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
- ---------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
B. REUBEN AUSPITZ 1100 CHASE SQUARE, ROCHESTER, NY 14604
- --------------------------------------------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 585-325-6880
-----------------
DATE OF FISCAL YEAR END: OCTOBER 31, 2004
----------------------------------------
DATE OF REPORTING PERIOD: NOVEMBER 1, 2003 THROUGH OCTOBER 31, 2004
---------------------------------------------------
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.
ITEM 1: REPORTS TO STOCKHOLDERS
December 27, 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 are copies of the Annual Reports for each of the above Series of the
Exeter Fund in which you owned shares as of October 31, 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 your Exeter Fund account.
Sincerely,
/s/ Amy J. Williams
Amy J. Williams
Fund Services Manager
Exeter Fund, Inc.
Annual Report
October 31, 2004
Equity Series
Management Discussion and Analysis (unaudited)
DEAR SHAREHOLDERS:
Over the past year, the behavior of the equity market has reflected the shift in
the economic environment. After noteworthy gains in 2003, the Standard & Poor's
500 Total Return Index (the "S&P 500"), a measure of the general stock market,
continued its rise until the middle of the first quarter of 2004. At this time
last year, we noted that equity valuations had pushed into questionable
territory, warning that the market may have come too far to fast. It did not
take long for the market to catch up with that view. By early March 2004, the
stock market finally took some time to digest the economic data and to consider
the prospect of the Federal Reserve's policy to start increasing interest rates.
Since that time, the S&P 500 has experienced a price decline of approximately
2%; however, for the one-year period since October 31, 2003, it has still
maintained a positive total return of 9.41%. The Equity Series has outperformed
the index by a fairly healthy margin for the same period.
The good economic news that marked the first part of 2004 began to fade
beginning in the third quarter. Growth in Gross Domestic Product, non-farm
payrolls, consumer spending and corporate profits all showed signs of
deceleration as the year progressed. As expected, the Federal Reserve began to
raise short-term interest rates at the end of the second quarter as well. On a
positive note, the growth in inflation the economy experienced in the first half
of the year eased. The conflicting economic data between the second and third
quarters has led to volatility in the stock market. As a result, although stock
prices have seen their share of reversals in this time period, the stock market
has taken somewhat of a wait-and-see approach.
During the past year, we shifted the Series' holdings within certain sectors
based on our fundamental equity selection approach. We reduced holdings in the
Information Technology sector during the early part of the year, and avoided
much of the 20% decline experienced in that sector between mid-January and
mid-August. We have also increased holdings in the Consumer Discretionary
sector, specifically companies with improving fundamentals that are not as
sensitive to rising interest rates as bigger-ticket consumer items. This sector
has experienced a nice rally since mid-August of this year. We have gradually
increased the Series' position in the Financials sector during the early and
middle part of this year as better values presented themselves as the sector
came down from its steady run that originated in early 2003. The Series has
also continued to benefit from its relatively large position in the Energy
sector relative to the S&P 500, as rising oil prices have driven this sector up
more than 40% during the past year.
As this year has shown, conditions can change dramatically in a relatively short
span of time. Observing the behavior of the economy and stock market over the
past year reinforces our long-standing conviction that our best hope of
providing attractive returns lies in our fundamentals-driven investment
approach. It allows us to deviate from market weightings during volatile
periods when stock selection is key to favorable returns. Rather than simply
match the portfolio to the market benchmark, we favor a disciplined bottom-up
investment approach that has historically served our long-term investors very
well. We will continue to monitor economic conditions for opportunities to
structure the portfolio in a manner that we expect will continue to provide
competitive absolute and risk-adjusted returns.
We wish you all the best in the new year.
Sincerely,
EXETER ASSET MANAGEMENT
1
Performance Update as of October 31, 2004 (unaudited)
Average Annual Total Returns
As of October 31, 2004
--------------------------------------------------
Growth of
One Five Since a $10, 000
Year Year Inception1 Investment*
----------------------------- ------ ----------- ------------
Exeter Fund, Inc. - Equity Series2,3 16.52% 7.54% 7.16% $ 15,678
Standard & Poor's (S&P) 500 Total Return Index4 9.41% -2.22% 1.74% $ 11,190
*The value of a $10,000 investment in the Exeter Fund, Inc. - Equity Series from
its inception1 (5/1/98) to present (10/31/04) 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
- -------- ------------------ --------------
5/1/98 . $ 10,000 $ 10,000
10/31/98 7,750 9,961
10/31/99 10,900 12,561
10/31/00 14,080 13,278
10/31/01 12,870 9,973
10/31/02 11,420 8,468
10/31/03 13,455 10,228
10/31/04 15,678 11,190
1Performance numbers for the Series and Index are calculated from May 1, 1998,
the Collective's inception date (see Note 3 below).
2The 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.
3For 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.
4The 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.
2
Shareholder Expense Example (unaudited)
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, including potential wire charges and exchange fees and (2) ongoing costs,
including management fees and other Series expenses. This example is intended
to help you understand your ongoing costs (in dollars) of investing in the
Series and to compare these costs with the ongoing costs of investing in other
mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (May 1, 2004 to October 31, 2004).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
5/1/04 10/31/04 5/1/04-10/31/04
-------------- -------------- ----------------
Actual. . . . . . . . . . . $ 1,000.00 $ 1,046.90 $ 5.40
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,019.86 $ 5.33
*Expenses are equal to the Series' annualized expense ratio of 1.05%, multiplied
by the average account value over the period, multiplied by 184/366 (to reflect
the one-half year period).
The Series' total return would have been lower had certain expenses not been
reimbursed during the period. Based on the most recent fiscal half year, the
Series' expense ratio may differ from the expense ratio based on one-year data
in the financial highlights.
3
Portfolio Composition - As of October 31, 2004 (unaudited)
<graphic>
<pie chart>
Sector Allocation*
Consumer Discretionary . . . . . . . . . . . . . . . . . . . . . 21.2%
Consumer Staples . . . . . . . . . . . . . . . . . . . . . . . . 7.7%
Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.5%
Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3%
Health Care. . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5%
Industrials. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8%
Information Technology . . . . . . . . . . . . . . . . . . . . . 4.1%
Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9%
Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4%
Cash, short-term investments, and liabilities, less other assets 6.6%
*As a percentage of net assets.
4
Investment Portfolio - October 31, 2004
VALUE
SHARES (NOTE 2)
------- ---------
COMMON STOCKS - 93.4%
CONSUMER DISCRETIONARY - 21.2%
HOTELS, RESTAURANTS & LEISURE - 3.0%
Carnival Corp. . . . . . . . . . . . . . . . . 1,025 $ 51,824
----------
MEDIA - 10.4%
Cablevision Systems New York Group - Class A*. 3,250 66,885
The E.W. Scripps Co. - Class A . . . . . . . . 600 28,632
Hearst-Argyle Television, Inc. - Class A . . . 925 24,105
Time Warner, Inc.* . . . . . . . . . . . . . . 3,900 64,896
----------
184,518
----------
SPECIALTY RETAIL - 7.8%
Foot Locker, Inc.. . . . . . . . . . . . . . . 800 19,520
Office Depot, Inc.*. . . . . . . . . . . . . . 2,800 45,332
Staples, Inc.. . . . . . . . . . . . . . . . . 1,025 30,484
Weight Watchers International, Inc.* . . . . . 1,200 43,104
----------
138,440
----------
374,782
----------
CONSUMER STAPLES - 7.7%
FOOD & STAPLES RETAILING - 1.9%
The Kroger Co.*. . . . . . . . . . . . . . . . 2,225 33,620
----------
FOOD PRODUCTS - 1.1%
Hain Celestial Group, Inc.*. . . . . . . . . . 1,225 19,820
----------
HOUSEHOLD PRODUCTS - 2.4%
Colgate-Palmolive Co.. . . . . . . . . . . . . 500 22,310
The Procter & Gamble Co. . . . . . . . . . . . 400 20,472
----------
42,782
----------
PERSONAL PRODUCTS - 2.3%
The Estee Lauder Companies, Inc. - Class A . . 950 40,802
----------
137,024
----------
ENERGY - 19.5%
ENERGY EQUIPMENT & SERVICES - 17.9%
Baker Hughes, Inc. . . . . . . . . . . . . . . 1,275 54,608
Cooper Cameron Corp.*. . . . . . . . . . . . . 875 42,306
Schlumberger Ltd.. . . . . . . . . . . . . . . 1,125 70,808
Transocean, Inc.*. . . . . . . . . . . . . . . 1,225 43,181
Varco International, Inc.* . . . . . . . . . . 1,625 44,980
Weatherford International Ltd.*. . . . . . . . 1,175 61,406
----------
317,289
----------
The accompanying notes are an integral part of the financial statements.
5
Investment Portfolio - October 31, 2004
VALUE
SHARES (NOTE 2)
------- ---------
ENERGY (continued)
OIL & GAS - 1.6%
Amerada Hess Corp.. . . . . . . . . . . 350 $ 28,249
----------
345,538
----------
FINANCIALS - 11.3%
CAPITAL MARKETS - 5.1%
The Bank of New York Co., Inc.. . . . . 1,550 50,313
SEI Investments Co. . . . . . . . . . . 1,125 40,489
----------
90,802
----------
COMMERCIAL BANKS - 5.2%
PNC Financial Services Group. . . . . . 575 30,073
U.S. Bancorp. . . . . . . . . . . . . . 1,100 31,471
Wachovia Corp.. . . . . . . . . . . . . 625 30,756
----------
92,300
----------
DIVERSIFIED FINANCIAL SERVICES - 1.0%
Principal Financial Group, Inc. . . . . 450 16,992
----------
200,094
----------
HEALTH CARE - 11.5%
HEALTH CARE EQUIPMENT & SUPPLIES - 1.6%
Millipore Corp.*. . . . . . . . . . . . 600 27,594
----------
HEALTH CARE PROVIDERS & SERVICES - 3.8%
WebMD Corp.*. . . . . . . . . . . . . . 9,025 68,229
----------
PHARMACEUTICALS - 6.1%
Pfizer, Inc.. . . . . . . . . . . . . . 950 27,503
Schering-Plough Corp. . . . . . . . . . 4,400 79,684
----------
107,187
----------
203,010
----------
INDUSTRIALS - 6.8%
AIRLINES - 1.6%
Southwest Airlines Co.. . . . . . . . . 1,800 28,386
----------
MACHINERY - 1.3%
AGCO Corp.* . . . . . . . . . . . . . . 1,175 22,818
----------
ROAD & RAIL - 3.9%
CSX Corp. . . . . . . . . . . . . . . . 900 32,850
Kansas City Southern* . . . . . . . . . 2,100 35,595
----------
68,445
----------
119,649
----------
INFORMATION TECHNOLOGY - 4.1%
IT SERVICES - 2.0%
First Data Corp.. . . . . . . . . . . . 875 36,120
----------
The accompanying notes are an integral part of the financial statements.
6
Investment Portfolio - October 31, 2004
SHARES/ VALUE
PRINCIPAL AMOUNT (NOTE 2)
------------------ ---------
INFORMATION TECHNOLOGY (continued)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.1%
Texas Instruments, Inc.. . . . . . . . . . . . . . . . . 1,500 $ 36,675
-----------
72,795
-----------
MATERIALS - 6.9%
CHEMICALS - 3.9%
Engelhard Corp.. . . . . . . . . . . . . . . . . . . . . 1,025 29,007
Minerals Technologies, Inc.. . . . . . . . . . . . . . . 650 39,065
-----------
68,072
-----------
CONTAINERS & PACKAGING - 1.3%
Packaging Corp. of America . . . . . . . . . . . . . . . 1,050 23,026
-----------
METALS & MINING - 1.7%
Alcoa, Inc.. . . . . . . . . . . . . . . . . . . . . . . 950 30,875
-----------
121,973
-----------
UTILITIES - 4.4%
ELECTRIC UTILITIES - 2.5%
Allegheny Energy, Inc.*. . . . . . . . . . . . . . . . . 2,450 44,859
-----------
MULTI-UTILITIES & UNREGULATED POWER - 1.9%
NRG Energy, Inc.*. . . . . . . . . . . . . . . . . . . . 1,175 32,595
-----------
77,454
-----------
TOTAL COMMON STOCKS
(Identified Cost $1,465,567) . . . . . . . . . . . . . . 1,652,319
-----------
SHORT-TERM INVESTMENTS - 7.4%
Dreyfus Treasury Cash Management - Institutional Shares. 51,004 51,004
Fannie Mae Discount Note, 12/13/2004 . . . . . . . . . . $ 50,000 49,890
U.S. Treasury Bill, 11/12/2004 . . . . . . . . . . . . . 30,000 29,987
-----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $130,881) . . . . . . . . . . . . . . . 130,881
-----------
TOTAL INVESTMENTS - 100.8%
(Identified Cost $1,596,448) . . . . . . . . . . . . . . 1,783,200
LIABILITIES, LESS OTHER ASSETS - (0.8%). . . . . . . . . (13,808)
-----------
NET ASSETS - 100%. . . . . . . . . . . . . . . . . . . . $ 1,769,392
===========
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
7
Statement of Assets and Liabilities
October 31, 2004
ASSETS:
Investments, at value (identified cost $1,596,448) (Note 2) $1,783,200
Dividends receivable. . . . . . . . . . . . . . . . . . . . 640
Receivable from investment advisor (Note 3) . . . . . . . . 12,540
----------
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . 1,796,380
----------
LIABILITIES:
Accrued fund accounting and transfer agent fees (Note 3). . 689
Audit fees payable. . . . . . . . . . . . . . . . . . . . . 24,055
Legal fees payable. . . . . . . . . . . . . . . . . . . . . 1,801
Other payables and accrued expenses . . . . . . . . . . . . 443
----------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . 26,988
----------
TOTAL NET ASSETS. . . . . . . . . . . . . . . . . . . . . . $1,769,392
==========
NET ASSETS CONSIST OF:
Capital stock . . . . . . . . . . . . . . . . . . . . . . . $ 1,132
Additional paid-in-capital. . . . . . . . . . . . . . . . . 1,481,326
Accumulated net realized gain on investments. . . . . . . . 100,182
Net unrealized appreciation on investments. . . . . . . . . 186,752
----------
TOTAL NET ASSETS. . . . . . . . . . . . . . . . . . . . . . $1,769,392
==========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE ($1,769,392/113,237 shares) . . . . . . . . $ 15.63
==========
The accompanying notes are an integral part of the financial statements.
8
Statement of Operations
For the Year Ended October 31, 2004
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . $ 14,754
Interest. . . . . . . . . . . . . . . . . . . . . . . 852
---------
Total Investment Income . . . . . . . . . . . . . . . 15,606
---------
EXPENSES:
Management fees (Note 3). . . . . . . . . . . . . . . 15,706
Directors' fees (Note 3). . . . . . . . . . . . . . . 8,201
Fund accounting and transfer agent fees (Note 3). . . 4,460
Audit fees. . . . . . . . . . . . . . . . . . . . . . 24,024
Legal fees. . . . . . . . . . . . . . . . . . . . . . 4,699
Custodian fees. . . . . . . . . . . . . . . . . . . . 3,081
Miscellaneous . . . . . . . . . . . . . . . . . . . . 1,067
---------
Total Expenses. . . . . . . . . . . . . . . . . . . . 61,238
Less reduction of expenses (Note 3) . . . . . . . . . (44,737)
---------
Net Expenses. . . . . . . . . . . . . . . . . . . . . 16,501
---------
NET INVESTMENT LOSS . . . . . . . . . . . . . . . . . (895)
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments. . . . . . . . . . . 159,977
Net change in unrealized appreciation on investments. 59,673
---------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS . . . . . . . . . . . . . . . . . . . . . 219,650
---------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS. . . . . . . . . . . . . . . . . . . . . . $218,755
=========
The accompanying notes are an integral part of the financial statements.
9
Statements of Changes in Net Assets
FOR THE FOR THE
YEAR ENDED YEAR ENDED
10/31/04 10/31/03
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss). . . . . . . . . . . . . $ (895) $ 800
Net realized gain on investments. . . . . . . . . . . 159,977 41,987
Net change in unrealized appreciation on investments. 59,673 126,200
------------ ------------
Net increase from operations. . . . . . . . . . . . . 218,755 168,987
------------ ------------
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) 345,056 520,216
------------ ------------
Net increase in net assets. . . . . . . . . . . . . . 563,173 687,803
NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . 1,206,219 518,416
------------ ------------
END OF YEAR (including undistributed net investment
income of $- and $621, respectively). . . . . . . . . $ 1,769,392 $ 1,206,219
============ ============
The accompanying notes are an integral part of the financial statements.
10
Financial Highlights
FOR THE PERIOD
FOR THE YEARS ENDED 7/10/02 1 TO
10/31/04 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. 2.23 2.02 (0.12)
---------------- ---------- ----------
Total from investment operations. . . . . . . . . . . . 2.22 2.03 (0.09)
---------------- ---------- ----------
Less distributions to shareholders:
From net investment income. . . . . . . . . . . . . . . (0.01) (0.03) -
---------------- ---------- ----------
NET ASSET VALUE - END OF PERIOD . . . . . . . . . . . . $ 15.63 $ 13.42 $ 11.42
================ ========== ==========
Total return2 . . . . . . . . . . . . . . . . . . . . . 16.52% 17.82% (0.78%)
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* . . . . . . . . . . . . . . . . . . . . . . . 1.05% 1.05% 1.05%3
Net investment income (loss). . . . . . . . . . . . . . (0.06%) 0.09% 0.78%3
Portfolio turnover. . . . . . . . . . . . . . . . . . . 60% 58% 30%
NET ASSETS - END OF PERIOD (000's omitted). . . . . . . $ 1,769 $ 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:
2.85% 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.
11
Notes to Financial Statements
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 October
31, 2004, 1.16 billion shares have been designated in total among 21 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 may be 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 realized
12
Notes to Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL TAXES (continued)
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 $15,706
and assumed expenses amounting to $29,031 for the year ended October 31, 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.
13
Notes to Financial Statements
4. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 2004, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$1,125,337 and $877,622, 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 YEAR FOR THE YEAR
ENDED 10/31/04 ENDED 10/31/03
--------------------------------- ------------------
Shares Amount Shares Amount
--------------- ---------------- ------- ---------
Sold. . . . 24,251 $ 358,646 45,346 $530,203
Reinvested. 45 638 118 1,400
Repurchased (959) (14,228) (968) (11,387)
--------------- ---------------- ------- ---------
Total . . . 23,337 $ 345,056 44,496 $520,216
=============== ================ ======= =========
At October 31, 2004, the retirement plan of the advisor and its affiliates owned
100,721 shares of the Series (88.9% of shares outstanding) valued at $1,574,269.
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 October 31, 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 October 31, 2004.
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. These
differences are primarily due to differing book and tax treatments in the timing
of the recognition of net investment income or gains and losses, including
differences in the cost basis of securities contributed in-kind. 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.
14
Notes to Financial Statements
8. FEDERAL INCOME TAX INFORMATION (continued)
The tax character of distributions paid were as follows:
FOR THE YEAR FOR THE YEAR
ENDED 10/31/04 ENDED 10/31/03
--------------- ---------------
Ordinary income $ 638 $ 1,400
At October 31, 2004, the tax basis components of distributable earnings and the
net unrealized appreciation based on identified cost for federal income tax
purposes were as follows:
Cost for federal income tax purposes. $1,604,776
Unrealized appreciation . . . . . . . $ 225,729
Unrealized depreciation . . . . . . . (47,305)
-----------
Net unrealized appreciation . . . . . $ 178,424
Undistributed long-term capital gains 100,182
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
For federal income tax purposes, the Series designates $638 or, if different,
the maximum amount allowable under the tax law as qualified dividend income.
15
Report of Independent Registered Public Accounting Firm
TO THE BOARD OF DIRECTORS OF EXETER FUND, INC. AND SHAREHOLDERS OF EQUITY
SERIES:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Equity Series (a Series of
Exeter Fund, Inc., hereafter referred to as the "Series") at October 31, 2004,
and the results of its operations, the changes in its net assets and the
financial highlights for the periods indicated, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Series' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 2004 by
correspondence with the custodian, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
BOSTON, MASSACHUSETTS
DECEMBER 13, 2004
16
Directors' and Officers' Information (unaudited)
The Statement of Additional Information provides additional information about
the Fund's directors and officers and can be obtained without charge by calling
1-800-466-3863 or on the EDGAR Database on the SEC Internet website
(http:\\www.sec.gov). The following chart shows certain information about the
Fund's officers and directors, including their principal occupations during the
last five years. Unless specific dates are provided, the individuals have held
the listed positions for longer than five years.
INTERESTED DIRECTOR
Name: . . . . . . . . . . . . . . . . . . . . . . B. Reuben Auspitz*
Address: . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . 57
Current Position(s) Held with Fund: . . . . . . . Principal Executive Officer, President, Chairman & Director
Term of Office1 & Length of Time Served:. . . . . Indefinite - Director; Vice President 1984 - 2003; President since 2004;
Director since 1984
Principal Occupation(s) During Past 5 Years:. . . Executive Vice President, Co-Executive Director, Executive Group Member** &
Chief Compliance Officer since 2004, Manning & Napier Advisors, Inc.; President
& Director Manning & Napier Investor Services, Inc.; Holds or has held one or
more of the following titles for various subsidiaries and affiliates:
President, Vice President, Director, Chairman, Treasurer, Chief Compliance
Officer or Member
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
INDEPENDENT DIRECTORS
Name:. . . . . . . . . . . . . . . . . . . . . . . Stephen B. Ashley
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 64
Current Position(s) Held with Fund:. . . . . . . . Director, Audit Committee Member, Governance & Nominating Committee Member
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 1996
Principal Occupation(s) During Past 5 Years: . . . Chairman, Director, President & Chief Executive Officer, The Ashley Group
(property management and investment)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . Genesee Corp.
The Ashley Group
Fannie Mae
Name:. . . . . . . . . . . . . . . . . . . . . . . Martin F. Birmingham
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 83
Current Position(s) Held with Fund:. . . . . . . . Director, Governance & Nominating Committee Member
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 1994
Principal Occupation(s) During Past 5 Years: . . . Advisory Trustee, The Freedom Forum (nonpartisan, international foundation)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
Name:. . . . . . . . . . . . . . . . . . . . . . . Peter L. Faber
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 66
Current Position(s) Held with Fund:. . . . . . . . Director, Governance & Nominating Committee Member
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 1987
Principal Occupation(s) During Past 5 Years: . . . Partner, McDermott, Will & Emery LLP (law firm)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . Partnership for New York City, Inc.
Name:. . . . . . . . . . . . . . . . . . . . . . . Harris H. Rusitzky
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 69
Current Position(s) Held with Fund:. . . . . . . . Director, Audit Committee Member, Governance & Nominating Committee Member
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 1985
Principal Occupation(s) During Past 5 Years: . . . President, The Greening Group (business consultants)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
17
Directors' and Officers' Information (unaudited)
OFFICERS
Name:. . . . . . . . . . . . . . . . . . . . . . . Jeffrey S. Coons, Ph.D., CFA
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 41
Current Position(s) Held with Fund:. . . . . . . . Vice President
Term of Office1 & Length of Time Served: . . . . . Since 2004
Principal Occupation(s) During Past 5 Years: . . . Co-Director of Research since 2002 & Executive Group Member**,
Manning & Napier Advisors, Inc.; Managing Director - Risk Management, Manning &
Napier Advisors, Inc., 1993-2002; Holds one or more of the following titles for
various subsidiaries and affiliates: President, Director, Treasurer or Senior
Trust Officer
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
Name:. . . . . . . . . . . . . . . . . . . . . . . Christine Glavin
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 38
Current Position(s) Held with Fund:. . . . . . . . Principal Financial Officer, Chief Financial Officer
Term of Office1 & Length of Time Served: . . . . . Since 2001
Principal Occupation(s) During Past 5 Years: . . . Fund Accounting Manager, Manning & Napier Advisors, Inc.
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
Name:. . . . . . . . . . . . . . . . . . . . . . . Jodi L. Hedberg
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 36
Current Position(s) Held with Fund:. . . . . . . . Corporate Secretary, Chief Compliance Officer, Anti-Money Laundering (AML)
Compliance Officer
Term of Office1 & Length of Time Served: . . . . . Corporate Secretary since 1997; Chief Compliance Officer since 2004
Compliance Manager, Manning & Napier Advisors, Inc. & affiliates
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
Name:. . . . . . . . . . . . . . . . . . . . . . . Alaina V. Metz
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 37
Current Position(s) Held with Fund:. . . . . . . . Special Assistant Secretary
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 2002
Principal Occupation(s) During Past 5 Years: . . . Vice President, BISYS Fund Services Ohio, Inc. (mutual fund servicing company)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
*Interested Director, within the meaning of the Investment Company Act of 1940
by reason of his position with the Fund's investment advisor and distributor.
Mr. Auspitz serves as the Executive Vice President and Director, Manning &
Napier Advisors, Inc. and President and Director, Manning & Napier Investor
Services, Inc., the Fund's distributor.
**The Executive Group, which consists of six members, performs the duties of the
Office of the President, effective May 1, 2003.
1The term of office for all officers is one year and until their respective
successors are chosen and qualified.
18
Literature Requests (unaudited)
PROXY VOTING POLICIES AND PROCEDURES
- --------------------------------------------------------------------------------
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30th is available
without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
QUARTERLY PORTFOLIO HOLDINGS
- --------------------------------------------------------------------------------
The Series' complete schedule of portfolio holdings for the 1st and 3rd quarters
of each fiscal year are provided on Form N-Q, 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. These documents are available without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
19
Exeter Fund, Inc.
Annual Report
October 31, 2004
Overseas Series
Management Discussion and Analysis (unaudited)
DEAR SHAREHOLDERS:
The Overseas Series outperformed its benchmark, the Morgan Stanley Capital
International (MSCI) All Country World Index ex U.S., for the twelve-month
period ended October 31, 2004. The Series also continued to outperform for the
three and five year periods. More importantly, the Series has outperformed the
index by a substantial margin (6.63% compared to -2.22% on an annualized basis)
over the current market cycle, which began January 1, 2000. Because a market
cycle includes periods of both rising and falling markets, it is a better time
period over which to evaluate fund performance than time periods based on the
calendar year or the Series' fiscal year.
Our team of analysts uses time-tested investment strategies to choose stocks for
the portfolio. These strategies included the Profile Strategy, Hurdle Rate
Strategy and the Bankable Deal Strategy. Our investment approach also considers
valuation measures, and we avoid stocks whose valuations do not appear justified
according to our analysis.
The Series has a large weighting in Consumer Staples companies relative to the
benchmark. The holdings were largely added under our Profile Strategy and
included areas such as food products, household and personal products and
beverages. The Profile Strategy seeks companies that have a sustainable
competitive advantage that allows them to grow sales faster than their
competitors. These positions were purchased as defensive positions as we
believe global growth may be slowing and we expect these stocks to hold up
better if the global economy should deteriorate.
Consumer Discretionary stocks also represent a large weighting compared to the
benchmark. A number of these companies are in the media industry, including
companies that publish materials for educational and scientific purposes.
Following the latest recession, spending in this area had fallen to very low
levels. With the economy now on stronger footing, we believe sales in the
industry will increase, benefiting these companies.
The Series has a relatively large position in the Energy sector relative to its
benchmark. These holdings are primarily in energy equipment and services
companies involved in searching for new oil and gas reserves. Most of these
companies were purchased under the Hurdle Rate Strategy. This investment
strategy looks for strong companies within industries that are expected to
experience strong supply and demand dynamics. As low profitability forces
capacity reduction, pricing power returns, which often leads to strong earnings
growth. As a group, these stocks performed very well over the last year as oil
companies began using strong profits to invest in the exploration for new
supplies.
The Series' Bankable Deal stocks were spread out among Consumer, Energy,
Information Technology and Utilities sectors. The Bankable Deal strategy is used
to identify viable companies that sell at such a discount to intrinsic value
that market forces should force management to realize that value. Information
Technology was one of the poorest performing sectors of the market over the last
year; the Series' performance compared to the benchmark was helped by its
relatively small holdings in this sector.
Going forward, we expect global economic growth to slow as many countries look
to control inflation through higher interest rates. The Series will continue to
search out attractively priced equities that fit our investment strategies.
We wish you all the best in the new year.
Sincerely,
EXETER ASSET MANAGEMENT
1
Performance Update as of October 31, 2004 (unaudited)
Average Annual Total Returns
As of October 31, 2004
-------------------------------------------------
Growth of
One Five Since a $10,000
Year Year Inception1 Investment*
----------------------------- ----- ----------- ------------
Exeter Fund, Inc. - Overseas Series2,3 21.58% 8.71% 11.13% $ 19,039
Morgan Stanley Capital International (MSCI) All
Country World Index ex U.S.4 19.67% 0.42% 5.87% $ 14,150
*The value of a $10,000 investment in the Exeter Fund, Inc. - Overseas Series
from its inception1 (9/23/98) to present (10/31/04) as compared to the MSCI All
Country World Index ex U.S.
<graphic>
<line chart>
Data for line chart to follow:
Exeter Fund, Inc. MSCI
Date Overseas Series All Country World Index ex U.S.
- -------- ------------------ --------------------------------
9/23/98. $ 10,000 $ 10,000
10/31/98 10,210 11,048
10/31/99 12,540 13,838
10/31/00 14,500 13,552
10/31/01 13,540 10,174
10/31/02 12,540 9,067
10/31/03 15,660 11,823
10/31/04 19,039 14,150
1Performance numbers for the Series are calculated from September 23, 1998, the
Collective's inception date (see Note 3 below). Prior to 2001, the MSCI All
Country World Index ex U.S. only published month-end numbers; therefore,
performance numbers for the Index are calculated from September 30, 1998.
2The 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.
3For 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.
4The MSCI All Country World Index ex U.S. is a free float-adjusted market
capitalization index that is designed to measure equity market performance in
the global developed and emerging markets and consists of 48 developed and
emerging market country indices outside the United States. The Index is
denominated in U.S. Dollars. The Index returns assume daily reinvestment of
gross dividends (which do not account for foreign dividend taxation) and, unlike
Series returns, do not reflect any fees or expenses.
2
Shareholder Expense Example (unaudited)
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, including potential wire charges and exchange fees and (2) ongoing costs,
including management fees and other Series expenses. This example is intended
to help you understand your ongoing costs (in dollars) of investing in the
Series and to compare these costs with the ongoing costs of investing in other
mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (May 1, 2004 to October 31, 2004).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
5/1/04 10/31/04 5/1/04-10/31/04
-------------- -------------- ----------------
Actual. . . . . . . . . . . $ 1,000.00 $ 1,059.60 $ 5.44
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,019.86 $ 5.33
*Expenses are equal to the Series' annualized expense ratio of 1.05%, multiplied
by the average account value over the period, multiplied by 184/366 (to reflect
the one-half year period).
The Series' total return would have been lower had certain expenses not been
reimbursed
during the period. Based on the most recent fiscal half year, the Series'
expense ratio may differ from the expense ratio based on one-year data in the
financial highlights.
3
Portfolio Composition - As of October 31, 2004 (unaudited)
<graphic>
<pie chart>
Country Allocation*
Australia. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8%
Belgium. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0%
Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9%
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1%
Finland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3%
France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1%
Germany. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6%
Japan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7%
Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7%
Netherlands. . . . . . . . . . . . . . . . . . . . . . . . . . . 3.6%
Norway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0%
Switzerland. . . . . . . . . . . . . . . . . . . . . . . . . . . 12.6%
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . 16.0%
Miscellaneous**. . . . . . . . . . . . . . . . . . . . . . . . . 5.7%
Cash, short-term investments, and liabilities, less other assets 7.9%
*As a percentage of net assets.
**Miscellaneous
Austria
Guernsey
South Korea
Taiwan
<graphic>
<pie chart>
Sector Allocation*
Consumer Discretionary . . . . . . . . . . . . . . . . . . . . . 17.7%
Consumer Staples . . . . . . . . . . . . . . . . . . . . . . . . 25.8%
Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.7%
Health Care. . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0%
Industrials. . . . . . . . . . . . . . . . . . . . . . . . . . . 10.8%
Information Technology . . . . . . . . . . . . . . . . . . . . . 5.4%
Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1%
Telecommunication Services . . . . . . . . . . . . . . . . . . . 5.6%
Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0%
Cash, short-term investments, and liabilities, less other assets 7.9%
*As a percentage of net assets.
4
Investment Portfolio - October 31, 2004
VALUE
SHARES (NOTE 2)
------- ---------
COMMON STOCKS - 92.1%
CONSUMER DISCRETIONARY - 17.7%
HOTELS, RESTAURANTS & LEISURE - 2.6%
Club Mediterranee S.A.* (France). . . . . . . . . . . . . . . . . . . 600 $ 27,086
----------
HOUSEHOLD DURABLES - 3.9%
Sony Corp. - ADR (Japan). . . . . . . . . . . . . . . . . . . . . . . 1,175 40,949
----------
MEDIA - 9.7%
The News Corp. Ltd. - ADR (now known as News Corp., Inc.) (Australia) 1,250 39,300
Pearson plc (United Kingdom). . . . . . . . . . . . . . . . . . . . . 2,200 24,173
Reed Elsevier plc - ADR (United Kingdom). . . . . . . . . . . . . . . 550 19,800
VNU N.V. (Netherlands). . . . . . . . . . . . . . . . . . . . . . . . 653 17,879
----------
101,152
----------
SPECIALTY RETAIL - 1.5%
Douglas Holding AG (Germany). . . . . . . . . . . . . . . . . . . . . 500 15,410
----------
184,597
----------
CONSUMER STAPLES - 25.8%
BEVERAGES - 3.0%
InBev (Belgium) . . . . . . . . . . . . . . . . . . . . . . . . . . . 900 32,054
----------
FOOD & STAPLES RETAILING - 3.3%
Carrefour S.A. (France) . . . . . . . . . . . . . . . . . . . . . . . 375 16,464
Organizacion Soriana S.A. de C.V. - Series B (Mexico) . . . . . . . . 5,600 17,957
----------
34,421
----------
FOOD PRODUCTS - 9.4%
Cadbury Schweppes plc (United Kingdom). . . . . . . . . . . . . . . . 2,700 22,448
Nestle S.A. (Switzerland) . . . . . . . . . . . . . . . . . . . . . . 160 37,956
Unilever plc - ADR (United Kingdom) . . . . . . . . . . . . . . . . . 1,100 37,499
----------
97,903
----------
HOUSEHOLD PRODUCTS - 6.1%
Henkel KGaA (Germany) . . . . . . . . . . . . . . . . . . . . . . . . 300 22,578
Kimberly-Clark de Mexico S.A. de C.V. - ADR (Mexico). . . . . . . . . 2,750 41,145
----------
63,723
----------
PERSONAL PRODUCTS - 4.0%
Clarins S.A. (France) . . . . . . . . . . . . . . . . . . . . . . . . 499 28,409
Shiseido Co. Ltd. (Japan) . . . . . . . . . . . . . . . . . . . . . . 1,000 13,068
----------
41,477
----------
269,578
----------
The accompanying notes are an integral part of the financial statements.
5
Investment Portfolio - October 31, 2004
VALUE
SHARES (NOTE 2)
------- ---------
ENERGY - 10.7%
ENERGY EQUIPMENT & SERVICES - 9.0%
Abbot Group plc (United Kingdom) . . . . . . . . . . . . . 6,100 $ 23,873
Compagnie Generale de Geophysique S.A. (CGG)* (France) . . 200 12,507
Precision Drilling Corp.* (Canada) . . . . . . . . . . . . 350 21,581
Smedvig ASA - Class A (Norway) . . . . . . . . . . . . . . 2,900 36,255
----------
94,216
----------
OIL & GAS - 1.7%
Petroleo Brasileiro S.A. (Petrobras) - ADR (Brazil). . . . 525 17,115
----------
111,331
----------
HEALTH CARE - 8.0%
PHARMACEUTICALS - 8.0%
Novartis AG - ADR (Switzerland). . . . . . . . . . . . . . 875 42,009
Schering AG (Germany). . . . . . . . . . . . . . . . . . . 650 41,812
----------
83,821
----------
INDUSTRIALS - 10.8%
AEROSPACE & DEFENSE - 2.0%
SNECMA* (France) . . . . . . . . . . . . . . . . . . . . . 1,000 21,357
----------
COMMERCIAL SERVICES & SUPPLIES - 3.3%
Aggreko plc (United Kingdom) . . . . . . . . . . . . . . . 2,850 7,855
BWT AG (Austria) . . . . . . . . . . . . . . . . . . . . . 200 5,371
Quebecor World, Inc. (Canada). . . . . . . . . . . . . . . 1,025 21,310
----------
34,536
----------
CONSTRUCTION & ENGINEERING - 1.9%
Koninklijke Boskalis Westminster N.V. (Netherlands). . . . 736 19,860
----------
MACHINERY - 3.6%
Tomra Systems ASA (Norway) . . . . . . . . . . . . . . . . 8,450 37,339
----------
113,092
----------
INFORMATION TECHNOLOGY - 5.4%
COMMUNICATIONS EQUIPMENT - 2.3%
Nokia Oyj - ADR (Finland). . . . . . . . . . . . . . . . . 1,525 23,515
----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.8%
Taiwan Semiconductor Manufacturing Co. Ltd. - ADR (Taiwan) 2,550 19,303
----------
SOFTWARE - 1.3%
Amdocs Ltd.* (Guernsey). . . . . . . . . . . . . . . . . . 550 13,833
----------
56,651
----------
The accompanying notes are an integral part of the financial statements.
6
Investment Portfolio - October 31, 2004
SHARES/ VALUE
PRINCIPAL AMOUNT (NOTE 2)
------------------ ---------
MATERIALS - 6.1%
CHEMICALS - 4.9%
Lonza Group AG (Switzerland) . . . . . . . . . . . . . . 1,050 $ 51,445
-----------
PAPER & FOREST PRODUCTS - 1.2%
Aracruz Celulose S.A. - ADR (Brazil) . . . . . . . . . . 375 12,630
-----------
64,075
-----------
TELECOMMUNICATION SERVICES - 5.6%
WIRELESS TELECOMMUNICATION SERVICES - 5.6%
NTT DoCoMo, Inc. (Japan) . . . . . . . . . . . . . . . . 15 26,504
Vodafone Group plc - ADR (United Kingdom). . . . . . . . 1,225 31,593
-----------
58,097
-----------
UTILITIES - 2.0%
ELECTRIC UTILITIES - 2.0%
Korea Electric Power Corp. (KEPCO) - ADR (South Korea) . 1,825 20,951
-----------
TOTAL COMMON STOCKS
(Identified Cost $819,102) . . . . . . . . . . . . . . . 962,193
-----------
SHORT-TERM INVESTMENTS - 8.4%
Dreyfus Treasury Cash Management - Institutional Shares. 37,358 37,358
Fannie Mae Discount Note, 12/13/2004 . . . . . . . . . . $ 50,000 49,891
-----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $87,249). . . . . . . . . . . . . . . . 87,249
-----------
TOTAL INVESTMENTS - 100.5%
(Identified Cost $906,351) . . . . . . . . . . . . . . . 1,049,442
LIABILITIES, LESS OTHER ASSETS - (0.5%). . . . . . . . . (5,090)
-----------
NET ASSETS - 100%. . . . . . . . . . . . . . . . . . . . $ 1,044,352
===========
*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 - 16.0%; Switzerland - 12.6%; France -
10.1%.
The accompanying notes are an integral part of the financial statements.
7
Statement of Assets and Liabilities
October 31, 2004
ASSETS:
Investments, at value (identified cost $906,351) (Note 2). . . . . . . . . . . $1,049,442
Dividends receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,470
Foreign tax reclaims receivable. . . . . . . . . . . . . . . . . . . . . . . . 599
Receivable from investment advisor (Note 3). . . . . . . . . . . . . . . . . . 23,846
----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,075,357
----------
LIABILITIES:
Accrued fund accounting and transfer agent fees (Note 3) . . . . . . . . . . . 553
Audit fees payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,150
Legal fees payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,846
Other payables and accrued expenses. . . . . . . . . . . . . . . . . . . . . . 456
----------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,005
----------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,044,352
==========
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 554
Additional paid-in-capital . . . . . . . . . . . . . . . . . . . . . . . . . . 881,202
Undistributed net investment income. . . . . . . . . . . . . . . . . . . . . . 8,505
Accumulated net realized gain on investments and other assets and liabilities. 10,919
Net unrealized appreciation on investments and other assets and liabilities. . 143,172
----------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,044,352
==========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE ($1,044,352/55,426 shares) . . . . . . . . . . . . . . . . . . $ 18.84
==========
The accompanying notes are an integral part of the financial statements.
8
Statement of Operations
For the Year Ended October 31, 2004
INVESTMENT INCOME:
Dividends (net of foreign tax withheld, $1,386). . $ 17,931
Interest . . . . . . . . . . . . . . . . . . . . . 534
---------
Total Investment Income. . . . . . . . . . . . . . 18,465
---------
EXPENSES:
Management fees (Note 3) . . . . . . . . . . . . . 8,654
Directors' fees (Note 3) . . . . . . . . . . . . . 8,201
Fund accounting and transfer agent fees (Note 3) . 3,458
Audit fees . . . . . . . . . . . . . . . . . . . . 28,050
Legal fees . . . . . . . . . . . . . . . . . . . . 5,001
Custodian fees . . . . . . . . . . . . . . . . . . 3,255
Miscellaneous. . . . . . . . . . . . . . . . . . . 1,211
---------
Total Expenses . . . . . . . . . . . . . . . . . . 57,830
Less reduction of expenses (Note 3). . . . . . . . (48,738)
---------
Net Expenses . . . . . . . . . . . . . . . . . . . 9,092
---------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . 9,373
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on -
Investments. . . . . . . . . . . . . . . . . . . . 64,854
Foreign currency and other assets and liabilities. (10)
---------
64,844
---------
Net change in unrealized appreciation on -
Investments. . . . . . . . . . . . . . . . . . . . 88,009
Foreign currency and other assets and liabilities. 65
---------
88,074
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS. . . . . . . . . . . . . . . . . . . . 152,918
---------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS . . . . . . . . . . . . . . . . . . . . $162,291
=========
The accompanying notes are an integral part of the financial statements.
9
Statements of Changes in Net Assets
FOR THE FOR THE
YEAR ENDED YEAR ENDED
10/31/04 10/31/03
------------ -----------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . $ 9,373 $ 6,753
Net realized gain on investments. . . . . . . . . . . 64,844 6,470
Net change in unrealized appreciaton on investments . 88,074 121,732
------------ -----------
Net increase from operations. . . . . . . . . . . . . 162,291 134,955
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 8):
From net investment income. . . . . . . . . . . . . . (7,711) -
------------ -----------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share transactions (Note 5) 188,732 56,328
------------ -----------
Net increase in net assets. . . . . . . . . . . . . . 343,312 191,283
NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . 701,040 509,757
------------ -----------
END OF YEAR (including undistributed net investment
income of $8,505 and $6,822, respectively). . . . . . $ 1,044,352 $ 701,040
============ ===========
The accompanying notes are an integral part of the financial statements.
10
Financial Highlights
FOR THE PERIOD
FOR THE YEARS ENDED 7/10/02 1 TO
10/31/04 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) . . . . . . . . 0.17 0.15 -4
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . 3.18 2.97 (1.83)
---------------- ---------- ----------
Total from investment operations . . . . . . 3.35 3.12 (1.83)
---------------- ---------- ----------
Less distributions to shareholders:
From net investment income . . . . . . . . . (0.17) - -
---------------- ---------- ----------
NET ASSET VALUE - END OF PERIOD. . . . . . . $ 18.84 $ 15.66 $ 12.54
================ ========== ==========
Total return2. . . . . . . . . . . . . . . . 21.58% 24.88% (12.73%)
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL
DATA:
Expenses*. . . . . . . . . . . . . . . . . . 1.05% 1.05% 1.05%3
Net investment income (loss) . . . . . . . . 1.08% 1.15% (0.10%)3
Portfolio turnover . . . . . . . . . . . . . 35% 30% 12%
NET ASSETS - END OF PERIOD (000's omitted) . $ 1,044 $ 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:
5.63% 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.
11
Notes to Financial Statements
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 October
31, 2004, 1.16 billion shares have been designated in total among 21 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 may be 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.
12
Note to Financial Statements
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.
13
Notes to Financial Statements
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 $8,654
and assumed expenses amounting to $40,084 for the year ended October 31, 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 year ended October 31, 2004, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$462,596 and $273,551, 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 YEAR FOR THE YEAR
ENDED 10/31/04 ENDED 10/31/03
--------------------------------- -----------------
Shares Amount Shares Amount
--------------- ---------------- ------- --------
Sold. . . . 10,489 $ 186,231 4,145 $57,055
Reinvested. 476 7,711 - -
Repurchased (291) (5,210) (53) (727)
--------------- ----------------- ------- --------
Total . . . 10,674 $ 188,732 4,092 $56,328
=============== ================ ======= ========
At October 31, 2004, the retirement plan of the Advisor and its affiliates owned
50,735 shares of the Series (91.5% of shares outstanding) valued at $955,847.
14
Notes to Financial Statements
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 October 31, 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. These
differences are primarily due to differing book and tax treatments in the timing
of the recognition of net investment income or gains and losses, including
differences in the cost basis of securities contributed in-kind and foreign
currency gains and losses. The Series may periodically make reclassifications
among its capital accounts to reflect income and gains available for
distribution (or available capital loss carryovers) under income tax
regulations, without impacting the Series' net asset value. Any such
reclassifications are not reflected in the financial highlights.
The tax character of distributions paid were as follows:
FOR THE YEAR FOR THE YEAR
ENDED 10/31/04 ENDED 10/31/03
--------------- ---------------
Ordinary income $ 7,711 $ -
At October 31, 2004, the tax basis components of distributable earnings and the
net unrealized appreciation based on identified cost for federal income tax
purposes were as follows:
Cost for federal income tax purposes. $921,380
Unrealized appreciation . . . . . . . $141,683
Unrealized depreciation . . . . . . . (13,621)
---------
Net unrealized appreciation . . . . . $128,062
Undistributed ordinary income . . . . 8,505
Undistributed long-term capital gains 10,919
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
For federal income tax purposes, the Series designates $7,711 or, if different,
the maximum amount allowable under the tax law as qualified dividend income.
15
Report of Independent Registered Public Accounting Firm
TO THE BOARD OF DIRECTORS OF EXETER FUND, INC. AND SHAREHOLDERS OF OVERSEAS
SERIES:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Overseas Series (a Series of
Exeter Fund, Inc., hereafter referred to as the "Series") at October 31, 2004,
and the results of its operations, the changes in its net assets and the
financial highlights for the periods indicated, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Series' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 2004 by
correspondence with the custodian, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
BOSTON, MASSACHUSETTS
DECEMBER 13, 2004
16
Directors' and Officers' Information (unaudited)
The Statement of Additional Information provides additional information about
the Fund's directors and officers and can be obtained without charge by calling
1-800-466-3863 or on the EDGAR Database on the SEC Internet website
(http:\\www.sec.gov). The following chart shows certain information about the
Fund's officers and directors, including their principal occupations during the
last five years. Unless specific dates are provided, the individuals have held
the listed positions for longer than five years.
INTERESTED DIRECTOR
Name: . . . . . . . . . . . . . . . . . . . . . . B. Reuben Auspitz*
Address: . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . 57
Current Position(s) Held with Fund: . . . . . . . Principal Executive Officer, President, Chairman & Director
Term of Office1 & Length of Time Served:. . . . . Indefinite - Director; Vice President 1984 - 2003; President since 2004;
Director since 1984
Principal Occupation(s) During Past 5 Years:. . . Executive Vice President, Co-Executive Director, Executive Group Member** &
Chief Compliance Officer since 2004, Manning & Napier Advisors, Inc.; President
& Director Manning & Napier Investor Services, Inc.; Holds or has held one or
more of the following titles for various subsidiaries and affiliates:
President, Vice President, Director, Chairman, Treasurer, Chief Compliance
Officer or Member
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
INDEPENDENT DIRECTORS
Name:. . . . . . . . . . . . . . . . . . . . . . . Stephen B. Ashley
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 64
Current Position(s) Held with Fund:. . . . . . . . Director, Audit Committee Member, Governance & Nominating Committee Member
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 1996
Principal Occupation(s) During Past 5 Years: . . . Chairman, Director, President & Chief Executive Officer, The Ashley Group
(property management and investment)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . Genesee Corp.
The Ashley Group
Fannie Mae
Name:. . . . . . . . . . . . . . . . . . . . . . . Martin F. Birmingham
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 83
Current Position(s) Held with Fund:. . . . . . . . Director, Governance & Nominating Committee Member
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 1994
Principal Occupation(s) During Past 5 Years: . . . Advisory Trustee, The Freedom Forum (nonpartisan, international foundation)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
Name:. . . . . . . . . . . . . . . . . . . . . . . Peter L. Faber
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 66
Current Position(s) Held with Fund:. . . . . . . . Director, Governance & Nominating Committee Member
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 1987
Principal Occupation(s) During Past 5 Years: . . . Partner, McDermott, Will & Emery LLP (law firm)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . Partnership for New York City, Inc.
Name:. . . . . . . . . . . . . . . . . . . . . . . Harris H. Rusitzky
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 69
Current Position(s) Held with Fund:. . . . . . . . Director, Audit Committee Member, Governance & Nominating Committee Member
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 1985
Principal Occupation(s) During Past 5 Years: . . . President, The Greening Group (business consultants)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
17
Directors' and Officers' Information (unaudited)
OFFICERS
Name:. . . . . . . . . . . . . . . . . . . . . . . Jeffrey S. Coons, Ph.D., CFA
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 41
Current Position(s) Held with Fund:. . . . . . . . Vice President
Term of Office1 & Length of Time Served: . . . . . Since 2004
Principal Occupation(s) During Past 5 Years: . . . Co-Director of Research since 2002 & Executive Group Member**,
Manning & Napier Advisors, Inc.; Managing Director - Risk Management, Manning &
Napier Advisors, Inc., 1993-2002; Holds one or more of the following titles for
various subsidiaries and affiliates: President, Director, Treasurer or Senior
Trust Officer
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
Name:. . . . . . . . . . . . . . . . . . . . . . . Christine Glavin
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 38
Current Position(s) Held with Fund:. . . . . . . . Principal Financial Officer, Chief Financial Officer
Term of Office1 & Length of Time Served: . . . . . Since 2001
Principal Occupation(s) During Past 5 Years: . . . Fund Accounting Manager, Manning & Napier Advisors, Inc.
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
Name:. . . . . . . . . . . . . . . . . . . . . . . Jodi L. Hedberg
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 36
Current Position(s) Held with Fund:. . . . . . . . Corporate Secretary, Chief Compliance Officer, Anti-Money Laundering (AML)
Compliance Officer
Term of Office1 & Length of Time Served: . . . . . Corporate Secretary since 1997; Chief Compliance Officer since 2004
Compliance Manager, Manning & Napier Advisors, Inc. & affiliates
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
Name:. . . . . . . . . . . . . . . . . . . . . . . Alaina V. Metz
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 37
Current Position(s) Held with Fund:. . . . . . . . Special Assistant Secretary
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 2002
Principal Occupation(s) During Past 5 Years: . . . Vice President, BISYS Fund Services Ohio, Inc. (mutual fund servicing company)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
*Interested Director, within the meaning of the Investment Company Act of 1940
by reason of his position with the Fund's investment advisor and distributor.
Mr. Auspitz serves as the Executive Vice President and Director, Manning &
Napier Advisors, Inc. and President and Director, Manning & Napier Investor
Services, Inc., the Fund's distributor.
**The Executive Group, which consists of six members, performs the duties of the
Office of the President, effective May 1, 2003.
1The term of office for all officers is one year and until their respective
successors are chosen and qualified.
18
Literature Requests (unaudited)
PROXY VOTING POLICIES AND PROCEDURES
- --------------------------------------------------------------------------------
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30th is available
without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
QUARTERLY PORTFOLIO HOLDINGS
- --------------------------------------------------------------------------------
The Series' complete schedule of portfolio holdings for the 1st and 3rd quarters
of each fiscal year are provided on Form N-Q, 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. These documents are available without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
19
Exeter Fund, Inc.
Annual Report
October 31, 2004
Tax Managed Series
Management Discussion and Analysis (unaudited)
DEAR SHAREHOLDERS:
Over the past year, the behavior of the equity market has reflected the shift in
the economic environment. After noteworthy gains in 2003, the Standard & Poor's
500 Total Return Index (the "S&P 500"), a measure of the general stock market,
continued its rise until the middle of the first quarter of 2004. At this time
last year, we noted that equity valuations had pushed into questionable
territory, warning that the market may have come too far too fast. It did not
take long for the market to catch up with that view. By early March 2004, the
stock market finally took some time to digest the economic data and to consider
the prospect of the Federal Reserve's policy to start increasing interest rates.
Since that time, the S&P 500 has experienced a price decline of approximately
2%; however, for the one-year period since October 31, 2003, it has still
maintained a positive total return of 9.41%. The Tax Managed Series has
outperformed the index by a large margin for the same period.
The good economic news that marked the first part of 2004 began to fade
beginning in the third quarter. Growth in Gross Domestic Product, non-farm
payrolls, consumer spending and corporate profits all showed signs of
deceleration as the year progressed. As expected, the Federal Reserve began to
raise short-term interest rates at the end of the second quarter as well. On a
positive note, the growth in inflation the economy experienced in the first half
of the year eased. The conflicting economic data between the second and third
quarters has led to volatility in the stock market. As a result, although stock
prices have seen their share of reversals in this time period, the stock market
has taken somewhat of a wait-and-see approach.
During the past year, we shifted the Series' holdings within certain sectors
based on our fundamental equity selection approach. We reduced holdings in the
Information Technology sector during the early part of the year, and avoided
much of the 20% decline experienced in that sector between mid-January and
mid-August. We have also increased holdings in the Consumer Discretionary
sector, specifically companies with improving fundamentals that are not as
sensitive to rising interest rates as bigger-ticket consumer items. This sector
has experienced a nice rally since mid-August of this year. We have gradually
increased the Series' position in the Financials sector during the early and
middle part of this year as better values presented themselves as the sector
came down from its steady run that began in early 2003. The Series has also
continued to benefit from its relatively large position in the Energy sector
relative to the S&P 500, as rising oil prices have driven this sector up more
than 40% during the past year. As always, we strive to minimize the impact of
capital gains when possible by attempting to limit turnover and short-term
realized gains when prudent from an investment perspective.
As this year has shown, conditions can change dramatically in a relatively short
span of time. Observing the behavior of the economy and stock market over the
past year reinforces our long-standing conviction that our best hope of
providing attractive tax-adjusted returns lies in our fundamentals-driven
investment approach. It allows us to deviate from market weightings during
volatile periods, when stock selection is key to favorable returns. Rather than
simply matching the portfolio to the market benchmark, we favor a disciplined
bottom-up investment approach that has historically served our long-term
investors very well. We will continue to monitor economic conditions for
opportunities to structure the portfolio in a manner that we expect will
continue to provide competitive absolute and risk-adjusted returns.
We wish you all the best in the new year.
Sincerely,
EXETER ASSET MANAGEMENT
1
Performance Update as of October 31, 2004 (unaudited)
Average Annual Total Returns
As of October 31, 2004
--------------------------------------------------
Growth of
One Five Since a $10,000
Year Year Inception1 Investment*
----------------------------- ------ ----------- ------------
Exeter Fund, Inc. - Tax Managed Series
Returns Before Taxes2 . . . . . . . . . . . . . . . . . . . . 16.96% 6.63% 10.71% $ 24,990
Returns After Taxes on Distributions3 . . . . . . . . . . . . 16.91% 6.47% 10.50% $ 24,555
Returns After Taxes on Distributions and Sale of Fund Shares3 11.07% 5.63% 9.42% $ 22,479
Standard & Poor's (S&P) 500 Total Return Index4 . . . . . . . 9.41% -2.22% 9.41% $ 22,464
*The value of a $10,000 investment in the Exeter Fund, Inc. - Tax Managed Series
(returns before taxes) from its inception1 (11/1/95) to present (10/31/04) 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
11/1/95. $ 10,000 $ 10,000
10/31/96 11,630 12,408
10/31/97 15,200 16,392
10/31/98 14,855 19,996
10/31/99 18,129 25,127
10/31/00 23,863 26,656
10/31/01 20,480 20,022
10/31/02 18,537 16,999
10/31/03 21,367 20,532
10/31/04 24,990 22,464
1Performance numbers for the Series and Index are calculated from November 1,
1995, the Series' inception date.
2The 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.
3Returns 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.
4The 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.
2
Shareholder Expense Example (unaudited)
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, including potential wire charges and exchange fees and (2) ongoing costs,
including management fees and other Series expenses. This example is intended
to help you understand your ongoing costs (in dollars) of investing in the
Series and to compare these costs with the ongoing costs of investing in other
mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (May 1, 2004 to October 31, 2004).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
5/1/04 10/31/04 5/1/04-10/31/04
-------------- -------------- ----------------
Actual. . . . . . . . . . . $ 1,000.00 $ 1,035.20 $ 6.14
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,019.10 $ 6.09
*Expenses are equal to the Series' annualized expense ratio of 1.20%, multiplied
by the average account value over the period, multiplied by 184/366 (to reflect
the one-half year period).
The Series' total return would have been lower had certain expenses not been
waived during the period. Based on the most recent fiscal half year, the
Series' expense ratio may differ from the expense ratio based on one-year data
in the financial highlights.
3
Portfolio Composition - As of October 31, 2004 (unaudited)
<graphic>
<pie chart>
Sector Allocation*
Consumer Discretionary . . . . . . . . . . . . . . . . . . . . . 19.3%
Consumer Staples . . . . . . . . . . . . . . . . . . . . . . . . 12.6%
Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.7%
Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.0%
Health Care. . . . . . . . . . . . . . . . . . . . . . . . . . . 14.5%
Industrials. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0%
Information Technology . . . . . . . . . . . . . . . . . . . . . 4.7%
Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0%
Telecommunication Services . . . . . . . . . . . . . . . . . . . 3.4%
Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7%
Cash, short-term investments, and liabilities, less other assets 7.1%
*As a percentage of net assets.
4
Investment Portfolio - October 31, 2004
VALUE
SHARES (NOTE 2)
--------- ---------
COMMON STOCKS - 92.9%
CONSUMER DISCRETIONARY - 19.3%
HOTELS, RESTAURANTS & LEISURE - 3.3%
Caesars Entertainment, Inc.* . . . . . . . . . 6,400 $114,560
Carnival Corp. . . . . . . . . . . . . . . . . 1,850 93,536
----------
208,096
----------
HOUSEHOLD DURABLES - 2.2%
Sony Corp. - ADR (Japan) (Note 7). . . . . . . 3,925 136,786
----------
MEDIA - 9.6%
Cablevision Systems New York Group - Class A*. 9,200 189,336
The E.W. Scripps Co. - Class A . . . . . . . . 1,575 75,159
Hearst-Argyle Television, Inc. - Class A . . . 2,550 66,453
Pearson plc (United Kingdom) (Note 7). . . . . 7,600 83,506
Time Warner, Inc.* . . . . . . . . . . . . . . 10,850 180,544
----------
594,998
----------
SPECIALTY RETAIL - 4.2%
Office Depot, Inc.*. . . . . . . . . . . . . . 9,075 146,924
Staples, Inc.. . . . . . . . . . . . . . . . . 3,300 98,142
Weight Watchers International, Inc.* . . . . . 425 15,266
----------
260,332
----------
1,200,212
----------
CONSUMER STAPLES - 12.6%
BEVERAGES - 1.3%
InBev (Belgium) (Note 7) . . . . . . . . . . . 2,325 82,807
----------
FOOD & STAPLES RETAILING - 1.2%
Carrefour S.A. (France) (Note 7) . . . . . . . 1,675 73,538
----------
FOOD PRODUCTS - 6.6%
H.J. Heinz Co. . . . . . . . . . . . . . . . . 1,150 41,803
Nestle S.A. (Switzerland) (Note 7) . . . . . . 750 177,921
Unilever plc - ADR (United Kingdom) (Note 7) . 5,550 189,200
----------
408,924
----------
HOUSEHOLD PRODUCTS - 2.2%
Kimberly-Clark Corp. . . . . . . . . . . . . . 2,275 135,749
----------
PERSONAL PRODUCTS - 1.3%
The Estee Lauder Companies, Inc. - Class A . . 1,950 83,752
----------
784,770
----------
ENERGY - 13.7%
ENERGY EQUIPMENT & SERVICES - 11.8%
Baker Hughes, Inc. . . . . . . . . . . . . . . 2,800 119,924
Cooper Cameron Corp.*. . . . . . . . . . . . . 825 39,889
The accompanying notes are an integral part of the financial statements.
5
Investment Portfolio - October 31, 2004
VALUE
SHARES (NOTE 2)
------- ---------
ENERGY (continued)
ENERGY EQUIPMENT & SERVICES (continued)
Schlumberger Ltd.. . . . . . . . . . . . 4,550 $286,377
Transocean, Inc.*. . . . . . . . . . . . 3,450 121,612
Varco International, Inc.* . . . . . . . 1,650 45,672
Weatherford International Ltd.*. . . . . 2,300 120,198
----------
733,672
----------
OIL & GAS - 1.9%
Amerada Hess Corp. . . . . . . . . . . . 1,425 115,012
----------
848,684
----------
FINANCIALS - 9.0%
CAPITAL MARKETS - 4.0%
The Bank of New York Co., Inc. . . . . . 3,825 124,159
SEI Investments Co.. . . . . . . . . . . 3,425 123,266
----------
247,425
----------
COMMERCIAL BANKS - 3.9%
PNC Financial Services Group . . . . . . 1,325 69,298
U.S. Bancorp . . . . . . . . . . . . . . 2,950 84,400
Wachovia Corp. . . . . . . . . . . . . . 1,775 87,348
----------
241,046
----------
DIVERSIFIED FINANCIAL SERVICES - 1.1%
Principal Financial Group, Inc.. . . . . 1,825 68,912
----------
557,383
----------
HEALTH CARE - 14.5%
HEALTH CARE PROVIDERS & SERVICES - 3.0%
WebMD Corp.* . . . . . . . . . . . . . . 24,650 186,354
----------
PHARMACEUTICALS - 11.5%
Novartis AG - ADR (Switzerland) (Note 7) 5,800 278,458
Pfizer, Inc. . . . . . . . . . . . . . . 3,791 109,749
Schering-Plough Corp.. . . . . . . . . . 17,850 323,264
----------
711,471
----------
897,825
----------
INDUSTRIALS - 6.0%
AEROSPACE & DEFENSE - 1.0%
SNECMA* (France) (Note 7). . . . . . . . 2,875 61,401
----------
AIRLINES - 1.2%
Southwest Airlines Co. . . . . . . . . . 4,625 72,936
----------
MACHINERY - 1.1%
AGCO Corp.*. . . . . . . . . . . . . . . 3,350 65,057
----------
The accompanying notes are an integral part of the financial statements.
6
Investment Portfolio - October 31, 2004
VALUE
SHARES (NOTE 2)
--------- ---------
INDUSTRIALS (continued)
ROAD & RAIL - 2.7%
CSX Corp.. . . . . . . . . . . . . . . . . . . . . 2,825 $103,112
Kansas City Southern*. . . . . . . . . . . . . . . 3,975 67,376
----------
170,488
----------
369,882
----------
INFORMATION TECHNOLOGY - 4.7%
IT SERVICES - 1.8%
First Data Corp. . . . . . . . . . . . . . . . . . 2,700 111,456
----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.5%
Texas Instruments, Inc.. . . . . . . . . . . . . . 4,000 97,800
----------
SOFTWARE - 1.4%
McAfee, Inc.*. . . . . . . . . . . . . . . . . . . 3,550 85,910
----------
295,166
----------
MATERIALS - 6.0%
CHEMICALS - 3.0%
Engelhard Corp.. . . . . . . . . . . . . . . . . . 2,725 77,118
Minerals Technologies, Inc.. . . . . . . . . . . . 1,800 108,180
----------
185,298
----------
CONTAINERS & PACKAGING - 1.2%
Packaging Corp. of America . . . . . . . . . . . . 3,350 73,465
----------
PAPER & FOREST PRODUCTS - 1.8%
Aracruz Celulose S.A. - ADR (Brazil) (Note 7). . . 3,300 111,144
----------
369,907
----------
TELECOMMUNICATION SERVICES - 3.4%
WIRELESS TELECOMMUNICATION SERVICES - 3.4%
Vodafone Group plc - ADR (United Kingdom) (Note 7) 8,125 209,544
----------
UTILITIES - 3.7%
ELECTRIC UTILITIES - 2.2%
Allegheny Energy, Inc.*. . . . . . . . . . . . . . 6,750 123,592
American Electric Power Co., Inc.. . . . . . . . . 400 13,172
----------
136,764
----------
MULTI-UTILITIES & UNREGULATED POWER - 1.5%
NRG Energy, Inc.*. . . . . . . . . . . . . . . . . 3,300 91,542
----------
228,306
----------
TOTAL COMMON STOCKS
(Identified Cost $5,004,481) . . . . . . . . . . . 5,761,679
----------
The accompanying notes are an integral part of the financial statements.
7
Investment Portfolio - October 31, 2004
SHARES/ VALUE
PRINCIPAL AMOUNT (NOTE 2)
------------------ ---------
SHORT-TERM INVESTMENTS - 7.5%
Dreyfus Treasury Cash Management - Institutional Shares. 168,197 $168,197
Fannie Mae Discount Note, 12/6/2004. . . . . . . . . . . $ 300,000 299,475
----------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $467,672) . . . . . . . . . . . . . . . 467,672
----------
TOTAL INVESTMENTS - 100.4%
(Identified Cost $5,472,153) . . . . . . . . . . . . . . 6,229,351
LIABILITIES, LESS OTHER ASSETS - (0.4%). . . . . . . . . (24,839)
----------
NET ASSETS - 100%. . . . . . . . . . . . . . . . . . . . $6,204,512
==========
*Non-income producing security
ADR - American Depository Receipt
The accompanying notes are an integral part of the financial statements.
8
Statement of Assets and Liabilities
October 31, 2004
ASSETS:
Investments, at value (identified cost $5,472,153) (Note 2). . $6,229,351
Foreign currency, at value (cost $1) . . . . . . . . . . . . . 1
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 3,355
Foreign tax reclaims receivable. . . . . . . . . . . . . . . . 1,012
----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 6,233,719
----------
LIABILITIES:
Accrued management fees (Note 3) . . . . . . . . . . . . . . . 108
Accrued fund accounting and transfer agent fees (Note 3) . . . 2,200
Audit fees payable . . . . . . . . . . . . . . . . . . . . . . 24,186
Legal fees payable . . . . . . . . . . . . . . . . . . . . . . 1,828
Other payables and accrued expenses. . . . . . . . . . . . . . 885
----------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 29,207
----------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $6,204,512
==========
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . $ 2,640
Additional paid-in-capital . . . . . . . . . . . . . . . . . . 5,093,635
Undistributed net investment income. . . . . . . . . . . . . . 2,526
Accumulated net realized gain on investments and other assets
and liabilities. . . . . . . . . . . . . . . . . . . . . . . . 348,426
Net unrealized appreciation on investments and other assets
and liabilities. . . . . . . . . . . . . . . . . . . . . . . . 757,285
----------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $6,204,512
==========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE - CLASS A ($6,204,512/263,951 shares). . . . . $ 23.51
==========
The accompanying notes are an integral part of the financial statements.
9
Statement of Operations
For the Year Ended October 31, 2004
INVESTMENT INCOME:
Dividends (net of foreign tax withheld, $1,902). . . $ 75,357
Interest . . . . . . . . . . . . . . . . . . . . . . 2,378
---------
Total Investment Income. . . . . . . . . . . . . . . 77,735
---------
EXPENSES:
Management fees (Note 3) . . . . . . . . . . . . . . 59,635
Fund accounting and transfer agent fees (Note 3) . . 12,522
Directors' fees (Note 3) . . . . . . . . . . . . . . 8,201
Audit fees . . . . . . . . . . . . . . . . . . . . . 24,000
Registration and filing fees . . . . . . . . . . . . 6,158
Custodian fees . . . . . . . . . . . . . . . . . . . 3,130
Miscellaneous. . . . . . . . . . . . . . . . . . . . 7,218
---------
Total Expenses . . . . . . . . . . . . . . . . . . . 120,864
Less reduction of expenses (Note 3). . . . . . . . . (49,286)
---------
Net Expenses . . . . . . . . . . . . . . . . . . . . 71,578
---------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . 6,157
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on -
Investments. . . . . . . . . . . . . . . . . . . . . 501,045
Foreign currency and other assets and liabilities. . 164
---------
501,209
---------
Net change in unrealized appreciation on -
Investments. . . . . . . . . . . . . . . . . . . . . 364,746
Foreign currency and other assets and liabilities. . (10)
---------
364,736
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS. . . . . . . . . . . . . . . . . . . . . 865,945
---------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS . . . . . . . . . . . . . . . . . . . . . $872,102
=========
The accompanying notes are an integral part of the financial statements.
10
Statements of Changes in Net Assets
FOR THE FOR THE
YEAR ENDED YEAR ENDED
10/31/04 10/31/03
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . $ 6,157 $ 11,204
Net realized gain (loss) on investments . . . . . . . 501,209 (60,404)
Net change in unrealized appreciation on investments. 364,736 706,886
------------ ------------
Net increase from operations. . . . . . . . . . . . . 872,102 657,686
------------ ------------
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). . . . . . . . . . . . . . . . . . . . . . . 469,643 514,982
------------ ------------
Net increase in net assets. . . . . . . . . . . . . . 1,329,813 1,149,134
NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . 4,874,699 3,725,565
------------ ------------
END OF YEAR (including undistributed net investment
income of $2,526 and $8,137, respectively). . . . . . $ 6,204,512 $ 4,874,699
============ ============
The accompanying notes are an integral part of the financial statements.
11
Financial Highlights
FOR THE YEARS ENDED
10/31/04 10/31/03 10/31/02 10/31/01 10/31/00
--------------------- ---------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH YEAR):
NET ASSET VALUE - BEGINNING OF YEAR. . . . . . . . $ 20.15 $ 17.59 $ 19.53 $ 22.83 $ 17.42
--------------------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income. . . . . . . . . . . . . . . 0.03 0.05 0.10 0.11 0.07
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . . . 3.38 2.62 (1.94) (3.34) 5.43
--------------------- ---------- ---------- ---------- ----------
Total from investment operations . . . . . . . . . 3.41 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)
--------------------- ---------- ---------- ---------- ----------
NET ASSET VALUE - END OF YEAR. . . . . . . . . . . $ 23.51 $ 20.15 $ 17.59 $ 19.53 $ 22.83
===================== ========== ========== ========== ==========
Total return1. . . . . . . . . . . . . . . . . . . 16.96% 15.27% (9.49%) (14.17%) 31.63%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses*. . . . . . . . . . . . . . . . . . . . . 1.20% 1.20% 1.20% 1.20% 1.20%
Net investment income. . . . . . . . . . . . . . . 0.10% 0.26% 0.53% 0.67% 0.36%
Portfolio turnover . . . . . . . . . . . . . . . . 64% 34% 63% 44% 67%
NET ASSETS - END OF YEAR (000's omitted) . . . . . $ 6,205 $ 4,875 $ 3,726 $ 3,362 $ 1,950
===================== ========== ========== ========== ==========
*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:
0.83% 2.53% 3.16% 3.23% 3.34%
1Represents aggregate total return for the year indicated, and assumes
reinvestment of all distributions. Total return would have been lower had
certain expenses not been waived or reimbursed during the year.
The accompanying notes are an integral part of the financial statements.
12
Notes to Financial Statements
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 October
31, 2004, 1.16 billion shares have been designated in total among 21 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 may be 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.
13
Notes to Financial Statements
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, which is allocated among
14
Notes to Financial Statements
3. TRANSACTIONS WITH AFFILIATES (continued)
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 $49,286 for the
year ended October 31, 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 year ended October 31, 2004, purchases and sales of securities, other
than United States Government securities and short-term securities, were
$3,614,951 and $3,563,363, 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 YEAR FOR THE YEAR
ENDED 10/31/04 ENDED 10/31/03
--------------------------------- --------------------
Shares Amount Shares Amount
--------------- ---------------- -------- ----------
Sold. . . . 74,451 $ 1,666,356 44,682 $ 790,413
Reinvested. 569 11,928 1,330 23,524
Repurchased (52,998) (1,208,641) (15,912) (298,955)
--------------- ---------------- -------- ----------
Total . . . 22,022 $ 469,643 30,100 $ 514,982
=============== ================ ======== ==========
The Advisor owned 23,397 shares on October 31, 2004 (8.9% of shares outstanding)
valued at $550,063.
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
15
Notes to Financial Statements
6. FINANCIAL INSTRUMENTS (continued)
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 October 31, 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. These
differences are primarily due to differing book and tax treatments in the timing
of the recognition of net investment income or gains and losses, including
losses deferred due to wash sales, the tax practice known as equalization and
foreign currency gains and losses. The Series may periodically make
reclassifications among its capital accounts to reflect income and gains
available for distribution (or available capital loss carryovers) under income
tax regulations, without impacting the Series' net asset value. Any such
reclassifications are not reflected in the financial highlights.
The tax character of distributions paid were as follows:
FOR THE YEAR FOR THE YEAR
ENDED 10/31/04 ENDED 10/31/03
--------------- ---------------
Ordinary income $ 11,932 $ 23,534
Pursuant to Section 852 of the Internal Revenue Code, as amended, the Series
hereby designates $25,000 as capital gains for its taxable year ended October
31, 2004.
At October 31, 2004, the tax basis components of distributable earnings and the
net unrealized appreciation based on identified cost for federal income tax
purposes were as follows:
Cost for federal income tax purposes. $5,474,721
Unrealized appreciation . . . . . . . $ 823,533
Unrealized depreciation . . . . . . . (69,903)
-----------
Net unrealized appreciation . . . . . $ 754,630
Undistributed ordinary income . . . . 2,526
Undistributed long-term capital gains 350,994
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
For federal income tax purposes, the Series designates $11,932 or, if different,
the maximum amount allowable under the tax law as qualified dividend income.
16
Report of Independent Registered Public Accounting Firm
TO THE BOARD OF DIRECTORS OF EXETER FUND, INC. AND SHAREHOLDERS OF TAX MANAGED
SERIES:
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Tax Managed Series (a Series of
Exeter Fund, Inc., hereafter referred to as the "Series") at October 31, 2004,
and the results of its operations, the changes in its net assets and the
financial highlights for the periods indicated, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Series' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 2004 by
correspondence with the custodian, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
BOSTON, MASSACHUSETTS
DECEMBER 13, 2004
17
Directors' and Officers' Information (unaudited)
The Statement of Additional Information provides additional information about
the Fund's directors and officers and can be obtained without charge by calling
1-800-466-3863 or on the EDGAR Database on the SEC Internet website
(http:\\www.sec.gov). The following chart shows certain information about the
Fund's officers and directors, including their principal occupations during the
last five years. Unless specific dates are provided, the individuals have held
the listed positions for longer than five years.
INTERESTED DIRECTOR
Name: . . . . . . . . . . . . . . . . . . . . . . B. Reuben Auspitz*
Address: . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . 57
Current Position(s) Held with Fund: . . . . . . . Principal Executive Officer, President, Chairman & Director
Term of Office1 & Length of Time Served:. . . . . Indefinite - Director; Vice President 1984 - 2003; President since 2004;
Director since 1984
Principal Occupation(s) During Past 5 Years:. . . Executive Vice President, Co-Executive Director, Executive Group Member** &
Chief Compliance Officer since 2004, Manning & Napier Advisors, Inc.; President
& Director Manning & Napier Investor Services, Inc.; Holds or has held one or
more of the following titles for various subsidiaries and affiliates:
President, Vice President, Director, Chairman, Treasurer, Chief Compliance
Officer or Member
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
INDEPENDENT DIRECTORS
Name:. . . . . . . . . . . . . . . . . . . . . . . Stephen B. Ashley
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 64
Current Position(s) Held with Fund:. . . . . . . . Director, Audit Committee Member, Governance & Nominating Committee Member
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 1996
Principal Occupation(s) During Past 5 Years: . . . Chairman, Director, President & Chief Executive Officer, The Ashley Group
(property management and investment)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . Genesee Corp.
The Ashley Group
Fannie Mae
Name:. . . . . . . . . . . . . . . . . . . . . . . Martin F. Birmingham
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 83
Current Position(s) Held with Fund:. . . . . . . . Director, Governance & Nominating Committee Member
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 1994
Principal Occupation(s) During Past 5 Years: . . . Advisory Trustee, The Freedom Forum (nonpartisan, international foundation)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
Name:. . . . . . . . . . . . . . . . . . . . . . . Peter L. Faber
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 66
Current Position(s) Held with Fund:. . . . . . . . Director, Governance & Nominating Committee Member
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 1987
Principal Occupation(s) During Past 5 Years: . . . Partner, McDermott, Will & Emery LLP (law firm)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . Partnership for New York City, Inc.
Name:. . . . . . . . . . . . . . . . . . . . . . . Harris H. Rusitzky
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 69
Current Position(s) Held with Fund:. . . . . . . . Director, Audit Committee Member, Governance & Nominating Committee Member
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 1985
Principal Occupation(s) During Past 5 Years: . . . President, The Greening Group (business consultants)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
18
Directors' and Officers' Information (unaudited)
OFFICERS
Name:. . . . . . . . . . . . . . . . . . . . . . . Jeffrey S. Coons, Ph.D., CFA
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 41
Current Position(s) Held with Fund:. . . . . . . . Vice President
Term of Office1 & Length of Time Served: . . . . . Since 2004
Principal Occupation(s) During Past 5 Years: . . . Co-Director of Research since 2002 & Executive Group Member**,
Manning & Napier Advisors, Inc.; Managing Director - Risk Management, Manning &
Napier Advisors, Inc., 1993-2002; Holds one or more of the following titles for
various subsidiaries and affiliates: President, Director, Treasurer or Senior
Trust Officer
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
Name:. . . . . . . . . . . . . . . . . . . . . . . Christine Glavin
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 38
Current Position(s) Held with Fund:. . . . . . . . Principal Financial Officer, Chief Financial Officer
Term of Office1 & Length of Time Served: . . . . . Since 2001
Principal Occupation(s) During Past 5 Years: . . . Fund Accounting Manager, Manning & Napier Advisors, Inc.
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
Name:. . . . . . . . . . . . . . . . . . . . . . . Jodi L. Hedberg
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 36
Current Position(s) Held with Fund:. . . . . . . . Corporate Secretary, Chief Compliance Officer, Anti-Money Laundering (AML)
Compliance Officer
Term of Office1 & Length of Time Served: . . . . . Corporate Secretary since 1997; Chief Compliance Officer since 2004
Compliance Manager, Manning & Napier Advisors, Inc. & affiliates
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
Name:. . . . . . . . . . . . . . . . . . . . . . . Alaina V. Metz
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 37
Current Position(s) Held with Fund:. . . . . . . . Special Assistant Secretary
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 2002
Principal Occupation(s) During Past 5 Years: . . . Vice President, BISYS Fund Services Ohio, Inc. (mutual fund servicing company)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
*Interested Director, within the meaning of the Investment Company Act of 1940
by reason of his position with the Fund's investment advisor and distributor.
Mr. Auspitz serves as the Executive Vice President and Director, Manning &
Napier Advisors, Inc. and President and Director, Manning & Napier Investor
Services, Inc., the Fund's distributor.
**The Executive Group, which consists of six members, performs the duties of the
Office of the President, effective May 1, 2003.
1The term of office for all officers is one year and until their respective
successors are chosen and qualified.
19
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20
(This page intentionally left blank)
21
Literature Requests (unaudited)
PROXY VOTING POLICIES AND PROCEDURES
- --------------------------------------------------------------------------------
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30th is available
without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
QUARTERLY PORTFOLIO HOLDINGS
- --------------------------------------------------------------------------------
The Series' complete schedule of portfolio holdings for the 1st and 3rd quarters
of each fiscal year are provided on Form N-Q, 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. These documents are available without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
22
Exeter Fund, Inc.
Annual Report
October 31, 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:
Over the past year, the behavior of the equity market has reflected the shift in
the economic environment. After noteworthy gains in 2003, the Standard & Poor's
500 Total Return Index (the "S&P 500"), a measure of the general stock market,
continued its rise until the middle of the first quarter of 2004. At this time
last year, we noted that equity valuations had pushed into questionable
territory, warning that the market may have come too far too fast. It did not
take long for the market to catch up with that view. By early March 2004, the
stock market finally took some time to digest the economic data and to consider
the prospect of the Federal Reserve's policy to start increasing interest rates.
Since that time, the S&P 500 has experienced a price decline of approximately
2%. For the one-year period since October 31, 2003, the S&P 500 has still
maintained a positive total return of 9.41%, and each of the Pro BlendSM Series
has outperformed its benchmarks for the same period.
The good economic news that marked the first part of 2004 began to fade
beginning in the third quarter. Growth in Gross Domestic Product, non-farm
payrolls, consumer spending and corporate profits all showed signs of
deceleration as the year progressed. As expected, the Federal Reserve began to
raise short-term interest rates at the end of the second quarter as well. On a
positive note, the growth in inflation the economy experienced in the first half
of the year eased. The conflicting economic data between the second and third
quarters has led to volatility in the stock market. As a result, although stock
prices have seen their share of reversals in this time period, the stock market
has taken somewhat of a wait-and-see approach.
As would be expected in the face of this fluctuating economic news, bond yields
have also reflected the changing environment. 30-year Treasury bond yields
dropped to 4.6% in March 2004, peaked at 5.6% in May, and dropped back down to
4.8% by the end of October. We took advantage of these higher yields by adding
a bit more to our modest long-bond exposure during the second quarter.
Alternately on the short end, the 3-month Treasury bill yield started the period
at 1.0% on October 31, 2003, remained relatively flat until May, then steadily
increased through October, ending at 1.9% on October 31, 2004. During this
time, we focused the remaining portion of our bond position on increasing the
short end, and were able to take advantage of these rising rates by quickly
reinvesting matured securities at higher interest rates. The exception was the
Pro-BlendSM Maximum Term Series, which has the most aggressive investment
objective and therefore tends to focus primarily on longer-term assets.
During the past year, we shifted the Series' holdings within certain sectors
based on our fundamental equity selection approach. We reduced holdings in the
Information Technology sector during the early part of the year, and avoided
much of the 20% decline experienced in that sector between mid-January and
mid-August. We have also increased holdings in the Consumer Discretionary
sector, specifically companies with improving fundamentals that are not as
sensitive to rising interest rates as bigger-ticket consumer items. This sector
has experienced a nice rally since mid-August of this year. We have gradually
increased the Series' positions in the Financials sector during the early and
middle part of this year as better values presented themselves as the sector
came down from its steady run that began in early 2003. The Series have also
continued to benefit from their relatively large positions in the Energy sector
relative to the S&P 500, as rising oil prices have driven this sector up more
than 40% during the past year.
As this year has shown, conditions can change dramatically in a relatively short
span of time. Observing the behavior of the economy and stock market over the
past year reinforces our long-standing conviction that our best hope of
providing attractive returns lies in our fundamentals-driven investment
approach. It allows us to deviate from market weightings during volatile
periods, when stock selection is key to favorable returns. Rather than simply
matching the portfolios to the market benchmarks, we favor a disciplined
bottom-up investment approach that has historically served our long-term
investors very well. We will continue to monitor economic conditions and to
structure the portfolios in a manner that we expect to maximize the upside
potential while minimizing the downside risk in accordance with each Series'
specific investment goals.
We wish you all the best in the new year.
Sincerely,
EXETER ASSET MANAGEMENT
1
Performance Update - Pro-BlendSM Conservative Term Series (unaudited)
Average Annual Total Returns
As of October 31, 2004
-------------------------------------------------
Growth of
One Five Since a $10, 000
Year Year Inception1 Investment*
----------------------------- ----- ----------- ------------
Exeter Fund, Inc. - Pro-BlendSM Conservative Term Series2 . . . 5.93% 7.12% 6.38% $ 17,449
Lehman Brothers Intermediate U.S. Government/Credit Bond Index3 4.33% 7.22% 6.59% $ 17,758
15%/85% Blended Index3. . . . . . . . . . . . . . . . . . . . . 5.11% 5.99% 7.22% $ 18,722
*The value of a $10,000 investment in the Exeter Fund, Inc. - Pro-BlendSM
Conservative Term Series from its inception1 (11/1/95) to present (10/31/04) 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
11/1/95 $10,000 $10,000 $10,000
10/31/96 10,494 10,581 10,790
10/31/97 11,411 11,374 11,904
10/31/98 12,157 12,411 13,197
10/31/99 12,371 12,533 13,695
10/31/00 13,684 13,342 14,604
10/31/01 14,927 15,244 15,907
10/31/02 15,576 16,145 16,457
10/31/03 16,471 17,022 17,812
10/31/04 17,449 17,758 18,722
1Performance numbers for the Series and Indices are calculated from November 1,
1995, the Series' inception date.
2The 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.
3The Lehman Brothers Intermediate U.S. Government/Credit Bond Index is a market
value weighted measure of over 2,000 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
Shareholder Expense Example - Pro-BlendSM Conservative Term Series (unaudited)
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, including potential wire charges and exchange fees and (2) ongoing costs,
including management fees and other Series expenses. This example is intended
to help you understand your ongoing costs (in dollars) of investing in the
Series and to compare these costs with the ongoing costs of investing in other
mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (May 1, 2004 to October 31, 2004).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
5/1/04 10/31/04 5/1/04-10/31/04
-------------- -------------- ----------------
Actual. . . . . . . . . . . $ 1,000.00 $ 1,031.30 $ 5.11
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,020.11 $ 5.08
*Expenses are equal to the Series' annualized expense ratio of 1.00%, multiplied
by the average account value over the period, multiplied by 184/366 (to reflect
the one-half year period).
The Series' total return would have been lower had certain expenses not been
waived during the period. Based on the most recent fiscal half year, the
Series' expense ratio may differ from the expense ratio based on one-year data
in the financial highlights.
3
Portfolio Composition -Pro-BlendSM Conservative Term Series (unaudited)
As of October 31, 2004
<graphic>
<pie chart>
Asset Allocation*
Cash, short-term investments, and liabilities, less other assets 2.96%
Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.05%
U.S. Government Agencies . . . . . . . . . . . . . . . . . . . . 1.28%
U.S. Treasury Bonds1 . . . . . . . . . . . . . . . . . . . . . . 13.41%
U.S. Treasury Notes2 . . . . . . . . . . . . . . . . . . . . . . 55.20%
Unit Investment Trusts . . . . . . . . . . . . . . . . . . . . . 0.10%
*As a percentage of net assets.
1A U.S. Treasury Bond is a long-term obligation of the U.S. Treasury issued with
a maturity period of more than ten years.
2A U.S. Treasury Note is an intermediate-term obligation of the U.S. Treasury
issued with a maturity period between one and ten years.
Stock Sector Allocation*
Consumer Discretionary . . 4.83%
Consumer Staples . . . . . 3.88%
Energy . . . . . . . . . . 4.39%
Financials . . . . . . . . 2.30%
Health Care. . . . . . . . 5.41%
Industrials. . . . . . . . 1.32%
Information Technology . . 1.29%
Materials. . . . . . . . . 0.57%
Telecommunication Services 1.36%
Utilities. . . . . . . . . 1.26%
*As a percentage of total investments.
Top Ten Stock Holdings*
Schering-Plough Corp. . . . . . . . . . . 1.72%
Novartis AG - ADR (Switzerland) . . . . . 1.57%
Unilever plc - ADR (United Kingdom) . . . 1.44%
Schlumberger Ltd. . . . . . . . . . . . . 1.42%
Vodafone Group plc - ADR (United Kingdom) 1.25%
Nestle S.A. (Switzerland) . . . . . . . . 1.24%
Time Warner, Inc. . . . . . . . . . . . . 1.06%
WebMD Corp. . . . . . . . . . . . . . . . 1.05%
Baker Hughes, Inc.. . . . . . . . . . . . 0.72%
Weight Watchers International, Inc. . . . 0.68%
*As a percentage of total investments.
4
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------------------------ ------- ---------
COMMON STOCKS - 27.05%
CONSUMER DISCRETIONARY - 4.90%
HOTELS, RESTAURANTS & LEISURE - 0.53%
Carnival Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,725 $137,776
International Speedway Corp. - Class A . . . . . . . . . . . . . . . . . . . . 25 1,176
Shangri-La Asia Ltd. (Hong Kong) (Note 7). . . . . . . . . . . . . . . . . . . 2,000 2,300
----------
141,252
----------
HOUSEHOLD DURABLES - 0.04%
Interface, Inc. - Class A* . . . . . . . . . . . . . . . . . . . . . . . . . . 300 2,607
Sony Corp. - ADR (Japan) (Note 7). . . . . . . . . . . . . . . . . . . . . . . 250 8,712
----------
11,319
----------
INTERNET & CATALOG RETAIL - 0.01%
IAC/InterActiveCorp* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 3,243
----------
LEISURE EQUIPMENT & PRODUCTS - 0.03%
Hasbro, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 3,096
Sega Sammy Holdings, Inc. (Japan) (Note 7) . . . . . . . . . . . . . . . . . . 100 4,649
----------
7,745
----------
MEDIA - 2.51%
Acme Communications, Inc.* . . . . . . . . . . . . . . . . . . . . . . . . . . 550 3,119
Belo Corp. - Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 2,325
Cablevision Systems New York Group - Class A*. . . . . . . . . . . . . . . . . 5,700 117,306
The E.W. Scripps Co. - Class A . . . . . . . . . . . . . . . . . . . . . . . . 2,275 108,563
Harris Interactive, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . . . 700 4,760
Hearst-Argyle Television, Inc. - Class A . . . . . . . . . . . . . . . . . . . 50 1,303
Impresa S.A. (SGPS)* (Portugal) (Note 7) . . . . . . . . . . . . . . . . . . . 500 2,916
Insight Communications Co., Inc. - Class A*. . . . . . . . . . . . . . . . . . 275 2,327
Media Capital S.A. (SGPS)* (Portugal) (Note 7) . . . . . . . . . . . . . . . . 550 3,735
The News Corp. Ltd. - ADR (now known as News Corp., Inc.) (Australia) (Note 7) 225 7,074
Pearson plc (United Kingdom) (Note 7). . . . . . . . . . . . . . . . . . . . . 10,175 111,799
PT Multimedia S.A. (SGPS) (Portugal) (Note 7). . . . . . . . . . . . . . . . . 125 2,922
Reed Elsevier plc - ADR (United Kingdom) (Note 7). . . . . . . . . . . . . . . 175 6,300
Scholastic Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 2,274
Time Warner, Inc.* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,400 289,536
VNU N.V. (Netherlands) (Note 7). . . . . . . . . . . . . . . . . . . . . . . . 275 7,530
----------
673,789
----------
MULTILINE RETAIL - 0.00%**
KarstadtQuelle AG (Germany) (Note 7) . . . . . . . . . . . . . . . . . . . . . 100 1,143
----------
The accompanying notes are an integral part of the financial statements.
5
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES SHARES (NOTE 2)
- -------------------------------------------------------------- --------- ---------
CONSUMER DISCRETIONARY (continued)
SPECIALTY RETAIL - 1.77%
Douglas Holding AG (Germany) (Note 7). . . . . . . . . . . . . 300 $ 9,246
Foot Locker, Inc.. . . . . . . . . . . . . . . . . . . . . . . 75 1,830
KOMERI Co. Ltd. (Japan) (Note 7) . . . . . . . . . . . . . . . 100 2,386
Office Depot, Inc.*. . . . . . . . . . . . . . . . . . . . . . 8,650 140,043
The Sherwin-Williams Co. . . . . . . . . . . . . . . . . . . . 75 3,204
Staples, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . 4,425 131,600
Weight Watchers International, Inc.* . . . . . . . . . . . . . 5,200 186,784
----------
475,093
----------
TEXTILES, APPAREL & LUXURY GOODS - 0.01%
LVMH S.A. (Louis Vuitton Moet Hennessy) (France) (Note 7). . . 50 3,434
----------
1,317,018
----------
CONSUMER STAPLES - 3.95%
BEVERAGES - 0.04%
Allied Domecq plc (United Kingdom) (Note 7). . . . . . . . . . 200 1,781
Diageo plc (United Kingdom) (Note 7) . . . . . . . . . . . . . 125 1,673
InBev (Belgium) (Note 7) . . . . . . . . . . . . . . . . . . . 150 5,342
Scottish & Newcastle plc (United Kingdom) (Note 7) . . . . . . 225 1,667
----------
10,463
----------
FOOD & STAPLES RETAILING - 0.56%
Carrefour S.A. (France) (Note 7) . . . . . . . . . . . . . . . 3,150 138,295
Metro AG (Germany) (Note 7). . . . . . . . . . . . . . . . . . 50 2,388
Organizacion Soriana S.A. de C.V. - Series B (Mexico) (Note 7) 1,225 3,928
Pathmark Stores, Inc.* . . . . . . . . . . . . . . . . . . . . 400 1,724
Tesco plc (United Kingdom) (Note 7). . . . . . . . . . . . . . 350 1,846
William Morrison Supermarkets plc (United Kingdom) (Note 7). . 425 1,769
----------
149,950
----------
FOOD PRODUCTS - 2.78%
Associated British Foods plc (United Kingdom) (Note 7) . . . . 150 1,915
Cadbury Schweppes plc (United Kingdom) (Note 7). . . . . . . . 675 5,612
Groupe Danone (France) (Note 7). . . . . . . . . . . . . . . . 50 4,195
Hain Celestial Group, Inc.*. . . . . . . . . . . . . . . . . . 125 2,022
Nestle S.A. (Switzerland) (Note 7) . . . . . . . . . . . . . . 1,425 338,050
Smithfield Foods, Inc.*. . . . . . . . . . . . . . . . . . . . 25 606
Unilever plc - ADR (United Kingdom) (Note 7) . . . . . . . . . 11,539 393,365
----------
745,765
----------
The accompanying notes are an integral part of the financial statements.
6
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES SHARES (NOTE 2)
- --------------------------------------------------------------- --------- ---------
CONSUMER STAPLES (continued)
HOUSEHOLD PRODUCTS - 0.06%
Henkel KGaA (Germany) (Note 7). . . . . . . . . . . . . . . . . 50 $ 3,763
Kimberly-Clark de Mexico S.A. de C.V. - ADR (Mexico) (Note 7) . 500 7,481
Rayovac Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . 75 1,868
Reckitt Benckiser plc (United Kingdom) (Note 7) . . . . . . . . 75 2,059
----------
15,171
----------
PERSONAL PRODUCTS - 0.51%
Clarins S.A. (France) (Note 7). . . . . . . . . . . . . . . . . 166 9,424
The Estee Lauder Companies, Inc. - Class A. . . . . . . . . . . 2,700 115,965
Shiseido Co. Ltd. (Japan) (Note 7). . . . . . . . . . . . . . . 1,000 13,068
----------
138,457
----------
1,059,806
----------
ENERGY - 4.46%
ENERGY EQUIPMENT & SERVICES - 3.68%
Atwood Oceanics, Inc.*. . . . . . . . . . . . . . . . . . . . . 125 5,994
Baker Hughes, Inc.. . . . . . . . . . . . . . . . . . . . . . . 4,575 195,947
Compagnie Generale de Geophysique S.A. (CGG)* (France) (Note 7) 50 3,127
Cooper Cameron Corp.* . . . . . . . . . . . . . . . . . . . . . 1,000 48,350
Helmerich & Payne, Inc. . . . . . . . . . . . . . . . . . . . . 175 4,996
National-Oilwell, Inc.* . . . . . . . . . . . . . . . . . . . . 150 5,056
Newpark Resources, Inc.*. . . . . . . . . . . . . . . . . . . . 450 2,444
Precision Drilling Corp.* (Canada) (Note 7) . . . . . . . . . . 150 9,249
Pride International, Inc.*. . . . . . . . . . . . . . . . . . . 425 7,854
Schlumberger Ltd. . . . . . . . . . . . . . . . . . . . . . . . 6,175 388,655
Smedvig ASA - Class A (Norway) (Note 7) . . . . . . . . . . . . 750 9,376
Transocean, Inc.* . . . . . . . . . . . . . . . . . . . . . . . 3,425 120,731
Varco International, Inc.*. . . . . . . . . . . . . . . . . . . 3,350 92,728
Weatherford International Ltd.* . . . . . . . . . . . . . . . . 1,800 94,068
----------
988,575
----------
OIL & GAS - 0.78%
Amerada Hess Corp.. . . . . . . . . . . . . . . . . . . . . . . 2,175 175,544
BP plc (United Kingdom) (Note 7). . . . . . . . . . . . . . . . 175 1,696
Eni S.p.A. (Italy) (Note 7) . . . . . . . . . . . . . . . . . . 400 9,105
Forest Oil Corp.* . . . . . . . . . . . . . . . . . . . . . . . 125 3,812
Petroleo Brasileiro S.A. (Petrobras) - ADR (Brazil) (Note 7). . 175 5,705
Shell Transport & Trading Co. plc (United Kingdom) (Note 7) . . 250 1,969
Total S.A. (France) (Note 7). . . . . . . . . . . . . . . . . . 50 10,423
----------
208,254
----------
1,196,829
----------
The accompanying notes are an integral part of the financial statements.
7
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES SHARES (NOTE 2)
- ---------------------------------------------------- ------- ---------
FINANCIALS - 2.34%
CAPITAL MARKETS - 0.87%
The Bank of New York Co., Inc. . . . . . . . . . . . 3,675 $119,290
Deutsche Bank AG (Germany) (Note 7). . . . . . . . . 75 5,736
SEI Investments Co.. . . . . . . . . . . . . . . . . 3,000 107,970
----------
232,996
----------
COMMERCIAL BANKS - 0.99%
Banca Intesa S.p.A. (Italy) (Note 7) . . . . . . . . 1,075 4,413
Banco BPI S.A. (Portugal) (Note 7) . . . . . . . . . 800 3,120
BNP Paribas S.A. (France) (Note 7) . . . . . . . . . 50 3,411
Metropolitan Bank & Trust Co. (Philippines) (Note 7) 8,000 3,979
Societe Generale (France) (Note 7) . . . . . . . . . 25 2,324
U.S. Bancorp . . . . . . . . . . . . . . . . . . . . 4,375 125,169
UniCredito Italiano S.p.A. (Italy) (Note 7). . . . . 875 4,711
Wachovia Corp. . . . . . . . . . . . . . . . . . . . 2,400 118,104
----------
265,231
----------
CONSUMER FINANCE - 0.00%**
MoneyGram International, Inc.. . . . . . . . . . . . 75 1,395
----------
DIVERSIFIED FINANCIAL SERVICES - 0.41%
Principal Financial Group, Inc.. . . . . . . . . . . 2,950 111,392
----------
INSURANCE - 0.04%
Allianz AG (Germany) (Note 7). . . . . . . . . . . . 25 2,668
Assicurazioni Generali S.p.A. (Italy) (Note 7) . . . 150 4,464
Axa (France) (Note 7). . . . . . . . . . . . . . . . 200 4,315
----------
11,447
----------
REAL ESTATE - 0.02%
SM Prime Holdings, Inc. (Philippines) (Note 7) . . . 32,550 4,337
----------
THRIFTS & MORTGAGE FINANCE - 0.01%
Flagstar Bancorp, Inc. . . . . . . . . . . . . . . . 100 2,089
----------
628,887
----------
HEALTH CARE - 5.50%
BIOTECHNOLOGY - 0.14%
BioMarin Pharmaceutical, Inc.* . . . . . . . . . . . 1,150 4,750
Chiron Corp.*. . . . . . . . . . . . . . . . . . . . 325 10,537
Diversa Corp.* . . . . . . . . . . . . . . . . . . . 825 7,112
Enzon Pharmaceuticals, Inc.* . . . . . . . . . . . . 300 4,851
Transkaryotic Therapies, Inc.* . . . . . . . . . . . 625 10,819
----------
38,069
----------
The accompanying notes are an integral part of the financial statements.
8
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES SHARES (NOTE 2)
- --------------------------------------------------------- --------- ---------
HEALTH CARE (continued)
HEALTH CARE EQUIPMENT & SUPPLIES - 0.58%
Advanced Neuromodulation Systems, Inc.* . . . . . . . . . 500 $ 15,915
Conceptus, Inc.*. . . . . . . . . . . . . . . . . . . . . 750 6,424
Millipore Corp.*. . . . . . . . . . . . . . . . . . . . . 2,575 118,424
Thermo Electron Corp.*. . . . . . . . . . . . . . . . . . 100 2,900
Varian, Inc.* . . . . . . . . . . . . . . . . . . . . . . 350 12,768
----------
156,431
----------
HEALTH CARE PROVIDERS & SERVICES - 1.31%
Allscripts Healthcare Solutions, Inc.*. . . . . . . . . . 1,350 12,548
American Healthways, Inc.*. . . . . . . . . . . . . . . . 525 15,845
AmerisourceBergen Corp. . . . . . . . . . . . . . . . . . 100 5,504
Express Scripts, Inc.*. . . . . . . . . . . . . . . . . . 150 9,600
HCA, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 150 5,510
McKesson Corp.. . . . . . . . . . . . . . . . . . . . . . 175 4,665
Omnicell, Inc.* . . . . . . . . . . . . . . . . . . . . . 500 5,163
Triad Hospitals, Inc.*. . . . . . . . . . . . . . . . . . 175 5,780
WebMD Corp.*. . . . . . . . . . . . . . . . . . . . . . . 37,800 285,768
----------
350,383
----------
PHARMACEUTICALS - 3.47%
AstraZeneca plc (United Kingdom) (Note 7) . . . . . . . . 25 1,025
GlaxoSmithKline plc (United Kingdom) (Note 7) . . . . . . 75 1,581
Novartis AG - ADR (Switzerland) (Note 7). . . . . . . . . 8,925 428,489
Pfizer, Inc.. . . . . . . . . . . . . . . . . . . . . . . 250 7,238
Sanofi-Aventis (France) (Note 7). . . . . . . . . . . . . 41 3,004
Schering AG (Germany) (Note 7). . . . . . . . . . . . . . 300 19,298
Schering-Plough Corp. . . . . . . . . . . . . . . . . . . 25,925 469,502
Shire Pharmaceuticals Group plc (United Kingdom) (Note 7) 200 1,906
----------
932,043
----------
1,476,926
----------
INDUSTRIALS - 1.34%
AEROSPACE & DEFENSE - 0.02%
SNECMA* (France) (Note 7) . . . . . . . . . . . . . . . . 200 4,271
----------
AIRLINES - 0.03%
Deutsche Lufthansa AG* (Germany) (Note 7) . . . . . . . . 225 2,975
JetBlue Airways Corp.*. . . . . . . . . . . . . . . . . . 100 2,205
SkyWest, Inc. . . . . . . . . . . . . . . . . . . . . . . 125 2,135
----------
7,315
----------
The accompanying notes are an integral part of the financial statements.
9
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------ ------- ---------
INDUSTRIALS (continued)
COMMERCIAL SERVICES & SUPPLIES - 0.04%
Aggreko plc (United Kingdom) (Note 7). . . . . . . . . . . . 1,375 $ 3,790
BWT AG (Austria) (Note 7). . . . . . . . . . . . . . . . . . 150 4,028
Quebecor World, Inc. (Canada) (Note 7) . . . . . . . . . . . 200 4,158
----------
11,976
----------
CONSTRUCTION & ENGINEERING - 0.04%
Infrasource Services, Inc.*. . . . . . . . . . . . . . . . . 175 1,827
Insituform Technologies, Inc. - Class A* . . . . . . . . . . 125 2,477
Koninklijke Boskalis Westminster N.V. (Netherlands) (Note 7) 236 6,368
----------
10,672
----------
ELECTRICAL EQUIPMENT - 0.02%
Global Power Equipment Group, Inc.*. . . . . . . . . . . . . 300 2,418
Plug Power, Inc.*. . . . . . . . . . . . . . . . . . . . . . 425 2,544
----------
4,962
----------
INDUSTRIAL CONGLOMERATES - 0.03%
Siemens AG (Germany) (Note 7). . . . . . . . . . . . . . . . 100 7,481
----------
MACHINERY - 0.60%
AGCO Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . 6,825 132,542
Albany International Corp. - Class A . . . . . . . . . . . . 108 3,242
Gardner Denver, Inc.*. . . . . . . . . . . . . . . . . . . . 75 2,249
Lindsay Manufacturing Co.. . . . . . . . . . . . . . . . . . 125 2,947
MAN AG (Germany) (Note 7). . . . . . . . . . . . . . . . . . 125 4,351
Tomra Systems ASA (Norway) (Note 7). . . . . . . . . . . . . 2,775 12,262
Wabtec Corp. . . . . . . . . . . . . . . . . . . . . . . . . 225 4,561
----------
162,154
----------
ROAD & RAIL - 0.55%
Central Freight Lines, Inc.* . . . . . . . . . . . . . . . . 275 1,537
CSX Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . 3,850 140,525
Kansas City Southern*. . . . . . . . . . . . . . . . . . . . 325 5,509
----------
147,571
----------
TRANSPORTATION INFRASTRUCTURE - 0.01%
Brisa-Auto Estradas de Portugal S.A. (Portugal) (Note 7) . . 400 3,279
----------
359,681
----------
INFORMATION TECHNOLOGY - 1.31%
COMMUNICATIONS EQUIPMENT - 0.06%
Lucent Technologies, Inc.* . . . . . . . . . . . . . . . . . 1,000 3,550
Nokia Oyj - ADR (Finland) (Note 7) . . . . . . . . . . . . . 650 10,023
SES Global - FDR (Luxembourg) (Note 7) . . . . . . . . . . . 300 3,108
----------
16,681
----------
The accompanying notes are an integral part of the financial statements.
10
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------------- ------- ---------
INFORMATION TECHNOLOGY (continued)
COMPUTERS & PERIPHERALS - 0.03%
Electronics for Imaging, Inc.*. . . . . . . . . . . . . . . . . . . 50 $ 902
EMC Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275 3,539
Stratasys, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . . 150 4,392
----------
8,833
----------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.06%
Digital Theater Systems, Inc.*. . . . . . . . . . . . . . . . . . . 200 3,402
Fargo Electronics*. . . . . . . . . . . . . . . . . . . . . . . . . 175 2,294
Mettler-Toledo International, Inc.* (Switzerland) (Note 7). . . . . 75 3,593
OSI Systems, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . 325 5,658
----------
14,947
----------
INTERNET SOFTWARE & SERVICES - 0.00%**
Online Resources Corp.* . . . . . . . . . . . . . . . . . . . . . . 150 1,089
----------
IT SERVICES - 0.51%
The BISYS Group, Inc.*1 . . . . . . . . . . . . . . . . . . . . . . 150 2,190
First Data Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . 3,225 133,128
----------
135,318
----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.58%
Brooks Automation, Inc.*. . . . . . . . . . . . . . . . . . . . . . 300 4,464
Cabot Microelectronics Corp.* . . . . . . . . . . . . . . . . . . . 100 3,603
Cymer, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 2,852
Sigma Designs, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . 275 2,164
Taiwan Semiconductor Manufacturing Co. Ltd. - ADR (Taiwan) (Note 7) 827 6,260
Texas Instruments, Inc. . . . . . . . . . . . . . . . . . . . . . . 5,575 136,309
----------
155,652
----------
SOFTWARE - 0.07%
Amdocs Ltd.* (Guernsey) (Note 7). . . . . . . . . . . . . . . . . . 425 10,689
Informatica Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . 350 2,733
SAP AG (Germany) (Note 7) . . . . . . . . . . . . . . . . . . . . . 25 4,262
VERITAS Software Corp.* . . . . . . . . . . . . . . . . . . . . . . 50 1,094
----------
18,778
----------
351,298
----------
MATERIALS - 0.58%
CHEMICALS - 0.33%
Bayer AG (Germany) (Note 7) . . . . . . . . . . . . . . . . . . . . 175 4,980
L'Air Liquide S.A. (France) (Note 7). . . . . . . . . . . . . . . . 27 4,371
Lonza Group AG (Switzerland) (Note 7) . . . . . . . . . . . . . . . 425 20,823
Minerals Technologies, Inc. . . . . . . . . . . . . . . . . . . . . 975 58,597
----------
88,771
----------
The accompanying notes are an integral part of the financial statements.
11
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES SHARES (NOTE 2)
- --------------------------------------------------------------- --------- ---------
MATERIALS (continued)
PAPER & FOREST PRODUCTS - 0.25%
Aracruz Celulose S.A. - ADR (Brazil) (Note 7) . . . . . . . . . 2,025 $ 68,202
----------
156,973
----------
TELECOMMUNICATION SERVICES - 1.39%
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.07%
Deutsche Telekom AG* (Germany) (Note 7) . . . . . . . . . . . . 150 2,885
Philippine Long Distance Telephone Co.* (Philippines) (Note 7). 100 2,496
PT Telekomunikasi Indonesia - ADR (Indonesia) (Note 7). . . . . 450 8,581
Telecom Italia S.p.A. (Italy) (Note 7). . . . . . . . . . . . . 1,732 5,781
----------
19,743
----------
WIRELESS TELECOMMUNICATION SERVICES - 1.32%
Globe Telecom, Inc. (Philippines) (Note 7). . . . . . . . . . . 150 2,731
NTT DoCoMo, Inc. (Japan) (Note 7) . . . . . . . . . . . . . . . 2 3,534
Telecom Italia Mobile S.p.A. (T.I.M.) (Italy) (Note 7). . . . . 825 4,874
Vodafone Group plc - ADR (United Kingdom) (Note 7). . . . . . . 13,250 341,718
----------
352,857
----------
372,600
----------
UTILITIES - 1.28%
ELECTRIC UTILITIES - 0.75%
Allegheny Energy, Inc.* . . . . . . . . . . . . . . . . . . . . 10,175 186,304
E.ON AG (Germany) (Note 7). . . . . . . . . . . . . . . . . . . 100 8,185
Korea Electric Power Corp. (KEPCO) - ADR (South Korea) (Note 7) 275 3,157
Westar Energy, Inc. . . . . . . . . . . . . . . . . . . . . . . 100 2,095
----------
199,741
----------
MULTI-UTILITIES & UNREGULATED POWER - 0.53%
National Grid Transco plc (United Kingdom) (Note 7) . . . . . . 200 1,740
NRG Energy, Inc.* . . . . . . . . . . . . . . . . . . . . . . . 4,800 133,152
RWE AG (Germany) (Note 7) . . . . . . . . . . . . . . . . . . . 150 7,961
----------
142,853
----------
342,594
----------
TOTAL COMMON STOCKS
(Identified Cost $6,545,474). . . . . . . . . . . . . . . . . . 7,262,612
----------
The accompanying notes are an integral part of the financial statements.
12
Investment Portfolio - October 31, 2004
SHARES/ VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES PRINCIPAL AMOUNT (NOTE 2)
- ----------------------------------------------------- ----------------- -----------
UNIT INVESTMENT TRUSTS - 0.10%
Nasdaq-100 Index Tracking Stock . . . . . . . . . . . 475 $ 17,509
Standard & Poor's Depositary Receipts Trust Series 1. 75 8,490
-----------
TOTAL UNIT INVESTMENT TRUSTS
(Identified Cost $24,826) . . . . . . . . . . . . . . 25,999
-----------
U.S. TREASURY SECURITIES - 68.61%
U.S. TREASURY BONDS - 13.41%
U.S. Treasury Bond, 6.875%, 8/15/2025 . . . . . . . . $ 170,000 215,887
U.S. Treasury Bond, 5.50%, 8/15/2028. . . . . . . . . 2,610,000 2,842,452
U.S. Treasury Bond, 5.375%, 2/15/2031 . . . . . . . . 500,000 543,066
-----------
TOTAL U.S. TREASURY BONDS
(Identified Cost $3,376,358). . . . . . . . . . . . . 3,601,405
-----------
U.S. TREASURY NOTES - 55.20%
U.S. Treasury Note, 1.625%, 4/30/2005 . . . . . . . . 1,365,000 1,361,800
U.S. Treasury Note, 6.50%, 5/15/2005. . . . . . . . . 625,000 639,502
U.S. Treasury Note, 1.50%, 7/31/2005. . . . . . . . . 600,000 597,094
U.S. Treasury Note, 1.625%, 9/30/2005 . . . . . . . . 1,600,000 1,591,688
U.S. Treasury Note, 1.875%, 12/31/2005. . . . . . . . 500,000 497,676
U.S. Treasury Note, 5.625%, 2/15/2006 . . . . . . . . 10,000 10,421
U.S. Treasury Note, 1.50%, 3/31/2006. . . . . . . . . 2,700,000 2,668,253
U.S. Treasury Note, 7.00%, 7/15/2006. . . . . . . . . 25,000 26,884
U.S. Treasury Note, 6.50%, 10/15/2006 . . . . . . . . 15,000 16,124
U.S. Treasury Note, 3.50%, 11/15/2006 . . . . . . . . 700,000 712,879
U.S. Treasury Note, 4.375%, 5/15/2007 . . . . . . . . 500,000 520,410
U.S. Treasury Note, 6.625%, 5/15/2007 . . . . . . . . 35,000 38,350
U.S. Treasury Note, 3.25%, 8/15/2007. . . . . . . . . 1,050,000 1,063,576
U.S. Treasury Note, 6.125%, 8/15/2007 . . . . . . . . 15,000 16,343
U.S. Treasury Note, 3.00%, 2/15/2008. . . . . . . . . 400,000 401,266
U.S. Treasury Note, 5.50%, 2/15/2008. . . . . . . . . 90,000 97,298
U.S. Treasury Note, 5.625%, 5/15/2008 . . . . . . . . 10,000 10,889
U.S. Treasury Note, 3.25%, 8/15/2008. . . . . . . . . 600,000 604,735
U.S. Treasury Note, 4.75%, 11/15/2008 . . . . . . . . 795,000 844,935
Interest Stripped - Principal Payment, 2/15/2009. . . 17,000 14,817
U.S. Treasury Note, 6.00%, 8/15/2009. . . . . . . . . 450,000 504,299
U.S. Treasury Note, 5.00%, 2/15/2011. . . . . . . . . 1,000,000 1,079,844
U.S. Treasury Note, 3.625%, 5/15/2013 . . . . . . . . 1,525,000 1,497,837
-----------
TOTAL U.S. TREASURY NOTES
(Identified Cost $14,599,914) . . . . . . . . . . . . 14,816,920
-----------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $17,976,272) . . . . . . . . . . . . 18,418,325
-----------
The accompanying notes are an integral part of the financial statements.
13
Investment Portfolio - October 31, 2004
PRINCIPAL AMOUNT/ VALUE
PRO-BLENDSM CONSERVATIVE TERM SERIES SHARES (NOTE 2)
- -------------------------------------------------------- ------------------- -----------
U.S. GOVERNMENT AGENCIES - 1.28%
MORTGAGE BACKED SECURITIES - 1.18%
GNMA, Pool #365225, 9.00%, 11/15/2024. . . . . . . . . . $ 2,238 $ 2,473
GNMA, Pool #398655, 6.50%, 5/15/2026 . . . . . . . . . . 5,024 5,316
GNMA, Pool #452826, 9.00%, 1/15/2028 . . . . . . . . . . 7,676 8,481
GNMA, Pool #460820, 6.00%, 6/15/2028 . . . . . . . . . . 19,819 20,634
GNMA, Pool #458983, 6.00%, 1/15/2029 . . . . . . . . . . 64,679 67,337
GNMA, Pool #530481, 8.00%, 8/15/2030 . . . . . . . . . . 51,116 55,723
GNMA, Pool #577796, 6.00%, 1/15/2032 . . . . . . . . . . 150,687 156,879
-------------
TOTAL MORTGAGE BACKED SECURITIES
(Identified Cost $301,625) . . . . . . . . . . . . . . . 316,843
-------------
OTHER AGENCIES - 0.10%
Fannie Mae, 6.00%, 12/15/2005. . . . . . . . . . . . . . 10,000 10,394
Fannie Mae, 5.25%, 1/15/2009 . . . . . . . . . . . . . . 15,000 16,033
-------------
TOTAL OTHER AGENCIES
(Identified Cost $26,433). . . . . . . . . . . . . . . . 26,427
-------------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $328,058) . . . . . . . . . . . . . . . 343,270
-------------
SHORT-TERM INVESTMENTS - 4.62%
Dreyfus Treasury Cash Management - Institutional Shares. 1,040,135 1,040,135
Fannie Mae Discount Note, 11/23/2004 . . . . . . . . . . $ 200,000 199,785
-------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $1,239,920) . . . . . . . . . . . . . . 1,239,920
-------------
TOTAL INVESTMENTS - 101.66%
(Identified Cost $26,114,550). . . . . . . . . . . . . . 27,290,126
LIABILITIES, LESS OTHER ASSETS - (1.66%) . . . . . . . . (445,924)
-------------
NET ASSETS - 100%. . . . . . . . . . . . . . . . . . . . $ 26,844,202
=============
*Non-income producing security
**Less than 0.01%
1A subsidiary of the company serves as the Fund's sub-accounting services and
sub-transfer agent. An employee of the company serves as an officer of the
Fund.
ADR - American Depository Receipt
FDR - Fiduciary Depository Receipt
The accompanying notes are an integral part of the financial statements.
14
Statement of Assets and Liabilities - Pro-BlendSM Conservative Term Series
October 31, 2004
ASSETS:
Investments, at value (identified cost $26,114,550) (Note 2) . $27,290,126
Receivable for securities sold . . . . . . . . . . . . . . . . 861,470
Interest receivable. . . . . . . . . . . . . . . . . . . . . . 179,769
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 3,831
Receivable for fund shares sold. . . . . . . . . . . . . . . . 2,822
Foreign tax reclaims receivable. . . . . . . . . . . . . . . . 865
-----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 28,338,883
-----------
LIABILITIES:
Accrued management fees (Note 3) . . . . . . . . . . . . . . . 8,002
Accrued fund accounting and transfer agent fees (Note 3) . . . 4,401
Payable for fund shares repurchased. . . . . . . . . . . . . . 1,446,710
Audit fees payable . . . . . . . . . . . . . . . . . . . . . . 24,689
Payable for securities purchased . . . . . . . . . . . . . . . 5,923
Other payables and accrued expenses. . . . . . . . . . . . . . 4,956
-----------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 1,494,681
-----------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $26,844,202
===========
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . $ 23,263
Additional paid-in-capital . . . . . . . . . . . . . . . . . . 25,170,523
Undistributed net investment income. . . . . . . . . . . . . . 272,494
Accumulated net realized gain on investments and other assets
and liabilities. . . . . . . . . . . . . . . . . . . . . . . . 202,266
Net unrealized appreciation on investments and other assets
and liabilities. . . . . . . . . . . . . . . . . . . . . . . . 1,175,656
-----------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $26,844,202
===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE - CLASS A ($26,844,202/2,326,250 shares) . . . $ 11.54
===========
The accompanying notes are an integral part of the financial statements.
15
Statement of Operations - Pro-BlendSM Conservative Term Series
For the Year Ended October 31, 204
INVESTMENT INCOME:
Interest. . . . . . . . . . . . . . . . . . . . . . . $ 577,938
Dividends (net of foreign tax withheld, $1,833) . . . 60,770
-----------
Total Investment Income . . . . . . . . . . . . . . . 638,708
-----------
EXPENSES:
Management fees (Note 3). . . . . . . . . . . . . . . 184,686
Fund accounting and transfer agent fees (Note 3). . . 44,091
Directors' fees (Note 3). . . . . . . . . . . . . . . 8,121
Audit fees. . . . . . . . . . . . . . . . . . . . . . 24,728
Registration and filing fees. . . . . . . . . . . . . 20,151
Custodian fees. . . . . . . . . . . . . . . . . . . . 12,851
Miscellaneous . . . . . . . . . . . . . . . . . . . . 9,599
-----------
Total Expenses. . . . . . . . . . . . . . . . . . . . 304,227
Less reduction of expenses (Note 3) . . . . . . . . . (73,237)
-----------
Net Expenses. . . . . . . . . . . . . . . . . . . . . 230,990
-----------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . 407,718
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on -
Investments . . . . . . . . . . . . . . . . . . . . . 215,897
Foreign currency and other assets and liabilities . . 60
-----------
215,957
-----------
Net change in unrealized appreciation on -
Investments . . . . . . . . . . . . . . . . . . . . . 686,520
Foreign currency and other assets and liabilities . . 33
-----------
686,553
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS . . . 902,510
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS. $1,310,228
===========
The accompanying notes are an integral part of the financial statements.
16
Statements of Changes of Net Assets - Pro-BlendSM Conservative Term Series
FOR THE FOR THE
YEAR ENDED YEAR ENDED
10/31/04 10/31/03
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . $ 407,718 $ 284,543
Net realized gain on investments. . . . . . . . . . . . . 215,957 488,772
Net change in unrealized appreciation on investments. . . 686,553 98,984
------------ ------------
Net increase from operations. . . . . . . . . . . . . . . 1,310,228 872,299
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 8):
From net investment income. . . . . . . . . . . . . . . . (316,566) (258,479)
From net realized gain on investments . . . . . . . . . . (478,056) (52,226)
------------ ------------
Total distributions to shareholders . . . . . . . . . . . (794,622) (310,705)
------------ ------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase from capital share transactions (Note 5) . . 6,337,844 7,234,350
------------ ------------
Net increase in net assets. . . . . . . . . . . . . . . . 6,853,450 7,795,944
NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . . . 19,990,752 12,194,808
------------ ------------
END OF YEAR (including undistributed net
investment income of $272,494 and $181,211, respectively) $26,844,202 $19,990,752
============ ============
The accompanying notes are an integral part of the financial statements.
17
Financial Highlights - Pro-BlendSM Conservative Term Series
FOR THE YEARS ENDED
10/31/04 10/31/03 10/31/02 10/31/01 10/31/00
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH YEAR):
NET ASSET VALUE - BEGINNING OF YEAR. . . . . . . . $ 11.32 $ 10.95 $ 11.34 $ 11.16 $ 10.62
--------------------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income. . . . . . . . . . . . . . . 0.18 0.17 0.30 2 0.46 0.46
Net realized and unrealized gain on investments. . 0.48 0.45 0.15 2 0.51 0.62
--------------------- ---------- ---------- ---------- ----------
Total from investment operations . . . . . . . . . 0.66 0.62 0.45 0.97 1.08
--------------------- ---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income . . . . . . . . . . . . (0.17) (0.21) (0.41) (0.48) (0.44)
From net realized gain on investments. . . . . . . (0.27) (0.04) (0.43) (0.31) (0.10)
--------------------- ---------- ---------- ---------- ----------
Total distributions to shareholders. . . . . . . . (0.44) (0.25) (0.84) (0.79) (0.54)
--------------------- ---------- ---------- ---------- ----------
NET ASSET VALUE - END OF YEAR. . . . . . . . . . . $ 11.54 $ 11.32 $ 10.95 $ 11.34 $ 11.16
===================== ========== ========== ========== ==========
Total return1. . . . . . . . . . . . . . . . . . . 5.93% 5.75% 4.35% 9.09% 10.62%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses*. . . . . . . . . . . . . . . . . . . . . 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment income. . . . . . . . . . . . . . . 1.77% 1.90% 2.95%2 3.84% 4.13%
Portfolio turnover . . . . . . . . . . . . . . . . 25% 40% 55% 42% 33%
NET ASSETS - END OF YEAR (000's omitted) . . . . . $ 26,844 $ 19,991 $ 12,195 $ 4,233 $ 4,838
===================== ========== ========== ========== ==========
*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:
0.32% 0.82% 1.84% 2.00% 1.23%
1Represents aggregate total return for the year indicated, and assumes
reinvestment of all distributions. Total return would have been lower had
certain expenses not been waived or reimbursed during the year.
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.
The accompanying notes are an integral part of the financial statements.
18
Performance Update - Pro-BlendSM Moderate Term Series (unaudited)
Average Annual Total Returns
As of October 31, 2004
-------------------------------------------
One Five Ten Since
Year Year Year Inception1
----------------------------- ----- ----- -----------
Exeter Fund, Inc. - Pro-BlendSM Moderate Term Series2 . . . . . 8.76% 7.19% 8.58% 7.65%
Lehman Brothers Intermediate U.S. Government/Credit Bond Index3 4.33% 7.22% 7.17% 6.28%
40%/60% Blended Index3. . . . . . . . . . . . . . . . . . . . . 6.40% 3.74% 9.03% 8.25%
Growth of
a $10,000
Investment*
------------
Exeter Fund, Inc. - Pro-BlendSM Moderate Term Series2 . . . . . $ 22,707
Lehman Brothers Intermediate U.S. Government/Credit Bond Index3 $ 19,652
40%/60% Blended Index3. . . . . . . . . . . . . . . . . . . . . $ 24,073
*The value of a $10,000 investment in the Exeter Fund, Inc. - Pro-BlendSM
Moderate Term Series from its inception1 (9/15/93) to present (10/31/04) as
compared to the Lehman BrothersIntermediate 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
- ---- -------------------------------- --------------------------------- ---------------------
9/15/93 $10,000 $10,000 $10,000
12/31/93 10,092 10,032 10,103
12/31/94 10,012 9,838 10,045
12/31/95 12,123 11,347 12,438
10/31/96 12,806 11,728 13,503
10/31/97 14,472 12,606 15,807
10/31/98 15,383 13,755 18,139
10/31/99 16,048 13,891 20,037
10/31/00 18,634 14,788 21,358
10/31/01 19,304 16,896 20,754
10/31/02 18,662 17,867 20,262
10/31/03 20,878 18,837 22,626
10/31/04 22,707 19,652 24,073
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.
2The 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 notbe indicative of future results.
3The Lehman Brothers Intermediate U.S. Government/Credit Bond Index is a market
value weighted measure of over 2,000 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.
19
Shareholder Expense Example - Pro-BlendSM Moderate Term Series (unaudited)
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, including potential wire charges and exchange fees and (2) ongoing costs,
including management fees and other Series expenses. This example is intended
to help you understand your ongoing costs (in dollars) of investing in the
Series and to compare these costs with the ongoing costs of investing in other
mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (May 1, 2004 to October 31, 2004).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
5/1/04 10/31/04 5/1/04-10/31/04
-------------- -------------- ----------------
Actual. . . . . . . . . . . $ 1,000.00 $ 1,031.40 $ 6.13
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,019.10 $ 6.09
*Expenses are equal to the Series' annualized expense ratio of 1.20%, multiplied
by the average account value over the period, multiplied by 184/366 (to reflect
the one-half year period).
The Series' total return would have been lower had certain expenses not been
waived during the period. Based on the most recent fiscal half year, the
Series' expense ratio may differ from the expense ratio based on one-year data
in the financial highlights.
20
Portfolio Composition - Pro-BlendSM Moderate Term Series (unaudited)
As of October 31, 2004
<graphic>
<pie chart>
Asset Allocation*
Cash, short-term investments, and liabilities, less other assets 10.09%
Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.36%
U.S. Government Agencies . . . . . . . . . . . . . . . . . . . . 0.09%
U.S. Treasury Bonds1 . . . . . . . . . . . . . . . . . . . . . . 14.06%
U.S. Treasury Notes2 . . . . . . . . . . . . . . . . . . . . . . 21.15%
Unit Investment Trusts . . . . . . . . . . . . . . . . . . . . . 0.25%
*As a percentage of net assets.
1A U.S. Treasury Bond is a long-term obligation of the U.S. Treasury issued with
a maturity period of more than ten years.
2A U.S. Treasury Note is an intermediate-term obligation of the U.S. Treasury
issued with a maturity period between one and ten years.
Stock Sector Allocation*
Consumer Discretionary . . 9.42%
Consumer Staples . . . . . 7.13%
Energy . . . . . . . . . . 8.89%
Financials . . . . . . . . 5.29%
Health Care. . . . . . . . 10.61%
Industrials. . . . . . . . 2.54%
Information Technology . . 2.61%
Materials. . . . . . . . . 1.07%
Telecommunication Services 2.58%
Utilities. . . . . . . . . 2.32%
*As a percentage of total investments.
Top Ten Stock Holdings*
Schering-Plough Corp. . . . . . . . . . . 3.06%
Novartis AG - ADR (Switzerland) . . . . . 2.92%
Schlumberger Ltd. . . . . . . . . . . . . 2.79%
Unilever plc - ADR (United Kingdom) . . . 2.70%
Time Warner, Inc. . . . . . . . . . . . . 2.33%
Vodafone Group plc - ADR (United Kingdom) 2.23%
Nestle S.A. (Switzerland) . . . . . . . . 2.13%
WebMD Corp. . . . . . . . . . . . . . . . 1.99%
Baker Hughes, Inc.. . . . . . . . . . . . 1.35%
Allegheny Energy, Inc.. . . . . . . . . . 1.23%
*As a percentage of total investments.
21
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------------------------ --------- -----------
COMMON STOCKS - 54.36%
CONSUMER DISCRETIONARY - 9.76%
AUTOMOBILES - 0.01%
Bayerische Motoren Werke AG (BMW) (Germany) (Note 7) . . . . . . . . . . . . . 250 $ 10,627
------------
HOTELS, RESTAURANTS & LEISURE - 1.12%
Carnival Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,425 1,032,688
International Speedway Corp. - Class A . . . . . . . . . . . . . . . . . . . . 300 14,112
Shangri-La Asia Ltd. (Hong Kong) (Note 7). . . . . . . . . . . . . . . . . . . 19,000 21,847
------------
1,068,647
------------
HOUSEHOLD DURABLES - 0.11%
Corporacion GEO S.A. de C.V. - Series B* (Mexico) (Note 7) . . . . . . . . . . 12,125 18,909
Interface, Inc. - Class A* . . . . . . . . . . . . . . . . . . . . . . . . . . 1,875 16,294
Libbey, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275 4,991
Sony Corp. - ADR (Japan) (Note 7). . . . . . . . . . . . . . . . . . . . . . . 1,825 63,601
------------
103,795
------------
INTERNET & CATALOG RETAIL - 0.02%
IAC/InterActiveCorp* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 975 21,079
------------
LEISURE EQUIPMENT & PRODUCTS - 0.07%
Callaway Golf Co.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475 4,954
Hasbro, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,350 23,881
K2, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525 8,515
Sega Sammy Holdings, Inc. (Japan) (Note 7) . . . . . . . . . . . . . . . . . . 600 27,892
------------
65,242
------------
MEDIA - 5.25%
Acme Communications, Inc.* . . . . . . . . . . . . . . . . . . . . . . . . . . 4,750 26,932
Belo Corp. - Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 925 21,506
Cablevision Systems New York Group - Class A*. . . . . . . . . . . . . . . . . 39,150 805,707
The E.W. Scripps Co. - Class A . . . . . . . . . . . . . . . . . . . . . . . . 15,525 740,853
Harris Interactive, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . . . 5,575 37,910
Hearst-Argyle Television, Inc. - Class A . . . . . . . . . . . . . . . . . . . 500 13,030
Impresa S.A. (SGPS)* (Portugal) (Note 7) . . . . . . . . . . . . . . . . . . . 4,825 28,137
Insight Communications Co., Inc. - Class A*. . . . . . . . . . . . . . . . . . 2,750 23,265
Media Capital S.A. (SGPS)* (Portugal) (Note 7) . . . . . . . . . . . . . . . . 5,125 34,802
The News Corp. Ltd. - ADR (now known as News Corp., Inc.) (Australia) (Note 7) 2,275 71,526
Pearson plc (United Kingdom) (Note 7). . . . . . . . . . . . . . . . . . . . . 67,700 743,860
PT Multimedia S.A. (SGPS) (Portugal) (Note 7). . . . . . . . . . . . . . . . . 1,100 25,715
Reed Elsevier plc - ADR (United Kingdom) (Note 7). . . . . . . . . . . . . . . 1,650 59,400
Scholastic Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 675 20,466
The accompanying notes are an integral part of the financial statements.
22
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- -------------------------------------------------------------- --------- -----------
CONSUMER DISCRETIONARY (continued)
MEDIA (continued)
Time Warner, Inc.* . . . . . . . . . . . . . . . . . . . . . . 138,725 $2,308,384
VNU N.V. (Netherlands) (Note 7). . . . . . . . . . . . . . . . 1,810 49,558
Wolters Kluwer N.V. (Netherlands) (Note 7) . . . . . . . . . . 1,175 21,473
------------
5,032,524
------------
MULTILINE RETAIL - 0.02%
Don Quijote Co. Ltd. (Japan) (Note 7). . . . . . . . . . . . . 300 18,028
KarstadtQuelle AG (Germany) (Note 7) . . . . . . . . . . . . . 550 6,288
------------
24,316
------------
SPECIALTY RETAIL - 3.12%
Douglas Holding AG (Germany) (Note 7). . . . . . . . . . . . . 2,250 69,346
Foot Locker, Inc.. . . . . . . . . . . . . . . . . . . . . . . 750 18,300
KOMERI Co. Ltd. (Japan) (Note 7) . . . . . . . . . . . . . . . 600 14,315
Office Depot, Inc.*. . . . . . . . . . . . . . . . . . . . . . 49,800 806,262
Staples, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . 29,775 885,508
Weight Watchers International, Inc.* . . . . . . . . . . . . . 33,200 1,192,544
------------
2,986,275
------------
TEXTILES, APPAREL & LUXURY GOODS - 0.04%
LVMH S.A. (Louis Vuitton Moet Hennessy) (France) (Note 7). . . 400 27,470
Wolverine World Wide, Inc. . . . . . . . . . . . . . . . . . . 375 11,415
------------
38,885
------------
9,351,390
------------
CONSUMER STAPLES - 7.39%
BEVERAGES - 0.11%
Allied Domecq plc (United Kingdom) (Note 7). . . . . . . . . . 1,900 16,923
Diageo plc (United Kingdom) (Note 7) . . . . . . . . . . . . . 1,175 15,728
Grupo Modelo S.A. de C.V. - Series C (Mexico) (Note 7) . . . . 6,025 15,441
InBev (Belgium) (Note 7) . . . . . . . . . . . . . . . . . . . 1,050 37,397
Scottish & Newcastle plc (United Kingdom) (Note 7) . . . . . . 2,050 15,189
------------
100,678
------------
FOOD & STAPLES RETAILING - 1.06%
Carrefour S.A. (France) (Note 7) . . . . . . . . . . . . . . . 20,750 910,989
Metro AG (Germany) (Note 7). . . . . . . . . . . . . . . . . . 325 15,524
Organizacion Soriana S.A. de C.V. - Series B (Mexico) (Note 7) 11,500 36,875
Pathmark Stores, Inc.* . . . . . . . . . . . . . . . . . . . . 3,675 15,839
Tesco plc (United Kingdom) (Note 7). . . . . . . . . . . . . . 3,400 17,929
William Morrison Supermarkets plc (United Kingdom) (Note 7). . 3,850 16,023
------------
1,013,179
------------
The accompanying notes are an integral part of the financial statements.
23
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- --------------------------------------------------------------- --------- -----------
CONSUMER STAPLES (continued)
FOOD PRODUCTS - 5.12%
Associated British Foods plc (United Kingdom) (Note 7). . . . . 1,375 $ 17,559
Cadbury Schweppes plc (United Kingdom) (Note 7) . . . . . . . . 4,975 41,363
Groupe Danone (France) (Note 7) . . . . . . . . . . . . . . . . 200 16,779
Hain Celestial Group, Inc.* . . . . . . . . . . . . . . . . . . 1,175 19,011
Nestle S.A. (Switzerland) (Note 7). . . . . . . . . . . . . . . 8,900 2,111,327
Smithfield Foods, Inc.* . . . . . . . . . . . . . . . . . . . . 775 18,778
Unilever plc - ADR (United Kingdom) (Note 7). . . . . . . . . . 78,598 2,679,406
------------
4,904,223
------------
HOUSEHOLD PRODUCTS - 0.16%
Henkel KGaA (Germany) (Note 7). . . . . . . . . . . . . . . . . 325 24,460
Kao Corp. (Japan) (Note 7). . . . . . . . . . . . . . . . . . . 1,000 23,102
Kimberly-Clark de Mexico S.A. de C.V. - ADR (Mexico) (Note 7) . 4,750 71,068
Rayovac Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . 800 19,928
Reckitt Benckiser plc (United Kingdom) (Note 7) . . . . . . . . 575 15,784
------------
154,342
------------
PERSONAL PRODUCTS - 0.94%
Clarins S.A. (France) (Note 7). . . . . . . . . . . . . . . . . 1,500 85,364
The Estee Lauder Companies, Inc. - Class A. . . . . . . . . . . 18,125 778,469
Shiseido Co. Ltd. (Japan) (Note 7). . . . . . . . . . . . . . . 3,000 39,203
------------
903,036
------------
7,075,458
------------
ENERGY - 9.21%
ENERGY EQUIPMENT & SERVICES - 7.80%
Atwood Oceanics, Inc.*. . . . . . . . . . . . . . . . . . . . . 1,250 59,937
Baker Hughes, Inc.. . . . . . . . . . . . . . . . . . . . . . . 31,200 1,336,296
Compagnie Generale de Geophysique S.A. (CGG)* (France) (Note 7) 350 21,888
Cooper Cameron Corp.* . . . . . . . . . . . . . . . . . . . . . 9,900 478,665
Helmerich & Payne, Inc. . . . . . . . . . . . . . . . . . . . . 1,475 42,111
National-Oilwell, Inc.* . . . . . . . . . . . . . . . . . . . . 1,625 54,779
Newpark Resources, Inc.*. . . . . . . . . . . . . . . . . . . . 4,550 24,706
Precision Drilling Corp.* (Canada) (Note 7) . . . . . . . . . . 950 58,577
Pride International, Inc.*. . . . . . . . . . . . . . . . . . . 4,225 78,078
Schlumberger Ltd. . . . . . . . . . . . . . . . . . . . . . . . 44,025 2,770,933
Smedvig ASA - Class A (Norway) (Note 7) . . . . . . . . . . . . 5,325 66,572
Transocean, Inc.* . . . . . . . . . . . . . . . . . . . . . . . 24,350 858,337
Varco International, Inc.*. . . . . . . . . . . . . . . . . . . 28,300 783,344
Weatherford International Ltd.* . . . . . . . . . . . . . . . . 15,900 830,934
------------
7,465,157
------------
The accompanying notes are an integral part of the financial statements.
24
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------------ --------- -----------
ENERGY (continued)
OIL & GAS - 1.41%
Amerada Hess Corp. . . . . . . . . . . . . . . . . . . . . . . . . 13,450 $1,085,549
BP plc (United Kingdom) (Note 7) . . . . . . . . . . . . . . . . . 1,775 17,204
Eni S.p.A. (Italy) (Note 7). . . . . . . . . . . . . . . . . . . . 3,475 79,104
Forest Oil Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . 1,200 36,600
Petroleo Brasileiro S.A. (Petrobras) - ADR (Brazil) (Note 7) . . . 1,350 44,010
Shell Transport & Trading Co. plc (United Kingdom) (Note 7). . . . 2,200 17,331
Total S.A. (France) (Note 7) . . . . . . . . . . . . . . . . . . . 350 72,959
------------
1,352,757
------------
8,817,914
------------
FINANCIALS - 5.49%
CAPITAL MARKETS - 1.80%
The Bank of New York Co., Inc. . . . . . . . . . . . . . . . . . . 24,975 810,688
Deutsche Bank AG (Germany) (Note 7). . . . . . . . . . . . . . . . 475 36,326
SEI Investments Co.. . . . . . . . . . . . . . . . . . . . . . . . 24,350 876,356
------------
1,723,370
------------
COMMERCIAL BANKS - 2.66%
Banca Intesa S.p.A. (Italy) (Note 7) . . . . . . . . . . . . . . . 6,423 26,367
Banco BPI S.A. (Portugal) (Note 7) . . . . . . . . . . . . . . . . 5,475 21,355
Banco Espirito Santo S.A. (BES) (Portugal) (Note 7). . . . . . . . 975 16,721
Bayerische Hypo-und Vereinsbank AG (HVB Group)* (Germany) (Note 7) 1,200 23,572
BNP Paribas S.A. (France) (Note 7) . . . . . . . . . . . . . . . . 350 23,879
Commerzbank AG* (Germany) (Note 7) . . . . . . . . . . . . . . . . 1,000 18,352
Metropolitan Bank & Trust Co. (Philippines) (Note 7) . . . . . . . 75,325 37,468
PNC Financial Services Group . . . . . . . . . . . . . . . . . . . 13,200 690,360
Societe Generale (France) (Note 7) . . . . . . . . . . . . . . . . 150 13,946
U.S. Bancorp . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,175 806,087
UniCredito Italiano S.p.A. (Italy) (Note 7). . . . . . . . . . . . 6,225 33,515
Wachovia Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . 16,925 832,879
------------
2,544,501
------------
CONSUMER FINANCE - 0.03%
MoneyGram International, Inc.. . . . . . . . . . . . . . . . . . . 725 13,485
Takefuji Corp. (Japan) (Note 7). . . . . . . . . . . . . . . . . . 230 14,560
------------
28,045
------------
The accompanying notes are an integral part of the financial statements.
25
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- ----------------------------------------------- --------- ---------
FINANCIALS (continued)
DIVERSIFIED FINANCIAL SERVICES - 0.83%
ING Groep N.V. (Netherlands) (Note 7) . . . . . 900 $ 23,883
Principal Financial Group, Inc. . . . . . . . . 20,450 772,192
----------
796,075
----------
INSURANCE - 0.10%
Allianz AG (Germany) (Note 7) . . . . . . . . . 150 16,008
Assicurazioni Generali S.p.A. (Italy) (Note 7). 1,100 32,735
Axa (France) (Note 7) . . . . . . . . . . . . . 1,400 30,204
Muenchener Rueckver AG (Germany) (Note 7) . . . 150 14,732
----------
93,679
----------
REAL ESTATE - 0.04%
SM Prime Holdings, Inc. (Philippines) (Note 7). 307,275 40,941
----------
THRIFTS & MORTGAGE FINANCE - 0.03%
Flagstar Bancorp, Inc.. . . . . . . . . . . . . 1,050 21,934
Hypo Real Estate Holding AG* (Germany) (Note 7) 156 5,855
----------
27,789
----------
5,254,400
----------
HEALTH CARE - 10.99%
BIOTECHNOLOGY - 0.44%
BioMarin Pharmaceutical, Inc.*. . . . . . . . . 13,725 56,684
Chiron Corp.* . . . . . . . . . . . . . . . . . 3,050 98,881
Ciphergen Biosystems, Inc.* . . . . . . . . . . 6,225 22,908
Diversa Corp.*. . . . . . . . . . . . . . . . . 7,725 66,590
Enzon Pharmaceuticals, Inc.*. . . . . . . . . . 2,775 44,872
Transkaryotic Therapies, Inc.*. . . . . . . . . 7,450 128,960
----------
418,895
----------
HEALTH CARE EQUIPMENT & SUPPLIES - 1.30%
Advanced Neuromodulation Systems, Inc.* . . . . 4,450 141,644
Conceptus, Inc.*. . . . . . . . . . . . . . . . 7,925 67,878
Millipore Corp.*. . . . . . . . . . . . . . . . 19,325 888,757
Thermo Electron Corp.*. . . . . . . . . . . . . 1,225 35,525
Varian, Inc.* . . . . . . . . . . . . . . . . . 3,000 109,440
----------
1,243,244
----------
HEALTH CARE PROVIDERS & SERVICES - 2.71%
Allscripts Healthcare Solutions, Inc.*. . . . . 15,825 147,093
American Healthways, Inc.*. . . . . . . . . . . 4,850 146,373
AmerisourceBergen Corp. . . . . . . . . . . . . 875 48,160
Express Scripts, Inc.*. . . . . . . . . . . . . 1,325 84,800
HCA, Inc. . . . . . . . . . . . . . . . . . . . 1,300 47,749
McKesson Corp.. . . . . . . . . . . . . . . . . 1,575 41,990
The accompanying notes are an integral part of the financial statements.
26
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------ ---------- -----------
HEALTH CARE (continued)
HEALTH CARE PROVIDERS & SERVICES (continued)
Omnicell, Inc.*. . . . . . . . . . . . . . . . . . . . . . . 4,675 $ 48,269
Triad Hospitals, Inc.* . . . . . . . . . . . . . . . . . . . 1,650 54,500
WebMD Corp.* . . . . . . . . . . . . . . . . . . . . . . . . 261,575 1,977,507
------------
2,596,441
------------
PHARMACEUTICALS - 6.54%
AstraZeneca plc (United Kingdom) (Note 7). . . . . . . . . . 350 14,354
GlaxoSmithKline plc (United Kingdom) (Note 7). . . . . . . . 750 15,806
Novartis AG - ADR (Switzerland) (Note 7) . . . . . . . . . . 60,400 2,899,804
Pfizer, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 2,275 65,861
Sanofi-Aventis (France) (Note 7) . . . . . . . . . . . . . . 270 19,785
Schering AG (Germany) (Note 7) . . . . . . . . . . . . . . . 2,750 176,898
Schering-Plough Corp.. . . . . . . . . . . . . . . . . . . . 167,750 3,037,953
Shire Pharmaceuticals Group plc (United Kingdom) (Note 7). . 1,750 16,680
Takeda Pharmaceutical Co. Ltd. (Japan) (Note 7). . . . . . . 400 19,351
------------
6,266,492
------------
10,525,072
------------
INDUSTRIALS - 2.63%
AEROSPACE & DEFENSE - 0.04%
SNECMA* (France) (Note 7). . . . . . . . . . . . . . . . . . 1,875 40,044
------------
AIRLINES - 0.07%
Deutsche Lufthansa AG* (Germany) (Note 7). . . . . . . . . . 1,575 20,827
JetBlue Airways Corp.* . . . . . . . . . . . . . . . . . . . 1,025 22,601
SkyWest, Inc.. . . . . . . . . . . . . . . . . . . . . . . . 1,250 21,350
------------
64,778
------------
COMMERCIAL SERVICES & SUPPLIES - 0.11%
Aggreko plc (United Kingdom) (Note 7). . . . . . . . . . . . 12,000 33,073
BWT AG (Austria) (Note 7). . . . . . . . . . . . . . . . . . 1,225 32,899
Quebecor World, Inc. (Canada) (Note 7) . . . . . . . . . . . 1,975 41,060
------------
107,032
------------
CONSTRUCTION & ENGINEERING - 0.12%
Hochtief AG (Germany) (Note 7) . . . . . . . . . . . . . . . 575 15,332
Infrasource Services, Inc.*. . . . . . . . . . . . . . . . . 1,550 16,182
Insituform Technologies, Inc. - Class A* . . . . . . . . . . 1,175 23,289
Koninklijke Boskalis Westminster N.V. (Netherlands) (Note 7) 2,208 59,580
------------
114,383
------------
The accompanying notes are an integral part of the financial statements.
27
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- -------------------------------------------------------- --------- ---------
INDUSTRIALS (continued)
ELECTRICAL EQUIPMENT - 0.04%
Global Power Equipment Group, Inc.*. . . . . . . . . . . 2,675 $ 21,561
Plug Power, Inc.*. . . . . . . . . . . . . . . . . . . . 3,250 19,451
----------
41,012
----------
INDUSTRIAL CONGLOMERATES - 0.09%
Siemens AG (Germany) (Note 7). . . . . . . . . . . . . . 875 65,461
Sonae S.A. (SGPS) (Portugal) (Note 7). . . . . . . . . . 19,025 23,357
----------
88,818
----------
MACHINERY - 1.12%
AGCO Corp.*. . . . . . . . . . . . . . . . . . . . . . . 40,875 793,793
Albany International Corp. - Class A . . . . . . . . . . 900 27,018
FANUC Ltd. (Japan) (Note 7). . . . . . . . . . . . . . . 200 12,094
Gardner Denver, Inc.*. . . . . . . . . . . . . . . . . . 750 22,485
Lindsay Manufacturing Co.. . . . . . . . . . . . . . . . 1,075 25,349
MAN AG (Germany) (Note 7). . . . . . . . . . . . . . . . 950 33,070
Tomra Systems ASA (Norway) (Note 7). . . . . . . . . . . 25,475 112,571
Wabtec Corp. . . . . . . . . . . . . . . . . . . . . . . 2,125 43,074
----------
1,069,454
----------
ROAD & RAIL - 1.02%
Central Freight Lines, Inc.* . . . . . . . . . . . . . . 2,575 14,394
CSX Corp.. . . . . . . . . . . . . . . . . . . . . . . . 24,775 904,288
Kansas City Southern*. . . . . . . . . . . . . . . . . . 3,125 52,969
----------
971,651
----------
TRANSPORTATION INFRASTRUCTURE - 0.02%
Brisa-Auto Estradas de Portugal S.A. (Portugal) (Note 7) 2,625 21,518
----------
2,518,690
----------
INFORMATION TECHNOLOGY - 2.71%
COMMUNICATIONS EQUIPMENT - 0.13%
Lucent Technologies, Inc.* . . . . . . . . . . . . . . . 6,800 24,140
Nokia Oyj - ADR (Finland) (Note 7) . . . . . . . . . . . 5,225 80,570
SES Global - FDR (Luxembourg) (Note 7) . . . . . . . . . 2,100 21,753
----------
126,463
----------
COMPUTERS & PERIPHERALS - 0.07%
Electronics for Imaging, Inc.* . . . . . . . . . . . . . 425 7,667
EMC Corp.* . . . . . . . . . . . . . . . . . . . . . . . 1,950 25,097
Stratasys, Inc.* . . . . . . . . . . . . . . . . . . . . 1,100 32,208
----------
64,972
----------
The accompanying notes are an integral part of the financial statements.
28
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------------- --------- ---------
INFORMATION TECHNOLOGY (continued)
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.22%
Digital Theater Systems, Inc.*. . . . . . . . . . . . . . . . . . . 1,500 $ 25,515
Fargo Electronics*. . . . . . . . . . . . . . . . . . . . . . . . . 4,100 53,751
KEYENCE Corp. (Japan) (Note 7). . . . . . . . . . . . . . . . . . . 100 22,563
Mabuchi Motor Co. Ltd. (Japan) (Note 7) . . . . . . . . . . . . . . 200 14,872
Mettler-Toledo International, Inc.* (Switzerland) (Note 7). . . . . 1,075 51,493
OSI Systems, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . 2,650 46,137
----------
214,331
----------
INTERNET SOFTWARE & SERVICES - 0.01%
Online Resources Corp.* . . . . . . . . . . . . . . . . . . . . . . 1,000 7,260
----------
IT SERVICES - 0.90%
The BISYS Group, Inc.*1 . . . . . . . . . . . . . . . . . . . . . . 1,325 19,345
First Data Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . 20,375 841,080
----------
860,425
----------
OFFICE ELECTRONICS - 0.05%
Canon, Inc. (Japan) (Note 7). . . . . . . . . . . . . . . . . . . . 1,000 49,417
----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.16%
Brooks Automation, Inc.*. . . . . . . . . . . . . . . . . . . . . . 3,125 46,500
Cabot Microelectronics Corp.* . . . . . . . . . . . . . . . . . . . 850 30,626
Cymer, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . . . . 925 26,381
Sigma Designs, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . 2,500 19,675
Taiwan Semiconductor Manufacturing Co. Ltd. - ADR (Taiwan) (Note 7) 6,022 45,587
Texas Instruments, Inc. . . . . . . . . . . . . . . . . . . . . . . 38,550 942,548
----------
1,111,317
----------
SOFTWARE - 0.17%
Amdocs Ltd.* (Guernsey) (Note 7). . . . . . . . . . . . . . . . . . 2,975 74,821
Informatica Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . 2,350 18,354
SAP AG (Germany) (Note 7) . . . . . . . . . . . . . . . . . . . . . 325 55,403
VERITAS Software Corp.* . . . . . . . . . . . . . . . . . . . . . . 400 8,752
----------
157,330
----------
2,591,515
----------
MATERIALS - 1.11%
CHEMICALS - 0.57%
Bayer AG (Germany) (Note 7) . . . . . . . . . . . . . . . . . . . . 1,050 29,877
Cabot Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275 9,372
Degussa AG (Germany) (Note 7) . . . . . . . . . . . . . . . . . . . 225 8,704
L'Air Liquide S.A. (France) (Note 7). . . . . . . . . . . . . . . . 165 26,714
Linde AG (Germany) (Note 7) . . . . . . . . . . . . . . . . . . . . 250 15,138
The accompanying notes are an integral part of the financial statements.
29
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- ----------------------------------------------------------------- --------- -----------
MATERIALS (continued)
CHEMICALS (continued)
Lonza Group AG (Switzerland) (Note 7) . . . . . . . . . . . . . . 3,550 $ 173,932
Minerals Technologies, Inc. . . . . . . . . . . . . . . . . . . . 4,600 276,460
------------
540,197
------------
PAPER & FOREST PRODUCTS - 0.54%
Aracruz Celulose S.A. - ADR (Brazil) (Note 7) . . . . . . . . . . 15,450 520,356
------------
1,060,553
------------
TELECOMMUNICATION SERVICES - 2.67%
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.21%
D&E Communications, Inc.. . . . . . . . . . . . . . . . . . . . . 1,100 13,607
Deutsche Telekom AG* (Germany) (Note 7) . . . . . . . . . . . . . 2,225 42,796
Philippine Long Distance Telephone Co.* (Philippines) (Note 7). . 1,050 26,208
PT Telekomunikasi Indonesia - ADR (Indonesia) (Note 7). . . . . . 3,275 62,454
Telecom Italia S.p.A. (Italy) (Note 7). . . . . . . . . . . . . . 12,378 41,315
Telefonos de Mexico S.A. de C.V. (Telmex) - ADR (Mexico) (Note 7) 475 16,264
------------
202,644
------------
WIRELESS TELECOMMUNICATION SERVICES - 2.46%
Globe Telecom, Inc. (Philippines) (Note 7). . . . . . . . . . . . 1,425 25,948
Maxis Communications Berhad (Malaysia) (Note 7) . . . . . . . . . 8,000 18,105
NTT DoCoMo, Inc. (Japan) (Note 7) . . . . . . . . . . . . . . . . 35 61,842
Telecom Italia Mobile S.p.A. (T.I.M.) (Italy) (Note 7). . . . . . 5,975 35,302
Vodafone Group plc - ADR (United Kingdom) (Note 7). . . . . . . . 85,775 2,212,137
------------
2,353,334
------------
2,555,978
------------
UTILITIES - 2.40%
ELECTRIC UTILITIES - 1.40%
Allegheny Energy, Inc.* . . . . . . . . . . . . . . . . . . . . . 66,575 1,218,988
E.ON AG (Germany) (Note 7). . . . . . . . . . . . . . . . . . . . 875 71,616
Korea Electric Power Corp. (KEPCO) - ADR (South Korea) (Note 7) . 2,200 25,256
Westar Energy, Inc. . . . . . . . . . . . . . . . . . . . . . . . 1,025 21,474
------------
1,337,334
------------
MULTI-UTILITIES & UNREGULATED POWER - 1.00%
National Grid Transco plc (United Kingdom) (Note 7) . . . . . . . 1,975 17,183
The accompanying notes are an integral part of the financial statements.
30
Investment Portfolio - October 31, 2004
SHARES/ VALUE
PRO-BLENDSM MODERATE TERM SERIES PRINCIPAL AMOUNT (NOTE 2)
- ----------------------------------------------------- ----------------- ------------
UTILITIES (continued)
MULTI-UTILITIES & UNREGULATED POWER (continued)
NRG Energy, Inc.* . . . . . . . . . . . . . . . . . . 31,300 $ 868,262
RWE AG (Germany) (Note 7) . . . . . . . . . . . . . . 1,175 62,360
Suez S.A. (France) (Note 7) . . . . . . . . . . . . . 550 12,886
-------------
960,691
-------------
2,298,025
-------------
TOTAL COMMON STOCKS
(Identified Cost $47,904,213) . . . . . . . . . . . . 52,048,995
-------------
UNIT INVESTMENT TRUSTS - 0.25%
Nasdaq-100 Index Tracking Stock . . . . . . . . . . . 4,075 150,204
Standard & Poor's Depositary Receipts Trust Series 1. 775 87,730
-------------
TOTAL UNIT INVESTMENT TRUSTS
(Identified Cost $227,643). . . . . . . . . . . . . . 237,934
-------------
U.S. TREASURY SECURITIES - 35.21%
U.S. TREASURY BONDS - 14.06%
U.S. Treasury Bond, 7.25%, 8/15/2022. . . . . . . . . $ 390,000 507,457
U.S. Treasury Bond, 6.25%, 8/15/2023. . . . . . . . . 10,000 11,813
U.S. Treasury Bond, 7.50%, 11/15/2024 . . . . . . . . 1,480,000 1,995,977
U.S. Treasury Bond, 5.50%, 8/15/2028. . . . . . . . . 10,055,000 10,950,518
-------------
TOTAL U.S. TREASURY BONDS
(Identified Cost $12,275,555) . . . . . . . . . . . . 13,465,765
-------------
U.S. TREASURY NOTES - 21.15%
U.S. Treasury Note, 5.875%, 11/15/2004. . . . . . . . 10,000 10,017
U.S. Treasury Note, 1.625%, 4/30/2005 . . . . . . . . 4,320,000 4,309,874
U.S. Treasury Note, 6.50%, 5/15/2005. . . . . . . . . 355,000 363,237
U.S. Treasury Note, 1.625%, 9/30/2005 . . . . . . . . 4,000,000 3,979,220
U.S. Treasury Note, 5.75%, 11/15/2005 . . . . . . . . 3,435,000 3,557,774
U.S. Treasury Note, 5.875%, 11/15/2005. . . . . . . . 5,000 5,185
U.S. Treasury Note, 1.875%, 12/31/2005. . . . . . . . 3,500,000 3,483,732
U.S. Treasury Note, 5.625%, 5/15/2008 . . . . . . . . 5,000 5,445
U.S. Treasury Note, 3.25%, 8/15/2008. . . . . . . . . 4,500,000 4,535,509
-------------
TOTAL U.S. TREASURY NOTES
(Identified Cost $20,164,257) . . . . . . . . . . . . 20,249,993
-------------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $32,439,812) . . . . . . . . . . . . 33,715,758
-------------
The accompanying notes are an integral part of the financial statements.
31
Investment Portfolio - October 31, 2004
PRINCIPAL AMOUNT/ VALUE
PRO-BLENDSM MODERATE TERM SERIES SHARES (NOTE 2)
- -------------------------------------------------------- ------------------- -----------
U.S. GOVERNMENT AGENCIES - 0.09%
MORTGAGE BACKED SECURITIES - 0.00%**
GNMA, Pool #286310, 9.00%, 2/15/2020 . . . . . . . . . . $ 3,218 $ 3,555
GNMA, Pool #288873, 9.50%, 8/15/2020 . . . . . . . . . . 344 390
-------------
TOTAL MORTGAGE BACKED SECURITIES
(Identified Cost $3,714) . . . . . . . . . . . . . . . . 3,945
-------------
OTHER AGENCIES - 0.09%
Fannie Mae, 5.50%, 2/15/2006 . . . . . . . . . . . . . . 5,000 5,187
Fannie Mae, 4.25%, 7/15/2007 . . . . . . . . . . . . . . 5,000 5,162
Fannie Mae, 5.75%, 2/15/2008 . . . . . . . . . . . . . . 55,000 59,362
Fannie Mae, 5.25%, 1/15/2009 . . . . . . . . . . . . . . 5,000 5,344
Fannie Mae, 6.375%, 6/15/2009. . . . . . . . . . . . . . 10,000 11,177
-------------
TOTAL OTHER AGENCIES
(Identified Cost $83,001). . . . . . . . . . . . . . . . 86,232
-------------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $86,715). . . . . . . . . . . . . . . . 90,177
-------------
SHORT-TERM INVESTMENTS - 13.71%
Dreyfus Treasury Cash Management - Institutional Shares. 5,138,115 5,138,115
Fannie Mae Discount Note, 11/23/2004 . . . . . . . . . . $ 6,000,000 5,993,547
Federal Home Loan Bank Discount Note, 12/6/2004. . . . . 2,000,000 1,996,539
-------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $13,128,201). . . . . . . . . . . . . . 13,128,201
-------------
TOTAL INVESTMENTS - 103.62%
(Identified Cost $93,786,584). . . . . . . . . . . . . . 99,221,065
LIABILITIES, LESS OTHER ASSETS - (3.62%) . . . . . . . . (3,465,311)
-------------
NET ASSETS - 100%. . . . . . . . . . . . . . . . . . . . $ 95,755,754
=============
*Non-income producing security
**Less than 0.01%
1A subsidiary of the company serves as the Fund's sub-accounting services and
sub-transfer agent. An employee of the company serves as an officer of the
Fund.
ADR - American Depository Receipt
FDR - Fiduciary Depository Receipt
The accompanying notes are an integral part of the financial statements.
32
Statement of Assets and Liabilities - Pro-BlendSM Moderate Term Series
October 31, 2004
ASSETS:
Investments, at value (identified cost $93,786,584) (Note 2) . $ 99,221,065
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,520,000
Receivable for securities sold . . . . . . . . . . . . . . . . 2,070,178
Interest receivable. . . . . . . . . . . . . . . . . . . . . . 390,375
Dividends receivable . . . . . . . . . . . . . . . . . . . . . 23,561
Foreign tax reclaims receivable. . . . . . . . . . . . . . . . 10,856
Receivable for fund shares sold. . . . . . . . . . . . . . . . 7,409
------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 105,243,444
------------
LIABILITIES:
Accrued management fees (Note 3) . . . . . . . . . . . . . . . 76,715
Accrued fund accounting and transfer agent fees (Note 3) . . . 13,581
Payable for fund shares repurchased. . . . . . . . . . . . . . 9,076,203
Payable for securities purchased . . . . . . . . . . . . . . . 281,817
Audit fees payable . . . . . . . . . . . . . . . . . . . . . . 29,324
Other payables and accrued expenses. . . . . . . . . . . . . . 10,050
------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 9,487,690
------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $ 95,755,754
============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . $ 81,098
Additional paid-in-capital . . . . . . . . . . . . . . . . . . 88,187,662
Undistributed net investment income. . . . . . . . . . . . . . 504,809
Accumulated net realized gain on investments and other assets
and liabilities. . . . . . . . . . . . . . . . . . . . . . . . 1,546,728
Net unrealized appreciation on investments and other assets
and liabilities. . . . . . . . . . . . . . . . . . . . . . . . 5,435,457
------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . $ 95,755,754
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE - CLASS A ($95,755,754/8,109,768 shares) . . . $ 11.81
============
The accompanying notes are an integral part of the financial statements.
33
Statement of Operations - Pro-BlendSM Moderate Term Series
For the Year Ended October 31, 2004
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . $1,410,039
Dividends (net of foreign tax withheld, $16,282) . 444,738
-----------
Total Investment Income. . . . . . . . . . . . . . 1,854,777
-----------
EXPENSES:
Management fees (Note 3) . . . . . . . . . . . . . 844,124
Fund accounting and transfer agent fees (Note 3) . 133,748
Directors' fees (Note 3) . . . . . . . . . . . . . 8,137
Custodian fees . . . . . . . . . . . . . . . . . . 24,701
Miscellaneous. . . . . . . . . . . . . . . . . . . 70,593
-----------
Total Expenses . . . . . . . . . . . . . . . . . . 1,081,303
Less reduction of expenses (Note 3). . . . . . . . (67,567)
-----------
Net Expenses . . . . . . . . . . . . . . . . . . . 1,013,736
-----------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . 841,041
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on -
Investments. . . . . . . . . . . . . . . . . . . . 1,610,233
Foreign currency and other assets and liabilities. 1,082
-----------
1,611,315
-----------
Net change in unrealized appreciation on -
Investments. . . . . . . . . . . . . . . . . . . . 4,026,429
Foreign currency and other assets and liabilities. 359
-----------
4,026,788
-----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS. . . . . . . . . . . . . . . . . . . . 5,638,103
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS . . . . . . . . . . . . . . . . . . . . $6,479,144
===========
The accompanying notes are an integral part of the financial statements.
34
Statements of Changes in Net Assets - Pro-BlendSM Moderate Term Series
FOR THE FOR THE
YEAR ENDED YEAR ENDED
10/31/04 10/31/03
------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . $ 841,041 $ 589,107
Net realized gain on investments. . . . . . . . . . . 1,611,315 1,500,106
Net change in unrealized appreciation on investments. 4,026,788 4,115,142
------------ ------------
Net increase from operations. . . . . . . . . . . . . 6,479,144 6,204,355
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 8):
From net investment income. . . . . . . . . . . . . . (654,858) (775,445)
From net realized gain on investments . . . . . . . . (704,843) -
------------ ------------
Total distributions to shareholders . . . . . . . . . (1,359,701) (775,445)
------------ ------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share transactions (Note 5) 21,242,966 16,293,921
------------ ------------
Net increase in net assets. . . . . . . . . . . . . . 26,362,409 21,722,831
NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . 69,393,345 47,670,514
------------ ------------
END OF YEAR (including undistributed net investment
income of $504,809 and $317,544, respectively). . . . $95,755,754 $69,393,345
============ ============
The accompanying notes are an integral part of the financial statements.
35
Financial Highlights - Pro-BlendSM Moderate Term Series
FOR THE YEARS ENDED
10/31/04 10/31/03 10/31/02 10/31/01 10/31/00
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH YEAR):
NET ASSET VALUE - BEGINNING OF YEAR. . . . . . . . $ 11.07 $ 10.05 $ 11.06 $ 12.18 $ 11.07
--------------------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income. . . . . . . . . . . . . . . 0.11 0.10 0.18 0.31 0.41
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . . . 0.85 1.08 (0.50) 0.11 1.30
--------------------- ---------- ---------- ---------- ----------
Total from investment operations . . . . . . . . . 0.96 1.18 (0.32) 0.42 1.71
--------------------- ---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income . . . . . . . . . . . . (0.10) (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. . . . . . . . (0.22) (0.16) (0.69) (1.54) (0.60)
--------------------- ---------- ---------- ---------- ----------
NET ASSET VALUE - END OF YEAR. . . . . . . . . . . $ 11.81 $ 11.07 $ 10.05 $ 11.06 $ 12.18
===================== ========== ========== ========== ==========
Total return1. . . . . . . . . . . . . . . . . . . 8.76% 11.87% (3.32%) 3.59% 16.12%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses*. . . . . . . . . . . . . . . . . . . . . 1.20% 1.20% 1.20% 1.20% 1.20%
Net investment income. . . . . . . . . . . . . . . 1.00% 1.05% 1.80% 2.68% 2.84%
Portfolio turnover . . . . . . . . . . . . . . . . 42% 60% 67% 77% 47%
NET ASSETS - END OF YEAR (000's omitted) . . . . . $ 95,756 $ 69,393 $ 47,671 $ 19,067 $ 18,040
===================== ========== ========== ========== ==========
*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% 0.13% 0.23% 0.55% 0.21%
1Represents aggregate total return for the year indicated, and assumes
reinvestment of all distributions. Total return would have been lower had
certain expenses not been waived during the year.
The accompanying notes are an integral part of the financial statements.
36
Performance Update - Pro-BlendSM Extended Term Series (unaudited)
Average Annual Total Returns
As of October 31, 2004
---------------------------------------------------------
Growth of
One Five Ten Since a $10, 000
Year Year Year Inception1 Investment*
----------------------------- ----- ------ ----------- ------------
Exeter Fund, Inc. - Pro-BlendSM Extended Term Series2 11.52% 7.89% 10.89% 10.11% $ 28,984
Lehman Brothers U.S. Government/Credit Bond Index3. . 5.57% 7.87% 7.86% 6.66% $ 20,328
50%/50% Blended Index3. . . . . . . . . . . . . . . . 7.54% 3.14% 9.79% 8.82% $ 25,344
*The value of a $10,000 investment in the Exeter Fund, Inc. - Pro-BlendSM
Extended Term Series from its inception1 (10/12/93) to present (10/31/04) as
compared to the Lehman Brothers U.S. Government/Credit Bond Index and a 50%/50%
Blended Index.
<graphic>
<line chart>
Exeter Fund, Inc. Lehman Brothers 50%/50% Blended
Date Pro-BlendSM Extended Term Series U.S. Government/Credit Bond Index Index
- ----------------- -------------------------------- --------------------------------- ---------------
10/12/93 $10,000 $10,000 $10,000
12/31/93 9,982 9,930 9,978
12/31/94 10,333 9,582 9,872
12/31/95 13,707 11,426 12,650
10/31/96 15,078 11,675 13,822
10/31/97 18,047 12,704 16,615
10/31/98 17,947 14,009 19,392
10/31/99 19,824 13,916 21,716
10/31/00 23,557 14,908 23,213
10/31/01 23,881 17,192 21,739
10/31/02 22,511 18,136 20,737
10/31/03 25,990 19,256 23,566
10/31/04 28,984 20,328 25,344
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.
2The 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 notbe indicative of future results.
3The Lehman Brothers U.S. Government/Credit Bond Index is a market value
weighted measure of over 3,000 investment grade corporate, government and
mortgage backed 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.
37
Shareholder Expense Example - Pro-BlendSM Extended Term Series (unaudited)
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, including potential wire charges and exchange fees and (2) ongoing costs,
including management fees and other Series expenses. This example is intended
to help you understand your ongoing costs (in dollars) of investing in the
Series and to compare these costs with the ongoing costs of investing in other
mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (May 1, 2004 to October 31, 2004).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
5/1/04 10/31/04 5/1/04-10/31/04
-------------- -------------- ----------------
Actual. . . . . . . . . . . $ 1,000.00 $ 1,040.30 $ 6.00
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,019.25 $ 5.94
*Expenses are equal to the Series' annualized expense ratio of 1.17%, multiplied
by the average account value over the period, multiplied by 184/366 (to reflect
the one-half year period).
The Series' total return would have been lower had certain expenses not been
waived during the period. Based on the most recent fiscal half year, the
Series' expense ratio may differ from the expense ratio based on one-year data
in the financial highlights.
38
Portfolio Composition - Pro-BlendSM Extended Term Series (unaudited)
As of October 31, 2004
<graphic>
<pie chart>
Asset Allocation*
Cash, short-term investments, and other assets, less liabilities 1.52%
Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66.59%
U.S. Government Agencies . . . . . . . . . . . . . . . . . . . . 0.07%
U.S. Treasury Bonds1 . . . . . . . . . . . . . . . . . . . . . . 13.98%
U.S. Treasury Notes2 . . . . . . . . . . . . . . . . . . . . . . 17.52%
Unit Investment Trusts . . . . . . . . . . . . . . . . . . . . . 0.32%
*As a percentage of net assets.
1A U.S. Treasury Bond is a long-term obligation of the U.S. Treasury issued with
a maturity period of more than ten years.
2A U.S. Treasury Note is an intermediate-term obligation of the U.S. Treasury
issued with a maturity period between one and ten years.
Stock Sector Allocation*
Consumer Discretionary . . 11.46%
Consumer Staples . . . . . 9.01%
Energy . . . . . . . . . . 10.52%
Financials . . . . . . . . 7.02%
Health Care. . . . . . . . 13.71%
Industrials. . . . . . . . 3.38%
Information Technology . . 3.26%
Materials. . . . . . . . . 2.22%
Telecommunication Services 3.24%
Utilities. . . . . . . . . 2.91%
*As a percentage of total investments.
Top Ten Stock Holdings*
Schering-Plough Corp. . . . . . . . . . . 3.97%
Novartis AG - ADR (Switzerland) . . . . . 3.56%
Unilever plc - ADR (United Kingdom) . . . 3.55%
Schlumberger Ltd. . . . . . . . . . . . . 2.88%
Vodafone Group plc - ADR (United Kingdom) 2.71%
WebMD Corp. . . . . . . . . . . . . . . . 2.51%
Time Warner, Inc. . . . . . . . . . . . . 2.33%
Nestle S.A. (Switzerland) . . . . . . . . 2.33%
Baker Hughes, Inc.. . . . . . . . . . . . 1.72%
Allegheny Energy, Inc.. . . . . . . . . . 1.51%
*As a percentage of total investments.
39
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------------------------ --------- -----------
COMMON STOCKS - 66.59%
CONSUMER DISCRETIONARY - 11.44%
AUTOMOBILES - 0.02%
Bayerische Motoren Werke AG (BMW) (Germany) (Note 7) . . . . . . . . . . . . . 1,200 $ 51,011
------------
HOTELS, RESTAURANTS & LEISURE - 1.22%
Carnival Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,575 3,214,352
International Speedway Corp. - Class A . . . . . . . . . . . . . . . . . . . . 1,350 63,504
Shangri-La Asia Ltd. (Hong Kong) (Note 7). . . . . . . . . . . . . . . . . . . 63,000 72,441
------------
3,350,297
------------
HOUSEHOLD DURABLES - 0.17%
Corporacion GEO S.A. de C.V. - Series B* (Mexico) (Note 7) . . . . . . . . . . 49,750 77,586
Hunter Douglas N.V. (Netherlands) (Note 7) . . . . . . . . . . . . . . . . . . 950 45,073
Interface, Inc. - Class A* . . . . . . . . . . . . . . . . . . . . . . . . . . 7,850 68,216
Sony Corp. - ADR (Japan) (Note 7). . . . . . . . . . . . . . . . . . . . . . . 7,625 265,731
------------
456,606
------------
INTERNET & CATALOG RETAIL - 0.03%
IAC/InterActiveCorp* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,650 78,913
------------
LEISURE EQUIPMENT & PRODUCTS - 0.10%
Callaway Golf Co.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,275 23,728
Hasbro, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 88,450
K2, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,175 35,278
Sega Sammy Holdings, Inc. (Japan) (Note 7) . . . . . . . . . . . . . . . . . . 2,550 118,543
------------
265,999
------------
MEDIA - 5.99%
Acme Communications, Inc.* . . . . . . . . . . . . . . . . . . . . . . . . . . 20,450 115,951
Belo Corp. - Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,525 81,956
Cablevision Systems New York Group - Class A*. . . . . . . . . . . . . . . . . 142,275 2,928,020
The E.W. Scripps Co. - Class A . . . . . . . . . . . . . . . . . . . . . . . . 56,425 2,692,601
Harris Interactive, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . . . 18,550 126,140
Hearst-Argyle Television, Inc. - Class A . . . . . . . . . . . . . . . . . . . 2,250 58,635
Impresa S.A. (SGPS)* (Portugal) (Note 7) . . . . . . . . . . . . . . . . . . . 19,400 113,133
Insight Communications Co., Inc. - Class A*. . . . . . . . . . . . . . . . . . 11,425 96,656
Media Capital S.A. (SGPS)* (Portugal) (Note 7) . . . . . . . . . . . . . . . . 20,250 137,512
The News Corp. Ltd. - ADR (now known as News Corp., Inc.) (Australia) (Note 7) 9,925 312,042
Pearson plc (United Kingdom) (Note 7). . . . . . . . . . . . . . . . . . . . . 244,550 2,687,017
PT Multimedia S.A. (SGPS) (Portugal) (Note 7). . . . . . . . . . . . . . . . . 4,325 101,107
Reed Elsevier plc - ADR (United Kingdom) (Note 7). . . . . . . . . . . . . . . 7,025 252,900
Scholastic Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,750 83,380
The accompanying notes are an integral part of the financial statements.
40
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- -------------------------------------------------------------- ---------- -----------
CONSUMER DISCRETIONARY (continued)
MEDIA (continued)
Time Warner, Inc.* . . . . . . . . . . . . . . . . . . . . . . 385,425 $6,413,472
VNU N.V. (Netherlands) (Note 7). . . . . . . . . . . . . . . . 8,019 219,562
Wolters Kluwer N.V. (Netherlands) (Note 7) . . . . . . . . . . 4,825 88,176
------------
16,508,260
------------
MULTILINE RETAIL - 0.03%
Don Quijote Co. Ltd. (Japan) (Note 7). . . . . . . . . . . . . 1,100 66,103
KarstadtQuelle AG (Germany) (Note 7) . . . . . . . . . . . . . 2,625 30,012
------------
96,115
------------
SPECIALTY RETAIL - 3.82%
Courts Mammoth Berhad (Malaysia) (Note 7). . . . . . . . . . . 63,700 26,151
Douglas Holding AG (Germany) (Note 7). . . . . . . . . . . . . 9,150 282,007
Foot Locker, Inc.. . . . . . . . . . . . . . . . . . . . . . . 2,800 68,320
KOMERI Co. Ltd. (Japan) (Note 7) . . . . . . . . . . . . . . . 2,400 57,259
Office Depot, Inc.*. . . . . . . . . . . . . . . . . . . . . . 191,025 3,092,695
Staples, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . 98,550 2,930,877
Weight Watchers International, Inc.* . . . . . . . . . . . . . 113,625 4,081,410
------------
10,538,719
------------
TEXTILES, APPAREL & LUXURY GOODS - 0.06%
LVMH S.A. (Louis Vuitton Moet Hennessy) (France) (Note 7). . . 1,925 132,198
Wolverine World Wide, Inc. . . . . . . . . . . . . . . . . . . 1,525 46,421
------------
178,619
------------
31,524,539
------------
CONSUMER STAPLES - 8.99%
BEVERAGES - 0.16%
Allied Domecq plc (United Kingdom) (Note 7). . . . . . . . . . 8,175 72,813
Diageo plc (United Kingdom) (Note 7) . . . . . . . . . . . . . 5,050 67,596
Grupo Modelo S.A. de C.V. - Series C (Mexico) (Note 7) . . . . 25,100 64,327
InBev (Belgium) (Note 7) . . . . . . . . . . . . . . . . . . . 4,750 169,176
Scottish & Newcastle plc (United Kingdom) (Note 7) . . . . . . 8,675 64,276
------------
438,188
------------
FOOD & STAPLES RETAILING - 1.31%
Carrefour S.A. (France) (Note 7) . . . . . . . . . . . . . . . 71,900 3,156,630
Metro AG (Germany) (Note 7). . . . . . . . . . . . . . . . . . 1,550 74,036
Organizacion Soriana S.A. de C.V. - Series B (Mexico) (Note 7) 53,100 170,268
Pathmark Stores, Inc.* . . . . . . . . . . . . . . . . . . . . 13,825 59,586
The accompanying notes are an integral part of the financial statements.
41
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- --------------------------------------------------------------- ---------- -----------
CONSUMER STAPLES (continued)
FOOD & STAPLES RETAILING (continued)
Tesco plc (United Kingdom) (Note 7) . . . . . . . . . . . . . . 14,600 $ 76,990
William Morrison Supermarkets plc (United Kingdom) (Note 7) . . 16,300 67,836
------------
3,605,346
------------
FOOD PRODUCTS - 6.05%
Associated British Foods plc (United Kingdom) (Note 7). . . . . 5,850 74,704
Cadbury Schweppes plc (United Kingdom) (Note 7) . . . . . . . . 23,650 196,631
Groupe Danone (France) (Note 7) . . . . . . . . . . . . . . . . 950 79,698
Hain Celestial Group, Inc.* . . . . . . . . . . . . . . . . . . 4,425 71,597
Nestle S.A. (Switzerland) (Note 7). . . . . . . . . . . . . . . 27,000 6,405,151
Smithfield Foods, Inc.* . . . . . . . . . . . . . . . . . . . . 3,700 89,651
Unilever plc - ADR (United Kingdom) (Note 7). . . . . . . . . . 286,424 9,764,194
------------
16,681,626
------------
HOUSEHOLD PRODUCTS - 0.24%
Henkel KgaA (Germany) (Note 7). . . . . . . . . . . . . . . . . 1,650 124,180
Kao Corp. (Japan) (Note 7). . . . . . . . . . . . . . . . . . . 3,000 69,306
Kimberly-Clark de Mexico S.A. de C.V. - ADR (Mexico) (Note 7) . 20,400 305,219
Rayovac Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . 3,525 87,808
Reckitt Benckiser plc (United Kingdom) (Note 7) . . . . . . . . 2,475 67,940
------------
654,453
------------
PERSONAL PRODUCTS - 1.23%
Clarins S.A. (France) (Note 7). . . . . . . . . . . . . . . . . 6,353 361,532
The Estee Lauder Companies, Inc. - Class A. . . . . . . . . . . 66,250 2,845,438
Shiseido Co. Ltd. (Japan) (Note 7). . . . . . . . . . . . . . . 15,000 196,013
------------
3,402,983
------------
24,782,596
------------
ENERGY - 10.50%
ENERGY EQUIPMENT & SERVICES - 8.76%
Atwood Oceanics, Inc.*. . . . . . . . . . . . . . . . . . . . . 4,400 210,980
Baker Hughes, Inc.. . . . . . . . . . . . . . . . . . . . . . . 110,675 4,740,210
Compagnie Generale de Geophysique S.A. (CGG)* (France) (Note 7) 1,775 111,001
Cooper Cameron Corp.* . . . . . . . . . . . . . . . . . . . . . 30,975 1,497,641
Helmerich & Payne, Inc. . . . . . . . . . . . . . . . . . . . . 6,075 173,441
National-Oilwell, Inc.* . . . . . . . . . . . . . . . . . . . . 5,050 170,236
Newpark Resources, Inc.*. . . . . . . . . . . . . . . . . . . . 20,675 112,265
Precision Drilling Corp.* (Canada) (Note 7) . . . . . . . . . . 4,475 275,928
Pride International, Inc.*. . . . . . . . . . . . . . . . . . . 12,075 223,146
The accompanying notes are an integral part of the financial statements.
42
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------------ ---------- -----------
ENERGY (continued)
ENERGY EQUIPMENT & SERVICES (continued)
Schlumberger Ltd.. . . . . . . . . . . . . . . . . . . . . . . . . 126,025 $7,932,014
Smedvig ASA - Class A (Norway) (Note 7). . . . . . . . . . . . . . 24,075 300,980
Transocean, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . 79,250 2,793,563
Varco International, Inc.* . . . . . . . . . . . . . . . . . . . . 99,425 2,752,084
Weatherford International Ltd.*. . . . . . . . . . . . . . . . . . 54,325 2,839,025
------------
24,132,514
------------
OIL & GAS - 1.74%
Amerada Hess Corp. . . . . . . . . . . . . . . . . . . . . . . . . 46,175 3,726,784
BP plc (United Kingdom) (Note 7) . . . . . . . . . . . . . . . . . 7,600 73,661
Eni S.p.A. (Italy) (Note 7). . . . . . . . . . . . . . . . . . . . 13,075 297,634
Forest Oil Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . 5,100 155,550
Petroleo Brasileiro S.A. (Petrobras) - ADR (Brazil) (Note 7) . . . 5,850 190,710
Shell Transport & Trading Co. plc (United Kingdom) (Note 7). . . . 9,325 73,461
Total S.A. (France) (Note 7) . . . . . . . . . . . . . . . . . . . 1,350 281,412
------------
4,799,212
------------
28,931,726
------------
FINANCIALS - 7.01%
CAPITAL MARKETS - 2.19%
The Bank of New York Co., Inc. . . . . . . . . . . . . . . . . . . 91,175 2,959,540
Deutsche Bank AG (Germany) (Note 7). . . . . . . . . . . . . . . . 2,175 166,334
SEI Investments Co.. . . . . . . . . . . . . . . . . . . . . . . . 80,375 2,892,696
------------
6,018,570
------------
COMMERCIAL BANKS - 3.44%
Banca Intesa S.p.A. (Italy) (Note 7) . . . . . . . . . . . . . . . 30,335 124,529
Banca Monte dei Paschi di Siena S.p.A. (Italy) (Note 7). . . . . . 10,950 32,768
Banco BPI S.A. (Portugal) (Note 7) . . . . . . . . . . . . . . . . 22,825 89,029
Banco Espirito Santo S.A. (BES) (Portugal) (Note 7). . . . . . . . 4,050 69,455
Bayerische Hypo-und Vereinsbank AG (HVB Group)* (Germany) (Note 7) 4,950 97,234
BNP Paribas S.A. (France) (Note 7) . . . . . . . . . . . . . . . . 1,550 105,752
Commerzbank AG* (Germany) (Note 7) . . . . . . . . . . . . . . . . 4,025 73,865
Hong Leong Bank Berhad (Malaysia) (Note 7) . . . . . . . . . . . . 36,300 50,151
Metropolitan Bank & Trust Co. (Philippines) (Note 7) . . . . . . . 315,000 156,689
PNC Financial Services Group . . . . . . . . . . . . . . . . . . . 51,675 2,702,602
SanPaolo IMI S.p.A. (Italy) (Note 7) . . . . . . . . . . . . . . . 3,025 38,453
The accompanying notes are an integral part of the financial statements.
43
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- ---------------------------------------------- ---------- -----------
FINANCIALS (continued)
COMMERCIAL BANKS (continued)
Societe Generale (France) (Note 7) . . . . . . 675 $ 62,757
U.S. Bancorp . . . . . . . . . . . . . . . . . 98,750 2,825,238
UniCredito Italiano S.p.A. (Italy) (Note 7). . 29,175 157,078
Wachovia Corp. . . . . . . . . . . . . . . . . 58,925 2,899,699
------------
9,485,299
------------
CONSUMER FINANCE - 0.04%
MoneyGram International, Inc.. . . . . . . . . 2,925 54,405
Takefuji Corp. (Japan) (Note 7). . . . . . . . 950 60,141
------------
114,546
------------
DIVERSIFIED FINANCIAL SERVICES - 1.09%
ING Groep N.V. (Netherlands) (Note 7). . . . . 3,650 96,857
Principal Financial Group, Inc.. . . . . . . . 77,150 2,913,184
------------
3,010,041
------------
INSURANCE - 0.16%
Allianz AG (Germany) (Note 7). . . . . . . . . 750 80,040
Assicurazioni Generali S.p.A. (Italy) (Note 7) 5,100 151,771
Axa (France) (Note 7). . . . . . . . . . . . . 6,550 141,311
Muenchener Rueckver AG (Germany) (Note 7). . . 625 61,385
------------
434,507
------------
REAL ESTATE - 0.06%
SM Prime Holdings, Inc. (Philippines) (Note 7) 1,283,025 170,948
------------
THRIFTS & MORTGAGE FINANCE - 0.03%
Flagstar Bancorp, Inc. . . . . . . . . . . . . 3,975 83,038
------------
19,316,949
------------
HEALTH CARE - 13.68%
BIOTECHNOLOGY - 0.56%
BioMarin Pharmaceutical, Inc.* . . . . . . . . 54,500 225,085
Chiron Corp.*. . . . . . . . . . . . . . . . . 11,450 371,209
Diversa Corp.* . . . . . . . . . . . . . . . . 31,075 267,867
Enzon Pharmaceuticals, Inc.* . . . . . . . . . 10,450 168,976
Transkaryotic Therapies, Inc.* . . . . . . . . 28,900 500,259
------------
1,533,396
------------
HEALTH CARE EQUIPMENT & SUPPLIES - 1.76%
Advanced Neuromodulation Systems, Inc.*. . . . 18,075 575,327
Conceptus, Inc.* . . . . . . . . . . . . . . . 29,575 253,310
Millipore Corp.* . . . . . . . . . . . . . . . 70,975 3,264,140
Thermo Electron Corp.* . . . . . . . . . . . . 4,450 129,050
Varian, Inc.*. . . . . . . . . . . . . . . . . 11,150 406,752
Viasys Healthcare, Inc.* . . . . . . . . . . . 12,850 219,607
------------
4,848,186
------------
The accompanying notes are an integral part of the financial statements.
44
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- --------------------------------------------------------- ---------- ------------
HEALTH CARE (continued)
HEALTH CARE PROVIDERS & SERVICES - 3.37%
Allscripts Healthcare Solutions, Inc.*. . . . . . . . . . 58,875 $ 547,243
American Healthways, Inc.*. . . . . . . . . . . . . . . . 19,475 587,756
AmerisourceBergen Corp. . . . . . . . . . . . . . . . . . 3,475 191,264
Express Scripts, Inc.*. . . . . . . . . . . . . . . . . . 4,975 318,400
HCA, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 5,250 192,833
McKesson Corp.. . . . . . . . . . . . . . . . . . . . . . 6,525 173,957
Omnicell, Inc.* . . . . . . . . . . . . . . . . . . . . . 17,675 182,494
Triad Hospitals, Inc.*. . . . . . . . . . . . . . . . . . 6,250 206,437
WebMD Corp.*. . . . . . . . . . . . . . . . . . . . . . . 911,625 6,891,885
-------------
9,292,269
-------------
PHARMACEUTICALS - 7.99%
AstraZeneca plc (United Kingdom) (Note 7) . . . . . . . . 1,450 59,465
GlaxoSmithKline plc (United Kingdom) (Note 7) . . . . . . 3,200 67,440
Novartis AG - ADR (Switzerland) (Note 7). . . . . . . . . 203,850 9,786,839
Pfizer, Inc.. . . . . . . . . . . . . . . . . . . . . . . 8,450 244,627
Sanofi-Aventis (France) (Note 7). . . . . . . . . . . . . 1,250 91,598
Schering AG (Germany) (Note 7). . . . . . . . . . . . . . 10,750 691,508
Schering-Plough Corp. . . . . . . . . . . . . . . . . . . 603,300 10,925,763
Shire Pharmaceuticals Group plc (United Kingdom) (Note 7) 7,425 70,771
Takeda Pharmaceutical Co. Ltd. (Japan) (Note 7) . . . . . 1,700 82,241
-------------
22,020,252
-------------
37,694,103
-------------
INDUSTRIALS - 3.37%
AEROSPACE & DEFENSE - 0.06%
SNECMA* (France) (Note 7) . . . . . . . . . . . . . . . . 7,950 169,787
-------------
AIRLINES - 0.09%
Deutsche Lufthansa AG* (Germany) (Note 7) . . . . . . . . 6,475 85,621
JetBlue Airways Corp.*. . . . . . . . . . . . . . . . . . 3,875 85,444
SkyWest, Inc. . . . . . . . . . . . . . . . . . . . . . . 3,725 63,623
-------------
234,688
-------------
COMMERCIAL SERVICES & SUPPLIES - 0.17%
Aggreko plc (United Kingdom) (Note 7) . . . . . . . . . . 51,875 142,972
BWT AG (Austria) (Note 7) . . . . . . . . . . . . . . . . 5,268 141,477
Quebecor World, Inc. (Canada) (Note 7). . . . . . . . . . 9,100 189,189
-------------
473,638
-------------
The accompanying notes are an integral part of the financial statements.
45
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------ --------- -----------
INDUSTRIALS (continued)
CONSTRUCTION & ENGINEERING - 0.18%
Hochtief AG (Germany) (Note 7) . . . . . . . . . . . . . . . 2,625 $ 69,993
Infrasource Services, Inc.*. . . . . . . . . . . . . . . . . 6,225 64,989
Insituform Technologies, Inc. - Class A* . . . . . . . . . . 4,825 95,631
Koninklijke Boskalis Westminster N.V. (Netherlands) (Note 7) 9,728 262,499
------------
493,112
------------
ELECTRICAL EQUIPMENT - 0.06%
Global Power Equipment Group, Inc.*. . . . . . . . . . . . . 10,725 86,443
Plug Power, Inc.*. . . . . . . . . . . . . . . . . . . . . . 12,925 77,356
------------
163,799
------------
INDUSTRIAL CONGLOMERATES - 0.13%
Siemens AG (Germany) (Note 7). . . . . . . . . . . . . . . . 3,325 248,753
Sonae S.A. (SGPS) (Portugal) (Note 7). . . . . . . . . . . . 77,250 94,840
------------
343,593
------------
MACHINERY - 1.42%
AGCO Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . 143,075 2,778,516
Albany International Corp. - Class A . . . . . . . . . . . . 3,800 114,076
FANUC Ltd. (Japan) (Note 7). . . . . . . . . . . . . . . . . 1,000 60,471
Gardner Denver, Inc.*. . . . . . . . . . . . . . . . . . . . 2,850 85,443
Lindsay Manufacturing Co.. . . . . . . . . . . . . . . . . . 4,375 103,163
MAN AG (Germany) (Note 7). . . . . . . . . . . . . . . . . . 3,875 134,890
Tomra Systems ASA (Norway) (Note 7). . . . . . . . . . . . . 108,200 478,121
Wabtec Corp. . . . . . . . . . . . . . . . . . . . . . . . . 8,175 165,707
------------
3,920,387
------------
ROAD & RAIL - 1.23%
Central Freight Lines, Inc.* . . . . . . . . . . . . . . . . 10,350 57,856
CSX Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . 85,950 3,137,175
Kansas City Southern*. . . . . . . . . . . . . . . . . . . . 11,925 202,129
------------
3,397,160
------------
TRANSPORTATION INFRASTRUCTURE - 0.03%
Brisa-Auto Estradas de Portugal S.A. (Portugal) (Note 7) . . 10,975 89,967
------------
9,286,131
------------
INFORMATION TECHNOLOGY - 3.25%
COMMUNICATIONS EQUIPMENT - 0.19%
Lucent Technologies, Inc.* . . . . . . . . . . . . . . . . . 25,650 91,058
Nokia Oyj - ADR (Finland) (Note 7) . . . . . . . . . . . . . 21,875 337,312
SES Global - FDR (Luxembourg) (Note 7) . . . . . . . . . . . 7,950 82,352
------------
510,722
------------
The accompanying notes are an integral part of the financial statements.
46
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------------- --------- -----------
INFORMATION TECHNOLOGY (continued)
COMPUTERS & PERIPHERALS - 0.05%
Electronics for Imaging, Inc.*. . . . . . . . . . . . . . . . . . . 1,550 $ 27,962
EMC Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,400 95,238
Stratasys, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . . 225 6,588
------------
129,788
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.24%
Digital Theater Systems, Inc.*. . . . . . . . . . . . . . . . . . . 5,825 99,083
Fargo Electronics*. . . . . . . . . . . . . . . . . . . . . . . . . 6,625 86,854
KEYENCE Corp. (Japan) (Note 7). . . . . . . . . . . . . . . . . . . 300 67,690
Mabuchi Motor Co. Ltd. (Japan) (Note 7) . . . . . . . . . . . . . . 800 59,489
Mettler-Toledo International, Inc.* (Switzerland) (Note 7). . . . . 3,900 186,810
OSI Systems, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . 9,950 173,229
------------
673,155
------------
INTERNET SOFTWARE & SERVICES - 0.01%
Online Resources Corp.* . . . . . . . . . . . . . . . . . . . . . . 3,775 27,406
------------
IT SERVICES - 1.03%
The BISYS Group, Inc.*1 . . . . . . . . . . . . . . . . . . . . . . 5,350 78,110
First Data Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . 66,800 2,757,504
------------
2,835,614
------------
OFFICE ELECTRONICS - 0.02%
Canon, Inc. (Japan) (Note 7). . . . . . . . . . . . . . . . . . . . 1,000 49,417
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.49%
Brooks Automation, Inc.*. . . . . . . . . . . . . . . . . . . . . . 12,900 191,952
Cabot Microelectronics Corp.* . . . . . . . . . . . . . . . . . . . 3,350 120,700
Cymer, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,900 111,228
Sigma Designs, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . 10,100 79,487
Taiwan Semiconductor Manufacturing Co. Ltd. - ADR (Taiwan) (Note 7) 24,661 186,684
Texas Instruments, Inc. . . . . . . . . . . . . . . . . . . . . . . 140,225 3,428,501
------------
4,118,552
------------
SOFTWARE - 0.22%
Amdocs Ltd.* (Guernsey) (Note 7). . . . . . . . . . . . . . . . . . 12,225 307,459
Informatica Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . 8,825 68,923
SAP AG (Germany) (Note 7) . . . . . . . . . . . . . . . . . . . . . 1,225 208,827
VERITAS Software Corp.* . . . . . . . . . . . . . . . . . . . . . . 1,525 33,367
------------
618,576
------------
8,963,230
------------
The accompanying notes are an integral part of the financial statements.
47
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM EXTENDED TERM SERIES SHARES (NOTE 2)
- ----------------------------------------------------------------- --------- -----------
MATERIALS - 2.22%
CHEMICALS - 1.13%
Bayer AG (Germany) (Note 7) . . . . . . . . . . . . . . . . . . . 5,000 $ 142,273
Cabot Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,325 45,156
L'Air Liquide S.A. (France) (Note 7). . . . . . . . . . . . . . . 742 120,132
Linde AG (Germany) (Note 7) . . . . . . . . . . . . . . . . . . . 1,125 68,123
Lonza Group AG (Switzerland) (Note 7) . . . . . . . . . . . . . . 14,700 720,226
Minerals Technologies, Inc. . . . . . . . . . . . . . . . . . . . 33,350 2,004,335
------------
3,100,245
------------
PAPER & FOREST PRODUCTS - 1.09%
Aracruz Celulose S.A. - ADR (Brazil) (Note 7) . . . . . . . . . . 89,200 3,004,256
------------
6,104,501
------------
TELECOMMUNICATION SERVICES - 3.23%
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.31%
D&E Communications, Inc.. . . . . . . . . . . . . . . . . . . . . 4,600 56,902
Deutsche Telekom AG* (Germany) (Note 7) . . . . . . . . . . . . . 9,150 175,991
Philippine Long Distance Telephone Co.* (Philippines) (Note 7). . 4,350 108,576
PT Telekomunikasi Indonesia - ADR (Indonesia) (Note 7). . . . . . 13,475 256,968
Telecom Italia S.p.A. (Italy) (Note 7). . . . . . . . . . . . . . 58,025 193,676
Telefonos de Mexico S.A. de C.V. (Telmex) - ADR (Mexico) (Note 7) 1,975 67,624
------------
859,737
------------
WIRELESS TELECOMMUNICATION SERVICES - 2.92%
Globe Telecom, Inc. (Philippines) (Note 7). . . . . . . . . . . . 5,900 107,435
Maxis Communications Berhad (Malaysia) (Note 7) . . . . . . . . . 32,500 73,553
NTT DoCoMo, Inc. (Japan) (Note 7) . . . . . . . . . . . . . . . . 142 250,900
Telecom Italia Mobile S.p.A. (T.I.M.) (Italy) (Note 7). . . . . . 27,950 165,137
Vodafone Group plc - ADR (United Kingdom) (Note 7). . . . . . . . 288,800 7,448,152
------------
8,045,177
------------
8,904,914
------------
UTILITIES - 2.90%
ELECTRIC UTILITIES - 1.68%
Allegheny Energy, Inc.* . . . . . . . . . . . . . . . . . . . . . 227,250 4,160,948
E.ON AG (Germany) (Note 7). . . . . . . . . . . . . . . . . . . . 3,250 266,002
Korea Electric Power Corp. (KEPCO) - ADR (South Korea) (Note 7) . 10,825 124,271
Westar Energy, Inc. . . . . . . . . . . . . . . . . . . . . . . . 3,850 80,657
------------
4,631,878
------------
The accompanying notes are an integral part of the financial statements.
48
Investment Portfolio - October 31, 2004
SHARES/ VALUE
PRO-BLENDSM EXTENDED TERM SERIES PRINCIPAL AMOUNT (NOTE 2)
- -------------------------------------------------------- ----------------- ------------
UTILITIES (continued)
MULTI-UTILITIES & UNREGULATED POWER - 1.22%
National Grid Transco plc (United Kingdom) (Note 7). . . 8,475 $ 73,733
NRG Energy, Inc.*. . . . . . . . . . . . . . . . . . . . 107,450 2,980,663
RWE AG (Germany) (Note 7). . . . . . . . . . . . . . . . 4,850 257,401
Suez S.A. (France) (Note 7). . . . . . . . . . . . . . . 2,575 60,329
-------------
3,372,126
-------------
8,004,004
-------------
TOTAL COMMON STOCKS
(Identified Cost $166,658,741) . . . . . . . . . . . . . 183,512,693
-------------
UNIT INVESTMENT TRUSTS - 0.32%
Nasdaq-100 Index Tracking Stock. . . . . . . . . . . . . 15,375 566,723
Standard & Poor's Depositary Receipts Trust Series 1 . . 2,900 328,280
-------------
TOTAL UNIT INVESTMENT TRUSTS
(Identified Cost $856,214) . . . . . . . . . . . . . . . 895,003
-------------
U.S. TREASURY SECURITIES - 31.50%
U.S. TREASURY BONDS - 13.98%
U.S. Treasury Bond, 7.25%, 8/15/2022 . . . . . . . . . . $ 5,000 6,506
U.S. Treasury Bond, 5.50%, 8/15/2028 . . . . . . . . . . 35,355,000 38,503,787
-------------
TOTAL U.S. TREASURY BONDS
(Identified Cost $35,486,188). . . . . . . . . . . . . . 38,510,293
-------------
U.S. TREASURY NOTES - 17.52%
U.S. Treasury Note, 1.625%, 9/30/2005. . . . . . . . . . 8,500,000 8,455,842
U.S. Treasury Note, 1.875%, 12/31/2005 . . . . . . . . . 15,000,000 14,930,280
U.S. Treasury Note, 3.00%, 2/15/2008 . . . . . . . . . . 19,700,000 19,762,331
U.S. Treasury Note, 3.875%, 5/15/2009. . . . . . . . . . 5,000,000 5,140,625
-------------
TOTAL U.S. TREASURY NOTES
(Identified Cost $48,773,864). . . . . . . . . . . . . . 48,289,078
-------------
TOTAL U.S. TREASURY SECURITIES
(Identified Cost $84,260,052). . . . . . . . . . . . . . 86,799,371
-------------
U.S. GOVERNMENT AGENCIES - 0.07%
Fannie Mae, 4.25%, 7/15/2007 . . . . . . . . . . . . . . 190,000 196,138
Fannie Mae, 5.75%, 2/15/2008 . . . . . . . . . . . . . . 5,000 5,397
-------------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $201,928) . . . . . . . . . . . . . . . 201,535
-------------
SHORT-TERM INVESTMENTS - 1.31%
Dreyfus Treasury Cash Management - Institutional Shares
(Identified Cost $3,616,067) . . . . . . . . . . . . . . 3,616,067 3,616,067
-------------
The accompanying notes are an integral part of the financial statements.
49
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM EXTENDED TERM SERIES (NOTE 2)
- -------------------------------------- -------------
TOTAL INVESTMENTS - 99.79%
(Identified Cost $255,593,002) . . . . $275,024,669
OTHER ASSETS, LESS LIABILITIES - 0.21% 572,550
------------
NET ASSETS - 100%. . . . . . . . . . . $275,597,219
============
*Non-income producing security
1A subsidiary of the company serves as the Fund's sub-accounting services and
sub-transfer agent. An employee of the company serves as an officer of the
Fund.
ADR - American Depository Receipt
FDR - Fiduciary Depository Receipt
The accompanying notes are an integral part of the financial statements.
50
Statement of Assets and Liabilities - Pro-BlendSM Extended Term Series
October 31, 2004
ASSETS:
Investments, at value (identified cost $255,593,002) (Note 2). . . . . . . . . $275,024,669
Interest receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 736,352
Receivable for securities sold . . . . . . . . . . . . . . . . . . . . . . . . 304,236
Receivable for fund shares sold. . . . . . . . . . . . . . . . . . . . . . . . 106,531
Dividends receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97,282
Foreign tax reclaims receivable. . . . . . . . . . . . . . . . . . . . . . . . 40,576
------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276,309,646
------------
LIABILITIES:
Accrued management fees (Note 3) . . . . . . . . . . . . . . . . . . . . . . . 218,497
Accrued fund accounting and transfer agent fees (Note 3) . . . . . . . . . . . 35,216
Payable for securities purchased . . . . . . . . . . . . . . . . . . . . . . . 389,930
Audit fees payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,229
Payable for fund shares repurchased. . . . . . . . . . . . . . . . . . . . . . 15,743
Other payables and accrued expenses. . . . . . . . . . . . . . . . . . . . . . 18,812
------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 712,427
------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $275,597,219
============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 190,777
Additional paid-in-capital . . . . . . . . . . . . . . . . . . . . . . . . . . 248,671,906
Undistributed net investment income. . . . . . . . . . . . . . . . . . . . . . 1,081,001
Accumulated net realized gain on investments and other assets and liabilities. 6,218,221
Net unrealized appreciation on investments and other assets and liabilities. . 19,435,314
------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $275,597,219
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE - CLASS A ($275,597,219/19,077,728 shares) . . . . . . . . . . $ 14.45
============
The accompanying notes are an integral part of the financial statements.
51
Statement of Operations - Pro-BlendSM Extended Term Series
For the Year Ended October 31, 2004
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . $ 3,260,571
Dividends (net of foreign tax withheld, $65,750) . 1,761,905
------------
Total Investment Income. . . . . . . . . . . . . . 5,022,476
------------
EXPENSES:
Management fees (Note 3) . . . . . . . . . . . . . 2,479,959
Fund accounting and transfer agent fees (Note 3) . 375,957
Directors' fees (Note 3) . . . . . . . . . . . . . 8,202
Custodian fees . . . . . . . . . . . . . . . . . . 44,699
Miscellaneous. . . . . . . . . . . . . . . . . . . 104,363
------------
Total Expenses . . . . . . . . . . . . . . . . . . 3,013,180
Less reduction of expenses (Note 3). . . . . . . . (110,644)
------------
Net Expenses . . . . . . . . . . . . . . . . . . . 2,902,536
------------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . 2,119,940
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on -
Investments. . . . . . . . . . . . . . . . . . . . 6,420,704
Foreign currency and other assets and liabilities. 5,326
------------
6,426,030
------------
Net change in unrealized appreciation on -
Investments. . . . . . . . . . . . . . . . . . . . 16,561,390
Foreign currency and other assets and liabilities. 777
------------
16,562,167
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS. . . . . . . . . . . . . . . . . . . . 22,988,197
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS . . . . . . . . . . . . . . . . . . . . $25,108,137
============
The accompanying notes are an integral part of the financial statements.
52
Statements of Changes in Net Assets - Pro-BlendSM Extended Term Series
FOR THE FOR THE
YEAR ENDED YEAR ENDED
10/31/04 10/31/03
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . $ 2,119,940 $ 1,611,695
Net realized gain on investments. . . . . . . . . . . 6,426,030 5,695,080
Net change in unrealized appreciation on investments. 16,562,167 18,079,951
------------- -------------
Net increase from operations. . . . . . . . . . . . . 25,108,137 25,386,726
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 8):
From net investment income. . . . . . . . . . . . . . (1,777,536) (2,453,069)
From net realized gain on investments . . . . . . . . (1,383,424) -
------------- -------------
Total distributions to shareholders . . . . . . . . . (3,160,960) (2,453,069)
------------- -------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share transactions
(Note 5). . . . . . . . . . . . . . . . . . . . . . . 44,612,219 29,921,731
------------- -------------
Net increase in net assets. . . . . . . . . . . . . . 66,559,396 52,855,388
NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . 209,037,823 156,182,435
------------- -------------
END OF YEAR (including undistributed net investment
income of $1,081,001 and $733,271, respectively). . . $275,597,219 $209,037,823
============= =============
The accompanying notes are an integral part of the financial statements.
53
Financial Highlights - Pro-BlendSM Extended Term Series
FOR THE YEARS ENDED
10/31/04 10/31/03 10/31/02 10/31/01 10/31/00
--------------------- ---------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH YEAR):
NET ASSET VALUE - BEGINNING OF YEAR . . . . . . . . . . $ 13.14 $ 11.55 $ 13.09 $ 14.03 $ 12.74
--------------------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income . . . . . . . . . . . . . . . . . 0.11 0.11 0.19 0.32 0.29
Net realized and unrealized gain (loss) on investments. 1.39 1.66 (0.86) (0.13) 1.97
--------------------- ---------- ---------- ---------- ----------
Total from investment operations. . . . . . . . . . . . 1.50 1.77 (0.67) 0.19 2.26
--------------------- ---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income. . . . . . . . . . . . . . . (0.10) (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 . . . . . . . . . . (0.19) (0.18) (0.87) (1.13) (0.97)
--------------------- ---------- ---------- ---------- ----------
NET ASSET VALUE - END OF YEAR . . . . . . . . . . . . . $ 14.45 $ 13.14 $ 11.55 $ 13.09 $ 14.03
===================== ========== ========== ========== ==========
Total return1 . . . . . . . . . . . . . . . . . . . . . 11.52% 15.45% (5.74%) 1.37% 18.83%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* . . . . . . . . . . . . . . . . . . . . . . . 1.17% 1.17% 1.19% 1.20% 1.20%
Net investment income . . . . . . . . . . . . . . . . . 0.86% 0.90% 1.61% 2.26% 2.55%
Portfolio turnover. . . . . . . . . . . . . . . . . . . 50% 67% 82% 75% 95%
NET ASSETS - END OF YEAR (000's omitted). . . . . . . . $ 275,597 $ 209,038 $ 156,182 $ 87,460 $ 89,672
===================== ========== ========== ========== ==========
*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% N/A N/A 0.03% N/A
1Represents aggregate total return for the year indicated, and assumes
reinvestment of all distributions. Total return would have been lower had
certain expenses not been waived during the year.
The accompanying notes are an integral part of the financial statements.
54
Performance Update - Pro-BlendSM Maximum Term Series (unaudited)
Average Annual Total Returns
As of October 31, 2004
--------------------------------------------------
Growth of
One Five Since a $10, 000
Year Year Inception1 Investment*
----------------------------- ------ ----------- ------------
Exeter Fund, Inc. - Pro-BlendSM Maximum Term Series2 15.20% 8.52% 11.25% $ 26,100
Standard & Poor's (S&P) 500 Total Return Index3. . . 9.41% -2.22% 9.41% $ 22,464
85%/15% Blended Index3 . . . . . . . . . . . . . . . 8.86% -0.55% 9.25% $ 22,168
*The value of a $10,000 investment in the Exeter Fund, Inc. - Pro-BlendSM
Maximum Term Series from its inception1 (11/1/95) to present (10/31/04) 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
- ---- ------------------------------- ------------------ ---------------------
11/1/95 $10,000 $10,000 $10,000
10/31/96 11,521 12,408 12,114
10/31/97 14,604 16,392 15,565
10/31/98 13,730 19,996 18,764
10/31/99 17,345 25,127 22,788
10/31/00 22,263 26,656 24,243
10/31/01 20,926 20,022 19,482
10/31/02 18,692 16,999 17,158
10/31/03 22,656 20,532 20,364
10/31/04 26,100 22,464 22,168
1Performance numbers for the Series and Indices are calculated from November 1,
1995, the Series' inception date.
2The 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.
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 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 over 3,000 investment grade corporate, government and
mortgage backed 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.
55
Shareholder Expense Example - Pro-BlendSM Maximum Term Series (unaudited)
As a shareholder of the Series, you incur two types of costs: (1) transaction
costs, including potential wire charges and exchange fees and (2) ongoing costs,
including management fees and other Series expenses. This example is intended
to help you understand your ongoing costs (in dollars) of investing in the
Series and to compare these costs with the ongoing costs of investing in other
mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (May 1, 2004 to October 31, 2004).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs. Therefore, the
second line of the table is useful in comparing ongoing costs only, and will not
help you determine the relative total costs of owning different funds.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
5/1/04 10/31/04 5/1/04-10/31/04
-------------- -------------- ----------------
Actual. . . . . . . . . . . $ 1,000.00 $ 1,032.00 $ 6.13
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,019.10 $ 6.09
*Expenses are equal to the Series' annualized expense ratio of 1.20%, multiplied
by the average account value over the period, multiplied by 184/366 (to reflect
the one-half year period).
The Series' total return would have been lower had certain expenses not been
waived during the period. Based on the most recent fiscal half year, the
Series' expense ratio may differ from the expense ratio based on one-year data
in the financial highlights.
56
Portfolio Composition - Pro-BlendSM Maximum Term Series (unaudited)
As of October 31, 2004
<graphic>
<pie chart>
Asset Allocation*
Cash, short-term investments, and liabilities, less other assets 2.33%
Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89.11%
U.S. Treasury Bonds1 . . . . . . . . . . . . . . . . . . . . . . 8.17%
Unit Investment Trusts . . . . . . . . . . . . . . . . . . . . . 0.39%
*As a percentage of net assets.
1A U.S. Treasury Bond is a long-term obligation of the U.S. Treasury issued with
a maturity period of more than ten years.
Stock Sector Allocation*
Consumer Discretionary . . 17.67%
Consumer Staples . . . . . 10.89%
Energy . . . . . . . . . . 10.97%
Financials . . . . . . . . 8.67%
Health Care. . . . . . . . 15.70%
Industrials. . . . . . . . 7.22%
Information Technology . . 4.80%
Materials. . . . . . . . . 3.86%
Telecommunication Services 4.11%
Utilities. . . . . . . . . 3.21%
*As a percentage of total investments.
Top Ten Stock Holdings*
Schering-Plough Corp. . . . . . . . . . . . . 5.19%
Unilever plc - ADR (United Kingdom) . . . . . 4.50%
Novartis AG - ADR (Switzerland) . . . . . . . 4.33%
Nestle S.A. (Switzerland) . . . . . . . . . . 3.19%
Vodafone Group plc - ADR (United Kingdom) . . 3.14%
Schlumberger Ltd. . . . . . . . . . . . . . . 3.13%
WebMD Corp. . . . . . . . . . . . . . . . . . 2.97%
Time Warner, Inc. . . . . . . . . . . . . . . 2.75%
Cablevision Systems New York Group - Class A. 2.68%
The Bank of New York Co., Inc.. . . . . . . . 1.98%
*As a percentage of total investments.
57
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------------------------ --------- -----------
COMMON STOCKS - 89.11%
CONSUMER DISCRETIONARY - 18.08%
AUTOMOBILES - 0.02%
Bayerische Motoren Werke AG (BMW) (Germany) (Note 7) . . . . . . . . . . . . . 525 $ 22,317
------------
HOTELS, RESTAURANTS & LEISURE - 1.44%
Carnival Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,200 1,830,272
International Speedway Corp. - Class A . . . . . . . . . . . . . . . . . . . . 900 42,336
Shangri-La Asia Ltd. (Hong Kong) (Note 7). . . . . . . . . . . . . . . . . . . 25,000 28,746
------------
1,901,354
------------
HOUSEHOLD DURABLES - 2.00%
Corporacion GEO S.A. de C.V. - Series B* (Mexico) (Note 7) . . . . . . . . . . 22,025 34,348
Interface, Inc. - Class A* . . . . . . . . . . . . . . . . . . . . . . . . . . 6,775 58,875
Libbey, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750 13,612
Sony Corp. - ADR (Japan) (Note 7). . . . . . . . . . . . . . . . . . . . . . . 72,425 2,524,011
------------
2,630,846
------------
INTERNET & CATALOG RETAIL - 0.15%
IAC/InterActiveCorp* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,475 204,849
------------
LEISURE EQUIPMENT & PRODUCTS - 0.10%
Callaway Golf Co.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,275 13,298
Hasbro, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,275 40,245
K2, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,475 23,924
Sega Sammy Holdings, Inc. (Japan) (Note 7) . . . . . . . . . . . . . . . . . . 1,200 55,785
------------
133,252
------------
MEDIA - 9.40%
Acme Communications, Inc.* . . . . . . . . . . . . . . . . . . . . . . . . . . 12,250 69,457
Belo Corp. - Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,675 38,944
Cablevision Systems New York Group - Class A*. . . . . . . . . . . . . . . . . 175,475 3,611,275
The E.W. Scripps Co. - Class A . . . . . . . . . . . . . . . . . . . . . . . . 31,150 1,486,478
Harris Interactive, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . . . 10,475 71,230
Hearst-Argyle Television, Inc. - Class A . . . . . . . . . . . . . . . . . . . 48,450 1,262,607
Impresa S.A. (SGPS)* (Portugal) (Note 7) . . . . . . . . . . . . . . . . . . . 9,075 52,922
Insight Communications Co., Inc. - Class A*. . . . . . . . . . . . . . . . . . 7,925 67,046
Media Capital S.A. (SGPS)* (Portugal) (Note 7) . . . . . . . . . . . . . . . . 9,625 65,361
The News Corp. Ltd. - ADR (now known as News Corp., Inc.) (Australia) (Note 7) 4,150 130,476
Pearson plc (United Kingdom) (Note 7). . . . . . . . . . . . . . . . . . . . . 137,075 1,506,125
PT Multimedia S.A. (SGPS) (Portugal) (Note 7). . . . . . . . . . . . . . . . . 2,050 47,924
Reed Elsevier plc - ADR (United Kingdom) (Note 7). . . . . . . . . . . . . . . 2,375 85,500
Scholastic Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,250 37,900
Time Warner, Inc.* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222,675 3,705,312
The accompanying notes are an integral part of the financial statements.
58
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- -------------------------------------------------------------- ---------- -----------
CONSUMER DISCRETIONARY (continued)
MEDIA (continued)
VNU N.V. (Netherlands) (Note 7). . . . . . . . . . . . . . . . 4,047 $ 110,808
Wolters Kluwer N.V. (Netherlands) (Note 7) . . . . . . . . . . 2,050 37,463
------------
12,386,828
------------
MULTILINE RETAIL - 0.04%
Don Quijote Co. Ltd. (Japan) (Note 7). . . . . . . . . . . . . 600 36,056
KarstadtQuelle AG (Germany) (Note 7) . . . . . . . . . . . . . 1,175 13,434
------------
49,490
------------
SPECIALTY RETAIL - 4.86%
Douglas Holding AG (Germany) (Note 7). . . . . . . . . . . . . 4,125 127,134
Foot Locker, Inc.. . . . . . . . . . . . . . . . . . . . . . . 2,075 50,630
KOMERI Co. Ltd. (Japan) (Note 7) . . . . . . . . . . . . . . . 1,100 26,244
Office Depot, Inc.*. . . . . . . . . . . . . . . . . . . . . . 112,850 1,827,042
Staples, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . 65,875 1,959,122
Weight Watchers International, Inc.* . . . . . . . . . . . . . 67,100 2,410,232
------------
6,400,404
------------
TEXTILES, APPAREL & LUXURY GOODS - 0.07%
LVMH S.A. (Louis Vuitton Moet Hennessy) (France) (Note 7). . . 850 58,373
Wolverine World Wide, Inc. . . . . . . . . . . . . . . . . . . 1,050 31,962
------------
90,335
------------
23,819,675
------------
CONSUMER STAPLES - 11.14%
BEVERAGES - 0.09%
Allied Domecq plc (United Kingdom) (Note 7). . . . . . . . . . 3,700 32,955
Diageo plc (United Kingdom) (Note 7) . . . . . . . . . . . . . 2,275 30,452
Grupo Modelo S.A. de C.V. - Series C (Mexico) (Note 7) . . . . 10,800 27,678
Scottish & Newcastle plc (United Kingdom) (Note 7) . . . . . . 4,075 30,193
------------
121,278
------------
FOOD & STAPLES RETAILING - 1.27%
Carrefour S.A. (France) (Note 7) . . . . . . . . . . . . . . . 33,325 1,463,070
Metro AG (Germany) (Note 7). . . . . . . . . . . . . . . . . . 700 33,436
Organizacion Soriana S.A. de C.V. - Series B (Mexico) (Note 7) 24,050 77,118
Pathmark Stores, Inc.* . . . . . . . . . . . . . . . . . . . . 6,575 28,338
Tesco plc (United Kingdom) (Note 7). . . . . . . . . . . . . . 6,600 34,804
William Morrison Supermarkets plc (United Kingdom) (Note 7). . 7,675 31,941
------------
1,668,707
------------
The accompanying notes are an integral part of the financial statements.
59
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------------------- ---------- -----------
CONSUMER STAPLES (continued)
FOOD PRODUCTS - 8.10%
Associated British Foods plc (United Kingdom) (Note 7). . . . . . . . . . 2,750 $ 35,117
Cadbury Schweppes plc (United Kingdom) (Note 7) . . . . . . . . . . . . . 10,550 87,715
Chiquita Brands International, Inc.*. . . . . . . . . . . . . . . . . . . 1,050 18,921
Groupe Danone (France) (Note 7) . . . . . . . . . . . . . . . . . . . . . 400 33,557
Hain Celestial Group, Inc.* . . . . . . . . . . . . . . . . . . . . . . . 2,100 33,978
Lancaster Colony Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . 375 16,118
Nestle S.A. (Switzerland) (Note 7). . . . . . . . . . . . . . . . . . . . 18,125 4,299,754
Ralcorp Holdings, Inc.* . . . . . . . . . . . . . . . . . . . . . . . . . 575 21,131
Smithfield Foods, Inc.* . . . . . . . . . . . . . . . . . . . . . . . . . 3,025 73,296
Unilever plc - ADR (United Kingdom) (Note 7). . . . . . . . . . . . . . . 177,732 6,058,884
------------
10,678,471
------------
HOUSEHOLD PRODUCTS - 0.25%
Henkel KgaA (Germany) (Note 7). . . . . . . . . . . . . . . . . . . . . . 725 54,564
Kao Corp. (Japan) (Note 7). . . . . . . . . . . . . . . . . . . . . . . . 2,000 46,204
Kimberly-Clark de Mexico S.A. de C.V. - ADR (Mexico) (Note 7) . . . . . . 8,400 125,678
Rayovac Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,800 69,748
Reckitt Benckiser plc (United Kingdom) (Note 7) . . . . . . . . . . . . . 1,175 32,254
------------
328,448
------------
PERSONAL PRODUCTS - 1.43%
Clarins S.A. (France) (Note 7). . . . . . . . . . . . . . . . . . . . . . 2,633 149,830
The Estee Lauder Companies, Inc. - Class A. . . . . . . . . . . . . . . . 38,200 1,640,690
Shiseido Co. Ltd. (Japan) (Note 7). . . . . . . . . . . . . . . . . . . . 7,000 91,473
------------
1,881,993
------------
14,678,897
------------
ENERGY - 11.22%
ENERGY EQUIPMENT & SERVICES - 9.50%
Atwood Oceanics, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . . 3,200 153,440
Baker Hughes, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,425 1,645,743
Compagnie Generale de Geophysique S.A. (CGG)* (France) (Note 7) . . . . . 775 48,465
Cooper Cameron Corp.* . . . . . . . . . . . . . . . . . . . . . . . . . . 15,825 765,139
Helmerich & Payne, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 2,750 78,512
National-Oilwell, Inc.* . . . . . . . . . . . . . . . . . . . . . . . . . 3,325 112,086
Newpark Resources, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . 14,575 79,142
Precision Drilling Corp.* (Canada) (Note 7) . . . . . . . . . . . . . . . 2,075 127,945
Pride International, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . 8,625 159,390
Schlumberger Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,925 4,212,259
Smedvig ASA - Class A (Norway) (Note 7) . . . . . . . . . . . . . . . . . 12,000 150,021
The accompanying notes are an integral part of the financial statements.
60
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------------ ---------- -----------
ENERGY (continued)
ENERGY EQUIPMENT & SERVICES (continued)
Transocean, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . 47,525 $1,675,256
Varco International, Inc.* . . . . . . . . . . . . . . . . . . . . 31,225 864,308
Weatherford International Ltd.*. . . . . . . . . . . . . . . . . . 46,775 2,444,462
------------
12,516,168
------------
OIL & GAS - 1.72%
Amerada Hess Corp. . . . . . . . . . . . . . . . . . . . . . . . . 21,550 1,739,300
BP plc (United Kingdom) (Note 7) . . . . . . . . . . . . . . . . . 3,450 33,438
Eni S.p.A. (Italy) (Note 7). . . . . . . . . . . . . . . . . . . . 5,825 132,598
Forest Oil Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . 3,600 109,800
Petroleo Brasileiro S.A. (Petrobras) - ADR (Brazil) (Note 7) . . . 2,625 85,575
Shell Transport & Trading Co. plc (United Kingdom) (Note 7). . . . 4,400 34,662
Total S.A. (France) (Note 7) . . . . . . . . . . . . . . . . . . . 600 125,072
------------
2,260,445
------------
14,776,613
------------
FINANCIALS - 8.87%
CAPITAL MARKETS - 3.70%
The Bank of New York Co., Inc. . . . . . . . . . . . . . . . . . . 82,375 2,673,892
Deutsche Bank AG (Germany) (Note 7). . . . . . . . . . . . . . . . 950 72,652
SEI Investments Co.. . . . . . . . . . . . . . . . . . . . . . . . 59,275 2,133,307
------------
4,879,851
------------
COMMERCIAL BANKS - 3.85%
Banca Intesa S.p.A. (Italy) (Note 7) . . . . . . . . . . . . . . . 13,450 55,214
Banco BPI S.A. (Portugal) (Note 7) . . . . . . . . . . . . . . . . 10,125 39,493
Banco Espirito Santo S.A. (BES) (Portugal) (Note 7). . . . . . . . 1,775 30,440
Bayerische Hypo-und Vereinsbank AG (HVB Group)* (Germany) (Note 7) 1,300 25,536
BNP Paribas S.A. (France) (Note 7) . . . . . . . . . . . . . . . . 650 44,347
Commerzbank AG* (Germany) (Note 7) . . . . . . . . . . . . . . . . 1,725 31,656
Metropolitan Bank & Trust Co. (Philippines) (Note 7) . . . . . . . 145,125 72,189
PNC Financial Services Group . . . . . . . . . . . . . . . . . . . 23,425 1,225,128
Societe Generale (France) (Note 7) . . . . . . . . . . . . . . . . 300 27,892
U.S. Bancorp . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,750 1,709,447
UniCredito Italiano S.p.A. (Italy) (Note 7). . . . . . . . . . . . 12,925 69,588
Wachovia Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . 35,300 1,737,113
------------
5,068,043
------------
The accompanying notes are an integral part of the financial statements.
61
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- ----------------------------------------------- ---------- -----------
FINANCIALS (continued)
CONSUMER FINANCE - 0.05%
MoneyGram International, Inc. . . . . . . . . . 2,275 $ 42,315
Takefuji Corp. (Japan) (Note 7) . . . . . . . . 450 28,488
------------
70,803
------------
DIVERSIFIED FINANCIAL SERVICES - 1.02%
ING Groep N.V. (Netherlands) (Note 7) . . . . . 775 20,566
Principal Financial Group, Inc. . . . . . . . . 34,950 1,319,712
------------
1,340,278
------------
INSURANCE - 0.15%
Allianz AG (Germany) (Note 7) . . . . . . . . . 325 34,684
Assicurazioni Generali S.p.A. (Italy) (Note 7). 2,275 67,702
Axa (France) (Note 7) . . . . . . . . . . . . . 2,925 63,105
Muenchener Rueckver AG (Germany) (Note 7) . . . 275 27,009
------------
192,500
------------
REAL ESTATE - 0.06%
SM Prime Holdings, Inc. (Philippines) (Note 7). 591,525 78,814
------------
THRIFTS & MORTGAGE FINANCE - 0.04%
Flagstar Bancorp, Inc.. . . . . . . . . . . . . 1,900 39,691
Hypo Real Estate Holding AG* (Germany) (Note 7) 325 12,199
------------
51,890
------------
11,682,179
------------
HEALTH CARE - 16.06%
BIOTECHNOLOGY - 0.49%
BioMarin Pharmaceutical, Inc.*. . . . . . . . . 21,000 86,730
Chiron Corp.* . . . . . . . . . . . . . . . . . 5,450 176,689
Diversa Corp.*. . . . . . . . . . . . . . . . . 14,650 126,283
Enzon Pharmaceuticals, Inc.*. . . . . . . . . . 5,050 81,659
Transkaryotic Therapies, Inc.*. . . . . . . . . 10,125 175,264
------------
646,625
------------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.65%
Advanced Neuromodulation Systems, Inc.* . . . . 8,425 268,168
Conceptus, Inc.*. . . . . . . . . . . . . . . . 12,625 108,133
Millipore Corp.*. . . . . . . . . . . . . . . . 7,775 357,572
Thermo Electron Corp.*. . . . . . . . . . . . . 1,425 41,325
Varian, Inc.* . . . . . . . . . . . . . . . . . 2,300 83,904
------------
859,102
------------
HEALTH CARE PROVIDERS & SERVICES - 3.87%
Allscripts Healthcare Solutions, Inc.*. . . . . 22,750 211,461
American Healthways, Inc.*. . . . . . . . . . . 8,950 270,111
The accompanying notes are an integral part of the financial statements.
62
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- --------------------------------------------------------- ---------- -----------
HEALTH CARE (continued)
HEALTH CARE PROVIDERS & SERVICES (continued)
AmerisourceBergen Corp. . . . . . . . . . . . . . . . . . 1,700 $ 93,568
Express Scripts, Inc.*. . . . . . . . . . . . . . . . . . 2,375 152,000
HCA, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 2,475 90,907
McKesson Corp.. . . . . . . . . . . . . . . . . . . . . . 3,150 83,979
Omnicell, Inc.* . . . . . . . . . . . . . . . . . . . . . 8,400 86,730
Triad Hospitals, Inc.*. . . . . . . . . . . . . . . . . . 2,975 98,264
WebMD Corp.*. . . . . . . . . . . . . . . . . . . . . . . 529,850 4,005,666
------------
5,092,686
------------
PHARMACEUTICALS - 11.05%
AstraZeneca plc (United Kingdom) (Note 7) . . . . . . . . 675 27,682
GlaxoSmithKline plc (United Kingdom) (Note 7) . . . . . . 1,450 30,559
Novartis AG - ADR (Switzerland) (Note 7). . . . . . . . . 121,500 5,833,215
Pfizer, Inc.. . . . . . . . . . . . . . . . . . . . . . . 43,720 1,265,694
Sanofi-Aventis (France) (Note 7). . . . . . . . . . . . . 562 41,182
Schering AG (Germany) (Note 7). . . . . . . . . . . . . . 4,675 300,726
Schering-Plough Corp. . . . . . . . . . . . . . . . . . . 386,000 6,990,460
Shire Pharmaceuticals Group plc (United Kingdom) (Note 7) 3,500 33,360
Takeda Pharmaceutical Co. Ltd. (Japan) (Note 7) . . . . . 800 38,702
------------
14,561,580
------------
21,159,993
------------
INDUSTRIALS - 7.38%
AEROSPACE & DEFENSE - 1.02%
SNECMA* (France) (Note 7) . . . . . . . . . . . . . . . . 63,150 1,348,686
------------
AIRLINES - 1.21%
Deutsche Lufthansa AG* (Germany) (Note 7) . . . . . . . . 2,850 37,687
JetBlue Airways Corp.*. . . . . . . . . . . . . . . . . . 1,850 40,793
SkyWest, Inc. . . . . . . . . . . . . . . . . . . . . . . 2,625 44,835
Southwest Airlines Co.. . . . . . . . . . . . . . . . . . 93,500 1,474,495
------------
1,597,810
------------
COMMERCIAL SERVICES & SUPPLIES - 0.16%
Aggreko plc (United Kingdom) (Note 7) . . . . . . . . . . 24,175 66,628
BWT AG (Austria) (Note 7) . . . . . . . . . . . . . . . . 2,350 63,111
Quebecor World, Inc. (Canada) (Note 7). . . . . . . . . . 4,125 85,759
------------
215,498
------------
CONSTRUCTION & ENGINEERING - 0.19%
Hochtief AG (Germany) (Note 7). . . . . . . . . . . . . . 1,200 31,997
Infrasource Services, Inc.* . . . . . . . . . . . . . . . 2,925 30,537
Insituform Technologies, Inc. - Class A*. . . . . . . . . 2,175 43,109
The accompanying notes are an integral part of the financial statements.
63
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------ --------- -----------
INDUSTRIALS (continued)
CONSTRUCTION & ENGINEERING (continued)
Koninklijke Boskalis Westminster N.V. (Netherlands) (Note 7) 5,468 $ 147,548
------------
253,191
------------
ELECTRICAL EQUIPMENT - 0.39%
American Superconductor Corp.* . . . . . . . . . . . . . . . 36,375 420,313
Global Power Equipment Group, Inc.*. . . . . . . . . . . . . 5,050 40,703
Plug Power, Inc.*. . . . . . . . . . . . . . . . . . . . . . 9,500 56,858
------------
517,874
------------
INDUSTRIAL CONGLOMERATES - 0.12%
Siemens AG (Germany) (Note 7). . . . . . . . . . . . . . . . 1,475 110,349
Sonae S.A. (SGPS) (Portugal) (Note 7). . . . . . . . . . . . 33,275 40,852
------------
151,201
------------
MACHINERY - 1.61%
AGCO Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . 73,800 1,433,196
Albany International Corp. - Class A . . . . . . . . . . . . 2,625 78,802
Gardner Denver, Inc.*. . . . . . . . . . . . . . . . . . . . 1,350 40,473
Lindsay Manufacturing Co.. . . . . . . . . . . . . . . . . . 3,400 80,172
MAN AG (Germany) (Note 7). . . . . . . . . . . . . . . . . . 1,675 58,307
Tomra Systems ASA (Norway) (Note 7). . . . . . . . . . . . . 70,050 309,541
Wabtec Corp. . . . . . . . . . . . . . . . . . . . . . . . . 5,925 120,100
------------
2,120,591
------------
ROAD & RAIL - 2.65%
Central Freight Lines, Inc.* . . . . . . . . . . . . . . . . 4,875 27,251
CSX Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . 53,250 1,943,625
Kansas City Southern*. . . . . . . . . . . . . . . . . . . . 89,225 1,512,364
------------
3,483,240
------------
TRANSPORTATION INFRASTRUCTURE - 0.03%
Brisa-Auto Estradas de Portugal S.A. (Portugal) (Note 7) . . 4,875 39,963
------------
9,728,054
------------
INFORMATION TECHNOLOGY - 4.92%
COMMUNICATIONS EQUIPMENT - 0.38%
Lucent Technologies, Inc.* . . . . . . . . . . . . . . . . . 41,725 148,124
Nokia Oyj - ADR (Finland) (Note 7) . . . . . . . . . . . . . 15,700 242,094
SES Global - FDR (Luxembourg) (Note 7) . . . . . . . . . . . 10,200 105,659
------------
495,877
------------
The accompanying notes are an integral part of the financial statements.
64
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- ------------------------------------------------------------------- --------- -----------
INFORMATION TECHNOLOGY (continued)
COMPUTERS & PERIPHERALS - 0.19%
Electronics for Imaging, Inc.*. . . . . . . . . . . . . . . . . . . 2,000 $ 36,080
EMC Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,500 122,265
Stratasys, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 87,840
------------
246,185
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.39%
Digital Theater Systems, Inc.*. . . . . . . . . . . . . . . . . . . 7,600 129,276
Fargo Electronics*. . . . . . . . . . . . . . . . . . . . . . . . . 10,350 135,689
KEYENCE Corp. (Japan) (Note 7). . . . . . . . . . . . . . . . . . . 200 45,127
Mettler-Toledo International, Inc.* (Switzerland) (Note 7). . . . . 1,050 50,295
OSI Systems, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . 8,750 152,337
------------
512,724
------------
INTERNET SOFTWARE & SERVICES - 0.04%
Online Resources Corp.* . . . . . . . . . . . . . . . . . . . . . . 6,775 49,187
------------
IT SERVICES - 1.25%
The BISYS Group, Inc.*1 . . . . . . . . . . . . . . . . . . . . . . 2,525 36,865
First Data Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . 39,125 1,615,080
------------
1,651,945
------------
OFFICE ELECTRONICS - 0.02%
Canon, Inc. (Japan) (Note 7). . . . . . . . . . . . . . . . . . . . 600 29,650
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.00%
Brooks Automation, Inc.*. . . . . . . . . . . . . . . . . . . . . . 10,775 160,332
Cabot Microelectronics Corp.* . . . . . . . . . . . . . . . . . . . 2,325 83,770
Cymer, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,025 171,833
Sigma Designs, Inc.*. . . . . . . . . . . . . . . . . . . . . . . . 17,150 134,970
Taiwan Semiconductor Manufacturing Co. Ltd. - ADR (Taiwan) (Note 7) 25,237 191,044
Texas Instruments, Inc. . . . . . . . . . . . . . . . . . . . . . . 77,625 1,897,931
------------
2,639,880
------------
SOFTWARE - 0.65%
Amdocs Ltd.* (Guernsey) (Note 7). . . . . . . . . . . . . . . . . . 15,775 396,741
DocuCorp International, Inc.* . . . . . . . . . . . . . . . . . . . 9,425 82,469
Informatica Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . 18,375 143,509
McAfee, Inc.* . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,675 88,935
SAP AG (Germany) (Note 7) . . . . . . . . . . . . . . . . . . . . . 550 93,759
VERITAS Software Corp.* . . . . . . . . . . . . . . . . . . . . . . 1,975 43,213
------------
848,626
------------
6,474,074
------------
The accompanying notes are an integral part of the financial statements.
65
Investment Portfolio - October 31, 2004
VALUE
PRO-BLENDSM MAXIMUM TERM SERIES SHARES (NOTE 2)
- ----------------------------------------------------------------- --------- -----------
MATERIALS - 3.95%
CHEMICALS - 2.67%
Bayer AG (Germany) (Note 7) . . . . . . . . . . . . . . . . . . . 2,225 $ 63,311
Cabot Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 750 25,560
Engelhard Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 55,250 1,563,575
L'Air Liquide S.A. (France) (Note 7). . . . . . . . . . . . . . . 330 53,428
Linde AG (Germany) (Note 7) . . . . . . . . . . . . . . . . . . . 500 30,277
Lonza Group AG (Switzerland) (Note 7) . . . . . . . . . . . . . . 6,550 320,917
Minerals Technologies, Inc. . . . . . . . . . . . . . . . . . . . 24,225 1,455,922
------------
3,512,990
------------
PAPER & FOREST PRODUCTS - 1.28%
Aracruz Celulose S.A. - ADR (Brazil) (Note 7) . . . . . . . . . . 50,225 1,691,578
------------
5,204,568
------------
TELECOMMUNICATION SERVICES - 4.21%
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.70%
CT Communications, Inc. . . . . . . . . . . . . . . . . . . . . . 15,300 191,556
D&E Communications, Inc.. . . . . . . . . . . . . . . . . . . . . 19,450 240,597
Deutsche Telekom AG* (Germany) (Note 7) . . . . . . . . . . . . . 3,950 75,974
Philippine Long Distance Telephone Co.* (Philippines) (Note 7). . 2,025 50,544
PT Telekomunikasi Indonesia - ADR (Indonesia) (Note 7). . . . . . 12,625 240,759
Telecom Italia S.p.A. (Italy) (Note 7). . . . . . . . . . . . . . 25,775 86,032
Telefonos de Mexico S.A. de C.V. (Telmex) - ADR (Mexico) (Note 7) 850 29,104
------------
914,566
------------
WIRELESS TELECOMMUNICATION SERVICES - 3.51%
Globe Telecom, Inc. (Philippines) (Note 7). . . . . . . . . . . . 2,725 49,620
Maxis Communications Berhad (Malaysia) (Note 7) . . . . . . . . . 14,000 31,684
NTT DoCoMo, Inc. (Japan) (Note 7) . . . . . . . . . . . . . . . . 134 236,765
Telecom Italia Mobile S.p.A. (T.I.M.) (Italy) (Note 7). . . . . . 12,375 73,115
Vodafone Group plc - ADR (United Kingdom) (Note 7). . . . . . . . 164,175 4,234,073
------------
4,625,257
------------
5,539,823
------------
UTILITIES - 3.28%
ELECTRIC UTILITIES - 1.81%
Allegheny Energy, Inc.* . . . . . . . . . . . . . . . . . . . . . 118,750 2,174,312
E.ON AG (Germany) (Note 7). . . . . . . . . . . . . . . . . . . . 1,450 118,678
Korea Electric Power Corp. (KEPCO) - ADR (South Korea) (Note 7) . 4,775 54,817
The accompanying notes are an integral part of the financial statements.
66
Investment Portfolio - October 31, 2004
SHARES/ VALUE
PRO-BLENDSM MAXIMUM TERM SERIES PRINCIPAL AMOUNT (NOTE 2)
- -------------------------------------------------------- ------------------ ------------
UTILITIES (continued)
ELECTRIC UTILITIES (continued)
Westar Energy, Inc.. . . . . . . . . . . . . . . . . . . 1,825 $ 38,234
--------------
2,386,041
--------------
MULTI-UTILITIES & UNREGULATED POWER - 1.47%
National Grid Transco plc (United Kingdom) (Note 7). . . 3,850 33,495
NRG Energy, Inc.*. . . . . . . . . . . . . . . . . . . . 63,775 1,769,119
RWE AG (Germany) (Note 7). . . . . . . . . . . . . . . . 2,100 111,452
Suez S.A. (France) (Note 7). . . . . . . . . . . . . . . 1,125 26,357
--------------
1,940,423
--------------
4,326,464
--------------
TOTAL COMMON STOCKS
(Identified Cost $108,299,769) . . . . . . . . . . . . . 117,390,340
--------------
UNIT INVESTMENT TRUSTS - 0.39%
Nasdaq-100 Index Tracking Stock. . . . . . . . . . . . . 9,800 361,228
Standard & Poor's Depositary Receipts Trust Series 1 . . 1,375 155,650
--------------
TOTAL UNIT INVESTMENT TRUSTS
(Identified Cost $493,002) . . . . . . . . . . . . . . . 516,878
--------------
U.S. TREASURY BONDS - 8.17%
U.S. Treasury Bond, 5.50%, 8/15/2028
(Identified Cost $9,976,838) . . . . . . . . . . . . . . $ 9,885,000 10,765,378
--------------
SHORT-TERM INVESTMENTS - 4.63%
Dreyfus Treasury Cash Management - Institutional Shares. 4,100,881 4,100,881
Fannie Mae Discount Note, 11/23/2004 . . . . . . . . . . $ 2,000,000 1,997,849
--------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $6,098,730) . . . . . . . . . . . . . . 6,098,730
--------------
TOTAL INVESTMENTS - 102.30%
(Identified Cost $124,868,339) . . . . . . . . . . . . . 134,771,326
LIABILITIES, LESS OTHER ASSETS - (2.30%) . . . . . . . . (3,024,030)
--------------
NET ASSETS - 100%. . . . . . . . . . . . . . . . . . . . $ 131,747,296
==============
*Non-income producing security
1A subsidiary of the company serves as the Fund's sub-accounting services and
sub-transfer agent. An employee of the company serves as an officer of the
Fund.
ADR - American Depository Receipt
FDR - Fiduciary Depository Receipt
The accompanying notes are an integral part of the financial statements.
67
Statement of Assets and Liabilities - Pro-BlendSM Maximum Term Series
October 31, 2004
ASSETS:
Investments, at value (identified cost $124,868,339) (Note 2). . . . . . . . . $134,771,326
Foreign currency, at value (cost $1) . . . . . . . . . . . . . . . . . . . . . 1
Receivable for securities sold . . . . . . . . . . . . . . . . . . . . . . . . 2,144,525
Interest receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,236
Dividends receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,407
Foreign tax reclaims receivable. . . . . . . . . . . . . . . . . . . . . . . . 25,784
Receivable for fund shares sold. . . . . . . . . . . . . . . . . . . . . . . . 17,197
------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137,143,476
------------
LIABILITIES:
Accrued management fees (Note 3) . . . . . . . . . . . . . . . . . . . . . . . 103,500
Accrued fund accounting and transfer agent fees (Note 3) . . . . . . . . . . . 17,861
Payable for fund shares repurchased. . . . . . . . . . . . . . . . . . . . . . 4,828,585
Payable for securities purchased . . . . . . . . . . . . . . . . . . . . . . . 403,117
Audit fees payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,083
Other payables and accrued expenses. . . . . . . . . . . . . . . . . . . . . . 13,034
------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,396,180
------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $131,747,296
============
NET ASSETS CONSIST OF:
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 87,832
Additional paid-in-capital . . . . . . . . . . . . . . . . . . . . . . . . . . 118,673,679
Undistributed net investment income. . . . . . . . . . . . . . . . . . . . . . 200,357
Accumulated net realized gain on investments and other assets and liabilities. 2,880,183
Net unrealized appreciation on investments and other assets and liabilities. . 9,905,245
------------
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $131,747,296
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE - CLASS A ($131,747,296/8,783,190 shares). . . . . . . . . . . $ 15.00
============
The accompanying notes are an integral part of the financial statements.
68
Statement of Operations - Pro-BlendSM Maximum Term Series
For the Year Ended October 31, 2004
INVESTMENT INCOME:
Dividends (net of foreign tax withheld, $37,519) . $ 1,239,438
Interest . . . . . . . . . . . . . . . . . . . . . 514,862
------------
Total Investment Income. . . . . . . . . . . . . . 1,754,300
------------
EXPENSES:
Management fees (Note 3) . . . . . . . . . . . . . 1,162,544
Fund accounting and transfer agent fees (Note 3) . 183,212
Directors' fees (Note 3) . . . . . . . . . . . . . 8,201
Custodian fees . . . . . . . . . . . . . . . . . . 29,200
Miscellaneous. . . . . . . . . . . . . . . . . . . 79,522
------------
Total Expenses . . . . . . . . . . . . . . . . . . 1,462,679
Less reduction of expenses (Note 3). . . . . . . . (66,678)
------------
Net Expenses . . . . . . . . . . . . . . . . . . . 1,396,001
------------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . 358,299
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on -
Investments. . . . . . . . . . . . . . . . . . . . 7,802,842
Foreign currency and other assets and liabilities. 1,771
------------
7,804,613
------------
Net change in unrealized appreciation on -
Investments. . . . . . . . . . . . . . . . . . . . 6,685,677
Foreign currency and other assets and liabilities. 804
------------
6,686,481
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS. . . . . . . . . . . . . . . . . . . . 14,491,094
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS . . . . . . . . . . . . . . . . . . . . $14,849,393
============
The accompanying notes are an integral part of the financial statements.
69
Statements of Changes in Net Assets - Pro-BlendSM Maximum Term Series
FOR THE FOR THE
YEAR ENDED YEAR ENDED
10/31/04 10/31/03
------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . $ 358,299 $ 268,131
Net realized gain on investments. . . . . . . . . . . 7,804,613 763,181
Net change in unrealized appreciation on
investments . . . . . . . . . . . . . . . . . . . . . 6,686,481 12,995,463
------------- ------------
Net increase from operations. . . . . . . . . . . . . 14,849,393 14,026,775
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 8):
From net investment income. . . . . . . . . . . . . . (247,271) (564,359)
------------- ------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share transactions (Note 5) 25,285,698 15,914,757
------------- ------------
Net increase in net assets. . . . . . . . . . . . . . 39,887,820 29,377,173
NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . 91,859,476 62,482,303
------------- ------------
END OF YEAR (including undistributed net investment
income of $200,357 and $87,558, respectively) . . . . $131,747,296 $91,859,476
============= ============
The accompanying notes are an integral part of the financial statements.
70
Financial Highlights - Pro-BlendSM Maximum Term Series
FOR THE YEARS ENDED
10/31/04 10/31/03 10/31/02 10/31/01 10/31/00
--------------------- ---------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH YEAR):
NET ASSET VALUE - BEGINNING OF YEAR. . . . . . . . $ 13.05 $ 10.86 $ 12.85 $ 16.45 $ 14.33
--------------------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income. . . . . . . . . . . . . . . 0.04 0.04 0.11 0.15 0.21
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . . . . 1.94 2.25 (1.36) (0.95) 3.57
--------------------- ---------- ---------- ---------- ----------
Total from investment operations . . . . . . . . . 1.98 2.29 (1.25) (0.80) 3.78
--------------------- ---------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income . . . . . . . . . . . . (0.03) (0.10) (0.15) (0.56) (0.22)
From net realized gain on investments. . . . . . . - - (0.59) (2.24) (1.44)
--------------------- ---------- ---------- ---------- ----------
Total distributions to shareholders. . . . . . . . (0.03) (0.10) (0.74) (2.80) (1.66)
--------------------- ---------- ---------- ---------- ----------
NET ASSET VALUE - END OF YEAR. . . . . . . . . . . $ 15.00 $ 13.05 $ 10.86 $ 12.85 $ 16.45
===================== ========== ========== ========== ==========
Total return1. . . . . . . . . . . . . . . . . . . 15.20% 21.20% (10.68%) (6.00%) 28.35%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses*. . . . . . . . . . . . . . . . . . . . . 1.20% 1.20% 1.20% 1.20% 1.20%
Net investment income. . . . . . . . . . . . . . . 0.31% 0.37% 0.97% 1.10% 1.26%
Portfolio turnover . . . . . . . . . . . . . . . . 68% 73% 99% 109% 84%
NET ASSETS - END OF YEAR (000's omitted) . . . . . $ 131,747 $ 91,859 $ 62,482 $ 27,928 $ 30,007
===================== ========== ========== ========== ==========
*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% 0.09% 0.16% 0.30% 0.14%
1Represents aggregate total return for the year indicated, and assumes
reinvestment of all distributions. Total return would have been lower had
certain expenses not been waived during the year.
The accompanying notes are an integral part of the financial statements.
71
Notes to Financial Statements
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 October
31, 2004, 1.16 billion shares have been designated in total among 21 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 may be 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.
72
Note to Financial Statements
2. SIGNIFICANT ACCOUNTING POLICIES
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.
73
Notes to Financial Statements
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 $73,237 for Pro-BlendSM Conservative Term Series, $67,567 for
Pro-BlendSM Moderate Term Series, $110,644 for Pro-BlendSM Extended Term Series
and $66,678 for Pro-BlendSM Maximum Term Series, for the year ended October 31,
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.
74
Notes to Financial Statements
4. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 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 $ 4,968,023 $ 6,053,871 $ 1,670,480 $ 3,821,442
Pro-BlendSM Moderate Term Series . . 36,098,211 14,127,457 15,083,915 17,284,829
Pro-BlendSM Extended Term Series . . 115,355,586 51,109,149 57,416,212 61,211,457
Pro-BlendSM Maximum Term Series. . . 84,720,218 14,585,609 60,530,191 15,271,193
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%.
An employee of The BISYS Group, Inc. serves as an officer of the Fund.
Therefore, The BISYS Group, Inc. is considered an "affiliated company", as
defined in the Investment Company Act of 1940. The following transactions were
effected in shares of The BISYS Group, Inc. for the year ended October 31, 2004.
PURCHASES SALES
------------------ --------------- REALIZED
Series SHARES COST SHARES COST GAIN INCOME
- ------------------------------------ --------- ------- -------- ----- ----- -------
Pro-BlendSM Conservative Term Series 150 $ 2,186 - $ - $ - $ -
Pro-BlendSM Moderate Term Series . . 1,325 19,312 - - - -
Pro-BlendSM Extended Term Series . . 5,350 77,977 - - - -
Pro-BlendSM Maximum Term Series. . . 2,525 36,802 - - - -
75
Notes to Financial Statements
5. CAPITAL STOCK TRANSACTIONS
Transactions in Class A Shares:
FOR THE YEAR FOR THE YEAR
ENDED 10/31/04 ENDED 10/31/03
--------------------------------- --------------------------
Shares Amount Shares Amount
--------------- ---------------- ----------- -------------
Pro-BlendSM Conservative Term Series:
Sold. . . . . . . . . . . . . . . . . 1,705,424 $ 19,331,738 1,437,721 $ 16,006,000
Reinvested. . . . . . . . . . . . . . 71,403 792,622 28,247 310,001
Repurchased . . . . . . . . . . . . . (1,215,782) (13,786,516) (814,210) (9,081,651)
--------------- ---------------- ----------- -------------
Total . . . . . . . . . . . . . . . . 561,045 $ 6,337,844 651,758 $ 7,234,350
=============== ================ =========== =============
Pro-BlendSM Moderate Term Series:
Sold. . . . . . . . . . . . . . . . . 4,571,787 $ 52,889,095 2,581,488 $ 27,288,390
Reinvested. . . . . . . . . . . . . . 121,039 1,353,981 75,813 772,282
Repurchased . . . . . . . . . . . . . (2,854,389) (33,000,110) (1,127,440) (11,766,751)
--------------- ---------------- ----------- -------------
Total . . . . . . . . . . . . . . . . 1,838,437 $ 21,242,966 1,529,861 $ 16,293,921
=============== ================ =========== =============
Pro-BlendSM Extended Term Series:
Sold. . . . . . . . . . . . . . . . . 7,023,464 $ 98,091,263 3,965,907 $ 48,958,151
Reinvested. . . . . . . . . . . . . . 232,865 3,147,963 205,951 2,443,689
Repurchased . . . . . . . . . . . . . (4,090,556) (56,627,007) (1,777,142) (21,480,109)
--------------- ---------------- ----------- -------------
Total . . . . . . . . . . . . . . . . 3,165,773 $ 44,612,219 2,394,716 $ 29,921,731
=============== ================ =========== =============
Pro-BlendSM Maximum Term Series:
Sold. . . . . . . . . . . . . . . . . 3,807,625 $ 55,167,460 3,977,751 $ 46,211,122
Reinvested. . . . . . . . . . . . . . 17,485 247,095 50,681 563,892
Repurchased . . . . . . . . . . . . . (2,082,013) (30,128,857) (2,742,009) (30,860,257)
--------------- ---------------- ----------- -------------
Total . . . . . . . . . . . . . . . . 1,743,097 $ 25,285,698 1,286,423 $ 15,914,757
=============== ================ =========== =============
The Advisor owned 27,032 shares of Pro-BlendSM Conservative Term Series (1.2% of
shares outstanding) valued at $311,949 and 21,750 shares of Pro-BlendSM Maximum
Term Series (0.2% of shares outstanding) valued at $326,250 on October 31, 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 October 31, 2004.
76
Notes to Financial Statements
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. These
differences are primarily due to differing book and tax treatments in the timing
of the recognition of net investment income or gains and losses, including
foreign currency gains and losses, losses deferred due to wash sales,
investments in passive foreign investment companies and market discount. 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.
The tax character of distributions paid were as follows:
PRO-BLENDSM CONSERVATIVE PRO-BLENDSM MODERATE
TERM SERIES TERM SERIES
------------------------------------------------ --------------------------------
For the Year For the Year For the Year For the Year
Ended 10/31/04 Ended 10/31/03 Ended 10/31/04 Ended 10/31/03
------------------------- --------------------- --------------- ---------------
Ordinary income . . . . $ 639,645 $ 310,705 $ 1,359,701 $ 775,445
Long-term capital gains 154,977 - - -
PRO-BLENDSM EXTENDED PRO-BLENDSM MAXIMUM
TERM SERIES TERM SERIES
------------------------------------------- --------------------------------
For the Year For the Year For the Year For the Year
Ended 10/31/04 Ended 10/31/03 Ended 10/31/04 Ended 10/31/03
--------------------- -------------------- --------------- ---------------
Ordinary income . . . . $ 3,160,960 $ 2,453,069 $ 247,271 $ 564,359
Long-term capital gains - - - -
77
Notes to Financial Statements
8. FEDERAL INCOME TAX INFORMATION (continued)
Pursuant to Section 852 of the Internal Revenue Code, as amended, the
Pro-BlendSM Conservative Term Series hereby designates the long-term capital
gains disclosed above as capital gains for its taxable year ended October 31,
2004.
At October 31, 2004, the tax basis components of distributable earnings and the
net unrealized appreciation based on identified cost for federal income tax
purposes were as follows:
PRO-BLENDSM CONSERVATIVE PRO-BLENDSM MODERATE PRO-BLENDSM EXTENDED
TERM SERIES TERM SERIES TERM SERIES
-------------------------- ---------------------- ----------------------
Cost for federal income tax purposes. $ 26,115,274 $ 94,053,547 $ 256,304,053
Unrealized appreciation . . . . . . . $ 1,289,390 $ 6,307,760 $ 23,537,375
Unrealized depreciation . . . . . . . (114,538) (1,140,242) (4,816,759)
-------------------------- ---------------------- ----------------------
Net unrealized appreciation . . . . . $ 1,174,852 $ 5,167,518 $ 18,720,616
Undistributed ordinary income . . . . 302,896 1,027,355 2,379,431
Undistributed long-term capital gains 172,588 1,291,145 5,630,842
PRO-BLENDSM MAXIMUM
TERM SERIES
---------------------
Cost for federal income tax purposes. $ 125,186,119
Unrealized appreciation . . . . . . . $ 13,315,109
Unrealized depreciation . . . . . . . (3,729,902)
---------------------
Net unrealized appreciation . . . . . $ 9,585,207
Undistributed ordinary income . . . . 200,357
Undistributed long-term capital gains 3,197,963
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
For federal income tax purposes, each of the Series designate the amount
disclosed below or, if different, the maximum amount allowable under the tax law
as qualified dividend income ("QDI").
SERIES QDI
- ------------------------------------ ----------
Pro-BlendSM Conservative Term Series $ 42,754
Pro-BlendSM Moderate Term Series . . 391,054
Pro-BlendSM Extended Term Series . . 1,636,327
Pro-BlendSM Maximum Term Series. . . 247,271
78
Report of Independent Registered Public Accounting Firm
TO THE BOARD OF DIRECTORS OF EXETER FUND, INC. AND SHAREHOLDERS OF - PRO-BLENDSM
CONSERVATIVE TERM SERIES, PRO-BLENDSM MODERATE TERM SERIES, PRO-BLENDSM EXTENDED
TERM SERIES AND PRO-BLENDSM MAXIMUM TERM SERIES:
In our opinion, the accompanying statements of assets and liabilities, including
the investment portfolios, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Pro-BlendSM Conservative Term
Series, Pro-BlendSM Moderate Term Series, Pro-BlendSM Extended Term Series and
Pro-BlendSM Maximum Term Series (each a Series of Exeter Fund, Inc., hereafter
collectively referred to as the "Series") at October 31, 2004, and the results
of each of their operations, the changes in each of their net assets and the
financial highlights for the periods indicated, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Series' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 2004 by
correspondence with the custodian, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
BOSTON, MASSACHUSETTS
DECEMBER 13, 2004
79
Directors' and Officers' Information (unaudited)
The Statement of Additional Information provides additional information about
the Fund's directors and officers and can be obtained without charge by calling
1-800-466-3863 or on the EDGAR Database on the SEC Internet website
(http:\\www.sec.gov). The following chart shows certain information about the
Fund's officers and directors, including their principal occupations during the
last five years. Unless specific dates are provided, the individuals have held
the listed positions for longer than five years.
INTERESTED DIRECTOR
Name: . . . . . . . . . . . . . . . . . . . . . . B. Reuben Auspitz*
Address: . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . 57
Current Position(s) Held with Fund: . . . . . . . Principal Executive Officer, President, Chairman & Director
Term of Office1 & Length of Time Served:. . . . . Indefinite - Director; Vice President 1984 - 2003; President since 2004;
Director since 1984
Principal Occupation(s) During Past 5 Years:. . . Executive Vice President, Co-Executive Director, Executive Group Member** &
Chief Compliance Officer since 2004, Manning & Napier Advisors, Inc.; President
& Director Manning & Napier Investor Services, Inc.; Holds or has held one or
more of the following titles for various subsidiaries and affiliates:
President, Vice President, Director, Chairman, Treasurer, Chief Compliance
Officer or Member
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
INDEPENDENT DIRECTORS
Name:. . . . . . . . . . . . . . . . . . . . . . . Stephen B. Ashley
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 64
Current Position(s) Held with Fund:. . . . . . . . Director, Audit Committee Member, Governance & Nominating Committee Member
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 1996
Principal Occupation(s) During Past 5 Years: . . . Chairman, Director, President & Chief Executive Officer, The Ashley Group
(property management and investment)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . Genesee Corp.
The Ashley Group
Fannie Mae
Name:. . . . . . . . . . . . . . . . . . . . . . . Martin F. Birmingham
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 83
Current Position(s) Held with Fund:. . . . . . . . Director, Governance & Nominating Committee Member
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 1994
Principal Occupation(s) During Past 5 Years: . . . Advisory Trustee, The Freedom Forum (nonpartisan, international foundation)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
Name:. . . . . . . . . . . . . . . . . . . . . . . Peter L. Faber
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 66
Current Position(s) Held with Fund:. . . . . . . . Director, Governance & Nominating Committee Member
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 1987
Principal Occupation(s) During Past 5 Years: . . . Partner, McDermott, Will & Emery LLP (law firm)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . Partnership for New York City, Inc.
Name:. . . . . . . . . . . . . . . . . . . . . . . Harris H. Rusitzky
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 69
Current Position(s) Held with Fund:. . . . . . . . Director, Audit Committee Member, Governance & Nominating Committee Member
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 1985
Principal Occupation(s) During Past 5 Years: . . . President, The Greening Group (business consultants)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
80
Directors' and Officers' Information (unaudited)
OFFICERS
Name:. . . . . . . . . . . . . . . . . . . . . . . Jeffrey S. Coons, Ph.D., CFA
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 41
Current Position(s) Held with Fund:. . . . . . . . Vice President
Term of Office1 & Length of Time Served: . . . . . Since 2004
Principal Occupation(s) During Past 5 Years: . . . Co-Director of Research since 2002 & Executive Group Member**,
Manning & Napier Advisors, Inc.; Managing Director - Risk Management, Manning &
Napier Advisors, Inc., 1993-2002; Holds one or more of the following titles for
various subsidiaries and affiliates: President, Director, Treasurer or Senior
Trust Officer
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
Name:. . . . . . . . . . . . . . . . . . . . . . . Christine Glavin
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 38
Current Position(s) Held with Fund:. . . . . . . . Principal Financial Officer, Chief Financial Officer
Term of Office1 & Length of Time Served: . . . . . Since 2001
Principal Occupation(s) During Past 5 Years: . . . Fund Accounting Manager, Manning & Napier Advisors, Inc.
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
Name:. . . . . . . . . . . . . . . . . . . . . . . Jodi L. Hedberg
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 36
Current Position(s) Held with Fund:. . . . . . . . Corporate Secretary, Chief Compliance Officer, Anti-Money Laundering (AML)
Compliance Officer
Term of Office1 & Length of Time Served: . . . . . Corporate Secretary since 1997; Chief Compliance Officer since 2004
Compliance Manager, Manning & Napier Advisors, Inc. & affiliates
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
Name:. . . . . . . . . . . . . . . . . . . . . . . Alaina V. Metz
Address: . . . . . . . . . . . . . . . . . . . . . 1100 Chase Square
Rochester, NY 14604
Age: . . . . . . . . . . . . . . . . . . . . . . . 37
Current Position(s) Held with Fund:. . . . . . . . Special Assistant Secretary
Term of Office & Length of Time Served:. . . . . . Indefinite - Since 2002
Principal Occupation(s) During Past 5 Years: . . . Vice President, BISYS Fund Services Ohio, Inc. (mutual fund servicing company)
Number of Portfolios Overseen within Fund Complex: 21
Other Directorships Held Outside Fund Complex: . . N/A
*Interested Director, within the meaning of the Investment Company Act of 1940
by reason of his position with the Fund's investment advisor and distributor.
Mr. Auspitz serves as the Executive Vice President and Director, Manning &
Napier Advisors, Inc. and President and Director, Manning & Napier Investor
Services, Inc., the Fund's distributor.
**The Executive Group, which consists of six members, performs the duties of the
Office of the President, effective May 1, 2003.
1The term of office for all officers is one year and until their respective
successors are chosen and qualified.
81
Literature Requests (unaudited)
PROXY VOTING POLICIES AND PROCEDURES
- --------------------------------------------------------------------------------
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge,
upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30th is available
without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
QUARTERLY PORTFOLIO HOLDINGS
- --------------------------------------------------------------------------------
The Series' complete schedule of portfolio holdings for the 1st and 3rd quarters
of each fiscal year are provided on Form N-Q, 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. These documents are available without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
82
ITEM 2: CODE OF ETHICS
(a) The registrant has adopted a code of ethics that applies to its
principal executive officer, principal financial officer and principal
accounting officer. A copy of the registrant's code of ethics is filed herewith
as Exhibit 11(a)(1).
(b) During the period covered by this report, no amendments were made to the
provisions of the code of ethics adopted in 2 (a) above.
(c) During the period covered by this report, no implicit or explicit
waivers to the provisions of the code of ethics adopted in 2 (a) above were
granted
(d) Not applicable to the registrant due to the response given in 2 (c)
above.
ITEM 3: AUDIT COMMITTEE FINANCIAL EXPERT
All of the members of the Audit committee have been determined by the
Registrant's Board of Trustees to be Audit Committee Financial Experts. The
members of the Audit Committee are: Harris H. Rusitzky and Stephen B. Ashley.
All Audit Committee members are independent under applicable rules. This
designation will not increase the designee's duties, obligations or liability as
compared to their duties, obligations and liability as a member of the Audit
Committee and of the Board.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Principal Accountant Fees and Services
- ------------------------------------------
Aggregate fees for professional services rendered for the Exeter Fund, Inc.
(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, and Overseas Series, collectively the "Fund") by
PricewaterhouseCoopers LLP ("PwC") as of and for the years ended October 31,
2004 and 2003 were:
2004 2003
-------- --------
Audit Fees (a) . . . . $153,970 $134,384
Audit Related Fees (b) - -
Tax Fees (c) . . . . . 41,455 37,875
All Other Fees (d) . . - -
-------- --------
$195,425 $172,259
======== ========
(a) Audit Fees
These fees relate to professional services rendered by PwC for the audit of the
Fund's annual financial statements or services normally provided by the
accountant in connection with statutory and regulatory filing or engagements.
These services include the audits of the financial statements of the Fund,
issuance of consents, income tax provision procedures and assistance with review
of documents filed with the SEC.
(b) Audit-Related Fees
These fees relate to assurance and related services by PwC that are reasonably
related to the performance of the audit of the Fund's financial statements and
are not reported under "Audit Fees" above.
(c) Tax Fees
These fees relate to professional services rendered by PwC for tax compliance,
tax advice and tax planning. The tax services provided by PwC related to the
preparation of the Fund's federal and state income tax returns, excise tax
calculations and returns, a review of the Fund's calculations of capital gain
and income distributions, and additional tax research for compliance purposes.
(d) All Other Fees
These fees relate to products and services provided by PwC other than those
reported above under "Audit Fees," "Audit-Related Fees," and "Tax Fees" above.
There were no amounts that were approved by the Audit Committee pursuant to the
de minimus exception (Rule 2-01(c)(7) of Regulation S-X) for the fiscal years
ended October 31, 2004 and 2003.
Non-Audit Services to the Fund's Service Affiliates that were Pre-Approved by
the Fund's Audit Committee
- --------------------------------------------------------------------------------
The Fund's Audit Committee is required to pre-approve non-audit services which
meet both the following criteria:
i) Directly relate to the Fund's operations and financial reporting; and
ii) Rendered by PwC to the Fund's advisor, Manning & Napier Advisors, Inc.,
and entities in a control relationship with the advisor ("service affiliate")
that provide ongoing services to the Fund. For purposes of disclosure, Manning
& Napier Investor Services, Inc. is considered to be a service affiliate.
2004 2003*
------- -------
Audit Related Fees $27,450 $33,950
Tax Fees . . . . . 8,500 9,600
All Other Fees . . - 2,000
------- -------
$35,950 $45,550
======= =======
*For periods prior to May 6, 2003, amounts shown relate to non-audit services
that would have been subject to pre-approval if the SEC rules relating to the
pre-approval of non-audit services had been in effect.
The Audit Related fees for the years ended October 31, 2004 and 2003 were for
17Ad-13 internal control examinations and attest services that were not required
by statute or regulation.
The Tax fees for the year ended October 31, 2004 relate to reseach on
liquidation issues, year-end reporting, and tender offers. The Tax fees for the
year ended October 31, 2003 relate to research on closing various funds and
related tax issues.
All Other fees for the year ended October 31, 2003 were for services rendered
for a peer survey related to disaster recovery plans.
There were no amounts that were approved by the Audit Committee pursuant to the
de minimus exception (Rule 2-01(c)(7) of Regulation S-X) for the fiscal years
ended October 31, 2004 and 2003.
Aggregate Fees
- ---------------
Aggregate fees billed to the Fund for non-audit services for 2004 and 2003 were
$41,455 and $37,875, respectively. Aggregate fees billed to the Fund's advisor
and service affiliates for non-audit services were $122,060 and $130,130,
respectively. These amounts include fees for non-audit services required to be
pre-approved and fees for non-audit services that did not require pre-approval
since they did not relate to the Fund's operations and financial reporting.
The Fund's Audit Committee has considered whether the provisions for non-audit
services to the Fund's advisor and service affiliates, that did not require
pre-approval, is compatible with maintaining PwC's independence.
ITEM 5: AUDIT COMMITTEE OF LISTED REGISTRANTS
Not Applicable.
ITEM 6: SCHEDULE OF INVESTMENTS
See Investment Portfolios under Item 1 on this Form N-CSR.
ITEM 7: DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 8: PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 9: PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
Not applicable.
ITEM 10: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no material changes to the procedure by which shareholders may
recommend nominees to the registrant's board of directors.
ITEM 11: CONTROLS AND PROCEDURES
(a) Based on their evaluation of the Funds' disclosure controls and procedures,
as of a date within 90 days of the filing date, the Funds' Principal Executive
Officer and Principal Financial Officer have concluded that the Funds'
disclosure controls and procedures are: (i) reasonably designed to ensure that
information required to be disclosed in this report is appropriately
communicated to the Funds' officers to allow timely decisions regarding
disclosures required in this report; (ii) reasonably designed to ensure that
information required to be disclosed in this report is recorded, processed,
summarized and reported in a timely manner; and (iii) are effective in achieving
the goals described in (i) and (ii) above.
During the second fiscal quarter of the period covered by this report,
there have been no changes in the Funds' internal control over financial
reporting that the above officers believe to have materially affected, or to be
reasonably likely to materially affect, the Funds' internal control over
financial reporting.
ITEM 12: EXHIBITS
(a)(1) Code of ethics that is subject to the disclosure of Item 2 above.
(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.
(a)(3) Not applicable.
(b) A certification of the Registrant's principal executive officer and
principal financial officer, as required by 18 U.S.C Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and
Rule 30a-2(b) under the Investment Company Act of 1940, is attached as
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.
December 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.
December 29, 2004
/s/ Christine Glavin
Christine Glavin
Chief Financial Officer & Principal Financial Officer of Exeter Fund, Inc.
December 29, 2004