----------
BROADCAST SERVICES-0.42%
Ceske Radiokomunikac as*. . . . . . . . 18,300 672,151
-----------
TELECOMMUNICATIONS-0.63%
Cesky Telecom as. . . . . . . . . . . . 62,790 1,010,298
-----------
UTILITIES-GAS AND ELECTRIC-0.35%
Ceske Energeticke Zvody as. . . . . . . 227,220 562,066
-----------
TOTAL CZECH SECURITIES
(Identified Cost $2,276,234) . . . . 2,469,824
-----------
FRANCE - 31.27%
AEROSPACE & MILITARY TECHNOLOGY - 0.30%
Thomson CSF . . . . . . . . . . . . . . 14,389 476,581
-----------
AUTOMOBILES - 0.59%
PSA Peugeot Citroen . . . . . . . . . . 4,145 943,719
-----------
BANKING - 2.30%
Banque Nationale de Paris . . . . . . . 23,347 2,160,185
Societe Generale. . . . . . . . . . . . 6,578 1,534,865
-----------
3,695,050
-----------
BEVERAGE & TOBACCO - 1.81%
LVMH (Louis Vuitton Moet Hennessy). . . 6,464 2,903,574
-----------
BUILDING MATERIALS & COMPONENTS - 0.53%
Lafarge SA. . . . . . . . . . . . . . . 7,327 855,556
-----------
BUSINESS & PUBLIC SERVICES-2.92%
Vivendi . . . . . . . . . . . . . . . . 51,747 4,685,974
-----------
CHEMICALS - 1.86%
L'Air Liquide . . . . . . . . . . . . . 9,006 1,511,915
Aventis SA. . . . . . . . . . . . . . . 25,300 1,474,554
-----------
2,986,469
-----------
ELECTRICAL & ELECTRONICS-3.06%
Alcatel Alsthom . . . . . . . . . . . . 21,353 4,917,656
-----------
ENERGY SOURCES-3.65%
Total Fina SA - B . . . . . . . . . . . 43,855 5,869,476
-----------
FOOD & HOUSEHOLD PRODUCTS - 0.84%
Groupe Danone . . . . . . . . . . . . . 5,706 1,348,689
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 2)
---------- ------------
FRANCE (continued)
<S> <C> <C>
HEALTH & PERSONAL CARE - 3.24%
Sanofi-Synthelabo SA*. . . . . . . 46,668 $ 1,948,741
L'Oreal. . . . . . . . . . . . . . 4,063 3,268,865
------------
5,217,606
------------
INDUSTRIAL COMPONENTS-0.21%
Michelin-B . . . . . . . . . . . . 8,413 331,421
------------
LEISURE & TOURISM - 0.40%
Accor SA . . . . . . . . . . . . . 13,295 644,202
------------
MACHINERY & ENGINEERING - 0.67%
Schnieder SA . . . . . . . . . . . 13,595 1,070,433
------------
MATERIALS & COMMODITIES-1.03%
Compagnie de St. Gobain. . . . . . 8,761 1,652,199
------------
MERCHANDISING - 3.40%
Carrefour Supermarche SA . . . . . 25,888 4,787,968
Casino Guichard-Perrachon SA . . . 5,825 668,992
------------
5,456,960
------------
MULTI-INDUSTRY - 4.46%
AXA. . . . . . . . . . . . . . . . 27,573 3,854,646
Chargeurs SA . . . . . . . . . . . 1,235 69,734
Pathe SA . . . . . . . . . . . . . 3,705 457,324
Suez Lyonnaise des Eaux. . . . . . 17,368 2,791,157
------------
7,172,861
------------
TOTAL FRENCH SECURITIES
(Identified Cost $20,392,720) . 50,228,426
------------
GERMANY - 35.13%
AIRLINES - 0.35%
Deutsche Lufthansa AG. . . . . . . 23,700 562,575
------------
BANKING - 3.81%
HypoVereinsbank AG . . . . . . . . 49,730 3,405,748
Dresdner Bank AG . . . . . . . . . 50,000 2,722,220
------------
6,127,968
------------
BUSINESS & PUBLIC SERVICES - 2.10%
SAP AG . . . . . . . . . . . . . . 6,850 3,376,562
------------
CHEMICALS - 2.49%
Bayer AG . . . . . . . . . . . . . 83,750 3,992,925
------------
ELECTRICAL & ELECTRONICS - 6.63%
Siemens AG . . . . . . . . . . . . 83,000 10,647,464
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 2)
---------- -----------
GERMANY (continued)
<S> <C> <C>
INSURANCE - 4.84%
Allianz AG . . . . . . . . . . . . 23,070 $7,771,553
-----------
MACHINERY & ENGINEERING - 6.19%
Mannesmann AG. . . . . . . . . . . 36,450 8,851,082
MAN AG . . . . . . . . . . . . . . 29,020 1,091,913
-----------
9,942,995
-----------
MATERIALS & COMMODITIES - 0.49%
Degussa-Huels AG . . . . . . . . . 17,900 786,514
-----------
MULTI-INDUSTRY - 1.02%
Viag AG. . . . . . . . . . . . . . 87.256 1,633,184
-----------
TELECOMMUNICATIONS - 3.07%
Deutsche Telekom AG. . . . . . . . 70,000 4,938,884
-----------
UTILITIES - GAS & ELECTRIC - 4.14%
RWE AG . . . . . . . . . . . . . . 75,810 3,024,740
VEBA AG. . . . . . . . . . . . . . 74,150 3,632,597
-----------
6,657,337
-----------
TOTAL GERMAN SECURITIES
(Identified Cost $21,836,879) . 56,437,961
-----------
HUNGARY - 3.09%
BANKING-0.48%
OTP bank Rt. . . . . . . . . . . . 13,300 776,599
-----------
CHEMICALS - 0.18%
Borsodchem Rt. . . . . . . . . . . 7,110 286,317
-----------
ENERGY SOURCES- 0.67%
MOL Magyar Olaj-es . . . . . . . . 52,300 1,084,022
-----------
FOOD & HOUSEHOLD PRODUCTS - 0.16%
Pick Szeged Rt . . . . . . . . . . 5,529 258,668
-----------
HEALTH & PERSONAL CARE - 0.65%
EGIS Rt. . . . . . . . . . . . . . 6,857 270,985
Gedeon Richter RT. . . . . . . . . 11,900 779,888
-----------
1,050,873
-----------
TELECOMMUNICATIONS - 0.95%
Magyar TavKozlesi Rt . . . . . . . 218,900 1,529,664
-----------
TOTAL HUNGARIAN SECURITIES
(Identified Cost $4,597,592). . 4,986,143
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 2)
---------- -----------
ITALY - 15.75%
<S> <C> <C>
BUILDING MATERIAL & COMPONENTS - 0.31%
Italcementi S.p.A. . . . . . . . . . . . . . . 41,600 $ 504,242
-----------
ENERGY SOURCES - 2.55%
Edison S.p.A.. . . . . . . . . . . . . . . . . 50,000 411,111
ENI S.p.A. . . . . . . . . . . . . . . . . . . 668,440 3,686,544
-----------
4,097,655
-----------
FINANCIAL SERVICES - 3.73%
Banca Commerciale Italiana . . . . . . . . . . 250,000 1,363,635
Banca Intesa S.p.A.. . . . . . . . . . . . . . 120,100 488,891
Uncredito Italiano S.p.A.. . . . . . . . . . . 489,000 2,410,422
Istituto Bancario San Paolo di Torina. . . . . 126,800 1,727,808
-----------
5,990,756
-----------
INSURANCE - 1.77%
Assicurazioni Generali . . . . . . . . . . . . 85,804 2,842,796
-----------
MULTI-INDUSTRY - 0.27%
Pirelli S.p.A. . . . . . . . . . . . . . . . . 160,000 440,404
-----------
TELECOMMUNICATIONS - 6.64%
Telecom Italia S.p.A.. . . . . . . . . . . . . 294,445 4,163,865
Telecom Italia Mobile S.p.A. . . . . . . . . . 580,000 6,497,165
-----------
10,661,030
-----------
TEXTILES & APPAREL - 0.48%
Benetton Group S.p.A.. . . . . . . . . . . . . 332,520 765,803
-----------
TOTAL ITALIAN SECURITIES
(Identified Cost $11,276,985) . . . . . . . 25,302,686
-----------
SPAIN -9.22%
BEVERAGE & TOBACCO - 0.19%
Altadis SA . . . . . . . . . . . . . . . . . . 21,330 305,945
-----------
CONSTRUCTION & HOUSING - 0.43%
Fomento de Construcciones y Contratas SA . . . 18,216 371,679
Grupo Dragados SA. . . . . . . . . . . . . . . 35,964 318,227
-----------
689,906
-----------
FINANCIAL SERVICES - 3.09%
Banco Bilbao Vizcaya SA. . . . . . . . . . . . 144,610 2,065,438
Banco Santander Central Hispano SA . . . . . . 183,854 2,087,391
Corporacion Bancaria de Espana SA (Argentaria) 34,098 803,541
-----------
4,956,370
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Shares/Principal Value
Amount (Note 2)
----------------- -----------
SPAIN (continued)
<S> <C> <C>
METAL - STEEL - 0.29%
Acerinox SA. . . . . . . . . . . . . . 11,715 $ 468,599
-----------
MULTI-INDUSTRY - 0.20%
Autopistas Concesionaria Espanola SA . 32,925 320,935
-----------
TELECOMMUNICATIONS - 2.62%
Telefonica SA. . . . . . . . . . . . . 168,315 4,216,372
-----------
UTILITIES - GAS & ELECTRIC - 2.40%
Endesa SA. . . . . . . . . . . . . . . 70,100 1,395,626
Gas Natural SDG - E SA . . . . . . . . 29,966 692,244
Iberdrola SA . . . . . . . . . . . . . 61,224 850,951
Union Electrica Fenosa SA. . . . . . . 52,126 912,994
-----------
3,851,815
-----------
TOTAL SPANISH SECURITIES
(Identified Cost $4,877,498). . . . 14,809,942
-----------
TOTAL COMMON STOCK
(Identified Cost $65,257,908) . . . 154,234,982
-----------
SHORT-TERM INVESTMENTS - 2.80%
U.S. Treasury Bill, 2/17/2000. . . . . $ 3,000,000 2,980,926
Dreyfus Treasury Cash Management Fund. 1,524,180 1,524,180
-----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $4,505,106). . . . 4,505,106
-----------
TOTAL INVESTMENTS - 98.80%
(Identified Cost $69,763,014) . . . 158,740,088
OTHER ASSETS, LESS LIABILITIES - 1.20% 1,930,046
-----------
NET ASSETS - 100%. . . . . . . . . . . $ 160,670,134
=================
</TABLE>
* Non-income producing security
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At December 31, 1999, the net unrealized appreciation based on identified
cost for federal income tax purposes of $69,763,014 was as follows:
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . $89,148,682
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . . . (171,608)
------------
UNREALIZED APPRECIATION - NET . . . . . . . . . . . . . . . . . . . . . . $88,977,074
============
</TABLE>
For its fiscal year ended December 31, 1999, the total amount of income received
by the Series from sources within foreign countries and possessions of the
United States was $0.345 per share (representing a total of $3,176,987). The
total amount of taxes paid by the Series to such countries was $0.047 per share
(representing a total of $435,825).
The accompanying notes are an integral part of the financial statements.
8
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
INDUSTRY CONCENTRATION (AS A PERCENT OF NET ASSETS) Percent
of Net Assets
--------------
<S> <C>
Aerospace & Military Technology . . . . . . . . . . 0.30%
Airlines. . . . . . . . . . . . . . . . . . . . . . 0.35%
Automobiles . . . . . . . . . . . . . . . . . . . . 0.59%
Banking . . . . . . . . . . . . . . . . . . . . . . 6.73%
Beverage & Tobacco. . . . . . . . . . . . . . . . . 2.00%
Broadcast Services. . . . . . . . . . . . . . . . . 0.42%
Building Materials & Components . . . . . . . . . . 0.84%
Business & Public Services. . . . . . . . . . . . . 5.02%
Chemicals . . . . . . . . . . . . . . . . . . . . . 4.53%
Construction & Housing. . . . . . . . . . . . . . . 0.43%
Electrical & Electronics. . . . . . . . . . . . . . 9.69%
Energy Sources. . . . . . . . . . . . . . . . . . . 6.87%
Financial Services. . . . . . . . . . . . . . . . . 6.82%
Food & Household Products . . . . . . . . . . . . . 1.00%
Health & Personal Care. . . . . . . . . . . . . . . 3.89%
Industrial Components . . . . . . . . . . . . . . . 0.21%
Insurance . . . . . . . . . . . . . . . . . . . . . 6.61%
Leisure & Tourism . . . . . . . . . . . . . . . . . 0.40%
Machinery & Engineering . . . . . . . . . . . . . . 6.86%
Materials & Commodities . . . . . . . . . . . . . . 1.52%
Merchandising . . . . . . . . . . . . . . . . . . . 3.40%
Metals-Steel. . . . . . . . . . . . . . . . . . . . 0.29%
Multi-Industry. . . . . . . . . . . . . . . . . . . 5.95%
Telecommunications. . . . . . . . . . . . . . . . . 13.91%
Textiles & Apparel. . . . . . . . . . . . . . . . . 0.48%
Utilities - Gas & Electric. . . . . . . . . . . . . 6.89%
--------------
TOTAL COMMON STOCK. . . . . . . . . . . . . . . . . 96.00%
==============
</TABLE>
The accompanying notes are and integral part of the financial statements.
9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1999
ASSETS:
<S> <C>
Investments, at value (identified cost $69,763,014)(Note 2). . $158,740,088
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 728,806
Foreign currency, at value (cost $537,943) . . . . . . . . . . 527,536
Foreign tax reclaims receivable. . . . . . . . . . . . . . . . 455,914
Receivable for securities sold . . . . . . . . . . . . . . . . 1,062,774
-------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 161,515,118
-------------
LIABILITIES:
Accrued management fee (Note 3). . . . . . . . . . . . . . . . 145,970
Accrued directors' fees (Note 3) . . . . . . . . . . . . . . . 1,720
Payable for fund shares repurchased. . . . . . . . . . . . . . 653,912
Audit fee payable. . . . . . . . . . . . . . . . . . . . . . . 25,142
Custodian fee payable. . . . . . . . . . . . . . . . . . . . . 11,236
Other payables and accrued expenses. . . . . . . . . . . . . . 7,004
-------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 844,984
-------------
NET ASSETS FOR 9,217,361 SHARES
OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . . . $160,670,134
=============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . $ 92,174
Additional paid-in-capital . . . . . . . . . . . . . . . . . . 46,840,643
Distributions in excess of net investment income . . . . . . . (9,701)
Accumulated net realized gain on investments . . . . . . . . . 24,824,145
Net unrealized appreciation on investments, foreign currency,
and other assets and liabilities . . . . . . . . . . . . 88,922,873
-------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $160,670,134
=============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($160,670,134/9,217,361 shares). . . . . . . . . . . . . . . . $ 17.43
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
INVESTMENT INCOME:
<S> <C>
Dividends (net of foreign tax withheld $435,825). . . . . . . $ 2,741,162
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 254,133
------------
Total Investment Income . . . . . . . . . . . . . . . . . . . 2,995,295
------------
EXPENSES:
Management fee (Note 3) . . . . . . . . . . . . . . . . . . . 1,834,579
Directors' fees (Note 3). . . . . . . . . . . . . . . . . . . 5,201
Custodian fee . . . . . . . . . . . . . . . . . . . . . . . . 122,499
Audit fee . . . . . . . . . . . . . . . . . . . . . . . . . . 32,800
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 49,581
------------
Total Expenses. . . . . . . . . . . . . . . . . . . . . . . . 2,044,660
------------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . . . . . 950,635
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on -
Investments . . . . . . . . . . . . . . . . . . . . . . . 34,350,162
Foreign currency , forward foreign currency
exchange contracts and other assets and liabilities. 7,926,356
------------
42,276,518
------------
Net change in unrealized appreciation (depreciation) on -
Investments. . . . . . . . . . . . . . . . . . . . . . . . (932,393)
Foreign currency, forward foreign currency exchange
contracts, and other assets and liabilities. . . . . . 221,668
------------
(710,725)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . 41,565,793
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . . $42,516,428
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
12/31/99 12/31/98
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income . . . . . . . . . . $ 950,635 $ 1,229,518
Net realized gain on investments. . . . . 42,276,518 4,256,342
Net change in unrealized appreciation
(depreciation) on investments. . . . . (710,725) 40,147,416
------------- -------------
Net increase from operations. . . . . . . 42,516,428 45,633,276
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 2):
From net investment income. . . . . . . . (1,003,470) (1,375,610)
From net realized gain on investments . . (17,865,661) (5,728,238)
------------- -------------
Total distributions to shareholders . . . (18,869,131) (7,103,848)
------------- -------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net decrease from capital share
transactions (Note 5). . . . . . . . . (62,235,987) (38,526,473)
------------- -------------
Net increase (decrease) in net assets . . (38,588,690) 2,955
NET ASSETS:
Beginning of year . . . . . . . . . . . . 199,258,824 199,255,869
------------- -------------
END OF YEAR (including undistributed net
investment income of $(9,701) and
($343,512), respectively) . . . . . . $160,670,134 $199,258,824
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEARS
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>
NET ASSET VALUE - BEGINNING OF YEAR. . $ 15.57 $ 13.08 $ 11.54 $ 9.57 $ 9.54
--------------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income . . . . . . . . 0.106 0.097 0.154 0.156 0.123
Net realized and unrealized gain
(loss) on investments. . . . . . . 4.034 2.948 2.992 1.976 0.262
--------------- ---------- ---------- ---------- ----------
Total from investment operations . . . . 4.140 3.045 3.146 2.132 0.385
--------------- ---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income. . . . . . (0.122) (0.109) (0.150) (0.143) (0.118)
From paid-in-capital. . . . . . . . . -- -- -- -- (0.160)
From net realized gain on
investments . . . . . . . . . . . (2.158) (0.446) (1.456) (0.019) (0.077)
--------------- ---------- ---------- ---------- ----------
Total distributions to shareholders. . . (2.280) (0.555) (1.606) (0.162) (0.355)
--------------- ---------- ---------- ---------- ----------
NET ASSET VALUE - END OF YEAR. . . . . . $ 17.43 $ 15.57 $ 13.08 $ 11.54 $ 9.57
=============== ========== ========== ========== ==========
Total return1. . . . . . . . . . . . . . 27.44% 23.63% 27.70% 22.35% 4.14%
Ratios to average net assets
Supplemental Data:
Expenses . . . . . . . . . . . . . . 1.12% 1.12% 1.08% 1.12% 1.20%
Net investment income. . . . . . . . 0.52% 0.59% 1.18% 1.46% 1.42%
Portfolio turnover . . . . . . . . . . . 4% 0% 10% 2% 14%
NET ASSETS - END OF YEAR
(000'S OMITTED) . . . . . . . . . . . . $ 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.
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 one
billion shares of common stock each having a par value of $0.01. As of December
31, 1999, 1.7 million shares have been designated in total among 31 series, of
which 50 million have been designated as International Series Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities, options and
corporate bonds, listed on an exchange are valued at the latest quoted sales
price of the exchange on which the security is primarily traded. Securities not
traded on valuation date or securities not listed on an exchange are valued at
the latest quoted bid price provided by the Fund's pricing service.
Debt securities, including government bonds and mortgage backed securities, will
normally be valued on the basis of evaluated bid prices provided by the Fund's
pricing service.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value as determined in good faith
by the Advisor under procedures approved by and under the general supervision of
the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are purchased
or sold. Dividend income is recorded on the ex-dividend date. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series distributes to
shareholders each year its taxable income, including any net realized gains on
investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
The Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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.
The Series elected to defer to its fiscal year ending December 31, 2000, $9,701
of losses recognized during the period November 31, 1999 to December 31, 1999.
For the year ended December 31, 1999, the Series distributed $14,694,553 of
long-term capital gains.
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.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS (continued)
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 December 31, 1999, the Series had no open forward foreign currency exchange
contracts.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of the revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with the Advisor, for which the
Series pays a fee, computed daily and payable monthly, at an annual rate of 1%
of the Series' average daily net assets.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' organization. The Advisor also provides the Fund with necessary
office space and portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are "affiliated persons" of
the Fund or of the Advisor, and all personnel of the Fund or of the Advisor
performing services relating to research, statistical and investment activities
are paid by the Advisor.
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. These services are provided at no additional cost to the
Series.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
4. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1999, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$6,873,826 and $76,946,015, respectively.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of International Series were:
<TABLE>
<CAPTION>
For the Year For the Year
Ended 12/31/99 Ended 12/31/98
Shares Amount Shares Amount
--------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold. . . . 308,298 $ 4,986,379 1,300,678 $ 19,592,425
Reinvested. 1,125,654 18,599,414 480,490 6,973,915
Repurchased (5,011,453) (85,821,780) (4,221,337) (65,092,813)
--------------- ---------------- ----------- -------------
Total . . . (3,577,501) $ (62,235,987) (2,440,169) $(38,526,473)
=============== ================ =========== =============
</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.
17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Exeter Fund, Inc. - International
Series:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statementsof operations and of changes
in net assets and the financial highlights present fairly, in all material
respects, the financial position of the Exeter Fund, Inc.: International Series
(the "Fund") at December 31, 1999, and the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with accounting principles generally accepted in the
United States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 18, 2000
18
<PAGE>
<PAGE>
<PAGE>
Exeter Fund, Inc.
Life Sciences Series
Annual Report
December 31, 1999
<PAGE>
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
DEAR SHAREHOLDERS:
The Life Sciences Series was reopened in the fourth quarter of 1999 to
capitalize on an exceptional investment opportunity in the healthcare services
sector. We previously opened the Series in the fall of 1992 to take advantage
of a broad sell-off in healthcare stocks due to investors' concerns about
President Clinton's proposed national healthcare reform. The Series was closed
in late 1995 following a strong rebound in healthcare stocks. During the period
the Series was active, it had a total return of 63.6% versus a return of 49.4%
for the S&P 500 Index and 30.1% for the S&P Health Care Sector Index. This time
we believe the investment opportunity lies more narrowly within healthcare,
primarily in the services sector, where stocks have declined dramatically due to
the Medicare reimbursement cuts contained in the Balanced Budget Act of 1997
("BBA-97").
The Balanced Budget Act of 1997 was largely designed to reduce the growth of
Medicare spending, as the Medicare Trust Fund was projected to be on the verge
of insolvency. However, recent projections by the Congressional Budget Office
(CBO) estimate Medicare spending reductions went far beyond Congress's intent
and were almost twice the original plan. In fact, Medicare outlays in 1999 were
actually expected to decline for the first time in the program's history.
Because Medicare spending patterns directly and indirectly impact the
profitability of healthcare providers, and reimbursement cuts contained in
BBA-97 have been far more severe than intended, the damage to the hospital and
nursing home industries has been enormous. As operational performance suffered
in 1998 and 1999, the publicly traded equities of most healthcare providers have
declined by more than 50%, in just the past eighteen months.
According to our research, in the past thirty years 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 following the cuts 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. We believe a similar rebound
will occur over the next several years as the sector recovers from the BBA-97.
The Life Sciences Series has not been reactivated for long, but an early
encouraging sign was the announcement of monetary relief for healthcare
providers from the federal government, which was seen as an admission that
budgetary cuts contained in the BBA-97 went too far. Market participants also
viewed this announcement as a signal that additional Medicare reimbursement cuts
to healthcare providers are unlikely in the near future. As one political
observer noted, no Congressman wants a financially-troubled hospital in his
district when the elections roll around in 2000.
Publicly-traded hospital companies were among the strongest performers in the
Series during the fourth quarter, as they reacted positively to the proposed
Medicare relief package. In addition, the managed care pricing environment
continues to look relatively benign in the coming year. Healthcare Information
Technology (HCIT) companies also generated strong returns during the fourth
quarter. HCIT outperformance was based on the expectation that healthcare
providers will have more to spend on clinical applications over the next few
years. In addition, HCIT stocks benefited from the market's expectation that
discretionary information technology spending will increase next year after
being crowded out by Year 2000 preparations in 1999.
We are excited about prospects for the Life Sciences Series in 2000. As
Medicare spending begins to reaccelerate, and healthcare providers further
adjust their cost structures to the new reimbursement outlook, we expect stocks
in our portfolio will positively reflect the improving fundamentals within the
healthcare services sector.
We wish you all the best in the new year.
Sincerely,
EXETER ASSET MANAGEMENT
1
<PAGE>
PERFORMANCE UPDATE AS OF DECEMBER 31, 1999
Exeter Fund, Inc.-Life Sciences Series
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
Inception 1 $10,800 8.00% NA
</TABLE>
S&P 500 Total Return Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
Inception 1 $10,745 7.45% NA
</TABLE>
S&P Health Care Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
Inception 1 $ 8,930 -10.70% NA
</TABLE>
The value of a $10,000 investment in the Exeter Fund, Inc. - Life Sciences
Series from its current activation (11/05/99) to present (12/31/99) as compared
to the Standard & Poor's (S&P) 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
11/30/99 10,440 10,147 9,821
12/31/99 10,800 10,745 8,930
</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.
2
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 2)
---------- -----------
COMMON STOCK - 94.11%
<S> <C> <C>
CHEMICALS & ALLIED PRODUCTS - 7.14%
BIOLOGICAL PRODUCTS - 5.32%
Connetics Corp.*. . . . . . . . . . . . . . . 82,750 $ 868,875
PathoGenesis Corp.* . . . . . . . . . . . . . 17,500 375,156
Sigma-Aldrich Corp. . . . . . . . . . . . . . 105,000 3,156,562
-----------
4,400,593
-----------
PHARMACEUTICAL PREPARATIONS - 1.82%
Merck KGaA (Germany) (Note 6) . . . . . . . . 48,000 1,503,029
-----------
5,903,622
-----------
COMPUTERS - 7.09%
INTEGRATED SYSTEMS DESIGN - 6.62%
Cerner Corp.* . . . . . . . . . . . . . . . . 92,000 1,811,250
Shared Medical Systems Corp.. . . . . . . . . 72,000 3,667,500
-----------
5,478,750
-----------
SOFTWARE - 0.47%
IDX Systems Corp.*. . . . . . . . . . . . . . 12,500 390,625
-----------
5,869,375
-----------
FURNITURE & FIXTURES - 3.29%
Hillenbrand Industries, Inc.. . . . . . . . . 86,000 2,725,125
-----------
GENERAL MEDICAL & SURGICAL HOSPITALS - 42.26%
Columbia/HCA Healthcare Corp. . . . . . . . . 123,000 3,605,437
Health Management Associates, Inc.* . . . . . 450,000 6,018,750
LifePoint Hospitals, Inc.*. . . . . . . . . . 350,000 4,134,375
Province Healthcare Co.*. . . . . . . . . . . 166,000 3,154,000
Quorum Health Group, Inc.*. . . . . . . . . . 375,000 3,492,188
Tenet Healthcare Corp.* . . . . . . . . . . . 140,000 3,290,000
Triad Hospitals, Inc.*. . . . . . . . . . . . 408,000 6,171,000
Universal Health Services, Inc.*. . . . . . . 142,000 5,112,000
-----------
34,977,750
-----------
NURSING CARE FACILITIES - 10.86%
Beverly Enterprises, Inc.*. . . . . . . . . . 679,000 2,970,625
Manor Care, Inc.* . . . . . . . . . . . . . . 376,000 6,016,000
-----------
8,986,625
-----------
SPECIALTY OUTPATIENT FACILITIES - 1.83%
HEALTHSOUTH Corp. . . . . . . . . . . . . . . 282,000 1,515,750
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Shares/Principal Value
Amount (Note 2)
----------------- -----------
<S> <C> <C>
SOCIAL SERVICES - 12.79%
Alterra Healthcare Corp.* 176,000 $1,463,000
American Retirement Corp.* 547,200 4,343,400
Assisted Living Concepts, Inc.* 188,000 387,750
Brookdale Living Communities, Inc.* 58,000 717,750
Emeritus Corp.* 106,000 689,000
Sunrise Assisted Living, Inc.* 217,000 2,983,750
-----------
10,584,650
-----------
TECHNICAL INSTRUMENTS & SUPPLIES - 8.85%
Beckman Coulter, Inc. 30,000 1,526,250
Becton, Dickinson & Co. 217,000 5,804,750
-----------
7,331,000
-----------
TOTAL COMMON STOCK
(Identified Cost $72,609,447) 77,893,897
-----------
SHORT-TERM INVESTMENTS - 4.68%
Dreyfus Treasury Cash Management Fund 2,874,729 2,874,729
Federal Home Loan Bank Discount Note, 1/20/2000 $1,000,000 997,077
-----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $3,871,806) 3,871,806
-----------
TOTAL INVESTMENTS - 98.79%
(Identified Cost $76,481,253) 81,765,703
OTHER ASSETS, LESS LIABILITIES - 1.21% 1,004,455
-----------
NET ASSETS - 100% $82,770,158
=================
</TABLE>
* Non-income producing security
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At December 31, 1999, the net unrealized appreciation based on identified
cost for federal income tax purposes of $76,481,253 was as follows:
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . $ 6,883,248
Unrealized depreciation . . . . . . . . . . . . . (1,598,798)
------------
UNREALIZED APPRECIATION - NET . . . . . . . . . . $ 5,284,450
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1999
ASSETS:
<S> <C>
Investments, at value (identified cost $76,481,253)(Note 2) $81,765,703
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,593
Receivable for securities sold. . . . . . . . . . . . . . . 3,745,557
Receivable for fund shares sold . . . . . . . . . . . . . . 116,190
-----------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . 85,675,043
-----------
LIABILITIES:
Accrued management fee (Note 3) . . . . . . . . . . . . . . 64,045
Payable for securities purchased. . . . . . . . . . . . . . 2,540,179
Payable for fund shares repurchased . . . . . . . . . . . . 271,096
Audit fee payable . . . . . . . . . . . . . . . . . . . . . 17,000
Custodian fee payable . . . . . . . . . . . . . . . . . . . 3,998
Other payables and accrued expenses . . . . . . . . . . . . 8,567
-----------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . 2,904,885
-----------
NET ASSETS FOR 7,664,119 SHARES
OUTSTANDING. . . . . . . . . . . . . . . . . . . . . . . $82,770,158
===========
NET ASSETS CONSIST OF:
Capital stock . . . . . . . . . . . . . . . . . . . . . . . $ 76,641
Additional paid-in-capital. . . . . . . . . . . . . . . . . 76,583,985
Undistributed net investment income . . . . . . . . . . . . 2,043
Accumulated net realized gain on investments. . . . . . . . 822,141
Net unrealized appreciation on investments. . . . . . . . . 5,285,348
-----------
TOTAL NET ASSETS. . . . . . . . . . . . . . . . . . . . . . $82,770,158
===========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($82,770,158/7,664,119 shares) . . . . . . . . . . . . . $ 10.80
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE PERIOD NOVEMBER 5, 1999 (RECOMMENCEMENT OF
OPERATIONS) TO DECEMBER 31, 1999
INVESTMENT INCOME:
<S> <C>
Interest . . . . . . . . . . . . . . . . . . . . . . . . $ 103,510
Dividends. . . . . . . . . . . . . . . . . . . . . . . . 49,392
----------
Total Investment Income. . . . . . . . . . . . . . . . . 152,902
----------
EXPENSES:
Management fee (Note 3) . . . . . . . . . . . . . . . . 121,292
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . 17,000
Custodian fee. . . . . . . . . . . . . . . . . . . . . . 4,000
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 8,568
----------
Total Expenses . . . . . . . . . . . . . . . . . . . . . 150,860
----------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . 2,042
----------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments (identified cost basis) 822,141
Net change in unrealized depreciation on investments . . 5,285,348
----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . 6,107,489
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . $6,109,531
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
11/5/99 (RECOMMENCEMENT
OF OPERATIONS) TO
12/31/99
---------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C>
Net investment income. . . . . . . . . . . . . . . . . $ 2,042
Net realized gain on investments . . . . . . . . . . . 822,141
Net change in unrealized appreciation
on investments . . . . . . . . . . . . . . . . . . 5,285,348
---------------
Net increase from operations . . . . . . . . . . . . . 6,109,531
---------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share
transactions (Note 5) . . . . . . . . . . . . . . . 76,660,627
---------------
Net increase in net assets . . . . . . . . . . . . . . 82,770,158
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . --
---------------
END OF PERIOD (including undistributed net investment
income of $2,043) . . . . . . . . . . . . . . . . . $ 82,770,158
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
11/5/99 1 1/1/95 TO
TO 12/31/99 9/21/95 4
---------------- ----------------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
<S> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD. . . . $ 10.00 $ 10.43
---------------- ----------------
Income from investment operations:
Net investment income. . . . . . . . . . . -- 0.058
Net realized and unrealized gain
on investments. . . . . . . . . . . . . . 0.800 4.026
---------------- ----------------
Total from investment operations. . . . . . . 0.800 4.084
---------------- ----------------
Less distributions to shareholders:
From net investment income . . . . . . . . -- (0.058)
From net realized gain on investments. . . -- (6.592)
Redemption of capitalization . . . . . . . -- (7.864)
---------------- ----------------
Total distributions to shareholder. . . . . . -- (14.514)
---------------- ----------------
NET ASSET VALUE - END OF PERIOD . . . . . . . $ 10.80 $ 0.00
================ ================
Total return 2. . . . . . . . . . . . . . . . 8.00% 41.07%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses. . . . . . . . . . . . . . . . . 1.22%3 1.06%3
Net investment income (loss). . . . . . . 0.02%3 0.57%3
Portfolio turnover. . . . . . . . . . . . 10% 28%
NET ASSETS - END OF PERIOD
(000'S OMITTED). . . . . . . . . . . . . . $ 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.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 one billion shares of
common stock each having a par value of $0.01. As of December 31, 1999, 1.7
million shares have been designated in total among 31 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.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are "affiliated persons" of
the Fund or of the Advisor, and all personnel of the Fund or of the Advisor
performing services relating to research, statistical and investment activities
are paid by the Advisor.
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. These services are provided at no additional cost to the
Series.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
4. PURCHASES AND SALES OF SECURITIES
For the period November 5, 1999 (recommencement of operations) to December 31,
1999, purchases and sales of securities, other than United States Government
securities and short-term securities, were $76,731,345 and $4,943,919,
respectively.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 OPERATIONS)
TO 12/31/99
-----------
Shares Amount
<S> <C> <C>
Sold 7,802,706 $78,090,749
Repurchased (138,587) (1,430,122)
--------- -----------
Total 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.
11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Exeter Fund, Inc. - Life Sciences
Series:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Exeter Fund, Inc.: Life
Sciences Series (the "Fund") at December 31, 1999, and the results of its
operations, the changes in its net assets and the financial highlights for the
period from November 5, 1999 (recommencement of operations) to December 31,
1999, in conformity with accounting principles generally accepted in the United
States. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these financial statements in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit, which included
confirmation of securities at December 31, 1999 by correspondence with the
custodian, provides a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 18, 2000
12
<PAGE>
<PAGE>
<PAGE>
Exeter Fund, Inc.
World Opportunities Series
Annual Report
December 31, 1999
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
DEAR SHAREHOLDERS:
The World Opportunities Series' investments in Southeast Asia and Latin America
helped it outpace its benchmarks in 1999. These holdings appreciated
significantly over the year as the economies in these regions began to
strengthen and the markets responded.
We purchased many emerging market stocks in 1998 as economic troubles provided
the opportunity to buy the stocks of outstanding companies at extremely
attractive prices. Our decisions on which stocks to buy were not based
primarily on economic or market matters, but on the individual merits of the
companies and the prices at which they were available. Emerging markets have
strengthened as the economies have shown signs of improvement, and our stocks
increased in value substantially. We sold many of our Southeast Asian stocks
during 1999 to lock in their gains and because we felt that their potential
going forward was not as significant as the returns they had already
contributed.
We have not yet sold as many of our Latin American stocks, although they have
also increased sharply, because they have not yet reached the sale prices we
targeted and we feel they continue to offer growth potential going forward. As
with the Asian stocks, we purchased companies that we felt were attractive for
company-specific reasons. Because we believed that the economic downturn in
this region would not be long-lasting and that valuations were extremely
attractive, we were able to identify companies with strong prospects that would
appreciate as the negative sentiment subsided. Amid good economic news in
Mexico and Brazil specifically, these companies have done well and the market is
recognizing their value, resulting in higher share prices.
An important part of the Advisors overview is the high level of
attractive investment opportunities overseas, and the World Opportunities Series
is one tool we use to try to capture these opportunities. We continue to
identify high-quality companies with good potential that we expect to make
strong contributions to future returns. Stocks are chosen using our
longstanding investment strategies.
An example of the kind of stocks we search for is Fosfertil, a Brazilian
fertilizer company that we bought in late 1997 and early 1998 and sold during
1999. We bought the stock under our "hurdle rate" strategy, under which we
search for industries with poor profitability such that bankruptcies or capacity
reductions at the least efficient companies will allow for a better environment
for the strongest companies in the industry in the future. At the time we
bought Fosfertil, profitability for fertilizer producers globally was very poor.
Demand for fertilizers had been weak in Brazil and around the world for several
years, but we expected it to improve, as farmers cannot cut back on fertilizer
use for more than three years without hurting their harvests. We chose
Fosfertil as the way to capture this story because it owns low cost natural
resources, so it has lower production costs than many competitors, and it is
very well situated given the strong performance of Brazil's agricultural
industry. Toward the end of 1999, more and more production capacity was being
shut down because of the poor environment. Fosfertil's stock price moved up
very sharply on that news as well as on some increase in demand, and we sold at
a gain for the Series. No one stock will typically make or break a fund's
performance, but this is an example of how we used one of Advisors
traditional strategies, the hurdle rate strategy, within the Series Fund
context.
We wish you all the best in the new year.
Sincerely,
EXETER ASSET MANAGEMENT
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
[graphic]
[pie chart]
Data for pie chart to follow:
Portfolio Allocation by Country* - As of December 31, 1999
Argentina - 4.02%
Australia - 2.88%
Brazil - 17.92%
Canada - 11.76%
Finland - 3.61%
Germany - 4.34%
Hong Kong - 7.25%
Mexico - 18.545
Norway - 2.67%
Netherlands - 2.39%
Peru - 1.43%
Singapore - 4.87%
United Kingdom - 8.19%
Cash & other assets, less liabilities - 10.13%
*As a percentage of common stocks.
2
PERFORMANCE UPDATE AS OF DECEMBER 31, 1999
Exeter Fund, Inc.-
World Opportunities Series
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $14,237 42.37% 42.37%
Inception 1 $15,385 53.85% 13.85%
</TABLE>
Morgan Stanley
Capital International World Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $12,494 24.94% 24.94%
Inception 1 $19,539 95.39% 22.35%
</TABLE>
Morgan Stanley
Capital International All Country World ex US Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $13,180 31.80% 31.80%
Inception 1 $15,902 59.02% 14.99%
</TABLE>
The value of a $10,000 investment in the Exeter Fund, Inc. - World Opportunities
Series from its inception (9/6/96) to present (12/31/99) as compared to the
Morgan Stanley Capital International World Index and the Morgan Stanley Capital
International All Country World ex U.S Index. 2
[graphic]
[line chart]
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. Morgan Stanley Capital Morgan Stanley Capital 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
</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 - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 2)
---------- -----------
COMMON STOCK - 89.87%
<S> <C> <C>
APPLIANCES - 4.66%
Brasmotor S.A. (Brazil). . . . . . . . . . . . . 38,800,000 $5,463,014
-----------
CHEMICALS & ALLIED PRODUCTS - 8.84%
Celltech Chiroscience plc* (United Kingdom). . . 450,000 3,852,125
Merck KGAA (Germany) . . . . . . . . . . . . . . 73,000 2,285,856
Orion-Yhtyma Oyj - B Shares (Finland). . . . . . 182,000 4,228,279
-----------
10,366,260
-----------
COMPUTER EQUIPMENT - 6.25%
Newbridge Networks Corp - ADR *. . . . . . . . . 61,400 1,385,338
Varitronix International Ltd. (Hong Kong). . . . 2,578,000 5,936,247
-----------
7,321,585
-----------
CRUDE PETROLEUM & NATURAL GAS - 10.97%
Gulf Canada Resources Ltd. - ADR . . . . . . . . 1,630,000 5,501,250
Petroleo Brasileiro S.A. (Petrobras) - ADR . . . 165,000 4,231,920
Stolt Comex Seaway S.A. - ADR *. . . . . . . . . 283,000 3,130,688
-----------
12,863,858
-----------
FOOD & KINDRED PRODUCTS - 19.93%
Coca-Cola Amatil (Australia). . . . . . . . . . 1,236,370 3,381,976
Coca-Cola Femsa S.A. - ADR . . . . . . . . . . . 360,000 6,322,500
South African Breweries plc (United Kingdom) . . 103,700 1,047,957
NG Fung Hong Ltd. (Hong Kong). . . . . . . . . . 2,704,000 1,391,370
Panamerican Beverages, Inc. - ADR. . . . . . . . 260,000 5,346,250
Vitasoy International Holdings Ltd. (Hong Kong). 4,508,000 1,174,316
Unilever plc - ADR . . . . . . . . . . . . . . . 155,249 4,705,985
-----------
23,370,354
-----------
METAL PRODUCTS - 2.39%
Schmalbach Lubeca AG (Germany) . . . . . . . . . 21,200 2,805,250
-----------
MOTION PICTURE - 1.43%
Alliance Atlantis Communication Corp. * (Canada) 201,900 1,674,833
-----------
PAPER & ALLIED PRODUCTS - 10.13%
Aracruz Celulose S.A. - ADR. . . . . . . . . . . 235,000 6,168,750
Asia Pulp & Paper Co. Ltd. - ADR . . . . . . . . 725,000 5,709,375
-----------
11,878,125
-----------
PRIMARY METAL INDUSTRIES - 2.39%
Ispat International - ADR. . . . . . . . . . . . 174,000 2,805,750
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Shares/ Principal Value
Amount (Note 2)
------------------ -----------
<S> <C> <C>
TELECOMMUNICATION SERVICES - 20.36%
Aliant Inc - ADR . . . . . . . . . . . . . . . . . . . . . 132,000 $2,281,224
Grupo Radio Centro S.A. - ADR. . . . . . . . . . . . . . . 761,700 6,379,238
Telecommunicacoes Brasileiras S.A. (Telebras) - ADR PFD *. 40,000 5,140,000
Telecom Argentina S.A. - ADR. . . . . . . . . . . . . . . 70,000 2,397,500
Telefonica de Argentina S.A - ADR . . . . . . . . . . . . 75,000 2,315,625
Telefonica del Peru S.A.A. - ADR. . . . . . . . . . . . . 125,000 1,671,875
TV Azteca S.A. - ADR. . . . . . . . . . . . . . . . . . . 410,000 3,690,000
-----------
23,875,462
-----------
TRANSPORTATION-RAILROAD - 2.52%
Canadian National Railway Co. - ADR. . . . . . . . . . . . 112,000 2,947,000
-----------
TOTAL COMMON STOCK
(Identified Cost $92,323,624). . . . . . . . . . . . . . . . 105,371,491
-----------
SHORT-TERM INVESTMENTS - 9.17%
U.S. Treasury Bill, 01/13/2000. . . . . . . . . . . . . . $ 10,000,000 9,982,866
Dreyfus Treasury Cash Management Fund. . . . . . . . . . . 772,540 772,540
-----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $10,755,406) . . . . . . . . . . . . . . . 10,755,406
-----------
TOTAL INVESTMENTS - 99.04%
(Identified Cost $103,079,030) . . . . . . . . . . . . . . . 116,126,897
OTHER ASSETS, LESS LIABILITIES - 0.96% . . . . . . . . . . . 1,121,265
-----------
NET ASSETS -100% . . . . . . . . . . . . . . . . . . . . . . $ 117,248,162
==================
</TABLE>
*Non-income producing security.
ADR - American Depository Receipt
FEDERAL TAX INFORMATION:
At December 31, 1999, the net unrealized appreciation based on identified cost
for federal income tax purposes of $106,263,814 was as follows:
Unrealized appreciation $19,063,895
Unrealized depreciation (9,200,811)
-----------
UNREALIZED APPRECIATION - NET $ 9,863,084
=============
For its fiscal year ended December 31, 1999, the total amount of income received
by the Series from sources within foreign countries and possessions of the
United States was $0.47 per share (representing a total of $5,873,923). The
total amount of taxes paid by the Series to such countries was $0.029 per share
(representing a total of $365,185).
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1999
ASSETS:
<S> <C>
Investments, at value (identified cost $103,079,030)
(Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . $116,126,897
Foreign currency, at value (cost $1,534,250) . . . . . . . . . 1,489,741
Receivable for securities sold . . . . . . . . . . . . . . . . 247,885
Receivable for fund shares sold. . . . . . . . . . . . . . . . 31,030
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 17,448
-------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 117,913,001
-------------
LIABILITIES:
Accrued management fee (Note 3). . . . . . . . . . . . . . . . 109,226
Accrued directors' fees (Note 3) . . . . . . . . . . . . . . . 1,610
Payable for fund shares repurchased. . . . . . . . . . . . . . 474,323
Custodian fee payable. . . . . . . . . . . . . . . . . . . . . 49,299
Audit fee payable. . . . . . . . . . . . . . . . . . . . . . . 23,278
Payable for fund shares repurchased. . . . . . . . . . . . . . 6,558
Other payables and accrued expenses. . . . . . . . . . . . . . 545
-------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 664,839
-------------
NET ASSETS FOR 12,601,444 SHARES
OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . . . $117,248,162
=============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . $ 126,015
Additional paid-in-capital . . . . . . . . . . . . . . . . . . 95,430,366
Distributions in excess of net investment income . . . . . . . (239,458)
Accumulated net realized gain on investments . . . . . . . . . 8,924,859
Net unrealized appreciation on investments, foreign currency,
and other assets and liabilities . . . . . . . . . . . . 13,006,380
-------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $117,248,162
=============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE - CLASS A
($117,248,162/12,601,444 shares) . . . . . . . . . . . . . . $ 9.30
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
INVESTMENT INCOME:
<S> <C>
Dividends (net of foreign tax withheld $365,185) . . . . . . . . . . . $ 5,559,671
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 758,855
------------
Total Investment Income. . . . . . . . . . . . . . . . . . . . . . . . 6,318,526
------------
EXPENSES:
Management fee (Note 3). . . . . . . . . . . . . . . . . . . . . . . . 1,896,402
Directors' fees (Note 3) . . . . . . . . . . . . . . . . . . . . . . . 5,201
Custodian fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000
Audit fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,001
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,494
------------
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,176,098
------------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . . . . . . 4,142,428
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on -
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,869,870
Foreign currency, forward foreign currency exchange contracts and
other assets and liabilities . . . . . . . . . . . . . . . . . (49,643)
------------
51,820,227
------------
Net change in unrealized appreciation (depreciation) on -
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . 13,501,431
Foreign currency, forward foreign currency exchange contracts
and other assets and liabilities. . . . . . . . . . . . . . . (21,203)
------------
13,480,228
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 65,300,455
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . $69,442,883
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED 12/31/99 ENDED 12/31/98
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income. . . . . . . . . . . . . . . . $ 4,142,428 $ 3,145,769
Net realized gain on investments . . . . . . . . . . 51,820,227 10,471,176
Net change in unrealized appreciation
on investments. . . . . . . . . . . . . . . . . 13,480,228 4,242,212
---------------- ----------------
Net increase from operations . . . . . . . . . . . . 69,442,883 17,859,157
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income . . . . . . . . . . . . . (3,093,630) (3,194,797)
From net realized gain on investments. . . . . . . . (25,346,782) (14,305,423)
---------------- ----------------
Total distributions to shareholders. . . . . . . . . (28,440,412) (17,500,220)
---------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital share
transactions (Note 5) . . . . . . . . . . . . . . (139,532,777) 120,204,580
---------------- ----------------
Net increase (decrease) in net assets. . . . . . . . (98,530,306) 120,563,517
NET ASSETS:
Beginning of year. . . . . . . . . . . . . . . . . . 215,778,468 95,214,951
---------------- ----------------
END OF YEAR (including undistributed net investment
income of $(239,458) and $663,586, respectively). $ 117,248,162 $ 215,778,468
================ ================
</TABLE>
The accompanying notes are an integral part of the financial statement.s
8
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE
PERIOD 9/6/96
(COMMENCEMENT OF
FOR THE YEAR FOR THE YEAR FOR THE YEAR OPERATIONS)
ENDED 12/31/99 ENDED 12/31/98 ENDED 12/31/97 TO 12/31/96
------------------ ---------------- ---------------- -------------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD)
<S> <C> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD . . $ 8.55 $ 9.76 $ 10.42 $ 10.00
------------------ ---------------- ---------------- -------------
Income from investment operations:
Net investment income . . . . . . . . . 0.386 0.121 0.086 0.051
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . 3.164 (0.593)1 0.669 0.429
------------------ ---------------- ---------------- -------------
Total from investment operations . . . . . 3.550 (0.472) 0.755 0.480
------------------ ---------------- ---------------- -------------
Less distributions to shareholders:
From net investment income. . . . . . . (0.277) (0.135) (0.086) (0.051)
From net realized gain on investments . (2.523) (0.603) (1.329) (0.009)
------------------ ---------------- ---------------- -------------
Total distributions to shareholders. . . . (2.800) (0.738) (1.415) (0.060)
------------------ ---------------- ---------------- -------------
NET ASSET VALUE - END OF PERIOD. . . . . . $ 9.30 $ 8.55 $ 9.76 $ 10.42
================== ================ ================ =============
Total return2. . . . . . . . . . . . . . . 42.37% (4.38)% 7.81% 4.82%
Ratios of expenses (to average net assets)
Supplemental Data:
Expenses. . . . . . . . . . . . . . . . 1.15% 1.13% 1.15% 1.17%3
Net investment income . . . . . . . . . 2.19% 2.30% 0.79% 1.54%3
Portfolio turnover . . . . . . . . . . . . 23% 52% 62% 1%
NET ASSETS - END OF PERIOD (000'S OMITTED) $ 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
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 one
billion shares of common stock each having a par value of $0.01. As of December
31, 1999, 1.7 million shares have been designated in total among 31 series, of
which 50 million have been designated as World Opportunities Series Class A
Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities, options and
corporate bonds, listed on an exchange are valued at the last quoted sales price
of the exchange on which the security is primarily traded. Securities not
traded on valuation date or securities not listed on an exchange are valued at
the latest quoted bid price provided by the Fund's pricing service.
Debt securities, including government bonds and mortgage backed securities, will
normally be valued on the basis of evaluated bid prices provided by the Fund's
pricing service.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value as determined in good faith
by 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
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.
The Series elected to defer to its fiscal year ended December 31, 2000, $2,948
of losses recognized during the period November 1, 1999 to December 31, 1999.
For the year ended December 31, 1999, the Series distributed $2,951,976 of
long-term capital gains.
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.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS (continued)
At December 31, 1999 the Series had no open forward foreign currency exchange
contracts.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of the revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with the Advisor, for which the
Series pays a fee, computed daily and payable monthly, at an annual rate of 1%
of the Series' average daily net assets.
Under the Fund's Investment Advisory Agreement (the "Agreement"), personnel of
the Advisor provide the Series with advice and assistance in the choice of
investments and the execution of securities transactions, and otherwise maintain
the Series' organization. The Advisor also provides the Fund with necessary
office space and portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are "affiliated persons" of
the Fund or of the Advisor, and all personnel of the Fund or of the Advisor
performing services relating to research, statistical and investment activities
are paid by the Advisor.
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. These services are provided at no additional cost to the
Series.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
4. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1999, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$39,871,971 and $208,974,666, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of World Opportunities Series Class A Shares were:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED 12/31/99 ENDED 12/31/98
--------------- ---------------
Shares Amount Shares Amount
--------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold. . . . 777,361 $ 7,535,189 15,718,371 $124,416,600
Reinvested. 3,035,173 28,109,237 2,113,935 17,233,683
Repurchased (16,460,332) (175,177,203) (2,338,228) (21,445,703)
--------------- ---------------- ----------- -------------
Total . . . (12,647,798) $ (139,532,777) 15,494,078 $120,204,580
=============== ================ =========== =============
</TABLE>
A significant portion of the Series shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Exeter Fund, Inc. - World
Opportunities Series:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Exeter Fund, Inc.: World
Opportunities Series (the "Fund") at December 31, 1999, and the results of its
operations, the changes in its net assets and the financial highlights for the
periods indicated, in conformity with accounting principles generally accepted
in the United States. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 18, 2000
14
<PAGE>
<PAGE>
<PAGE>
Exeter Fund, Inc.
Global Fixed Income Series
Annual Report
December 31, 1999
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
DEAR SHAREHOLDERS:
The Global Fixed Income Series was opened a little over two years ago to take
advantage of opportunities in foreign bond markets, as well as some in the
United States that are difficult to capture using individual securities. The
most important factor in its start-up was the decline in Latin American bonds
(specifically Brazil, Argentina, and Mexico) that we purchased for the Series at
very attractive prices. These holdings performed well for us in 1999, and they
helped the Series outperform its benchmarks, the Merrill Lynch Global Government
Bond Index and the Merrill Lynch U.S. Treasury Bond Index.
We invested in the Latin American bonds because in our judgment they were being
penalized along with those countries in the Pacific Rim whose financial systems
were imploding. Manning & Napier felt that the problems in Latin America were
different, so their debt instruments were a compelling fixed income opportunity.
It should be pointed out that Latin America was not problem-free. Brazil was
under the greatest pressure with currency reserves fleeing the country.
Ultimately, Brazil was forced to abandon the controlled devaluation of the its
currency in January of 1999. The sharp decline of the Brazilian currency and the
dramatic increase in Brazilian interest rates triggered a recession and given
Brazil's economic relationship with Argentina, that country's economy suffered
as well. However, when it became apparent that the recessions in Brazil and
Argentina were not as severe as many had expected, and that the region was
starting to rebound, the Series' holdings in both countries bounced back nicely,
especially during the second half of the year. Mexican bonds also struggled
slightly during the first quarter of this year, but their market value declines
were muted and their subsequent performance during the second half of 1999 was
quite impressive.
Emerging market bonds were one of the few bright spots in the fixed income
markets during 1999. In the U.S., which is the largest fixed income market, and
in Europe, interest rates moved higher throughout the year. That was especially
true during the second half of the year. That hurt the performance of our
dollar-denominated non-emerging market holdings, as well as our holdings in
Europe (i.e. Spain, Italy, and to a lesser extent the U.K.). The European
holdings were also hurt during the second half of the year by a depreciating
euro and U.K. pound relative to the U.S. dollar. The Series' other major
holdings were in Canada, Australia, and New Zealand. Interest rates also rose in
those countries, but their currencies remained relatively stable, limiting their
negative impact on the performance of the Series. Against this backdrop of
negative returns, the Global Fixed Income Series posted a positive return in
1999 of 4.71%, two-thirds of which was garnered during the second half of the
year. That was especially good relative to the Series' benchmark, the Merrill
Lynch Global Government Bond Index which lost 1.66% during the year. Relative to
the Merrill Lynch U.S. Treasury Bond Index (-2.38%), the Series looked even
better.
For clients who have authorized its use within their portfolios, we use the
Global Fixed Income Series to capture additional fixed income opportunities.
Its performance during 1999 relative to U.S. Treasuries illustrates the value of
this added tool.
We wish you all the best in the new year.
Sincerely,
EXETER ASSET MANAGEMENT
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
[graphic]
[pie chart]
Data for pie chart to follow:
Portfolio Composition* - As of December 31, 1999
Argentina Government - 5.85%
Australia Government - 8.31%
Brazil Government - 5.52%
Canada Government - 15.48%
Italy Government - 3.91%
Mexico Government - 5.05%
New Zealand Government - 3.26%
Spain Government - 3.32%
United Kingdom Government - 5.18%
United States Government - 5.80%
Corporate Bonds - 34.42%
Cash, short-term investments, and other assets less liabilities - 3.90%
*As a percentage of net assets.
2
<PAGE>
PERFORMANCE UPDATE AS OF DECEMBER 31, 1999
Exeter Fund, Inc.
Global Fixed Income Series
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $10,471 4.71% 4.71%
Inception 1 $10,977 9.77% 4.39%
</TABLE>
Merrill Lynch Global Government Bond Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $ 9,834 -1.66% -1.66%
Inception 1 $11,045 10.45% 4.69%
</TABLE>
Merrill Lynch U.S. Treasury Bond Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $ 9,762 -2.38% -2.38%
Inception 1 $10,913 9.13% 4.11%
</TABLE>
The value of a $10,000 investment in the Exeter Fund, Inc. - Global Fixed Income
Series from its inception (10/31/97) to present (12/31/99) as compared to the
Merrill Lynch Global Government Bond Index and the Merrill Lynch U.S. Treasury
Bond Index. 2
[graphic]
[line chart]
Data for line 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
</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 150 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 - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Principal Value
Currency Amount (Note 2)
---------- ---------- -----------
GOVERNMENT SECURITIES - 61.68%
<S> <C> <C> <C>
ARGENTINA - 5.85%
Republic of Argentina, 11.375%, 1/30/2017
(Identified Cost $4,993,992). . . . . . . . . . USD 5,500,000 $5,366,075
-----------
AUSTRALIA - 8.31%
Australian Government, 8.75%, 1/15/2001 . . . . AUD 5,320,000 3,596,569
Australian Government, 6.75%, 11/15/2006. . . . AUD 6,140,000 4,021,652
-----------
TOTAL AUSTRALIAN SECURITIES
(Identified Cost $8,348,805). . . . . . . . . . 7,618,221
-----------
BRAZIL - 5.52%
Federal Republic of Brazil, 10.125%, 5/15/2027
(Identified Cost $4,965,000). . . . . . . . . . USD 6,000,000 5,062,500
-----------
CANADA - 15.48%
Canadian Government, 5.50%, 9/1/2002. . . . . . CAD 3,745,000 2,551,331
Canadian Government, 7.25%, 6/1/2007. . . . . . CAD 11,745,000 8,580,329
Canadian Government, 6.00%, 6/1/2008. . . . . . CAD 4,500,000 3,057,877
-----------
TOTAL CANADIAN SECURITIES
(Identified Cost $14,766,386). . . . . . . . . 14,189,537
-----------
ITALY - 3.91%
Buoni Poliennali del Tesoro, 6.25%, 3/1/2002
(Identified Cost $4,019,854) . . . . . . . . . . EUR 3,460,255 3,582,933
-----------
MEXICO - 5.05%
United Mexican States, 11.50%, 5/15/2026
(Identified Cost $3,451,500) . . . . . . . . . USD 3,900,000 4,630,275
-----------
NEW ZEALAND - 3.26%
New Zealand Government, 6.50%, 2/15/2000. . . . NZD 3,065,000 1,600,181
New Zealand Government, 8.00%, 11/15/2006 . . . NZD 2,550,000 1,383,764
-----------
TOTAL NEW ZEALAND SECURITIES
(Identified Cost $3,645,473). . . . . . . . . . 2,983,945
-----------
SPAIN - 3.32%
Bonos Y Oblig Del Estado, 7.90%, 2/28/2002
(Identified Cost $3,384,874). . . . . . . . . . EUR 2,812,736 3,040,849
-----------
UNITED KINGDOM - 5.18%
United Kingdom Bond, 8.00%, 12/07/2000
(Identified Cost $4,967,105). . . . . . . . . . BP 2,900,000 4,749,093
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Principal Value
Currency Amount (Note 2)
----------- --------- -----------
<S> <C> <C> <C>
UNITED STATES - 5.80%
Federal Home Loan Mortgage Corp. Discount
Note, 5.125%, 10/15/2008 . . . . . . . . . . . . . . USD 1,400,000 $1,223,683
GNMA, POOL #417346, 6.00%, 4/15/2026. . . . . . . . . . USD 4,493,030 4,090,998
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $5,695,651). . . . . . . . . . . . . . 5,314,681
-----------
TOTAL GOVERNMENT SECURITIES
(Identified Cost, $58,238,640). . . . . . . . . . . . . . . $56,538,109
-----------
CORPORATE BONDS - 34.42%
Asia Pulp & Paper, 3.50%, 4/30/2003 (Mauritius) . . . . USD 5,000,000 3,681,250
Bayer Corp., 6.20%, 2/15/2028 (United States) . . . . . USD 2,000,000 1,845,060
Canadian National Railway, 6.90%, 7/15/2028 (Canada). . USD 3,000,000 2,669,550
General Electric, 7.44%, 12/11/2002 (United States) . . USD 2,300,000 2,332,308
Gulf Canada Resources, 8.375%, 11/15/2005 (Canada). . . USD 2,000,000 1,940,000
Merrill Lynch & Co., Stock Linked Note (Telebras),
11/28/2003 (United States) . . . . . . . . . . . . . USD 5,000,000 5,371,240
Motorola, Inc., 6.50%, 9/1/2025 (United States). . . . USD 3,000,000 2,884,542
Oracle Corp., 6.91%, 2/15/2007 (United States). . . . . USD 2,000,000 1,898,432
PDVSA Finance Ltd., 8.75%, 2/15/2004 (Cayman Islands) . USD 2,000,000 1,952,636
Pemex Finance Ltd., 5.72%, 11/15/2003 (Cayman Islands). USD 2,500,000 2,432,975
Pemex Finance Ltd., 6.125%, 11/15/2003 (Cayman Islands) USD 500,000 487,710
Tembec Industries, Inc., 8.625%, 6/30/2009 (Canada) . . USD 250,000 249,375
Xerox Corp., 6.25%, 11/15/2026 (United States . . . . . USD 3,990,000 3,803,831
-----------
TOTAL CORPORATE BONDS
(Identified Cost $33,804,572). . . . . . . . . . . . . . . . . 31,548,909
-----------
TOTAL INVESTMENTS - 96.10%
(Identified Cost $92,043,212). . . . . . . . . . . . . . . . . 88,087,018
OTHER ASSETS, LESS LIABILITIES - 3.90% . . . . . . . . . . . . 3,573,950
-----------
NET ASSETS -100% . . . . . . . . . . . . . . . . . . . . . . . $91,660,968
===========
</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 - DECEMBER 31, 1999
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At December 31, 1999, the net unrealized depreciation based on identified
cost for federal tax purposes of $92,043,212 was as follows:
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,153,278
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . . . (6,109,472)
------------
UNREALIZED DEPRECIATION - NET . . . . . . . . . . . . . . . . . . . . . . $(3,956,194)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value (identified cost $92,043,212)(Note 2). . $88,087,018
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,885
Interest receivable. . . . . . . . . . . . . . . . . . . . . . 1,487,823
Receivable for foreign currencies sold . . . . . . . . . . . . 2,183,038
Receivable for securities sold . . . . . . . . . . . . . . . . 530,571
Receivable for fund shares sold. . . . . . . . . . . . . . . . 28,360
------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 92,405,695
------------
LIABILITIES:
Accrued management fees (Note 3) . . . . . . . . . . . . . . . 78,280
Accrued directors' fees (Note 3) . . . . . . . . . . . . . . . 1,711
Payable for fund shares repurchased. . . . . . . . . . . . . . 618,597
Audit fee payable. . . . . . . . . . . . . . . . . . . . . . . 23,905
Other payables and accrued expenses. . . . . . . . . . . . . . 22,234
------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 744,727
------------
NET ASSETS FOR 9,679,585 SHARES OUTSTANDING. . . . . . . . . . $91,660,968
============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . $ 96,796
Additional paid-in-capital . . . . . . . . . . . . . . . . . . 96,630,832
Distributions in excess of net investment income. . . . . . . (70,991)
Accumulated net realized loss on investments . . . . . . . . . (1,035,640)
Net unrealized depreciation on investments, foreign currency,
and other assets and liabilities. . . . . . . . . . . . . (3,960,029)
------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $91,660,968
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($91,660,968/9,679,585 shares) . . . . . . . . . . . . . . . . $ 9.47
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest (net of foreign tax withheld, $1,987). . . . . . . . $ 6,739,590
------------
EXPENSES:
Management fees (Note 3). . . . . . . . . . . . . . . . . . . 1,033,386
Directors' fees (Note 3). . . . . . . . . . . . . . . . . . . 5,201
Custodian fee . . . . . . . . . . . . . . . . . . . . . . . . 29,999
Audit fee . . . . . . . . . . . . . . . . . . . . . . . . . . 28,500
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 38,277
------------
Total Expenses. . . . . . . . . . . . . . . . . . . . . . . . 1,135,363
------------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . . . . . 5,604,227
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on-
Investments . . . . . . . . . . . . . . . . . . . . . . . (632,647)
Foreign currency, forward foreign currency
exchange contracts, and other assets and liabilities. 144,128
------------
(488,519)
------------
Net change in unrealized depreciation on-
Investments . . . . . . . . . . . . . . . . . . . . . . . (437,490)
Foreign currency, forward foreign currency exchange
contracts, and other assets and liabilities . . . . (102,431)
------------
(539,921)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . (1,028,440)
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . $ 4,575,787
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED 12/31/99 ENDED 12/31/98
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income. . . . . . . . . . . . . . . . . . . . . . . $ 5,604,227 $ 6,953,613
Net realized gain (loss) on investments. . . . . . . . . . . . . . (488,519) 1,263,097
Net change in unrealized depreciation on investments and
foreign currency. . . . . . . . . . . . . . . . . . . . . . . (539,921) (4,861,731)
---------------- ----------------
Net increase from operations . . . . . . . . . . . . . . . . . . . 4,575,787 3,354,979
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE2):
From net investment income . . . . . . . . . . . . . . . . . . . . (5,888,207) (7,343,129)
From realized gain on investments. . . . . . . . . . . . . . . . . (17,549) (1,231,571)
---------------- ----------------
Total distribution to shareholders . . . . . . . . . . . . . . . . (5,905,756) (8,574,700)
---------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net decrease from capital share
transactions (Note 5). . . . . . . . . . . . . . . . . . . . . (25,801,780) (3,159,203)
---------------- ----------------
Net decrease in net assets . . . . . . . . . . . . . . . . . . . . (27,131,749) (8,378,924)
NET ASSETS:
Beginning of year. . . . . . . . . . . . . . . . . . . . . . . . . 118,792,717 127,171,641
---------------- ----------------
END OF YEAR (including distribution in excess of net investment
income of $(70,991) and undistributed net investment income of
$113,492, respectively) . . . . . . . . . . . . . . . . . . . $ 91,660,968 $ 118,792,717
================ ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR FOR THE PERIOD
ENDED 12/31/99 ENDED 12/31/98 10/31/97* TO 12/31/97
---------------- ----------------------- -------------------
Per share data (for a share outstanding
throughout each period):
<S> <C> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD. . . . $ 9.66 $ 10.12 $ 10.00
---------------- ----------------------- ----------------
Income from investment operations:
Net investment income . . . . . . . . . . . 0.609 0.597 0.081
Net realized and unrealized gain (loss) on
Investments. . . . . . . . . . . . . . . (0.161) (0.322) 0.118
Total from investment operations. . . . . . . 0.448 0.275 0.199
---------------- ----------------------- ----------------
Less distributions to shareholders:
From net investment income. . . . . . . . . (0.636) (0.629) (0.079)
From realized gain on investments . . . . . (0.002) (0.106) --
Total distributions to shareholders . . . . . (0.638) (0.735) (0.079)
---------------- ----------------------- ----------------
NET ASSET VALUE- END OF PERIOD. . . . . . . . $ 9.47 $ 9.66 $ 10.12
================ ======================= ================
Total return 1. . . . . . . . . . . . . . . . 4.71% 2.78% 2.00%
Ratios to average net assets/
Supplemental Data:
Expenses . . . . . . . . . . . . . . . . . 1.10% 1.10% 1.09%2
Net investment income. . . . . . . . . . . 5.42% 5.75% 4.75%2
Portfolio turnover. . . . . . . . . . . . . . 10% 29% 3%
NET ASSETS-END OF PERIOD (000'S OMITTED). . . $ 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 STATMENTS
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 one billion shares of
common stock each having a par value of $0.01. As of December 31, 1999, 1.7
million shares have been designated in total among 31 series, of which 50
million have been designated as Global Fixed Income Series Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including corporate bonds, listed on an exchange are
valued at the latest quoted sales price of the exchange on which the security is
traded most extensively. Securities not traded on valuation date or securities
not listed on an exchange are valued at the latest quoted bid price provided by
the Fund's pricing service.
Debt securities, including domestic and foreign government bonds and mortgage
backed securities, will normally be valued on the basis of evaluated bid prices
provided by the Fund's pricing service.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value as determined in good faith
by the Advisor under procedures approved by and under the general supervision
and responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are purchased
or sold. Interest income and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series distributes to
shareholders each year its taxable income, including any net realized gains on
investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
The Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
At December 31, 1999, the Series, for federal income tax purposes, had a capital
loss carryforward of $870,399 which will expire on December 31, 2007.
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.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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.
The Series elected to defer to its fiscal year ending December 31, 2000,
$308,393 of losses recognized during the period November 1, 1999 to December 31,
1999.
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 December 31, 1999, the Series had no open forward foreign currency exchange
contracts.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of 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 portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are "affiliated persons" of
the Fund or of the Advisor, and all personnel of the Fund or of the Advisor
performing services relating to research, statistical and investment activities
are paid by the Advisor.
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. These services are provided at no additional cost to the
Series.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
4. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1999, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$9,457,556 and $16,600,904, respectively. Purchases and sales of United States
Government securities, other than short-term securities were $0 and $15,700,301,
respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Global Fixed Income Series were:
<TABLE>
<CAPTION>
For the Year For the Year
Ended 12/31/99 Ended 12/31/98
--------------- ----------------
Shares Amount Shares Amount
--------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold. . . . 519,125 $ 5,044,723 787,498 $ 8,046,051
Reinvested. 612,441 5,746,614 860,110 8,297,448
Repurchased (3,755,364) (36,593,117) (1,912,940) (19,502,702)
--------------- ---------------- ----------- -------------
Total . . . (2,623,798) $ (25,801,780) (265,332) $ (3,159,203)
- ----------- =============== ================ =========== =============
</TABLE>
A significant portion of the Series shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Exeter Fund, Inc. - Global Fixed
Income Series:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statementsof operations and of changes
in net assets and the financial highlights present fairly, in all material
respects, the financial position of the Exeter Fund, Inc.: Global Fixed Income
Series (the "Fund") at December 31, 1999, and the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with accounting principles generally accepted in the
United States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 18, 2000
15
<PAGE>
<PAGE>
Exeter Fund, Inc.
New York Tax Exempt
Annual Report
December 31, 1999
<PAGE>
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
DEAR SHAREHOLDERS:
In 1999, the poor performance of both the taxable and tax-exempt fixed income
markets can be traced to rising interest rates. Interest rates rose throughout
the year as economic growth continually surpassed market expectations and
significantly higher energy prices raised concerns about inflation. Interest
rates ended the year 150 basis points (1.50%) higher than where they started it,
and long-term Treasury securities lost over 9% in 1999.
Rates move when market expectations change, and from the start of 1999 to the
end of 1999, expectations about the rate of economic growth changed
dramatically. The Wall Street Journal surveys approximately 50 economists at the
start of each year. Some work for brokerage houses, some are academics, and
others are economic consultants. In aggregate, their opinions are representative
of market expectations. In January of 1999, the group was not especially
optimistic about the year ahead. They felt the economy would continue to grow,
but at a more moderate pace. They were concerned about a worsening of the
emerging market financial crisis, the possibility of a stock market correction
(including its impact on the rate of consumer spending), and a continuation in
the slowdown of corporate profit growth. Concerns were also raised about
possible Y2K problems, low oil prices triggering problems in the Middle East,
and the possibility of trade wars.
As most are probably aware, the group's expectations were wrong. The financial
problems of the emerging markets have been replaced by a new sense of optimism
about emerging markets, stock returns as measured by the S&P 500 posted another
20%+ year, and profit growth reaccelerated. As for Y2K problems, they were
negligible, and oil prices staged a remarkable turnaround. Growth did not
moderate, it accelerated.
As growth picked up, so too did the demand for capital. Rising demand generally
causes prices to rise, and in the case of capital its "price" is represented by
real interest rates. With the introduction of U.S. Treasury inflation-indexed
notes early in 1997, a market measure of real interest rates is now available.
Real interest rates rose by about 60 basis points (0.60%) last year. Granted,
those are taxable rates, but real interest rate increases in the Treasury market
also impact the municipal market.
Inflation expectations are driven by a number of different factors. One of those
is economic growth coming in greater than anticipated, which is what happened in
1999. Stronger than expected growth raises concerns about capacity constraints,
and what most worried the markets in 1999 was a potential shortage of labor.
With unemployment hitting 30+ year lows, there was a concern that wage pressures
would develop and that firms would try to pass those cost increases through to
consumers. Potential wage pressures were not the only things that captured the
markets' attention. A doubling of oil prices from the extraordinarily low levels
that existed at the end of 1998 caused energy prices to move up rather
dramatically.
Municipal bonds held on quite nicely during the first quarter of the year when
U.S. Treasury yields were moving higher. Demand and supply in the municipal
market were such that it was one of the few fixed income markets that posted
positive total returns during the first quarter. Unfortunately, that changed
during the second quarter and continued throughout the last two quarters of the
year as the fundamentals and the supply-demand situation combined to push up
municipal yields. The net effect of these rate increases was a negative total
return in most sectors of the municipal market.
During 1999, the New York Tax Exempt Series held longer-term bonds than its
benchmark, the Merrill Lynch Intermediate Municipal Bond Index. This held down
performance relative to the index because longer-term bonds are affected more
strongly by interest rate changes than those with shorter maturities. In 1997
and 1998, however, when interest rates were falling, the Series performed well
relative to its benchmark given the Series' preference for higher quality, yet
lower yielding, issues.
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
Although 1999's performance was negative, it is important to view it in the
larger context of the performance of the bond market as a whole, as we've
discussed above. In addition, it is helpful to view it in the larger context of
performance over time. As we mentioned in June, cyclical factors exert powerful
short-term influences. The investor should always remember that municipal yields
will fluctuate over time; sometimes the cyclical pressures push them higher and
other times they will push lower. However, the non-cyclical trends that drove
inflation lower over the last 15+ years remain in firmly place. As a result,
long-term investors should continue to base their decisions on the expectation
of a benign inflation environment. That is the long-term investment perspective
that has driven, and continues to drive, the fixed income investment process at
Manning & Napier.
We wish you all the best in the new year.
Sincerely,
EXETER ASSET MANAGEMENT
[graphic]
[pie chart]
Data for pie chart to follow:
Portfolio Composition 1 - As of 12/31/99
General Obligation Bonds - 59.23%
Revenue Bonds - 38.87%
Pre-Refunded Bonds - 1.9%
1 - As a percentage of municipal securities
[graphic]
[pie chart]
Data for pie chart to follow:
Quality Ratings 2 - As of 12/31/99
Aaa - 80.94%
Aa - 15.1%
A - 3.96%
2 - Using Moody's Ratings, as a percentage of municipal securities (unaudited)
2
<PAGE>
PERFORMANCE UPDATE AS OF DECEMBER 31, 1999
Exeter Fund, Inc.
New York Tax Exempt Series
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $ 9,608 -3.92% -3.92%
Five Years $13,253 32.53% 5.79%
Inception 1 $12,349 23.49% 3.60%
</TABLE>
Merrill Lynch Intermediate Municipal Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $ 9,999 -0.01% -0.01%
Five Years $13,577 35.77% 6.30%
Inception 1 $13,196 31.96% 4.76%
</TABLE>
The value of a $10,000 investment in the Exeter Fund, Inc. - New York Tax Exempt
Series from its inception (1/17/94) to present (12/31/99) as compared to the
Merrill Lynch Intermediate Municipal Index. 2
[graphic]
{line chart]
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. Merrill Lynch
Date New York Tax Exempt Series Intermediate Municipal Index
<S> <C> <C>
01/17/1994 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
</TABLE>
1 The Series and Index performance numbers are calculated from January 17, 1994,
the Series' inception date. The Series' performance is historical and may not
be indicative of future results.
2 The unmanaged Merrill Lynch Intermediate Municipal Index is a market value
weighted measure of approximately 110 municipal bonds issued across the United
States. The Index is comprised of investment grade securities. Index returns
assume reinvestment of coupons and, unlike Series returns, do not reflect any
fees or expenses.
3
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Credit
Rating* Principal Value
(unaudited) Amount (Note 2)
----------- ------------------- ---------
NEW YORK MUNICIPAL SECURITIES - 97.31%
<S> <C> <C> <C>
Albany County, G.O. Bond, 5.75%, 6/1/2010. . . . . . . . . . . . Aaa $ 200,000 $205,772
Amherst Public Improvement, G.O. Bond, 4.625%, 3/1/2007. . . . . Aaa 200,000 193,842
Auburn Central School District, G.O. Bond, 4.55%, 12/1/2006. . . Aaa 385,000 373,165
Bayport-Blue Point Union Free School District, G.O. Bond,
5.60%, 6/15/2012 Aaa 250,000 254,540
Brighton Central School District, G.O. Bond, 5.40%, 6/1/2012 . . Aaa 250,000 249,987
Brockport Central School District, G.O. Bond, 5.50%, 6/15/2015 . Aaa 300,000 293,880
Broome County Public Safety, Certificate of Participation,
5.00%, 4/1/2006 Aaa 250,000 250,580
Buffalo General Improvement, G.O. Bond, Series A,
4.75%, 2/1/2004 Aaa 500,000 498,640
Buffalo Municipal Water Authority, Revenue Bond, Series A,
5.00%, 7/1/2019 Aaa 1,000,000 870,400
Buffalo Municipal Water Authority, Revenue Bond, Series B,
5.00%, 7/1/2028 Aaa 750,000 630,315
Buffalo Schools, G.O. Bond, Series B, 5.05%, 2/1/2009 . . . . . Aaa 250,000 246,573
Buffalo, G.O. Bond, 5.00%, 12/1/2009 . . . . . . . . . . . . . . Aaa 150,000 147,135
Buffalo, G.O. Bond, Series A, 5.20%, 2/1/2010. . . . . . . . . . Aaa 250,000 247,765
Cattaraugus County Public Improvement, G.O. Bond,
5.00%, 8/1/2007 Aaa 300,000 300,138
Chittenango Central School District, G.O. Bond,
5.375%, 6/15/2016 Aaa 200,000 190,448
Colonie, G.O. Bond, 5.20%, 8/15/2008 . . . . . . . . . . . . . . Aaa 100,000 100,984
Cortlandville, G.O. Bond, 5.40%, 6/15/2013 . . . . . . . . . . . Aaa 155,000 154,264
Dryden Central School District, G.O. Bond, 5.50%, 6/15/2011. . . Aaa 200,000 200,844
East Aurora Union Free School District, G.O. Bond,
5.20%, 6/15/2011 Aaa 300,000 298,713
East Hampton, G.O. Bond, 4.625%, 1/15/2007 . . . . . . . . . . . Aaa 175,000 170,879
East Hampton, G.O. Bond, 4.625%, 1/15/2008 . . . . . . . . . . . Aaa 175,000 169,615
Eastchester Public Improvement, G.O. Bond, Series B,
4.90%, 10/15/2011 Aaa 385,000 362,828
Ellenville Central School District, G.O. Bond, 5.375%, 5/1/2009. Aaa 210,000 213,822
Ellenville Central School District, G.O. Bond, Series B,
5.70%, 5/1/2011 Aaa 700,000 717,549
Erie County, G.O. Bond, Series B, 5.50%, 6/15/2009. . . . . . . Aaa 100,000 101,925
Erie County, G.O. Bond, Series B, 5.50%, 6/15/2025 . . . . . . . Aaa 400,000 368,200
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Credit
Rating* Principal Value
(unaudited) Amount (Note 2)
----------- ------------------ ---------
NEW YORK MUNICIPAL SECURITIES (continued)
<S> <C> <C> <C>
Fillmore Central School District, G.O. Bond, 5.25%, 6/15/2015. . Aaa $ 300,000 $287,730
Gloversville City School District, G.O. Bond, 5.00%, 6/15/2005 . Aaa 350,000 352,716
Greene Central School District, G.O. Bond, 5.25%, 6/15/2012 . . Aaa 195,000 193,588
Guilderland School District, G.O. Bond, 4.90%, 6/15/2008 . . . . Aaa 370,000 363,144
Guilderland School District, G.O. Bond, 5.00%, 5/15/2014 . . . . Aaa 505,000 468,726
Guilderland School District, G.O. Bond, 5.00%, 5/15/2016 . . . . Aaa 400,000 360,948
Hamburg Central School District, G.O. Bond, 5.375%, 6/1/2014 . . Aaa 600,000 585,000
Hempstead Town, G.O. Bond, Series B, 5.625%, 2/1/2010. . . . . . Aaa 200,000 205,396
Holland Central School District, G.O. Bond, 6.125%, 6/15/2010. . Aaa 245,000 259,394
Huntington, G.O. Bond, 5.90%, 1/15/2007. . . . . . . . . . . . . Aaa 300,000 316,158
Huntington, G.O. Bond, 5.875%, 9/1/2009. . . . . . . . . . . . . Aaa 250,000 260,285
Indian River Central School District, G.O. Bond, Second Series,
4.30%, 12/15/2003 Aaa 475,000 469,552
Irvington Union Free School District, G.O. Bond, Series B,
5.10%, 7/15/2005 Aaa 275,000 278,432
Jamesville-Dewitt Central School District, G.O. Bond,
5.75%, 6/15/2009 Aaa 420,000 439,144
Jordan-El Bridge Central School District, G.O. Bond,
5.875%, 6/15/2008 Aaa 500,000 526,840
Le Roy Central School District, G.O. Bond, 0.10%, 6/15/2008. . . Aaa 350,000 227,234
Middletown City School District, G.O. Bond, Series A,
5.50%, 11/15/2005 Aaa 175,000 180,833
Monroe County Public Improvement - Pre-refunded, G.O. Bond,
6.00%, 3/1/2002 Aaa 95,000 97,740
Monroe County Public Improvement - Pre-refunded, G.O. Bond,
6.10%, 6/1/2015 Aaa 20,000 21,372
Monroe County Public Improvement - Unrefunded Balance,
G.O. Bond, 6.00%, 3/1/2002. . . . . . . . . . . . . . . . . . Aaa 15,000 15,444
Monroe County Public Improvement - Unrefunded Balance,
G.O. Bond, 6.10%, 6/1/2015. . . . . . . . . . . . . . . . . . Aaa 180,000 192,348
Monroe County Public Improvement, G.O. Bond, 4.90%, 6/1/2005 . . Aaa 250,000 250,780
Monroe County Water Authority, Revenue Bond, Series B,
5.25%, 8/1/2011 Aa3 500,000 494,000
Monroe County Water Authority, Revenue Bond,
5.00%, 8/1/2019 Aa3 1,700,000 1,480,836
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Credit
Rating* Principal Value
(unaudited) Amount (Note 2)
----------- ----------------- -----------
NEW YORK MUNICIPAL SECURITIES (continued)
<S> <C> <C> <C> <C> <C>
Monroe County Water Improvement, G.O. Bond, 5.25%, 2/1/2017 . . . Aa2 $ 320,000 $ 296,810
Nassau County, G.O. Bond, Series S, 5.00%, 3/1/2005 . . . . . . . Aaa 300,000 301,104
Nassau County General Improvement, G.O. Bond, Series U,
5.25%, 11/1/2014 Aaa 335,000 317,446
Nassau County General Improvement, G.O. Bond, Series V,
5.25%, 3/1/2015 Aaa 385,000 360,479
New Castle, G.O. Bond, 4.75%, 6/1/2010. . . . . . . . . . . . . . Aa1 450,000 428,148
New Rochelle, G.O. Bond, Series C, 6.20%, 3/15/2007 . . . . . . . Aaa 175,000 185,745
New York City Municipal Water Authority, Revenue Bond,
Series B, 5.375%, 6/15/2019. . . . . . . . . . . . . . . . . . Aaa 250,000 230,578
New York City Municipal Water Finance Authority, Revenue
Bond, Series B, 5.50%, 6/15/2019 . . . . . . . . . . . . . . . Aaa 1,000,000 941,920
New York City Municipal Water Finance Authority, Revenue
Bond, Series B, 5.125%, 6/15/2030. . . . . . . . . . . . . . . Aaa 1,000,000 851,180
New York City, G.O. Bond, Series K, 5.50%, 4/1/2007. . . . . . . Aaa 500,000 512,715
New York City, G.O. Bond, Series I 5.00%, 5/15/2028 . . . . . . . Aaa 1,900,000 1,588,343
New York Government Assistance Corp., Revenue Bond,
Series A, 5.90%, 4/1/2013. . . . . . . . . . . . . . . . . . . Aaa 500,000 531,425
New York Government Assistance Corp., Revenue Bond,
Series A, 6.00%, 4/1/2024. . . . . . . . . . . . . . . . . . . A3 250,000 245,277
New York State Dorm Authority, Revenue Bond, 5.00%, 7/1/2022. . . Aaa 2,000,000 1,752,580
New York State Environmental Facilities Corp. Pollution Control,
Revenue Bond, Series A, 4.65%, 6/15/2007. . . . . . . . . . . Aaa 250,000 242,562
New York State Environmental Facilities Corp. Pollution Control,
Revenue Bond, Series A, 5.20%, 6/15/2015. . . . . . . . . . . Aaa 250,000 234,672
New York State Environmental Pollution Control, Revenue Bond
Pooled LN-B, 6.65%, 9/15/2013. . . . . . . . . . . . . . . . . Aaa 500,000 531,430
New York State Environmental Facilities Corp. Pollution Control,
Revenue Bond, Series E, 5.00%, 6/15/2012 . . . . . . . . . . . Aaa 200,000 190,370
New York State Housing Finance Agency, State University
Construction, Revenue Bond, Series A, 8.00%, 5/1/2011. . . . . Aaa 250,000 300,755
New York State Local Government Assistance Corp.,
Revenue Bond, Series C, 5.00%, 4/1/2021. . . . . . . . . . . . Aaa 750,000 648,397
New York State Local Government Assistance Corp.,
Revenue Bond, Series D, 5.00%, 4/1/2023. . . . . . . . . . . . Aaa 1,375,000 1,177,605
New York State Medical Care Facility, Financial Agency,
Revenue Bond, 7.75%, 2/15/2020 . . . . . . . . . . . . . . . . Aaa 380,000 389,226
New York State Mortgage Agency, Homeowners Mortgage,
Revenue Bond, Series 31A, 5.375%, 10/1/2017. . . . . . . . . . Aa2 495,000 456,365
New York State Power Authority, Revenue Bond, Series CC,
5.00%, 1/1/2014 Aaa 500,000 513,985
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 999
<TABLE>
<CAPTION>
Credit
Rating* Principal Value
(unaudited) Amount (Note 2)
----------- ---------- -----------
NEW YORK MUNICIPAL SECURITIES (continued)
<S> <C> <C> <C>
New York State Power Authority, Revenue Bond, Series CC,
5.25%, 1/1/2018 . . . . . . . . . . . . . . . . . . . . . . . Aaa $ 250,000 $ 258,725
New York State Power Authority Revenue & General Purpose,
Revenue Bond, Ref-Series CC, 4.80%, 1/1/2005. . . . . . . . . . Aaa 250,000 255,607
New York State Thruway Authority, Highway & Bridge, Revenue
Bond, Series B, 5.75%, 4/1/2006 . . . . . . . . . . . . . . . . Aaa 100,000 104,220
New York State Thruway Authority, Highway & Bridge, Revenue
Bond, Series C, 5.00%, 4/1/2016 . . . . . . . . . . . . . . . . A3 950,000 837,757
New York State Thruway Authority, Highway & Bridge, Revenue
Bond, Series A, 5.25%, 4/1/2017 . . . . . . . . . . . . . . . . Aaa 555,000 511,716
New York State Thruway Authority, Revenue Bond, Series A,
5.50%, 1/1/2023. . . . . . . . . . . . . . . . . . . . . . . . Aaa 1,020,000 1,038,136
New York State Thruway Authority, Revenue Bond, Series B,
4.90%, 1/1/2007. . . . . . . . . . . . . . . . . . . . . . . . Aaa 450,000 444,915
New York State Urban Development Correctional Capital Facilities,
Facilities, Revenue Bond, Series A, 5.25%, 1/1/2014. . . . . . Aaa 500,000 483,175
New York State Urban Development Corp. Correctional Facility,
Revenue Bond, Series G, 7.00%, 1/1/2017 . . . . . . . . . . . . Aaa 50,000 51,000
New York State Urban Development, Revenue Bond,
5.375%, 7/1/2022. . . . . . . . . . . . . . . . . . . . . . . . Aaa 400,000 361,592
New York, G.O. Bond, 8.00%, 3/15/2016. . . . . . . . . . . . . . . Aaa 500,000 511,400
New York, G.O. Bond, Series B, 5.125%, 3/1/2018. . . . . . . . . . A2 1,000,000 891,720
Niagara County, G.O. Bond, Series B, 5.20%, 1/15/2011. . . . . . . Aaa 400,000 395,628
Niagara County, G.O. Bond, 5.90%, 7/15/2014. . . . . . . . . . . . Aaa 350,000 354,147
North Syracuse Central School District, G.O. Bond,
5.50%, 6/15/2011 . . . . . . . . . . . . . . . . . . . . . . . Aaa 295,000 298,021
Onondaga County, G.O. Bond, 5.85%, 2/15/2002 . . . . . . . . . . . Aa2 300,000 307,878
Penfield Central School District, G.O. Bond, 5.20%, 6/15/2010. . . Aaa 560,000 561,047
Queensbury, G O. Bond, Series A, 5.50%, 4/15/2011. . . . . . . . . Aaa 150,000 152,716
Queensbury, G.O. Bond, Series A, 5.50%, 4/15/2012. . . . . . . . . Aaa 350,000 354,284
Rochester, G.O. Bond, Series A, 4.70%, 8/15/2006 . . . . . . . . . Aaa 250,000 245,830
Rochester, G.O. Bond, Series A, 5.00%, 8/15/2020 . . . . . . . . . Aaa 250,000 220,628
Rochester, G.O. Bond, Series A, 5.00%, 8/15/2022 . . . . . . . . . Aaa 95,000 82,999
Rome, G.O. Bond, 5.20%, 12/1/2010. . . . . . . . . . . . . . . . . Aaa 390,000 389,243
Sands Point, G.O. Bond, 6.70%, 11/15/2014. . . . . . . . . . . . . A2a 700,000 758,352
Schenectady, G.O. Bond, 5.30%, 2/1/2011. . . . . . . . . . . . . . Aaa 250,000 249,655
South County Central School District Brookhaven, G.O. Bond,
5.50%, 9/15/2007 . . . . . . . . . . . . . . . . . . . . . . . Aaa 380,000 389,413
South Huntington Union Free School District, G.O. Bond,
5.00%, 9/15/2016 . . . . . . . . . . . . . . . . . . . . . . Aaa 325,000 292,883
South Huntington Union Free School District, G.O. Bond,
5.10%, 9/15/2017. . . . . . . . . . . . . . . . . . . . . . . Aaa 100,000 90,520
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Credit
Rating* Principal Value
(unaudited) Amount (Note 2)
----------- ---------- -----------
NEW YORK MUNICIPAL SECURITIES (continued)
<S> <C> <C> <C>
Steuben County Public Improvement, G.O. Bond, 5.60%, 5/1/2006. . . Aaa $ 500,000 $ 507,290
Suffolk County Water Authority, Revenue Bond, 5.10%, 6/1/2009. . . Aaa 250,000 248,255
Suffolk County, G.O. Bond, Series G, 5.40%, 4/1/2013. . . . . . . Aaa 400,000 394,388
Suffolk County, G.O. Bond, Series A, 4.75%, 8/1/2019 . . . . . . . Aaa 895,000 743,629
Suffolk County Water Authority, Series A, Revenue Bond,
5.00%, 6/1/2017 . . . . . . . . . . . . . . . . . . . . . . Aaa 400,000 355,536
Sullivan County Public Improvement, G.O. Bond,
5.125%, 3/15/2013. . . . . . . . . . . . . . . . . . . . . . . Aaa 330,000 315,183
Three Village Central School District, G.O. Bond,
5.375%, 6/15/2007 . . . . . . . . . . . . . . . . . . . . . . Aaa 230,000 235,465
Tioga County Public Improvement, G.O. Bond, 5.25%, 3/15/2005. . . Aaa 250,000 254,048
Tompkins County, G.O. Bond, Series B, 5.625%, 9/15/2011. . . . . . Aa2 135,000 137,057
Tompkins County, G.O. Bond, Series B, 5.625%, 9/15/2013. . . . . . Aa2 300,000 301,788
Tompkins County, G.O. Bond, Series B, 5.625%, 9/15/2014. . . . . . Aa2 300,000 300,333
Tompkins County Public Improvement, G.O. Bond, Series B,
5.10%, 4/1/2020. . . . . . . . . . . . . . . . . . . . . . . . Aa2 400,000 354,236
Triborough Bridge & Tunnel Authority, Revenue Bond, Series A,
5.00%, 1/1/2012. . . . . . . . . . . . . . . . . . . . . . . . Aa3 500,000 474,460
Triborough Bridge & Tunnel Authority - General Purpose,
Revenue Bond, 5.00%, 1/1/2017. . . . . . . . . . . . . . . . . Aa3 250,000 221,392
Triborough Bridge & Tunnel Authority - General Purpose,
Revenue Bond, Series A, 4.75%, 1/1/2019. . . . . . . . . . . . Aaa 300,000 249,486
Triborough Bridge & Tunnel Authority - General Purpose,
Revenue Bond, Series A, 5.125%, 1/1/2022 . . . . . . . . . . . Aa3 1,700,000 1,480,326
Tri-Valley Central School District, G.O. Bond, 5.60%, 6/15/2008. Aaa 120,000 123,667
Westchester County, G.O. Bond, Series A, 4.75%, 12/15/2008 . . . . Aaa 250,000 243,258
Westchester County, G.O. Bond, Series A, 4.75%, 12/15/2009 . . . . Aaa 250,000 240,023
Westchester County, G.O. Bond, Series B, 4.30%, 12/15/2010 . . . . Aaa 215,000 193,547
Westchester County, G.O. Bond, Series B, 4.30%, 12/15/2011 . . . . Aaa 100,000 88,570
White Plains, G.O. Bond, 4.50%, 9/1/2005 . . . . . . . . . . . . . Aa1 180,000 176,551
White Plains, G.O. Bond, 4.50%, 9/1/2007 . . . . . . . . . . . . . Aa1 315,000 301,701
William Floyd Union Free School District, G.O. Bond,
5.70%, 6/15/2008 . . . . . . . . . . . . . . . . . . . . . . . Aaa 405,000 421,257
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Credit Principal
Rating* Amount/ Value
(unaudited) Shares (Note 2)
------------ ---------- ---------
NEW YORK MUNICIPAL SECURITIES (continued)
<S> <C> <C> <C>
Williamsville Central School District, G.O. Bond, 5.375%, 5/1/2004. Aaa $ 800,000 $819,856
Wyandanch Union Free School District, G.O. Bond,
a 5.60%, 4/1/2017 . . . . . . . . . . . . . . . . . . . . . . . . Aaa 500,000 487,865
---------
TOTAL MUNICIPAL SECURITIES
(Identified Cost $52,084,128). . . . . . . . . . . . . . . . . . 49,931,934
---------
SHORT-TERM INVESTMENTS - 1.87%
Dreyfus Basic New York Tax Free Money Market
Fund (Identified Cost $959,238). . . . . . . . . . . . . . . . . 959,238 959,238
---------
TOTAL INVESTMENTS - 99.18%
(Identified Cost $53,043,366). . . . . . . . . . . . . . . . . . 50,891,172
OTHER ASSETS, LESS LIABILITIES - 0.82%. . . . . . . . . . . . . . . 420,151
---------
NET ASSETS - 100% . . . . . . . . . . . . . . . . . . . . . . . . . $ 51,311,323
============
</TABLE>
KEY-
G.O. Bond - General Obligation Bond
Ref. - Referendum
*Credit ratings from Moody's (unaudited).
<TABLE>
<CAPTION>
FEDERAL TAX INFORMATION:
At December 31, 1999, the net unrealized depreciation based on identified
cost for federal income tax purposes of $53,043,36 was as follows:
<S> <C>
Unrealized appreciation . . . . . . . . . . . . . . . . . . . . . . . . . $ 587,491
Unrealized depreciation . . . . . . . . . . . . . . . . . . . . . . . . . (2,739,685)
------------
UNREALIZED DEPRECIATION - NET . . . . . . . . . . . . . . . . . . . . . . $(2,152,194)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1999
<S> <C>
ASSETS:
Investments, at value (identified cost $53,043,366) (Note 2) $50,891,172
Interest receivable. . . . . . . . . . . . . . . . . . . . . 733,252
Receivable for fund shares sold. . . . . . . . . . . . . . . 5,450
--------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . 51,629,874
--------------
LIABILITIES:
Accrued management fee (Note 3). . . . . . . . . . . . . . . 22,282
Accrued directors' fees (Note 3) . . . . . . . . . . . . . . 1,687
Payable for fund shares repurchased. . . . . . . . . . . . . 281,263
Audit fee payable. . . . . . . . . . . . . . . . . . . . . . 13,077
Other payables and accrued expenses. . . . . . . . . . . . . 242
--------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . 318,551
--------------
NET ASSETS FOR 5,336,124 SHARES
OUTSTANDING . . . . . . . . . . . . . . . . . . . . . . . $51,311,323
============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . $ 53,362
Additional paid-in-capital . . . . . . . . . . . . . . . . . 53,342,060
Undistributed net investment income. . . . . . . . . . . . . 67,933
Accumulated net realized gain on investments . . . . . . . . 162
Net unrealized depreciation on investments . . . . . . . . . (2,152,194)
--------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . $51,311,323
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($51,311,323 / 5,336,124 shares) . . . . . . . . . . . . . $ 9.62
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
<S> <C>
INVESTMENT INCOME:
Interest. . . . . . . . . . . . . . . . . . . . . . . $ 2,798,070
------------
EXPENSES:
Management fee (Note 3) . . . . . . . . . . . . . . . 276,749
Directors' fees (Note 3). . . . . . . . . . . . . . . 5,201
Transfer agent fees (Note 3). . . . . . . . . . . . . 13,284
Audit fee . . . . . . . . . . . . . . . . . . . . . . 15,002
Custodian fee . . . . . . . . . . . . . . . . . . . . 10,479
Miscellaneous . . . . . . . . . . . . . . . . . . . . 13,961
------------
Total Expenses. . . . . . . . . . . . . . . . . . . . 334,676
------------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . 2,463,394
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on investments. . . . . . . . . . . 73,548
Net change in unrealized depreciation on investments. (4,700,361)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS. . . . . . . . . . . . . . . . . . . . (4,626,813)
------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . . . $(2,163,419)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED 12/31/99 ENDED 12/31/98
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . $ 2,463,394 $ 2,092,347
Net realized gain (loss) on investments. . . . . . . 73,548 (38)
Net change in unrealized appreciation (depreciation)
on investments. . . . . . . . . . . . . . . . . . (4,700,361) 556,299
---------------- ----------------
Net increase (decrease) from operations. . . . . . . (2,163,419) 2,648,608
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 2):
From net investment income . . . . . . . . . . . . . (2,535,231) (2,050,623)
From net realized gain on investments. . . . . . . . (53,535) --
---------------- ----------------
Total distributions to shareholders. . . . . . . . . (2,588,766) (2,050,623)
---------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital share
transactions (Note 5). . . . . . . . . . . . . . (4,708,926) 14,493,132
---------------- ----------------
Net increase (decrease) in net assets. . . . . . . . (9,461,111) 15,091,117
NET ASSETS:
Beginning of year. . . . . . . . . . . . . . . . . . 60,772,434 45,681,317
---------------- ----------------
END OF YEAR (including undistributed net
investment income of $67,933 and $139,770,
respectively) . . . . . . . . . . . . . . . . . . $ 51,311,323 $ 60,772,434
================ ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
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>
NET ASSET VALUE - BEGINNING OF YEAR . . . $ 10.51 $ 10.37 $ 9.98 $ 10.07 $ 8.98
--------------------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income . . . . . . . . . 0.464 0.427 0.431 0.422 0.404
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . (0.869) 0.138 0.384 (0.102) 1.086
--------------------- ---------- ---------- ---------- ----------
Total from investment operations . . . . . (0.405) 0.565 0.815 0.320 1.490
--------------------- ---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income. . . . . . . (0.475) (0.425) (0.425) (0.410) (0.400)
From net realized gain on investments . (0.010) -- -- -- --
--------------------- ---------- ---------- ---------- ----------
Total distributions to shareholders. . . . (0.485) (0.425) (0.425) (0.410) (0.400)
NET ASSET VALUE - END OF YEAR. . . . . . . $ 9.62 $ 10.51 $ 10.37 $ 9.98 $ 10.07
===================== ========== ========== ========== ==========
Total return1. . . . . . . . . . . . . . . (3.92)% 5.53% 8.33% 3.32% 16.78%
Ratios of expenses (to average net
assets) / Supplemental Data:
Expenses . . . . . . . . . . . . . . . 0.60% 0.61% 0.61% 0.61% 0.65%
Net investment income. . . . . . . . . 4.45% 4.17% 4.36% 4.41% 4.36%
Portfolio turnover . . . . . . . . . . . . 0% 3% 2% 6% 0%
NET ASSETS - END OF YEAR
(000'S OMITTED). . . . . . . . . . . . $ 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.
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 one
billion shares of common stock each having a par value of $0.01. As of December
31, 1999, 1.7 million shares have been designated in total among 31 series, of
which 50 million have been designated as New York Tax Exempt Series Common
Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Municipal securities will normally be valued on the basis of market valuations
provided by an independent pricing service (the "Service"). The Service
utilizes the latest price quotations and a matrix system (which considers such
factors as security prices of similar securities, yields, maturities, and
ratings). The Service has been approved by the Fund's Board of Directors.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value as determined in good faith
by the Advisor under procedures established by and under the general supervision
of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are purchased
or sold. Dividend income is recorded on the ex-dividend date. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series distributes to
shareholders each year its taxable income, including any net realized gains on
investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
The Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made quarterly.
Distributions 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
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.
The Series hereby designates 100% of its ordinary distribution as tax-exempt
dividends for the year ended December 31, 1999.
For the year ended December 31, 1999, the Series distributed $53,698 of
long-term capital gains.
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 portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are "affiliated persons" of
the Fund or of the Advisor, and all personnel of the Fund or of the Advisor
performing services relating to research, statistical and investment activities
are paid by the Advisor.
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. For these services, the Series pays a fee which is
calculated as a percentage of the average daily net assets at an annual rate of
0.024%.
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.
4. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1999, purchases and sales of securities, other
than United States Government securities and short-term securities, were $0 and
$4,432,136, respectively.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of New York Tax Exempt Series were:
<TABLE>
<CAPTION>
For the Year For the Year
Ended 12/31/99 Ended 12/31/98
--------------- ----------------
Shares Amount Shares Amount
--------------- ---------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold. . . . 497,312 $ 4,984,485 1,763,211 $18,531,432
Reinvested. 252,084 2,503,500 191,072 2,000,958
Repurchased (1,193,849) (12,196,911) (577,357) (6,039,258)
--------------- ---------------- ---------- ------------
Total . . . (444,453) $ (4,708,926) 1,376,926 $14,493,132
=============== ================ ========== ============
</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 December 31, 1999.
7. CONCENTRATION OF CREDIT
The Series primarily invests in debt obligations issued by the State of New York
and its political subdivisions, agencies, and public authorities to obtain funds
for various public purposes. The Series is more susceptible to factors
adversely affecting issues of New York municipal securities than is a municipal
bond fund that is not concentrated in these issues to the same extent.
16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Exeter Fund, Inc. - New York Tax
Exempt Series:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio (except for bond ratings), and the related statements
of operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the Exeter Fund,
Inc.: New York Tax Exempt Series (the "Fund") at December 31, 1999, and the
results of its operations, the changes in its net assets and the financial
highlights for the periods indicated, in conformity with accounting principles
generally accepted in the United States. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1999 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 18, 2000
17
<PAGE>
<PAGE>
<PAGE>
Exeter Fund, Inc.
Ohio Tax Exempt Series
Annual Report
December 31, 1999
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
DEAR SHAREHOLDERS:
In 1999, the poor performance of both the taxable and tax-exempt fixed income
markets can be traced to rising interest rates. Interest rates rose throughout
the year as economic growth continually surpassed market expectations and
significantly higher energy prices raised concerns about inflation. Interest
rates ended the year 150 basis points (1.50%) higher than where they started it,
and long-term Treasury securities lost over 9% in 1999.
Rates move when market expectations change, and from the start of 1999 to the
end of 1999, expectations about the rate of economic growth changed
dramatically. The Wall Street Journal surveys approximately 50 economists at the
start of each year. Some work for brokerage houses, some are academics, and
others are economic consultants. In aggregate, their opinions are representative
of market expectations. In January of 1999, the group was not especially
optimistic about the year ahead. They felt the economy would continue to grow,
but at a more moderate pace. They were concerned about a worsening of the
emerging market financial crisis, the possibility of a stock market correction
(including its impact on the rate of consumer spending), and a continuation in
the slowdown of corporate profit growth. Concerns were also raised about
possible Y2K problems, low oil prices triggering problems in the Middle East,
and the possibility of trade wars.
As most are probably aware, the group's expectations were wrong. The financial
problems of the emerging markets have been replaced by a new sense of optimism
about emerging markets, stock returns as measured by the S&P 500 posted another
20%+ year, and profit growth reaccelerated. As for Y2K problems, they were
negligible, and oil prices staged a remarkable turnaround. Growth did not
moderate, it accelerated.
As growth picked up, so too did the demand for capital. Rising demand generally
causes prices to rise, and in the case of capital its "price" is represented by
real interest rates. With the introduction of U.S. Treasury inflation-indexed
notes early in 1997, a market measure of real interest rates is now available.
Real interest rates rose by about 60 basis points (0.60%) last year. Granted,
those are taxable rates, but real interest rate increases in the Treasury market
also impact the municipal market.
Inflation expectations are driven by a number of different factors. One of those
is economic growth coming in greater than anticipated, which is what happened in
1999. Stronger than expected growth raises concerns about capacity constraints,
and what most worried the markets in 1999 was a potential shortage of labor.
With unemployment hitting 30+ year lows, there was a concern that wage pressures
would develop and that firms would try to pass those cost increases through to
consumers. Potential wage pressures were not the only things that captured the
markets' attention. A doubling of oil prices from the extraordinarily low levels
that existed at the end of 1998 caused energy prices to move up rather
dramatically.
Municipal bonds held on quite nicely during the first quarter of the year when
U.S. Treasury yields were moving higher. Demand and supply in the municipal
market were such that it was one of the few fixed income markets that posted
positive total returns during the first quarter. Unfortunately, that changed
during the second quarter and continued throughout the last two quarters of the
year as the fundamentals and the supply-demand situation combined to push up
municipal yields. The net effect of these rate increases was a negative total
return in most sectors of the municipal market.
During 1999, the Ohio Tax Exempt Series held longer-term bonds than its
benchmark, the Merrill Lynch Intermediate Municipal Bond Index. This held down
performance relative to the index because longer-term bonds are affected more
strongly by interest rate changes than those with shorter maturities. In 1997
and 1998, however, when interest rates were falling, the Series performed well
relative to its benchmark given the Series' preference for higher quality, yet
lower yielding, issues.
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
Although 1999's performance was negative, it is important to view it in the
larger context of the performance of the bond market as a whole, as we've
discussed above. In addition, it is helpful to view it in the larger context of
performance over time. As we mentioned in June, cyclical factors exert powerful
short-term influences. The investor should always remember that municipal yields
will fluctuate over time; sometimes the cyclical pressures push them higher and
other times they will push lower. However, the non-cyclical trends that drove
inflation lower over the last 15+ years remain in firmly place. As a result,
long-term investors should continue to base their decisions on the expectation
of a benign inflation environment. That is the long-term investment perspective
that has driven, and continues to drive, the fixed income investment process at
Manning & Napier.
We wish you all the best in the new year.
Sincerely,
EXETER ASSET MANAGEMENT
[GRAPHIC]
[PIE CHART]
Data for pie chart to follow:
Portfolio Composition 1 - As of 12/31/99
General Obligation Bonds - 62.07%
Revenue Bonds - 37.93%
1 As a percentage of municipal securities.
[graphic]
[pie chart]
Quality Ratings 2 - As of 12/31/99
Aaa - 92.49%
Aa - 5.56%
A - 1.95%
2 Using Moody's Ratings, as a percentage of municipal securities (unaudited).
2
<PAGE>
PERFORMANCE UPDATE AS OF DECEMBER 31, 1999
Exeter Fund, Inc. - Ohio Tax Exempt Series
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $ 9,493 -5.07% -5.07%
Five Years $13,041 30.41% 5.45%
Inception 1 $12,229 22.29% 3.48%
</TABLE>
Merrill Lynch Intermediate Municipal Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $ 9,999 -0.01% -0.01%
Five Years $13,577 35.77% 6.30%
Inception 1 $13,182 31.82% 4.81%
</TABLE>
The value of a $10,000 investment in the Exeter Fund, Inc. - Ohio Tax Exempt
Series from its inception (2/14/94) to present (12/31/99) as compared to the
Merrill Lynch Intermediate Municipal Index. 2
[GRAPHIC]
[LINE CHART]
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. Merrill Lynch
Date Ohio Tax Exempt Series Intermediate Municipal 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
</TABLE>
1 The Series and Index performance numbers are calculated from February 14,
1994, the Series' inception date. The Series' performance is historical and may
not be indicative of future results.
2 The unmanaged Merrill Lynch Intermediate Municipal Index is a market value
weighted measure of approximately 110 municipal bonds issued across the United
States. The Index is comprised of investment grade securities. Index returns
assume reinvestment of coupons and, unlike Series returns, do not reflect any
fees or expenses.
3
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Credit
Rating* Principal Value
(unaudited) Amount (Note 2)
----------- ---------- ---------
OHIO MUNICIPAL SECURITIES - 98.59%
<S> <C> <C> <C>
Akron Waterworks, Revenue Management Bond, 5.70%,
3/1/2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa $ 100,000 $103,598
Allen County, G.O. Bond, 5.30%, 12/1/2007 . . . . . . . . . . . . . . . . . Aaa 100,000 101,167
Amherst Police & Jail Facility, G.O. Bond, 5.375%,12/1/2012 . . . . . . . . Aaa 50,000 49,974
Avon Lake, G.O. Bond, 6.00%, 12/1/2009. . . . . . . . . . . . . . . . . . . A 40,000 41,353
Barberton City School District, G.O. Bond, 5.125%, 11/1/2022. . . . . . . . Aaa 350,000 307,902
Bedford Heights, G.O. Bond, Series A, 5.65%, 12/1/2014. . . . . . . . . . . Aaa 60,000 60,782
Belmont County, G.O. Bond, 5.15%, 12/1/2010 . . . . . . . . . . . . . . . . Aaa 100,000 99,427
Canton City School District, G.O. Bond, 5.85%, 12/1/2007. . . . . . . . . . Aaa 40,000 42,499
Chagrin Falls Exempt Village School District, G.O. Bond,
5.55%, 12/1/2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . Aa3 100,000 94,287
Cleveland City School District, G.O. Bond, 5.875%, 12/1/2011. . . . . . . . Aaa 125,000 128,941
Cleveland Public Power Systems Ref., G.O. Bond, 5.00%, 11/15/2024. . . . . Aaa 300,000 255,978
Cleveland Waterworks Ref & Impt., Revenue Bond, Series I, 5.00% ,1/1/2028. Aaa 265,000 223,451
Columbus Sewer Improvement Number 28, G.O. Bond,
6.00%, 5/1/2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 155,000 163,730
Columbus, G.O. Bond, Series D, 5.50%, 9/15/2008 . . . . . . . . . . . . . . Aaa 50,000 51,139
Crawford County, G.O. Bond, 6.75%, 12/1/2019. . . . . . . . . . . . . . . . Aaa 175,000 193,037
Delaware City School District, G.O. Bond, 5.00%, 12/01/2025 . . . . . . . . Aaa 300,000 255,903
Delaware City School District, Construction & Impt., G.O.
Bond, Series B, 5.20%, 12/1/2016 . . . . . . . . . . . . . . . . . . . . Aaa 100,000 92,245
Erie County Revenue Ref & Impt., G.O. Bond, 4.75%, 10/1/2019. . . . . . . . Aaa 175,000 146,311
Franklin County, G.O. Bond, 4.95%, 12/1/2004. . . . . . . . . . . . . . . . Aaa 50,000 50,519
Franklin County, G.O. Bond, 5.50%, 12/1/2013. . . . . . . . . . . . . . . . Aaa 100,000 100,145
Genoa Local School District, G.O. Bond, 5.40%, 12/1/2027. . . . . . . . . . Aaa 150,000 137,928
Greene County Sewer System, Revenue Bond, 5.50%,
12/1/2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 30,000 28,445
Hilliard School District, G.O. Bond, Series A, 5.00%, 12/1/2020 . . . . . . Aaa 225,000 197,163
Kettering City School District, G.O. Bond, 5.25%, 12/1/2022 . . . . . . . . Aaa 60,000 53,746
Kings Local School District, G.O. Bond, 5.50%, 12/1/2021. . . . . . . . . . Aaa 115,000 107,634
Lakewood City School District, G.O. Bond, 5.55%,12/1/2013 . . . . . . . . . A1 100,000 100,144
Lakota Local School District, G.O. Bond, 5.75%, 12/1/2006 . . . . . . . . . Aaa 50,000 52,007
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Credit
Rating* Principal Value
(unaudited) Amount (Note 2)
----------- ---------- ---------
OHIO MUNICIPAL SECURITIES (continued)
<S> <C> <C> <C>
Mahoning County, G.O. Bond, 5.70%, 12/1/2009. . . . . . . . . . . . . . . Aaa $ 150,000 $154,137
Mentor, G.O. Bond, 5.25%, 12/01/2017. . . . . . . . . . . . . . . . . . . Aa3 100,000 92,656
Montgomery County, G.O. Bond, 5.30%, 9/1/2007 . . . . . . . . . . . . . . Aa3 65,000 65,736
Montgomery County, Moraine-Beaver Creek Sewers, Revenue
Bond, 5.60%, 9/1/2011. . . . . . . . . . . . . . . . . . . . . . . . . Aaa 100,000 100,766
North Olmstead, G.O. Bond, 5.00%, 12/1/2016 . . . . . . . . . . . . . . . Aaa 125,000 113,056
Northwood Local School District, G.O. Bond, 5.55%, 12/1/2006. . . . . . . Aaa 65,000 67,227
Northwood Local School District, G.O. Bond, 6.20%, 12/1/2013. . . . . . . Aaa 40,000 41,824
Ohio, G.O. Bond, 6.50%, 8/1/2011. . . . . . . . . . . . . . . . . . . . . Aal 50,000 51,960
Ohio Building Authority, State Facilities - Administration
Building, Revenue Bond, 5.50%, 10/1/2005 . . . . . . . . . . . . . . . Aaa 50,000 51,559
Ohio Higher Education Facility, University of Dayton
Project, Revenue Bond, 5.80%, 12/1/2019. . . . . . . . . . . . . . . . Aaa 100,000 97,801
Ohio State Infrastructure Improvement, G.O. Bond, 5.20%,
8/1/2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aal 50,000 49,974
Ohio State Turnpike, Revenue Bond, Series A, 5.40%,
2/15/2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 250,000 253,908
Ohio State Turnpike, Revenue Bond, Series A, 5.70%,
2/15/2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 125,000 131,874
Ohio State Water Development Authority Ref. & Impt. -
Pure Water, Revenue Bond, 5.75%, 12/1/2005 . . . . . . . . . . . . . . Aaa 60,000 62,281
Ohio State Water Development Authority Pure Water,
Revenue Bond, Series I, 6.00%, 12/1/2016 . . . . . . . . . . . . . . Aaa 40,000 41,488
Ohio State Water Development Authority, Pollution Control
Facility, Revenue Bond, 5.25%, 12/1/2014 . . . . . . . . . . . . . . . Aaa 100,000 95,611
Ohio State Water Development Authority, Revenue Bond, 5.125%, 2/01/2023. Aaa 300,000 261,795
Ontario Local School District, G.O. Bond, 5.00%, 12/1/2023 . . . . . . . Aaa 350,000 301,077
Ottawa County, G.O. Bond, 5.45%, 9/1/2006 . . . . . . . . . . . . . . . . Aaa 30,000 30,835
Pickerington Local School District Construction & Impt.,
G.O. Bond, 5.375%, 12/1/2019 . . . . . . . . . . . . . . . . . . . . . Aaa 150,000 138,200
Pickerington Water Systems Improvements, G.O. Bond,
5.85%, 12/1/2013. . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 50,000 50,936
Reynoldsburg City School District, G.O. Bond, 6.55%,
12/1/2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 175,000 187,122
Rural Lorain Water Authority Ref. & Impt., Revenue Bond,
5.30%, 10/1/2012. . . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 110,000 107,835
South-Western City School District, Franklin & Pickway
Counties, G.O. Bond, 4.80%, 12/1/2006. . . . . . . . . . . . . . . . . Aaa 100,000 98,655
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Credit Principal
Rating* Amount/ Value
(unaudited) Shares (Note 2)
------------ ---------- ---------
OHIO MUNICIPAL SECURITIES (continued)
<S> <C> <C> <C>
Stark County, G.O. Bond, 5.70%, 11/15/2017 . . . . . . . . Aaa $ 100,000 $ 98,845
Toledo Sewer System, Revenue Bond, 6.35%, 11/15/2017 . . . Aaa 185,000 190,378
Toledo, G.O. Bond, 5.95%, 12/1/2015. . . . . . . . . . . . Aaa 175,000 177,523
Trumbull County, G.O. Bond, 6.20%, 12/1/2014 . . . . . . . Aaa 100,000 104,268
Upper Arlington City Schools, G.O. Bond, 5.250%, 12/01/22. Aaa 255,000 229,288
Warren, G.O. Bond, 5.20%, 11/15/2013 . . . . . . . . . . . Aaa 50,000 50,882
Warren County Waterworks, Revenue Bond, 5.45%, 12/1/2015 . Aaa 140,000 135,793
Westlake Ref. & Impt., G.O. Bond, 5.50%, 12/1/2020 . . . . Aal 295,000 279,893
Wood County, G.O. Bond, 5.40%, 12/1/2013 . . . . . . . . . Aa3 50,000 48,672
Youngstown, G.O. Bond, 6.125%, 12/1/2014 . . . . . . . . . Aaa 50,000 51,486
---------
TOTAL MUNICIPAL SECURITIES
(Identified Cost $7,459,785). . . . . . . . . . . . . . 7,254,796
---------
SHORT-TERM INVESTMENTS - 1.33%
Dreyfus Municipal Reserves
(Identified Cost $97,645) . . . . . . . . . . . . . . . 97,645 97,645
---------
TOTAL INVESTMENTS - 99.92%
(Identified Cost $7,557,430). . . . . . . . . . . . . . 7,352,441
LIABILITIES, LESS OTHER ASSETS - 0.08% . . . . . . . . . . 6,235
---------
NET ASSETS - 100%. . . . . . . . . . . . . . . . . . . . . $ 7,358,676
============
</TABLE>
FEDERAL TAX INFORMATION:
At December 31, 1999 the net unrealized depreciation based on identified cost
for federal income tax purposes of $7,557,430 was as follows:
Unrealized appreciation $156,159
Unrealized depreciation (361,148)
---------
UNREALIZED DEPRECIATION - NET ($204,989)
==========
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value (identified cost $7,557,430)(Note 2) $7,352,441
Interest receivable. . . . . . . . . . . . . . . . . . . . 63,232
-----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . 7,415,673
-----------
LIABILITIES:
Accrued management fee (Note 3). . . . . . . . . . . . . . 3,335
Accrued directors' fees (Note 3) . . . . . . . . . . . . . 1,689
Transfer agent fees payable (Note 3) . . . . . . . . . . . 160
Payable for fund shares repurchased. . . . . . . . . . . . 34,046
Audit fee payable. . . . . . . . . . . . . . . . . . . . . 16,043
Other payables and accrued expenses. . . . . . . . . . . . 1,724
-----------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . 56,997
-----------
NET ASSETS FOR 769,365 SHARES OUTSTANDING. . . . . . . . . $7,358,676
===========
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . $ 7,693
Additional paid-in-capital . . . . . . . . . . . . . . . . 7,624,273
Undistributed net investment income. . . . . . . . . . . . 15,238
Accumulated net realized loss on investments . . . . . . . (83,539)
Net unrealized depreciation on investments . . . . . . . . (204,989)
-----------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . $7,358,676
===========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($7,358,676/769,365 shares). . . . . . . . . . . . . . . . $ 9.56
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest. . . . . . . . . . . . . . . . . . . . . . . $ 506,596
----------
EXPENSES:
Management fee (Note 3) . . . . . . . . . . . . . . . 48,570
Directors' fees (Note 3). . . . . . . . . . . . . . . 5,201
Transfer agent fees (Note 3). . . . . . . . . . . . . 2,331
Audit fees. . . . . . . . . . . . . . . . . . . . . . 12,600
Legal fees. . . . . . . . . . . . . . . . . . . . . . 5,121
Custodian fees. . . . . . . . . . . . . . . . . . . . 3,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . 3,419
----------
Total Expenses. . . . . . . . . . . . . . . . . . . . 80,242
----------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . 426,354
----------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS:
Net realized loss on investments. . . . . . . . . . . (17,160)
Net change in unrealized depreciation on investments. (825,723)
----------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS. . . . . . . . . . . . . . . . . . . (842,883)
----------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . $(416,529)
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED 12/31/99 ENDED 12/31/98
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C>
OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . $ 426,354 $ 414,097
Net realized gain (loss) on investments. . . . . . . (17,160) 426
Net change in unrealized appreciation (depreciation)
on investments . . . . . . . . . . . . . . . . . (825,723) 85,980
---------------- ----------------
Net increase (decrease) from operations. . . . . . . (416,529) 500,503
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income . . . . . . . . . . . . . (427,001) (405,764)
From net realized gain on investments. . . . . . . . (66,026) --
---------------- ----------------
Total distributions to shareholders. . . . . . . . . (493,027) (405,764)
---------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital share
Transactions (Note 5). . . . . . . . . . . . . . . (4,301,054) 3,168,569
---------------- ----------------
Net increase (decrease) in net assets. . . . . . . . (5,210,610) 3,263,308
NET ASSETS:
Beginning of year. . . . . . . . . . . . . . . . . . 12,569,286 9,305,978
---------------- ----------------
END OF YEAR (including undistributed net investment
income of $15,238 and $15,886, respectively). . . $ 7,358,676 $ 12,569,286
================ ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
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>
NET ASSET VALUE - BEGINNING OF YEAR. . . . . $ 10.66 $ 10.53 $ 10.18 $ 10.31 $ 9.18
--------------------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income* . . . . . . . . . . 0.491 0.430 0.446 0.439 0.419
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . (1.022) 0.125 0.344 (0.129) 1.136
--------------------- ---------- ---------- ---------- ----------
Total from investment operations. . . . . . . (0.531) 0.555 0.790 0.310 1.555
--------------------- ---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income . . . . . . . . (0.485) (0.425) (0.440) (0.438) (0.425)
From net realized gain on investments. . . (0.084) -- -- (0.002) --
--------------------- ---------- ---------- ---------- ----------
Total distributions to shareholders . . . . . (0.569) (0.425) (0.440) (0.440) (0.425)
--------------------- ---------- ---------- ---------- ----------
NET ASSET VALUE - END OF YEAR . . . . . . . . $ 9.56 $ 10.66 $ 10.53 $ 10.18 $ 10.31
===================== ========== ========== ========== ==========
Total return 1. . . . . . . . . . . . . . . . (5.07)% 5.35% 7.92% 3.16% 17.14%
Ratios of expenses (to average net assets) /
Supplemental Data:
Expenses*. . . . . . . . . . . . . . . . . 0.83% 0.79% 0.79% 0.85% 0.85%
Net investment income* . . . . . . . . . . 4.39% 4.10% 4.37% 4.40% 4.50%
Portfolio turnover. . . . . . . . . . . . . . 4% 5% 12% 2% 1%
NET ASSETS - END OF YEAR (000's omitted). . . $ 7,359 $ 12,569 $ 9,306 $ 7,698 $ 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 Fund's expenses. If these expenses
had been incurred by the Fund, the net investment income per share and the
ratios would have been as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net investment income . . . . . N/A N/A N/A $0.437 $0.411
Ratios (to average net assets):
Expenses. . . . . . . . . . . . N/A N/A N/A 0.87% 0.94%
Net investment income . . . . . 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.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 one
billion shares of common stock each having a par value of $0.01. As of December
31, 1999, 1.7 million shares have been designated in total among 31 series, of
which 50 million have been designated as Ohio Tax Exempt Series Common Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Municipal securities will normally be valued on the basis of market valuations
provided by an independent pricing service (the "Service"). The Service
utilizes the latest price quotations and a matrix system (which considers such
factors as security prices of similar securities, yields, maturities, and
ratings). The Service has been approved by the Fund's Board of Directors.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value as determined in good faith
by the Advisor under procedures approved by and under the general supervision of
the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on the date the securities are purchased
or sold. Dividend income is recorded on the ex-dividend date. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the
Fund.
FEDERAL INCOME TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent the Series distributes to
shareholders each year its taxable income, including any net realized gains on
investments in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
The Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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.
The Series hereby designates 100% of its ordinary distributions as tax-exempt
dividends for the year ended December 31, 1999.
For the year ended December 31, 1999, the Series distributed $66,052 of
long-term capital gains.
The Series elected to defer to its fiscal year ending December 31, 2000, $83,565
of losses recognized during the period November 1, 1999 to December 31, 1999.
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 portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are "affiliated persons" of
the Fund or of the Advisor, and all personnel of the Fund or of the Advisor
performing services relating to research, statistical and investment activities
are paid by the Advisor.
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. For these services, the Series pays a fee which is
calculated as a percentage of the average daily net assets at an annual rate of
0.024%.
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.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1999, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$385,730 and $4,501,311, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Ohio Tax Exempt Series were:
<TABLE>
<CAPTION>
For the Year For the Year
Ended 12/31/99 Ended 12/31/98
--------------- ----------------
Shares Amount Shares Amount
--------------- ---------------- --------- ------------
<S> <C> <C> <C> <C>
Sold. . . . 73,338 $ 736,400 406,999 $ 4,339,586
Reinvested. 48,995 488,024 36,480 393,729
Repurchased (532,038) (5,525,478) (148,132) (1,564,746)
--------------- ---------------- --------- ------------
Total . . . (409,705) $ (4,301,054) 295,347 $ 3,168,569
=============== ================ ========= ============
</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 December 31, 1999.
7. CONCENTRATION OF CREDIT
The Series primarily invests in debt obligations issued by the State of Ohio and
its political subdivisions, agencies, and public authorities to obtain funds for
various public purposes. The Series is more susceptible to factors adversely
affecting issues of Ohio municipal securities than is a municipal bond fund that
is not concentrated in these issues to the same extent.
13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Exeter Fund, Inc. - Ohio Tax
Exempt Series:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio (except for bond ratings), and the related statements
of operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the Exeter Fund,
Inc.: Ohio Tax Exempt Series (the "Fund") at December 31, 1999, and the results
of its operations, the changes in its net assets and the financial highlights
for the period indicated, in conformity with accounting principles generally
accepted in the United States. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1999 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 18, 2000
14
<PAGE>
<PAGE>
Exeter Fund, Inc.
Diversified Tax Exempt Series
Annual Report
December 31, 1999
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
DEAR SHAREHOLDERS:
In 1999, the poor performance of both the taxable and tax-exempt fixed income
markets can be traced to rising interest rates. Interest rates rose throughout
the year as economic growth continually surpassed market expectations and
significantly higher energy prices raised concerns about inflation. Interest
rates ended the year 150 basis points (1.50%) higher than where they started it,
and long-term Treasury securities lost over 9% in 1999.
Rates move when market expectations change, and from the start of 1999 to the
end of 1999, expectations about the rate of economic growth changed
dramatically. The Wall Street Journal surveys approximately 50 economists at the
start of each year. Some work for brokerage houses, some are academics, and
others are economic consultants. In aggregate, their opinions are representative
of market expectations. In January of 1999, the group was not especially
optimistic about the year ahead. They felt the economy would continue to grow,
but at a more moderate pace. They were concerned about a worsening of the
emerging market financial crisis, the possibility of a stock market correction
(including its impact on the rate of consumer spending), and a continuation in
the slowdown of corporate profit growth. Concerns were also raised about
possible Y2K problems, low oil prices triggering problems in the Middle East,
and the possibility of trade wars.
As most are probably aware, the group's expectations were wrong. The financial
problems of the emerging markets have been replaced by a new sense of optimism
about emerging markets, stock returns as measured by the S&P 500 posted another
20%+ year, and profit growth reaccelerated. As for Y2K problems, they were
negligible, and oil prices staged a remarkable turnaround. Growth did not
moderate, it accelerated.
As growth picked up, so too did the demand for capital. Rising demand generally
causes prices to rise, and in the case of capital its "price" is represented by
real interest rates. With the introduction of U.S. Treasury inflation-indexed
notes early in 1997, a market measure of real interest rates is now available.
Real interest rates rose by about 60 basis points (0.60%) last year. Granted,
those are taxable rates, but real interest rate increases in the Treasury market
also impact the municipal market.
Inflation expectations are driven by a number of different factors. One of those
is economic growth coming in greater than anticipated, which is what happened in
1999. Stronger than expected growth raises concerns about capacity constraints,
and what most worried the markets in 1999 was a potential shortage of labor.
With unemployment hitting 30+ year lows, there was a concern that wage pressures
would develop and that firms would try to pass those cost increases through to
consumers. Potential wage pressures were not the only things that captured the
markets' attention. A doubling of oil prices from the extraordinarily low levels
that existed at the end of 1998 caused energy prices to move up rather
dramatically.
Municipal bonds held on quite nicely during the first quarter of the year when
U.S. Treasury yields were moving higher. Demand and supply in the municipal
market were such that it was one of the few fixed income markets that posted
positive total returns during the first quarter. Unfortunately, that changed
during the second quarter and continued throughout the last two quarters of the
year as the fundamentals and the supply-demand situation combined to push up
municipal yields. The net effect of these rate increases was a negative total
return in most sectors of the municipal market.
During 1999, the Diversified Tax Exempt Series held longer-term bonds than its
benchmark, the Merrill Lynch Intermediate Municipal Bond Index. This held down
performance relative to the index because longer-term bonds are affected more
strongly by interest rate changes than those with shorter maturities. In 1997
and 1998, however, when interest rates were falling, the Series performed well
relative to its benchmark given the Series' preference for higher quality, yet
lower yielding, issues.
1
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
Although 1999's performance was negative, it is important to view it in the
larger context of the performance of the bond market as a whole, as we've
discussed above. In addition, it is helpful to view it in the larger context of
performance over time. As we mentioned in June, cyclical factors exert powerful
short-term influences. The investor should always remember that municipal yields
will fluctuate over time; sometimes the cyclical pressures push them higher and
other times they will push lower. However, the non-cyclical trends that drove
inflation lower over the last 15+ years remain in firmly place. As a result,
long-term investors should continue to base their decisions on the expectation
of a benign inflation environment. That is the long-term investment perspective
that has driven, and continues to drive, the fixed income investment process at
Manning & Napier.
We wish you all the best in the new year.
Sincerely,
EXETER ASSET MANAGEMENT
[graphic]
[pie chart]
Data for pie chart to follow:
Portfolio Composition 1 - As of 12/31/99
General Obligation Bonds - 79.35%
Revenue Bonds - 19.58%
Pre-Refunded Bonds - 1.07%
1 - As a percentage of municipal securities.
[graphic]
[pie chart]
Data for pie chart to follow:
Quality Ratings 2 - As of 12/31/99
Aaa - 80.31%
Aa - 17.49%
A - 2.20%
2 - Using Moody's Ratings, as a percentage of municipal securities (unaudited).
2
<PAGE>
PERFORMANCE UPDATE AS OF DECEMBER 31, 1999
Exeter Fund, Inc.
Diversified Tax Exempt Series
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $ 9,533 -4.67% -4.67%
Five Years $13,043 30.43% 5.45%
Inception 1 $12,340 23.40% 3.64%
</TABLE>
Merrill Lynch Intermediate Municipal Index
<TABLE>
<CAPTION>
Total Return
Through Growth of $10,000 Average
12/31/99 Investment Cumulative Annual
<C> <S> <C> <C>
One Year $ 9,999 -0.01% -0.01%
Five Years $13,577 35.77% 6.30%
Inception 1 $13,182 31.82% 4.81%
</TABLE>
The value of a $10,000 investment in the Exeter Fund, Inc. - Diversified
Tax Exempt Series from its inception (2/14/94) to present (12/31/99) as compared
to the Merrill Lynch Intermediate Municipal Index. 2
[graphic]
[line chart]
Data for line chart to follow:
<TABLE>
<CAPTION>
Exeter Fund, Inc. Merrill Lynch
Date Diversified Tax Exempt Series Intermediate Municipal 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
</TABLE>
1 The Series and Index performance numbers are calculated from February 14,
1994, the Series' inception date. The Series' performance is historical and may
not be indicative of future results.
2 The unmanaged Merrill Lynch Intermediate Municipal Index is a market value
weighted measure of approximately 110 municipal bonds issued across the United
States. The Index is comprised of investment grade securities. Index returns
assume reinvestment of coupons and, unlike Series returns, do not reflect any
fees or expenses.
3
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Credit
-----------
Rating* Principal Value
(unaudited) Amount (Note 2)
---------
MUNICIPAL SECURITIES - 98.44%
<S> <C> <C> <C>
ALABAMA - 1.47%
Bessemer Water Supply, Revenue Bond, 5.20%, 6/01/2024 . . . . . Aaa $ 500,000 $438,625
---------
ALASKA - 1.04%
Anchorage, G.O. Bond, 6.10%, 8/1/2004 . . . . . . . . . . . . . Aaa 300,000 310,533
---------
ARIZONA - 0.85%
Maricopa County School District No. 097 Deer Valley, G.O.
Bond, Series A, 5.20%, 7/1/2007 . . . . . . . . . . . . . . Aaa 250,000 252,195
---------
CALIFORNIA - 4.70%
California State, G.O. Bond, 4.75%, 12/1/2028 . . . . . . . . . Aa3 795,000 639,037
Oak Grove School District Bond, 5.25%, 08/01/2024 . . . . . . . Aaa 500,000 450,310
Wiseburn School District, G.O. Bond, Series A, 5.25%, 8/1/2016. Aaa 330,000 310,814
---------
1,400,161
---------
COLORADO - 0.58%
El Paso County School District No. 020, G.O. Bond, Series A,
a 6.20%, 12/15/2007. . . . . . . . . . . . . . . . . . . . . Aaa 160,000 172,048
---------
FLORIDA - 5.79%
Florida State Board of Education Capital Outlay Public Ed.,
G.O. Bond Series A, 5.00%, 6/1/2027 . . . . . . . . . . . . Aa2 750,000 636,360
---------
Florida State Board of Education Capital Outlay Public Ed.,
G.O. Bond Series C, 5.60%, 6/1/2025 . . . . . . . . . . . . Aaa 135,000 128,096
---------
Florida State Senior Lien - Jacksonville Trans, G.O. Bond,
a 5.00%, 7/1/2027 . . . . . . . . . . . . . . . . . . . . . Aa2 710,000 604,828
Hillsborough County Capital Improvement Program, Revenue
Bond, 5.125%, 7/1/2022. . . . . . . . . . . . . . . . . . . Aaa 400,000 354,840
---------
1,724,124
---------
GEORGIA - 3.14%
Atlanta, G. O. Bond, 5.60%, 12/1/2018 . . . . . . . . . . . . . Aa3 350,000 338,107
Georgia, G.O. Bond, Series B, 5.65%, 3/1/2012 . . . . . . . . . Aaa 200,000 206,384
Rockdale County Water & Sewer Authority, Revenue Bond,
a 5.00%, 7/1/2022. . . . . . . . . . . . . . . . . . . . . . Aaa 450,000 388,863
933,354
---------
HAWAII - 0.92%
Hawaii, G.O. Bond, Series CH, 6.00%, 11/1/2007. . . . . . . . . A1 260,000 272,932
---------
IDAHO - 0.34%
Ada & Canyon Counties Joint School District No. 2
Meridian, G.O. Bond, 5.10%, 7/30/2005 . . . . . . . . . . . Aa2 100,000 102,022
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Credit
-----------
Rating* Principal Value
(unaudited) Amount (Note 2)
----------- ---------- ---------
<S> <C> <C> <C>
ILLINOIS - 5.51%
Aurora, G.O. Bond, 5.80%, 1/1/2012. . . . . . . . . . . . . . . . . . . Aaa $ 190,000 $197,826
---------
Chicago Schools Financial Authority, G.O. Bond, Series A,
a 5.00%, 6/1/2007. . . . . . . . . . . . . . . . . . . . . . . . . . Aaa 200,000 197,942
Chicago, G.O. Bond, Series A, 5.875%, 1/1/2022. . . . . . . . . . . . . Aaa 100,000 104,226
Chicago, G.O. Bond, 5.25%, 1/1/2027 . . . . . . . . . . . . . . . . . . Aaa 250,000 217,592
Cook County, G.O. Bond, Series A, 5.00%, 11/15/2022 . . . . . . . . . . Aaa 750,000 636,652
Illinois, Certificate of Participation, Series 1995A, 5.60%, 7/1/2010. Aaa 100,000 101,508
Rock Island County School District No. 041-Rock Island,
G.O. Bond, 5.125%, 12/1/2015 . . . . . . . . . . . . . . . . . . . Aaa 200,000 182,646
---------
1,638,392
---------
INDIANA - 0.98%
Bloomington Sewer Works, Revenue Bond, 5.80%, 1/1/2011. . . . . . . . . Aaa 150,000 153,319
Lafayette Waterworks, Revenue Bond, 4.90%, 7/1/2006 . . . . . . . . . . Aaa 140,000 138,513
---------
291,832
---------
IOWA - 2.04%
Cedar Rapids, G. O. Bond, 6.45%, 6/1/2014 . . . . . . . . . . . . . . . Aaa 350,000 367,678
Iowa City Sewer, Revenue Bond, 5.75%, 7/1/2021. . . . . . . . . . . . . Aaa 250,000 238,160
---------
605,838
---------
KANSAS - 1.52%
Derby, Series A, G.O. Bond, 5.00%, 6/1/2015 . . . . . . . . . . . . . . Aaa 275,000 250,412
Johnson County Unified School District No. 229, G.O. Bond,
Series A, 5.00%, 10/1/2014. . . . . . . . . . . . . . . . . . . . . Aa1 220,000 203,309
---------
453,721
---------
KENTUCKY - 1.89%
Jefferson County School District Finance Corp. School
Building, Revenue Bond, Series A, 5.00%, 2/1/2011 . . . . . . . . . Aaa 300,000 290,076
Kentucky State Turnpike Authority Revitalization Projects,
Revenue Bond, 6.50%, 7/1/2008 . . . . . . . . . . . . . . . . . . . Aaa 250,000 273,538
---------
563,614
---------
LOUISIANA - 0.98%
New Orleans Sewer Service, Revenue Bond, 5.25%, 6/1/2012. . . . . . . . Aaa 300,000 292,248
---------
MAINE - 3.19%
Hermon, G.O. Bond, 5.60%, 11/1/2013 . . . . . . . . . . . . . . . . . . Aaa 75,000 74,993
Kennebec Water District, Revenue Bond, 5.125%, 12/1/2021. . . . . . . . Aaa 750,000 659,003
Portland, G.O. Bond, 6.20%, 4/1/2006. . . . . . . . . . . . . . . . . . Aa1 200,000 213,662
---------
947,658
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
INVESTMENT PORTFOLIO - DECEBMER 31, 1999
<TABLE>
<CAPTION>
Credit
Rating* Principal Value
(unaudited) Amount (Note 2)
---------
<S> <C> <C> <C>
MARYLAND - 2.17%
Baltimore Water Project, Revenue Bond, Series A,
a 5.55%, 7/1/2009 . . . . . . . . . . . . . . . . . . . Aaa $ 260,000 $267,358
---------
Prince Georges County Public Improvement, G.O. Bond,
a 5.00%, 3/15/2014 . . . . . . . . . . . . . . . . . . . Aaa 200,000 186,106
---------
Washington County Public Improvement, G.O. Bond,
a 4.875%, 1/1/2010 . . . . . . . . . . . . . . . . . . . Aaa 200,000 191,670
---------
645,134
---------
MASSACHUSETTS - 4.71%
Martha's Vineyard Regional High School District No. 100,
G.O. Bond, 6.70%, 12/15/2014 . . . . . . . . . . . . . Aaa 200,000 219,832
Massachusetts Bay Transit Authority, G.O. Bond, Series B,
a 5.25%, 3/1/2026 . . . . . . . . . . . . . . . . . . . Aaa 500,000 439,430
Massachusetts Municipal Electric Supply System, Revenue
Bond, Series A, 5.00%, 7/1/2017. . . . . . . . . . . . Aaa 200,000 177,520
Massachusetts State, G.O. Bond, Series C, 5.75%, 8/1/2010. Aaa 400,000 415,536
Massachusetts Water Resource Authority General Ref.,
Revenue Bond, Series B, 5.25%, 3/1/2013. . . . . . . . Aaa 155,000 149,423
---------
1,401,741
---------
MICHIGAN - 3.45%
Comstock Park Public Schools, G.O. Bond, 5.50%, 5/1/2011 . Aaa 150,000 150,943
Hudsonville Public Schools, G.O. Bond, 5.15%, 5/01/2027. . Aaa 225,000 193,741
Lincoln Park School District, G.O. Bond, 5.00%, 5/1/2026 . Aaa 480,000 404,573
Pinckney Community Schools, G.O. Bond, 5.00%, 5/1/2014 . . Aaa 200,000 183,458
St. Joseph County Sewer Disposal Systems - Constantine,
G.O. Bond, 5.00%, 4/1/2012 . . . . . . . . . . . . . . Aaa 100,000 94,724
---------
1,027,439
---------
MINNESOTA - 3.28%
Big Lake Indpt. School District Bond, 5.50%, 2/01/2014 . . Aaa 500,000 495,145
Minneapolis, G.O. Bond, Series B, 5.20%, 3/1/2013 . . . . Aaa 300,000 288,930
Western Minnesota Municipal Power Agency, Revenue
Bond, 6.625%, 1/1/2016 . . . . . . . . . . . . . . . . Aaa 175,000 191,975
---------
976,050
---------
MISSISSIPPI - 0.72%
Mississippi, G.O. Bond, 6.30%, 12/1/2006 . . . . . . . . . Aa3 200,000 212,720
---------
MISSOURI - 0.84%
Missouri State Ref.- Third Street Building, G.O. Bond,
Series A, 5.125%, 8/1/2009 . . . . . . . . . . . . . . Aaa 250,000 250,408
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Credit
Rating* Principal Value
(unaudited) Amount (Note 2)
---------
<S> <C> <C> <C>
MONTANA - 0.64%
Montana Long Range Building Project, G.O. Bond, Series A,
a 4.875%, 8/1/2010 . . . . . . . . . . . . . . . . . . . . Aa3 $ 200,000 $191,828
---------
NEBRASKA - 1.74%
Douglas County School District No. 17, G.O. Bond, 5.00%,
a 10/1/2012. . . . . . . . . . . . . . . . . . . . . . . . Aaa 545,000 517,341
---------
NEVADA - 3.15%
Clark County School District, G.O. Bond,
a 6.00%, 6/15/2002 . . . . . . . . . . . . . . . . . . . . Aaa 100,000 103,101
Nevada State Project No. 42, G.O. Bond, 5.70%, 9/1/2008. . . Aa2 200,000 208,778
Nevada State Project Nos. 66 & 67, G.O. Bond
Series A, 5.00%, 5/15/2028. . . . . . . . . . . . . . . . Aaa 750,000 626,115
---------
937,994
---------
NEW HAMPSHIRE - 0.73%
New Hampshire, G.O. Bond, 6.60%, 9/1/2014 . . . . . . . . . . Aa2 200,000 216,304
---------
NEW JERSEY - 2.41%
Jersey City Water, G.O. Bond, 5.50%, 3/15/2011. . . . . . . . Aaa 225,000 227,441
North Hudson Sewer Authority, Revenue Bond, 5.25%, 8/1/2016. Aaa 250,000 234,453
West Windsor Plainsboro, G.O. Bond, 5.25%, 12/1/2004. . . . . Aaa 250,000 255,963
---------
717,857
---------
NEW YORK - 3.92%
Monroe County Community School Corporation First
Meeting, Revenue Bond, 5.25%, 7/1/2016. . . . . . . . . . Aaa 125,000 115,760
New York State Thruway Authority, Revenue Bond,
Series A, 5.50%, 1/1/2023 . . . . . . . . . . . . . . . . Aaa 200,000 203,556
Sands Point, G.O. Bond, 6.70%, 11/15/2013 . . . . . . . . . . Aa2 350,000 379,176
Spencerport Central School District, G.O. Bond, 5.00%,
a 11/15/2012 . . . . . . . . . . . . . . . . . . . . . . . . Aaa 350,000 337,425
Westchester County, G.O. Bond, 4.75%, 11/15/2016. . . . . . . Aaa 150,000 131,133
---------
1,167,050
---------
NORTH CAROLINA - 1.34%
North Carolina State Prison Facilities, G.O. Bond, 4.80%,
3/1/2009 . . . . . . . . . . . . . . . . . . . . . . . . Aaa 200,000 193,588
Raleigh North Carolina, G.O. Bond, 4.40%, 6/1/2017. . . . . . Aaa 250,000 205,765
---------
399,353
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Credit
Rating* Principal Value
(unaudited) Amount (Note 2)
----------- ---------- ---------
<S> <C> <C> <C>
OHIO - 3.51%
Cleveland Water & Sewer, G.O. Bond, 5.35%, 9/1/2023 . . . . . Aaa $ 450,000 $407,250
Oak Hills Local School District, G.O. Bond, 5.125%, 12/1/2025. Aaa 490,000 425,982
Summit County Various Purpose, G.O. Bond, 6.625%, 12/1/2012. . Aaa 200,000 211,422
---------
1,044,654
---------
OKLAHOMA - 2.18%
Oklahoma State Turnpike Authority, Revenue Bond,
Series A, 5.00%, 1/1/2023 . . . . . . . . . . . . . . . . . Aaa 750,000 647,880
---------
OREGON - 0.87%
Salem Pedestrian Safety Impts., G.O. Bond, 5.50%, 5/1/2010 . . Aaa 255,000 259,434
---------
PENNSYLVANIA - 4.82%
Beaver County, G.O. Bond, 5.15%, 10/01/2017. . . . . . . . . . Aaa 300,000 272,718
Cambria County, G.O. Bond, Series A, 6.10%, 8/15/2016 . . . . Aaa 350,000 367,234
Philadelphia Water & Waste, Revenue Bond, 5.60%, 8/1/2018. . . Aaa 150,000 143,583
Pittsburgh Water & Sewer Authority, G.O. Bond, Series C,
5.125%, 9/1/2023. . . . . . . . . . . . . . . . . . . . Aaa 750,000 650,633
---------
1,434,168
---------
RHODE ISLAND - 1.06%
Rhode Island State Pre-refunded Balance, G.O. Bond,
Series A, 6.20%, 6/15/2004 . . . . . . . . . . . . . . . . Aaa 115,000 121,209
Rhode Island State Unrefunded Balance, G.O. Bond,
Series A, 6.20%, 6/15/2004 . . . . . . . . . . . . . . . . Aaa 185,000 194,272
---------
315,481
---------
SOUTH CAROLINA - 1.21%
South Carolina State Highway, G.O. Bond, Series B,
a 5.625%, 7/1/2010. . . . . . . . . . . . . . . . . . . . . Aaa 350,000 361,449
---------
SOUTH DAKOTA - 1.83%
Rapid City Area School District, G.O. Bond, 4.75%, 1/1/2018. . Aaa 650,000 544,290
---------
TENNESSEE - 1.64%
Johnson City School Sales Tax, G.O. Bond, 6.70%, 5/1/2021. . . Aaa 350,000 383,260
Lawrence County, G.O. Bond, 6.60%, 3/1/2013. . . . . . . . . . Aaa 100,000 105,268
---------
488,528
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Credit
Rating* Principal Value
(unaudited) Amount (Note 2)
----------- ---------- ---------
<S> <C> <C> <C>
TEXAS - 5.40%
Brazoria County , G.O. Bond, 4.75%, 9/1/2011. . . . . . . . . Aaa $ 445,000 $410,726
Carrollton Independent School District, G.O. Bond,
6.00%, 2/15/2019. . . . . . . . . . . . . . . . . . . . Aaa 500,000 500,655
Dallas Waterworks & Sewer, Revenue Bond, 5.625%, 4/1/2009 . . Aa2 200,000 205,676
North Texas Municipal Water District, Revenue Bond,
5.00%, 6/1/2012. . . . . . . . . . . . . . . . . . . . . Aaa 150,000 141,761
Southlake Waterwork & Sewer System, G.O. Bond, 5.30%,
2/15/2011. . . . . . . . . . . . . . . . . . . . . . . . Aaa 350,000 347,368
---------
1,606,186
---------
UTAH - 2.45%
Alpine School District, G.O. Bond, 5.375%, 3/15/2009. . . . . Aaa 250,000 252,682
Nebo School District, G.O. Bond, 6.00%, 6/15/2018 . . . . . . Aaa 450,000 475,700
---------
728,382
---------
VIRGINIA - 1.29%
Franklin County Capital Improvement , G.O. Bond, 6.60%,
7/15/2013. . . . . . . . . . . . . . . . . . . . . . . . Aaa 250,000 261,707
Spotsylvania County Water & Sewer Systems, Revenue
Bond, 5.25%, 6/1/2016 . . . . . . . . . . . . . . . . . . Aaa 130,000 121,833
---------
383,540
---------
WASHINGTON - 4.60%
King County Ref-Series B Bond, 5.00%, 1/01/2030 . . . . . . . Aaa 400,000 329,376
Kitsap County School District, G.O. Bond, 6.625%, 12/1/2008. A1 350,000 370,909
Seattle, G.O. Bond, Series A, 5.75%, 1/15/2020. . . . . . . . Aa1 230,000 223,342
Seattle Met. Municipality, G.O. Bond, 5.65%, 1/1/2020 . . . . Aa3 100,000 95,775
Washington State, G.O. Bond, Series A, 5.00%, 1/1/2023. . . . Aa1 410,000 348,795
---------
1,368,197
---------
WISCONSIN - 3.54%
East Troy School District, G.O. Bond, Series A, 4.625%,
10/1/2011. . . . . . . . . . . . . . . . . . . . . . . . Aaa 400,000 362,228
Merrill Public School District, G.O. Bond, 5.30%, 4/1/2013. . Aaa 400,000 386,376
Wisconsin State, G.O. Bond, Series A, 5.75%, 5/1/2001 . . . . Aa2 300,000 305,118
---------
1,053,722
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
INVESTMENT PORTFOLIO - DECEMBER 31, 1999
<TABLE>
<CAPTION>
Value
Shares (Note 2)
----------- --------
<S> <C> <C>
TOTAL MUNICIPAL SECURITIES
(Identified Cost $30,742,230). . . . . $29,296,427
-----------
SHORT-TERM INVESTMENTS - 0.59%
Dreyfus Municipal Reserves
(Identified Cost $176,416) . . . . 176,416 176,416
--------
TOTAL INVESTMENTS - 99.03%
(Identified Cost $30,918,646). . . . . 29,472,843
OTHER ASSETS, LESS LIABILITIES - 0.97% 287,694
-----------
NET ASSETS - 100%. . . . . . . . . . . $29,760,537
===========
</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:
<TABLE>
<CAPTION>
At December 31, 1999, the net unrealized depreciation based on identified cost
for federal income tax purposes of $30,918,646 was as follows:
<S> <C>
Unrealized appreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 425,057
Unrealized depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,870,860)
------------
UNREALIZED DEPRECIATION - NET. . . . . . . . . . . . . . . . . . . . . . . . . $(1,445,803)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1999
<S> <C>
ASSETS:
Investments, at value (identified cost $30,918,646)(Note 2) $29,472,843
Interest receivable . . . . . . . . . . . . . . . . . . . . 468,292
Receivable for fund shares sold . . . . . . . . . . . . . . 202,655
------------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . 30,143,790
------------
LIABILITIES:
Accrued management fee (Note 3) . . . . . . . . . . . . . . 13,115
Accrued directors' fees (Note 3). . . . . . . . . . . . . . 1,688
Transfer agent fees payable (Note 3). . . . . . . . . . . . 630
Payable for fund shares repurchased . . . . . . . . . . . . 347,302
Audit fee payable . . . . . . . . . . . . . . . . . . . . . 18,727
Other payables and accrued expenses . . . . . . . . . . . . 1,791
------------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . 383,253
------------
NET ASSETS FOR 3,054,006 SHARES
OUTSTANDING. . . . . . . . . . . . . . . . . . . . . . . $29,760,537
============
NET ASSETS CONSIST OF:
Capital stock . . . . . . . . . . . . . . . . . . . . . . . $ 30,540
Additional paid-in-capital. . . . . . . . . . . . . . . . . 31,113,737
Undistributed net investment income . . . . . . . . . . . . 65,015
Accumulated net realized loss on investments. . . . . . . . (2,952)
Net unrealized depreciation on investments. . . . . . . . . (1,445,803)
------------
TOTAL NET ASSETS. . . . . . . . . . . . . . . . . . . . . . $29,760,537
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($29,760,537/3,054,006 shares). . . . . . . . . . . . . $ 9.74
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
INVESTMENT INCOME:
<S> <C>
Interest. . . . . . . . . . . . . . . . . . . . . . . $ 1,641,571
------------
EXPENSES:
Management fee (Note 3) . . . . . . . . . . . . . . . 158,586
Directors' fees (Note 3). . . . . . . . . . . . . . . 5,201
Transfer agent fees (Note 3). . . . . . . . . . . . . 7,612
Registration and filing fees. . . . . . . . . . . . . 13,627
Audit fee . . . . . . . . . . . . . . . . . . . . . . 13,600
Custodian fee . . . . . . . . . . . . . . . . . . . . 6,639
Miscellaneous . . . . . . . . . . . . . . . . . . . . 8,956
------------
Total Expenses. . . . . . . . . . . . . . . . . . . . 214,221
------------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . 1,427,350
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on investments. . . . . . . . . . . 36,836
Net change in unrealized depreciation on investments. (2,873,865)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS . . . . . . . . . . . . . . . . . . (2,837,029)
------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . . . . . . $(1,409,679)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED 12/31/99 ENDED 12/31/98
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income. . . . . . . . . . . . . . . . . . . . . . $ 1,427,350 $ 1,139,715
Net realized gain on investments . . . . . . . . . . . . . . . . 36,836 35,973
Net unrealized appreciation (depreciation) on investments. . . . (2,873,865) 251,930
---------------- ----------------
Net increase (decrease) from operations. . . . . . . . . . . . . (1,409,679) 1,427,618
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2):
From net investment income . . . . . . . . . . . . . . . . . . . (1,457,769) (1,089,090)
From net realized gain on investments. . . . . . . . . . . . . . (39,827) (27,563)
---------------- ----------------
Total distributions to shareholders. . . . . . . . . . . . . . . (1,497,596) (1,116,653)
---------------- ----------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase (decrease) from capital share transactions (Note 5) (1,902,195) 10,607,836
---------------- ----------------
Net increase (decrease) in net assets. . . . . . . . . . . . . . (4,809,470) 10,918,801
NET ASSETS:
Beginning of year. . . . . . . . . . . . . . . . . . . . . . . . 34,570,007 23,651,206
---------------- ----------------
END OF YEAR (including undistributed net investment
income of $65,015 and $95,434, respectively). . . . . . . . . $ 29,760,537 $ 34,570,007
================ ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
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>
NET ASSET VALUE - BEGINNING OF YEAR . . . . $ 10.73 $ 10.59 $ 10.23 $ 10.32 $ 9.26
Income from investment operations:
Net investment income . . . . . . . . . . 0.477 0.435 0.434 0.434 0.428
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . (0.969) 0.139 0.361 (0.104) 1.062
--------------------- ---------- ---------- ---------- ----------
Total from investment operations . . . . . . (0.492) 0.574 0.795 0.330 1.490
--------------------- ---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income. . . . . . . . (0.485) (0.425) (0.435) (0.420) (0.430)
From net realized gain on investments . . (0.013) (0.009) -- -- --
--------------------- ---------- ---------- ---------- ----------
Total distributions to shareholders. . . . (0.498) (0.434) (0.435) (0.420) (0.430)
--------------------- ---------- ---------- ---------- ----------
NET ASSET VALUE - END OF YEAR. . . . . . . . $ 9.74 $ 10.73 $ 10.59 $ 10.23 $ 10.32
===================== ========== ========== ========== ==========
Total return1. . . . . . . . . . . . . . . . (4.67)% 5.49% 7.92 % 3.33% 16.29%
Ratios of expenses (to average net assets)/
Supplemental Data:
Expenses . . . . . . . . . . . . . . . . 0.68% 0.69% 0.69% 0.70% 0.79%
Net investment income. . . . . . . . . . 4.50% 4.19% 4.41% 4.44% 4.52%
Portfolio turnover . . . . . . . . . . . . . 6% 5% 1% 2% 5%
NET ASSETS-END OF YEAR (000'S OMITTED) . . . $ 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.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 one
billion shares of common stock each having a par value of $0.01. As of December
31, 1999, 1,7 million shares have been designated in total among 31 series, of
which 50 million have been designated as Diversified Tax Exempt Series Common
Stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Municipal securities will normally be valued on the basis of market valuations
provided by an independent pricing service (the "Service"). The Service
utilizes the 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
2. SIGNIFICANT ACCOUNTING POLICIES (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.
The Series hereby designates 100% of its ordinary distributions as tax-exempt
dividends for the year ended December 31, 1999.
For the year ended December 31, 1999, the Series distributed $40,012 of
long-term capital gains.
The Series elected to defer to its fiscal year ending December 31, 2000, $3,137
of losses recognized during the period November 1, 1999 to December 31, 1999.
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 portfolio accounting and bookkeeping services. The salaries of
all officers of the Fund and of all Directors who are "affiliated persons" of
the Fund or of the Advisor, and all personnel of the Fund or of the Advisor
performing services relating to research, statistical and investment activities
are paid by the Advisor.
The Advisor also acts as the transfer, dividend paying and shareholder servicing
agent for the Fund. For these services, the Series pays a fee which is
calculated as a percentage of the average daily net assets at an annual rate of
0.024%.
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.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
4. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1999, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$1,838,462 and $3,009,148, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Diversified Tax Exempt Series were:
<TABLE>
<CAPTION>
For the Year For the Year
Ended 12/31/99 Ended 12/31/98
--------------- ----------------
Shares Amount Shares Amount
--------------- ---------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold. . . . 624,517 $ 6,412,323 1,391,383 $14,935,106
Reinvested. 141,835 1,431,834 101,391 1,085,235
Repurchased (934,336) (9,746,352) (504,283) (5,412,505)
--------------- ---------------- ---------- ------------
Total . . . (167,984) $ (1,902,195) 988,491 $10,607,836
=============== ================ ========== ============
</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 December 31, 1999.
17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Exeter Fund, Inc. - Diversified
Tax Exempt Series:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio (except for bond ratings), and the related statements
of operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the Exeter Fund,
Inc.: Diversified Tax Exempt Series (the "Fund") at December 31, 1999, and the
results of its operations, the changes in its net assets and the financial
highlights for the periods indicated, in conformity with accounting principles
generally accepted in the United States. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1999 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 18, 2000
18
<PAGE>
<PAGE>
<PAGE>
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] DIVERSIFIED TAX EXEMPT SERIES
[NUMBER] 18
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-START] JAN-01-1999
[PERIOD-END] DEC-31-1999
[PERIOD-TYPE] 12-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 30918646
[INVESTMENTS-AT-VALUE] 29472843
[RECEIVABLES] 670947
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 30143790
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 383253
[TOTAL-LIABILITIES] 383253
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 31144277
[SHARES-COMMON-STOCK] 3054006
[SHARES-COMMON-PRIOR] 3221990
[ACCUMULATED-NII-CURRENT] 65015
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (2952)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (1445803)
[NET-ASSETS] 29760537
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 1641571
[OTHER-INCOME] 0
[EXPENSES-NET] 214221
[NET-INVESTMENT-INCOME] 1427350
[REALIZED-GAINS-CURRENT] 36836
[APPREC-INCREASE-CURRENT] (2873865)
[NET-CHANGE-FROM-OPS] (1409679)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1457769
[DISTRIBUTIONS-OF-GAINS] 39827
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 624517
[NUMBER-OF-SHARES-REDEEMED] 934336
[SHARES-REINVESTED] 141835
[NET-CHANGE-IN-ASSETS] (4809470)
[ACCUMULATED-NII-PRIOR] 95434
[ACCUMULATED-GAINS-PRIOR] 39
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 158586
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 214221
[AVERAGE-NET-ASSETS] 31802234
[PER-SHARE-NAV-BEGIN] 10.73
[PER-SHARE-NII] 0.477
[PER-SHARE-GAIN-APPREC] (0.969)
[PER-SHARE-DIVIDEND] 0.485
[PER-SHARE-DISTRIBUTIONS] 0.013
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 9.74
[EXPENSE-RATIO] 0.68
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] GLOBAL FIXED INCOME SERIES
[NUMBER] 10
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-START] JAN-01-1999
[PERIOD-END] DEC-31-1999
[PERIOD-TYPE] 12-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 92043212
[INVESTMENTS-AT-VALUE] 88087018
[RECEIVABLES] 4229792
[ASSETS-OTHER] 88885
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 92405695
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 744727
[TOTAL-LIABILITIES] 744727
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 96727628
[SHARES-COMMON-STOCK] 9679585
[SHARES-COMMON-PRIOR] 12303383
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (70991)
[ACCUMULATED-NET-GAINS] (1035640)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (3960029)
[NET-ASSETS] 91660968
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 6739590
[OTHER-INCOME] 0
[EXPENSES-NET] 1135363
[NET-INVESTMENT-INCOME] 5604227
[REALIZED-GAINS-CURRENT] (488519)
[APPREC-INCREASE-CURRENT] (539921)
[NET-CHANGE-FROM-OPS] 4575787
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 5888207
[DISTRIBUTIONS-OF-GAINS] 17549
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 519125
[NUMBER-OF-SHARES-REDEEMED] 3755364
[SHARES-REINVESTED] 612441
[NET-CHANGE-IN-ASSETS] (27131749)
[ACCUMULATED-NII-PRIOR] 113492
[ACCUMULATED-GAINS-PRIOR] (4300704)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1033386
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1135363
[AVERAGE-NET-ASSETS] 103480424
[PER-SHARE-NAV-BEGIN] 9.66
[PER-SHARE-NII] 0.609
[PER-SHARE-GAIN-APPREC] (0.161)
[PER-SHARE-DIVIDEND] 0.636
[PER-SHARE-DISTRIBUTIONS] 0.002
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 9.47
[EXPENSE-RATIO] 1.10
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] INTERNATIONAL SERIES
[NUMBER] 7
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-START] JAN-01-1999
[PERIOD-END] DEC-31-1999
[PERIOD-TYPE] 12-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 69763014
[INVESTMENTS-AT-VALUE] 158740088
[RECEIVABLES] 1518688
[ASSETS-OTHER] 1256342
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 161515118
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 844984
[TOTAL-LIABILITIES] 844984
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 46932817
[SHARES-COMMON-STOCK] 9217361
[SHARES-COMMON-PRIOR] 12794862
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (9701)
[ACCUMULATED-NET-GAINS] 24824145
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 88922873
[NET-ASSETS] 160670134
[DIVIDEND-INCOME] 2741162
[INTEREST-INCOME] 254133
[OTHER-INCOME] 0
[EXPENSES-NET] 2044660
[NET-INVESTMENT-INCOME] 950635
[REALIZED-GAINS-CURRENT] 42276518
[APPREC-INCREASE-CURRENT] (710725)
[NET-CHANGE-FROM-OPS] 42516428
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1003470
[DISTRIBUTIONS-OF-GAINS] 17865661
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 308298
[NUMBER-OF-SHARES-REDEEMED] 5011453
[SHARES-REINVESTED] 1125654
[NET-CHANGE-IN-ASSETS] (38588690)
[ACCUMULATED-NII-PRIOR] (343512)
[ACCUMULATED-GAINS-PRIOR] 799934
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1834579
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 2044660
[AVERAGE-NET-ASSETS] 182578415
[PER-SHARE-NAV-BEGIN] 15.57
[PER-SHARE-NII] 0.106
[PER-SHARE-GAIN-APPREC] 4.034
[PER-SHARE-DIVIDEND] 0.122
[PER-SHARE-DISTRIBUTIONS] 2.158
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 17.43
[EXPENSE-RATIO] 1.12
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] LIFE SCIENCE SERIES
[NUMBER] 9
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-START] NOV-05-1999
[PERIOD-END] DEC-31-1999
[PERIOD-TYPE] 2-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 76481253
[INVESTMENTS-AT-VALUE] 81765703
[RECEIVABLES] 3861747
[ASSETS-OTHER] 47593
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 85675043
[PAYABLE-FOR-SECURITIES] 2540179
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 364706
[TOTAL-LIABILITIES] 2904885
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 76660626
[SHARES-COMMON-STOCK] 7664119
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 2043
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 822141
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 5285348
[NET-ASSETS] 82770158
[DIVIDEND-INCOME] 49392
[INTEREST-INCOME] 103510
[OTHER-INCOME] 0
[EXPENSES-NET] 150860
[NET-INVESTMENT-INCOME] 2042
[REALIZED-GAINS-CURRENT] 822141
[APPREC-INCREASE-CURRENT] 5285348
[NET-CHANGE-FROM-OPS] 6109531
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 7802706
[NUMBER-OF-SHARES-REDEEMED] 138587
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 82770158
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 121292
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 150860
[AVERAGE-NET-ASSETS] 81700696
[PER-SHARE-NAV-BEGIN] 10.00
[PER-SHARE-NII] 0
[PER-SHARE-GAIN-APPREC] 0.800
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.80
[EXPENSE-RATIO] 1.22%
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] NEW YORK TAX EXEMPT
[NUMBER] 16
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-START] JAN-01-1999
[PERIOD-END] DEC-31-1999
[PERIOD-TYPE] 12-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 53043366
[INVESTMENTS-AT-VALUE] 50891172
[RECEIVABLES] 738702
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 51629874
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 318551
[TOTAL-LIABILITIES] 318551
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 53395422
[SHARES-COMMON-STOCK] 5336124
[SHARES-COMMON-PRIOR] 5780577
[ACCUMULATED-NII-CURRENT] 67933
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 162
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 2152194
[NET-ASSETS] 51311323
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 2798070
[OTHER-INCOME] 0
[EXPENSES-NET] 334676
[NET-INVESTMENT-INCOME] 2463394
[REALIZED-GAINS-CURRENT] 73548
[APPREC-INCREASE-CURRENT] (4700361)
[NET-CHANGE-FROM-OPS] (2163419)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 2535231
[DISTRIBUTIONS-OF-GAINS] 53535
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 497312
[NUMBER-OF-SHARES-REDEEMED] 1193849
[SHARES-REINVESTED] 252084
[NET-CHANGE-IN-ASSETS] (9461111)
[ACCUMULATED-NII-PRIOR] 139770
[ACCUMULATED-GAINS-PRIOR] (19850)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 276749
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 334676
[AVERAGE-NET-ASSETS] 55454100
[PER-SHARE-NAV-BEGIN] 10.51
[PER-SHARE-NII] 0.464
[PER-SHARE-GAIN-APPREC] (0.869)
[PER-SHARE-DIVIDEND] 0.475
[PER-SHARE-DISTRIBUTIONS] 0.010
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 9.62
[EXPENSE-RATIO] 0.60
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[ARTICLE] 6
[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] OHIO EXEMPT SERIES
[NUMBER] 17
[MULTIPLIER] 1
[CURRENCY] 1
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-START] JAN-01-1999
[PERIOD-END] DEC-31-1999
[PERIOD-TYPE] 12-MOS
[EXCHANGE-RATE] 1
[INVESTMENTS-AT-COST] 7557430
[INVESTMENTS-AT-VALUE] 7352441
[RECEIVABLES] 63232
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 7415673
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 56997
[TOTAL-LIABILITIES] 56997
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 7631966
[SHARES-COMMON-STOCK] 769365
[SHARES-COMMON-PRIOR] 1179070
[ACCUMULATED-NII-CURRENT] 15239
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (83539)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (204989)
[NET-ASSETS] 7358676
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 506596
[OTHER-INCOME] 0
[EXPENSES-NET] 80242
[NET-INVESTMENT-INCOME] 426354
[REALIZED-GAINS-CURRENT] (17160)
[APPREC-INCREASE-CURRENT] (825723)
[NET-CHANGE-FROM-OPS] (416529)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 427001
[DISTRIBUTIONS-OF-GAINS] 66026
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 73338
[NUMBER-OF-SHARES-REDEEMED] 532038
[SHARES-REINVESTED] 48995
[NET-CHANGE-IN-ASSETS] (5210610)
[ACCUMULATED-NII-PRIOR] 15886
[ACCUMULATED-GAINS-PRIOR] (353)
[OVERDISTRIB-NII-PRIOR] 0
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[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
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[LEGEND]
[RESTATED]
[CIK] 0000751173
[NAME] EXETER FUND, INC.
[SERIES]
[NAME] WORLD OPPORTUNITIES SERIES
[NUMBER] 19
[MULTIPLIER] 1
[CURRENCY] 1
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