Exeter Fund, Inc.
As a shareholder of the Series, you may incur two types of costs: (1) transaction costs, including potential wire charges on redemptions and (2) ongoing costs, including management fees and other Series expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Series and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2006 to June 30, 2006).
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Series’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Series’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid during the period. You may use this information to compare the ongoing costs of investing in the Series and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as potential wire charges on redemptions. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
*Expenses are equal to the Series’ annualized expense ratio (for the six-month period) of 0.80%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses are based on the most recent fiscal half year. The Series’ total return would have been lower had certain expenses not been waived during the period.
*As a percentage of net assets.
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
*The investment advisor did not impose all of its management fee. If these expenses had been incurred by the Series, the expense ratio (to average net assets) would have been increased as follows:
The accompanying notes are an integral part of the financial statements.
Core Bond 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' investment objective is to provide long-term total return by investing primarily in investment grade bonds and other financial instruments, including derivatives, with economic characteristics similar to bonds.
The Fund’s Advisor is Manning & Napier Advisors, Inc. (the “Advisor”). Shares of the Series are offered to investors, clients and employees of the Advisor and its affiliates. The total authorized capital stock of the Fund consists of 1.7 billion shares of common stock each having a par value of $0.01. As of June 30, 2006, 1.16 billion shares have been designated in total among 21 series, of which 75 million have been designated as Core Bond Series common stock.
Debt securities, including government bonds, sovereign bonds, corporate 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 may be 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 (the “Board”).
Short-term investments that mature in sixty days or less are valued at amortized cost, which approximates market value. Investments in open-end investment companies are valued at their net asset value per share on valuation date.
Security transactions are accounted for on trade date. Interest income, including amortization of premium and accretion of discounts, is earned from settlement date and accrued daily. Dividend 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 in such a manner as deemed equitable by the Fund's Board, taking into consideration, among other things, the nature and type of expense.
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.
The Series may purchase securities on a when-issued basis or forward commitment. These transactions involve a commitment by the Series to purchase securities for a predetermined price with payment and delivery taking place beyond the customary settlement period. When such purchases are outstanding, the Series will designate liquid assets in an amount sufficient to meet the purchase price. When purchasing a security on a delayed delivery basis, the Series assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations, and takes such fluctuations into account when determining its net asset value. The Series may sell the when-issued securities before they are delivered, which may result in a capital gain or loss.
In connection with its ability to purchase or sell securities on a forward commitment basis, the Series may enter into forward roll transactions principally using To Be Announced (TBA) securities. Forward roll transactions require the sale of securities for delivery in the current month, and a simultaneous agreement to repurchase substantially similar (same type, coupon and maturity) securities on a specified future date. Risks of entering into forward roll transactions include the potential inability of the counterparty to meet the terms of the agreement; the potential of the Series to receive inferior securities at redelivery as compared to the securities sold to the counterparty; counterparty credit risk; and the potential pay down speed variance between the mortgage-backed pools. During the roll period, the Series forgoes principal and interest paid on the securities.
Restricted securities are purchased in private placement transactions, are not registered under the Securities Act of 1933, as amended, and may have contractual restrictions on resale. Information regarding restricted securities is included at the end of the Series’ Investment Portfolio.
A security may be considered illiquid if so deemed in good faith by the Advisor under procedures approved by and under the general supervision and responsibility of the Fund’s Board. Securities that are illiquid are marked with the applicable footnote on the Investment Portfolio.
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 that 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.
Distributions to shareholders of net investment income and 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 Fund’s organizational documents provide former and current directors and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 income and expenses during the reporting period. Actual results could differ from those estimates.
The Fund has an Investment Advisory Agreement (the “Agreement”) with the Advisor, for which the Series pays a fee, computed daily and payable monthly, at an annual rate of 0.60% of the Series’ average daily net assets.
Under the Agreement, personnel of the Advisor provide the Series with advice and assistance in the choice of investments and the execution of securities transactions, and otherwise maintain the Series’ organization. The Advisor also provides the Fund with necessary office space and fund administration and support services. The salaries of all officers of the Fund (except a percentage of the Fund’s Chief Compliance Officer’s salary, which is paid by the Fund, and the Special Assistant Secretary’s salary, which is paid by BISYS Fund Services Ohio, Inc. (“BISYS”)), 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. Each "non-affiliated" Director receives an annual stipend, which is allocated among all the active series of the Fund. In addition, these Directors also receive a fee per Board meeting attended for each active series of the Fund plus a fee for each committee meeting attended.
The Advisor has contractually agreed, until at least April 30, 2007, to waive its fee and, if necessary, pay other operating expenses of the Series in order to maintain total expenses for the Series at no more than 0.80% of average daily net assets each year. Accordingly, the Advisor waived fees of $16,522 for the six months ended June 30, 2006, which is reflected as a reduction of expenses on the Statement of Operations.
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.
For fund accounting and transfer agent services, the Fund pays the Advisor an annual fee of 0.12% of the Fund’s average daily net assets up to $900 million, 0.09% of the Fund’s average daily net assets between $900 million and $1.5 billion, and 0.05% of the Fund’s average daily net assets over $1.5 billion. These fee rates are scheduled to be reduced each year through 2007. Additionally, certain transaction and account-based fees and out-of-pocket expenses, including charges for reporting relating to the Fund’s compliance program, are charged. Expenses not directly attributable to a series are allocated based on each series’ relative net assets or number of accounts, depending on the expense. The Advisor has an agreement with BISYS under which BISYS serves as sub-accounting services and sub-transfer agent.
For the six months ended June 30, 2006, purchases and sales of securities, other than United States Government securities and short-term securities, were $5,345,115 and $2,742,991, respectively. Purchases and sales of United States Government securities, other than short-term securities, were $34,231,435 and $32,550,615, respectively.
Substantially all of the Series’ shares represent investments by fiduciary accounts over which the Advisor has sole investment discretion.
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, forward foreign currency exchange contracts and futures contracts and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. No such investments were held by the Series on June 30, 2006.
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 comparable domestic companies and the United States Government.
The amount and characterization of certain income and capital gains to be distributed are determined in accordance with federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. The Series may periodically make reclassifications among its capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations, without impacting the Series' net asset value. Any such reclassifications are not reflected in the financial highlights.
The tax character of distributions paid for the period April 21, 2005 (commencement of operations) to December 31, 2005 were as follows:
For the period April 21, 2005 (commencement of operations) to December 31, 2005, the Series elected to defer $134,190 of capital losses attributable to Post-October losses.
At December 31, 2005, the Series had a capital loss carryover of $65,864, available to the extent allowed by tax law to offset future net capital gain, if any, which will expire on December 31, 2013.
At June 30, 2006, the identified cost of investments for federal income tax purposes, the resulting gross unrealized appreciation and depreciation, and the net unrealized depreciation were as follows:
On May 15, 2006, the Fund’s Board approved a change in the name of the Fund from Exeter Fund, Inc. to Manning & Napier Fund, Inc. The name change will become effective when filed with the Securities and Exchange Commission in the next few months.
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2006
Ohio Tax Exempt Series
Shareholder Expense Example (unaudited)
As a shareholder of the Series, you may incur two types of costs: (1) transaction costs, including potential wire charges on redemptions and (2) ongoing costs, including management fees and other Series expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Series and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2006 to June 30, 2006).
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Series’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Series’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid during the period. You may use this information to compare the ongoing costs of investing in the Series and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as potential wire charges on redemptions. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| | Beginning | Ending | Expenses Paid |
| | Account Value | Account Value | During Period* |
| | 1/1/06 | 6/30/06 | 1/1/06-6/30/06 |
| Actual | $1,000.00 | $995.10 | $4.20 |
| Hypothetical | | | |
| (5% return before expenses) | $1,000.00 | $1,020.58 | $4.26 |
*Expenses are equal to the Series’ annualized expense ratio (for the six-month period) of 0.85%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses are based on the most recent fiscal half year. The Series’ total return would have been lower had certain expenses not been waived during the period.
1
Portfolio Composition as of June 30, 2006 (unaudited)
<graphic>
<pie chart>
Bond Types1
| General Obligation Bonds | 91.0% |
| Revenue Bonds | 7.1% |
| Cash, short-term investments, and liabilities, less other assets | 1.9% |
1As a percentage of net assets.
<graphic>
<pie chart>
Credit Quality Ratings2,3
| Aaa | 88.7% |
| Aa | 9.4% |
| Unrated investments, such as cash, short-term investments, and liabilities, less other assets | 1.9% |
2As a percentage of net assets.
3Based on ratings from Moody's, or the S&P equivalent. The Series may use different ratings provided by other rating agencies for purposes of determining compliance with the Series' investment policies.
2
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
OHIO MUNICIPAL SECURITIES - 98.1% | | | |
| | | | |
| Amherst Exempt Village School District, G.O. Bond, FGIC, 4.75%, 12/1/2010 | Aaa | $200,000 | $206,686 |
| Avon Lake City School District, Prerefunded Balance, G.O. Bond, FGIC, 5.75%, 12/1/2014 | Aaa | 500,000 | 537,970 |
| Bedford Heights, G.O. Bond, Series A, AMBAC, 5.65%, 12/1/2014 | Aaa | 50,000 | 52,809 |
| Big Walnut Local School District, Delaware County, School Facilities Construction & Impt., G.O. Bond, FSA, 4.50%, 12/1/2029 | Aaa | 200,000 | 192,426 |
| Canal Winchester Local School District, G.O. Bond, MBIA, 5.00%, 12/1/2025 | Aaa | 355,000 | 365,803 |
| Chagrin Falls Exempt Village School District, Prerefunded Balance, G.O. Bond, 5.55%, 12/1/2022 | Aa3 | 100,000 | 103,345 |
| Chillicothe Water System, Revenue Bond, MBIA, 4.00%, 12/1/2009 | Aaa | 125,000 | 125,473 |
| Cincinnati, Various Purposes, G.O. Bond, Series A, 5.00%, 12/1/2011 | Aa1 | 200,000 | 209,980 |
| Cleveland Heights & University Heights County School District, Library Impt., G.O. Bond, 5.125%, 12/1/2026 | Aa3 | 200,000 | 208,138 |
| Cleveland Waterworks, Prerefunded Balance, Revenue Bond, Series I, FSA, 5.00%, 1/1/2028 | Aaa | 110,000 | 112,934 |
| Cleveland Waterworks, Unrefunded Balance, Revenue Bond, Series I, FSA, 5.00%, 1/1/2028 | Aaa | 155,000 | 156,840 |
| Columbus, Limited Tax, G.O. Bond, Series 2, 5.00%, 7/1/2017 | Aaa | 250,000 | 262,780 |
| Delaware City School District, Prerefunded Balance, G.O. Bond, FSA, 5.00%, 12/1/2025 | Aaa | 200,000 | 207,050 |
| Delaware City School District, Prerefunded Balance, G.O. Bond, FSA, 5.00%, 12/1/2025 | Aaa | 100,000 | 103,525 |
| Dublin City School District, School Facilities Construction & Impt., G.O. Bond, 5.375%, 12/1/2017 | Aa1 | 350,000 | 373,121 |
| Eaton City School District, G.O. Bond, FGIC, 5.00%, 12/1/2029 | Aaa | 200,000 | 203,840 |
| Erie County, G.O. Bond, FGIC, 4.75%, 10/1/2019 | Aaa | 175,000 | 176,288 |
| Euclid, G.O. Bond, MBIA, 4.25%, 12/1/2023 | Aaa | 465,000 | 439,755 |
| Fairfield County, Building Impt., G.O. Bond, 5.00%, 12/1/2018 | Aa3 | 250,000 | 258,763 |
| Field Local School District, School Facilities Construction & Impt., G.O. Bond, AMBAC, 5.00%, 12/1/2026 | Aaa | 200,000 | 205,792 |
| Garfield Heights City School District, School Impt., G.O. Bond, MBIA, 5.00%, 12/15/2026 | Aaa | 250,000 | 254,773 |
| Genoa Area Local School District, Prerefunded Balance, G.O. Bond, FGIC, 5.40%, 12/1/2027 | Aaa | 150,000 | 160,332 |
The accompanying notes are an integral part of the financial statements.
3
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
OHIO MUNICIPAL SECURITIES (continued) | | | |
| | | | |
| Greater Cleveland Regional Transit Authority, Capital Impts., G.O. Bond, FGIC, 4.125%, 12/1/2023 | Aaa | $450,000 | $414,301 |
| Greene County Sewer System, Governmental Enterprise, Prerefunded Balance, Revenue Bond, AMBAC, 5.625%, 12/1/2025 | Aaa | 235,000 | 252,818 |
| Hancock County, Various Purposes, G.O. Bond, MBIA, 4.00%, 12/1/2016 | Aaa | 200,000 | 195,194 |
| Highland Local School District, School Impt., G.O. Bond, FSA, 5.00%, 12/1/2009 | Aaa | 190,000 | 196,623 |
| Hilliard School District, Prerefunded Balance, G.O. Bond, Series A, FGIC, 5.00%, 12/1/2020 | Aaa | 225,000 | 228,389 |
| Jackson Local School District, Stark & Summit Counties, G.O. Bond, FGIC, 3.50%, 12/1/2011 | Aaa | 210,000 | 204,355 |
| Jackson Local School District, Stark & Summit Counties, Construction & Impt., G.O. Bond, FGIC, 5.00%, 12/1/2030 | Aaa | 200,000 | 204,320 |
| Licking County Joint Vocational School District, School Facilities Construction & Impt., G.O. Bond, MBIA, 5.00%, 12/1/2007 | Aaa | 300,000 | 304,878 |
| Licking Heights Local School District, School Facilities Construction & Impt., G.O. Bond, Series A, MBIA, 5.00%, 12/1/2022 | Aaa | 250,000 | 258,720 |
| Lorain City School District, Classroom Facilities Impt., G.O. Bond, MBIA, 4.75%, 12/1/2025 | Aaa | 400,000 | 402,744 |
| Loveland City School District, Prerefunded Balance, G.O. Bond, Series A, MBIA, 5.00%, 12/1/2024 | Aaa | 200,000 | 208,680 |
| Mansfield City School District, Various Purposes, Prerefunded Balance, G.O. Bond, MBIA, 5.75%, 12/1/2022 | Aaa | 250,000 | 266,397 |
| Marysville Exempt Village School District, G.O. Bond, FSA, 5.00%, 12/1/2023 | Aaa | 500,000 | 517,065 |
| Maumee, G.O. Bond, MBIA, 4.125%, 12/1/2018 | Aaa | 375,000 | 363,874 |
| Maumee City School District, School Facilities Construction & Impt., G.O. Bond, FSA, 4.60%, 12/1/2031 | Aaa | 260,000 | 251,511 |
| Medina City School District, G.O. Bond, FGIC, 5.00%, 12/1/2018 | Aaa | 150,000 | 152,528 |
| Mentor, Prerefunded Balance, G.O. Bond, 5.25%, 12/1/2017 | Aa2 | 100,000 | 102,593 |
| Minster Local School District, G.O. Bond, FSA, 4.25%, 12/1/2018 | AAA2 | 250,000 | 244,792 |
| Mississinawa Valley Local School District, Classroom Facilities, G.O. Bond, FSA, 5.75%, 12/1/2022 | Aaa | 205,000 | 223,376 |
| New Albany Plain Local School District, Prerefunded Balance, G.O. Bond, FGIC, 5.00%, 12/1/2025 | Aaa | 45,000 | 47,357 |
| New Albany Plain Local School District, Unrefunded Balance, G.O. Bond, FGIC, 5.00%, 12/1/2025 | Aaa | 270,000 | 275,810 |
The accompanying notes are an integral part of the financial statements.
4
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
OHIO MUNICIPAL SECURITIES (continued) | | | |
| | | | |
| New Albany Plain Local School District, Prerefunded Balance, G.O. Bond, FGIC, 5.00%, 12/1/2029 | Aaa | $95,000 | $99,975 |
| New Albany Plain Local School District, Unrefunded Balance, G.O. Bond, FGIC, 5.00%, 12/1/2029 | Aaa | 130,000 | 132,192 |
| North Olmsted, G.O. Bond, AMBAC, 5.00%, 12/1/2016 | Aaa | 125,000 | 128,240 |
| Northwood Local School District, G.O. Bond, AMBAC, 5.55%, 12/1/2006 | Aaa | 65,000 | 65,468 |
| Ohio State, Common Schools Capital Facilities, Prerefunded Balance, G.O. Bond, Series A, 4.75%, 6/15/2020 | Aa1 | 250,000 | 257,462 |
| Ohio State, Infrastructure Impt., Prerefunded Balance, G.O. Bond, 5.20%, 8/1/2010 | Aa1 | 50,000 | 51,225 |
| Ohio State Water Development Authority, Fresh Water, Prerefunded Balance, Revenue Bond, FSA, 5.125%, 12/1/2023 | Aaa | 300,000 | 309,864 |
| Ohio State Water Development Authority, Pollution Control, Revenue Bond, 5.25%, 12/1/2015 | Aaa | 200,000 | 216,710 |
| Ohio State Water Development Authority, Pure Water, Revenue Bond, Series I, AMBAC, 6.00%, 12/1/2016 | Aaa | 40,000 | 44,066 |
| Ontario Local School District, Prerefunded Balance, G.O. Bond, FSA, 5.00%, 12/1/2023 | Aaa | 350,000 | 362,338 |
| Orange City School District, G.O. Bond, 5.00%, 12/1/2023 | Aaa | 305,000 | 312,497 |
| Painesville City School District, School Impt., G.O. Bond, FGIC, 4.50%, 12/1/2025 | Aaa | 170,000 | 165,906 |
| Pickerington Local School District, G.O. Bond, MBIA, 4.30%, 12/1/2024 | Aaa | 300,000 | 283,470 |
| Plain Local School District, G.O. Bond, FGIC, 5.00%, 12/1/2030 | Aaa | 140,000 | 142,866 |
| Sidney City School District, School Impt., G.O. Bond, Series B, FGIC, 5.10%, 12/1/2019 | Aaa | 150,000 | 156,342 |
| South-Western City School District, Franklin & Pickway County, G.O. Bond, AMBAC, 4.75%, 12/1/2026 | Aaa | 175,000 | 175,486 |
| Springboro Community City School District, School Impt., G.O. Bond, MBIA, 5.00%, 12/1/2025 | Aaa | 280,000 | 287,728 |
| Tallmadge City School District, School Facilities, G.O. Bond, FSA, 5.00%, 12/1/2031 | AAA2 | 200,000 | 204,616 |
| Tecumseh Local School District, School Impt., G.O. Bond, FGIC, 4.75%, 12/1/2027 | Aaa | 195,000 | 195,530 |
| Troy City School District, School Impt., G.O. Bond, FSA, 4.00%, 12/1/2014 | Aaa | 250,000 | 247,055 |
| Twinsburg Local School District, Prerefunded Balance, G.O. Bond, FGIC, 5.90%, 12/1/2021 | Aaa | 325,000 | 334,298 |
| Upper Arlington City School District, Capital Appreciation, Prerefunded Balance, G.O. Bond, MBIA, 5.25%, 12/1/2022 | Aaa | 255,000 | 259,103 |
The accompanying notes are an integral part of the financial statements.
5
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | Principal | |
| | Rating1 | Amount/ | Value |
| | (unaudited) | Shares | (Note 2) |
OHIO MUNICIPAL SECURITIES (continued) | | | |
| | | | |
| Van Buren Local School District, School Facilities Construction & Impt., G.O. Bond, FSA, 5.25%, 12/1/2016 | Aaa | $300,000 | $316,485 |
| Van Wert City School District, School Impt., G.O. Bond, FGIC, 5.00%, 12/1/2020 | Aaa | 500,000 | 515,475 |
| Vandalia, G.O. Bond, AMBAC, 5.00%, 12/1/2015 | Aaa | 235,000 | 247,902 |
| Washington Court House City School District, School Impt., G.O. Bond, FGIC, 5.00%, 12/1/2029 | Aaa | 500,000 | 512,440 |
| Westerville City School District, G.O. Bond, MBIA, 5.00%, 12/1/2027 | Aaa | 200,000 | 202,952 |
| Wood County, G.O. Bond, 5.40%, 12/1/2013 | Aa3 | 50,000 | 50,048 |
| Wyoming City School District, Prerefunded Balance, G.O. Bond, Series B, FGIC, 5.15%, 12/1/2027 | Aaa | 300,000 | 311,604 |
| | | | |
TOTAL OHIO MUNICIPAL SECURITIES | | | |
| (Identified Cost $16,727,374) | | | 16,824,091 |
| | | | |
SHORT-TERM INVESTMENTS - 2.5% | | | |
| Dreyfus Municipal Reserves - Class R | | | |
| (Identified Cost $436,762) | | 436,762 | 436,762 |
| | | | |
TOTAL INVESTMENTS - 100.6% | | | |
| (Identified Cost $17,164,136) | | | 17,260,853 |
| | | | |
LIABILITIES, LESS OTHER ASSETS - (0.6%) | | | (104,247) |
| | | | |
NET ASSETS - 100% | | | $17,156,606 |
KEY:
G.O. Bond - General Obligation Bond
Impt. - Improvement
Scheduled principal and interest payments are guaranteed by:
AMBAC (AMBAC Assurance Corp.)
FGIC (Financial Guaranty Insurance Co.)
FSA (Financial Security Assurance)
MBIA (MBIA, Inc.)
The insurance does not guarantee the market value of the municipal bonds.
1Credit ratings from Moody’s (unaudited).
2Credit ratings from S&P (unaudited).
The Series' portfolio holds, as a percentage of net assets, greater than 10% in bonds insured by the following companies: FGIC - 31.4%; MBIA - 24.6%; FSA - 21.3%.
The accompanying notes are an integral part of the financial statements.
6
Statement of Assets and Liabilities (unaudited)
June 30, 2006
ASSETS: | |
| | |
| Investments, at value (identified cost $17,164,136) (Note 2) | $17,260,853 |
| Interest receivable | 79,788 |
| Dividends receivable | 1,379 |
| | |
| TOTAL ASSETS | 17,342,020 |
| | |
LIABILITIES: | |
| | |
| Accrued management fees (Note 3) | 5,825 |
| Accrued fund accounting and transfer agent fees (Note 3) | 2,362 |
| Accrued directors' fees (Note 3) | 280 |
| Payable for fund shares repurchased | 159,751 |
| Audit fees payable | 15,755 |
| Other payables and accrued expenses | 1,441 |
| | |
| TOTAL LIABILITIES | 185,414 |
| | |
TOTAL NET ASSETS | $17,156,606 |
| | |
NET ASSETS CONSIST OF: | |
| | |
| Capital stock | $16,668 |
| Additional paid-in-capital | 16,936,920 |
| Undistributed net investment income | 103,745 |
| Accumulated net realized gain on investments | 2,556 |
| Net unrealized appreciation on investments | 96,717 |
| | |
TOTAL NET ASSETS | $17,156,606 |
| | |
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE ($17,156,606/1,666,799 shares) | $10.29 |
The accompanying notes are an integral part of the financial statements.
7
Statement of Operations (unaudited)
For the Six Months Ended June 30, 2006
INVESTMENT INCOME: | |
| | |
| Interest | $373,435 |
| Dividends | 5,199 |
| | |
| Total Investment Income | 378,634 |
| | |
EXPENSES: | |
| | |
| Management fees (Note 3) | 42,582 |
| Fund accounting and transfer agent fees (Note 3) | 13,588 |
| Directors' fees (Note 3) | 4,078 |
| Chief Compliance Officer service fees (Note 3) | 2,567 |
| Audit fees | 12,992 |
| Custodian fees | 1,334 |
| Miscellaneous | 3,498 |
| | |
| Total Expenses | 80,639 |
| Less reduction of expenses (Note 3) | (8,224) |
| | |
| Net Expenses | 72,415 |
| | |
| NET INVESTMENT INCOME | 306,219 |
| | |
REALIZED AND UNREALIZED LOSS ON INVESTMENTS: | |
| | |
| Net realized loss on investments | (8,059) |
| Net change in unrealized appreciation on investments | (386,712) |
| | |
| NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS | (394,771) |
| | |
| NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $(88,552) |
The accompanying notes are an integral part of the financial statements.
8
Statements of Changes in Net Assets
| | For the Six | |
| | Months Ended | For the |
| | 6/30/06 | Year Ended |
| | (unaudited) | 12/31/05 |
| | | |
INCREASE (DECREASE) IN NET ASSETS: | | |
| | | |
OPERATIONS: | | |
| | | |
| Net investment income | $306,219 | $555,086 |
| Net realized gain (loss) on investments | (8,059) | 15,686 |
| Net change in unrealized appreciation on investments | (386,712) | (145,892) |
| | | |
| Net increase (decrease) from operations | (88,552) | 424,880 |
| | | |
DISTRIBUTIONS TO SHAREHOLDERS (Note 8): | | |
| | | |
| From net investment income | (302,918) | (519,425) |
| From net realized gain on investments | - | (10,188) |
| | | |
| Total distributions to shareholders | (302,918) | (529,613) |
| | | |
CAPITAL STOCK ISSUED AND REPURCHASED: | | |
| | | |
| Net increase from capital share transactions (Note 5) | 1,559,638 | 1,973,214 |
| | | |
| Net increase in net assets | 1,168,168 | 1,868,481 |
| | | |
NET ASSETS: | | |
| | | |
| Beginning of period | 15,988,438 | 14,119,957 |
| | | |
End of period (including undistributed net investment income of $103,745 and $100,444, respectively) | $17,156,606 | $15,988,438 |
The accompanying notes are an integral part of the financial statements.
9
Financial Highlights
| | For the Six | | | | | |
| | Months Ended | | | | | |
| | 6/30/06 | For the Years Ended |
| | (unaudited) | 12/31/05 | 12/31/04 | 12/31/03 | 12/31/02 | 12/31/01 |
| | | | | | | |
Per share data (for a share outstanding | | | | | | |
throughout each period): | | | | | | |
| | | | | | | |
Net asset value - Beginning of period | $10.52 | $10.59 | $10.75 | $10.74 | $10.31 | $10.29 |
| | | | | | | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income | 0.18 | 0.38 | 0.38 | 0.42 | 0.41 | 0.46 |
| Net realized and unrealized gain (loss) on investments | (0.23) | (0.08) | (0.04) | 0.03 | 0.43 | (0.03) |
| | | | | | | |
| Total from investment operations | (0.05) | 0.30 | 0.34 | 0.45 | 0.84 | 0.43 |
| | | | | | | |
| Less distributions to shareholders: | | | | | | |
| From net investment income | (0.18) | (0.36) | (0.49) | (0.39) | (0.40) | (0.41) |
| From net realized gain on investments | - | (0.01) | (0.01) | (0.05) | (0.01) | - |
| | | | | | | |
| Total distributions to shareholders | (0.18) | (0.37) | (0.50) | (0.44) | (0.41) | (0.41) |
| | | | | | | |
Net asset value - End of period | $10.29 | $10.52 | $10.59 | $10.75 | $10.74 | $10.31 |
| | | | | | | |
Total return1 | (0.49%) | 2.85% | 3.28% | 4.23% | 8.22% | 4.18% |
| | | | | | | |
Ratios (to average net assets)/Supplemental Data: | | | | | | |
| Expenses* | 0.85%2 | 0.85% | 0.85% | 0.85% | 0.85% | 0.85% |
| Net investment income | 3.60%2 | 3.65% | 3.64% | 3.91% | 4.09% | 4.27% |
| | | | | | | |
| Portfolio turnover | 4% | 9% | 7% | 14% | 8% | 9% |
| | | | | | | |
Net assets - End of period (000's omitted) | $17,157 | $15,988 | $14,120 | $12,092 | $11,785 | $9,833 |
*The investment advisor did not impose all or a portion of its management fee and in some periods paid a portion of the Series' expenses. If these expenses had been incurred by the Series, the expense ratio (to average net assets) would have been increased as follows:
| | 0.10%2 | 0.15% | 0.20% | 0.59% | 0.68% | 0.74% |
1Represents aggregate total return for the period indicated, and assumes reinvestment of all distributions. Total return would have been lower had certain expenses not been waived or reimbursed during the period. Periods less than one year are not annualized.
2Annualized.
The accompanying notes are an integral part of the financial statements.
10
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Ohio Tax Exempt Series (the "Series") is a no-load diversified series of Exeter Fund, Inc. (the “Fund”). The Fund is organized in Maryland and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.
The Series' investment objective is to provide as high a level of current income exempt from federal income tax and Ohio State personal income tax as the Advisor believes is consistent with the preservation of capital.
The Fund’s Advisor is Manning & Napier Advisors, Inc. (the “Advisor”). Shares of the Series are offered to investors, clients and employees of the Advisor and its affiliates. The total authorized capital stock of the Fund consists of 1.7 billion shares of common stock each having a par value of $0.01. As of June 30, 2006, 1.16 billion shares have been designated in total among 21 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 (the “Board”).
Securities for which representative valuations or prices are not available from the Fund's pricing service may be 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.
Short-term investments that mature in sixty days or less are valued at amortized cost, which approximates market value. Investments in open-end investment companies are valued at their net asset value per share on valuation date.
Security Transactions, Investment Income and Expenses
Security transactions are accounted for on trade date. Interest income, including amortization of premium and accretion of discounts, is earned from settlement date and accrued daily. Dividend 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 in such a manner as deemed equitable by the Fund's Board, taking into consideration, among other things, the nature and type of expense.
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.
Federal 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 that 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.
11
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Distributions of Income and Gains
Distributions to shareholders of net investment income are made quarterly. 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.
Indemnifications
The Fund’s organizational documents provide former and current directors and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Other
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 income and expenses during the reporting period. Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory Agreement (the “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 Agreement, personnel of the Advisor provide the Series with advice and assistance in the choice of investments and the execution of securities transactions, and otherwise maintain the Series’ organization. The Advisor also provides the Fund with necessary office space and fund administration and support services. The salaries of all officers of the Fund (except a percentage of the Fund’s Chief Compliance Officer’s salary, which is paid by the Fund, and the Special Assistant Secretary’s salary, which is paid by BISYS Fund Services Ohio, Inc. (“BISYS”)), 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. Each "non-affiliated" Director receives an annual stipend, which is allocated among all the active series of the Fund. In addition, these Directors also receive a fee per Board meeting attended for each active series of the Fund plus a fee for each committee meeting attended.
The Advisor has contractually agreed, until at least April 30, 2007, to waive its fee and, if necessary, pay other operating expenses of the Series in order to maintain total expenses for the Series at no more than 0.85% of average daily net assets each year. Accordingly, the Advisor waived fees of $8,224 for the six months ended June 30, 2006, which is reflected as a reduction of expenses on the Statement of Operations.
12
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
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.
For fund accounting and transfer agent services, the Fund pays the Advisor an annual fee of 0.12% of the Fund’s average daily net assets up to $900 million, 0.09% of the Fund’s average daily net assets between $900 million and $1.5 billion, and 0.05% of the Fund’s average daily net assets over $1.5 billion. These fee rates are scheduled to be reduced each year through 2007. Additionally, certain transaction and account-based fees and out-of-pocket expenses, including charges for reporting relating to the Fund’s compliance program, are charged. Expenses not directly attributable to a series are allocated based on each series’ relative net assets or number of accounts, depending on the expense. The Advisor has an agreement with BISYS under which BISYS serves as sub-accounting services and sub-transfer agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2006, purchases and sales of securities, other than United States Government securities and short-term securities, were $2,168,969 and $650,262, respectively. There were no purchases or sales of United States Government securities.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Ohio Tax Exempt Series were:
| | For the Six Months | For the Year |
| | Ended 6/30/06 | Ended 12/31/05 |
| | | | | |
| | Shares | Amount | Shares | Amount |
| Sold | 248,540 | $2,614,035 | 338,241 | $3,578,039 |
| Reinvested | 28,773 | 299,392 | 49,592 | 521,757 |
| Repurchased | (130,113) | (1,353,789) | (201,117) | (2,126,582) |
| Total | 147,200 | $1,559,638 | 186,716 | $1,973,214 |
Substantially all of the Series’ shares represent investments by fiduciary accounts over which the Advisor has sole investment discretion.
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the normal course of its investing activities to assist in managing exposure to various market risks. These financial instruments include written options and futures contracts and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. No such investments were held by the Series on June 30, 2006.
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
Notes to Financial Statements (unaudited)
| 8. | FEDERAL INCOME TAX INFORMATION |
The amount and characterization of certain income and capital gains to be distributed are determined in accordance with federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. The Series may periodically make reclassifications among its capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations, without impacting the Series' net asset value. Any such reclassifications are not reflected in the financial highlights.
The final determination of the tax character of current year distributions will be made at the conclusion of the fiscal year. The tax character of distributions paid for the year ended December 31, 2005 were as follows:
| Tax exempt income | $519,425 |
| Long-term capital gains | 10,188 |
At June 30, 2006, the identified cost of investments for federal income tax purposes, the resulting gross unrealized appreciation and depreciation, and the net unrealized appreciation were as follows:
| Cost for federal income tax purposes | $17,137,722 |
| | |
| Unrealized appreciation | $342,595 |
| Unrealized depreciation | (219,464) |
| | |
| Net unrealized appreciation | $123,131 |
On May 15, 2006, the Fund’s Board approved a change in the name of the Fund from Exeter Fund, Inc. to Manning & Napier Fund, Inc. The name change will become effective when filed with the Securities and Exchange Commission in the next few months.
14
Literature Requests (unaudited)
Proxy Voting Policies and Procedures
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available, without charge, upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission’s (SEC) web site http://www.sec.gov
Proxy Voting Record
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30th is available, without charge, upon request:
By phone 1-800-466-3863
On the SEC’s web site http://www.sec.gov
Quarterly Portfolio Holdings
The Series’ complete schedule of portfolio holdings for the 1st and 3rd quarters of each fiscal year are provided on Form N-Q, and are available, without charge, upon request:
By phone 1-800-466-3863
On the SEC’s web site http://www.sec.gov
The Series’ Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Prospectus and Statement of Additional Information (SAI)
The prospectus and SAI provide additional information about each Series, including charges, expenses and risks. These documents are available, without charge, upon request:
By phone 1-800-466-3863
On the SEC’s web site http://www.sec.gov
On the Advisor’s web site http://www.manningnapieradvisors.com/www/exeter_fund.asp
Additional information available at www.manningnapieradvisors.com/www/exeter_fund.asp
| 1. | Fund Holdings - Month-End |
| 2. | Fund Holdings - Quarter-End |
| 3. | Shareholder Report - Annual |
| 4. | Shareholder Report - Semi-Annual |
15
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2006
New York Tax Exempt Series
Shareholder Expense Example (unaudited)
As a shareholder of the Series, you may incur two types of costs: (1) transaction costs, including potential wire charges on redemptions and (2) ongoing costs, including management fees and other Series expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Series and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2006 to June 30, 2006).
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Series’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Series’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid during the period. You may use this information to compare the ongoing costs of investing in the Series and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as potential wire charges on redemptions. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| | Beginning | Ending | Expenses Paid |
| | Account Value | Account Value | During Period* |
| | 1/1/06 | 6/30/06 | 1/1/06-6/30/06 |
| Actual | $1,000.00 | $996.10 | $3.41 |
| Hypothetical | | | |
| (5% return before expenses) | $1,000.00 | $1,021.37 | $3.46 |
*Expenses are equal to the Series’ annualized expense ratio (for the six-month period) of 0.69%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses are based on the most recent fiscal half year.
1
Portfolio Composition as of June 30, 2006 (unaudited)
<graphic>
<pie chart>
Bond Types1
| General Obligation Bonds | 60.2% |
| Revenue Bonds | 36.2% |
| Cash, short-term investments, and other assets, less liabilities | 3.6% |
1As a percentage of net assets.
<graphic>
<pie chart>
Credit Quality Ratings2,3
| Aaa | 90.2% |
| Aa | 5.8% |
| Baa | 0.4% |
| Unrated investments, such as cash, short-term investments, and other assets, less liabilities | 3.6% |
2As a percentage of net assets.
3Based on ratings from Moody's, or the S&P equivalent. The Series may use different ratings provided by other rating agencies for purposes of determining compliance with the Series' investment policies.
2
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
NEW YORK MUNICIPAL SECURITIES - 96.4% | | | |
| | | | |
| Amherst, Public Impt., G.O. Bond, FGIC, 4.625%, 3/1/2007 | Aaa | $200,000 | $201,154 |
| Arlington Central School District, G.O. Bond, MBIA, 4.625%, 12/15/2024 | Aaa | 845,000 | 845,507 |
| Arlington Central School District, G.O. Bond, MBIA, 4.625%, 12/15/2025 | Aaa | 365,000 | 363,832 |
| Auburn City School District, G.O. Bond, FGIC, 4.55%, 12/1/2006 | Aaa | 385,000 | 386,340 |
| Beacon City School District, G.O. Bond, MBIA, 5.60%, 7/15/2019 | Aaa | 500,000 | 529,745 |
| Brookhaven, Public Impt., G.O. Bond, FGIC, 4.00%, 5/1/2023 | Aaa | 900,000 | 830,187 |
| Brookhaven, Public Impt., G.O. Bond, FGIC, 4.00%, 5/1/2024 | Aaa | 815,000 | 744,551 |
| Buffalo, Prerefunded Balance, G.O. Bond, Series A, AMBAC, 5.20%, 2/1/2010 | Aaa | 250,000 | 257,030 |
| Buffalo Fiscal Stability Authority, Sales Tax & State Aid, Revenue Bond, Series B, MBIA, 5.00%, 9/1/2016 | Aaa | 525,000 | 553,103 |
| Buffalo Municipal Water Finance Authority, Water Systems, Prerefunded Balance, Revenue Bond, Series A, FGIC, 5.00%, 7/1/2028 | Aaa | 750,000 | 774,592 |
| Cattaraugus County, Public Impt., G.O. Bond, AMBAC, 5.00%, 8/1/2007 | Aaa | 300,000 | 303,930 |
| Chautauqua County, Public Impt., G.O. Bond, Series B, MBIA, 4.50%, 12/15/2018 | Aaa | 485,000 | 489,831 |
| Clyde-Savannah Central School District, G.O. Bond, FGIC, 5.00%, 6/1/2013 | Aaa | 500,000 | 526,700 |
| Colonie, G.O. Bond, MBIA, 5.20%, 8/15/2008 | Aaa | 100,000 | 101,146 |
| Dryden Central School District, G.O. Bond, FSA, 5.50%, 6/15/2011 | Aaa | 200,000 | 202,752 |
| Dutchess County New York, G.O. Bond, MBIA, 4.00%, 12/15/2016 | Aaa | 675,000 | 662,647 |
| East Aurora Union Free School District, G.O. Bond, FGIC, 5.20%, 6/15/2011 | Aaa | 300,000 | 303,531 |
| Eastchester, Public Impt., G.O. Bond, Series B, FSA, 4.90%, 10/15/2011 | Aaa | 385,000 | 389,374 |
| Ellenville Central School District, G.O. Bond, FSA, 5.375%, 5/1/2009 | Aaa | 210,000 | 215,128 |
| Ellenville Central School District, G.O. Bond, AMBAC, 5.70%, 5/1/2011 | Aaa | 700,000 | 723,604 |
| Erie County, Public Impt., G.O. Bond, Series A, FGIC, 5.00%, 9/1/2014 | Aaa | 500,000 | 524,560 |
| Erie County, Public Impt., G.O. Bond, Series A, FGIC, 4.75%, 10/1/2016 | Aaa | 550,000 | 561,753 |
The accompanying notes are an integral part of the financial statements.
3
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
NEW YORK MUNICIPAL SECURITIES (continued) | | | |
| | | | |
| Fairport Central School District, G.O. Bond, FSA, 5.00%, 6/1/2019 | Aaa | $500,000 | $520,785 |
| Franklin Square Union Free School District, G.O. Bond, FGIC, 5.00%, 1/15/2021 | Aaa | 520,000 | 537,956 |
| Freeport, G.O. Bond, Series A, FGIC, 4.00%, 1/15/2014 | Aaa | 540,000 | 535,415 |
| Greece Central School District, G.O. Bond, FSA, 4.60%, 6/15/2018 | Aaa | 180,000 | 181,696 |
| Hamburg Central School District, G.O. Bond, FGIC, 5.375%, 6/1/2014 | Aaa | 600,000 | 620,436 |
| Hempstead Town, Unrefunded Balance, G.O. Bond, Series B, FGIC, 5.625%, 2/1/2010 | Aaa | 165,000 | 168,519 |
| Huntington, G.O. Bond, MBIA, 5.875%, 9/1/2009 | Aaa | 45,000 | 45,144 |
| Islip, Public Impt., G.O. Bond, FGIC, 5.375%, 6/15/2015 | Aaa | 1,555,000 | 1,645,874 |
| Jamesville-Dewitt Central School District, G.O. Bond, AMBAC, 5.75%, 6/15/2009 | Aaa | 420,000 | 442,487 |
| Johnson City Central School District, G.O. Bond, FGIC, 4.25%, 6/15/2024 | Aaa | 500,000 | 470,475 |
| Johnson City Central School District, G.O. Bond, FGIC, 4.375%, 6/15/2028 | Aaa | 1,000,000 | 944,240 |
| Johnson City Central School District, G.O. Bond, FGIC, 4.375%, 6/15/2030 | Aaa | 985,000 | 923,763 |
| Le Roy Central School District, G.O. Bond, FGIC, 0.10%, 6/15/2008 | Aaa | 350,000 | 324,345 |
| Long Island Power Authority, Electric Systems, Revenue Bond, Series A, 5.00%, FGIC, 12/1/2019 | Aaa | 1,000,000 | 1,043,690 |
| Long Island Power Authority, Electric Systems, Revenue Bond, Series A, FGIC, 5.00%, 12/1/2025 | Aaa | 1,690,000 | 1,739,230 |
| Longwood Central School District at Middle Island, G.O. Bond, FSA, 5.00%, 6/15/2017 | Aaa | 250,000 | 260,395 |
| Longwood Central School District at Middle Island, G.O. Bond, FSA, 5.00%, 6/15/2018 | Aaa | 250,000 | 260,395 |
| Metropolitan Transportation Authority, Revenue Bond, Series A, FGIC, 5.00%, 11/15/2025 | Aaa | 1,500,000 | 1,534,410 |
| Metropolitan Transportation Authority, Dedicated Tax Fund, Revenue Bond, Series A, MBIA, 5.00%, 11/15/2030 | Aaa | 750,000 | 763,057 |
| Metropolitan Transportation Authority, Transportation Facilities, Prerefunded Balance, Revenue Bond, Series B, AMBAC, 5.00%, 7/1/2018 | Aaa | 1,500,000 | 1,577,220 |
| Monroe County, Water Impt., G.O. Bond, 5.25%, 2/1/2017 | Baa1 | 320,000 | 324,403 |
| Monroe County, Public Impt., G.O. Bond, AMBAC, 4.125%, 6/1/2020 | Aaa | 1,000,000 | 958,990 |
| Monroe County Water Authority, Revenue Bond, 5.00%, 8/1/2019 | Aa3 | 1,700,000 | 1,742,823 |
The accompanying notes are an integral part of the financial statements.
4
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
NEW YORK MUNICIPAL SECURITIES (continued) | | | |
| | | | |
| Mount Morris Central School District, G.O. Bond, FGIC, 4.125%, 6/15/2013 | Aaa | $790,000 | $793,452 |
| Nassau County, Combined Sewer Districts, G.O. Bond, Series F, MBIA, 5.35%, 7/1/2008 | Aaa | 1,500,000 | 1,542,390 |
| Nassau County, General Impt., G.O. Bond, Series C, FSA, 5.125%, 1/1/2014 | Aaa | 500,000 | 525,270 |
| Nassau County, General Impt., G.O. Bond, Series U, AMBAC, 5.25%, 11/1/2014 | Aaa | 335,000 | 343,298 |
| Nassau County, General Impt., G.O. Bond, Series V, AMBAC, 5.25%, 3/1/2015 | Aaa | 385,000 | 396,369 |
| Nassau County Interim Financial Authority, Sales Tax Secured, Revenue Bond, Series A, AMBAC, 4.75%, 11/15/2023 | Aaa | 1,000,000 | 1,008,000 |
| New Hyde Park Garden City Park District, Union Free School District, G.O. Bond, FSA, 4.125%, 6/15/2023 | Aaa | 200,000 | 186,946 |
| New Hyde Park Garden City Park District, Union Free School District, G.O. Bond, FSA, 4.125%, 6/15/2024 | Aaa | 250,000 | 231,857 |
| New York, G.O. Bond, Series I, MBIA, 5.00%, 5/15/2028 | Aaa | 1,900,000 | 1,923,237 |
| New York, G.O. Bond, Series K, FSA, 5.375%, 8/1/2020 | Aaa | 1,000,000 | 1,048,900 |
| New York City, G.O. Bond, Series A, CIFG, 5.00%, 8/1/2024 | Aaa | 1,000,000 | 1,027,150 |
| New York City Municipal Water Finance Authority, Water & Sewer Systems, Revenue Bond, Series A, AMBAC, 5.00%, 6/15/2035 | Aaa | 750,000 | 761,430 |
| New York City Municipal Water Finance Authority, Water & Sewer Systems, Revenue Bond, Series B, FGIC, 5.125%, 6/15/2030 | Aaa | 2,000,000 | 2,028,380 |
| New York City Municipal Water Finance Authority, Water & Sewer Systems, Revenue Bond, Series D, AMBAC, 4.50%, 6/15/2036 | Aaa | 500,000 | 476,285 |
| New York City Municipal Water Finance Authority, Revenue Bond, Series E, FGIC, 5.00%, 6/15/2026 | Aaa | 750,000 | 762,487 |
| New York City Transitional Finance Authority, Prerefunded Balance, Revenue Bond, Series A, 5.50%, 2/15/2011 | Aa1 | 1,000,000 | 1,064,170 |
| New York State, G.O. Bond, Series A, 4.60%, 3/15/2013 | Aa3 | 475,000 | 487,146 |
| New York State, Prerefunded Balance, G.O. Bond, Series B, 5.125%, 3/1/2018 | Aa3 | 1,000,000 | 1,031,180 |
| New York State, G.O. Bond, Series C, FSA, 5.00%, 4/15/2012 | AAA2 | 700,000 | 737,233 |
| New York State, Prerefunded Balance, G.O. Bond, Series D, AMBAC, 5.00%, 7/15/2015 | Aaa | 500,000 | 516,580 |
| New York State Dormitory Authority, Columbia University, Revenue Bond, Series A, 5.00%, 7/1/2025 | Aaa | 500,000 | 510,915 |
The accompanying notes are an integral part of the financial statements.
5
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
NEW YORK MUNICIPAL SECURITIES (continued) | | | |
| | | | |
| New York State Environmental Facilities Corp., Clean Water & Drinking, Revenue Bond, MBIA, 5.00%, 6/15/2021 | Aaa | $600,000 | $617,214 |
| New York State Environmental Facilities Corp., Clean Water & Drinking, Revenue Bond, 4.50%, 6/15/2022 | Aaa | 300,000 | 296,964 |
| New York State Environmental Facilities Corp., Clean Water & Drinking, Revenue Bond, Series B, 5.00%, 6/15/2027 | Aaa | 1,000,000 | 1,019,580 |
| New York State Environmental Facilities Corp., Personal Income Tax, Revenue Bond, Series A, 5.00%, 12/15/2019 | AAA2 | 750,000 | 780,960 |
| New York State Environmental Facilities Corp., Pollution Control, Revenue Bond, Series B, 6.65%, 9/15/2013 | Aaa | 250,000 | 252,192 |
| New York State Environmental Facilities Corp., Pollution Control, Revenue Bond, Series E, MBIA, 5.00%, 6/15/2012 | Aaa | 200,000 | 203,766 |
| New York State Environmental Facilities Corp., Pollution Control, Unrefunded Balance, Revenue Bond, Series A, 4.65%, 6/15/2007 | Aaa | 110,000 | 110,808 |
| New York State Environmental Facilities Corp., Pollution Control, Unrefunded Balance, Revenue Bond, Series B, 5.20%, 5/15/2014 | Aaa | 440,000 | 468,521 |
| New York State Environmental Facilities Corp., Pollution Control, Unrefunded Balance, Revenue Bond, Series A, 5.20%, 6/15/2015 | Aaa | 25,000 | 25,523 |
| New York State Housing Finance Agency, State University Construction, Revenue Bond, Series A, 8.00%, 5/1/2011 | Aaa | 250,000 | 277,937 |
| New York State Thruway Authority, Highway & Bridge, Prerefunded Balance, Revenue Bond, Series A, FGIC, 5.50%, 4/1/2015 | Aaa | 320,000 | 344,515 |
| New York State Thruway Authority, Highway & Bridge, Prerefunded Balance, Revenue Bond, Series A, AMBAC, 5.25%, 4/1/2017 | Aaa | 555,000 | 572,011 |
| New York State Thruway Authority, Revenue Bond, Series F, AMBAC, 5.00%, 1/1/2026 | Aaa | 340,000 | 349,000 |
| New York State Thruway Authority, Highway & Bridge, Prerefunded Balance, Revenue Bond, Series B, MBIA, 5.25%, 4/1/2016 | Aaa | 300,000 | 318,756 |
| New York State Thruway Authority, Highway & Bridge, Revenue Bond, Series C, MBIA, 5.25%, 4/1/2011 | Aaa | 1,000,000 | 1,056,210 |
| New York State Thruway Authority, Highway & Bridge, Revenue Bond, Series C, AMBAC, 5.00%, 4/1/2020 | Aaa | 750,000 | 773,318 |
| New York State Thruway Authority, Personal Income Tax, Revenue Bond, Series A, FSA, 5.00%, 3/15/2014 | Aaa | 500,000 | 525,230 |
| New York State Thruway Authority, Personal Income Tax, Revenue Bond, Series A, MBIA, 5.00%, 3/15/2016 | Aaa | 300,000 | 312,675 |
| New York State Urban Development Corp., Revenue Bond, 5.375%, 7/1/2022 | Aaa | 400,000 | 408,464 |
The accompanying notes are an integral part of the financial statements.
6
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
NEW YORK MUNICIPAL SECURITIES (continued) | | | |
| | | | |
| New York State Urban Development Corp., Correctional Capital Facilities, Revenue Bond, Series A, FSA, 5.25%, 1/1/2014 | Aaa | $500,000 | $529,670 |
| Niagara County, G.O. Bond, Series B, MBIA, 5.20%, 1/15/2011 | Aaa | 400,000 | 402,680 |
| Niagara Falls City School District, G.O. Bond, FSA, 4.375%, 9/15/2029 | AAA2 | 885,000 | 835,015 |
| North Hempstead, G.O. Bond, Series A, FGIC, 4.75%, 1/15/2023 | Aaa | 1,000,000 | 1,024,230 |
| Norwich City School District, G.O. Bond, FSA, 5.00%, 6/15/2010 | Aaa | 250,000 | 260,095 |
| Panama Central School District, G.O. Bond, FGIC, 5.00%, 6/15/2019 | Aaa | 595,000 | 616,259 |
| Patchogue-Medford Union Free School District, G.O. Bond, Series A, FGIC, 3.50%, 7/1/2012 | Aaa | 805,000 | 783,708 |
| Pavilion Central School District, G.O. Bond, FSA, 5.625%, 6/15/2018 | Aaa | 880,000 | 930,389 |
| Phelps-Clifton Springs Central School District, G.O. Bond, Series B, MBIA, 5.00%, 6/15/2021 | Aaa | 850,000 | 886,550 |
| Phelps-Clifton Springs Central School District, G.O. Bond, Series B, MBIA, 5.00%, 6/15/2022 | Aaa | 450,000 | 468,522 |
| Ravena Coeymans Selkirk Central School District, G.O. Bond, FSA, 4.25%, 6/15/2014 | Aaa | 1,180,000 | 1,187,269 |
| Rochester, G.O. Bond, AMBAC, 4.70%, 8/15/2006 | Aaa | 10,000 | 10,013 |
| Rochester, Unrefunded Balance, G.O. Bond, AMBAC, 4.70%, 8/15/2006 | Aaa | 240,000 | 240,311 |
| Rochester, G.O. Bond, Series A, AMBAC, 5.00%, 8/15/2020 | Aaa | 250,000 | 264,563 |
| Rochester, G.O. Bond, Series A, AMBAC, 5.00%, 8/15/2022 | Aaa | 95,000 | 100,625 |
| Rondout Valley Central School District, G.O. Bond, FSA, 5.375%, 3/1/2020 | Aaa | 500,000 | 530,235 |
| Schenectady, G.O. Bond, MBIA, 5.30%, 2/1/2011 | Aaa | 250,000 | 256,843 |
| Scotia Glenville Central School District, G.O. Bond, FGIC, 5.50%, 6/15/2020 | Aaa | 1,025,000 | 1,081,939 |
| South Glens Falls Central School District, Prerefunded Balance, G.O. Bond, FGIC, 5.375%, 6/15/2018 | Aaa | 605,000 | 636,514 |
| South Glens Falls Central School District, Unrefunded Balance, G.O. Bond, FGIC, 5.375%, 6/15/2018 | Aaa | 95,000 | 99,701 |
| South Huntington Union Free School District, G.O. Bond, FGIC, 5.00%, 9/15/2016 | Aaa | 325,000 | 337,532 |
| South Huntington Union Free School District, G.O. Bond, FGIC, 5.10%, 9/15/2017 | Aaa | 100,000 | 104,058 |
| Suffolk County, Public Impt., G.O. Bond, Series A, MBIA, 4.25%, 5/1/2024 | Aaa | 1,000,000 | 942,090 |
The accompanying notes are an integral part of the financial statements.
7
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
NEW YORK MUNICIPAL SECURITIES (continued) | | | |
| | | | |
| Suffolk County, G.O. Bond, Series A, FGIC, 4.75%, 8/1/2019 | Aaa | $895,000 | $920,633 |
| Suffolk County Water Authority, Prerefunded Balance, Revenue Bond, Series A, AMBAC, 5.00%, 6/1/2017 | Aaa | 400,000 | 412,280 |
| Suffolk County Water Authority, Revenue Bond, MBIA, 5.10%, 6/1/2009 | Aaa | 55,000 | 56,931 |
| Suffolk County Water Authority, Unrefunded Balance, Revenue Bond, MBIA, 5.10%, 6/1/2009 | Aaa | 195,000 | 201,663 |
| Suffolk County Water Authority, Unrefunded Balance, Revenue Bond, MBIA, 4.50%, 6/1/2027 | Aaa | 1,160,000 | 1,126,267 |
| Sullivan County, Public Impt., G.O. Bond, MBIA, 5.125%, 3/15/2013 | Aaa | 330,000 | 330,307 |
| Syracuse, Public Impt., G.O. Bond, Series C, AMBAC, 5.40%, 8/1/2017 | Aaa | 700,000 | 746,270 |
| Syracuse, Public Impt., G.O. Bond, Series C, AMBAC, 5.50%, 8/1/2018 | Aaa | 850,000 | 909,373 |
| Syracuse, Public Impt., G.O. Bond, Series A, MBIA, 4.25%, 6/15/2023 | Aaa | 690,000 | 658,633 |
| Syracuse, Public Impt., G.O. Bond, Series A, MBIA, 4.375%, 6/15/2025 | Aaa | 990,000 | 951,697 |
| Triborough Bridge & Tunnel Authority, General Purposes, Revenue Bond, Series B, 5.00%, 11/15/2020 | Aa2 | 750,000 | 771,383 |
| Triborough Bridge & Tunnel Authority, General Purposes, Prerefunded Balance, Revenue Bond, Series A, MBIA, 4.75%, 1/1/2019 | Aaa | 300,000 | 312,837 |
| Triborough Bridge & Tunnel Authority, General Purposes, Prerefunded Balance, Revenue Bond, Series A, MBIA, 5.00%, 1/1/2032 | Aaa | 1,695,000 | 1,782,259 |
| Triborough Bridge & Tunnel Authority, General Purposes, Unrefunded Balance, Revenue Bond, Series A, MBIA, 5.00%, 1/1/2032 | Aaa | 305,000 | 309,243 |
| Triborough Bridge & Tunnel Authority, Subordinate Bonds, Revenue Bond, FGIC, 5.00%, 11/15/2032 | Aaa | 1,000,000 | 1,017,840 |
| Ulster County, Public Impt., G.O. Bond, 4.50%,11/15/2026 | AAA2 | 560,000 | 553,347 |
| Warwick Valley Central School District, G.O. Bond, FSA, 5.60%, 1/15/2018 | Aaa | 575,000 | 613,192 |
| Warwick Valley Central School District, G.O. Bond, FSA, 5.625%, 1/15/2022 | Aaa | 380,000 | 405,551 |
| Wayne County, Public Impt., G.O. Bond, MBIA, 4.125%, 6/1/2024 | Aaa | 500,000 | 465,825 |
| West Seneca Central School District, G.O. Bond, FSA, 5.00%, 5/1/2011 | Aaa | 300,000 | 313,821 |
| Westchester County, G.O. Bond, Series A, 4.75%, 12/15/2008 | Aaa | 60,000 | 60,583 |
| Westchester County, Unrefunded Balance, G.O. Bond, Series A, 4.75%, 12/15/2008 | AAA2 | 5,000 | 5,045 |
The accompanying notes are an integral part of the financial statements.
8
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | Principal | |
| | Rating1 | Amount/ | Value |
| | (unaudited) | Shares | (Note 2) |
NEW YORK MUNICIPAL SECURITIES (continued) | | | |
| | | | |
| Westchester County, G.O. Bond, Series A, 4.75%, 12/15/2009 | Aaa | $65,000 | $65,632 |
| Westchester County, Unrefunded Balance, G.O. Bond, Series A, 4.75%, 12/15/2009 | AAA2 | 5,000 | 5,044 |
| Westchester County, G.O. Bond, Series B, 4.30%, 12/15/2011 | Aaa | 15,000 | 15,292 |
| Westchester County, G.O. Bond, Series B, 3.70%, 12/15/2015 | Aaa | 1,000,000 | 959,850 |
| Westhampton Beach Union Free School District, G.O. Bond, MBIA, 4.00%, 7/15/2018 | Aaa | 726,000 | 696,437 |
| William Floyd Union Free School District of the Mastics-Moriches-Shirley, G.O. Bond, AMBAC, 5.70%, 6/15/2008 | Aaa | 405,000 | 420,260 |
| Williamsville Central School District, G.O. Bond, MBIA, 5.00%, 6/15/2012 | Aaa | 490,000 | 515,264 |
| Wyandanch Union Free School District, G.O. Bond, FSA, 5.60%, 4/1/2017 | Aaa | 500,000 | 511,745 |
| Yonkers, G.O. Bond, Series B, MBIA, 5.00%, 8/1/2023 | Aaa | 1,125,000 | 1,161,439 |
| | | | |
TOTAL NEW YORK MUNICIPAL SECURITIES | | | |
| (Identified Cost $83,554,134) | | | 83,977,818 |
| | | | |
SHORT-TERM INVESTMENTS - 2.5% | | | |
| Dreyfus BASIC New York Municipal Money Market Fund | | | |
| (Identified Cost $2,163,614) | | 2,163,614 | 2,163,614 |
| | | | |
TOTAL INVESTMENTS - 98.9% | | | |
| (Identified Cost $85,717,748) | | | 86,141,432 |
| | | | |
OTHER ASSETS, LESS LIABILITIES - 1.1% | | | 917,867 |
| | | | |
NET ASSETS - 100% | | | $87,059,299 |
KEY:
G.O. Bond - General Obligation Bond
Impt. - Improvement
Scheduled principal and interest payments are guaranteed by:
AMBAC (AMBAC Assurance Corp.)
CIFG (CIFG North America, Inc.)
FGIC (Financial Guaranty Insurance Co.)
FSA (Financial Security Assurance)
MBIA (MBIA, Inc.)
The insurance does not guarantee the market value of the municipal bonds.
1Credit ratings from Moody's (unaudited).
2Credit ratings from S&P (unaudited).
The Series' portfolio holds, as a percentage of net assets, greater than 10% in bonds insured by the following companies: FGIC - 29.7%; MBIA - 25.1%; AMBAC - 14.4%; FSA - 13.1%.
The accompanying notes are an integral part of the financial statements.
9
Statement of Assets and Liabilities (unaudited)
June 30, 2006
ASSETS: | |
| | |
| Investments, at value (identified cost $85,717,748) (Note 2) | $86,141,432 |
| Interest receivable | 912,245 |
| Receivable for fund shares sold | 61,453 |
| Dividends receivable | 6,575 |
| | |
| TOTAL ASSETS | 87,121,705 |
| | |
LIABILITIES: | |
| | |
| Accrued management fees (Note 3) | 35,864 |
| Accrued fund accounting and transfer agent fees (Note 3) | 8,955 |
| Accrued directors' fees (Note 3) | 278 |
| Audit fees payable | 16,038 |
| Payable for fund shares repurchased | 407 |
| Other payables and accrued expenses | 864 |
| | |
| TOTAL LIABILITIES | 62,406 |
| | |
TOTAL NET ASSETS | $87,059,299 |
| | |
NET ASSETS CONSIST OF: | |
| | |
| Capital stock | $85,078 |
| Additional paid-in-capital | 86,039,204 |
| Undistributed net investment income | 475,661 |
| Accumulated net realized gain on investments | 35,672 |
| Net unrealized appreciation on investments | 423,684 |
| | |
TOTAL NET ASSETS | $87,059,299 |
| | |
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE ($87,059,299/8,507,817 shares) | $10.23 |
The accompanying notes are an integral part of the financial statements.
10
Statement of Operations (unaudited)
For the Six Months Ended June 30, 2006
INVESTMENT INCOME: | |
| | |
| Interest | $1,824,194 |
| Dividends | 42,233 |
| | |
| Total Investment Income | 1,866,427 |
| | |
EXPENSES: | |
| | |
| Management fees (Note 3) | 212,725 |
| Fund accounting and transfer agent fees (Note 3) | 48,932 |
| Directors' fees (Note 3) | 4,078 |
| Chief Compliance Officer service fees (Note 3) | 2,567 |
| Custodian fees | 5,026 |
| Miscellaneous | 19,478 |
| | |
| Total Expenses | 292,806 |
| | |
| NET INVESTMENT INCOME | 1,573,621 |
| | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | |
| | |
| Net realized gain on investments | 17,634 |
| Net change in unrealized appreciation on investments | (1,874,562) |
| | |
| NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | (1,856,928) |
| | |
| NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $(283,307) |
The accompanying notes are an integral part of the financial statements.
11
Statements of Changes in Net Assets
| | For the Six | |
| | Months Ended | For the |
| | 6/30/06 | Year Ended |
| | (unaudited) | 12/31/05 |
| | | |
INCREASE (DECREASE) IN NET ASSETS: | | |
| | | |
OPERATIONS: | | |
| | | |
| Net investment income | $1,573,621 | $2,816,400 |
| Net realized gain on investments | 17,634 | 91,450 |
| Net change in unrealized appreciation on investments | (1,874,562) | (1,163,352) |
| | | |
| Net increase (decrease) from operations | (283,307) | 1,744,498 |
| | | |
DISTRIBUTIONS TO SHAREHOLDERS (Note 8): | | |
| | | |
| From net investment income | (1,493,553) | (2,708,429) |
| From net realized gain on investments | - | (97,103) |
| | | |
| Total distributions to shareholders | (1,493,553) | (2,805,532) |
| | | |
CAPITAL STOCK ISSUED AND REPURCHASED: | | |
| | | |
| Net increase from capital share transactions (Note 5) | 6,430,735 | 7,646,554 |
| | | |
| Net increase in net assets | 4,653,875 | 6,585,520 |
| | | |
NET ASSETS: | | |
| | | |
| Beginning of period | 82,405,424 | 75,819,904 |
| | | |
| | | |
End of period (including undistributed net investment income of $475,661 and $395,593, respectively) | $87,059,299 | $82,405,424 |
The accompanying notes are an integral part of the financial statements.
12
Financial Highlights
| | For the Six | | | | | |
| | Months Ended | | | | | |
| | 6/30/06 | For the Years Ended |
| | (unaudited) | 12/31/05 | 12/31/04 | 12/31/03 | 12/31/02 | 12/31/01 |
| | | | | | | |
Per share data (for a share outstanding | | | | | | |
throughout each period): | | | | | | |
| | | | | | | |
Net asset value - Beginning of period | $10.45 | $10.58 | $10.77 | $10.89 | $10.36 | $10.36 |
| | | | | | | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income | 0.19 | 0.37 | 0.36 | 0.42 | 0.46 | 0.46 |
| Net realized and unrealized gain (loss) on investments | (0.23) | (0.13) | (0.07) | -2 | 0.54 | (0.05) |
| | | | | | | |
| Total from investment operations | (0.04) | 0.24 | 0.29 | 0.42 | 1.00 | 0.41 |
| | | | | | | |
| Less distributions to shareholders: | | | | | | |
| From net investment income | (0.18) | (0.36) | (0.45) | (0.41) | (0.42) | (0.41) |
| From net realized gain on investments | - | (0.01) | (0.03) | (0.13) | (0.05) | - |
| | | | | | | |
| Total distributions to shareholders | (0.18) | (0.37) | (0.48) | (0.54) | (0.47) | (0.41) |
| | | | | | | |
Net asset value - End of period | $10.23 | $10.45 | $10.58 | $10.77 | $10.89 | $10.36 |
| | | | | | | |
Total return1 | (0.39%) | 2.33% | 2.83% | 3.90% | 9.81% | 3.96% |
| | | | | | | |
Ratios (to average net assets)/Supplemental Data: | | | | | | |
| Expenses | 0.69%3 | 0.72% | 0.75% | 0.75%* | 0.73% | 0.72% |
| Net investment income | 3.70%3 | 3.55% | 3.57% | 3.80% | 4.20% | 4.23% |
| | | | | | | |
| Portfolio turnover | 7% | 6% | 7% | 17% | 6% | 7% |
| | | | | | | |
Net assets - End of period (000's omitted) | $87,059 | $82,405 | $75,820 | $64,193 | $63,961 | $66,295 |
*The investment advisor did not impose all of its management fee. If these expenses had been incurred by the Series, the expense ratio (to average net assets) for the year ended 12/31/03 would have been increased by 0.00%4.
1Represents aggregate total return for the period indicated, and assumes reinvestment of all distributions. Total return would have been lower had certain expenses not been waived during the year ended 12/31/03. Periods less than one year are not annualized.
2Less than $0.01 per share.
3Annualized.
4 Less than 0.01%.
The accompanying notes are an integral part of the financial statements.
13
Notes to Financial Statements (unaudited)
1. ORGANIZATION
New York Tax Exempt Series (the "Series") is a no-load diversified series of Exeter Fund, Inc. (the “Fund”). The Fund is organized in Maryland and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.
The Series' investment objective is to provide as high a level of current income exempt from federal income tax and New York State personal income tax as the Advisor believes is consistent with the preservation of capital.
The Fund’s Advisor is Manning & Napier Advisors, Inc. (the “Advisor”). Shares of the Series are offered to investors, clients and employees of the Advisor and its affiliates. The total authorized capital stock of the Fund consists of 1.7 billion shares of common stock each having a par value of $0.01. As of June 30, 2006, 1.16 billion shares have been designated in total among 21 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 (the “Board”).
Securities for which representative valuations or prices are not available from the Fund's pricing service may be 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.
Short-term investments that mature in sixty days or less are valued at amortized cost, which approximates market value. Investments in open-end investment companies are valued at their net asset value per share on valuation date.
Security Transactions, Investment Income and Expenses
Security transactions are accounted for on trade date. Interest income, including amortization of premium and accretion of discounts, is earned from settlement date and accrued daily. Dividend 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 in such a manner as deemed equitable by the Fund's Board, taking into consideration, among other things, the nature and type of expense.
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.
Federal 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 that the Series distributes to shareholders each year its taxable income, including any net realized gains on investments, in accordance with requirements of the Internal Revenue Code. Accordingly, no provision for federal income tax or excise tax has been made in the financial statements.
14
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Distributions of Income and Gains
Distributions to shareholders of net investment income are made quarterly. 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.
Indemnifications
The Fund’s organizational documents provide former and current directors and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Other
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 income and expenses during the reporting period. Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory Agreement (the “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 Agreement, personnel of the Advisor provide the Series with advice and assistance in the choice of investments and the execution of securities transactions, and otherwise maintain the Series’ organization. The Advisor also provides the Fund with necessary office space and fund administration and support services. The salaries of all officers of the Fund (except a percentage of the Fund’s Chief Compliance Officer’s salary, which is paid by the Fund, and the Special Assistant Secretary’s salary, which is paid by BISYS Fund Services Ohio, Inc. (“BISYS”)), 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. Each "non-affiliated" Director receives an annual stipend, which is allocated among all the active series of the Fund. In addition, these Directors also receive a fee per Board meeting attended for each active series of the Fund plus a fee for each committee meeting attended.
The Advisor has contractually agreed, until at least April 30, 2007, to waive its fee and, if necessary, pay other operating expenses of the Series in order to maintain total expenses for the Series at no more than 0.85% of average daily net assets each year. In addition to its contractual agreement to limit expenses to 0.85%, the Advisor has voluntarily agreed to waive fees and reimburse expenses during the current fiscal year in order to keep total operating expenses from exceeding 0.75% of average daily net assets. The Advisor may change or eliminate all or part of its voluntary waiver at any time. For the six months ended June 30, 2006, the Advisor did not waive its management fee or reimburse any expenses of 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.
15
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
For fund accounting and transfer agent services, the Fund pays the Advisor an annual fee of 0.12% of the Fund’s average daily net assets up to $900 million, 0.09% of the Fund’s average daily net assets between $900 million and $1.5 billion, and 0.05% of the Fund’s average daily net assets over $1.5 billion. These fee rates are scheduled to be reduced each year through 2007. Additionally, certain transaction and account-based fees and out-of-pocket expenses, including charges for reporting relating to the Fund’s compliance program, are charged. Expenses not directly attributable to a series are allocated based on each series’ relative net assets or number of accounts, depending on the expense. The Advisor has an agreement with BISYS under which BISYS serves as sub-accounting services and sub-transfer agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2006, purchases and sales of securities, other than United States Government securities and short-term securities, were $12,927,238 and $5,760,400, respectively. There were no purchases or sales of United States Government securities.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of New York Tax Exempt Series were:
| | For the Six Months | For the Year |
| | Ended 6/30/06 | Ended 12/31/05 |
| | Shares | Amount | Shares | Amount |
| | | | | |
| Sold | 746,434 | $7,770,352 | 1,217,413 | $12,838,558 |
| Reinvested | 136,834 | 1,414,734 | 252,977 | 2,650,023 |
| Repurchased | (264,839) | (2,754,351) | (744,729) | (7,842,027) |
| Total | 618,429 | $6,430,735 | 725,661 | $7,646,554 |
Substantially all of the Series’ shares represent investments by fiduciary accounts over which the Advisor has sole investment discretion.
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the normal course of its investing activities to assist in managing exposure to various market risks. These financial instruments include written options and futures contracts and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. No such investments were held by the Series on June 30, 2006.
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
Notes to Financial Statements (unaudited)
| 8. | FEDERAL INCOME TAX INFORMATION |
The amount and characterization of certain income and capital gains to be distributed are determined in accordance with federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. The Series may periodically make reclassifications among its capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations, without impacting the Series' net asset value. Any such reclassifications are not reflected in the financial highlights.
The final determination of the tax character of current year distributions will be made at the conclusion of the fiscal year. The tax character of distributions paid for the year ended December 31, 2005 were as follows:
| Tax exempt income | $2,708,429 |
| Long-term capital gains | 97,103 |
At June 30, 2006, the identified cost of investments for federal income tax purposes, the resulting gross unrealized appreciation and depreciation, and the net unrealized appreciation were as follows:
| Cost for federal income tax purposes | $85,687,687 |
| | |
| Unrealized appreciation | $1,638,287 |
| Unrealized depreciation | (1,184,542) |
| | |
| Net unrealized appreciation | $453,745 |
On May 15, 2006, the Fund’s Board approved a change in the name of the Fund from Exeter Fund, Inc. to Manning & Napier Fund, Inc. The name change will become effective when filed with the Securities and Exchange Commission in the next few months.
17
Literature Requests (unaudited)
Proxy Voting Policies and Procedures
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available, without charge, upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission’s (SEC) web site http://www.sec.gov
Proxy Voting Record
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30th is available, without charge, upon request:
By phone 1-800-466-3863
On the SEC’s web site http://www.sec.gov
Quarterly Portfolio Holdings
The Series’ complete schedule of portfolio holdings for the 1st and 3rd quarters of each fiscal year are provided on Form N-Q, and are available, without charge, upon request:
By phone 1-800-466-3863
On the SEC’s web site http://www.sec.gov
The Series’ Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Prospectus and Statement of Additional Information (SAI)
The prospectus and SAI provide additional information about each Series, including charges, expenses and risks. These documents are available, without charge, upon request:
By phone 1-800-466-3863
On the SEC’s web site http://www.sec.gov
On the Advisor’s web site http://www.manningnapieradvisors.com/www/exeter_fund.asp
Additional information available at www.manningnapieradvisors.com/www/exeter_fund.asp
| 1. | Fund Holdings - Month-End |
| 2. | Fund Holdings - Quarter-End |
| 3. | Shareholder Report - Annual |
| 4. | Shareholder Report - Semi-Annual |
18
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2006
Diversified Tax Exempt
Shareholder Expense Example (unaudited)
As a shareholder of the Series, you may incur two types of costs: (1) transaction costs, including potential wire charges on redemptions and (2) ongoing costs, including management fees and other Series expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Series and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2006 to June 30, 2006).
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Series’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Series’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid during the period. You may use this information to compare the ongoing costs of investing in the Series and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as potential wire charges on redemptions. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| | Beginning | Ending | Expenses Paid |
| | Account Value | Account Value | During Period* |
| | 1/1/06 | 6/30/06 | 1/1/06-6/30/06 |
| Actual | $1,000.00 | $993.40 | $3.36 |
| Hypothetical | | | |
| (5% return before expenses) | $1,000.00 | $1,021.42 | $3.41 |
*Expenses are equal to the Series’ annualized expense ratio (for the six-month period) of 0.68%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses are based on the most recent fiscal half year.
1
Portfolio Composition as of June 30, 2006 (unaudited)
<graphic>
<pie chart>
Bond Types1
| Certificate of Participation | 2.1% |
| General Obligation Bonds | 68.9% |
| Revenue Bonds | 24.2% |
| Special Tax | 0.4% |
| Tax Allocation | 1.3% |
| Cash, short-term investments, and other assets, less liabilities | 3.1% |
1As a percentage of net assets.
Credit Quality Ratings2,3
| Aaa | 82.4% |
| Aa | 13.5% |
| A | 1.0% |
| Unrated investments, such as cash, short-term investments, and other assets, less liabilities | 3.1% |
2As a percentage of net assets.
3Based on ratings from Moody's, or the S&P equivalent. The Series may use different ratings provided by other rating agencies for purposes of determining compliance with the Series' investment policies.
Top Ten States4
| Ohio | 4.8% |
| Texas | 4.8% |
| California | 4.7% |
| Florida | 4.4% |
| Pennsylvania | 4.4% |
| Washington | 4.2% |
| New York | 3.9% |
| Georgia | 3.9% |
| New Jersey | 3.5% |
| Kansas | 3.5% |
4As a percentage of total investments.
2
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
MUNICIPAL SECURITIES - 96.9% | | | |
| | | | |
Alabama - 2.1% | | | |
| Bessemer Governmental Utility Services Corp., Water Supply, Revenue Bond, MBIA, 5.20%, 6/1/2024 | Aaa | $500,000 | $517,770 |
| Fort Payne Waterworks Board, Revenue Bond, AMBAC, 3.50%, 7/1/2015 | Aaa | 665,000 | 615,936 |
| Hoover Board of Education, Capital Outlay Warrants, Special Tax Warrants, MBIA, 5.25%, 2/15/2017 | Aaa | 500,000 | 522,435 |
| Mobile County Board of School Commissioners, Capital Outlay Warrants, Prerefunded Balance, G.O. Bond, Series B, AMBAC, 5.00%, 3/1/2018 | Aaa | 500,000 | 522,010 |
| Odenville Utilities Board Water, Revenue Bond, MBIA, 4.30%, 8/1/2028 | Aaa | 500,000 | 483,360 |
| | | | 2,661,511 |
| | | | |
Alaska - 0.3% | | | |
| Alaska Municipal Banking Authority, Revenue Bond, MBIA, 4.10%, 6/1/2017 | Aaa | 455,000 | 441,714 |
| | | | |
Arizona - 3.2% | | | |
| Phoenix, G.O. Bond, Series B, 4.20%, 7/1/2021 | Aa1 | 1,500,000 | 1,435,170 |
| Salt River Project, Agricultural Impt. & Power District, Certificate of Participation, MBIA, 5.00%, 12/1/2011 | Aaa | 1,500,000 | 1,567,410 |
| Yuma County Library District, G.O. Bond, Series A, AMBAC, 4.50%, 7/1/2035 | Aaa | 1,200,000 | 1,138,548 |
| | | | 4,141,128 |
| | | | |
California - 4.6% | | | |
| California State, G.O. Bond, 5.25%, 2/1/2023 | A2 | 500,000 | 532,605 |
| California State, G.O. Bond, 4.75%, 12/1/2028 | A2 | 795,000 | 780,976 |
| Chula Vista Elementary School District, G.O. Bond, Series F, MBIA, 4.80%, 8/1/2024 | Aaa | 435,000 | 438,637 |
| Chula Vista Elementary School District, G.O. Bond, Series F, MBIA, 4.875%, 8/1/2025 | Aaa | 425,000 | 430,223 |
| Oak Grove School District, Prerefunded Balance, G.O. Bond, FSA, 5.25%, 8/1/2024 | Aaa | 500,000 | 505,595 |
| Oak Valley Hospital District, G.O. Bond, FGIC, 4.50%, 7/1/2025 | Aaa | 1,395,000 | 1,341,530 |
| Richmond Joint Powers Financing Authority, Tax Allocation, Series A, MBIA, 5.25%, 9/1/2025 | Aaa | 1,570,000 | 1,632,596 |
| Wiseburn School District, Prerefunded Balance, G.O. Bond, Series A, FGIC, 5.25%, 8/1/2016 | Aaa | 330,000 | 341,718 |
| | | | 6,003,880 |
The accompanying notes are an integral part of the financial statements.
3
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
| | | | |
Colorado - 3.3% | | | |
| Broomfield Water Activity, Enterprise Water, Revenue Bond, MBIA, 5.00%, 12/1/2015 | Aaa | $700,000 | $732,487 |
| Colorado Water Resources & Power Development Authority, Water Resource, Revenue Bond, Series D, FSA, 4.375%, 8/1/2035 | Aaa | 1,420,000 | 1,300,905 |
| Commerce City, Certificat of Participation, AMBAC, 4.75%, 12/15/2032 | AAA2 | 1,000,000 | 980,780 |
| Denver City & County School District No. 1, Prerefunded Balance, G.O. Bond, FGIC, 5.00%, 12/1/2023 | Aaa | 895,000 | 933,843 |
| Denver City & County School District No. 1, Unrefunded Balance, G.O. Bond, FGIC, 5.00%, 12/1/2023 | Aaa | 105,000 | 107,581 |
| El Paso County School District No. 020, G.O. Bond, Series A, MBIA, 6.20%, 12/15/2007 | Aaa | 160,000 | 165,349 |
| | | | 4,220,945 |
| | | | |
Connecticut - 1.2% | | | |
| Stamford, G.O. Bond, 4.40%, 2/15/2026 | Aaa | 1,545,000 | 1,497,105 |
| | | | |
Delaware - 0.8% | | | |
| Delaware Transportation Authority, Revenue Bond, MBIA, 5.00%, 7/1/2011 | Aaa | 1,000,000 | 1,049,090 |
| | | | |
Florida - 4.4% | | | |
| Florida State, Jacksonville Transportation, Prerefunded Balance, G.O. Bond, Series A, 5.00%, 7/1/2027 | Aa1 | 710,000 | 725,350 |
| Florida State Board of Education, Capital Outlay, Prerefunded Balance, G.O. Bond, Series A, 5.00%, 6/1/2027 | Aaa | 750,000 | 765,502 |
| Florida State Board of Education, Capital Outlay, Public Education, G.O. Bond, Series C, AMBAC, 5.00%, 6/1/2011 | Aaa | 425,000 | 444,431 |
| Florida State Board of Education, Capital Outlay, Public Education, G.O. Bond, Series A, FSA, 4.50%, 6/1/2025 | Aa1 | 1,280,000 | 1,246,541 |
| Florida State Department of Transportation, G.O. Bond, 5.00%, 7/1/2027 | Aa1 | 1,000,000 | 1,020,120 |
| Hillsborough County, Capital Impt. Program, County Center Project, Prerefunded Balance, Revenue Bond, Series B, MBIA, 5.125%, 7/1/2022 | Aaa | 400,000 | 408,012 |
| Miami-Dade County, Educational Facilities Authority, Revenue Bond, Series A, AMBAC, 5.00%, 4/1/2015 | Aaa | 510,000 | 536,382 |
| Tohopekaliga Water Authority, Utility System, Revenue Bond, Series A, FSA, 5.00%, 10/1/2028 | Aaa | 510,000 | 519,904 |
| | | | 5,666,242 |
| | | | |
Georgia - 3.9% | | | |
| Atlanta, Prerefunded Balance, G.O. Bond, 5.60%, 12/1/2018 | Aa3 | 350,000 | 357,462 |
| Atlanta, Water & Wastewater, Revenue Bond, Series A, MBIA, 5.00%, 11/1/2033 | Aaa | 310,000 | 313,732 |
The accompanying notes are an integral part of the financial statements.
4
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
| | | | |
Georgia (continued) | | | |
| Atlanta, Water & Wastewater, Revenue Bond, FSA, 5.00%, 11/1/2043 | Aaa | $1,500,000 | $1,510,065 |
| Georgia State, G.O. Bond, Series B, 5.65%, 3/1/2012 | Aaa | 200,000 | 217,456 |
| Georgia State, G.O. Bond, Series B, 4.00%, 3/1/2022 | Aaa | 1,270,000 | 1,187,259 |
| Madison Water & Sewer, Revenue Bond, AMBAC, 4.625%, 7/1/2030 | Aaa | 1,000,000 | 966,920 |
| Rockdale County, Water & Sewer Authority, Prerefunded Balance, Revenue Bond, FSA, 5.00%, 7/1/2022 | Aaa | 450,000 | 464,067 |
| | | | 5,016,961 |
| | | | |
Hawaii - 0.2% | | | |
| Hawaii State, G.O. Bond, Series CH, 6.00%, 11/1/2007 | Aa2 | 260,000 | 267,197 |
| | | | |
Illinois - 3.0% | | | |
| Chicago, Prerefunded Balance, G.O. Bond, FGIC, 5.25%, 1/1/2027 | Aaa | 250,000 | 259,935 |
| Chicago, G.O. Bond, Series A, MBIA, 5.00%, 1/1/2034 | Aaa | 830,000 | 838,250 |
| Chicago Neighborhoods Alive 21 Program, Prerefunded Balance, G.O. Bond, FGIC, 5.375%, 1/1/2026 | Aaa | 500,000 | 527,860 |
| Cook County, G.O. Bond, Series A, FGIC, 5.00%, 11/15/2022 | Aaa | 750,000 | 767,692 |
| Illinois State, Certificate of Participation, Series 1995 A, MBIA, 5.60%, 7/1/2010 | Aaa | 100,000 | 101,624 |
| Illinois State, G.O. Bond, 5.00%, 12/1/2027 | Aa3 | 600,000 | 609,522 |
| Madison & St. Clair Counties School District No. 010 Collinsville, School Building, Prerefunded Balance, G.O. Bond, FGIC, 5.125%, 2/1/2019 | Aaa | 500,000 | 524,345 |
| Rock Island County School District No. 041 Rock Island, G.O. Bond, FSA, 5.125%, 12/1/2015 | Aaa | 200,000 | 204,716 |
| | | | 3,833,944 |
| | | | |
Indiana - 1.9% | | | |
| Avon Community School Building Corp., Prerefunded Balance, Revenue Bond, AMBAC, 5.25%, 1/1/2022 | Aaa | 310,000 | 316,209 |
| Avon Community School Building Corp., Prerefunded Balance, Revenue Bond, AMBAC, 5.25%, 1/1/2022 | Aaa | 615,000 | 627,318 |
| La Porte County, G.O. Bond, FGIC, 5.20%, 1/15/2018 | Aaa | 300,000 | 314,877 |
| Monroe County Community School Corp., Prerefunded Balance, Revenue Bond, MBIA, 5.25%, 7/1/2016 | Aaa | 125,000 | 128,379 |
| Noblesville Sewage Works, Revenue Bond, AMBAC, 5.00%, 1/1/2024 | Aaa | 550,000 | 563,706 |
| North Lawrence Indiana Community Schools Building Corp., Revenue Bond, FSA, 5.00%, 7/15/2020 | Aaa | 450,000 | 462,506 |
| | | | 2,412,995 |
The accompanying notes are an integral part of the financial statements.
5
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
| | | | |
Iowa - 0.8% | | | |
| Indianola Community School District, G.O. Bond, FGIC, 5.20%, 6/1/2021 | Aaa | $425,000 | $445,536 |
| Iowa City, Sewer, Revenue Bond, MBIA, 5.75%, 7/1/2021 | Aaa | 250,000 | 250,365 |
| Iowa City Community School District, G.O. Bond, FSA, 4.00%, 6/1/2018 | Aaa | 425,000 | 403,440 |
| | | | 1,099,341 |
| | | | |
Kansas - 3.4% | | | |
| Johnson County Unified School District No. 229, Prerefunded Balance, G.O. Bond, Series A, 5.00%, 10/1/2014 | Aa1 | 220,000 | 223,214 |
| Johnson County Unified School District No. 231, Prerefunded Balance, G.O. Bond, Series A, FGIC, 5.75%, 10/1/2016 | Aaa | 500,000 | 527,970 |
| Johnson & Miami Counties Unified School District No. 230, G.O. Bond, FGIC, 4.00%, 9/1/2022 | Aaa | 1,000,000 | 914,380 |
| Sedgwick County Unified School District No. 265, G.O. Bond, FSA, 5.00%, 10/1/2025 | Aaa | 1,090,000 | 1,124,967 |
| Shawnee County Unified School District No. 450, Shawnee Heights, G.O. Bond, FSA, 4.20%, 9/1/2020 | Aaa | 700,000 | 673,162 |
| Shawnee County Unified School District No. 450, Shawnee Heights, G.O. Bond, FSA, 4.25%, 9/1/2021 | Aaa | 580,000 | 556,748 |
| Wyandotte County School District No. 204,Prerefunded Balance, G.O. Bond, FSA, Series A, 5.375%, 9/1/2015 | Aaa | 290,000 | 305,875 |
| Wyandotte County School District No. 204, Unrefunded Balance, G.O. Bond, FSA, Series A, 5.375%, 9/1/2015 | Aaa | 110,000 | 115,521 |
| | | | 4,441,837 |
| | | | |
Kentucky - 0.2% | | | |
| Kentucky State Turnpike Authority, Economic Development, Revenue Bond, AMBAC, 6.50%, 7/1/2008 | Aaa | 250,000 | 262,455 |
| | | | |
Louisiana - 2.4% | | | |
| Caddo Parish Parishwide School District, G.O. Bond, MBIA, 4.35%, 3/1/2026 | Aaa | 660,000 | 620,822 |
| Caddo Parish Parishwide School District, G.O. Bond, MBIA, 4.375%, 3/1/2027 | Aaa | 1,090,000 | 1,024,055 |
| Lafayette Public Power Authority, Revenue Bond, Series A, AMBAC, 5.00%, 11/1/2012 | Aaa | 730,000 | 759,682 |
| New Orleans Sewage Service, Revenue Bond, FGIC, 5.25%, 6/1/2012 | Aaa | 300,000 | 305,403 |
| Orleans Parish Parishwide School District, G.O. Bond, Series A, FGIC, 5.125%, 9/1/2016 | Aaa | 400,000 | 403,632 |
| | | | 3,113,594 |
| | | | |
Maine - 0.6% | | | |
| Kennebec Water District, Revenue Bond, FSA, 5.125%, 12/1/2021 | Aaa | 750,000 | 764,910 |
The accompanying notes are an integral part of the financial statements.
6
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
| | | | |
Maryland - 1.7% | | | |
| Anne Arundel County, Water & Sewer, G.O. Bond, 4.20%, 3/1/2025 | Aa1 | $1,770,000 | $1,647,569 |
| Anne Arundel County, Water & Sewer, G.O. Bond, 4.125%, 3/1/2024 | Aa1 | 345,000 | 320,250 |
| Baltimore, Water Project, Revenue Bond, Series A, FGIC, 5.55%, 7/1/2009 | Aaa | 260,000 | 272,272 |
| | | | 2,240,091 |
| | | | |
Massachusetts - 3.0% | | | |
| Boston, G.O. Bond, Series A, MBIA, 4.125%, 1/1/2021 | Aaa | 1,000,000 | 955,750 |
| Boston, G.O. Bond, Series A, MBIA, 4.125%, 1/1/2022 | Aaa | 410,000 | 388,582 |
| Lowell, State Qualified, G.O. Bond, AMBAC, 5.00%, 2/1/2020 | Aaa | 500,000 | 515,820 |
| Massachusetts State, G.O. Bond, Series C, AMBAC, 5.75%, 8/1/2010 | Aaa | 400,000 | 426,876 |
| Massachusetts State, G.O. Bond, Series D, 5.25%, 10/1/2014 | Aa2 | 1,000,000 | 1,071,090 |
| Plymouth, G.O. Bond, MBIA, 5.25%, 10/15/2020 | Aaa | 100,000 | 105,495 |
| Richmond, G.O. Bond, MBIA, 5.00%, 4/15/2021 | Aaa | 400,000 | 414,824 |
| | | | 3,878,437 |
| | | | |
Michigan - 2.9% | | | |
| Bendle Public School District, School Building & Site, G.O. Bond, FGIC, 4.50%, 5/1/2028 | Aaa | 640,000 | 616,090 |
| Detroit City School District, School Building & Site Impt., G.O. Bond, FGIC, 5.00%, 5/1/2033 | Aaa | 750,000 | 756,862 |
| Holly Area School District, G.O. Bond, FGIC, 5.00%, 5/1/2022 | Aaa | 500,000 | 509,625 |
| Hudsonville Public Schools, Prerefunded Balance, G.O. Bond, FGIC, 5.15%, 5/1/2027 | Aaa | 185,000 | 189,270 |
| Hudsonville Public Schools, Unrefunded Balance, G.O. Bond, FGIC, 5.15%, 5/1/2027 | Aaa | 40,000 | 40,527 |
| Lincoln Park School District, G.O. Bond, FGIC, 5.00%, 5/1/2026 | Aaa | 480,000 | 483,902 |
| Muskegon Water, Revenue Bond, FSA, 4.75%, 5/1/2019 | Aaa | 565,000 | 574,210 |
| Oakland County, George W. Kuhn Drain District, G.O. Bond, Series B, 5.375%, 4/1/2021 | Aaa | 475,000 | 489,958 |
| St. Joseph County, Sewer Disposal Systems - Constantine, G.O. Bond, FSA, 5.00%, 4/1/2012 | Aaa | 100,000 | 101,236 |
| | | | 3,761,680 |
| | | | |
Minnesota - 1.8% | | | |
| Big Lake Independent School District No. 727, G.O. Bond, MBIA, 5.50%, 2/1/2014 | Aaa | 500,000 | 505,105 |
| Brooklyn Center Independent School District No. 286, School Building, G.O. Bond, Series A, MBIA, 4.375%, 2/1/2026 | Aaa | 1,105,000 | 1,051,153 |
The accompanying notes are an integral part of the financial statements.
7
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
| | | | |
Minnesota (continued) | | | |
| Pine County, G.O. Bond, Series A, FGIC, 4.40%, 2/1/2028 | Aaa | $555,000 | $525,485 |
| Western Minnesota Municipal Power Agency, Revenue Bond, 6.625%, 1/1/2016 | Aaa | 175,000 | 201,126 |
| | | | 2,282,869 |
| | | | |
Mississippi - 1.2% | | | |
| Biloxi Public School District, Revenue Bond, MBIA, 5.00%, 4/1/2017 | Aaa | 500,000 | 509,805 |
| De Soto County School District, G.O. Bond, FSA, 5.00%, 2/1/2013 | Aaa | 1,000,000 | 1,042,720 |
| | | | 1,552,525 |
| | | | |
Missouri - 0.4% | | | |
| Metropolitan St. Louis Sewer District Wastewater System, Revenue Bond, Series A, MBIA, 3.60%, 5/1/2013 | Aaa | 600,000 | 578,844 |
| | | | |
Nevada - 1.9% | | | |
| Clark County Transportation, G.O. Bond, Series A, FGIC, 4.50%, 12/1/2019 | Aaa | 500,000 | 496,995 |
| Clark County Public Facilities, G.O. Bond, Series C, FGIC, 5.00%, 6/1/2024 | Aaa | 425,000 | 433,415 |
| Nevada State, Project Nos. 66 & 67, Prerefunded Balance, G.O. Bond, Series A, FGIC, 5.00%, 5/15/2028 | Aaa | 625,000 | 638,025 |
| Nevada State, Project Nos. 66 & 67, Unrefunded Balance, G.O. Bond, Series A, FGIC, 5.00%, 5/15/2028 | Aaa | 125,000 | 126,039 |
| Truckee Meadows, Water Authority, Revenue Bond, Series A, FSA, 5.00%, 7/1/2025 | Aaa | 750,000 | 765,735 |
| | | | 2,460,209 |
| | | | |
New Jersey - 3.4% | | | |
| East Brunswick Township Board of Education, G.O. Bond, FSA, 4.50%, 11/1/2028 | Aaa | 835,000 | 806,401 |
| East Brunswick Township Board of Education, G.O. Bond, FSA, 4.50%, 11/1/2029 | Aaa | 1,000,000 | 964,910 |
| Essex County, G.O. Bond, Series A, MBIA, 4.50%, 5/1/2031 | Aaa | 500,000 | 483,270 |
| Jersey City Water, Prerefunded Balance, G.O. Bond, FSA, 5.50%, 3/15/2011 | Aaa | 225,000 | 232,087 |
| Morris County Impt. Authority, School District, Morris Hills Regional District, Revenue Bond, 3.70%, 10/1/2018 | Aaa | 540,000 | 493,792 |
| North Hudson Sewerage Authority, Revenue Bond, FGIC, 5.25%, 8/1/2016 | Aaa | 250,000 | 252,753 |
| South Brunswick Township Board of Education, G.O. Bond, MBIA, 4.125%, 8/1/2012 | Aaa | 1,200,000 | 1,208,964 |
| | | | 4,442,177 |
The accompanying notes are an integral part of the financial statements.
8
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
| | | | |
New Mexico - 0.6% | | | |
| New Mexico Finance Authority, Public Project Revolving Fund, Revenue Bond, Series A, MBIA, 3.25%, 6/1/2013 | Aaa | $800,000 | $741,760 |
| | | | |
New York - 3.9% | | | |
| Erie County, Public Impt., G.O. Bond, Series A, FGIC, 5.00%, 9/1/2014 | Aaa | 380,000 | 398,666 |
| Mount Morris Central School District, G.O. Bond, FGIC, 4.125%, 6/15/2014 | Aaa | 1,290,000 | 1,297,121 |
| New York City Municipal Water Finance Authority, Revenue Bond, Series E, FGIC, 5.00%, 6/15/2026 | Aaa | 750,000 | 762,488 |
| New York State Urban Development Corp., Revenue Tax Bond, Series B, MBIA, 5.00%, 1/1/2019 | AAA2 | 1,000,000 | 1,044,610 |
| Orange County, G.O. Bond, 5.125%, 9/1/2024 | Aa1 | 500,000 | 512,630 |
| Orange County, G.O. Bond, Series A, 3.00%, 11/1/2006 | Aa1 | 500,000 | 498,645 |
| Spencerport Central School District, G.O. Bond, FSA, 5.00%, 11/15/2012 | Aaa | 350,000 | 359,559 |
| Westchester County, G.O. Bond, 4.75%, 11/15/2016 | Aaa | 15,000 | 15,206 |
| Westchester County, Unrefunded Balance, G.O. Bond, 4.75%, 11/15/2016 | Aaa | 135,000 | 136,604 |
| | | | 5,025,529 |
| | | | |
North Carolina - 2.4% | | | |
| Cary, G.O. Bond, 5.00%, 3/1/2018 | Aaa | 700,000 | 731,969 |
| Mecklenburg County, Public Impt., G.O. Bond, Series A, 4.125%, 2/1/2022 | Aaa | 1,455,000 | 1,386,455 |
| Raleigh, G.O. Bond, 4.40%, 6/1/2017 | Aaa | 250,000 | 252,892 |
| Union County, Prerefunded Balance, G.O. Bond, Series B, FGIC, 5.30%, 3/1/2013 | Aaa | 250,000 | 263,503 |
| Wilson, G.O. Bond, AMBAC, 5.10%, 6/1/2019 | Aaa | 400,000 | 417,240 |
| | | | 3,052,059 |
| | | | |
North Dakota - 1.4% | | | |
| Fargo, G.O. Bond, Series A, MBIA, 4.70%, 5/1/2030 | Aaa | 1,840,000 | 1,796,061 |
| | | | |
Ohio - 4.7% | | | |
| Cleveland, Various Purposes, G.O. Bond, MBIA, 5.00%, 12/1/2012 | Aaa | 1,140,000 | 1,200,979 |
| Columbus, Limited Tax, G.O. Bond, Series 2, 5.00%, 7/1/2017 | Aaa | 1,000,000 | 1,051,120 |
| Licking Heights Local School District, School Facilities Construction & Impt., G.O. Bond, Series A, MBIA, 5.00%, 12/1/2022 | Aaa | 1,450,000 | 1,500,576 |
| Newark City School District, School Impt., G.O. Bond, FGIC, 4.25%, 12/1/2027 | Aaa | 500,000 | 459,290 |
| Oak Hills Local School District, Prerefunded Balance, G.O. Bond, MBIA, 5.125%, 12/1/2025 | Aaa | 490,000 | 503,539 |
The accompanying notes are an integral part of the financial statements.
9
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
| | | | |
Ohio (continued) | | | |
| Ohio State Conservation Project, G.O. Bond, Series A, 5.00%, 3/1/2015 | Aa1 | $1,000,000 | $1,052,140 |
| Springfield City School District, G.O. Bond, FGIC, 5.20%, 12/1/2023 | Aaa | 325,000 | 340,451 |
| | | | 6,108,095 |
| | | | |
Oklahoma - 2.0% | | | |
| Oklahoma City, G.O. Bond, MBIA, 4.25%, 3/1/2023 | Aaa | 2,000,000 | 1,894,460 |
| Oklahoma State Turnpike Authority, Revenue Bond, Series A, FGIC, 5.00%, 1/1/2023 | Aaa | 750,000 | 762,862 |
| | | | 2,657,322 |
| | | | |
Oregon - 2.2% | | | |
| Josephine County Unit School District Three Rivers, Prerefunded Balance, G.O. Bond, FSA, 5.25%, 6/15/2017 | Aaa | 825,000 | 872,850 |
| Oregon State Board of Higher Education, G.O. Bond, Series B, 5.00%, 8/1/2033 | Aa3 | 1,500,000 | 1,511,865 |
| Washington County School District No. 015 Forest Grove, Prerefunded Balance, G.O. Bond, FSA, 5.50%, 6/15/2017 | Aaa | 500,000 | 534,580 |
| | | | 2,919,295 |
| | | | |
Pennsylvania - 4.3% | | | |
| Beaver County, G.O. Bond, MBIA, 5.15%, 10/1/2017 | Aaa | 300,000 | 303,876 |
| Jenkintown School District, G.O. Bond, Series A, FGIC, 4.50%, 5/15/2032 | Aaa | 1,000,000 | 950,930 |
| Pennsylvania State, G.O. Bond, MBIA, 5.00%, 1/1/2011 | Aaa | 1,500,000 | 1,566,900 |
| Pennsylvania State Turnpike Commission, Prerefunded Balance, Revenue Bond, AMBAC, 5.375%, 7/15/2019 | Aaa | 530,000 | 568,261 |
| Philadelphia, Water & Wastewater, Revenue Bond, MBIA, 5.60%, 8/1/2018 | Aaa | 20,000 | 21,115 |
| Plum Boro School District, G.O. Bond, Series A, FGIC, 4.50%, 9/15/2030 | AAA2 | 855,000 | 819,637 |
| Uniontown Area School District, G.O. Bond, FSA, 4.35%, 10/1/2034 | AAA2 | 1,500,000 | 1,369,710 |
| | | | 5,600,429 |
| | | | |
Rhode Island - 0.8% | | | |
| Rhode Island Clean Water Finance Agency, Revenue Bond, Series A, MBIA, 5.00%, 10/1/2035 | Aaa | 1,000,000 | 1,008,400 |
| | | | |
South Carolina - 3.4% | | | |
| Beaufort County School District, Prerefunded Balance, G.O. Bond, Series A, 5.00%, 3/1/2020 | Aa1 | 500,000 | 522,010 |
| Charleston County, Transportation Sales Tax, G.O. Bond, 5.00%, 11/1/2017 | Aa1 | 1,000,000 | 1,055,120 |
The accompanying notes are an integral part of the financial statements.
10
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
| | | | |
South Carolina (continued) | | | |
| Orangeburg County Consolidated School District 5, G.O. Bond, 5.625%, 3/1/2019 | Aa1 | $800,000 | $842,712 |
| South Carolina, Transportation Infrastructure Bank, Prerefunded Balance, Revenue Bond, Series A, AMBAC, 5.25%, 10/1/2021 | Aaa | 1,500,000 | 1,574,430 |
| South Carolina State Highway, Prerefunded Balance, G.O. Bond, Series B, 5.625%, 7/1/2010 | Aaa | 350,000 | 357,017 |
| | | | 4,351,289 |
| | | | |
South Dakota - 0.5% | | | |
| Rapid City Area School District No. 51-4, Capital Outlay Certificates, G.O. Bond, FSA, 4.75%, 1/1/2018 | Aaa | 650,000 | 658,840 |
| | | | |
Tennessee - 2.7% | | | |
| Cleveland Water & Sewer, Prerefunded Balance, G.O. Bond, FGIC, 5.35%, 9/1/2023 | Aaa | 450,000 | 457,947 |
| Rhea County, Prerefunded Balance, G.O. Bond, MBIA, 5.00%, 4/1/2018 | Aaa | 950,000 | 992,360 |
| Shelby County, G.O. Bond, Series A, 5.50%, 3/1/2010 | Aa2 | 2,000,000 | 2,108,800 |
| | | | 3,559,107 |
| | | | |
Texas - 4.7% | | | |
| Alvin Independent School District, G.O. Bond, 4.375%, 2/15/2024 | Aaa | 750,000 | 710,632 |
| Brazoria County, G.O. Bond, FGIC, 4.75%, 9/1/2011 | Aaa | 445,000 | 451,412 |
| Brazos River Authority, Revenue Bond, Series B, FGIC, 4.25%, 12/1/2017 | Aaa | 1,125,000 | 1,096,335 |
| Huntsville Independent School District, G.O. Bond, 4.50%, 2/15/2029 | Aaa | 1,220,000 | 1,157,817 |
| McKinney Waterworks & Sewer, Revenue Bond, FGIC, 4.75%, 3/15/2024 | Aaa | 1,000,000 | 998,740 |
| North Texas Municipal Water District, Regional Wastewater, Revenue Bond, FSA, 5.00%, 6/1/2012 | Aaa | 150,000 | 151,296 |
| Richardson Independent School District, G.O. Bond, Series B, 5.00%, 2/15/2021 | Aaa | 500,000 | 506,610 |
| San Patricio Municipal Water District, Revenue Bond, FSA, 5.20%, 7/10/2028 | Aaa | 490,000 | 501,412 |
| Waller Consolidated Independent School District, G.O. Bond, 4.75%, 2/15/2023 | Aaa | 500,000 | 501,005 |
| | | | 6,075,259 |
| | | | |
Utah - 2.0% | | | |
| Alpine School District, Prerefunded Balance, G.O. Bond, FGIC, 5.375%, 3/15/2009 | Aaa | 250,000 | 250,802 |
| Mountain Regional Water Special Service District, Revenue Bond, MBIA, 5.00%, 12/15/2030 | Aaa | 1,240,000 | 1,262,370 |
The accompanying notes are an integral part of the financial statements.
11
Investment Portfolio - June 30, 2006 (unaudited)
| | Credit | | |
| | Rating1 | Principal | Value |
| | (unaudited) | Amount | (Note 2) |
| | | | |
Utah (continued) | | | |
| St. George, Parks and Recreation, G.O. Bond, AMBAC, 4.00%, 8/1/2019 | Aaa | $795,000 | $746,076 |
| Utah State Building Ownership Authority, Revenue Bond, Series C, FSA, 5.50%, 5/15/2011 | Aaa | 300,000 | 319,395 |
| | | | 2,578,643 |
| | | | |
Virginia - 0.9% | | | |
| Norfolk, Capital Impt., G.O. Bond, MBIA, 4.375%, 3/1/2024 | Aaa | 685,000 | 664,039 |
| Richmond, G.O. Bond, Series B, FSA, 4.75%, 7/15/2023 | Aaa | 400,000 | 404,524 |
| Spotsylvania County Water & Sewer Systems, Prerefunded Balance, Revenue Bond, MBIA, 5.25%, 6/1/2016 | Aaa | 130,000 | 134,222 |
| | | | 1,202,785 |
| | | | |
Washington - 4.2% | | | |
| Franklin County, G.O. Bond, FGIC, 5.125%, 12/1/2022 | Aaa | 1,000,000 | 1,035,440 |
| King County, G.O. Bond, Series B, MBIA, 5.00%, 1/1/2030 | Aaa | 400,000 | 403,320 |
| King County, Sewer, Revenue Bond, Series A, MBIA, 4.50%, 1/1/2032 | Aaa | 1,070,000 | 1,006,431 |
| King CountySchool District No. 411 Issaquah, G.O. Bond, Series A, FSA, 5.25%, 12/1/2018 | Aaa | 2,420,000 | 2,559,852 |
| Washington State, G.O. Bond, Series A, 5.00%, 1/1/2023 | Aa1 | 410,000 | 413,657 |
| | | | 5,418,700 |
| | | | |
West Virginia - 0.6% | | | |
| West Virginia Water Development Authority, Revenue Bond, Series A-II, FGIC, 4.25%, 11/1/2026 | Aaa | 820,000 | 758,590 |
| | | | |
Wisconsin - 3.0% | | | |
| East Troy School District, G.O. Bond, Series A, MBIA, 4.625%, 10/1/2011 | Aaa | 400,000 | 400,832 |
| Kenosha, G.O. Bond, Series B, FSA, 5.00%, 9/1/2011 | Aaa | 765,000 | 800,840 |
| Oshkosh, Corporate Purposes, G.O. Bond, Series A, FGIC, 5.05%, 12/1/2021 | Aaa | 450,000 | 464,922 |
| Stoughton Area School District, G.O. Bond, FGIC, 4.875%, 4/1/2016 | Aaa | 500,000 | 515,785 |
| Two Rivers Public School District, Prerefunded Balance, G.O. Bond, FSA, 5.625%, 3/1/2019 | Aaa | 415,000 | 438,983 |
| Washington County, Workforce Development Center, G.O. Bond, 3.75%, 3/1/2007 | Aa1 | 25,000 | 24,991 |
| West De Pere School District, Prerefunded Balance, G.O. Bond, Series A, FSA, 5.25%, 10/1/2017 | Aaa | 500,000 | 525,385 |
| Wisconsin State Transportation, Revenue Bond, Series A, FSA, 5.00%, 7/1/2025 | Aaa | 700,000 | 720,972 |
| | | | 3,892,710 |
The accompanying notes are an integral part of the financial statements.
12
Investment Portfolio - June 30, 2006 (unaudited)
| | | | |
| | | | Value |
| | | Shares | (Note 2) |
| | | | |
TOTAL MUNICIPAL SECURITIES | | | |
| (Identified Cost $126,041,578) | | | $125,496,554 |
| | | | |
SHORT-TERM INVESTMENTS - 1.7% | | | |
| Dreyfus Municipal Reserves - Class R | | | |
| (Identified Cost $2,274,325) | | 2,274,325 | 2,274,325 |
| | | | |
TOTAL INVESTMENTS - 98.6% | | | |
| (Identified Cost $128,315,903) | | | 127,770,879 |
| | | | |
OTHER ASSETS, LESS LIABILITIES - 1.4% | | | 1,766,007 |
| | | | |
NET ASSETS - 100% | | | $129,536,886 |
KEY:
G.O. Bond - General Obligation Bond
Impt. - Improvement
No. - Number
Scheduled principal and interest payments are guaranteed by:
AMBAC (AMBAC Assurance Corp.)
FGIC (Financial Guaranty Insurance Co.)
FSA (Financial Security Assurance)
MBIA (MBIA, Inc.)
The insurance does not guarantee the market value of the municipal bonds.
1Credit ratings from Moody’s (unaudited).
2Credit ratings from S&P (unaudited) .
The Series' portfolio holds, as a percentage of net assets, greater than 10% in bonds insured by the following companies: MBIA - 26.5%; FGIC - 19.4%; FSA - 19.2%.
The accompanying notes are an integral part of the financial statements.
13
Statement of Assets and Liabilities (unaudited)
June 30, 2006
ASSETS: | |
| | |
| Investments, at value (identified cost $128,315,903) (Note 2) | $127,770,879 |
| Interest receivable | 1,720,342 |
| Receivable for fund shares sold | 317,656 |
| Dividends receivable | 9,184 |
| Prepaid expenses | 1,977 |
| | |
| TOTAL ASSETS | 129,820,038 |
| | |
LIABILITIES: | |
| | |
| Accrued management fees (Note 3) | 53,143 |
| Accrued fund accounting and transfer agent fees (Note 3) | 12,117 |
| Payable for fund shares repurchased | 201,791 |
| Audit fees payable | 16,101 |
| | |
| TOTAL LIABILITIES | 283,152 |
| | |
TOTAL NET ASSETS | $129,536,886 |
| | |
NET ASSETS CONSIST OF: | |
| | |
| Capital stock | $121,580 |
| Additional paid-in-capital | 129,151,306 |
| Undistributed net investment income | 763,822 |
| Accumulated net realized gain on investments | 45,202 |
| Net unrealized depreciation on investments | (545,024) |
| | |
TOTAL NET ASSETS | $129,536,886 |
| | |
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE ($129,536,886/12,158,026 shares) | $10.65 |
The accompanying notes are an integral part of the financial statements.
14
Statement of Operations (unaudited)
For the Six Months Ended June 30, 2006
INVESTMENT INCOME: | |
| | |
| Interest | $2,599,994 |
| Dividends | 57,694 |
| | |
| Total Investment Income | 2,657,688 |
| | |
EXPENSES: | |
| | |
| Management fees (Note 3) | 304,130 |
| Fund accounting and transfer agent fees (Note 3) | 66,843 |
| Directors' fees (Note 3) | 4,078 |
| Chief Compliance Officer service fees (Note 3) | 2,567 |
| Custodian fees | 6,514 |
| Miscellaneous | 27,442 |
| | |
| Total Expenses | 411,574 |
| | |
| NET INVESTMENT INCOME | 2,246,114 |
| | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | |
| | |
| Net realized gain on investments | 45,202 |
| Net change in unrealized appreciation (depreciation) on investments | (3,068,015) |
| | |
| NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | (3,022,813) |
| | |
| NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $(776,699) |
The accompanying notes are an integral part of the financial statements.
15
Statements of Changes in Net Assets
| | For the Six | |
| | Months Ended | For the |
| | 6/30/06 | Year Ended |
| | (unaudited) | 12/31/05 |
| | | |
INCREASE (DECREASE) IN NET ASSETS: | | |
| | | |
OPERATIONS: | | |
| | | |
| Net investment income | $2,246,114 | $3,656,495 |
| Net realized gain on investments | 45,202 | 104,286 |
| Net change in unrealized appreciation (depreciation) on investments | (3,068,015) | (1,163,694) |
| | | |
| Net increase (decrease) from operations | (776,699) | 2,597,087 |
| | | |
DISTRIBUTIONS TO SHAREHOLDERS (Note 7): | | |
| | | |
| From net investment income | (2,071,155) | (3,408,479) |
| From net realized gain on investments | - | (108,954) |
| | | |
| Total distributions to shareholders | (2,071,155) | (3,517,433) |
| | | |
CAPITAL STOCK ISSUED AND REPURCHASED: | | |
| | | |
| Net increase from capital share transactions (Note 5) | 19,420,188 | 27,443,894 |
| | | |
| Net increase in net assets | 16,572,334 | 26,523,548 |
| | | |
NET ASSETS: | | |
| | | |
| Beginning of period | 112,964,552 | 86,441,004 |
| | | |
End of period (including undistributed net investment income of $763,822 and $588,863, respectively) | $129,536,886 | $112,964,552 |
The accompanying notes are an integral part of the financial statements.
16
Financial Highlights
| | For the Six | | | | | |
| | Months Ended | | | | | |
| | 6/30/06 | For the Years Ended |
| | (unaudited) | 12/31/05 | 12/31/04 | 12/31/03 | 12/31/02 | 12/31/01 |
| | | | | | | |
Per share data (for a share outstanding | | | | | | |
throughout each period): | | | | | | |
| | | | | | | |
Net asset value - Beginning of period | $10.90 | $10.99 | $11.04 | $11.00 | $10.54 | $10.57 |
| | | | | | | |
| Income (loss) from investment operations: | | | | | | |
| Net investment income | 0.19 | 0.37 | 0.37 | 0.41 | 0.44 | 0.45 |
| Net realized and unrealized gain (loss) on investments | (0.26) | (0.09) | 0.04 | 0.10 | 0.51 | (0.06) |
| | | | | | | |
| Total from investment operations | (0.07) | 0.28 | 0.41 | 0.51 | 0.95 | 0.39 |
| | | | | | | |
| Less distributions to shareholders: | | | | | | |
| From net investment income | (0.18) | (0.36) | (0.45) | (0.41) | (0.41) | (0.41) |
| From net realized gain on investments | - | (0.01) | (0.01) | (0.06) | (0.08) | (0.01) |
| | | | | | | |
| Total distributions to shareholders | (0.18) | (0.37) | (0.46) | (0.47) | (0.49) | (0.42) |
| | | | | | | |
Net asset value - End of period | $10.65 | $10.90 | $10.99 | $11.04 | $11.00 | $10.54 |
| | | | | | | |
Total return1 | (0.66%) | 2.60% | 3.80% | 4.65% | 9.21% | 3.72% |
| | | | | | | |
Ratios (to average net assets)/Supplemental Data: | | | | | | |
| Expenses | 0.68%2 | 0.71% | 0.77% | 0.78% | 0.82% | 0.78% |
| Net investment income | 3.69%2 | 3.58% | 3.63% | 3.83% | 4.07% | 4.26% |
| | | | | | | |
| Portfolio turnover | 3% | 2% | 5% | 7% | 11% | 3% |
| | | | | | | |
Net assets - End of period (000's omitted) | $129,537 | $112,965 | $86,441 | $63,754 | $55,169 | $53,266 |
1Represents aggregate total return for the period indicated, and assumes reinvestment of all distributions. Periods less than one year are not annualized.
2Annualized.
The accompanying notes are an integral part of the financial statements.
17
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Diversified Tax Exempt Series (the "Series") is a no-load diversified series of Exeter Fund, Inc. (the “Fund”). The Fund is organized in Maryland and is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company.
The Series' investment objective is to provide as high a level of current income exempt from federal income tax as the Advisor believes is consistent with the preservation of capital.
The Fund’s Advisor is Manning & Napier Advisors, Inc. (the “Advisor”). Shares of the Series are offered to investors, clients and employees of the Advisor and its affiliates. The total authorized capital stock of the Fund consists of 1.7 billion shares of common stock each having a par value of $0.01. As of June 30, 2006, 1.16 billion shares have been designated in total among 21 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 (the “Board”).
Securities for which representative valuations or prices are not available from the Fund's pricing service may be 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.
Short-term investments that mature in sixty days or less are valued at amortized cost, which approximates market value. Investments in open-end investment companies are valued at their net asset value per share on valuation date.
Security Transactions, Investment Income and Expenses
Security transactions are accounted for on trade date. Interest income, including amortization of premium and accretion of discounts, is earned from settlement date and accrued daily. Dividend 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 in such a manner as deemed equitable by the Fund's Board, taking into consideration, among other things, the nature and type of expense.
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.
Federal 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 that the Series distributes to shareholders each year its taxable income, including any net realized gains on investments, in accordance with requirements of the Internal Revenue Code. Accordingly, no provision for federal income tax or excise tax has been made in the financial statements.
18
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Distributions of Income and Gains
Distributions to shareholders of net investment income are made quarterly. 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.
Indemnifications
The Fund’s organizational documents provide former and current directors and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Other
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 income and expenses during the reporting period. Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory Agreement (the “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 Agreement, personnel of the Advisor provide the Series with advice and assistance in the choice of investments and the execution of securities transactions, and otherwise maintain the Series’ organization. The Advisor also provides the Fund with necessary office space and fund administration and support services. The salaries of all officers of the Fund (except a percentage of the Fund’s Chief Compliance Officer’s salary, which is paid by the Fund, and the Special Assistant Secretary’s salary, which is paid by BISYS Fund Services Ohio, Inc. (“BISYS”)), 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. Each "non-affiliated" Director receives an annual stipend, which is allocated among all the active series of the Fund. In addition, these Directors also receive a fee per Board meeting attended for each active series of the Fund plus a fee for each committee meeting attended.
The Advisor has contractually agreed, until at least April 30, 2007, to waive its fee and, if necessary, pay other operating expenses of the Series in order to maintain total expenses for the Series at no more than 0.85% of average daily net assets each year. In addition to its contractual agreement to limit expenses to 0.85%, the Advisor has voluntarily agreed to waive fees and reimburse expenses during the current fiscal year in order to keep total operating expenses from exceeding 0.78% of average daily net assets. The Advisor may change or eliminate all or part of its voluntary waiver at any time. For the six months ended June 30, 2006, the Advisor did not waive its management fee or reimburse any expenses of 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.
19
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
For fund accounting and transfer agent services, the Fund pays the Advisor an annual fee of 0.12% of the Fund’s average daily net assets up to $900 million, 0.09% of the Fund’s average daily net assets between $900 million and $1.5 billion, and 0.05% of the Fund’s average daily net assets over $1.5 billion. These fee rates are scheduled to be reduced each year through 2007. Additionally, certain transaction and account-based fees and out-of-pocket expenses, including charges for reporting relating to the Fund’s compliance program, are charged. Expenses not directly attributable to a series are allocated based on each series’ relative net assets or number of accounts, depending on the expense. The Advisor has an agreement with BISYS under which BISYS serves as sub-accounting services and sub-transfer agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2006, purchases and sales of securities, other than United States Government securities and short-term securities, were $20,485,658 and $2,986,650, respectively. There were no purchases or sales of United States Government securities.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Diversified Tax Exempt Series were:
| | For the Six Months Ended 6/30/06 | For the Year Ended 12/31/05 |
| | | | | |
| | Shares | Amount | Shares | Amount |
| | | | | |
| Sold | 2,183,905 | $23,694,834 | 3,259,615 | $35,783,025 |
| Reinvested | 184,268 | 1,985,935 | 306,477 | 3,340,725 |
| Repurchased | (578,487) | (6,260,581) | (1,066,096) | (11,679,856) |
| | | | | |
| Total | 1,789,686 | $19,420,188 | 2,499,996 | $27,443,894 |
Substantially all of the Series’ shares represent investments by fiduciary accounts over which the Advisor has sole investment discretion.
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the normal course of its investing activities to assist in managing exposure to various market risks. These financial instruments include written options and futures contracts and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. No such investments were held by the Series on June 30, 2006.
| 7. | FEDERAL INCOME TAX INFORMATION |
The amount and characterization of certain income and capital gains to be distributed are determined in accordance with federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. The Series may periodically make reclassifications among its capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations, without impacting the Series' net asset value. Any such reclassifications are not reflected in the financial highlights.
20
Notes to Financial Statements (unaudited)
| 7. | FEDERAL INCOME TAX INFORMATION (continued) |
The final determination of the tax character of current year distributions will be made at the conclusion of the fiscal year. The tax character of distributions paid for the year ended December 31, 2005 were as follows:
| Tax exempt income | $3,408,647 |
| Long-term capital gains | 108,786 |
At June 30, 2006, the identified cost of investments for federal income tax purposes, the resulting gross unrealized appreciation and depreciation, and the net unrealized depreciation were as follows:
| Cost for federal income tax purposes | $128,271,690 |
| | |
| Unrealized appreciation | $1,714,850 |
| Unrealized depreciation | (2,215,661) |
| | |
| Net unrealized depreciation | $(500,811) |
On May 15, 2006, the Fund’s Board approved a change in the name of the Fund from Exeter Fund, Inc. to Manning & Napier Fund, Inc. The name change will become effective when filed with the Securities and Exchange Commission in the next few months.
21
Literature Requests (unaudited)
Proxy Voting Policies and Procedures
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available, without charge, upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission’s (SEC) web site http://www.sec.gov
Proxy Voting Record
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30th is available, without charge, upon request:
By phone 1-800-466-3863
On the SEC’s web site http://www.sec.gov
Quarterly Portfolio Holdings
The Series’ complete schedule of portfolio holdings for the 1st and 3rd quarters of each fiscal year are provided on Form N-Q, and are available, without charge, upon request:
By phone 1-800-466-3863
On the SEC’s web site http://www.sec.gov
The Series’ Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Prospectus and Statement of Additional Information (SAI)
The prospectus and SAI provide additional information about each Series, including charges, expenses and risks. These documents are available, without charge, upon request:
By phone 1-800-466-3863
On the SEC’s web site http://www.sec.gov
On the Advisor’s web site http://www.manningnapieradvisors.com/www/exeter_fund.asp
Additional information available at www.manningnapieradvisors.com/www/exeter_fund.asp
| 1. | Fund Holdings - Month-End |
| 2. | Fund Holdings - Quarter-End |
| 3. | Shareholder Report - Annual |
| 4. | Shareholder Report - Semi-Annual |
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ITEM 2: CODE OF ETHICS
Not applicable for Semi-Annual Reports.
ITEM 3: AUDIT COMMITTEE FINANCIAL EXPERT
Not applicable for Semi-Annual Reports.
ITEM 4: PRINCIPAL ACCOUNTANT AND FEES
Not applicable for Semi-Annual Reports.
ITEM 5: AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6: SCHEDULE OF INVESTMENTS
See Investment Portfolios under Item 1 on this Form N-CSR.
ITEM 7: DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 8: PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 9: PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS
Not applicable.
ITEM 10: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no material changes to the procedure by which shareholders may recommend nominees to the registrant's board of directors.
ITEM 11: CONTROLS AND PROCEDURES
(a) Based on their evaluation of the Funds' disclosure controls and procedures, as of a date within 90 days of the filing date, the Funds' Principal Executive Officer and Principal Financial Officer have concluded that the Funds' disclosure controls and procedures are: (i) reasonably designed to ensure that information required to be disclosed in this report is appropriately communicated to the Funds' officers to allow timely decisions regarding disclosures required in this report; (ii) reasonably designed to ensure that information required to be disclosed in this report is recorded, processed, summarized and reported in a timely manner; and (iii) are effective in achieving the goals described in (i) and (ii) above.
(b) During the second fiscal quarter of the period covered by this report, there have been no changes in the Funds' internal control over financial reporting that the above officers believe to have materially affected, or to be reasonably likely to materially affect, the Funds' internal control over financial reporting.
ITEM 12: EXHIBITS
(a)(1) Not applicable for Semi-Annual Reports.
(a)(2) Separate certifications for the Registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached as Ex-99.CERT.
(a)(3) Not applicable.
(b) A certification of the Registrant's principal executive officer and principal financial officer, as required by 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule 30a-2(b) under the Investment Company Act of 1940, is attached as Ex-99.906CERT. The certification furnished pursuant to this paragraph is not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certification is not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates them by reference.
