UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
INVESTMENT COMPANY ACT FILE NUMBER 811-04087
------------------------------------
EXETER FUND, INC.
- ---------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
1100 CHASE SQUARE, ROCHESTER, NY 14604
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
B. REUBEN AUSPITZ 1100 CHASE SQUARE, ROCHESTER, NY 14604
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(NAME AND ADDRESS OF AGENT FOR SERVICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 585-325-6880
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DATE OF FISCAL YEAR END: OCTOBER 31, 2004
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DATE OF REPORTING PERIOD: NOVEMBER 1, 2003 THROUGH APRIL 30, 2004
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FORM N-CSR IS TO BE USED BY MANAGEMENT INVESTMENT COMPANIES TO FILE REPORTS WITH
THE COMMISSION NOT LATER THAN 10 DAYS AFTER THE TRANSMISSION TO STOCKHOLDERS OF
ANY REPORT THAT IS REQUIRED TO BE TRANSMITTED TO STOCKHOLDERS UNDER RULE 30E-1
UNDER THE INVESTMENT COMPANY ACT OF 1940 (17 CFR 270.30E-1). THE COMMISSION MAY
USE THE INFORMATION PROVIDED ON FORM N-CSR IN ITS REGULATORY, DISCLOSURE REVIEW,
INSPECTION, AND POLICYMAKING ROLES.
A REGISTRANT IS REQUIRED TO DISCLOSE THE INFORMATION SPECIFIED BY FORM N-CSR,
AND THE COMMISSION WILL MAKE THIS INFORMATION PUBLIC. A REGISTRANT IS NOT
REQUIRED TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN FORM N-CSR
UNLESS THE FORM DISPLAYS A CURRENTLY VALID OFFICE OF MANAGEMENT AND BUDGET
("OMB") CONTROL NUMBER. PLEASE DIRECT COMMENTS CONCERNING THE ACCURACY OF THE
INFORMATION COLLECTION BURDEN ESTIMATE AND ANY SUGGESTIONS FOR REDUCING THE
BURDEN TO SECRETARY, SECURITIES AND EXCHANGE COMMISSION, 450 FIFTH STREET, NW,
WASHINGTON, DC 20549-0609. THE OMB HAS REVIEWED THIS COLLECTION OF INFORMATION
UNDER THE CLEARANCE REQUIREMENTS OF 44 U.S.C. SECTION 3507.
June 29, 2004
To Shareholders of the following Series of the Exeter Fund:
Pro-Blendsm Conservative Term Series
Pro-Blendsm Moderate Term Series
Pro-Blendsm Extended Term Series
Pro-Blendsm Maximum Term Series
Tax Managed Series
Equity Series
Overseas Series
Dear Shareholder:
Enclosed is a copy of the Semi-Annual Report for each of the above Series of the
Exeter Fund in which you were invested as of April 30, 2004. The reports include
information about the Series' performance as well as portfolio listings as of
that date.
Please contact our Fund Services department at 1-800-466-3863 if you have any
questions about the Semi-Annual Reports or about the Fund.
Sincerely,
/s/ Amy J. Williams
Amy J. Williams
Fund Services Manager
Exeter Fund, Inc.
Semi-Annual Report
April 30, 2004
Tax Managed Series
Management Discussion and Analysis (unaudited)
Dear Shareholders:
The economic recovery has solidified since our last correspondence: the third
quarter 2003 gross domestic product figure surprised on the upside, confirming
the optimism that had been building during the prior months. As a result,
equity markets continued marching upward well into January, as investors rushed
to participate in the returns associated with the early stages of the growth
cycle. Volatility started to increase somewhat in February as investors began
to realize how far equities had come. Markets moved largely sideways through
March, and then slightly downward in April, giving up some of the earlier gains.
Overall, the results were favorable, with the Standard & Poor's (S&P) 500 Total
Return Index (the "Index") returning 6.27% for the six months ended April 30,
2004.
The Tax Managed Series handily outperformed the S&P 500 Total Return Index over
the same period, in part owing to the allocation of assets across sectors. The
Series derived benefit from our over-weighted position in the Energy sector,
which was the best performing sector in the S&P 500 Total Return Index. Also
contributing to our outperformance, though to a lesser extent, was our
overweighted position in Health Care, another top-performing sector in the
Index, as well as our relative underweighting in the underperforming Information
Technology and Financials sectors. The Series currently remains overweighted in
Energy, and we also have significantly decreased our exposure to Information
Technology compared to the Index over the past several months. As always, while
we manage the investment priorities of the Series, we continue to take into
account the tax implications of these decisions as well by strategically
realizing losses when appropriate.
Recent improvement in the labor market has heightened awareness of the
inevitable interest rate tightening cycle, suggesting that equity markets have
already yielded the most dynamic returns associated with the bear market
rebound. We believe that it is early in the U.S. economic and market cycle,
however. In general, our analysis shows stock valuations are already
discounting upward movements in interest rates, whereas bond valuations are more
likely to experience a period of adjustment in the months ahead. Given this
environment, we have reduced some of our exposure to cyclical growth companies,
focusing primarily on high quality companies with growth drivers that are less
sensitive to U.S. economic growth. However, volatility in the stock market is
likely to provide a buying opportunity over the months ahead for us to take
advantage of using our bottom-up driven investment strategies and disciplines.
As always, we appreciate the opportunity to serve you.
Sincerely,
EXETER ASSET MANAGEMENT
1
Portfolio Composition - As of April 30, 2004 (unaudited)
<graphic>
<pie chart>
Sector Allocation*
Consumer Discretionary 21.9%
Consumer Staples 16.8%
Energy 16.0%
Financials 5.8%
Health Care 14.5%
Industrials 5.9%
Information Technology 2.6%
Materials 4.6%
Telecommunication Services 2.9%
Utilities 2.7%
Cash, short-term investments, and liabilities, less other assets 6.3%
*As a percentage of net assets.
2
Performance Update as of April 30, 2004 (unaudited)
Average Annual Total Returns
As of April 30, 2004
--------------------------------
Growth of
One Five Since a $10, 000
Year Year Inception1 Investment
-----------------------------------------------
Exeter Fund, Inc. - Tax Managed Series
Returns Before Taxes 28.04% 6.05% 10.92% $ 24,140
Returns After Taxes on Distributions2 27.99% 5.89% 10.70% $ 23,719
Returns After Taxes on Distributions and Sale of Series Shares2 18.28% 5.13% 9.59% $ 21,770
Standard & Poor's (S&P) 500 Total Return Index3 22.87% -2.26% 9.61% $ 21,820
The value of a $10,000 investment in the Exeter Fund, Inc. - Tax Managed Series
from its inception (11/1/95) to present (4/30/04) as compared to the S&P 500
Total Return Index.
<graphic>
<line chart>
Data for line chart to follow:
Exeter Fund, Inc. S&P 500
Date Tax Managed Series Total Return Index
11/1/1995 $ 10,000 $ 10,000
10/31/1996 11,630 12,408
10/31/1997 15,200 16,392
10/31/1998 14,855 19,996
10/31/1999 18,129 25,127
10/31/2000 23,863 26,656
10/31/2001 20,480 20,022
10/31/2002 18,537 16,999
10/31/2003 21,367 20,532
4/30/2004 24,140 21,820
1Performance numbers for the Series and Index are calculated from November 1,
1995, the Series' inception date. The Series' performance is historical and
may not be indicative of future results.
2Returns after taxes on distributions assume that an investor owned the Series
during the entire period and paid taxes on the Series' distributions. Returns
after taxes on distributions and sale of series shares assume that an investor
paid taxes on the Series' distributions and sold all shares at the end of each
period. After-tax returns reflect the historical highest individual federal
marginal income tax rates and do not reflect state and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ from
those shown. After-tax returns reflect past tax effects and are not indicative
of future tax effects. After-tax returns are not relevant to those investing
through 401(k) plans, IRAs or other tax-deferred arrangements.
3The S&P 500 Total Return Index is an unmanaged capitalization-weighted measure
of 500 widely held common stocks listed on the New York Stock Exchange, American
Stock Exchange and the Over-the-Counter Market. The Index returns assume daily
reinvestment of dividends and, unlike Series returns, do not reflect any fees or
expenses.
3
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
SHARES (NOTE 2)
- -------------------------------------------------------------------
COMMON STOCKS - 93.7%
CONSUMER DISCRETIONARY - 21.9%
HOTELS, RESTAURANTS & LEISURE - 4.6%
Caesars Entertainment, Inc.* 6,400 $ 84,800
Carnival Corp 3,725 158,946
Club Mediterranee S.A.* (France) (Note 7) 925 37,978
---------
281,724
---------
HOUSEHOLD DURABLES - 4.1%
Newell Rubbermaid, Inc 4,350 102,834
Sony Corp. - ADR (Japan) (Note 7) 3,925 150,720
---------
253,554
---------
MEDIA - 7.3%
Cablevision Systems New York Group - Class A* 3,125 68,219
Hearst-Argyle Television, Inc. - Class A 2,025 53,156
Pearson plc (United Kingdom) (Note 7) 7,600 88,682
Time Warner, Inc.* 14,225 239,264
---------
449,321
---------
SPECIALTY RETAIL - 5.9%
Office Depot, Inc.* 9,075 158,903
Staples, Inc. 3,300 85,008
Weight Watchers International, Inc.* 2,975 116,025
---------
359,936
---------
1,344,535
---------
CONSUMER STAPLES - 16.8%
BEVERAGES - 1.1%
Interbrew (Belgium) (Note 7) 2,325 69,845
---------
FOOD & STAPLES RETAILING - 2.9%
Carrefour S.A. (France) (Note 7) 1,675 77,726
The Kroger Co.* 5,600 98,000
---------
175,726
---------
FOOD PRODUCTS - 8.9%
H.J. Heinz Co. 2,675 102,158
Nestle S.A. (Switzerland) (Note 7) 750 189,727
Unilever plc - ADR (United Kingdom) (Note 7) 6,625 254,864
---------
546,749
---------
HOUSEHOLD PRODUCTS - 2.4%
Kimberly-Clark Corp. 2,275 148,899
---------
The accompanying notes are an integral part of the financial statements.
4
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
SHARES (NOTE 2)
- ----------------------------------------------------------------
CONSUMER STAPLES (continued)
PERSONAL PRODUCTS - 1.5%
The Estee Lauder Companies, Inc. - Class A 1,950 $ 89,135
----------
1,030,354
----------
ENERGY - 16.0%
ENERGY EQUIPMENT & SERVICES - 14.4%
Baker Hughes, Inc. 2,800 102,704
Cooper Cameron Corp.* 2,275 109,996
Schlumberger Ltd. 4,550 266,311
Transocean, Inc.* 5,750 159,677
Varco International, Inc.* 4,325 89,484
Weatherford International Ltd.* 3,525 153,267
----------
881,439
----------
OIL & GAS - 1.6%
Amerada Hess Corp. 1,425 101,360
----------
982,799
----------
FINANCIALS - 5.8%
CAPITAL MARKETS - 2.4%
The Bank of New York Co., Inc. 2,250 65,565
SEI Investments Co. 2,900 85,608
----------
151,173
----------
COMMERCIAL BANKS - 3.4%
PNC Financial Services Group 1,325 70,358
U.S. Bancorp 2,950 75,638
Wachovia Corp. 1,325 60,619
----------
206,615
----------
357,788
----------
HEALTH CARE - 14.5%
HEALTH CARE EQUIPMENT & SUPPLIES - 1.7%
Beckman Coulter, Inc. 775 43,276
Millipore Corp.* 1,175 61,605
----------
104,881
----------
HEALTH CARE PROVIDERS & SERVICES - 2.0%
Odyssey Healthcare, Inc.* 3,275 55,053
WebMD Corp.* 7,675 67,463
----------
122,516
----------
The accompanying notes are an integral part of the financial statements.
5
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
SHARES (NOTE 2)
- ---------------------------------------------------------------------
HEALTH CARE (continued)
PHARMACEUTICALS - 10.8%
Novartis AG - ADR (Switzerland) (Note 7) 5,800 $259,840
Pfizer, Inc. 3,791 135,566
Schering-Plough Corp. 15,825 264,752
--------
660,158
--------
887,555
--------
INDUSTRIALS - 5.9%
COMMERCIAL SERVICES & SUPPLIES - 0.9%
Waste Management, Inc. 1,875 53,250
--------
ELECTRICAL EQUIPMENT - 1.7%
Emerson Electric Co. 1,750 105,385
--------
MACHINERY - 1.0%
AGCO Corp.* 3,350 64,487
--------
ROAD & RAIL - 2.3%
CSX Corp. 2,825 86,897
Kansas City Southern* 3,975 55,054
--------
141,951
--------
365,073
--------
INFORMATION TECHNOLOGY - 2.6%
IT SERVICES - 2.0%
First Data Corp. 2,700 122,553
--------
SOFTWARE - 0.6%
Network Associates, Inc.* 2,425 38,024
--------
160,577
--------
MATERIALS - 4.6%
CHEMICALS - 1.7%
Minerals Technologies, Inc. 1,800 105,570
--------
CONTAINERS & PACKAGING - 1.2%
Packaging Corp. of America 3,350 73,633
--------
PAPER & FOREST PRODUCTS - 1.7%
Aracruz Celulose S.A. - ADR (Brazil) (Note 7) 3,300 102,762
--------
281,965
--------
TELECOMMUNICATION SERVICES - 2.9%
WIRELESS TELECOMMUNICATION SERVICES - 2.9%
Vodafone Group plc - ADR (United Kingdom) (Note 7) 7,175 176,075
--------
The accompanying notes are an integral part of the financial statements.
6
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
SHARES/ VALUE
PRINCIPAL AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------------
UTILITIES - 2.7%
ELECTRIC UTILITIES - 2.7%
Allegheny Energy, Inc.* 6,750 $ 93,015
American Electric Power Co., Inc. 2,375 72,295
---------
165,310
---------
TOTAL COMMON STOCKS
(Identified Cost $5,144,724) 5,752,031
---------
SHORT-TERM INVESTMENTS - 6.4%
Dreyfus Treasury Cash Management - Institutional Shares 192,565 192,565
U.S. Treasury Bill, 6/3/2004 $ 200,000 199,847
---------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $392,412) 392,412
---------
TOTAL INVESTMENTS - 100.1%
(Identified Cost $5,537,136) 6,144,443
LIABILITIES, LESS OTHER ASSETS - (0.1%) (5,763)
---------
NET ASSETS - 100% $6,138,680
==========
*Non-income producing security
ADR - American Depository Receipt
The accompanying notes are an integral part of the financial statements.
7
STATEMENT OF ASSETS & LIABILITIES (UNAUDITED)
April 30, 2004
ASSETS:
Investments, at value (identified cost $5,537,136) (Note 2) $6,144,443
Foreign currency, at value (cost $4,795) 4,825
Dividends receivable 8,100
Foreign tax reclaims receivable 1,879
----------
TOTAL ASSETS 6,159,247
----------
LIABILITIES:
Accrued management fees (Note 3) 1,347
Accrued transfer agent fees (Note 3) 1,972
Accrued fund accounting and transfer agent service fees (Note 3) 1,415
Accrued fund accounting fees (Note 3) 563
Audit fees payable 15,020
Other payables and accrued expenses 250
----------
TOTAL LIABILITIES 20,567
----------
TOTAL NET ASSETS $6,138,680
==========
NET ASSETS CONSIST OF:
Capital stock $ 2,704
Additional paid-in-capital 5,215,835
Undistributed net investment income 4,722
Accumulated net realized gain on investments and other assets
and liabilities 308,070
Net unrealized appreciation on investments and other assets
and liabilities 607,349
----------
TOTAL NET ASSETS $6,138,680
==========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE - CLASS A ($6,138,680/270,353 shares) $ 22.71
==========
The accompanying notes are an integral part of the financial statements.
8
STATEMENT OF OPERATIONS (UNAUDITED)
For the Six Months Ended April 30, 2004
INVESTMENT INCOME:
Dividends (net of foreign tax withheld, $1,629) $ 41,816
Interest 983
---------
Total Investment Income 42,799
---------
EXPENSES:
Management fees (Note 3) 28,555
Fund accounting and transfer agent service fees (Note 3) 4,000
Directors' fees (Note 3) 3,330
Transfer agent fees (Note 3) 2,375
Fund accounting fees (Note 3) 1,280
Audit fees 12,035
Custodian fees 1,540
Miscellaneous 4,993
---------
Total Expenses 58,108
Less reduction of expenses (Note 3) (23,826)
---------
Net Expenses 34,282
---------
NET INVESTMENT INCOME 8,517
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on -
Investments 435,634
Foreign currency and other assets and liabilities 55
---------
435,689
---------
Net change in unrealized appreciation on -
Investments 214,855
Foreign currency and other assets and liabilities (55)
---------
214,800
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS 650,489
---------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $659,006
=========
The accompanying notes are an integral part of the financial statements.
9
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX
MONTHS ENDED FOR THE
4/30/04 YEAR ENDED
(UNAUDITED) 10/31/03
------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 8,517 $ 11,204
Net realized gain (loss) on investments 435,689 (60,404)
Net change in unrealized appreciation on investments 214,800 706,886
-------------- ------------
Net increase from operations 659,006 657,686
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 8):
From net investment income (11,932) (23,534)
-------------- ------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase from capital share transactions
(Note 5) 616,907 514,982
-------------- ------------
Net increase in net assets 1,263,981 1,149,134
NET ASSETS:
Beginning of period 4,874,699 3,725,565
-------------- ------------
END OF PERIOD (including undistributed net investment
income of $4,722 and $8,137, respectively) $ 6,138,680 $ 4,874,699
============== ============
The accompanying notes are an integral part of the financial statements.
10
FINANCIAL HIGHLIGHTS
FOR THE SIX
MONTHS ENDED
4/30/04 FOR THE YEARS ENDED
(UNAUDITED) 10/31/03 10/31/02 10/31/01 10/31/00
-------------- --------------------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 20.15 $ 17.59 $ 19.53 $ 22.83 $ 17.42
-------------- --------------------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.04 0.05 0.10 0.11 0.07
Net realized and unrealized gain (loss) on
investments 2.57 2.62 (1.94) (3.34) 5.43
-------------- --------------------- ---------- ---------- ----------
Total from investment operations 2.61 2.67 (1.84) (3.23) 5.50
-------------- --------------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.05) (0.11) (0.10) (0.07) (0.09)
From net realized gain on investments - - - - -
-------------- --------------------- ---------- ---------- ----------
Total distributions to shareholders (0.05) (0.11) (0.10) (0.07) (0.09)
-------------- --------------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 22.71 $ 20.15 $ 17.59 $ 19.53 $ 22.83
============== ===================== ========== ========== ==========
Total return1 12.98% 15.27% (9.49%) (14.17%) 31.63%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 1.20%2 1.20% 1.20% 1.20% 1.20%
Net investment income 0.30%2 0.26% 0.53% 0.67% 0.36%
Portfolio turnover 40% 34% 63% 44% 67%
NET ASSETS - END OF PERIOD (000's omitted) $ 6,139 $ 4,875 $ 3,726 $ 3,362 $ 1,950
============== ===================== ========== ========== ==========
FOR THE YEARS ENDED
10/31/99
--------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $14.46
-------
Income (loss) from investment operations:
Net investment income 0.08
Net realized and unrealized gain (loss) on
investments 3.07
-------
Total from investment operations 3.15
-------
Less distributions to shareholders:
From net investment income (0.13)
From net realized gain on investments (0.06)
-------
Total distributions to shareholders (0.19)
-------
NET ASSET VALUE - END OF PERIOD $17.42
=======
Total return1 22.04%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 1.20%
Net investment income 0.49%
Portfolio turnover 85%
NET ASSETS - END OF PERIOD (000's omitted) $1,069
=======
*The investment advisor did not impose all 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:
0.84%2 2.53% 3.16% 3.23% 3.34% 2.67%
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.
11
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Tax Managed 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 maximize long-term growth while
attempting to minimize the impact of taxes on the Series' total return.
The Series is authorized to issue five classes of shares (Class A, B, C, D and
E). Currently, only Class A shares have been issued. Each class of shares is
substantially the same, except that class-specific distribution and shareholder
servicing expenses are borne by the specific class of shares to which they
relate.
Shares of the Series are offered to investors and employees of Manning & Napier
Advisors, Inc. (the "Advisor"), doing business as Exeter Asset Management, and
its affiliates. The total authorized capital stock of the Fund consists of 1.7
billion shares of common stock each having a par value of $0.01. As of April 30,
2004, 960 million shares have been designated in total among 18 series, of which
37.5 million have been designated as Tax Managed Series Class A common stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities and options,
listed on an exchange other than the NASDAQ National Market System are valued at
the latest quoted sales price of the exchange on which the security is primarily
traded. Securities not traded on valuation date or securities not listed on an
exchange are valued at the latest quoted bid price provided by the Fund's
pricing service. Securities listed on the NASDAQ National Market System are
valued in accordance with the NASDAQ Official Closing Price.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value. If trading or events
occurring after the close of the principal market in which securities are traded
are expected to materially affect the value of those securities, then they may
be valued at their fair value, taking this trading or these events into account.
Fair value is determined in good faith by the Advisor under procedures approved
by and under the general supervision and responsibility of the Fund's Board of
Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on trade date. Dividend income is
recorded on the ex-dividend date, except that if the ex-dividend date has
passed, certain dividends from foreign securities are recorded as soon as the
Fund is informed of the ex-dividend date. Non-cash dividends, if any, are
recorded at the fair market value of the securities received. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses
which cannot be directly attributed are apportioned among the series in the Fund
in such a manner as deemed equitable by the Fund's Directors, taking into
consideration, among other things, the nature and type of expense.
12
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES (continued)
The Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
FOREIGN CURRENCY TRANSLATION
The books and records of the Series are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the current exchange rates. Purchases and sales of investment
securities and income and expenses are translated on the respective dates of
such transactions. The Series does not isolate realized and unrealized gains and
losses attributable to changes in the exchange rates from gains and losses that
arise from changes in the market value of investments. Such fluctuations are
included with net realized and unrealized gain or loss on investments. Net
realized foreign currency gains and losses represent foreign currency gains and
losses between trade date and settlement date on securities transactions, gains
and losses on disposition of foreign currencies and the difference between the
amount of income and foreign withholding taxes recorded on the books of the
Series and the amounts actually received or paid.
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.
DISTRIBUTIONS OF INCOME AND GAINS
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.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory Agreement (the "Agreement") with the
Advisor, for which the Series pays a fee, computed daily and payable monthly, at
an annual rate of 1.00% 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 services.
The salaries of all officers of the Fund, and of all Directors who are
"affiliated persons" of the Fund, or of the Advisor, and all personnel of the
Fund, or of the Advisor, performing services relating to research, statistical
and investment activities, are paid by the Advisor. Each "non-affiliated"
Director receives an annual stipend,
13
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
which is allocated among all the active series of the Fund. In addition, these
Directors also receive a per meeting fee for each active series of the Fund plus
a fee for each committee meeting.
The Advisor has contractually agreed, until at least February 28, 2005, 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 1.20% of average daily
net assets each year. Accordingly, the Advisor waived fees of $23,826 for the
six months ended April 30, 2004, 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.
Effective November 1, 2003, the Master Services Agreement between the Fund and
the Advisor, which covers fund accounting services and transfer agent services,
was amended. Under the amended agreement, for providing these services, the
Fund will pay the Advisor an annual fee of 0.15% of the Fund's net assets up to
$900 million, 0.11% for the Fund's net assets between $900 million and $1.5
billion, and 0.07% for the Fund's 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 will be charged.
Expenses not directly attributable to a series will be allocated based on each
series' relative net assets. The Advisor has an agreement with BISYS Fund
Services Ohio, Inc. ("BISYS") under which BISYS serves as sub-accounting
services and sub-transfer agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended April 30, 2004, purchases and sales of securities,
other than United States Government securities and short-term securities, were
$2,428,807 and $2,171,537, respectively. There were no purchases or sales of
United States Government securities.
5. CAPITAL STOCK TRANSACTIONS
Transactions in Class A shares of Tax Managed Series were:
FOR THE SIX MONTHS FOR THE YEAR
ENDED 4/30/04 ENDED 10/31/03
------------------------------------- --------------------
Shares Amount Shares Amount
------------------- ---------------- -------- ----------
Sold 60,692 $ 1,348,786 44,682 $ 790,413
Reinvested 569 11,928 1,330 23,524
Repurchased (32,837) (743,807) (15,912) (298,955)
------------------- ---------------- -------- ----------
Total 28,424 $ 616,907 30,100 $ 514,982
=================== ================ ======== ==========
The Advisor owned 23,397 shares on April 30, 2004 (8.7% of shares outstanding)
valued at $531,346.
14
Notes to Financial Statements (unaudited)
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,
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 April 30, 2004.
7. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of domestic companies and the United States Government. These risks
include revaluation of currencies and future adverse political and economic
developments. Moreover, securities of foreign companies and foreign governments
and their markets may be less liquid and their prices more volatile than those
of comparable domestic companies and the United States Government.
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 generally accepted accounting principles. 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 October 31, 2003 were as follows:
Ordinary income $23,534
At October 31, 2003, the Series had capital loss carryovers available to the
extent allowed by tax law to offset future net capital gain, if any, which will
expire as follows:
Loss Carryover Expiration Date
- --------------- ------------------
$ 9,022 October 31, 2007
$ 2,450 October 31, 2008
$ 20,940 October 31, 2009
$ 34,812 October 31, 2010
$ 60,395 October 31, 2011
At April 30, 2004, 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 $5,537,136
Unrealized appreciation $ 711,712
Unrealized depreciation (104,405)
-----------
Net unrealized appreciation $ 607,307
===========
15
(THIS PAGE INTENTIONALLY LEFT BLANK)
16
(THIS PAGE INTENTIONALLY LEFT BLANK)
17
Literature Requests
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 (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Beginning no later than August 31, 2004, information regarding how the Fund
voted proxies relating to portfolio securities during the most recent 12-month
period ended June 30 will be available without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION (SAI)
- --------------------------------------------------------------------------------
The prospectus and SAI provide additional information about each Series,
including charges, expenses and risks. You may obtain these documents without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
18
EXETER FUND, INC.
SEMI-ANNUAL REPORT
APRIL 30, 2004
OVERSEAS SERIES
Management Discussion and Analysis (unaudited)
Dear Shareholders:
The Overseas Series continued to turn in strong absolute returns for the
twelve-month period ended April 30, 2004. Although it did not match the return
of its benchmark, the Morgan Stanley Capital International (MSCI) All Country
World Index Free ex U.S., in the short-term, the Series has outperformed the
Index by a substantial margin for longer periods.
The Overseas Series did well in several areas over the past year, such as in its
positioning in the Materials sector, and its Brazilian investments. Competitive
returns in the face of growing market volatility over the past six months can be
traced to investments in relatively defensive sectors such as Consumer Staples
and Health Care. The Series has benefited recently from these overweighted
sectors, as well as corresponding underweightings in Information Technology and
Financials. Also, exposure to the Energy sector in general and Oil & Gas
stocks in particular has provided strong returns over the past six months.
The Series' relative underweightings in Financials and Information Technology
are a direct result of our investment strategies. In choosing stocks for the
portfolio, we seek to identify investment opportunities with three main
strategies: the Profile Strategy, the Hurdle Rate Strategy, and the Bankable
Deal Strategy. Stocks must meet one of these strategies, as well as our strict
pricing discipline, before they will qualify for the portfolio. Financials and
Information Technology have, in general, failed to meet our strategies in the
recent environment and therefore have not been included in the portfolio. In
the case of the Financials sector, we are concerned about high levels of
consumer debt, and about the likelihood that interest rates will rise on a
global basis, and we believe these factors will cause banking activity to slow.
In the case of Information Technology, continued high valuations in the sector
have led us to limit exposure to stocks in this sector. In addition, we believe
that we are closer to a peak than a trough in the semiconductor cycle, meaning
that we see fewer opportunities for growth going forward.
Over time, the Overseas Series has had holdings in both cyclical and defensive
equities. Recently the scale has been tipping more towards defensive stocks, as
cyclically oriented stocks seem to be reaching peak valuation levels, especially
many of the Materials stocks. As these positions are being reduced, we have
rotated the portfolio into more defensive holdings, and we expect this to
continue in the near future barring a significant downturn in global stock
markets.
The Series' defensive positions include stocks in the Food, Beverages, Household
Products, Personal Products, and Pharmaceuticals industries. The defensive
equities are generally able to maintain fairly stable sales to weather the
downturns in the economic cycle. The defensive holdings are purchased based
on the Profile and Bankable Deal investment strategies. The Profile Strategy
seeks to identify reasonably priced companies with a competitive advantage
that enables them to gain market share and achieve above average profitability.
The Bankable Deal Strategy is used to locate viable companies that sell at
such a discount to intrinsic value that market forces should force management
to realize that value.
Many of the cyclical equities are selected based on the Hurdle Rate Strategy.
Positions held under the Hurdle Rate Strategy include Paper & Forest Products
and Energy Equipment & Services industries. This investment strategy
identifies strong companies within industries that are expected to experience
favorable supply and demand dynamics. As low profitability forces capacity
rationalization, pricing power returns, which may lead to strong earnings
growth. Bottom-up-selected Hurdle Rate equities can outperform the broader
markets, due to the favorable industry cycle, even in a weak economy. If the
industry experiences further weakness, this only improves industry economics
going forward because a greater amount of capacity is removed, as companies shut
facilities or go out of business altogether. As long as capacity cannot easily
be added back to the system (these cases are avoided), as demand picks up there
will likely be a shortage of supply, and increasing prices.
1
Management Discussion and Analysis (unaudited)
While the Series has provided strong returns over the past twelve months on an
absolute basis, short-term underperformance relative to the benchmark can be
largely attributed to the Series' relative underweighting in Japanese
securities. The Japanese stock market was up over 60% over the trailing twelve
months driven primarily by the strength of exports to China and improving
domestic demand. While we added a number of Japanese stocks to the portfolio in
the second half of 2003, we are still wary of the Japanese market as a whole.
Japan has begun to institute necessary economic reforms and has loosened
monetary policy, but we are waiting for signs that these policies will hold. In
addition, we are concerned about near-term growth trends in China and the United
States, the two biggest markets for Japanese exports.
The Series has outperformed its benchmark by a wide margin over longer time
periods, including the 3 years and 5 years ended April 30th and since its
inception in September 1998. We believe this is due to the strength of our
research process, which looks at both company-specific factors and global
economic trends. Unlike the benchmark, the Series is able to shift in and out
of countries and sectors as we identify opportunities. As an example, over a
year ago, we added a number of stocks that were located in emerging markets and
were related to commodities. Both emerging markets and commodity companies did
well as demand soared and supply couldn't keep up. We have since been selling
many of these positions as they reached high valuations and we believed that the
potential for additional growth was limited. Recently, emerging markets have
struggled, as investors have become more risk averse.
As always, we appreciate the opportunity to serve you.
Sincerely,
EXETER ASSET MANAGEMENT
2
Portfolio Composition - As of April 30, 2004 (unaudited)
<graphic>
<pie chart>
Country Allocation*
Australia 4.8%
Belgium 3.1%
Brazil 4.0%
Canada 3.9%
France 8.9%
Germany 8.4%
Japan 10.5%
Mexico 4.8%
Netherlands 2.0%
Norway 4.8%
Switzerland 12.1%
United Kingdom 19.6%
Cash, short-term investments, and liabilities, less other assets 5.9%
Miscellaneous** 7.2%
*As a percentage of net assets.
**Miscellaneous
Bermuda
Guernsey
Hong Kong
Ireland
South Korea
Taiwan
<graphic>
<pie chart>
Sector Allocation*
Consumer Discretionary 22.6%
Consumer Staples 25.0%
Energy 9.9%
Health Care 8.4%
Industrials 7.8%
Information Technology 5.3%
Materials 5.3%
Telecommunication Services 6.8%
Utilities 3.0%
Cash, short-term investments, and liabilities, less other assets 5.9%
*As a percentage of net assets.
3
Performance Update as of April 30, 2004 (unaudited)
Average Annual Total Returns
As of April 30, 2004
------------------------------------------------
Growth of
One Five Since a $10, 000
Year Year Inception1 Investment
--------------------------------------------------------------
Exeter Fund, Inc. - Overseas Series2 35.40% 7.76% 11.01% $ 17,968
Morgan Stanley Capital International (MSCI)
All Country World Index Free ex U.S.3 41.33% 0.40% 5.11% $ 13,208
The value of a $10,000 investment in the Exeter Fund, Inc. - Overseas Series
from its inception (9/23/98) to present (4/30/04) as compared to the MSCI All
Country World Index Free ex U.S.
<graphic>
<line chart>
Data for line chart to follow:
Exeter Fund, Inc. MSCI
Date Overseas Series All Country World Index Free ex U.S.
9/23/1998 $ 10,000 $ 10,000
10/31/1998 10,210 11,048
10/31/1999 12,540 13,838
10/31/2000 14,500 13,552
10/31/2001 13,540 10,174
10/31/2002 12,540 9,067
10/31/2003 15,660 11,823
4/30/2004 17,968 13,208
1Performance numbers for the Series are calculated from September 23, 1998, the
Collective's inception date (see Note 2 below). Prior to 2001, the MSCI All
Country World Index Free ex U.S. only published month-end numbers; therefore,
performance numbers for the Index are calculated from September 30, 1998. The
Series' performance does not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of shares. The Series'
performance is historical and may not be indicative of future results.
2For periods prior to the inception of the Series on July 10, 2002, the
performance figures reflect the performance of the Exeter Trust Company Group
Trust for Employee Benefit Plans - International Equity Collective Investment
Trust (the "Collective"), which was managed by the Advisor and reorganized
into the Series. The Collective was not open to the public generally, or
registered under the Investment Company Act of 1940 (the "1940 Act"), or subject
to certain restrictions that are imposed by the 1940 Act. If the Collective
had been registered under the 1940 Act, performance may have been adversely
affected. Because the fees of the Collective were lower than the Series' fees,
historical performance would have been lower if the Collective had been subject
to the same fees.
3The MSCI All Country World Index Free ex U.S. is a free float-adjusted market
capitalization index that is designed to measure equity performance in the
global developed and emerging markets and consists of 48 developed and emerging
market country indices excluding the United States. The Index is denominated in
U.S. Dollars. The Index returns assume daily reinvestment of dividends and,
unlike Series returns, do not reflect any fees or expenses.
4
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
SHARES (NOTE 2)
- -------------------------------------------------------------------------
COMMON STOCKS - 94.1%
CONSUMER DISCRETIONARY - 22.6%
HOTELS, RESTAURANTS & LEISURE - 5.0%
Club Mediterranee S.A.* (France) 600 $ 24,634
The Hongkong & Shanghai Hotels Ltd. (Hong Kong) 9,000 5,654
Mandarin Oriental International Ltd.* (Bermuda) 9,000 5,580
Shangri-La Asia Ltd. (Hong Kong) 8,000 7,846
--------
43,714
--------
HOUSEHOLD DURABLES - 4.0%
Sony Corp. - ADR (Japan) 800 30,720
Waterford Wedgwood plc (Ireland) 15,300 4,211
--------
34,931
--------
MEDIA - 10.1%
The News Corp. Ltd. - ADR (Australia) 1,250 42,187
Pearson plc (United Kingdom) 2,200 25,671
Reed Elsevier plc - ADR (United Kingdom) 550 20,735
--------
88,593
--------
MULTILINE RETAIL - 1.9%
Organizacion Soriana S.A. de C.V. - Series B* (Mexico) 5,600 16,947
--------
SPECIALTY RETAIL - 1.6%
Douglas Holding AG (Germany) 500 13,552
--------
197,737
--------
CONSUMER STAPLES - 25.0%
BEVERAGES - 3.1%
Interbrew (Belgium) 900 27,037
--------
FOOD & STAPLES RETAILING - 2.0%
Carrefour S.A. (France) 375 17,401
--------
FOOD PRODUCTS - 9.7%
Cadbury Schweppes plc (United Kingdom) 2,700 21,474
Nestle S.A. (Switzerland) 125 31,621
Unilever plc - ADR (United Kingdom) 825 31,738
--------
84,833
--------
HOUSEHOLD PRODUCTS - 5.8%
Henkel KGaA (Germany) 300 25,965
Kimberly-Clark de Mexico S.A. de C.V. - ADR (Mexico) 1,900 25,200
--------
51,165
--------
The accompanying notes are an integral part of the financial statements.
5
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
SHARES (NOTE 2)
- ----------------------------------------------------------------------------------
CONSUMER STAPLES (continued)
PERSONAL PRODUCTS - 4.4%
Clarins S.A. (France) 416 $ 25,832
Shiseido Co. Ltd. (Japan) 1,000 12,297
--------
38,129
--------
218,565
--------
ENERGY - 9.9%
ENERGY EQUIPMENT & SERVICES - 8.4%
Abbot Group plc (United Kingdom) 6,100 18,822
Compagnie Generale de Geophysique S.A. (CGG)* (France) 200 9,914
Precision Drilling Corp.* (Canada) 350 16,765
Smedvig ASA - Class A (Norway) 2,900 27,689
--------
73,190
--------
OIL & GAS - 1.5%
Petroleo Brasileiro S.A. (Petrobras) - ADR (Brazil) 525 13,099
--------
86,289
--------
HEALTH CARE - 8.4%
PHARMACEUTICALS - 8.4%
Novartis AG - ADR (Switzerland) 875 39,200
Schering AG (Germany) 650 34,051
--------
73,251
--------
INDUSTRIALS - 7.8%
AEROSPACE & DEFENSE - 1.2%
Empresa Brasileira de Aeronautica S.A. (Embraer) - ADR (Brazil) 400 10,320
--------
COMMERICAL SERVICES & SUPPLIES - 3.0%
Aggreko plc (United Kingdom) 2,850 8,124
Quebecor World, Inc. (Canada) 1,025 17,661
--------
25,785
--------
CONSTRUCTION & ENGINEERING - 2.0%
Koninklijke Boskalis Westminster N.V. (Netherlands) 700 17,622
--------
MACHINERY - 1.6%
Tomra Systems ASA (Norway) 3,575 14,383
--------
68,110
--------
The accompanying notes are an integral part of the financial statements.
6
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
SHARES/ VALUE
PRINCIPAL AMOUNT (NOTE 2)
- ----------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 5.3%
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.5%
Taiwan Semiconductor Manufacturing Co. Ltd. - ADR* (Taiwan) 1,350 $ 12,866
--------
SOFTWARE - 3.8%
Amdocs Ltd.* (Guernsey) 550 14,602
Nintendo Co. Ltd. (Japan) 200 18,885
--------
33,487
--------
46,353
--------
MATERIALS - 5.3%
CHEMICALS - 4.0%
Lonza Group AG (Switzerland) 725 35,003
--------
PAPER & FOREST PRODUCTS - 1.3%
Aracruz Celulose S.A. - ADR (Brazil) 375 11,677
--------
46,680
--------
TELECOMMUNICATION SERVICES - 6.8%
WIRELESS TELECOMMUNICATION SERVICES - 6.8%
NTT DoCoMo, Inc. (Japan) 15 29,768
Vodafone Group plc - ADR (United Kingdom) 1,225 30,061
--------
59,829
--------
UTILITIES - 3.0%
ELECTRIC UTILITIES - 1.3%
Korea Electric Power Corp. (KEPCO) - ADR (South Korea) 1,200 11,268
--------
MULTI-UTILITIES & UNREGULATED POWER - 1.7%
International Power plc - ADR* (United Kingdom) 600 15,060
--------
26,328
--------
TOTAL COMMON STOCKS
(Identified Cost $725,972) 823,142
--------
SHORT-TERM INVESTMENTS - 6.2%
Dreyfus Treasury Cash Management - Institutional Shares 4,265 4,265
Fannie Mae Discount Note, 6/2/2004 $ 50,000 49,956
--------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $54,221) 54,221
--------
The accompanying notes are an integral part of the financial statements.
7
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
(NOTE 2)
- ---------------------------------------------------------------------
TOTAL INVESTMENTS - 100.3%
(Identified Cost $780,193) $ 877,363
LIABILITIES, LESS OTHER ASSETS - (0.3%) (2,387)
------------------
NET ASSETS - 100% $ 874,976
==================
*Non-income producing security
ADR - American Depository Receipt
The Series' portfolio holds, as a percentage of net assets, greater than 10% in
the following countries: United Kingdom - 19.6%; Switzerland - 12.1%; Japan -
10.5%.
The accompanying notes are an integral part of the financial statements.
8
STATEMENT OF ASSETS & LIABILITIES (UNAUDITED)
April 30, 2004
ASSETS:
Investments, at value (identified cost $780,193) (Note 2) $877,363
Foreign currency, at value (cost $1,057) 1,064
Dividends receivable 3,582
Foreign tax reclaims receivable 757
Receivable from investment advisor (Note 3) 12,571
--------
TOTAL ASSETS 895,337
--------
LIABILITIES:
Accrued fund accounting fees (Note 3) 808
Accrued fund accounting and transfer agent service fees (Note 3) 201
Accrued transfer agent fees (Note 3) 12
Audit fees payable 17,873
Other payables and accrued expenses 1,467
--------
TOTAL LIABILITIES 20,361
--------
TOTAL NET ASSETS $874,976
========
NET ASSETS CONSIST OF:
Capital stock $ 492
Additional paid-in-capital 751,369
Undistributed net investment income 6,757
Accumulated net realized gain on investments and other assets and liabilities 19,185
Net unrealized appreciation on investments and other assets and liabilities 97,173
--------
TOTAL NET ASSETS $874,976
========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE ($874,976/49,217 shares) $ 17.78
========
The accompanying notes are an integral part of the financial statements.
9
STATEMENT OF OPERATIONS (UNAUDITED)
For the Six Months Ended April 30, 2004
INVESTMENT INCOME:
Dividends (net of foreign tax withheld, $1,073) $ 11,554
Interest 291
---------
Total Investment Income 11,845
---------
EXPENSES:
Management fees (Note 3) 4,000
Directors' fees (Note 3) 3,330
Fund accounting fees (Note 3) 1,735
Fund accounting and transfer agent service fees (Note 3) 560
Transfer agent fees (Note 3) 25
Audit fees 14,000
Legal fees 1,790
Custodian fees 1,540
Miscellaneous 739
---------
Total Expenses 27,719
Less reduction of expenses (Note 3) (23,520)
---------
Net Expenses 4,199
---------
NET INVESTMENT INCOME 7,646
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on -
Investments 54,047
Foreign currency and other assets and liabilities (26)
---------
54,021
---------
Net change in unrealized appreciation on -
Investments 42,088
Foreign currency and other assets and liabilities (13)
---------
42,075
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS 96,096
---------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $103,742
=========
The accompanying notes are an integral part of the financial statements.
10
Statements of Changes in Net Assets
FOR THE SIX
MONTHS ENDED FOR THE
4/30/04 YEAR ENDED
(UNAUDITED) 10/31/03
-------------- -----------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 7,646 $ 6,753
Net realized gain on investments 54,021 6,470
Net change in unrealized appreciaton on investments 42,075 121,732
-------------- -----------
Net increase from operations 103,742 134,955
-------------- -----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 8):
From net investment income (7,711) -
-------------- -----------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share transactions (Note 5) 77,905 56,328
-------------- -----------
Net increase in net assets 173,936 191,283
NET ASSETS:
Beginning of period 701,040 509,757
-------------- -----------
END OF PERIOD (including undistributed net investment
income of $6,757 and $6,822, respectively) $ 874,976 $ 701,040
============== ===========
The accompanying notes are an integral part of the financial statements.
11
Financial Highlights
FOR THE SIX FOR THE
MONTHS ENDED FOR THE PERIOD
4/30/04 YEAR ENDED 7/10/02 1 TO
(UNAUDITED) 10/31/03 10/31/02
--------------- ------------ -------------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 15.66 $ 12.54 $ 14.37
-------------- ------------ -------------
Income (loss) from investment operations:
Net investment income (loss) 0.16 0.15 -4
Net realized and unrealized gain (loss) on
investments 2.13 2.97 (1.83)
-------------- ------------ -------------
Total from investment operations 2.29 3.12 (1.83)
-------------- ------------ -------------
Less distributions to shareholders:
From net investment income (0.17) - -
-------------- ------------ -------------
NET ASSET VALUE - END OF PERIOD $ 17.78 $ 15.66 $ 12.54
============== ============ =============
Total return2 14.74% 24.88% (12.73%)
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL
DATA:
Expenses* 1.05%3 1.05% 1.05%3
Net investment income (loss) 1.91%3 1.15% (0.10%)3
Portfolio turnover 29% 30% 12%
NET ASSETS - END OF PERIOD (000's omitted) $ 875 $ 701 $ 510
============== ============ =============
*The investment advisor did not impose its management fee and 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:
5.89%3 19.95% 33.12%3
1Commencement of operations.
2Represents 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.
3Annualized.
4Less than $0.01.
The accompanying notes are an integral part of the financial statements.
12
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Overseas 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 capital growth by
investing principally in the common stocks of issuers from outside the United
States.
Shares of the Series are offered to investors and employees of Manning & Napier
Advisors, Inc. (the "Advisor"), doing business as Exeter Asset Management, and
its affiliates. The total authorized capital stock of the Fund consists of 1.7
billion shares of common stock each having a par value of $0.01. As of April 30,
2004, 960 million shares have been designated in total among 18 series, of which
50 million have been designated as Overseas Series common stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities and options,
listed on an exchange other than the NASDAQ National Market System are valued
at the latest quoted sales price of the exchange on which the security is
primarily traded. Securities not traded on valuation date or securities not
listed on an exchange are valued at the latest quoted bid price provided by the
Fund's pricing service. Securities listed on the NASDAQ National Market System
are valued in accordance with the NASDAQ Official Closing Price.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value. If trading or events
occurring after the close of the principal market in which securities are traded
are expected to materially affect the value of those securities, then they may
be valued at their fair value, taking this trading or these events into account.
Fair value is determined in good faith by the Advisor under procedures approved
by and under the general supervision and responsibility of the Fund's Board of
Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on trade date. Dividend income is
recorded on the ex-dividend date, except that if the ex-dividend date has
passed, certain dividends from foreign securities are recorded as soon as the
Fund is informed of the ex-dividend date. Non-cash dividends, if any, are
recorded at the fair market value of the securities received. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses which
cannot be directly attributed are apportioned among the series in the Fund in
such a manner as deemed equitable by the Fund's Directors, 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.
FOREIGN CURRENCY TRANSLATION
The books and records of the Series are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the current exchange rates.
13
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FOREIGN CURRENCY TRANSLATION (continued)
Purchases and sales of investment securities and income and expenses are
translated on the respective dates of such transactions. The Series does not
isolate realized and unrealized gains and losses attributable to changes in the
exchange rates from gains and losses that arise from changes in the market value
of investments. Such fluctuations are included with net realized and unrealized
gain or loss on investments. Net realized foreign currency gains and losses
represent foreign currency gains and losses between trade date and settlement
date on securities transactions, gains and losses on disposition of foreign
currencies and the difference between the amount of income and foreign
withholding taxes recorded on the books of the Series and the amounts actually
received or paid.
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.
DISTRIBUTIONS OF INCOME AND GAINS
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.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory Agreement (the "Agreement") with the
Advisor, for which the Series pays a fee, computed daily and payable monthly, at
an annual rate of 1.00% 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 services.
The salaries of all officers of the Fund, and of all Directors who are
"affiliated persons" of the Fund, or of the Advisor, and all personnel of the
Fund, or of the Advisor, performing services relating to research, statistical
and investment activities, are paid by the Advisor. 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 per meeting fee
for each active series of the Fund plus a fee for each committee meeting.
14
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
The Advisor has contractually agreed, until at least February 28, 2005, 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 1.05% of average daily
net assets each year. Accordingly, the Advisor did not impose its fee of $4,000
and assumed expenses amounting to $19,520 for the six months ended April 30,
2004, 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.
Effective November 1, 2003, the Master Services Agreement between the Fund and
the Advisor, which covers fund accounting services and transfer agent services,
was amended. Under the amended agreement, for providing these services, the
Fund will pay the Advisor an annual fee of 0.15% of the Fund's net assets up to
$900 million, 0.11% for the Fund's net assets between $900 million and $1.5
billion, and 0.07% for the Fund's 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 will be charged.
Expenses not directly attributable to a series will be allocated based on each
series' relative net assets. The Advisor has an agreement with BISYS Fund
Services Ohio, Inc. ("BISYS") under which BISYS serves as sub-accounting
services and sub-transfer agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended April 30, 2004, purchases and sales of securities,
other than United States Government securities and short-term securities, were
$309,618 and $202,897, respectively. There were no purchases or sales of United
States Government securities.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Overseas Series were:
FOR THE SIX MONTHS FOR THE YEAR
ENDED 4/30/04 ENDED 10/31/03
------------------------------------- ----------------
Shares Amount Shares Amount
------------------- ---------------- ------- --------
Sold 4,014 $ 70,636 4,145 $57,055
Reinvested 476 7,711 - -
Repurchased (25) (442) (53) (727)
------------------- ---------------- ------- --------
Total 4,465 $ 77,905 4,092 $56,328
=================== ================ ======= ========
The Series was formed on July 10, 2002 with an initial contribution of cash and
securities in-kind, which had a market value of $582,040, representing the net
assets of Exeter Trust Company Group Trust for Employee Benefit Plans -
International Equity Collective Investment Trust, on the date of contribution,
in exchange for 40,504 shares of the Series. For tax purposes, the Series
recorded the contribution on a tax-free basis at a cost of $649,191.
At April 30, 2004, the retirement plan of the Advisor and its affiliates owned
47,965 shares of the Series (97.5% of shares outstanding) valued at $852,818.
15
Notes to Financial Statements (unaudited)
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,
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 April 30, 2004.
7. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of domestic companies and the United States Government. These risks
include revaluation of currencies and future adverse political and economic
developments. Moreover, securities of foreign companies and foreign governments
and their markets may be less liquid and their prices more volatile than those
of comparable domestic companies and the United States Government.
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 generally accepted accounting principles. 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.
At October 31, 2003, the Series had capital loss carryovers available to the
extent allowed by tax law to offset future net capital gain, if any, which will
expire as follows:
Loss Carryover Expiration Date
- --------------- ------------------
$ 24,325 October 31, 2010
$ 10,511 October 31, 2011
At April 30, 2004, 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 $780,193
Unrealized appreciation $119,240
Unrealized depreciation (22,070)
---------
Net unrealized appreciation $ 97,170
=========
16
[This page intentionally left blank]
17
Literature Requests
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 (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Beginning no later than August 31, 2004, information regarding how the Fund
voted proxies relating to portfolio securities during the most recent 12-month
period ended June 30 will be available without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION (SAI)
- --------------------------------------------------------------------------------
The prospectus and SAI provide additional information about each Series,
including charges, expenses and risks. You may obtain these documents without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
18
Exeter Fund, Inc.
Semi-Annual Report
April 30, 2004
Equity Series
Management Discussion and Analysis (unaudited)
Dear Shareholders:
The economic recovery has solidified since our last correspondence: the third
quarter 2003 gross domestic product figure surprised on the upside, confirming
the optimism that had been building during the prior months. As a result,
equity markets continued marching upward well into January, as investors rushed
to participate in the returns associated with the early stages of the growth
cycle. Volatility started to increase somewhat in February as investors began
to realize how far equities had come. Markets moved largely sideways through
March, and then slightly downward in April, giving up some of the earlier gains.
Overall, the results were favorable, with the Standard & Poor's (S&P) 500 Total
Return Index (the "Index") returning 6.27% for the six months ended April 30,
2004.
The Equity Series handily outperformed the S&P 500 Total Return Index over the
same period, in part owing to the allocation of assets across sectors. The
Series derived the most benefit from our overweighted position in the Energy
sector, which was the best performing sector in the S&P 500 Total Return Index.
Also contributing to our outperformance, though to a lesser extent, was our
overweighted position in Health Care, another top-performing sector in the
Index, as well as our relative underweighting in the underperforming Information
Technology and Financials sectors. The Series currently remains overweighted in
Energy, and we also have significantly decreased our investments in Information
Technology to a significantly underweighted position relative to the Index over
the past several months as stocks reached our sell prices.
Recent improvement in the labor market has heightened awareness of the
inevitable interest rate tightening cycle, suggesting that equity markets have
already yielded the most dynamic returns associated with the bear market
rebound. We believe that the U.S. is early in the economic and market cycle,
however. In general, our analysis shows stock valuations are already
discounting upward movements in interest rates, whereas bond valuations are more
likely to experience a period of adjustment in the months ahead. Given this
environment, we have reduced some of our exposure to cyclical growth companies,
focusing primarily on high quality companies with growth drivers that are less
sensitive to U.S. economic growth. However, volatility in the stock market is
likely to provide a buying opportunity over the months ahead for us to take
advantage of using our bottom-up driven investment strategies and disciplines.
As always, we appreciate the opportunity to serve you.
Sincerely,
EXETER ASSET MANAGEMENT
1
Portfolio Composition - As of April 30, 2004 (unaudited)
<graphic>
<pie chart>
Sector Allocation*
Consumer Discretionary 23.0%
Consumer Staples 9.9%
Energy 21.4%
Financials 7.3%
Health Care 9.6%
Industrials 5.9%
Information Technology 4.5%
Materials 6.9%
Utilities 3.5%
Cash, short-term investments, and liabilities, less other assets 8.0%
*As a percentage of net assets.
2
Performance Update as of April 30, 2004 (unaudited)
Average Annual Total Returns
As of April 30, 2004
--------------------------------------------------
Growth of
One Five Since a $10, 000
Year Year Inception1 Investment
---------------------------------------------------------------
Exeter Fund, Inc. - Equity Series2 26.05% 6.57% 6.96% $ 14,976
Standard & Poor's (S&P) 500 Total Return Index3 22.87% -2.26% 1.40% $ 10,869
The value of a $10,000 investment in the Exeter Fund, Inc. - Equity Series from
its inception (5/1/98) to present (4/30/04) as compared to the S&P 500 Total
Return Index.
<graphic>
<line chart>
Data for line chart to follow:
Exeter Fund, Inc. S&P 500 Total
Date Equity Series Return Index
5/1/1998 $ 10,000 $ 10,000
10/31/1998 7,750 9,961
10/31/1999 10,900 12,561
10/31/2000 14,080 13,278
10/31/2001 12,870 9,973
10/31/2002 11,420 8,468
10/31/2003 13,455 10,228
4/30/2004 14,976 10,869
1Performance numbers for the Series and Index are calculated from May 1, 1998,
the Collective's inception date (see Note 2 below). The Series' performance
does not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of shares. The Series' performance is
historical and may not be indicative of future results.
2For periods prior to the inception of the Series on July 10, 2002, the
performance figures reflect the performance of the Exeter Trust Company Group
Trust for Employee Benefit Plans - All-Equity Collective Investment Trust (the
"Collective"), which was managed by the Advisor and reorganized into the Series.
The Collective was not open to the public generally, or registered under the
Investment Company Act of 1940 (the "1940 Act"), or subject to certain
restrictions that are imposed by the 1940 Act. If the Collective had been
registered under the 1940 Act, performance may have been adversely affected.
Because the fees of the Collective were lower than the Series' fees, historical
performance would have been lower if the Collective had been subject to the same
fees.
3The S&P 500 Total Return Index is an unmanaged capitalization-weighted measure
of 500 widely held common stocks listed on the New York Stock Exchange, American
Stock Exchange and the Over-the-Counter Market. The Index returns assume daily
reinvestment of dividends and, unlike Series returns, do not reflect any fees or
expenses.
3
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
SHARES (NOTE 2)
- -----------------------------------------------------------------
COMMON STOCKS - 92.0%
CONSUMER DISCRETIONARY - 23.0%
HOTELS, RESTAURANTS & LEISURE - 4.0%
Caesars Entertainment, Inc.* 1,625 $ 21,531
Carnival Corp. 1,025 43,737
--------
65,268
--------
HOUSEHOLD DURABLES - 2.2%
Newell Rubbermaid, Inc. 1,550 36,642
--------
MEDIA - 7.6%
Cablevision Systems New York Group - Class A* 1,275 27,833
Hearst-Argyle Television, Inc. - Class A 675 17,719
Time Warner, Inc.* 4,625 77,792
--------
123,344
--------
SPECIALTY RETAIL - 9.2%
Blockbuster, Inc. - Class A 875 14,481
Foot Locker, Inc. 800 19,200
Office Depot, Inc.* 2,800 49,028
Staples, Inc. 1,025 26,404
Weight Watchers International, Inc.* 1,050 40,950
--------
150,063
--------
375,317
--------
CONSUMER STAPLES - 9.9%
FOOD & STAPLES RETAILING - 3.1%
The Kroger Co.* 2,875 50,312
--------
FOOD PRODUCTS - 2.6%
H.J. Heinz Co. 1,125 42,964
--------
HOUSEHOLD PRODUCTS - 2.6%
Kimberly-Clark Corp. 650 42,542
--------
PERSONAL PRODUCTS - 1.6%
The Estee Lauder Companies, Inc. - Class A 575 26,283
--------
162,101
--------
ENERGY - 21.4%
ENERGY EQUIPMENT & SERVICES - 19.1%
Baker Hughes, Inc. 1,550 56,854
Cooper Cameron Corp.* 725 35,054
Schlumberger Ltd. 1,275 74,626
Transocean, Inc.* 2,000 55,540
Varco International, Inc.* 1,900 39,311
Weatherford International Ltd.* 1,175 51,089
--------
312,474
--------
The accompanying notes are an integral part of the financial statements.
4
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
SHARES (NOTE 2)
- ---------------------------------------------------------
ENERGY (continued)
OIL & GAS - 2.3%
Amerada Hess Corp. 525 $ 37,343
--------
349,817
--------
FINANCIALS - 7.3%
CAPITAL MARKETS - 3.2%
The Bank of New York Co., Inc. 675 19,669
SEI Investments Co. 1,125 33,210
--------
52,879
--------
COMMERCIAL BANKS - 4.1%
PNC Financial Services Group 425 22,568
U.S. Bancorp 1,100 28,204
Wachovia Corp. 350 16,013
--------
66,785
--------
119,664
--------
HEALTH CARE - 9.6%
HEALTH CARE EQUIPMENT & SUPPLIES - 1.0%
Millipore Corp.* 325 17,040
--------
HEALTH CARE PROVIDERS & SERVICES - 2.5%
Odyssey Healthcare, Inc.* 800 13,448
WebMD Corp.* 3,150 27,689
--------
41,137
--------
PHARMACEUTICALS - 6.1%
Pfizer, Inc. 710 25,390
Schering-Plough Corp. 4,400 73,612
--------
99,002
--------
157,179
--------
INDUSTRIALS - 5.9%
MACHINERY - 1.4%
AGCO Corp.* 1,175 22,619
--------
ROAD & RAIL - 4.5%
CSX Corp. 900 27,684
Kansas City Southern* 3,325 46,051
--------
73,735
--------
96,354
--------
INFORMATION TECHNOLOGY - 4.5%
IT SERVICES - 2.4%
First Data Corp. 875 39,716
--------
The accompanying notes are an integral part of the financial statements.
5
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
SHARES/ VALUE
PRINCIPAL AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY (continued)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.0%
Cymer, Inc.* 475 $ 15,191
---------
SOFTWARE - 1.1%
Network Associates, Inc.* 1,175 18,424
---------
73,331
---------
MATERIALS - 6.9%
CHEMICALS - 2.3%
Minerals Technologies, Inc. 650 38,122
---------
CONTAINERS & PACKAGING - 1.4%
Packaging Corp. of America 1,050 23,079
---------
METALS & MINING - 1.8%
Alcoa, Inc. 950 29,212
---------
PAPER & FOREST PRODUCTS - 1.4%
Bowater, Inc. 550 23,072
---------
113,485
---------
UTILITIES - 3.5%
ELECTRIC UTILITIES - 3.5%
Allegheny Energy, Inc.* 2,100 28,938
American Electric Power Co., Inc. 925 28,157
---------
57,095
---------
TOTAL COMMON STOCKS
(Identified Cost $1,356,163) 1,504,343
---------
SHORT-TERM INVESTMENTS - 8.6%
Dreyfus Treasury Cash Management - Institutional Shares 15,604 15,604
Fannie Mae Discount Note, 6/2/2004 $ 85,000 84,926
U.S. Treasury Bill, 6/3/2004 40,000 39,970
---------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $140,500) 140,500
---------
TOTAL INVESTMENTS - 100.6%
(Identified Cost $1,496,663) 1,644,843
LIABILITIES, LESS OTHER ASSETS - (0.6%) (9,542)
---------
NET ASSETS - 100% $1,635,301
=========
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
6
Statement of Assets and Liabilities (unaudited)
April 30, 2004
ASSETS:
Investments, at value (identified cost $1,496,663) (Note 2) $1,644,843
Dividends receivable 390
Receivable from investment advisor (Note 3) 7,100
----------
TOTAL ASSETS 1,652,333
----------
LIABILITIES:
Accrued fund accounting and transfer agent service fees (Note 3) 378
Accrued transfer agent fees (Note 3) 139
Accrued fund accounting fees (Note 3) 15
Audit fees payable 14,777
Legal fees payable 1,148
Other payables and accrued expenses 575
----------
TOTAL LIABILITIES 17,032
----------
TOTAL NET ASSETS $1,635,301
==========
NET ASSETS CONSIST OF:
Capital stock $ 1,095
Additional paid-in-capital 1,390,957
Undistributed net investment loss (847)
Accumulated net realized gain on investments 95,916
Net unrealized appreciation on investments 148,180
----------
TOTAL NET ASSETS $1,635,301
==========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE ($1,635,301/109,504 shares) $ 14.93
==========
The accompanying notes are an integral part of the financial statements.
7
Statement of Operations (unaudited)
For the Six Months Ended April 30, 2004
INVESTMENT INCOME:
Dividends $ 6,355
Interest 462
--------
Total Investment Income 6,817
--------
EXPENSES:
Management fees (Note 3) 7,275
Directors' fees (Note 3) 3,330
Fund accounting fees (Note 3) 1,205
Fund accounting and transfer agent service fees (Note 3) 1,020
Transfer agent fees (Note 3) 60
Audit fees 11,945
Legal fees 1,740
Custodian fees 1,640
Miscellaneous 762
--------
Total Expenses 28,977
Less reduction of expenses (Note 3) (21,330)
--------
Net Expenses 7,647
--------
NET INVESTMENT LOSS (830)
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 120,914
Net change in unrealized appreciation on investments 21,101
--------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS 142,015
--------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $141,185
========
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
4/30/04 YEAR ENDED
(UNAUDITED) 10/31/03
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) $ (830) $ 800
Net realized gain on investments 120,914 41,987
Net change in unrealized appreciation on investments 21,101 126,200
-------------- ------------
Net increase from operations 141,185 168,987
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 8):
From net investment income (638) (1,400)
-------------- ------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share transactions (Note 5) 288,535 520,216
-------------- ------------
Net increase in net assets 429,082 687,803
NET ASSETS:
Beginning of period 1,206,219 518,416
-------------- ------------
END OF PERIOD (including undistributed net investment
income (loss) of ($847) and $621, respectively) $ 1,635,301 $ 1,206,219
============== ============
The accompanying notes are an integral part of the financial statements.
9
Financial Highlights
FOR THE SIX
MONTHS ENDED FOR THE FOR THE PERIOD
4/30/04 YEAR ENDED 7/10/02 1 TO
(UNAUDITED) 10/31/03 10/31/02
-------------- ------------ ----------------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 13.42 $ 11.42 $ 11.51
-------------- ------------ ----------------
Income (loss) from investment operations:
Net investment income (loss) (0.01) 0.01 0.03
Net realized and unrealized gain (loss) on investments 1.53 2.02 (0.12)
-------------- ------------ ----------------
Total from investment operations 1.52 2.03 (0.09)
-------------- ------------ ----------------
Less distributions to shareholders:
From net investment income (0.01) (0.03) -
-------------- ------------ ----------------
NET ASSET VALUE - END OF PERIOD $ 14.93 $ 13.42 $ 11.42
============== ============ ================
Total return2 11.31% 17.82% (0.78%)
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 1.05%3 1.05% 1.05%3
Net investment income (loss) (0.11%)3 0.09% 0.78%3
Portfolio turnover 35% 58% 30%
NET ASSETS - END OF PERIOD (000's omitted) $ 1,635 $ 1,206 $ 518
============== ============ ================
*The investment advisor did not impose its management fee and 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:
2.93%3 11.55% 31.99%3
1Commencement of operations.
2Represents 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.
3Annualized.
The accompanying notes are an integral part of the financial statements.
10
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Equity 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 growth of capital,
primarily through investments in U.S. common stocks.
Shares of the Series are offered to investors and employees of Manning & Napier
Advisors, Inc. (the "Advisor"), doing business as Exeter Asset Management, and
its affiliates. The total authorized capital stock of the Fund consists of 1.7
billion shares of common stock each having a par value of $0.01. As of April 30,
2004, 960 million shares have been designated in total among 18 series, of which
75 million have been designated as Equity Series common stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities and options,
listed on an exchange other than the NASDAQ National Market System are valued at
the latest quoted sales price of the exchange on which the security is primarily
traded. Securities not traded on valuation date or securities not listed on an
exchange are valued at the latest quoted bid price provided by the Fund's
pricing service. Securities listed on the NASDAQ National Market System are
valued in accordance with the NASDAQ Official Closing Price.
Securities for which representative valuations or prices are not available from
the Fund's pricing service are valued at fair value. If trading or events
occurring after the close of the principal market in which securities are traded
are expected to materially affect the value of those securities, then they may
be valued at their fair value, taking this trading or these events into account.
Fair value is determined in good faith by the Advisor under procedures approved
by and under the general supervision and responsibility of the Fund's Board of
Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on trade date. Dividend income is
recorded on the ex-dividend date, except that if the ex-dividend date has
passed, certain dividends from foreign securities are recorded as soon as the
Fund is informed of the ex-dividend date. Non-cash dividends, if any, are
recorded at the fair market value of the securities received. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses which
cannot be directly attributed are apportioned among the series in the Fund in
such a manner as deemed equitable by the Fund's Directors, 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
11
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL TAXES (continued)
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 OF INCOME AND GAINS
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.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory Agreement (the "Agreement") with the
Advisor, for which the Series pays a fee, computed daily and payable monthly, at
an annual rate of 1.00% 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 services.
The salaries of all officers of the Fund, and of all Directors who are
"affiliated persons" of the Fund, or of the Advisor, and all personnel of the
Fund, or of the Advisor, performing services relating to research, statistical
and investment activities, are paid by the Advisor. 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 per meeting fee
for each active series of the Fund plus a fee for each committee meeting.
The Advisor has contractually agreed, until at least February 28, 2005, 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 1.05% of average daily
net assets each year. Accordingly, the Advisor did not impose its fee of $7,275
and assumed expenses amounting to $14,055 for the six months ended April 30,
2004, 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.
Effective November 1, 2003, the Master Services Agreement between the Fund and
the Advisor, which covers fund accounting services and transfer agent services,
was amended. Under the amended agreement, for providing these services, the
Fund will pay the Advisor an annual fee of 0.15% of the Fund's net assets up to
$900 million, 0.11% for the Fund's net assets between $900 million and $1.5
billion, and 0.07% for the Fund's 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 will be charged.
Expenses not directly attributable to a series will
12
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
be allocated based on each series' relative net assets. The Advisor has an
agreement with BISYS Fund Services Ohio, Inc. ("BISYS") under which BISYS
serves as sub-accounting services and sub-transfer agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended April 30, 2004, purchases and sales of securities,
other than United States Government securities and short-term securities, were
$642,846 and $465,454, respectively. There were no purchases or sales of United
States Government securities.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Equity Series were:
FOR THE SIX MONTHS FOR THE YEAR
ENDED 4/30/04 ENDED 10/31/03
------------------------------------- ----------------
Shares Amount Shares Amount
------------------- ---------------- ------- ---------
Sold 20,031 $ 294,797 45,346 $530,203
Reinvested 45 638 118 1,400
Repurchased (472) (6,900) (968) (11,387)
------------------- ---------------- ------- ---------
Total 19,604 $ 288,535 44,496 $520,216
=================== ================ ======= =========
The Series was formed on July 10, 2002 with an initial contribution of cash and
securities in-kind, which had a market value of $495,922, representing the net
assets of Exeter Trust Company Group Trust for Employee Benefit Plans -
All-Equity Collective Investment Trust, on the date of contribution, in exchange
for 43,086 shares of the Series. For tax purposes, the Series recorded the
contribution on a tax-free basis at a cost of $602,813.
At April 30, 2004, the retirement plan of the advisor and its affiliates owned
97,385 shares of the Series (88.9% of shares outstanding) valued at $1,453,958.
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,
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 April 30, 2004.
7. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of domestic companies and the United States Government. These risks
include revaluation of currencies and future adverse political and economic
developments. Moreover, securities of foreign companies and foreign governments
and their markets may be less liquid and their prices more volatile than those
of comparable domestic companies and the United States Government. No such
investments were held by the Series on April 30, 2004.
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 generally accepted accounting principles. 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 October 31, 2003 were as follows:
Ordinary income $1,400
At October 31, 2003, the Series had capital loss carryovers available to the
extent allowed by tax law to offset future net capital gain, if any, which will
expire as follows:
Loss Carryover Expiration Date
- --------------- ------------------
$ 21,577 October 31, 2010
$ 3,421 October 31, 2011
At April 30, 2004, 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 $1,496,663
Unrealized appreciation $ 182,492
Unrealized depreciation (34,312)
-----------
Net unrealized appreciation $ 148,180
===========
14
Literature Requests
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 (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Beginning no later than August 31, 2004, information regarding how the Fund
voted proxies relating to portfolio securities during the most recent 12-month
period ended June 30 will be available without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION (SAI)
- --------------------------------------------------------------------------------
The prospectus and SAI provide additional information about each Series,
including charges, expenses and risks. You may obtain these documents without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
15
Exeter Fund, Inc.
Semi-Annual Report
April 30, 2004
Pro-BlendSM Conservative Term Series
Pro-BlendSM Moderate Term Series
Pro-BlendSM Extended Term Series
Pro-BlendSM Maximum Term Series
Management Discussion and Analysis (unaudited)
Dear Shareholders:
The economic recovery has solidified since our last correspondence: the third
quarter 2003 gross domestic product figure surprised on the upside, confirming
the optimism that had been building during the prior months. As a result,
equity markets continued marching upward well into January, as investors rushed
to participate in the returns associated with the early stages of the growth
cycle. Volatility started to increase somewhat in February as investors began
to realize how far equities had come. Markets moved largely sideways through
March, and then slightly downward in April, giving up some of the earlier gains.
Overall, the results were favorable, with the Standard & Poor's (S&P) 500 Total
Return Index (the "Index") returning 6.27% for the six months ended April 30,
2004.
Bond markets remained relatively passive throughout March, but yields increased
markedly during April as indications of long-awaited improvement in the labor
market surfaced, heightening anticipation of the inevitable interest rate
tightening cycle. Fixed income markets managed only a modest return for the
period, with the Lehman Brothers U.S. Government/Credit Bond Index reporting
returns of 1.17% for the six months ended April 30, 2004.
The Pro-BlendSM Conservative, Moderate, Extended and Maximum Term Series all
outperformed their benchmarks during this same six-month period, in a manner
consistent with a general increase in their exposure to defensive sectors as
volatility increased in the stock market. Within the equity portion of the
portfolios, outperformance was largely attributable to our overweighted
positions in the Energy sector, the best performing sector in the S&P 500 Total
Return Index, and the Health Care sector, which was the third best performing
sector in the Index. Our significantly underweighted position in Information
Technology, which was the worst performing sector in the Index, also positively
contributed to our performance.
Going forward, it appears that equity markets have already yielded the dynamic
returns associated with the initial rebound from the bear market, but we believe
that we are still relatively early in the economic and market cycle. In
general, our analysis shows stock valuations are already discounting upward
movements in interest rates, whereas bond valuations are more likely to
experience a period of adjustment in the months ahead. Given this environment,
we have reduced some of our exposure to cyclical growth companies, focusing
primarily on high quality companies with growth drivers that are less sensitive
to U.S. economic growth. However, volatility in the stock and bond markets is
likely to provide buying opportunities over the months ahead for us to take
advantage of, using our bottom-up driven investment strategies and disciplines.
As always, we appreciate the opportunity to serve you.
Sincerely,
EXETER ASSET MANAGEMENT
1
Performance Update - Pro BlendSM Conservative Term Series (unaudited)
Average Annual Total Returns
As of April 30, 2004
-------------------------------------------------
Growth of
One Five Since a $10, 000
Year Year Inception1 Investment
--------------------------------------------------------------
Exeter Fund, Inc. - Pro-BlendSM Conservative Term Series 5.88% 6.28% 6.38% $ 16,920
Lehman Brothers Intermediate U.S. Government/Credit Bond Index2 2.03% 6.63% 6.59% $ 17,202
15%/85% Blended Index2 4.99% 5.50% 7.25% $ 18,140
The value of a $10,000 investment in the Exeter Fund, Inc. - Pro-BlendSM
Conservative Term Series from its inception (11/1/95) to present (4/30/04) as
compared to the Lehman Brothers Intermediate U.S. Government/Credit Bond Index
and a 15%/85% Blended Index.
<graphic>
<line chart>
Data for line chart to follow:
Exeter Fund, Inc. Lehman Brothers Intermediate
Date Pro-BlendSM Conservative Term Series U. S. Government/Credit Bond Index 15%/85% Blended Index
11/1/1995 $10,000 $10,000 $10,000
10/31/1996 10,494 10,581 10,790
10/31/1997 11,411 11,374 11,904
10/31/1998 12,157 12,411 13,197
10/31/1999 12,371 12,533 13,695
10/31/2000 13,684 13,342 14,604
10/31/2001 14,927 15,244 15,907
10/31/2002 15,576 16,145 16,457
10/31/2003 16,471 17,022 17,812
4/30/2004 16,920 17,202 18,140
1Performance numbers for the Series and Indices are calculated from November 1,
1995, the Series' inception date. The Series' performance does not reflect the
deduction of taxes that a shareholder would pay on fund distributions or the
redemption of shares. The Series' performance is historical and may not be
indicative of future results.
2The Lehman Brothers Intermediate U.S. Government/Credit Bond Index is a market
value weighted measure of approximately 3,000 corporate and government
investment grade securities with maturities greater than one year but less than
ten years. The 15%/85% Blended Index is 15% Standard & Poor's (S&P) 500 Total
Return Index and 85% Lehman Brothers Intermediate U.S. Government/Credit Bond
Index. The S&P 500 Total Return Index is an unmanaged capitalization-weighted
measure of 500 widely held common stocks listed on the New York Stock Exchange,
American Stock Exchange and the Over-the-Counter market. Both Indices' returns
assume reinvestment of income and, unlike Series returns, do not reflect any
fees or expenses. Because the Series' asset allocation will vary over time, the
composition of the Series' portfolio may not match the composition of the
comparative Indices' portfolios.
2
Portfolio Composition - As of April 30, 2004 (unaudited)
<graphic>
<pie chart>
ASSET ALLOCATION*
Stocks and Unit Investment Trust 20.89%
Bonds 77.86%
Cash, short-term investments, and other assets, less liabilities 1.25%
*As a percentage of net assets.
SECTOR ALLOCATION*
Bonds 77.86%
Consumer Discretionary 3.80%
Consumer Staples 4.36%
Energy 3.98%
Financials 1.30%
Health Care 4.14%
Industrials 0.63%
Information Technology 0.70%
Materials 0.69%
Telecommunication Services 0.72%
Unit Investment Trust 0.04%
Utilities 0.53%
Cash, short-term investments, and other assets, less liabilities 1.25%
*As a percentage of net assets.
TOP TEN STOCK HOLDINGS*
Unilever plc - ADR (United Kingdom) 1.54%
Schlumberger Ltd. 1.36%
Schering-Plough Corp. 1.28%
Novartis AG - ADR (Switzerland) 1.25%
Time Warner, Inc. 1.04%
Kimberly-Clark Corp. 0.77%
Nestle S.A. (Switzerland) 0.65%
Baker Hughes, Inc. 0.64%
Vodafone Group plc - ADR (United Kingdom) 0.62%
Weight Watchers International, Inc. 0.60%
*As a percentage of net assets.
3
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES SHARES (NOTE 2)
- ---------------------------------------------------------------------------
COMMON STOCKS - 20.85%
CONSUMER DISCRETIONARY - 3.80%
HOTELS, RESTAURANTS & LEISURE - 0.70%
Carnival Corp. 2,575 $109,875
Club Mediterranee S.A.* (France) (Note 7) 950 39,004
The Hongkong & Shanghai Hotels Ltd. (Hong Kong) (Note 7) 1,900 1,194
International Speedway Corp. - Class A 25 1,053
Shangri-La Asia Ltd. (Hong Kong) (Note 7) 4,000 3,923
--------
155,049
--------
HOUSEHOLD DURABLES - 0.03%
Interface, Inc. - Class A* 300 2,559
Sony Corp. - ADR (Japan) (Note 7) 100 3,840
Waterford Wedgwood plc (Ireland) (Note 7) 1,625 447
--------
6,846
--------
MEDIA - 1.53%
Acme Communications, Inc.* 400 2,688
Cablevision Systems New York Group - Class A* 4,050 88,411
Hearst-Argyle Television, Inc. - Class A 50 1,313
Insight Communications Co., Inc.* 275 2,505
The News Corp. Ltd. - ADR (Australia) (Note 7) 225 7,594
Reed Elsevier plc - ADR (United Kingdom) (Note 7) 175 6,597
Time Warner, Inc.* 13,775 231,696
--------
340,804
--------
MULTILINE RETAIL - 0.03%
KarstadtQuelle AG (Germany) (Note 7) 100 2,134
PT Ramayana Lestari Sentosa Tbk (Indonesia) (Note 7) 6,500 3,960
--------
6,094
--------
SPECIALTY RETAIL - 1.50%
Douglas Holding AG (Germany) (Note 7) 75 2,033
KOMERI Co. Ltd. (Japan) (Note 7) 100 2,737
Office Depot, Inc.* 5,800 101,558
Staples, Inc. 3,525 90,804
Toys "R" Us, Inc.* 125 1,931
Weight Watchers International, Inc.* 3,425 133,575
--------
332,638
--------
The accompanying notes are an integral part of the financial statements.
4
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES SHARES (NOTE 2)
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY (continued)
TEXTILES, APPAREL & LUXURY GOODS - 0.01%
LVMH S.A. (Louis Vuitton Moet Hennessy) (France) (Note 7) 50 $ 3,524
--------
844,955
--------
CONSUMER STAPLES - 4.36%
BEVERAGES - 0.02%
Interbrew (Belgium) (Note 7) 150 4,506
--------
FOOD & STAPLES RETAILING - 0.82%
Carrefour S.A. (France) (Note 7) 2,575 119,489
The Kroger Co.* 3,475 60,812
Metro AG (Germany) (Note 7) 50 2,224
--------
182,525
--------
FOOD PRODUCTS - 2.27%
American Italian Pasta Co. - Class A 50 1,548
Cadbury Schweppes plc (United Kingdom) (Note 7) 475 3,778
Groupe Danone (France) (Note 7) 25 4,190
Nestle S.A. (Switzerland) (Note 7) 575 145,457
Smithfield Foods, Inc.* 75 1,995
Sylvan, Inc.* 475 5,719
Unilever plc - ADR (United Kingdom) (Note 7) 8,864 340,998
--------
503,685
--------
HOUSEHOLD PRODUCTS - 0.83%
Henkel KGaA (Germany) (Note 7) 50 4,327
Kimberly-Clark Corp. 2,600 170,170
Kimberly-Clark de Mexico S.A. de C.V. - ADR (Mexico) (Note 7) 500 6,632
Rayovac Corp.* 150 3,998
--------
185,127
--------
PERSONAL PRODUCTS - 0.42%
Clarins S.A. (France) (Note 7) 138 8,569
The Estee Lauder Companies, Inc. - Class A 1,825 83,421
--------
91,990
--------
967,833
--------
ENERGY - 3.98%
ENERGY EQUIPMENT & SERVICES - 3.33%
Atwood Oceanics, Inc.* 125 4,581
Baker Hughes, Inc. 3,875 142,135
Cooper Cameron Corp.* 900 43,515
The accompanying notes are an integral part of the financial statements.
5
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES SHARES (NOTE 2)
- ---------------------------------------------- ------- ---------
ENERGY (continued)
ENERGY EQUIPMENT & SERVICES (continued)
Helmerich & Payne, Inc. 75 $ 2,024
National-Oilwell, Inc.* 150 4,188
Newpark Resources, Inc.* 450 2,579
Precision Drilling Corp.* (Canada) (Note 7) 50 2,395
Pride International, Inc.* 425 7,170
Schlumberger Ltd. 5,150 301,430
Smedvig ASA - Class A (Norway) (Note 7) 750 7,161
Transocean, Inc.* 2,850 79,144
Varco International, Inc.* 3,175 65,691
Weatherford International Ltd.* 1,800 78,264
--------
740,277
--------
OIL & GAS - 0.65%
Amerada Hess Corp. 1,725 122,699
Eni S.p.A. (Italy) (Note 7) 400 8,132
Forest Oil Corp.* 125 3,281
Total S.A. (France) (Note 7) 50 9,248
--------
143,360
--------
883,637
--------
FINANCIALS - 1.30%
CAPITAL MARKETS - 0.41%
Deutsche Bank AG (Germany) (Note 7) 75 6,159
SEI Investments Co. 2,875 84,870
--------
91,029
--------
COMMERCIAL BANKS - 0.84%
Banca Intesa S.p.A. (Italy) (Note 7) 1,075 3,557
Banco BPI S.A. (Portugal) (Note 7) 800 3,050
BNP Paribas S.A. (France) (Note 7) 50 3,003
Societe Generale (France) (Note 7) 25 2,083
U.S. Bancorp 3,175 81,407
UniCredito Italiano S.p.A. (Italy) (Note 7) 875 4,080
Wachovia Corp. 1,950 89,212
--------
186,392
--------
INSURANCE - 0.05%
Allianz AG (Germany) (Note 7) 25 2,646
Assicurazioni Generali S.p.A. (Italy) (Note 7) 150 3,956
Axa (France) (Note 7) 200 4,212
--------
10,814
--------
288,235
--------
The accompanying notes are an integral part of the financial statements.
6
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES SHARES (NOTE 2)
- -----------------------------------------------------------
HEALTH CARE - 4.14%
BIOTECHNOLOGY - 0.11%
BioMarin Pharmaceutical, Inc.* 1,050 $ 7,266
Ciphergen Biosystems, Inc.* 400 2,932
Invitrogen Corp.* 75 5,417
Millennium Pharmaceuticals, Inc.* 300 4,497
Transkaryotic Therapies, Inc.* 300 4,359
--------
24,471
--------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.69%
Advanced Neuromodulation Systems, Inc.* 225 6,131
Bruker BioSciences Corp.* 881 4,572
Cardiac Science, Inc.* 3,625 10,875
Conceptus, Inc.* 425 4,887
CTI Molecular Imaging, Inc.* 275 4,133
Millipore Corp.* 2,350 123,211
--------
153,809
--------
HEALTH CARE PROVIDERS & SERVICES - 0.64%
Allscripts Healthcare Solutions, Inc.* 1,350 12,703
AmerisourceBergen Corp. 100 5,789
Cardinal Health, Inc. 75 5,494
CIGNA Corp. 100 6,451
McKesson Corp. 175 5,751
Odyssey Healthcare, Inc.* 275 4,623
WebMD Corp.* 11,500 101,085
--------
141,896
--------
PHARMACEUTICALS - 2.70%
Aventis S.A. (France) (Note 7) 50 3,809
Guilford Pharmaceuticals, Inc.* 1,150 7,280
Novartis AG - ADR (Switzerland) (Note 7) 6,200 277,760
Orphan Medical, Inc.* 250 2,873
Pfizer, Inc. 250 8,940
Schering AG (Germany) (Note 7) 300 15,716
Schering-Plough Corp. 16,950 283,574
--------
599,952
--------
920,128
--------
INDUSTRIALS - 0.63%
AIRLINES - 0.01%
SkyWest, Inc. 125 2,275
--------
COMMERCIAL SERVICES & SUPPLIES - 0.05%
Aggreko plc (United Kingdom) (Note 7) 1,375 3,920
The accompanying notes are an integral part of the financial statements.
7
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES SHARES (NOTE 2)
- --------------------------------------------------------------------------------
INDUSTRIALS (continued)
COMMERCIAL SERVICES & SUPPLIES (continued)
BWT AG (Austria) (Note 7) 50 $ 1,139
Quebecor World, Inc. (Canada) (Note 7) 200 3,446
Viad Corp. 75 1,872
--------
10,377
--------
CONSTRUCTION & ENGINEERING - 0.04%
Insituform Technologies, Inc. - Class A* 125 2,030
Koninklijke Boskalis Westminster N.V. (Netherlands) (Note 7) 225 5,664
--------
7,694
--------
ELECTRICAL EQUIPMENT - 0.01%
Plug Power, Inc.* 250 1,942
--------
INDUSTRIAL CONGLOMERATES - 0.03%
Siemens AG (Germany) (Note 7) 100 7,181
--------
MACHINERY - 0.07%
AGCO Corp.* 175 3,369
Albany International Corp. - Class A 108 3,294
Lindsay Manufacturing Co. 125 2,956
Tomra Systems ASA (Norway) (Note 7) 700 2,816
Wabtec Corp. 225 3,668
--------
16,103
--------
ROAD & RAIL - 0.41%
CSX Corp. 2,825 86,897
Kansas City Southern* 325 4,501
--------
91,398
--------
TRANSPORTATION INFRASTRUCTURE - 0.01%
Brisa-Auto Estradas de Portugal S.A. (Portugal) (Note 7) 400 2,724
--------
139,694
--------
INFORMATION TECHNOLOGY - 0.70%
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.12%
Fargo Electronics* 175 1,689
Mettler-Toledo International, Inc.* (Switzerland) (Note 7) 175 7,844
Thermo Electron Corp.* 250 7,300
Varian, Inc.* 250 10,260
--------
27,093
--------
The accompanying notes are an integral part of the financial statements.
8
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES SHARES (NOTE 2)
- -------------------------------------------------------------------------
INFORMATION TECHNOLOGY (continued)
IT SERVICES - 0.51%
First Data Corp. 2,425 $110,071
SAP AG (Germany) (Note 7) 25 3,824
--------
113,895
--------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.05%
Brooks Automation, Inc.* 475 7,904
Cymer, Inc.* 100 3,198
--------
11,102
--------
SOFTWARE - 0.02%
Amdocs Ltd.* (Guernsey) (Note 7) 125 3,319
--------
155,409
--------
MATERIALS - 0.69%
CHEMICALS - 0.39%
Bayer AG (Germany) (Note 7) 175 4,741
L'Air Liquide S.A. (France) (Note 7) 25 4,378
Lonza Group AG (Switzerland) (Note 7) 425 20,519
Minerals Technologies, Inc. 975 57,184
--------
86,822
--------
PAPER & FOREST PRODUCTS - 0.30%
Aracruz Celulose S.A. - ADR (Brazil) (Note 7) 2,025 63,058
Bowater, Inc. 75 3,146
--------
66,204
--------
153,026
--------
TELECOMMUNICATION SERVICES - 0.72%
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.08%
Deutsche Telekom AG* (Germany) (Note 7) 150 2,575
PT Telekomunikasi Indonesia (Indonesia) (Note 7) 6,500 5,958
Telecom Italia S.p.A.* (Italy) (Note 7) 1,732 5,554
Telefonica S.A. (Spain) (Note 7) 250 3,719
--------
17,806
--------
WIRELESS TELECOMMUNICATION SERVICES - 0.64%
Telecom Italia Mobile S.p.A. (T.I.M.) (Italy) (Note 7) 825 4,707
Vodafone Group plc - ADR (United Kingdom) (Note 7) 5,600 137,424
--------
142,131
--------
159,937
--------
The accompanying notes are an integral part of the financial statements.
9
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
SHARES/ VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES PRINCIPAL AMOUNT (NOTE 2)
- ----------------------------------------------------------------------------------------------
UTILITIES - 0.53%
ELECTRIC UTILITIES - 0.52%
Allegheny Energy, Inc.* 7,500 $ 103,350
E.ON AG (Germany) (Note 7) 100 6,629
Endesa S.A. (Spain) (Note 7) 150 2,749
Korea Electric Power Corp. (KEPCO) - ADR (South Korea) (Note 7) 275 2,582
----------
115,310
----------
MULTI-UTILITIES & UNREGULATED POWER - 0.01%
RWE AG (Germany) (Note 7) 75 3,259
----------
118,569
----------
TOTAL COMMON STOCKS
(Identified Cost $4,140,174) 4,631,423
----------
UNIT INVESTMENT TRUST - 0.04%
Standard & Poor's Depositary Receipts Trust Series 1
(Identified Cost $8,395) 75 8,325
----------
U.S. TREASURY SECURITIES - 75.64%
U.S. TREASURY BONDS - 8.74%
U.S. Treasury Bond, 6.875%, 8/15/2025 $ 170,000 202,851
U.S. Treasury Bond, 5.50%, 8/15/2028 1,710,000 1,737,454
----------
TOTAL U.S. TREASURY BONDS
(Identified Cost $1,934,320) 1,940,305
----------
U.S. TREASURY NOTES - 66.90%
U.S. Treasury Note, 2.25%, 7/31/2004 1,000,000 1,002,969
U.S. Treasury Note, 7.25%, 8/15/2004 65,000 66,148
U.S. Treasury Note, 5.875%, 11/15/2004 10,000 10,245
U.S. Treasury Note, 1.625%, 1/31/2005 55,000 55,097
U.S. Treasury Note, 1.625%, 4/30/2005 2,235,000 2,235,349
U.S. Treasury Note, 6.50%, 5/15/2005 625,000 655,908
U.S. Treasury Note, 1.50%, 7/31/2005 600,000 597,914
U.S. Treasury Note, 1.625%, 9/30/2005 1,600,000 1,593,813
U.S. Treasury Note, 1.875%, 12/31/2005 500,000 497,988
U.S. Treasury Note, 5.625%, 2/15/2006 10,000 10,603
U.S. Treasury Note, 1.50%, 3/31/2006 1,200,000 1,183,266
U.S. Treasury Note, 7.00%, 7/15/2006 25,000 27,421
U.S. Treasury Note, 6.50%, 10/15/2006 15,000 16,379
U.S. Treasury Note, 3.50%, 11/15/2006 700,000 714,657
U.S. Treasury Note, 4.375%, 5/15/2007 500,000 521,386
U.S. Treasury Note, 6.625%, 5/15/2007 35,000 38,772
U.S. Treasury Note, 3.25%, 8/15/2007 1,050,000 1,058,695
U.S. Treasury Note, 6.125%, 8/15/2007 15,000 16,457
The accompanying notes are an integral part of the financial statements.
10
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
PRINCIPAL AMOUNT/ VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES SHARES (NOTE 2)
- ---------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES (continued)
U.S. TREASURY NOTES (continued)
U.S. Treasury Note, 3.00%, 2/15/2008 $ 400,000 $ 397,141
U.S. Treasury Note, 5.50%, 2/15/2008 90,000 97,358
U.S. Treasury Note, 5.625%, 5/15/2008 10,000 10,867
U.S. Treasury Note, 3.25%, 8/15/2008 600,000 596,297
U.S. Treasury Note, 4.75%, 11/15/2008 795,000 836,644
Interest Stripped - Principal Payment, 2/15/2009 17,000 14,266
U.S. Treasury Note, 5.50%, 5/15/2009 225,000 244,556
U.S. Treasury Note, 6.00%, 8/15/2009 450,000 499,148
U.S. Treasury Note, 5.00%, 2/15/2011 400,000 421,953
U.S. Treasury Note, 3.625%, 5/15/2013 1,525,000 1,438,981
----------
TOTAL U.S. TREASURY NOTES
(Identified Cost $14,744,555) 14,860,278
----------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $16,678,875) 16,800,583
----------
U.S. GOVERNMENT AGENCIES - 2.22%
MORTGAGE BACKED SECURITIES - 2.08%
GNMA, Pool #365225, 9.00%, 11/15/2024 2,257 2,477
GNMA, Pool #398655, 6.50%, 5/15/2026 7,069 7,385
GNMA, Pool #452826, 9.00%, 1/15/2028 10,652 11,690
GNMA, Pool #460820, 6.00%, 6/15/2028 25,618 26,279
GNMA, Pool #458983, 6.00%, 1/15/2029 86,615 88,850
GNMA, Pool #530481, 8.00%, 8/15/2030 113,557 123,919
GNMA, Pool #577796, 6.00%, 11/15/2032 197,130 202,217
----------
TOTAL MORTGAGE BACKED SECURITIES
(Identified Cost $446,497) 462,817
----------
OTHER AGENCIES - 0.14%
Fannie Mae, 3.50%, 9/15/2004 5,000 5,044
Fannie Mae, 6.00%, 12/15/2005 10,000 10,598
Fannie Mae, 5.25%, 1/15/2009 15,000 15,854
----------
TOTAL OTHER AGENCIES
(Identified Cost $31,778) 31,496
----------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $478,275) 494,313
----------
SHORT-TERM INVESTMENTS - 0.42%
Dreyfus Treasury Cash Management - Institutional Shares
(Identified Cost $93,211) 93,211 93,211
----------
The accompanying notes are an integral part of the financial statements.
11
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES (NOTE 2)
- -------------------------------------------------------------------
TOTAL INVESTMENTS - 99.17%
(Identified Cost $21,398,930) $ 22,027,855
OTHER ASSETS, LESS LIABILITIES - 0.83% 184,060
------------
NET ASSETS - 100% $ 22,211,915
============
*Non-income producing security
ADR - American Depository Receipt
The accompanying notes are an integral part of the financial statements.
12
STATEMENT OF ASSETS AND LIABILITIES - PRO-BLENDSM CONSERVATIVE TERM SERIES
(UNAUDITED)
APRIL 30, 2004
ASSETS:
Investments, at value (identified cost $21,398,930) (Note 2) $22,027,855
Foreign currency, at value (cost $4,288) 4,305
Interest receivable 156,863
Receivable for fund shares sold 38,038
Receivable for securities sold 14,854
Dividends receivable 4,177
Prepaid expenses 2,292
Foreign tax reclaims receivable 1,115
-----------
TOTAL ASSETS 22,249,499
-----------
LIABILITIES:
Accrued management fees (Note 3) 9,819
Accrued fund accounting and transfer agent service fees (Note 3) 2,547
Accrued fund accounting fees (Note 3) 1,576
Accrued transfer agent fees (Note 3) 461
Audit fees payable 14,992
Payable for fund shares repurchased 5,442
Payable for securities purchased 2,747
-----------
TOTAL LIABILITIES 37,584
-----------
TOTAL NET ASSETS $22,211,915
===========
NET ASSETS CONSIST OF:
Capital stock $ 19,755
Additional paid-in-capital 21,217,075
Undistributed net investment income 161,657
Accumulated net realized gain on investments and other assets
and liabilities 184,473
Net unrealized appreciation on investments and other assets
and liabilities 628,955
-----------
TOTAL NET ASSETS $22,211,915
===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE - CLASS A ($22,211,915/1,975,511 shares) $ 11.24
===========
The accompanying notes are an integral part of the financial statements.
13
STATEMENT OF OPERATIONS - PRO-BLENDSM CONSERVATIVE TERM SERIES (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 2004
INVESTMENT INCOME:
Interest $268,513
Dividends (net of foreign tax withheld, $1,003) 28,303
--------
Total Investment Income 296,816
--------
EXPENSES:
Management fees (Note 3) 84,985
Fund accounting and transfer agent service fees (Note 3) 14,895
Fund accounting fees (Note 3) 4,365
Directors' fees (Note 3) 3,330
Transfer agent fees (Note 3) 3,230
Audit fees 12,230
Registration and filing fees 8,825
Custodian fees 4,710
Miscellaneous 2,913
--------
Total Expenses 139,483
Less reduction of expenses (Note 3) (33,285)
--------
Net Expenses 106,198
--------
NET INVESTMENT INCOME 190,618
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on -
Investments 197,958
Foreign currency and other assets and liabilities 77
--------
198,035
--------
Net change in unrealized appreciation on -
Investments 139,869
Foreign currency and other assets and liabilities (17)
--------
139,852
--------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS 337,887
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $528,505
========
The accompanying notes are an integral part of the financial statements.
14
STATEMENTS OF CHANGES IN NET ASSETS - PRO-BLENDSM CONSERVATIVE TERM SERIES
FOR THE SIX
MONTHS ENDED FOR THE
4/30/04 YEAR ENDED
(UNAUDITED) 10/31/03
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 190,618 $ 284,543
Net realized gain on investments 198,035 488,772
Net change in unrealized appreciation on investments 139,852 98,984
-------------- ------------
Net increase from operations 528,505 872,299
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 8):
From net investment income (210,172) (258,479)
From net realized gain on investments (478,057) (52,226)
-------------- ------------
Total distributions to shareholders (688,229) (310,705)
-------------- ------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase from capital share transactions (Note 5) 2,380,887 7,234,350
-------------- ------------
Net increase in net assets 2,221,163 7,795,944
NET ASSETS:
Beginning of period 19,990,752 12,194,808
-------------- ------------
END OF PERIOD (including undistributed net
investment income of $161,657 and $181,211,
respectively) $ 22,211,915 $19,990,752
============== ============
The accompanying notes are an integral part of the financial statements.
15
FINANCIAL HIGHLIGHTS - PRO-BLENDSM CONSERVATIVE TERM SERIES
FOR THE SIX
MONTHS ENDED
4/30/04 FOR THE YEARS ENDED
(UNAUDITED) 10/31/03 10/31/02 10/31/01
-------------- --------------------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 11.32 $ 10.95 $ 11.34 $ 11.16
-------------- --------------------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.10 0.17 0.30 2 0.46
Net realized and unrealized gain (loss) on
investments 0.21 0.45 0.15 2 0.51
-------------- --------------------- ---------- ----------
Total from investment operations 0.31 0.62 0.45 0.97
-------------- --------------------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.12) (0.21) (0.41) (0.48)
From net realized gain on investments (0.27) (0.04) (0.43) (0.31)
-------------- --------------------- ---------- ----------
Total distributions to shareholders (0.39) (0.25) (0.84) (0.79)
-------------- --------------------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 11.24 $ 11.32 $ 10.95 $ 11.34
============== ===================== ========== ==========
Total return1 2.72% 5.75% 4.35% 9.09%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 1.00%3 1.00% 1.00% 1.00%
Net investment income 1.80%3 1.90% 2.95%2 3.84%
Portfolio turnover 12% 40% 55% 42%
NET ASSETS - END OF PERIOD (000's omitted) $ 22,212 $ 19,991 $ 12,195 $ 4,233
============== ===================== ========== ==========
FOR THE YEARS ENDED
10/31/00 10/31/99
---------- -------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.62 $10.85
---------- -------
Income (loss) from investment operations:
Net investment income 0.46 0.46
Net realized and unrealized gain (loss) on
investments 0.62 (0.27)
---------- -------
Total from investment operations 1.08 0.19
---------- -------
Less distributions to shareholders:
From net investment income (0.44) (0.38)
From net realized gain on investments (0.10) (0.04)
---------- -------
Total distributions to shareholders (0.54) (0.42)
---------- -------
NET ASSET VALUE - END OF PERIOD $ 11.16 $10.62
========== =======
Total return1 10.62% 1.75%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 1.00% 1.00%
Net investment income 4.13% 4.08%
Portfolio turnover 33% 33%
NET ASSETS - END OF PERIOD (000's omitted) $ 4,838 $4,837
========== =======
*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:
0.31%3 0.82% 1.84% 2.00% 1.23% 0.57%
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.
2The Series adopted the provisions of the revised AICPA Audit and Accounting
Guide for Investment Companies, which requires the Series to amortize premium
and accrete discount on all debt securities (see Note 2 to the financial
statements). The effect of this change for the year ended October 31, 2002 was
to increase net investment income per share by $0.01, decrease net realized and
unrealized gain (loss) on investments per share by $0.01, and increase the net
investment income ratio from 2.80% to 2.95%. Per share data and ratios for the
periods prior to November 1, 2001 have not been restated to reflect this change
in presentation.
3Annualized.
The accompanying notes are an integral part of the financial statements.
16
Performance Update - Pro-BlendSM Moderate Term Series (unaudited)
Average Annual Total Returns
As of April 30, 2004
-------------------------------------------
Growth of
One Five Ten Since a $10,000
Year Year Year Inception1 Investment
--------------------------------------------------------
Exeter Fund, Inc. - Pro-BlendSM Moderate Term Series 13.75% 5.84% 8.49% 7.70% $ 22,015
Lehman Brothers Intermediate U.S. Government/Credit Bond Index2 2.03% 6.63% 6.92% 6.27% $ 19,036
40%/60% Blended Index2 10.05% 3.40% 9.01% 8.33% $ 23,337
The value of a $10,000 investment in the Exeter Fund, Inc. - Pro-BlendSM
Moderate Term Series from its inception (9/15/93) to present (4/30/04) as
compared to the Lehman Brothers Intermediate U.S. Government/Credit Bond
Index and a 40%/60% Blended Index.
<graphic>
<line chart>
Data for line chart to follow:
Exeter Fund, Inc. Lehman Brothers Intermediate
Date Pro-BlendSM Moderate Term Series U.S. Government/Credit Bond Index 40%/60% Blended Index
9/15/1993 $10,000 $10,000 $10,000
12/31/1993 10,092 10,032 10,103
12/31/1994 10,012 9,838 10,045
12/31/1995 12,123 11,347 12,438
10/31/1996 12,806 11,728 13,503
10/31/1997 14,472 12,606 15,807
10/31/1998 15,383 13,755 18,139
10/31/1999 16,048 13,891 20,037
10/31/2000 18,634 14,788 21,358
10/31/2001 19,304 16,896 20,754
10/31/2002 18,662 17,867 20,262
10/31/2003 20,878 18,837 22,626
4/30/2004 22,015 19,036 23,337
1Performance numbers for the Series are calculated from September 15, 1993, the
Series' inception date. The Lehman Brothers Intermediate U.S. Government/Credit
Bond Index only publishes month-end numbers; therefore, performance numbers for
the Indices are calculated from September 30, 1993. The Series' performance
does not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of shares. The Series' performance is
historical and may not be indicative of future results.
2The Lehman Brothers Intermediate U.S. Government/Credit Bond Index is a market
value weighted measure of approximately 3,000 corporate and government
investment grade securities with maturities greater than one year but less than
ten years. The 40%/60% Blended Index is 40% Standard & Poor's (S&P) 500 Total
Return Index and 60% Lehman Brothers Intermediate U.S. Government/Credit Bond
Index. The S&P 500 Total Return Index is an unmanaged capitalization-weighted
measure of 500 widely held common stocks listed on the New York Stock Exchange,
American Stock Exchange and the Over-the-Counter market. Both Indices' returns
assume reinvestment of income and, unlike Series returns, do not reflect any
fees or expenses. Because the Series' asset allocation will vary over time, the
composition of the Series' portfolio may not match the composition of the
comparative Indices' portfolios.
17
Portfolio Composition - As of April 30, 2004 (unaudited)
<graphic>
<pie chart>
ASSET ALLOCATION*
Stocks and Unit Investment Trust 42.56%
Bonds 53.85%
Cash, short-term investments, and other assets, less liabilities 3.59%
*As a percentage of net assets.
SECTOR ALLOCATION*
Bonds 53.85%
Consumer Discretionary 7.07%
Consumer Staples 9.39%
Energy 7.70%
Financials 2.50%
Health Care 8.80%
Industrials 1.45%
Information Technology 1.71%
Materials 1.15%
Telecommunication Services 1.59%
Unit Investment Trust 0.11%
Utilities 1.09%
Cash, short-term investments, and other assets, less liabilities 3.59%
*As a percentage of net assets.
TOP TEN STOCK HOLDINGS*
Unilever plc - ADR (United Kingdom) 2.77%
Novartis AG - ADR (Switzerland) 2.61%
Schlumberger Ltd. 2.49%
Schering-Plough Corp. 2.31%
Time Warner, Inc. 2.23%
Nestle S.A. (Switzerland) 2.12%
Kimberly-Clark Corp. 1.71%
Vodafone Group plc - ADR (United Kingdom) 1.19%
Baker Hughes, Inc. 1.12%
Weight Watchers International, Inc. 1.10%
*As a percentage of net assets.
18
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCKS - 42.45%
CONSUMER DISCRETIONARY - 7.07%
AUTOMOBILES - 0.01%
Bayerische Motoren Werke AG (BMW) (Germany) (Note 7) 250 $ 10,744
-----------
HOTELS, RESTAURANTS & LEISURE - 1.41%
Carnival Corp. 16,650 710,455
Club Mediterranee S.A.* (France) (Note 7) 8,750 359,251
The Hongkong & Shanghai Hotels Ltd. (Hong Kong) (Note 7) 83,050 52,174
International Speedway Corp. - Class A 300 12,639
Mandarin Oriental International Ltd.* (Bermuda) (Note 7) 17,000 10,540
Shangri-La Asia Ltd. (Hong Kong) (Note 7) 38,000 37,270
-----------
1,182,329
-----------
HOUSEHOLD DURABLES - 0.14%
Cavalier Homes, Inc.* 3,275 20,763
Corporacion GEO S.A. de C.V. - Series B*
(Mexico) (Note 7) 2,425 13,929
Helen of Troy Ltd.* 500 16,625
Interface, Inc. - Class A* 2,950 25,163
Libbey, Inc. 275 7,197
Sony Corp. - ADR (Japan) (Note 7) 750 28,800
Waterford Wedgwood plc (Ireland) (Note 7) 21,975 6,048
-----------
118,525
-----------
LEISURE EQUIPMENT & PRODUCTS - 0.05%
Callaway Golf Co. 475 8,061
Hasbro, Inc. 1,350 25,501
K2, Inc.* 525 7,697
-----------
41,259
-----------
MEDIA - 2.55%
Acme Communications, Inc.* 3,300 22,176
Antena 3 de Television S.A.* (Spain) (Note 7) 5 254
Hearst-Argyle Television, Inc. - Class A 500 13,125
Insight Communications Co., Inc.* 2,750 25,052
The News Corp. Ltd. - ADR (Australia) (Note 7) 2,275 76,781
Pearson plc (United Kingdom) (Note 7) 2,875 33,547
Reed Elsevier plc - ADR (United Kingdom) (Note 7) 1,650 62,205
Time Warner, Inc.* 111,575 1,876,691
VNU N.V. (Netherlands) (Note 7) 550 15,388
Wolters Kluwer N.V. (Netherlands) (Note 7) 1,175 19,790
-----------
2,145,009
-----------
The accompanying notes are an integral part of the financial statements.
19
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY (continued)
MULTILINE RETAIL - 0.08%
Don Quijote Co. Ltd. (Japan) (Note 7) 300 $ 21,367
KarstadtQuelle AG (Germany) (Note 7) 550 11,736
PT Ramayana Lestari Sentosa Tbk (Indonesia) (Note 7) 49,000 29,851
----------
62,954
----------
SPECIALTY RETAIL - 2.78%
Douglas Holding AG (Germany) (Note 7) 2,250 60,983
Foot Locker, Inc. 1,300 31,200
KOMERI Co. Ltd. (Japan) (Note 7) 600 16,420
Office Depot, Inc.* 37,800 661,878
Staples, Inc. 24,100 620,816
Toys "R" Us, Inc.* 1,200 18,540
Weight Watchers International, Inc.* 23,700 924,300
----------
2,334,137
----------
TEXTILES, APPAREL & LUXURY GOODS - 0.05%
Hampshire Group Ltd.* 250 7,463
LVMH S.A. (Louis Vuitton Moet Hennessy) (France) (Note 7) 400 28,195
Wolverine World Wide, Inc. 375 10,080
----------
45,738
----------
5,940,695
----------
CONSUMER STAPLES - 9.39%
BEVERAGES - 0.07%
Grupo Modelo S.A. de C.V. (Mexico) (Note 7) 6,025 15,163
Interbrew (Belgium) (Note 7) 1,050 31,543
PepsiAmericas, Inc. 675 13,520
----------
60,226
----------
FOOD & STAPLES RETAILING - 1.65%
Carrefour S.A. (France) (Note 7) 17,575 815,544
The Kroger Co.* 31,850 557,375
Metro AG (Germany) (Note 7) 325 14,454
----------
1,387,373
----------
FOOD PRODUCTS - 5.05%
American Italian Pasta Co. - Class A 400 12,384
Cadbury Schweppes plc (United Kingdom) (Note 7) 3,100 24,656
Groupe Danone (France) (Note 7) 100 16,759
Nestle S.A. (Switzerland) (Note 7) 7,025 1,777,109
Sanderson Farms, Inc. 375 13,942
Smithfield Foods, Inc.* 1,325 35,245
Sylvan, Inc.* 2,700 32,508
The accompanying notes are an integral part of the financial statements.
20
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- ---------------------------------------------------------------------------------------
CONSUMER STAPLES (continued)
FOOD PRODUCTS (continued)
Unilever plc - ADR (United Kingdom) (Note 7) 60,498 $2,327,358
-----------
4,239,961
-----------
HOUSEHOLD PRODUCTS - 1.90%
Henkel KGaA (Germany) (Note 7) 325 28,129
Kao Corp. (Japan) (Note 7) 1,000 23,877
Kimberly-Clark Corp. 21,950 1,436,628
Kimberly-Clark de Mexico S.A. de C.V. - ADR (Mexico) (Note 7) 4,750 63,000
Rayovac Corp.* 1,450 38,643
-----------
1,590,277
-----------
PERSONAL PRODUCTS - 0.71%
Clarins S.A. (France) (Note 7) 1,250 77,619
The Estee Lauder Companies, Inc. - Class A 10,600 484,526
Shiseido Co. Ltd. (Japan) (Note 7) 3,000 36,890
-----------
599,035
-----------
TOBACCO - 0.01%
Altadis S.A. (Spain) (Note 7) 275 7,770
-----------
7,884,642
-----------
ENERGY - 7.70%
ENERGY EQUIPMENT & SERVICES - 6.54%
Atwood Oceanics, Inc.* 1,250 45,812
Baker Hughes, Inc. 25,600 939,008
Compagnie Generale de Geophysique S.A. (CGG)* (France) (Note 7) 350 17,349
Cooper Cameron Corp.* 7,900 381,965
Helmerich & Payne, Inc. 650 17,543
National-Oilwell, Inc.* 1,625 45,370
Newpark Resources, Inc.* 4,550 26,071
Precision Drilling Corp.* (Canada) (Note 7) 950 45,505
Pride International, Inc.* 4,225 71,276
Schlumberger Ltd. 35,675 2,088,058
Smedvig ASA - Class A (Norway) (Note 7) 5,325 50,843
Transocean, Inc.* 21,700 602,609
Varco International, Inc.* 25,350 524,492
Veritas DGC, Inc.* 900 18,387
Weatherford International Ltd.* 14,150 615,242
-----------
5,489,530
-----------
OIL & GAS - 1.16%
Amerada Hess Corp. 10,900 775,317
Eni S.p.A. (Italy) (Note 7) 3,475 70,650
The accompanying notes are an integral part of the financial statements.
21
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- ---------------------------------------------------------------------------------
ENERGY (continued)
OIL & GAS (continued)
Forest Oil Corp.* 1,200 $ 31,500
Petroleo Brasileiro S.A. (Petrobras) - ADR (Brazil) (Note 7) 1,350 33,683
Total S.A. (France) (Note 7) 350 64,739
---------
975,889
---------
6,465,419
---------
FINANCIALS - 2.50%
CAPITAL MARKETS - 0.74%
Deutsche Bank AG (Germany) (Note 7) 475 39,004
SEI Investments Co. 19,700 581,544
---------
620,548
---------
COMMERCIAL BANKS - 1.61%
Banca Intesa S.p.A. (Italy) (Note 7) 6,423 21,251
Banco BPI S.A. (Portugal) (Note 7) 5,475 20,871
Banco Espirito Santo S.A. (BES) (Portugal) (Note 7) 975 16,363
Bayerische Hypo-und Vereinsbank AG (HVB
Group)* (Germany) (Note 7) 1,200 20,815
BNP Paribas S.A. (France) (Note 7) 350 21,020
Commerzbank AG (Germany) (Note 7) 1,000 17,262
Societe Generale (France) (Note 7) 150 12,497
U.S. Bancorp 22,725 582,669
UniCredito Italiano S.p.A. (Italy) (Note 7) 6,225 29,028
Wachovia Corp. 13,275 607,331
---------
1,349,107
---------
CONSUMER FINANCE - 0.02%
Takefuji Corp. (Japan) (Note 7) 230 14,610
---------
DIVERSIFIED FINANCIAL SERVICES - 0.02%
ING Groep N.V. (Netherlands) (Note 7) 900 19,290
---------
INSURANCE - 0.11%
Allianz AG (Germany) (Note 7) 150 15,877
Assicurazioni Generali S.p.A. (Italy) (Note 7) 1,100 29,010
Axa (France) (Note 7) 1,400 29,487
Muenchener Rueckver AG (Germany) (Note 7) 150 16,201
---------
90,575
---------
THRIFTS & MORTGAGE FINANCE - 0.00%**
Hypo Real Estate Holding AG* (Germany) (Note 7) 156 4,245
---------
2,098,375
---------
The accompanying notes are an integral part of the financial statements.
22
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- --------------------------------------------------------------------------
HEALTH CARE - 8.80%
BIOTECHNOLOGY - 0.66%
BioMarin Pharmaceutical, Inc.* 12,950 $ 89,614
Celltech Group plc* (United Kingdom) (Note 7) 32,400 241,461
Ciphergen Biosystems, Inc.* 3,400 24,922
Invitrogen Corp.* 1,150 83,065
Millennium Pharmaceuticals, Inc.* 3,550 53,214
Transkaryotic Therapies, Inc.* 4,450 64,659
----------
556,935
----------
HEALTH CARE EQUIPMENT & SUPPLIES - 1.41%
Advanced Neuromodulation Systems, Inc.* 1,975 53,819
Bruker BioSciences Corp.* 9,629 49,975
Cardiac Science, Inc.* 44,600 133,800
Conceptus, Inc.* 4,875 56,062
CTI Molecular Imaging, Inc.* 3,275 49,223
Millipore Corp.* 16,025 840,191
----------
1,183,070
----------
HEALTH CARE PROVIDERS & SERVICES - 1.36%
Allscripts Healthcare Solutions, Inc.* 15,825 148,913
AmerisourceBergen Corp. 875 50,654
Cardinal Health, Inc. 700 51,275
CIGNA Corp. 1,225 79,025
McKesson Corp. 1,575 51,754
Odyssey Healthcare, Inc.* 3,000 50,430
WebMD Corp.* 80,825 710,452
----------
1,142,503
----------
PHARMACEUTICALS - 5.37%
Aventis S.A. (France) (Note 7) 325 24,759
Guilford Pharmaceuticals, Inc.* 12,625 79,916
Novartis AG - ADR (Switzerland) (Note 7) 48,950 2,192,960
Orphan Medical, Inc.* 2,275 26,140
Pfizer, Inc. 2,275 81,354
Schering AG (Germany) (Note 7) 2,750 144,060
Schering-Plough Corp. 116,025 1,941,098
Takeda Chemical Industries Ltd. (Japan) (Note 7) 400 16,130
----------
4,506,417
----------
7,388,925
----------
INDUSTRIALS - 1.45%
AEROSPACE & DEFENSE - 0.03%
Empresa Brasileira de Aeronautica S.A. (Embraer) -
ADR (Brazil) (Note 7) 950 24,510
----------
The accompanying notes are an integral part of the financial statements.
23
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- ----------------------------------------------------------------------------------
INDUSTRIALS (continued)
AIRLINES - 0.06%
Deutsche Lufthansa AG (Germany) (Note 7) 1,575 $ 25,243
SkyWest, Inc. 1,250 22,750
---------
47,993
---------
COMMERCIAL SERVICES & SUPPLIES - 0.11%
Aggreko plc (United Kingdom) (Note 7) 12,000 34,208
BWT AG (Austria) (Note 7) 375 8,541
Quebecor World, Inc. (Canada) (Note 7) 1,975 34,029
Viad Corp. 725 18,096
---------
94,874
---------
CONSTRUCTION & ENGINEERING - 0.10%
Hochtief AG (Germany) (Note 7) 575 16,267
Insituform Technologies, Inc. - Class A* 1,175 19,082
Koninklijke Boskalis Westminster N.V. (Netherlands) (Note 7) 2,100 52,865
---------
88,214
---------
ELECTRICAL EQUIPMENT - 0.02%
Plug Power, Inc.* 2,100 16,317
---------
INDUSTRIAL CONGLOMERATES - 0.10%
Siemens AG (Germany) (Note 7) 875 62,830
Sonae S.A. (SGPS) (Portugal) (Note 7) 19,025 20,982
---------
83,812
---------
MACHINERY - 0.23%
AGCO Corp.* 1,600 30,800
Albany International Corp. - Class A 900 27,450
FANUC Ltd. (Japan) (Note 7) 200 12,251
Lindsay Manufacturing Co. 1,075 25,424
MAN AG (Germany) (Note 7) 950 34,791
Tomra Systems ASA (Norway) (Note 7) 6,700 26,956
Wabtec Corp. 2,125 34,638
---------
192,310
---------
ROAD & RAIL - 0.78%
CSX Corp. 19,925 612,893
Kansas City Southern* 3,125 43,281
---------
656,174
---------
TRANSPORTATION INFRASTRUCTURE - 0.02%
Brisa-Auto Estradas de Portugal S.A. (Portugal) (Note 7) 2,625 17,873
---------
1,222,077
---------
The accompanying notes are an integral part of the financial statements.
24
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- -----------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 1.71%
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.42%
Fargo Electronics* 1,625 $ 15,681
KEYENCE Corp. (Japan) (Note 7) 100 24,013
Mabuchi Motor Co. Ltd. (Japan) (Note 7) 200 13,792
Mettler-Toledo International, Inc.* (Switzerland) (Note 7) 2,100 94,122
Thermo Electron Corp.* 2,725 79,570
Varian, Inc.* 3,000 123,120
---------
350,298
---------
IT SERVICES - 0.96%
First Data Corp. 16,650 755,743
SAP AG (Germany) (Note 7) 325 49,712
---------
805,455
---------
OFFICE ELECTRONICS - 0.06%
Canon, Inc. (Japan) (Note 7) 1,000 52,467
---------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.16%
Brooks Automation, Inc.* 4,625 76,960
Cymer, Inc.* 925 29,581
Taiwan Semiconductor Manufacturing Co. Ltd. - ADR* (Taiwan) (Note 7) 2,825 26,922
---------
133,463
---------
SOFTWARE - 0.11%
Amdocs Ltd.* (Guernsey) (Note 7) 875 23,231
Nintendo Co. Ltd. (Japan) (Note 7) 500 47,211
Sammy Corp. (Japan) (Note 7) 600 25,391
---------
95,833
---------
1,437,516
---------
MATERIALS - 1.15%
CHEMICALS - 0.63%
Bayer AG (Germany) (Note 7) 1,050 28,446
Cabot Corp. 275 9,295
Degussa AG (Germany) (Note 7) 225 8,089
L'Air Liquide S.A. (France) (Note 7) 150 26,271
Linde AG (Germany) (Note 7) 250 13,636
Lonza Group AG (Switzerland) (Note 7) 3,550 171,394
Minerals Technologies, Inc. 4,600 269,790
---------
526,921
---------
The accompanying notes are an integral part of the financial statements.
25
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- --------------------------------------------------------------------------------------
MATERIALS (continued)
PAPER & FOREST PRODUCTS - 0.52%
Aracruz Celulose S.A. - ADR (Brazil) (Note 7) 13,075 $407,155
Bowater, Inc. 850 35,657
---------
442,812
---------
969,733
---------
TELECOMMUNICATION SERVICES - 1.59%
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.28%
D&E Communications, Inc. 1,100 15,004
Deutsche Telekom AG* (Germany) (Note 7) 2,225 38,195
Portugal Telecom S.A. (SGPS) (Portugal) (Note 7) 2,025 21,969
PT Telekomunikasi Indonesia (Indonesia) (Note 7) 45,000 41,249
PT Telekomunikasi Indonesia - ADR (Indonesia) (Note 7) 2,025 36,653
Telecom Italia S.p.A.* (Italy) (Note 7) 12,378 39,692
Telefonica S.A. (Spain) (Note 7) 1,750 26,034
Telefonos de Mexico S.A. de C.V. (Telmex) - ADR (Mexico) (Note 7) 475 16,217
---------
235,013
---------
WIRELESS TELECOMMUNICATION SERVICES - 1.31%
Maxis Communications Berhad (Malaysia) (Note 7) 8,000 18,316
NTT DoCoMo, Inc. (Japan) (Note 7) 25 49,613
Telecom Italia Mobile S.p.A. (T.I.M.) (Italy) (Note 7) 5,975 34,094
Vodafone Group plc - ADR (United Kingdom) (Note 7) 40,675 998,165
---------
1,100,188
---------
1,335,201
---------
UTILITIES - 1.09%
ELECTRIC UTILITIES - 1.00%
Allegheny Energy, Inc.* 54,125 745,842
E.ON AG (Germany) (Note 7) 875 58,005
Endesa S.A. (Spain) (Note 7) 900 16,496
Korea Electric Power Corp. (KEPCO) - ADR (South Korea) (Note 7) 2,200 20,658
---------
841,001
---------
MULTI-UTILITIES & UNREGULATED POWER - 0.09%
International Power plc* (United Kingdom) (Note 7) 4,050 10,091
RWE AG (Germany) (Note 7) 1,175 51,059
The accompanying notes are an integral part of the financial statements.
26
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
PRINCIPAL AMOUNT/ VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------------------------------
UTILITIES (continued)
MULTI-UTILITIES & UNREGULATED POWER (continued)
Suez S.A. (France) (Note 7) 550 $ 11,024
-----------
72,174
-----------
913,175
-----------
TOTAL COMMON STOCKS
(Identified Cost $33,061,774) 35,655,758
-----------
UNIT INVESTMENT TRUST - 0.11%
Standard & Poor's Depositary Receipts Trust Series 1
(Identified Cost $92,833) 825 91,575
-----------
U.S. TREASURY SECURITIES - 52.58%
U.S. TREASURY BONDS - 8.96%
U.S. Treasury Bond, 7.25%, 8/15/2022 $ 390,000 $ 479,913
U.S. Treasury Bond, 6.25%, 8/15/2023 10,000 11,112
U.S. Treasury Bond, 7.50%, 11/15/2024 1,480,000 1,881,912
U.S. Treasury Bond, 5.50%, 8/15/2028 5,070,000 5,151,399
-----------
TOTAL U.S. TREASURY BONDS
(Identified Cost $7,170,023) 7,524,336
-----------
U.S. TREASURY NOTES - 43.62%
U.S. Treasury Note, 2.25%, 7/31/2004 2,525,000 2,532,497
U.S. Treasury Note, 2.125%, 10/31/2004 1,700,000 1,707,636
U.S. Treasury Note, 5.875%, 11/15/2004 10,000 10,245
U.S. Treasury Note, 1.625%, 4/30/2005 4,320,000 4,320,674
U.S. Treasury Note, 6.50%, 5/15/2005 355,000 372,556
U.S. Treasury Note, 1.625%, 9/30/2005 4,000,000 3,984,532
U.S. Treasury Note, 5.75%, 11/15/2005 3,435,000 3,627,683
U.S. Treasury Note, 5.875%, 11/15/2005 5,000 5,290
U.S. Treasury Note, 1.875%, 12/31/2005 7,000,000 6,971,839
U.S. Treasury Note, 4.625%, 5/15/2006 75,000 78,366
U.S. Treasury Note, 6.50%, 10/15/2006 5,000 5,460
U.S. Treasury Note, 3.50%, 11/15/2006 1,500,000 1,531,407
U.S. Treasury Note, 3.25%, 8/15/2007 3,500,000 3,528,983
U.S. Treasury Note, 6.125%, 8/15/2007 5,000 5,486
U.S. Treasury Note, 5.625%, 5/15/2008 5,000 5,433
U.S. Treasury Note, 3.25%, 8/15/2008 6,000,000 5,962,968
U.S. Treasury Note, 3.375%, 12/15/2008 2,000,000 1,986,094
-----------
TOTAL U.S. TREASURY NOTES
(Identified Cost $36,508,767) 36,637,149
-----------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $43,678,790) 44,161,485
-----------
The accompanying notes are an integral part of the financial statements.
27
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
PRINCIPAL AMOUNT/ VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- ----------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES - 1.27%
MORTGAGE BACKED SECURITIES - 0.00%**
GNMA, Pool #286310, 9.00%, 2/15/2020 $ 4,185 $ 4,593
GNMA, Pool #288873, 9.50%, 8/15/2020 440 494
-----------
TOTAL MORTGAGE BACKED SECURITIES
(Identified Cost $4,825) 5,087
-----------
OTHER AGENCIES - 1.27%
Fannie Mae, 3.50%, 9/15/2004 970,000 978,663
Fannie Mae, 5.50%, 2/15/2006 5,000 5,272
Fannie Mae, 4.25%, 7/15/2007 5,000 5,150
Fannie Mae, 5.75%, 2/15/2008 55,000 59,210
Fannie Mae, 5.25%, 1/15/2009 5,000 5,285
Fannie Mae, 6.375%, 6/15/2009 10,000 11,087
-----------
TOTAL OTHER AGENCIES
(Identified Cost $1,058,432) 1,064,667
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $1,063,257) 1,069,754
-----------
SHORT-TERM INVESTMENTS - 2.25%
Dreyfus Treasury Cash Management - Institutional Shares
(Identified Cost $1,889,476) 1,889,476 1,889,476
-----------
TOTAL INVESTMENTS - 98.66%
(Identified Cost $79,786,130) 82,868,048
OTHER ASSETS, LESS LIABILITIES - 1.34% 1,129,486
------------
NET ASSETS - 100% $83,997,534
============
*Non-income producing security
**Less than 0.01%
ADR - American Depository Receipt
The accompanying notes are an integral part of the financial statements.
28
STATEMENT OF ASSETS AND LIABILITIES - PRO-BLENDSM MODERATE TERM SERIES
(UNAUDITED)
APRIL 30, 2004
ASSETS:
Investments, at value (identified cost $79,786,130) (Note 2) $82,868,048
Foreign currency, at value (cost $41,398) 41,614
Receivable for securities sold 797,988
Interest receivable 403,125
Receivable for fund shares sold 60,067
Dividends receivable 29,281
Foreign tax reclaims receivable 11,022
Prepaid expenses 536
-----------
TOTAL ASSETS 84,211,681
-----------
LIABILITIES:
Accrued management fees (Note 3) 64,753
Accrued fund accounting and transfer agent service fees (Note 3) 9,562
Accrued fund accounting fees (Note 3) 1,949
Accrued transfer agent fees (Note 3) 1,349
Payable for fund shares repurchased 111,446
Audit fees payable 17,395
Payable for securities purchased 7,693
-----------
TOTAL LIABILITIES 214,147
-----------
TOTAL NET ASSETS $83,997,534
===========
NET ASSETS CONSIST OF:
Capital stock $ 73,138
Additional paid-in-capital 79,103,720
Undistributed net investment income 316,386
Accumulated net realized gain on investments and other assets
and liabilities 1,422,084
Net unrealized appreciation on investments and other assets
and liabilities 3,082,206
-----------
TOTAL NET ASSETS $83,997,534
===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE - CLASS A ($83,997,534/7,313,819 shares) $ 11.48
===========
The accompanying notes are an integral part of the financial statements.
29
STATEMENT OF OPERATIONS - PRO-BLENDSM MODERATE TERM SERIES (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 2004
INVESTMENT INCOME:
Interest $ 669,128
Dividends (net of foreign tax withheld, $10,627) 214,031
-----------
Total Investment Income 883,159
-----------
EXPENSES:
Management fees (Note 3) 378,345
Fund accounting and transfer agent service fees (Note 3) 53,025
Transfer agent fees (Note 3) 6,330
Fund accounting fees (Note 3) 4,720
Directors' fees (Note 3) 3,330
Custodian fees 9,500
Miscellaneous 30,361
-----------
Total Expenses 485,611
Less reduction of expenses (Note 3) (31,491)
-----------
Net Expenses 454,120
-----------
NET INVESTMENT INCOME 429,039
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on -
Investments 1,484,334
Foreign currency and other assets and liabilities 1,254
-----------
1,485,588
-----------
Net change in unrealized appreciation on -
Investments 1,673,866
Foreign currency and other assets and liabilities (329)
-----------
1,673,537
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS 3,159,125
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $3,588,164
===========
The accompanying notes are an integral part of the financial statements.
30
STATEMENTS OF CHANGES IN NET ASSETS - PRO-BLENDSM MODERATE TERM SERIES
FOR THE SIX
MONTHS ENDED FOR THE
4/30/04 YEAR ENDED
(UNAUDITED) 10/31/03
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 429,039 $ 589,107
Net realized gain on investments 1,485,588 1,500,106
Net change in unrealized appreciation on investments 1,673,537 4,115,142
-------------- ------------
Net increase from operations 3,588,164 6,204,355
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 8):
From net investment income (430,197) (775,445)
From net realized gain on investments (704,843) -
-------------- ------------
Total distributions to shareholders (1,135,040) (775,445)
-------------- ------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share transactions (Note 5) 12,151,065 16,293,921
-------------- ------------
Net increase in net assets 14,604,189 21,722,831
NET ASSETS:
Beginning of period 69,393,345 47,670,514
-------------- ------------
END OF PERIOD (including undistributed net investment
income of $316,386 and $317,544, respectively) $ 83,997,534 $69,393,345
============== ============
The accompanying notes are an integral part of the financial statements.
31
FINANCIAL HIGHLIGHTS - PRO-BLENDSM MODERATE TERM SERIES
FOR THE SIX
MONTH ENDED
4/30/04 FOR THE YEARS ENDED
(UNAUDITED) 10/31/03 10/31/02 10/31/01 10/31/00
------------- --------------------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 11.07 $ 10.05 $ 11.06 $ 12.18 $ 11.07
------------- --------------------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.06 0.10 0.18 0.31 0.41
Net realized and unrealized gain (loss) on
investments 0.54 1.08 (0.50) 0.11 1.30
------------- --------------------- ---------- ---------- ----------
Total from investment operations 0.60 1.18 (0.32) 0.42 1.71
------------- --------------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.07) (0.16) (0.26) (0.38) (0.35)
From net realized gain on investments (0.12) - (0.43) (1.16) (0.25)
------------- --------------------- ---------- ---------- ----------
Total distributions to shareholders (0.19) (0.16) (0.69) (1.54) (0.60)
------------- --------------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 11.48 $ 11.07 $ 10.05 $ 11.06 $ 12.18
============= ===================== ========== ========== ==========
Total return1 5.44% 11.87% (3.32%) 3.59% 16.12%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 1.20%2 1.20% 1.20% 1.20% 1.20%
Net investment income 1.13%2 1.05% 1.80% 2.68% 2.84%
Portfolio turnover 14% 60% 67% 77% 47%
NET ASSETS - END OF PERIOD (000's omitted) $ 83,998 $ 69,393 $ 47,671 $ 19,067 $ 18,040
============= ===================== ========== ========== ==========
FOR THE YEARS ENDED
10/31/99
--------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 11.59
--------
Income (loss) from investment operations:
Net investment income 0.38
Net realized and unrealized gain (loss) on
investments 0.22
--------
Total from investment operations 0.60
--------
Less distributions to shareholders:
From net investment income (0.34)
From net realized gain on investments (0.78)
--------
Total distributions to shareholders (1.12)
--------
NET ASSET VALUE - END OF PERIOD $ 11.07
========
Total return1 4.32%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 1.20%
Net investment income 3.09%
Portfolio turnover 45%
NET ASSETS - END OF PERIOD (000's omitted) $26,515
========
*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:
0.08%2 0.13% 0.23% 0.55% 0.21% 0.03%
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.
32
Performance Update - Pro-BlendSM Extended Term Series (unaudited)
Average Annual Total Returns
As of April 30, 2004
---------------------------------------------------------
Growth of
One Five Ten Since a $10, 000
Year Year Year Inception1 Investment
----------------------------------------------------------------------
Exeter Fund, Inc. - Pro-BlendSM Extended Term Series 17.75% 6.04% 11.00% 10.19% $ 27,861
Lehman Brothers U.S. Government/Credit Bond Index2 1.80% 6.83% 7.39% 6.55% $ 19,481
50%/50% Blended Index2 12.03% 2.64% 9.73% 8.88% $ 24,444
The value of a $10,000 investment in the Exeter Fund, Inc. - Pro-BlendSM
Extended Term Series from its inception (10/12/93) to present (4/30/04) as
compared to the Lehman Brothers U.S. Government/Credit Bond Index and a 50%/50%
Blended Index.
<graphic>
<line chart>
Data for line chart to follow:
Exeter Fund, Inc. Lehman Brothers 50%/50% Blended
Date Pro-BlendSM Extended Term Series U.S. Government/Credit Bond Index Index
10/12/1993 $10,000 $10,000 $10,000
12/31/1993 9,982 9,930 9,978
12/31/1994 10,333 9,582 9,872
12/31/1995 13,707 11,426 12,650
10/31/1996 15,078 11,675 13,822
10/31/1997 18,047 12,704 16,615
10/31/1998 17,947 14,009 19,392
10/31/1999 19,824 13,916 21,716
10/31/2000 23,557 14,908 23,213
10/31/2001 23,881 17,192 21,739
10/31/2002 22,511 18,136 20,737
10/31/2003 25,990 19,256 23,566
4/30/2004 27,861 19,481 24,444
1Performance numbers for the Series are calculated from October 12, 1993, the
Series' inception date. The Lehman Brothers U.S. Government/Credit Bond Index
only publishes month-end numbers; therefore, performance numbers for the Indices
are calculated from October 31, 1993. The Series' performance does not reflect
the deduction of taxes that a shareholder would pay on fund distributions or the
redemption of shares. The Series' performance is historical and may not be
indicative of future results.
2The Lehman Brothers U.S. Government/Credit Bond Index is a market value
weighted measure of approximately 4,000 corporate, government and mortgage
backed securities. The Index is comprised of investment grade securities with
maturities greater than one year. The 50%/50% Blended Index is 50% Standard &
Poor's (S&P) 500 Total Return Index and 50% Lehman Brothers U.S.
Government/Credit Bond Index. The S&P 500 Total Return Index is an unmanaged
capitalization-weighted measure of 500 widely held common stocks listed on the
New York Stock Exchange, American Stock Exchange and the Over-the-Counter
market. Both Indices' returns assume reinvestment of income and, unlike Series
returns, do not reflect any fees or expenses. Because the Series' asset
allocation will vary over time, the composition of the Series' portfolio may not
match the composition of the comparative Indices' portfolios.
33
Portfolio Composition - As of April 30, 2004 (unaudited)
<graphic>
<pie graph>
ASSET ALLOCATION*
Stocks and Unit Investment Trust 55.93%
Bonds 40.42%
Cash, short-term investments, and other assets, less liabilities 3.65%
*As a percentage of net assets.
SECTOR ALLOCATION*
Bonds 40.42%
Consumer Discretionary 8.90%
Consumer Staples 12.36%
Energy 9.57%
Financials 3.44%
Health Care 11.48%
Industrials 1.97%
Information Technology 2.13%
Materials 2.32%
Telecommunication Services 2.17%
Unit Investment Trust 0.13%
Utilities 1.46%
Cash, short-term investments, and other assets, less liabilities 3.65%
*As a percentage of net assets.
TOP TEN STOCK HOLDINGS*
Unilever plc - ADR (United Kingdom) 3.68%
Novartis AG - ADR (Switzerland) 3.44%
Schering-Plough Corp. 3.00%
Schlumberger Ltd. 2.77%
Nestle S.A. (Switzerland) 2.56%
Time Warner, Inc. 2.52%
Kimberly-Clark Corp. 2.24%
Vodafone Group plc - ADR (United Kingdom) 1.61%
Baker Hughes, Inc. 1.58%
Millipore Corp. 1.40%
*As a percentage of net assets.
34
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCKS - 55.80%
CONSUMER DISCRETIONARY - 8.90%
AUTOMOBILES - 0.02%
Bayerische Motoren Werke AG (BMW) (Germany) (Note 7) 1,200 $ 51,570
-----------
HOTELS, RESTAURANTS & LEISURE - 1.74%
Carnival Corp. 63,575 2,712,745
Club Mediterranee S.A.* (France) (Note 7) 35,225 1,446,240
The Hongkong & Shanghai Hotels Ltd. (Hong Kong) (Note 7) 88,875 55,833
International Speedway Corp. - Class A 1,350 56,876
Mandarin Oriental International Ltd.* (Bermuda) (Note 7) 82,000 50,840
Shangri-La Asia Ltd. (Hong Kong) (Note 7) 126,000 123,580
-----------
4,446,114
-----------
HOUSEHOLD DURABLES - 0.19%
Cavalier Homes, Inc.* 12,150 77,031
Corporacion GEO S.A. de C.V. - Series B*
(Mexico) (Note 7) 9,950 57,150
Helen of Troy Ltd.* 2,000 66,500
Hunter Douglas N.V. (Netherlands) (Note 7) 950 45,518
Interface, Inc. - Class A* 11,925 101,720
Sony Corp. - ADR (Japan) (Note 7) 3,425 131,520
Waterford Wedgwood plc (Ireland) (Note 7) 52,200 14,367
-----------
493,806
-----------
LEISURE EQUIPMENT & PRODUCTS - 0.06%
Callaway Golf Co. 2,275 38,607
Hasbro, Inc. 5,000 94,450
K2, Inc.* 2,175 31,885
-----------
164,942
-----------
MEDIA - 3.07%
Acme Communications, Inc.* 14,500 97,440
Cablevision Systems New York Group - Class A* 10,200 222,666
Hearst-Argyle Television, Inc. - Class A 2,250 59,062
Impresa S.A. (SGPS)* (Portugal) (Note 7) 8,400 42,292
Insight Communications Co., Inc.* 11,425 104,082
The News Corp. Ltd. - ADR (Australia) (Note 7) 9,925 334,969
Pearson plc (United Kingdom) (Note 7) 12,975 151,401
Reed Elsevier plc - ADR (United Kingdom) (Note 7) 7,025 264,843
Time Warner, Inc.* 384,025 6,459,301
VNU N.V. (Netherlands) (Note 7) 2,250 62,952
The accompanying notes are an integral part of the financial statements.
35
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- ---------------------------------------------------------------------------------
CONSUMER DISCRETIONARY (continued)
MEDIA (continued)
Wolters Kluwer N.V. (Netherlands) (Note 7) 4,825 $ 81,265
----------
7,880,273
----------
MULTILINE RETAIL - 0.10%
Don Quijote Co. Ltd. (Japan) (Note 7) 1,100 78,347
KarstadtQuelle AG (Germany) (Note 7) 2,625 56,012
PT Ramayana Lestari Sentosa Tbk (Indonesia) (Note 7) 198,000 120,622
----------
254,981
----------
SPECIALTY RETAIL - 3.62%
Courts Mammoth Berhad (Malaysia) (Note 7) 63,700 42,578
Douglas Holding AG (Germany) (Note 7) 9,150 247,999
Foot Locker, Inc. 4,700 112,800
KOMERI Co. Ltd. (Japan) (Note 7) 2,400 65,679
Office Depot, Inc.* 157,800 2,763,078
Staples, Inc. 98,550 2,538,648
Toys "R" Us, Inc.* 4,800 74,160
Weight Watchers International, Inc.* 87,925 3,429,075
-----------
9,274,017
-----------
TEXTILES, APPAREL & LUXURY GOODS - 0.10%
Hampshire Group Ltd.* 975 29,106
LVMH S.A. (Louis Vuitton Moet Hennessy) (France) (Note 7) 1,925 135,687
The Timberland Co. - Class A* 725 45,472
Wolverine World Wide, Inc. 1,525 40,992
-----------
251,257
-----------
22,816,960
-----------
CONSUMER STAPLES - 12.36%
BEVERAGES - 0.10%
Grupo Modelo S.A. de C.V. (Mexico) (Note 7) 25,100 63,170
Interbrew (Belgium) (Note 7) 4,750 142,693
PepsiAmericas, Inc. 2,425 48,573
-----------
254,436
-----------
FOOD & STAPLES RETAILING - 2.16%
Carrefour S.A. (France) (Note 7) 71,900 3,336,421
The Kroger Co.* 121,475 2,125,812
Metro AG (Germany) (Note 7) 1,550 68,934
-----------
5,531,167
-----------
The accompanying notes are an integral part of the financial statements.
36
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- ---------------------------------------------------------------------------------------
CONSUMER STAPLES (continued)
FOOD PRODUCTS - 6.48%
American Italian Pasta Co. - Class A 1,600 $ 49,536
Cadbury Schweppes plc (United Kingdom) (Note 7) 15,625 124,273
Groupe Danone (France) (Note 7) 475 79,603
Nestle S.A. (Switzerland) (Note 7) 25,950 6,564,553
Sanderson Farms, Inc. 1,537 57,146
Smithfield Foods, Inc.* 5,950 158,270
Sylvan, Inc.* 10,875 130,935
Unilever plc - ADR (United Kingdom) (Note 7) 245,199 9,432,806
-----------
16,597,122
-----------
HOUSEHOLD PRODUCTS - 2.49%
Henkel KGaA (Germany) (Note 7) 1,650 142,807
Kao Corp. (Japan) (Note 7) 3,000 71,632
Kimberly-Clark Corp. 87,800 5,746,510
Kimberly-Clark de Mexico S.A. de C.V. - ADR (Mexico) (Note 7) 20,400 270,569
Rayovac Corp.* 6,100 162,565
-----------
6,394,083
-----------
PERSONAL PRODUCTS - 1.12%
Clarins S.A. (France) (Note 7) 5,294 328,732
The Estee Lauder Companies, Inc. - Class A 52,500 2,399,775
Shiseido Co. Ltd. (Japan) (Note 7) 12,000 147,560
-----------
2,876,067
-----------
TOBACCO - 0.01%
Altadis S.A. (Spain) (Note 7) 1,275 36,025
-----------
31,688,900
-----------
ENERGY - 9.57%
ENERGY EQUIPMENT & SERVICES - 8.03%
Atwood Oceanics, Inc.* 4,400 161,260
Baker Hughes, Inc. 110,675 4,059,559
Compagnie Generale de Geophysique S.A. (CGG)* (France) (Note 7) 1,775 87,984
Cooper Cameron Corp.* 30,975 1,497,641
Helmerich & Payne, Inc. 2,675 72,198
National-Oilwell, Inc.* 5,050 140,996
Newpark Resources, Inc.* 20,675 118,468
Precision Drilling Corp.* (Canada) (Note 7) 4,475 214,352
Pride International, Inc.* 12,075 203,705
Schlumberger Ltd. 121,300 7,099,689
Smedvig ASA - Class A (Norway) (Note 7) 24,075 229,869
The accompanying notes are an integral part of the financial statements.
37
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------------------------------------
ENERGY (continued)
ENERGY EQUIPMENT & SERVICES (continued)
Transocean, Inc.* 79,250 $2,200,773
Varco International, Inc.* 99,425 2,057,103
Veritas DGC, Inc.* 3,300 67,419
Weatherford International Ltd.* 54,325 2,362,051
-----------
20,573,067
-----------
OIL & GAS - 1.54%
Amerada Hess Corp. 44,300 3,151,059
Eni S.p.A. (Italy) (Note 7) 13,075 265,825
Forest Oil Corp.* 5,100 133,875
Petroleo Brasileiro S.A. (Petrobras) - ADR (Brazil) (Note 7) 5,850 145,958
Total S.A. (France) (Note 7) 1,350 249,706
-----------
3,946,423
-----------
24,519,490
-----------
FINANCIALS - 3.44%
CAPITAL MARKETS - 1.00%
Deutsche Bank AG (Germany) (Note 7) 2,175 178,599
SEI Investments Co. 80,375 2,372,670
-----------
2,551,269
-----------
COMMERCIAL BANKS - 2.23%
Banca Intesa S.p.A. (Italy) (Note 7) 30,335 100,365
Banca Monte dei Paschi di Siena S.p.A. (Italy) (Note 7) 10,950 34,128
Banco BPI S.A. (Portugal) (Note 7) 22,825 87,009
Banco Espirito Santo S.A. (BES) (Portugal) (Note 7) 4,050 67,969
Bayerische Hypo-und Vereinsbank AG (HVB Group)* (Germany) (Note 7) 4,950 85,862
BNP Paribas S.A. (France) (Note 7) 1,550 93,089
Commerzbank AG (Germany) (Note 7) 4,025 69,480
Hong Leong Bank Berhad (Malaysia) (Note 7) 36,300 48,718
SanPaolo IMI S.p.A. (Italy) (Note 7) 3,025 35,283
Societe Generale (France) (Note 7) 675 56,236
U.S. Bancorp 92,775 2,378,751
UniCredito Italiano S.p.A. (Italy) (Note 7) 29,175 136,047
Wachovia Corp. 55,225 2,526,544
-----------
5,719,481
-----------
The accompanying notes are an integral part of the financial statements.
38
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- ---------------------------------------------------------------------
FINANCIALS (continued)
CONSUMER FINANCE - 0.02%
Takefuji Corp. (Japan) (Note 7) 950 $ 60,346
----------
DIVERSIFIED FINANCIAL SERVICES - 0.03%
ING Groep N.V. (Netherlands) (Note 7) 3,650 78,233
----------
INSURANCE - 0.16%
Allianz AG (Germany) (Note 7) 750 79,387
Assicurazioni Generali S.p.A. (Italy) (Note 7) 5,100 134,500
Axa (France) (Note 7) 6,550 137,956
Muenchener Rueckver AG (Germany) (Note 7) 625 67,505
-----------
419,348
-----------
8,828,677
-----------
HEALTH CARE - 11.48%
BIOTECHNOLOGY - 0.83%
BioMarin Pharmaceutical, Inc.* 48,050 332,506
Celltech Group plc* (United Kingdom) (Note 7) 125,550 935,663
Ciphergen Biosystems, Inc.* 15,000 109,950
Invitrogen Corp.* 4,250 306,978
Millennium Pharmaceuticals, Inc.* 13,150 197,119
Transkaryotic Therapies, Inc.* 16,550 240,472
-----------
2,122,688
-----------
HEALTH CARE EQUIPMENT & SUPPLIES - 1.87%
Advanced Neuromodulation Systems, Inc.* 8,100 220,725
Bruker BioSciences Corp.* 20,032 103,966
Cardiac Science, Inc.* 165,325 495,975
Conceptus, Inc.* 18,125 208,437
CTI Molecular Imaging, Inc.* 12,225 183,742
Millipore Corp.* 68,525 3,592,766
-----------
4,805,611
-----------
HEALTH CARE PROVIDERS & SERVICES - 1.77%
Allscripts Healthcare Solutions, Inc.* 58,875 554,014
AmerisourceBergen Corp. 3,475 201,168
Cardinal Health, Inc. 2,900 212,425
CIGNA Corp. 4,500 290,295
McKesson Corp. 6,525 214,412
Odyssey Healthcare, Inc.* 11,175 187,852
WebMD Corp.* 326,575 2,870,594
-----------
4,530,760
-----------
The accompanying notes are an integral part of the financial statements.
39
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------------------------------------------
HEALTH CARE (continued)
PHARMACEUTICALS - 7.01%
Aventis S.A. (France) (Note 7) 1,500 $ 114,271
Guilford Pharmaceuticals, Inc.* 46,950 297,194
Novartis AG - ADR (Switzerland) (Note 7) 196,650 8,809,920
Orphan Medical, Inc.* 9,400 108,006
Pfizer, Inc. 8,450 302,172
Schering AG (Germany) (Note 7) 10,750 563,143
Schering-Plough Corp. 460,100 7,697,473
Takeda Chemical Industries Ltd. (Japan) (Note 7) 1,700 68,551
-----------
17,960,730
-----------
29,419,789
-----------
INDUSTRIALS - 1.97%
AEROSPACE & DEFENSE - 0.04%
Empresa Brasileira de Aeronautica S.A. (Embraer) - ADR (Brazil) (Note 7) 4,075 105,135
-----------
AIRLINES - 0.07%
Deutsche Lufthansa AG (Germany) (Note 7) 6,475 103,777
SkyWest, Inc. 3,725 67,795
-----------
171,572
-----------
COMMERCIAL SERVICES & SUPPLIES - 0.15%
Aggreko plc (United Kingdom) (Note 7) 51,875 147,878
Quebecor World, Inc. (Canada) (Note 7) 9,100 156,793
Viad Corp. 2,925 73,008
-----------
377,679
-----------
CONSTRUCTION & ENGINEERING - 0.16%
Fomento de Construcciones y Contratas S.A. (FCC) (Spain) (Note 7) 1,075 38,183
Hochtief AG (Germany) (Note 7) 2,625 74,263
Insituform Technologies, Inc. - Class A* 4,825 78,358
Koninklijke Boskalis Westminster N.V. (Netherlands) (Note 7) 9,250 232,857
-----------
423,661
-----------
ELECTRICAL EQUIPMENT - 0.04%
Global Power Equipment Group, Inc.* 5,500 39,820
Plug Power, Inc.* 8,575 66,628
-----------
106,448
-----------
INDUSTRIAL CONGLOMERATES - 0.13%
Siemens AG (Germany) (Note 7) 3,325 238,752
Sonae S.A. (SGPS) (Portugal) (Note 7) 77,250 85,195
-----------
323,947
-----------
The accompanying notes are an integral part of the financial statements.
40
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- -------------------------------------------------------------------------------------------
INDUSTRIALS (continued)
MACHINERY - 0.31%
AGCO Corp.* 6,500 $ 125,125
Albany International Corp. - Class A 3,800 115,900
FANUC Ltd. (Japan) (Note 7) 1,000 61,257
Lindsay Manufacturing Co. 4,375 103,469
MAN AG (Germany) (Note 7) 3,875 141,910
Tomra Systems ASA (Norway) (Note 7) 30,900 124,320
Wabtec Corp. 8,175 133,252
-----------
805,233
-----------
ROAD & RAIL - 1.04%
CSX Corp. 80,925 2,489,253
Kansas City Southern* 11,925 165,161
-----------
2,654,414
-----------
TRANSPORTATION INFRASTRUCTURE - 0.03%
Brisa-Auto Estradas de Portugal S.A. (Portugal) (Note 7) 10,975 74,728
-----------
5,042,817
----------
INFORMATION TECHNOLOGY - 2.13%
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.50%
Fargo Electronics* 6,625 63,931
KEYENCE Corp. (Japan) (Note 7) 300 72,040
Mabuchi Motor Co. Ltd. (Japan) (Note 7) 800 55,167
Mettler-Toledo International, Inc.* (Switzerland) (Note 7) 7,775 348,475
Thermo Electron Corp.* 10,125 295,650
Varian, Inc.* 11,150 457,596
-----------
1,292,859
-----------
IT SERVICES - 1.23%
First Data Corp. 65,225 2,960,563
SAP AG (Germany) (Note 7) 1,225 187,377
-----------
3,147,940
-----------
OFFICE ELECTRONICS - 0.02%
Canon, Inc. (Japan) (Note 7) 1,000 52,467
-----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.22%
Brooks Automation, Inc.* 18,950 315,328
Cymer, Inc.* 3,900 124,722
Taiwan Semiconductor Manufacturing Co. Ltd. - ADR* (Taiwan) (Note 7) 12,325 117,457
-----------
557,507
-----------
The accompanying notes are an integral part of the financial statements.
41
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- ----------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY (continued)
SOFTWARE - 0.16%
Amdocs Ltd.* (Guernsey) (Note 7) 4,275 $ 113,501
Nintendo Co. Ltd. (Japan) (Note 7) 2,000 188,845
Sammy Corp. (Japan) (Note 7) 2,550 107,911
----------
410,257
----------
5,461,030
----------
MATERIALS - 2.32%
CHEMICALS - 1.18%
Bayer AG (Germany) (Note 7) 5,000 135,459
Cabot Corp. 1,325 44,785
L'Air Liquide S.A. (France) (Note 7) 675 118,218
Linde AG (Germany) (Note 7) 1,125 61,361
Lonza Group AG (Switzerland) (Note 7) 14,700 709,718
Minerals Technologies, Inc. 33,350 1,955,977
----------
3,025,518
----------
METALS & MINING - 0.02%
RTI International Metals, Inc.* 3,100 45,415
----------
PAPER & FOREST PRODUCTS - 1.12%
Aracruz Celulose S.A. - ADR (Brazil) (Note 7) 89,200 2,777,688
Bowater, Inc. 2,625 110,119
----------
2,887,807
----------
5,958,740
----------
TELECOMMUNICATION SERVICES - 2.17%
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.40%
D&E Communications, Inc. 4,600 62,744
Deutsche Telekom AG* (Germany) (Note 7) 9,150 157,070
Portugal Telecom S.A. (SGPS) (Portugal) (Note 7) 8,400 91,129
PT Telekomunikasi Indonesia (Indonesia) (Note 7) 187,000 171,413
PT Telekomunikasi Indonesia - ADR (Indonesia) (Note 7) 8,800 159,280
Telecom Italia S.p.A.* (Italy) (Note 7) 58,025 186,066
Telefonica S.A. (Spain) (Note 7) 8,175 121,615
Telefonos de Mexico S.A. de C.V. (Telmex) - ADR (Mexico) (Note 7) 1,975 67,426
----------
1,016,743
----------
WIRELESS TELECOMMUNICATION SERVICES - 1.77%
Maxis Communications Berhad (Malaysia) (Note 7) 32,500 74,408
The accompanying notes are an integral part of the financial statements.
42
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
SHARES/ VALUE
PRO-BLENDSM EXTENDED TERM SERIES PRINCIPAL AMOUNT (NOTE 2)
- -----------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES (continued)
WIRELESS TELECOMMUNICATION SERVICES (continued)
NTT DoCoMo, Inc. (Japan) (Note 7) 100 $ 198,450
Telecom Italia Mobile S.p.A. (T.I.M.) (Italy) (Note 7) 27,950 159,484
Vodafone Group plc - ADR (United Kingdom) (Note 7) 167,825 4,118,426
-----------
4,550,768
-----------
5,567,511
-----------
UTILITIES - 1.46%
ELECTRIC UTILITIES - 1.34%
Allegheny Energy, Inc.* 217,400 2,995,772
E.ON AG (Germany) (Note 7) 3,250 215,445
Endesa S.A. (Spain) (Note 7) 4,200 76,981
Iberdrola S.A. (Spain) (Note 7) 1,800 35,495
Korea Electric Power Corp. (KEPCO) - ADR (South Korea) (Note 7) 10,825 101,647
------------
3,425,340
------------
MULTI-UTILITIES & UNREGULATED POWER - 0.12%
International Power plc* (United Kingdom) (Note 7) 19,900 49,582
RWE AG (Germany) (Note 7) 4,850 210,755
Suez S.A. (France) (Note 7) 2,575 51,611
------------
311,948
------------
3,737,288
------------
TOTAL COMMON STOCKS
(Identified Cost $131,735,507) 143,041,202
------------
UNIT INVESTMENT TRUST - 0.13%
Standard & Poor's Depositary Receipts Trust Series 1
(Identified Cost $339,757) 3,025 335,775
------------
U.S. TREASURY SECURITIES - 40.34%
U.S. TREASURY BONDS - 9.56%
U.S. Treasury Bond, 7.25%, 8/15/2022 $ 5,000 6,153
U.S. Treasury Bond, 5.50%, 8/15/2028 24,110,000 24,497,086
------------
TOTAL U.S. TREASURY BONDS
(Identified Cost $24,311,511) 24,503,239
------------
U.S. TREASURY NOTES - 30.78%
U.S. Treasury Note, 1.625%, 4/30/2005 3,000,000 3,000,468
U.S. Treasury Note, 1.50%, 7/31/2005 5,000,000 4,982,615
U.S. Treasury Note, 1.625%, 9/30/2005 12,000,000 11,953,596
The accompanying notes are an integral part of the financial statements.
43
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
PRINCIPAL AMOUNT/ VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- ----------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES (continued)
U.S. TREASURY NOTES (continued)
U.S. Treasury Note, 1.875%, 12/31/2005 $ 15,000,000 $14,939,655
U.S. Treasury Note, 3.00%, 2/15/2008 19,700,000 19,559,184
U.S. Treasury Note, 3.25%, 8/15/2008 5,000,000 4,969,140
U.S. Treasury Note, 3.375%, 12/15/2008 19,650,000 19,513,374
-----------
TOTAL U.S. TREASURY NOTES
(Identified Cost $79,898,586) 78,918,032
-----------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $104,210,097) 103,421,271
-----------
U.S. GOVERNMENT AGENCIES - 0.08%
Fannie Mae, 4.25%, 7/15/2007 190,000 195,681
Fannie Mae, 5.75%, 2/15/2008 5,000 5,383
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $203,147) 201,064
------------
SHORT-TERM INVESTMENTS - 3.25%
Dreyfus Treasury Cash Management - Institutional Shares 331,296 331,296
Fannie Mae Discount Note, 6/2/2004 $ 8,000,000 7,992,889
------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $8,324,185) 8,324,185
------------
TOTAL INVESTMENTS - 99.60%
(Identified Cost $244,812,693) 255,323,497
OTHER ASSETS, LESS LIABILITIES - 0.40% 1,015,300
------------
NET ASSETS - 100% $256,338,797
============
*Non-income producing security
ADR - American Depository Receipt
The accompanying notes are an integral part of the financial statements.
44
STATEMENT OF ASSETS AND LIABILITIES - PRO-BLENDSM EXTENDED TERM SERIES
(UNAUDITED)
APRIL 30, 2004
ASSETS:
Investments, at value (identified cost $244,812,693) (Note 2) $255,323,497
Foreign currency, at value (cost $159,441) 159,899
Interest receivable 816,424
Dividends receivable 160,368
Receivable for fund shares sold 156,128
Foreign tax reclaims receivable 42,441
------------
TOTAL ASSETS 256,658,757
------------
LIABILITIES:
Accrued management fees (Note 3) 203,400
Accrued fund accounting and transfer agent service fees (Note 3) 29,223
Accrued transfer agent fees (Note 3) 2,147
Accrued fund accounting fees (Note 3) 1,052
Payable for securities purchased 37,915
Payable for fund shares repurchased 24,868
Audit fees payable 20,384
Other payables and accrued expenses 971
------------
TOTAL LIABILITIES 319,960
------------
TOTAL NET ASSETS $256,338,797
============
NET ASSETS CONSIST OF:
Capital stock $ 184,067
Additional paid-in-capital 239,090,479
Undistributed net investment income 886,034
Accumulated net realized gain on investments and other assets and liabilities 5,666,292
Net unrealized appreciation on investments and other assets and liabilities 10,511,925
------------
TOTAL NET ASSETS $256,338,797
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE - CLASS A ($256,338,797/18,406,713 shares) $ 13.93
============
The accompanying notes are an integral part of the financial statements.
45
STATEMENT OF OPERATIONS - PRO-BLENDSM EXTENDED TERM SERIES (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 2004
INVESTMENT INCOME:
Interest $ 1,657,421
Dividends (net of foreign tax withheld, $41,432) 882,091
------------
Total Investment Income 2,539,512
------------
EXPENSES:
Management fees (Note 3) 1,159,355
Fund accounting and transfer agent service fees (Note 3) 162,505
Transfer agent fees (Note 3) 15,350
Fund accounting fees (Note 3) 3,460
Directors' fees (Note 3) 3,330
Custodian fees 17,070
Miscellaneous 44,906
------------
Total Expenses 1,405,976
Less reduction of expenses (Note 3) (49,163)
------------
Net Expenses 1,356,813
------------
NET INVESTMENT INCOME 1,182,699
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on -
Investments 5,862,979
Foreign currency and other assets and liabilities 5,797
------------
5,868,776
------------
Net change in unrealized appreciation on -
Investments 7,640,527
Foreign currency and other assets and liabilities (1,749)
------------
7,638,778
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS 13,507,554
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $14,690,253
============
The accompanying notes are an integral part of the financial statements.
46
STATEMENTS OF CHANGES IN NET ASSETS - PRO-BLENDSM EXTENDED TERM SERIES
FOR THE SIX
MONTHS ENDED FOR THE
4/30/04 YEAR ENDED
(UNAUDITED) 10/31/03
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,182,699 $ 1,611,695
Net realized gain on investments 5,868,776 5,695,080
Net change in unrealized appreciation on investments 7,638,778 18,079,951
-------------- -------------
Net increase from operations 14,690,253 25,386,726
-------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 8):
From net investment income (1,029,936) (2,453,069)
From net realized gain on investments (1,383,424) -
-------------- -------------
Total distributions to shareholders (2,413,360) (2,453,069)
-------------- -------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share transactions
(Note 5) 35,024,081 29,921,731
-------------- -------------
Net increase in net assets 47,300,974 52,855,388
NET ASSETS:
Beginning of period 209,037,823 156,182,435
-------------- -------------
END OF PERIOD (including undistributed net investment
income of $886,034 and $733,271, respectively) $ 256,338,797 $209,037,823
============== =============
The accompanying notes are an integral part of the financial statements.
47
FINANCIAL HIGHLIGHTS - PRO-BLENDSM EXTENDED TERM SERIES
FOR THE SIX
MONTHS ENDED
4/30/04 FOR THE YEARS ENDED
(UNAUDITED) 10/31/03 10/31/02 10/31/01 10/31/00
-------------- --------------------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 13.14 $ 11.55 $ 13.09 $ 14.03 $ 12.74
-------------- --------------------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.07 0.11 0.19 0.32 0.29
Net realized and unrealized gain (loss) on
investments 0.87 1.66 (0.86) (0.13) 1.97
-------------- --------------------- ---------- ---------- ----------
Total from investment operations 0.94 1.77 (0.67) 0.19 2.26
-------------- --------------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.06) (0.18) (0.25) (0.35) (0.28)
From net realized gain on investments (0.09) - (0.62) (0.78) (0.69)
-------------- --------------------- ---------- ---------- ----------
Total distributions to shareholders (0.15) (0.18) (0.87) (1.13) (0.97)
-------------- --------------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 13.93 $ 13.14 $ 11.55 $ 13.09 $ 14.03
============== ===================== ========== ========== ==========
Total return1 7.20% 15.45% (5.74%) 1.37% 18.83%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 1.17%2 1.17% 1.19% 1.20% 1.20%
Net investment income 1.02%2 0.90% 1.61% 2.26% 2.55%
Portfolio turnover 28% 67% 82% 75% 95%
NET ASSETS - END OF PERIOD (000's omitted) $ 256,339 $ 209,038 $ 156,182 $ 87,460 $ 89,672
============== ===================== ========== ========== ==========
FOR THE YEARS ENDED
10/31/99
--------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 12.60
--------
Income (loss) from investment operations:
Net investment income 0.33
Net realized and unrealized gain (loss) on
investments 0.92
--------
Total from investment operations 1.25
--------
Less distributions to shareholders:
From net investment income (0.31)
From net realized gain on investments (0.80)
--------
Total distributions to shareholders (1.11)
--------
NET ASSET VALUE - END OF PERIOD $ 12.74
========
Total return1 10.46%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 1.15%
Net investment income 2.44%
Portfolio turnover 78%
NET ASSETS - END OF PERIOD (000's omitted) $65,205
========
*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:.
0.04%2 N/A N/A 0.03% N/A N/A
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.
48
Performance Update - Pro-BlendSM Maximum Term Series (unaudited)
Average Annual Total Returns
As of April 30, 2004
--------------------------------------------------
Growth of
One Five Since a $10, 000
Year Year Inception1 Investment
---------------------------------------------------------------
Exeter Fund, Inc. - Pro-BlendSM Maximum Term Series 27.38% 7.75% 11.53% $ 25,291
Standard & Poor's (S&P) 500 Total Return Index2 22.87% -2.26% 9.61% $ 21,820
85%/15% Blended Index2 19.55% -0.72% 9.41% $ 21,485
The value of a $10,000 investment in the Exeter Fund, Inc. - Pro-BlendSM Maximum
Term Series from its inception (11/1/95) to present (4/30/04) as compared to the
S&P 500 Total Return Index and an 85%/15% Blended Index.
<graphic>
<line chart>
Data for line chart to follow:
Exeter Fund, Inc. S&P 500
Date Pro-BlendSM Maximum Term Series Total Return Index 85%/15% Blended Index
11/1/1995 $10,000 $10,000 $10,000
10/31/1996 11,521 12,408 12,114
10/31/1997 14,604 16,392 15,565
10/31/1998 13,730 19,996 18,764
10/31/1999 17,345 25,127 22,788
10/31/2000 22,263 26,656 24,243
10/31/2001 20,926 20,022 19,482
10/31/2002 18,692 16,999 17,158
10/31/2003 22,656 20,532 20,364
4/30/2004 25,291 21,820 21,485
1Performance numbers for the Series and Indices are calculated from November 1,
1995, the Series' inception date. The Series' performance does not reflect the
deduction of taxes that a shareholder would pay on fund distributions or the
redemption of shares. The Series' performance is historical and may not be
indicative of future results.
2The S&P 500 Total Return Index is an unmanaged capitalization-weighted measure
of 500 widely held common stocks listed on the New York Stock Exchange, American
Stock Exchange and the Over-the-Counter market. The 85%/15% Blended Index is
85% S&P 500 Total Return Index and 15% Lehman Brothers U.S. Government/Credit
Bond Index. The Lehman Brothers U.S. Government/Credit Bond Index is a market
value weighted measure of approximately 4,000 corporate, government and mortgage
backed securities. The Index is comprised of investment grade securities with
maturities greater than one year. Both Indices' returns assume reinvestment of
income and, unlike Series returns, do not reflect any fees or expenses. Because
the Series' asset allocation will vary over time, the composition of the Series'
portfolio may not match the composition of the comparative Indices' portfolios.
49
Portfolio Composition - As of April 30, 2004 (unaudited)
<graphic>
<pie chart>
ASSET ALLOCATION*
Stocks and Unit Investment Trust 83.74%
Bonds 11.70%
Cash, short-term investments, and other assets, less liabilities 4.56%
*As a percentage of net assets.
SECTOR ALLOCATION*
Bonds 11.70%
Consumer Discretionary 18.23%
Consumer Staples 15.73%
Energy 12.51%
Financials 5.69%
Health Care 12.56%
Industrials 4.68%
Information Technology 4.33%
Materials 4.11%
Telecommunication Services 3.21%
Unit Investment Trust 0.11%
Utilities 2.58%
Cash, short-term investments, and other assets, less liabilities 4.56%
*As a percentage of net assets.
TOP TEN STOCK HOLDINGS*
Unilever plc - ADR (United Kingdom) 3.78%
Novartis AG - ADR (Switzerland) 3.58%
Time Warner, Inc. 3.27%
Schering-Plough Corp. 3.10%
Nestle S.A. (Switzerland) 2.85%
Schlumberger Ltd. 2.79%
Vodafone Group plc - ADR (United Kingdom) 2.59%
Carnival Corp. 2.27%
Kimberly-Clark Corp. 2.06%
Transocean, Inc. 2.05%
*As a percentage of net assets.
50
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- -------------------------------------------------------------------------------
COMMON STOCKS - 83.63%
CONSUMER DISCRETIONARY - 18.23%
AUTOMOBILES - 0.02%
Bayerische Motoren Werke AG (BMW) (Germany) (Note 7) 525 $ 22,562
-----------
HOTELS, RESTAURANTS & LEISURE - 3.08%
Carnival Corp. 62,275 2,657,274
Club Mediterranee S.A.* (France) (Note 7) 19,175 787,272
The Hongkong & Shanghai Hotels Ltd. (Hong Kong) (Note 7) 85,750 53,870
International Speedway Corp. - Class A 900 37,917
Mandarin Oriental International Ltd.* (Bermuda) (Note 7) 37,050 22,971
Shangri-La Asia Ltd. (Hong Kong) (Note 7) 50,000 49,040
-----------
3,608,344
-----------
HOUSEHOLD DURABLES - 3.28%
Helen of Troy Ltd.* 1,375 45,719
Interface, Inc. - Class A* 8,725 74,424
Libbey, Inc. 750 19,627
Newell Rubbermaid, Inc. 69,575 1,644,753
Sony Corp. - ADR (Japan) (Note 7) 53,250 2,044,800
Waterford Wedgwood plc (Ireland) (Note 7) 83,275 22,920
-----------
3,852,243
-----------
LEISURE EQUIPMENT & PRODUCTS - 0.05%
Callaway Golf Co. 1,275 21,637
JAKKS Pacific, Inc.* 1,200 20,844
K2, Inc.* 1,475 21,623
-----------
64,104
-----------
MEDIA - 6.58%
Acme Communications, Inc.* 9,550 64,176
Antena 3 de Television S.A.* (Spain) (Note 7) 12 610
Cablevision Systems New York Group - Class A* 53,850 1,175,545
Hearst-Argyle Television, Inc. - Class A 34,725 911,531
Insight Communications Co., Inc.* 7,925 72,197
The News Corp. Ltd. - ADR (Australia) (Note 7) 4,150 140,062
Pearson plc (United Kingdom) (Note 7) 121,775 1,420,950
Reed Elsevier plc - ADR (United Kingdom) (Note 7) 2,375 89,538
Time Warner, Inc.* 228,100 3,836,642
-----------
7,711,251
-----------
The accompanying notes are an integral part of the financial statements.
51
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- ---------------------------------------------------------------------------------
CONSUMER DISCRETIONARY (continued)
MULTILINE RETAIL - 0.02%
KarstadtQuelle AG (Germany) (Note 7) 1,175 $ 25,072
----------
SPECIALTY RETAIL - 5.09%
Douglas Holding AG (Germany) (Note 7) 1,825 49,464
Foot Locker, Inc. 9,125 219,000
Office Depot, Inc.* 130,600 2,286,806
Staples, Inc. 53,700 1,383,312
Toys "R" Us, Inc.* 3,750 57,937
Weight Watchers International, Inc.* 50,525 1,970,475
----------
5,966,994
----------
TEXTILES, APPAREL & LUXURY GOODS - 0.11%
Hampshire Group Ltd.* 675 20,150
LVMH S.A. (Louis Vuitton Moet Hennessy) (France) (Note 7) 850 59,914
The Timberland Co. - Class A* 400 25,088
Wolverine World Wide, Inc. 1,050 28,224
----------
133,376
----------
21,383,946
----------
CONSUMER STAPLES - 15.73%
BEVERAGES - 0.98%
Interbrew (Belgium) (Note 7) 37,425 1,124,273
PepsiAmericas, Inc. 1,400 28,042
----------
1,152,315
----------
FOOD & STAPLES RETAILING - 2.68%
Carrefour S.A. (France) (Note 7) 31,350 1,454,754
The Kroger Co.* 94,850 1,659,875
Metro AG (Germany) (Note 7) 700 31,132
----------
3,145,761
----------
FOOD PRODUCTS - 8.42%
American Italian Pasta Co. - Class A 1,175 36,378
Cadbury Schweppes plc (United Kingdom) (Note 7) 6,900 54,879
Chiquita Brands International, Inc.* 1,050 18,911
Groupe Danone (France) (Note 7) 200 33,517
H.J. Heinz Co. 44,225 1,688,953
Lancaster Colony Corp. 375 15,488
Nestle S.A. (Switzerland) (Note 7) 13,200 3,339,195
Ralcorp Holdings, Inc.* 575 20,016
Sanderson Farms, Inc. 1,050 39,039
Smithfield Foods, Inc.* 4,100 109,060
The accompanying notes are an integral part of the financial statements.
52
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- ---------------------------------------------------------------------------------------
CONSUMER STAPLES (continued)
FOOD PRODUCTS (continued)
Sylvan, Inc.* 7,850 $ 94,514
Unilever plc - ADR (United Kingdom) (Note 7) 115,157 4,430,090
----------
9,880,040
----------
HOUSEHOLD PRODUCTS - 2.30%
Henkel KGaA (Germany) (Note 7) 725 62,749
Kimberly-Clark Corp. 36,825 2,410,196
Kimberly-Clark de Mexico S.A. de C.V. - ADR (Mexico) (Note 7) 8,400 111,411
Rayovac Corp.* 4,000 106,600
----------
2,690,956
----------
PERSONAL PRODUCTS - 1.35%
Clarins S.A. (France) (Note 7) 2,194 136,237
The Estee Lauder Companies, Inc. - Class A 31,675 1,447,864
----------
1,584,101
----------
18,453,173
----------
ENERGY - 12.51%
ENERGY EQUIPMENT & SERVICES - 10.93%
Atwood Oceanics, Inc.* 3,200 117,280
Baker Hughes, Inc. 35,950 1,318,646
Compagnie Generale de Geophysique S.A. (CGG)* (France) (Note 7) 775 38,415
Cooper Cameron Corp.* 27,375 1,323,581
Helmerich & Payne, Inc. 1,200 32,388
National-Oilwell, Inc.* 3,325 92,834
Newpark Resources, Inc.* 14,575 83,515
Precision Drilling Corp.* (Canada) (Note 7) 2,075 99,392
Pride International, Inc.* 8,625 145,504
Schlumberger Ltd. 55,925 3,273,290
Smedvig ASA - Class A (Norway) (Note 7) 12,000 114,576
Transocean, Inc.* 86,775 2,409,742
Varco International, Inc.* 81,825 1,692,959
Veritas DGC, Inc.* 1,875 38,306
Weatherford International Ltd.* 46,775 2,033,777
----------
12,814,205
----------
OIL & GAS - 1.58%
Amerada Hess Corp. 21,525 1,531,073
Eni S.p.A. (Italy) (Note 7) 5,825 118,427
Forest Oil Corp.* 3,600 94,500
Total S.A. (France) (Note 7) 600 110,980
----------
1,854,980
----------
14,669,185
----------
The accompanying notes are an integral part of the financial statements.
53
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- -----------------------------------------------------------------------------------------
FINANCIALS - 5.69%
CAPITAL MARKETS - 2.27%
The Bank of New York Co., Inc. 31,700 $ 923,738
Deutsche Bank AG (Germany) (Note 7) 950 78,009
SEI Investments Co. 56,275 1,661,238
----------
2,662,985
----------
COMMERCIAL BANKS - 3.26%
Banca Intesa S.p.A. (Italy) (Note 7) 13,450 44,500
Banco BPI S.A. (Portugal) (Note 7) 10,125 38,597
Banco Espirito Santo S.A. (BES) (Portugal) (Note 7) 1,775 29,789
Bayerische Hypo-und Vereinsbank AG (HVB Group)* (Germany) (Note 7) 1,300 22,550
BNP Paribas S.A. (France) (Note 7) 650 39,037
PNC Financial Services Group 21,450 1,138,995
Societe Generale (France) (Note 7) 300 24,994
U.S. Bancorp 47,225 1,210,849
UniCredito Italiano S.p.A. (Italy) (Note 7) 12,925 60,271
Wachovia Corp. 26,575 1,215,806
----------
3,825,388
----------
DIVERSIFIED FINANCIAL SERVICES - 0.02%
ING Groep N.V. (Netherlands) (Note 7) 775 16,611
----------
INSURANCE - 0.13%
Allianz AG (Germany) (Note 7) 325 34,401
Assicurazioni Generali S.p.A. (Italy) (Note 7) 2,275 59,997
Axa (France) (Note 7) 2,925 61,606
----------
156,004
----------
THRIFTS & MORTGAGE FINANCE - 0.01%
Hypo Real Estate Holding AG* (Germany) (Note 7) 325 8,844
----------
6,669,832
----------
HEALTH CARE - 12.56%
BIOTECHNOLOGY - 0.36%
BioMarin Pharmaceutical, Inc.* 18,925 130,961
Ciphergen Biosystems, Inc.* 6,500 47,645
Invitrogen Corp.* 1,650 119,180
Millennium Pharmaceuticals, Inc.* 4,275 64,082
Transkaryotic Therapies, Inc.* 4,525 65,748
----------
427,616
----------
The accompanying notes are an integral part of the financial statements.
54
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- -----------------------------------------------------------------------------------------
HEALTH CARE (continued)
HEALTH CARE EQUIPMENT & SUPPLIES - 1.36%
Advanced Neuromodulation Systems, Inc.* 3,775 $ 102,869
Bruker BioSciences Corp.* 18,594 96,503
Cardiac Science, Inc.* 63,000 189,000
Conceptus, Inc.* 7,175 82,513
CTI Molecular Imaging, Inc.* 4,825 72,520
Millipore Corp.* 19,975 1,047,289
----------
1,590,694
----------
HEALTH CARE PROVIDERS & SERVICES - 2.66%
Allscripts Healthcare Solutions, Inc.* 22,750 214,078
AmerisourceBergen Corp. 1,700 98,413
Cardinal Health, Inc. 1,400 102,550
CIGNA Corp. 1,825 117,731
McKesson Corp. 3,150 103,509
Odyssey Healthcare, Inc.* 55,525 933,375
WebMD Corp.* 176,075 1,547,699
----------
3,117,355
----------
PHARMACEUTICALS - 8.18%
Aventis S.A. (France) (Note 7) 675 51,422
Guilford Pharmaceuticals, Inc.* 18,400 116,472
Novartis AG - ADR (Switzerland) (Note 7) 93,650 4,195,520
Orphan Medical, Inc.* 4,250 48,833
Pfizer, Inc. 39,545 1,414,129
Schering AG (Germany) (Note 7) 2,600 136,202
Schering-Plough Corp. 217,375 3,636,684
----------
9,599,262
----------
14,734,927
----------
INDUSTRIALS - 4.68%
AIRLINES - 0.04%
SkyWest, Inc. 2,625 47,775
----------
COMMERCIAL SERVICES & SUPPLIES - 0.17%
Aggreko plc (United Kingdom) (Note 7) 24,175 68,915
Quebecor World, Inc. (Canada) (Note 7) 4,125 71,074
Viad Corp. 2,275 56,784
----------
196,773
----------
CONSTRUCTION & ENGINEERING - 0.18%
Fomento de Construcciones y Contratas S.A. (FCC) (Spain) (Note 7) 500 17,759
Hochtief AG (Germany) (Note 7) 1,200 33,949
The accompanying notes are an integral part of the financial statements.
55
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------------------------------
INDUSTRIALS (continued)
CONSTRUCTION & ENGINEERING (continued)
Insituform Technologies, Inc. - Class A* 2,175 $ 35,322
Koninklijke Boskalis Westminster N.V. (Netherlands) (Note 7) 5,200 130,904
----------
217,934
----------
ELECTRICAL EQUIPMENT - 0.34%
American Superconductor Corp.* 29,050 366,901
Plug Power, Inc.* 4,000 31,080
----------
397,981
----------
INDUSTRIAL CONGLOMERATES - 0.09%
Siemens AG (Germany) (Note 7) 1,475 105,913
----------
MACHINERY - 1.27%
AGCO Corp.* 58,550 1,127,087
Albany International Corp. - Class A 2,625 80,062
Lindsay Manufacturing Co. 3,400 80,410
Tomra Systems ASA (Norway) (Note 7) 26,600 107,020
Wabtec Corp. 5,925 96,577
----------
1,491,156
----------
ROAD & RAIL - 2.56%
CSX Corp. 43,600 1,341,136
Kansas City Southern* 119,775 1,658,884
----------
3,000,020
----------
TRANSPORTATION INFRASTRUCTURE - 0.03%
Brisa-Auto Estradas de Portugal S.A. (Portugal) (Note 7) 4,875 33,193
----------
5,490,745
----------
INFORMATION TECHNOLOGY - 4.33%
COMMUNICATIONS EQUIPMENT - 0.03%
Performance Technologies, Inc.* 2,800 36,372
----------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.42%
Fargo Electronics* 10,350 99,878
Mettler-Toledo International, Inc.* (Switzerland) (Note 7) 2,900 129,978
Thermo Electron Corp.* 4,125 120,450
Varian, Inc.* 3,450 141,588
----------
491,894
----------
INTERNET SOFTWARE & SERVICES - 0.03%
Online Resources Corp.* 6,775 38,618
----------
The accompanying notes are an integral part of the financial statements.
56
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- -------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY (continued)
IT SERVICES - 2.08%
eFunds Corp.* 1,350 $ 21,681
First Data Corp. 51,275 2,327,372
SAP AG (Germany) (Note 7) 550 84,128
----------
2,433,181
----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.58%
Brooks Automation, Inc.* 25,050 416,832
Cymer, Inc.* 6,175 197,477
Taiwan Semiconductor Manufacturing Co. Ltd. - ADR* (Taiwan) (Note 7) 7,200 68,616
----------
682,925
----------
SOFTWARE - 1.19%
Amdocs Ltd.* (Guernsey) (Note 7) 11,300 300,015
DocuCorp International, Inc.* 4,600 49,864
Network Associates, Inc.* 60,950 955,696
Nintendo Co. Ltd. (Japan) (Note 7) 900 84,980
----------
1,390,555
----------
5,073,545
----------
MATERIALS - 4.11%
CHEMICALS - 1.94%
Bayer AG (Germany) (Note 7) 2,225 60,279
Cabot Corp. 750 25,350
L'Air Liquide S.A. (France) (Note 7) 300 52,541
Linde AG (Germany) (Note 7) 500 27,272
Lonza Group AG (Switzerland) (Note 7) 6,550 316,235
Minerals Technologies, Inc. 30,550 1,791,757
----------
2,273,434
----------
CONTAINERS & PACKAGING - 1.01%
Packaging Corp. of America 53,825 1,183,073
----------
PAPER & FOREST PRODUCTS - 1.16%
Aracruz Celulose S.A. - ADR (Brazil) (Note 7) 43,725 1,361,596
----------
4,818,103
----------
TELECOMMUNICATION SERVICES - 3.21%
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.50%
CT Communications, Inc. 11,600 144,118
D&E Communications, Inc. 12,975 176,979
Deutsche Telekom AG* (Germany) (Note 7) 1,850 31,757
PT Telekomunikasi Indonesia - ADR (Indonesia) (Note 7) 5,200 94,120
The accompanying notes are an integral part of the financial statements.
57
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
SHARES/ VALUE
PRO-BLENDSM MAXIMUM TERM SERIES PRINCIPAL AMOUNT (NOTE 2)
- ----------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES (continued)
DIVERSIFIED TELECOMMUNICATION SERVICES (continued)
Telecom Italia S.p.A.* (Italy) (Note 7) 25,775 $ 82,652
Telefonica S.A. (Spain) (Note 7) 3,650 54,299
----------
583,925
----------
WIRELESS TELECOMMUNICATION SERVICES - 2.71%
NTT DoCoMo, Inc. (Japan) (Note 7) 41 81,365
Telecom Italia Mobile S.p.A. (T.I.M.) (Italy) (Note 7) 12,375 70,612
Vodafone Group plc - ADR (United Kingdom) (Note 7) 123,625 3,033,758
----------
3,185,735
----------
3,769,660
----------
UTILITIES - 2.58%
ELECTRIC UTILITIES - 2.50%
Allegheny Energy, Inc.* 108,575 1,496,164
American Electric Power Co., Inc. 41,400 1,260,216
E.ON AG (Germany) (Note 7) 1,450 96,122
Endesa S.A. (Spain) (Note 7) 1,850 33,908
Korea Electric Power Corp. (KEPCO) - ADR (South Korea) (Note 7) 4,775 44,837
----------
2,931,247
----------
MULTI-UTILITIES & UNREGULATED POWER - 0.08%
International Power plc* (United Kingdom) (Note 7) 8,975 22,362
RWE AG (Germany) (Note 7) 1,000 43,455
Suez S.A. (France) (Note 7) 1,125 22,549
----------
88,366
----------
3,019,613
----------
TOTAL COMMON STOCKS
(Identified Cost $89,825,199) 98,082,729
----------
UNIT INVESTMENT TRUST - 0.11%
Standard & Poor's Depositary Receipts Trust Series 1
(Identified Cost $134,319) 1,200 133,200
----------
U.S. TREASURY SECURITIES - 11.70%
U.S. TREASURY BONDS - 4.07%
U.S. Treasury Bond, 5.50%, 8/15/2028
(Identified Cost $5,000,390) $ 4,700,000 4,775,458
----------
The accompanying notes are an integral part of the financial statements.
58
INVESTMENT PORTFOLIO - APRIL 30, 2004 (UNAUDITED)
PRINCIPAL AMOUNT/ VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- ---------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES (continued)
U.S. TREASURY NOTES - 7.63%
U.S. Treasury Note, 3.25%, 8/15/2008 $ 2,000,000 $1,987,656
U.S. Treasury Note, 3.375%, 12/15/2008 7,000,000 6,951,329
-----------
TOTAL U.S. TREASURY NOTES
(Identified Cost $8,977,434) 8,938,985
-----------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $13,977,824) 13,714,443
-----------
SHORT-TERM INVESTMENTS - 4.33%
Dreyfus Treasury Cash Management - Institutional Shares 2,577,422 2,577,422
Fannie Mae Discount Note, 6/2/2004 $ 2,500,000 2,497,778
-----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $5,075,200) 5,075,200
-----------
TOTAL INVESTMENTS - 99.77%
(Identified Cost $109,012,542) 117,005,572
OTHER ASSETS, LESS LIABILITIES - 0.23% 275,394
------------
NET ASSETS - 100% $117,280,966
============
*Non-income producing security
ADR - American Depository Receipt
The accompanying notes are an integral part of the financial statements.
59
STATEMENT OF ASSETS AND LIABILITIES - PRO BLENDSM MAXIMUM TERM SERIES
(UNAUDITED)
APRIL 30, 2004
ASSETS:
Investments, at value (identified cost $109,012,542) (Note 2) $117,005,572
Foreign currency, at value (cost $87,244) 87,756
Interest receivable 156,622
Dividends receivable 122,269
Receivable for fund shares sold 98,377
Foreign tax reclaims receivable 20,313
------------
TOTAL ASSETS 117,490,909
------------
LIABILITIES:
Accrued management fees (Note 3) 92,570
Accrued fund accounting and transfer agent service fees (Note 3) 13,389
Accrued transfer agent fees (Note 3) 2,635
Accrued fund accounting fees (Note 3) 1,406
Payable for securities purchased 46,708
Payable for fund shares repurchased 35,060
Audit fees payable 17,776
Other payables and accrued expenses 399
------------
TOTAL LIABILITIES 209,943
------------
TOTAL NET ASSETS $117,280,966
============
NET ASSETS CONSIST OF:
Capital stock $ 80,605
Additional paid-in-capital 108,236,588
Undistributed net investment income 171,423
Accumulated net realized gain on investments and other assets and liabilities 799,911
Net unrealized appreciation on investments and other assets and liabilities 7,992,439
------------
TOTAL NET ASSETS $117,280,966
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE - CLASS A ($117,280,966/8,060,474 shares) $ 14.55
============
The accompanying notes are an integral part of the financial statements.
60
STATEMENT OF OPERATIONS - PRO-BLENDSM MAXIMUM TERM SERIES (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 2004
INVESTMENT INCOME:
Dividends (net of foreign tax withheld, $25,245) $ 632,535
Interest 204,642
------------
Total Investment Income 837,177
------------
EXPENSES:
Management fees (Note 3) 527,555
Fund accounting and transfer agent service fees (Note 3) 73,945
Transfer agent fees (Note 3) 11,210
Directors' fees (Note 3) 3,330
Fund accounting fees (Note 3) 3,300
Custodian fees 10,195
Miscellaneous 34,057
------------
Total Expenses 663,592
Less reduction of expenses (Note 3) (30,203)
------------
Net Expenses 633,389
------------
NET INVESTMENT INCOME 203,788
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on -
Investments 5,719,958
Foreign currency and other assets and liabilities 2,612
------------
5,722,570
------------
Net change in unrealized appreciation on -
Investments 4,775,720
Foreign currency and other assets and liabilities (2,045)
------------
4,773,675
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS 10,496,245
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $10,700,033
============
The accompanying notes are an integral part of the financial statements.
61
STATEMENTS OF CHANGES IN NET ASSETS - PRO-BLENDSM MAXIMUM TERM SERIES
FOR THE SIX
MONTHS ENDED FOR THE
4/30/04 YEAR ENDED
(UNAUDITED) 10/31/03
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 203,788 $268,131
Net realized gain on investments 5,722,570 763,181
Net change in unrealized appreciation on
investments 4,773,675 12,995,463
-------------- ------------
Net increase from operations 10,700,033 14,026,775
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 8):
From net investment income (119,923) (564,359)
-------------- ------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share transactions (Note 5) 14,841,380 15,914,757
-------------- ------------
Net increase in net assets 25,421,490 29,377,173
NET ASSETS:
Beginning of period 91,859,476 62,482,303
-------------- ------------
END OF PERIOD (including undistributed net investment
income of $171,423 and $87,558, respectively) $117,280,966 $91,859,476
============== ============
The accompanying notes are an integral part of the financial statements.
62
FINANCIAL HIGHLIGHTS - PRO-BLENDSM MAXIMUM TERM SERIES
FOR THE SIX
MONTHS ENDED
4/30/04 FOR THE YEARS ENDED
(UNAUDITED) 10/31/03 10/31/02 10/31/01 10/31/00
-------------- --------------------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 13.05 $ 10.86 $ 12.85 $ 16.45 $ 14.33
-------------- --------------------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.03 0.04 0.11 0.15 0.21
Net realized and unrealized gain (loss) on
investments 1.49 2.25 (1.36) (0.95) 3.57
-------------- --------------------- ---------- ---------- ----------
Total from investment operations 1.52 2.29 (1.25) (0.80) 3.78
-------------- --------------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.02) (0.10) (0.15) (0.56) (0.22)
From net realized gain on investments - - (0.59) (2.24) (1.44)
-------------- --------------------- ---------- ---------- ----------
Total distributions to shareholders (0.02) (0.10) (0.74) (2.80) (1.66)
-------------- --------------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 14.55 $ 13.05 $ 10.86 $ 12.85 $ 16.45
============== ===================== ========== ========== ==========
Total return1 11.63% 21.20% (10.68%) (6.00%) 28.35%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 1.20%2 1.20% 1.20% 1.20% 1.20%
Net investment income 0.39%2 0.37% 0.97% 1.10% 1.26%
Portfolio turnover 31% 73% 99% 109% 84%
NET ASSETS - END OF PERIOD (000's omitted) $ 117,281 $ 91,859 $ 62,482 $ 27,928 $ 30,007
============== ===================== ========== ========== ==========
FOR THE YEARS ENDED
10/31/99
--------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 12.10
--------
Income (loss) from investment operations:
Net investment income 0.18
Net realized and unrealized gain (loss) on
investments 3.06
--------
Total from investment operations 3.24
--------
Less distributions to shareholders:
From net investment income (0.22)
From net realized gain on investments (0.79)
--------
Total distributions to shareholders (1.01)
--------
NET ASSET VALUE - END OF PERIOD $ 14.33
========
Total return1 26.34%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 1.20%
Net investment income 0.93%
Portfolio turnover 96%
NET ASSETS - END OF PERIOD (000's omitted) $21,515
========
*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:
0.06%2 0.09% 0.16% 0.30% 0.14% 0.08%
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.
63
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Pro-BlendSM Conservative Term Series, Pro-BlendSM Moderate Term Series,
Pro-BlendSM Extended Term Series and Pro-BlendSM Maximum Term Series (each the
"Series") are 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 are asset allocation funds. Each invests in a combination of stocks,
bonds and cash, and is managed according to specific goals. The goals are as
follows: Pro-BlendSM Conservative Term Series - primary goal is preservation of
capital; secondary goal is long-term growth of capital. Pro-BlendSM Moderate
Term Series - equal emphasis on long-term growth of capital and preservation of
capital. Pro-BlendSM Extended Term Series - primary goal is long-term growth of
capital; secondary goal is preservation of capital. Pro-BlendSM Maximum Term
Series - long-term growth of capital.
Each Series is authorized to issue five classes of shares (Class A, B, C, D and
E). Currently, only Class A shares have been issued. Each class of shares is
substantially the same, except that class-specific distribution and shareholder
servicing expenses are borne by the specific class of shares to which they
relate.
Shares of each Series are offered to investors and employees of Manning & Napier
Advisors, Inc. (the "Advisor"), doing business as Exeter Asset Management, and
its affiliates. The total authorized capital stock of the Fund consists of 1.7
billion shares of common stock each having a par value of $0.01. As of April 30,
2004, 960 million shares have been designated in total among 18 series, of which
37.5 million each have been designated as Pro-BlendSM Conservative Term Series
Class A, Pro-BlendSM Moderate Term Series Class A and Pro-BlendSM Extended Term
Series Class A common stock, and 75 million have been designated as Pro-BlendSM
Maximum Term Series Class A common stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities and options,
listed on an exchange other than the NASDAQ National Market System are valued at
the latest quoted sales price of the exchange on which the security is primarily
traded. Securities not traded on valuation date or securities not listed on an
exchange are valued at the latest quoted bid price provided by the Fund's
pricing service. Securities listed on the NASDAQ National Market System are
valued in accordance with the NASDAQ Official Closing Price.
Debt securities, including government 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 are valued at fair value. If trading or events
occurring after the close of the principal market in which securities are traded
are expected to materially affect the value of those securities, then they may
be valued at their fair value, taking this trading or these events into account.
Fair value is determined in good faith by the Advisor under procedures approved
by and under the general supervision and responsibility of the Fund's Board of
Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value.
64
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on trade date. Dividend income is
recorded on the ex-dividend date, except that if the ex-dividend date has
passed, certain dividends from foreign securities are recorded as soon as the
Fund is informed of the ex-dividend date. Non-cash dividends, if any, are
recorded at the fair market value of the securities received. Interest income
and expenses are recorded on an accrual basis.
Most expenses of the Fund can be attributed to a specific series. Expenses which
cannot be directly attributed are apportioned among the series in the Fund in
such a manner as deemed equitable by the Fund's Directors, taking into
consideration, among other things, the nature and type of expense.
Interest income, including amortization of premium and accretion of discounts,
is earned from settlement date and accrued daily.
The Series use the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
FOREIGN CURRENCY TRANSLATION
The books and records of the Series are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the current exchange rates. Purchases and sales of investment
securities and income and expenses are translated on the respective dates of
such transactions. The Series do not isolate realized and unrealized gains and
losses attributable to changes in the exchange rates from gains and losses that
arise from changes in the market value of investments. Such fluctuations are
included with net realized and unrealized gain or loss on investments. Net
realized foreign currency gains and losses represent foreign currency gains and
losses between trade date and settlement date on securities transactions, gains
and losses on disposition of foreign currencies and the difference between the
amount of income and foreign withholding taxes recorded on the books of the
Series and the amounts actually received or paid.
FEDERAL TAXES
Each Series' policy is to comply with the provisions of the Internal Revenue
Code applicable to regulated investment companies. The Series are not subject to
federal income or excise tax to the extent that each 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 OF INCOME AND GAINS
Distributions to shareholders of net investment income are made semi-annually.
Distributions of net realized gains are made annually. An additional
distribution may be necessary to avoid taxation of a Series. Distributions are
recorded on the ex-dividend date.
OTHER
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
65
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory Agreement (the "Agreement") with the
Advisor, for which each Series pays a fee, computed daily and payable monthly,
at an annual rate of 0.80% for Pro-BlendSM Conservative Term Series and 1.00%
for Pro-BlendSM Moderate Term Series, Pro-BlendSM Extended Term Series and
Pro-BlendSM Maximum Term Series, 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 services.
The salaries of all officers of the Fund, and of all Directors who are
"affiliated persons" of the Fund, or of the Advisor, and all personnel of the
Fund, or of the Advisor, performing services relating to research, statistical
and investment activities, are paid by the Advisor. 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 per meeting fee
for each active series of the Fund plus a fee for each committee meeting.
The Advisor has contractually agreed, until at least February 28, 2005, 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 1.00% for Pro-BlendSM
Conservative Term Series and 1.20% for Pro-BlendSM Moderate Term Series,
Pro-BlendSM Extended Term Series and Pro-BlendSM Maximum Term Series, of average
daily net assets each year. In addition to its contractual agreement to limit
expenses for the Pro-BlendSM Extended Term Series to 1.20%, 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 1.17%
of the Series' average daily net assets. The Advisor may change or eliminate
all or part of its voluntary waiver at any time. Accordingly, the Advisor
waived fees of $33,285 for Pro-BlendSM Conservative Term Series, $31,491 for
Pro-BlendSM Moderate Term Series, $49,163 for Pro-BlendSM Extended Term Series
and $30,203 for Pro-BlendSM Maximum Term Series, for the six months ended April
30, 2004, 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.
Effective November 1, 2003, the Master Services Agreement between the Fund and
the Advisor, which covers fund accounting services and transfer agent services,
was amended. Under the amended agreement, for providing these services, the
Fund will pay the Advisor an annual fee of 0.15% of the Fund's net assets up to
$900 million, 0.11% for the Fund's net assets between $900 million and $1.5
billion, and 0.07% for the Fund's 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 will be charged.
Expenses not directly attributable to a series will be allocated based on each
series' relative net assets. The Advisor has an agreement with BISYS Fund
Services Ohio, Inc. ("BISYS") under which BISYS serves as sub-accounting
services and sub-transfer agent.
66
Notes to Financial Statements (unaudited)
4. PURCHASES AND SALES OF SECURITIES
For the six months ended April 30, 2004, purchases and sales of securities,
other than short-term securities, were as follows:
PURCHASES SALES
------------------------ ------------------------
Other Other
Series Issuers Government Issuers Government
- ------------------------------------ ----------- ----------- ----------- -----------
Pro-BlendSM Conservative Term Series $ 1,964,901 $ 2,516,797 $ 1,066,382 $ 1,435,415
Pro-BlendSM Moderate Term Series 15,894,825 9,018,906 9,721,638 5,229
Pro-BlendSM Extended Term Series 59,944,311 34,789,367 36,491,411 25,414,063
Pro-BlendSM Maximum Term Series 34,935,660 6,972,656 27,283,516 3,871,114
During the period, Pro-BlendSM Moderate Term Series and Pro-BlendSM Extended
Term Series held shares of iShares MSCI Malaysia Index Fund and iShares MSCI
Singapore Index Fund; such investments were not consistent with the investment
restrictions of the Series. Each Series sold these securities prior to
period-end, resulting in a realized gain of $2,915 and $12,323 for Pro-BlendSM
Moderate Term Series and Pro-BlendSM Extended Term Series, respectively. The
impact on each Series' total return from the realized gain on the sale of these
investments was less than 0.01%.
5. CAPITAL STOCK TRANSACTIONS
Transactions in Class A Shares:
FOR THE SIX MONTHS FOR THE YEAR
ENDED 4/30/04 ENDED 10/31/03
------------------------------------- --------------------------
Shares Amount Shares Amount
------------------- ---------------- ----------- -------------
Pro-BlendSM Conservative Term Series:
Sold 917,488 $ 10,419,263 1,437,721 $ 16,006,000
Reinvested 61,898 686,455 28,247 310,001
Repurchased (769,080) (8,724,831) (814,210) (9,081,651)
------------------- ---------------- ----------- -------------
Total 210,306 $ 2,380,887 651,758 $ 7,234,350
=================== ================ =========== =============
Pro-BlendSM Moderate Term Series:
Sold 2,352,804 $ 27,144,799 2,581,488 $ 27,288,390
Reinvested 101,569 1,130,477 75,813 772,282
Repurchased (1,411,885) (16,124,211) (1,127,440) (11,766,751)
------------------- ---------------- ----------- -------------
Total 1,042,488 $ 12,151,065 1,529,861 $ 16,293,921
=================== ================ =========== =============
67
Notes to Financial Statements (unaudited)
5. CAPITAL STOCK TRANSACTIONS (continued)
Transactions in Class A Shares:
FOR THE SIX MONTHS FOR THE YEAR
ENDED 4/30/04 ENDED 10/31/03
------------------------------------- --------------------------
Shares Amount Shares Amount
------------------- ---------------- ----------- -------------
Pro-BlendSM Extended Term Series:
Sold 4,870,989 $ 67,806,255 3,965,907 $ 48,958,151
Reinvested 179,483 2,403,283 205,951 2,443,689
Repurchased (2,555,714) (35,185,457) (1,777,142) (21,480,109)
------------------- ---------------- ----------- -------------
Total 2,494,758 $ 35,024,081 2,394,716 $ 29,921,731
=================== ================ =========== =============
Pro-BlendSM Maximum Term Series:
Sold 2,012,908 $ 28,877,330 3,977,751 $ 46,211,122
Reinvested 8,800 119,854 50,681 563,892
Repurchased (1,001,327) (14,155,804) (2,742,009) (30,860,257)
------------------- ---------------- ----------- -------------
Total 1,020,381 $ 14,841,380 1,286,423 $ 15,914,757
=================== ================ =========== =============
The Advisor owned 26,912 shares of Pro-BlendSM Conservative Term Series (1.4% of
shares outstanding) valued at $302,491 and 21,728 shares of Pro-BlendSM Maximum
Term Series (0.3% of shares outstanding) valued at $316,142 on April 30, 2004.
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the
normal course of their 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 April 30, 2004.
7. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in
securities of domestic companies and the United States Government. These risks
include revaluation of currencies and future adverse political and economic
developments. Moreover, securities of foreign companies and foreign governments
and their markets may be less liquid and their prices more volatile than those
of comparable domestic companies and the United States Government.
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 generally accepted accounting principles. Each 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.
68
Notes to Financial Statements (unaudited)
8. 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 October 31, 2003 were as follows:
Pro-BlendSM Pro-BlendSM Pro-BlendSM Pro-BlendSM
Conservative Moderate Extended Maximum
Term Series Term Series Term Series Term Series
------------- ------------ ------------ ------------
Ordinary income $ 310,705 $ 775,445 $ 2,453,069 $ 564,359
At October 31, 2003, the Pro-BlendSM Maximum Term Series had a capital loss
carryover, disclosed below, available to the extent allowed by tax law to offset
future net capital gain, if any, which will expire as follows:
Loss Carryover Expiration Date
- --------------- ------------------
$ 4,645,723 October 31, 2010
$ 132,473 October 31, 2011
At April 30, 2004, 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:
PRO-BLENDSM CONSERVATIVE PRO-BLENDSM MODERATE PRO-BLENDSM EXTENDED
TERM SERIES TERM SERIES TERM SERIES
-------------------------- ---------------------- ----------------------
Cost for federal income tax purposes $ 21,398,930 $ 79,786,130 $ 244,812,693
Unrealized appreciation $ 750,276 $ 4,074,976 $ 15,746,004
Unrealized depreciation (121,351) (993,058) (5,235,200)
-------------------------- ---------------------- ----------------------
Net unrealized appreciation $ 628,925 $ 3,081,918 $ 10,510,804
========================== ====================== ======================
PRO-BLENDSM MAXIMUM
TERM SERIES
---------------------
Cost for federal income tax purposes $ 109,012,542
Unrealized appreciation $ 11,492,957
Unrealized depreciation (3,499,927)
---------------------
Net unrealized appreciation $ 7,993,030
=====================
69
Literature Requests
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 (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Beginning no later than August 31, 2004, information regarding how the Fund
voted proxies relating to portfolio securities during the most recent 12-month
period ended June 30 will be available without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION (SAI)
- --------------------------------------------------------------------------------
The prospectus and SAI provide additional information about each Series,
including charges, expenses and risks. You may obtain these documents without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
70
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 FEES AND SERVICES
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: PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
Not applicable.
ITEM 9: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The primary function of the Governance and Nominating Committee (the
"Committee") is to identify and recommend individuals for membership on the
Board. Shareholders may recommend candidates for Board following the procedures
outlined as follows:
1. A stockholder or group of stockholders (referred to in either case as a
"Nominating Stockholder") that, individually or as a group, has beneficially
owned at least 5% of the Fund's common stock for at least two years prior to the
date the Nominating Stockholder submits a candidate for nomination as a Director
may submit one candidate to the Committee for consideration at an annual meeting
of stockholders.
2. The Nominating Stockholder must submit any such recommendation (a
"Stockholder Recommendation") in writing to the Fund, to the attention of the
Secretary, at the address of the principal executive offices of the Fund.
3. The Stockholder Recommendation must be delivered to or mailed and
received at the principal executive offices of the Fund not less than the date
specified in a public notice by the Fund. Such public notice shall be made at
least 30 calendar days prior to the deadline for submission of Stockholder
Recommendations. Such public notice may be given in a stockholder report or
other mailing to stockholders or by any other means deemed by the Committee or
the Board of Directors to be reasonably calculated to inform stockholders.
4. The Stockholder Recommendation must include: (i) a statement in writing
setting forth (A) the name, date of birth, business address and residence
address of the person recommended by the Nominating Stockholder (the
"candidate"); (B) any position or business relationship of the candidate,
currently or within the preceding five years, with the Nominating Stockholder or
an Associated Person of the Nominating Stockholder (as defined below); (C) the
class or series and number of all shares of the Fund owned of record or
beneficially by the candidate, as reported to such Nominating Stockholder by the
candidate; (D) any other information regarding the candidate that is required to
be disclosed about a nominee in a proxy statement or other filing required to be
made in connection with the solicitation of proxies for election of Directors
pursuant to Section 20 of the Investment Company Act of 1940, as amended (the
"1940 Act") and the rules and regulations promulgated thereunder; (E) whether
the Nominating Stockholder believes that the candidate is or will be an
"interested person" of the Fund (as defined in the 1940 Act) and, if believed
not to be an "interested person," information regarding the candidate that will
be sufficient for the Fund to make such determination; and (F) information as to
the candidate's knowledge of the investment company industry, experience as a
director or senior officer of public companies, directorships on the boards of
other registered investment companies and educational background ; (ii) the
written and signed consent of the candidate to be named as a nominee and to
serve as a Director if elected; (iii) the written and signed agreement of the
candidate to complete a directors' and officers' questionnaire if elected; (iv)
the Nominating Stockholder's consent to be named as such by the Fund; (v) the
class or series and number of all shares of the Fund owned beneficially and of
record by the Nominating Stockholder and any Associated Person of the Nominating
Stockholder and the dates on which such shares were acquired, specifying the
number of shares owned beneficially but not of record by each, and stating the
names of each as they appear on the Fund's record books and the names of any
nominee holders for each; and (vi) a description of all arrangements or
understandings between the Nominating Stockholder, the candidate and/or any
other person or persons (including their names) pursuant to which the
recommendation is being made by the Nominating Stockholder. "Associated Person
of the Nominating Stockholder" as used in this paragraph 4 means any person
required to be identified pursuant to clause (vi) and any other person
controlling, controlled by or under common control with, directly or indirectly,
(a) the Nominating Stockholder or (b) any person required to be identified
pursuant to clause (vi).
5. The Committee may require the Nominating Stockholder to furnish such
other information as it may reasonably require or deem necessary to verify any
information furnished pursuant to paragraph 4 above or to determine the
qualifications and eligibility of the candidate proposed by the Nominating
Stockholder to serve on the Board. If the Nominating Stockholder fails to
provide such other information in writing within seven days of receipt of
written request from the Committee, the recommendation of such candidate as a
nominee will be deemed not properly submitted for consideration, and will not be
considered, by the Committee.
ITEM 10: 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 Funds' last fiscal half-year, 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 11: 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 Ex99.CERT.
(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
Ex99.906CERT. 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.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Exeter Fund, Inc.
/s/ B. Reuben Auspitz
B. Reuben Auspitz
President & Principal Executive Officer of Exeter Fund, Inc.
June 29, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
/s/ B. Reuben Auspitz
B. Reuben Auspitz
President & Principal Executive Officer of Exeter Fund, Inc.
June 29, 2004
/s/ Christine Glavin
Christine Glavin
Chief Financial Officer & Principal Financial Officer of Exeter Fund. Inc.
June 29, 2004