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)
290 WOODCLIFF DRIVE, FAIRPORT, NY 14450
- -----------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
B. REUBEN AUSPITZ 290 WOODCLIFF DRIVE, FAIRPORT, NY 14450
- ----------------------------------------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 585-325-6880
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DATE OF FISCAL YEAR END: DECEMBER 31, 2005
---------------------------------------
DATE OF REPORTING PERIOD: JANUARY 1, 2005 THROUGH JUNE 30, 2005
-----------------------------------------
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
August 26, 2005
To Shareholders of the following Series of the Exeter Fund:
Core Bond Series
Core Plus Bond Series
Diversified Tax Exempt Series
International Series
Life Sciences Series
New York Tax Exempt Series
Ohio Tax Exempt Series
Small Cap Series
Technology Series
World Opportunities Series
Dear Shareholder:
Enclosed is a copy of the Semi-Annual Report for each of the above Series of the
Exeter Fund in which you were invested as of June 30, 2005. The reports include
portfolio holdings and financial statements as of that date.
Please contact our Fund Services department at 1-800-466-3863 or your Client
Consultant if you have any questions about the Semi-Annual Reports or about the
Fund.
Sincerely,
/s/ Amy J. Williams
Amy J. Williams
Fund Services Manager
<page>
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2005
Technology Series
<page>
<page>
Shareholder Expense Example (unaudited)
As a shareholder of the Series, you may incur two types of costs: (1)
transaction costs, including potential wire charges on redemptions and (2)
ongoing costs, including management fees and other Series expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Series and to compare these costs with the ongoing costs of
investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2005 to June 30, 2005).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as potential
wire charges on redemptions. Therefore, the second line of the table is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds. In addition, if these transaction costs
were included, your costs would have been higher.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
1/1/05 6/30/05 1/1/05-6/30/05
-------------- -------------- ---------------
Actual $ 1,000.00 $ 942.60 $ 5.78
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,018.84 $ 6.01
*Expenses are equal to the Series' annualized expense ratio (for the six-month
period) of 1.20%, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period). Expenses are based
on the most recent fiscal half year. The Series' total return would have been
lower had certain expenses not been waived during the period.
1
<page>
Portfolio Composition as of June 30, 2005 (unaudited)
<graphic>
<pie chart>
SECTOR ALLOCATION*
Consumer Discretionary 9.6%
Health Care 5.2%
Industrials 2.8%
Information Technology (Communications Equipment) 15.8%
Information Technology (Computers & Peripherals) 8.6%
Information Technology (Electronic Equipment & Instruments) 5.0%
Information Technology (Internet Software & Services) 5.4%
Information Technology (IT Services) 1.9%
Information Technology (Semiconductors & Semiconductor Equipment) 16.0%
Information Technology (Software) 26.1%
Telecommunication Services 2.9%
Cash, short-term investments, and liabilities, less other assets 0.7%
*As a percentage of net assets.
TOP TEN STOCK HOLDINGS*
Symantec Corp. 4.3%
Texas Instruments, Inc. 4.1%
Cisco Systems, Inc. 3.9%
WebMD Corp. 3.9%
Nokia Oyj - ADR (Finland) 3.7%
Packeteer, Inc. 3.5%
Amdocs Ltd. (Guernsey) 3.4%
Secure Computing Crop. 3.2%
Blue Coat Systems, Inc. 3.2%
Taiwan Semiconductor Manufacturing Co. Ltd. - ADR (Finland) 3.0%
*As a percentage of total investments.
2
<page>
Investment Portfolio - June 30, 2005 (unaudited)
VALUE
SHARES (NOTE 2)
------- ------------
COMMON STOCKS - 99.3%
CONSUMER DISCRETIONARY - 9.6%
DIVERSIFIED CONSUMER SERVICES - 1.3%
Career Education Corp.* 35,150 $ 1,286,841
------------
HOUSEHOLD DURABLES - 1.7%
Sony Corp. - ADR (Japan) (Note 7) 48,000 1,653,120
------------
INTERNET & CATALOG RETAIL - 2.0%
IAC/InterActiveCorp* 81,000 1,948,050
------------
MEDIA - 2.9%
Harris Interactive, Inc.* 600,000 2,922,000
------------
SPECIALTY RETAIL - 1.7%
RadioShack Corp. 72,000 1,668,240
------------
TOTAL CONSUMER DISCRETIONARY 9,478,251
------------
HEALTH CARE - 5.2%
HEALTH CARE PROVIDERS & SERVICES - 5.2%
Omnicell, Inc.* 143,000 1,258,400
WebMD Corp.* 378,000 3,882,060
------------
TOTAL HEALTH CARE 5,140,460
------------
INDUSTRIALS - 2.8%
COMMERCIAL SERVICES & SUPPLIES - 2.8%
Tomra Systems ASA (Norway) (Note 7) 664,000 2,743,844
------------
INFORMATION TECHNOLOGY - 78.8%
COMMUNICATIONS EQUIPMENT - 15.8%
Cisco Systems, Inc.* 206,000 3,936,660
Nokia Oyj - ADR (Finland) (Note 7) 223,000 3,710,720
Packeteer, Inc.* 250,000 3,525,000
Polycom, Inc.* 172,000 2,564,520
Scientific-Atlanta, Inc. 58,000 1,929,660
------------
15,666,560
------------
COMPUTERS & PERIPHERALS - 8.6%
EMC Corp.* 206,000 2,824,260
International Business Machines (IBM) Corp. 37,500 2,782,500
Logitech International S.A. - ADR* (Switzerland) (Note 7) 45,000 2,870,100
------------
8,476,860
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 5.0%
DTS, Inc.* 110,000 1,961,300
Solectron Corp.* 781,000 2,959,990
------------
4,921,290
------------
INTERNET SOFTWARE & SERVICES - 5.4%
Blue Coat Systems, Inc.* 105,500 3,152,340
Online Resources Corp.* 197,000 2,228,070
------------
5,380,410
------------
The accompanying notes are an integral part of the financial statements.
3
<page>
Investment Portfolio - June 30, 2005 (unaudited)
VALUE
SHARES (NOTE 2)
--------- ------------
INFORMATION TECHNOLOGY (continued)
IT SERVICES - 1.9%
First Data Corp. 46,000 $ 1,846,440
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 16.0%
ATI Technologies, Inc.* (Canada) (Note 7) 114,000 1,350,900
Cabot Microelectronics Corp.* 66,000 1,913,340
Cymer, Inc.* 27,300 719,355
Exar Corp.* 143,000 2,129,270
Taiwan Semiconductor Manufacturing Co. Ltd. - ADR (Taiwan) (Note 7) 327,600 2,987,712
Texas Instruments, Inc. 145,000 4,070,150
Zoran Corp.* 197,000 2,618,130
------------
15,788,857
------------
SOFTWARE - 26.1%
Amdocs Ltd.* (Guernsey) (Note 7) 130,000 3,435,900
Blackbaud, Inc. 218,000 2,943,000
Business Objects S.A. - ADR* (France) (Note 7) 24,000 631,200
F-Secure Oyj* (Finland) (Note 7) 267,000 607,700
Opsware, Inc.* 181,000 926,720
PalmSource, Inc.* 289,000 2,456,500
SAP AG - ADR (Germany) (Note 7) 45,000 1,948,500
Secure Computing Corp.* 297,000 3,231,360
Symantec Corp.* 198,000 4,304,520
Synopsys, Inc.* 157,000 2,617,190
Verity, Inc.* 302,000 2,648,540
------------
25,751,130
------------
TOTAL INFORMATION TECHNOLOGY 77,831,547
------------
TELECOMMUNICATION SERVICES - 2.9%
WIRELESS TELECOMMUNICATION SERVICES - 2.9%
Vodafone Group plc - ADR (United Kingdom) (Note 7) 118,000 2,869,760
------------
TOTAL COMMON STOCKS
(Identified Cost $90,182,782) 98,063,862
------------
SHORT-TERM INVESTMENTS - 1.9%
Dreyfus Treasury Cash Management - Institutional Shares
(Identified Cost $1,868,599) 1,868,599 1,868,599
------------
TOTAL INVESTMENTS - 101.2%
(Identified Cost $92,051,381) 99,932,461
LIABILITIES, LESS OTHER ASSETS - (1.2%) (1,158,866)
------------
NET ASSETS - 100% $98,773,595
============
*Non-income producing security
ADR - American Depository Receipt
The accompanying notes are an integral part of the financial statements.
4
<page>
Statement of Assets and Liabilities (unaudited)
June 30, 2005
ASSETS:
Investments, at value (identified cost $92,051,381) (Note 2) $ 99,932,461
Receivable for fund shares sold 241,229
Receivable for securities sold 224,872
Dividends receivable 131,404
-------------
TOTAL ASSETS 100,529,966
-------------
LIABILITIES:
Accrued management fees (Note 3) 75,805
Accrued fund accounting and transfer agent fees (Note 3) 12,711
Accrued Chief Compliance Officer services fees (Note 3) 1,062
Payable for securities purchased 1,644,980
Audit fees payable 14,423
Payable for fund shares repurchased 5,509
Other payables and accrued expenses 1,881
-------------
TOTAL LIABILITIES 1,756,371
-------------
TOTAL NET ASSETS $ 98,773,595
=============
NET ASSETS CONSIST OF:
Capital stock $ 127,968
Additional paid-in-capital 132,523,722
Undistributed net investment loss (56,607)
Accumulated net realized loss on investments, foreign currency, and
other assets and liabilities (41,702,568)
Net unrealized appreciation on investments 7,881,080
-------------
TOTAL NET ASSETS $ 98,773,595
=============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE ($98,773,595/12,796,825 shares) $ 7.72
=============
The accompanying notes are an integral part of the financial statements.
5
<page>
Statement of Operations (unaudited)
For the Six Months Ended June 30, 2005
INVESTMENT INCOME:
Dividends (net of foreign tax withheld, $26,881) $ 337,530
Interest 36,516
------------
Total Investment Income 374,046
------------
EXPENSES:
Management fees (Note 3) 357,887
Fund accounting and transfer agent fees (Note 3) 51,374
Directors' fees (Note 3) 3,459
Chief Compliance Officer services fees (Note 3) 2,988
Custodian fees 7,935
Miscellaneous 27,424
------------
Total Expenses 451,067
Less reduction of expenses (Note 3) (20,414)
------------
Net Expenses 430,653
------------
NET INVESTMENT LOSS (56,607)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on -
Investments 2,499,683
Foreign currency and other assets and liabilities (1,184)
------------
2,498,499
------------
Net change in unrealized appreciation on investments (3,048,795)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (550,296)
------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ (606,903)
============
The accompanying notes are an integral part of the financial statements.
6
<page>
Statements of Changes in Net Assets
FOR THE SIX
MONTHS ENDED FOR THE
6/30/05 YEAR ENDED
(UNAUDITED) 12/31/04
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss $ (56,607) $ (177,506)
Net realized gain on investments 2,498,499 4,562,135
Net change in unrealized appreciation on investments (3,048,795) 4,698,784
-------------- ------------
Net increase (decrease) from operations (606,903) 9,083,413
-------------- ------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase from capital share transactions (Note 5) 36,059,698 34,205,184
-------------- ------------
Net increase in net assets 35,452,795 43,288,597
NET ASSETS:
Beginning of period 63,320,800 20,032,203
-------------- ------------
END OF PERIOD (including undistributed net investment
loss of $56,607 and $0, respectively) $ 98,773,595 $63,320,800
============== ============
The accompanying notes are an integral part of the financial statements.
7
<page>
Financial Highlights
FOR THE SIX
MONTHS ENDED
6/30/05 FOR THE YEARS ENDED
(UNAUDITED) 12/31/04 12/31/03 12/31/02 12/31/01
-------------- --------------------- ------------ ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 8.19 $ 7.44 $ 3.73 $ 5.91 $ 7.16
-------------- --------------------- ------------ ---------- ----------
Income (loss) from investment operations:
Net investment loss --2 (0.04)3 (0.03) (0.03)3 (0.03)
Net realized and unrealized gain (loss) on
investments (0.47) 0.79 3.74 (2.15) (1.22)
-------------- --------------------- ------------ ---------- ----------
Total from investment operations (0.47) 0.75 3.71 (2.18) (1.25)
-------------- --------------------- ------------ ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 7.72 $ 8.19 $ 7.44 $ 3.73 $ 5.91
============== ===================== ============ ========== ==========
Total return4 (5.74%) 10.08% 99.46% (36.89%) (17.46%)
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 1.20%5 1.20% 1.20% 1.20% 1.20%
Net investment loss (0.16%)5 (0.52%) (0.58%) (0.71%) (0.49%)
Portfolio turnover 36% 50% 83% 137% 63%
NET ASSETS - END OF PERIOD (000's omitted) $ 98,774 $ 63,321 $ 20,032 $ 10,178 $ 53,071
============== ===================== ============ ========== ==========
FOR THE PERIOD
8/8/00 1 TO
12/31/00
----------------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.00
----------------
Income (loss) from investment operations:
Net investment loss (0.02)
Net realized and unrealized gain (loss) on
investments (2.82)
----------------
Total from investment operations (2.84)
----------------
NET ASSET VALUE - END OF PERIOD $ 7.16
================
Total return4 (28.40%)
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 1.18%5
Net investment loss (0.71%)5
Portfolio turnover 13%
NET ASSETS - END OF PERIOD (000's omitted) $ 66,624
================
*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%5 0.16% 0.81% 0.41% 0.11% N/A
1Recommencement of operations.
2Less than $0.01 per share.
3Calculated based on average shares outstanding during the period.
4Represents aggregate total return for the period indicated, and assumes
reinvestment of all distributions. Total return would have been lower had
certain expenses not been waived during the period. Periods less than one year
are not annualized.
5Annualized.
The accompanying notes are an integral part of the financial statements.
8
<page>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Technology 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 by investing
principally in the common stocks of companies in technology-based industries.
The Fund's Advisor is Manning & Napier Advisors, Inc. (the "Advisor"), doing
business as Exeter Asset Management. On August 8, 2000, the Series resumed
sales of shares to advisory clients and employees of the Advisor and its
affiliates. The Series resumed offering shares directly to investors on May 18,
2004, as it had done previously from time to time.
The total authorized capital stock of the Fund consists of 1.7 billion shares of
common stock each having a par value of $0.01. As of June 30, 2005, 1.16
billion shares have been designated in total among 21 series, of which 50
million have been designated as Technology Series common stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities,
exchange-traded funds 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. Investments in open-end investment
companies are valued at their net asset value per share on valuation date, with
the exception of exchange-traded funds as noted above.
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.
9
<page>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES (continued)
The Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
FOREIGN CURRENCY TRANSLATION
The books and records of the Series are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the current exchange rates. Purchases and sales of investment
securities and income and expenses are translated on the respective dates of
such transactions. The Series does not isolate realized and unrealized gains
and losses attributable to changes in the exchange rates from gains and losses
that arise from changes in the market value of investments. Such fluctuations
are included with net realized and unrealized gain or loss on investments. Net
realized foreign currency gains and losses represent foreign currency gains and
losses between trade date and settlement date on securities transactions, gains
and losses on disposition of foreign currencies and the difference between the
amount of income and foreign withholding taxes recorded on the books of the
Series and the amounts actually received or paid.
FEDERAL TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent that the Series distributes to
shareholders each year its taxable income, including any net realized gains on
investments, in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income and net realized gains
are made annually. An additional distribution may be necessary to avoid
taxation of the Series. Distributions are recorded on the ex-dividend date.
OTHER
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of 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 (except a percentage of the Fund's
Chief Compliance Officer's salary, which is paid by the Fund, and the Special
Assistant Secretary's salary, which is paid by BISYS Fund Services Ohio, Inc.
10
<page>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
("BISYS")), and of all Directors who are "affiliated persons" of the Fund, or of
the Advisor, and all personnel of the Fund, or of the Advisor, performing
services relating to research, statistical and investment activities, are paid
by the Advisor. Each "non-affiliated" Director receives an annual stipend,
which is allocated among all the active series of the Fund. In addition, these
Directors also receive a per meeting fee for each active series of the Fund plus
a fee for each committee meeting attended.
The Advisor has contractually agreed, until at least April 30, 2006, 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 $20,414 for the
six months ended June 30, 2005, 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 pays the Advisor an annual fee of 0.15% of the Fund's average daily net
assets up to $900 million, 0.11% for the Fund's average daily net assets between
$900 million and $1.5 billion, and 0.07% for the Fund's average daily net assets
over $1.5 billion. These fee rates are scheduled to be reduced each year
through 2007. Additionally, certain transaction and account-based fees and
out-of-pocket expenses, including charges for reporting relating to the Fund's
Compliance Program, are charged. Expenses not directly attributable to a series
are allocated based on each series' relative net assets or number accounts,
depending on the expense. The Advisor has an agreement with BISYS under which
BISYS serves as sub-accounting services and sub-transfer agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2005, purchases and sales of securities, other
than short-term securities, were $62,749,900 and $25,119,424, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Technology Series were:
FOR THE SIX MONTHS FOR THE YEAR
ENDED 6/30/05 ENDED 12/31/04
------------------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
------------------- ---------------- ---------- ------------
Sold 5,519,447 $ 39,564,452 5,819,094 $40,253,707
Repurchased (452,831) (3,504,754) (782,440) (6,048,523)
------------------- ---------------- ----------
Total 5,066,616 $ 36,059,698 5,036,654 $34,205,184
=================== ================ ========== ============
Substantially all of the Series' shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
11
<page>
Notes to Financial Statements (unaudited)
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options,
forward foreign currency exchange contracts and futures contracts and may
involve, to a varying degree, elements of risk in excess of the amounts
recognized for financial statement purposes. No such investments were held by
the Series on June 30, 2005.
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. TECHNOLOGY SECURITIES
The Series may focus its investments in certain related technology industries;
hence, the Series may subject itself to a greater degree of risk than a series
that is more diversified.
9. FEDERAL INCOME TAX INFORMATION
The amount and characterization of certain income and capital gains to be
distributed are determined in accordance with federal income tax regulations,
which may differ from accounting principles generally accepted in the United
States of America. The Series may periodically make reclassifications among its
capital accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations, without
impacting the Series' net asset value. Any such reclassifications are not
reflected in the financial highlights.
At December 31, 2004, the Series had capital loss carryovers available to the
extent allowed by tax law to offset future net capital gain, if any, which will
expire as follows:
LOSS CARRYOVER EXPIRATION DATE
- --------------- -----------------
$ 6,187,851 December 31, 2009
$ 36,793,969 December 31, 2010
At June 30, 2005, the identified cost of investments for federal income tax
purposes, the resulting gross unrealized appreciation and depreciation, and the
net unrealized appreciation were as follows:
Cost for federal income tax purposes $92,051,381
Unrealized appreciation $10,594,696
Unrealized depreciation (2,713,616)
------------
Net unrealized appreciation $ 7,881,080
============
12
<page>
[This page intentionally left blank]
13
<page>
Literature Requests (unaudited)
PROXY VOTING POLICIES AND PROCEDURES
- --------------------------------------------------------------------------------
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available, without charge,
upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission's (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30th is available,
without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
QUARTERLY PORTFOLIO HOLDINGS
- --------------------------------------------------------------------------------
The Series' complete schedule of portfolio holdings for the 1st and 3rd quarters
of each fiscal year are provided on Form N-Q, and are available, without charge,
upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
The Series' Form N-Q may be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION (SAI)
- --------------------------------------------------------------------------------
The prospectus and SAI provide additional information about each Series,
including charges, expenses and risks. These documents are available, without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
On the Advisor's web site
http://www.manningnapieradvisors.com/www/exeter_fund.asp
ADDITIONAL INFORMATION AVAILABLE AT
WWW.MANNINGNAPIERADVISORS.COM/WWW/EXETER_FUND.ASP
- --------------------------------------------------------------------------------
1. Fund Holdings - month-end
2. Fund Holdings - quarter-end
3. Shareholder Report - Annual
4. Shareholder Report - Semi-Annual
14
<page>
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2005
Life Sciences Series
<page>
<page>
Shareholder Expense Example (unaudited)
As a shareholder of the Series, you may incur two types of costs: (1)
transaction costs, including potential wire charges on redemptions and (2)
ongoing costs, including management fees and other Series expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Series and to compare these costs with the ongoing costs of
investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2005 to June 30, 2005).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as potential
wire charges on redemptions. Therefore, the second line of the table is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds. In addition, if these transaction costs
were included, your costs would have been higher.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
1/1/05 6/30/05 1/1/05-6/30/05
-------------- -------------- ---------------
Actual $ 1,000.00 $ 1,029.40 $ 5.94
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,018.94 $ 5.91
*Expenses are equal to the Series' annualized expense ratio (for the six-month
period) of 1.18%, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period). Expenses are based
on the most recent fiscal half year. The Series' total return would have been
lower had certain expenses not been waived during the period.
1
<page>
Portfolio Composition as of June 30, 2005 (unaudited)
<graphic>
<pie chart>
SECTOR ALLOCATION*
Health Care (Biotechnology) 11.2%
Health Care (Health Care Equipment & Supplies) 14.3%
Health Care (Health Care Providers & Services) 41.5%
Health Care (Pharmaceuticals) 21.5%
Industrials 0.5%
Information Technology 1.3%
Materials 4.7%
Cash, short-term investments, and liabilities, less other assets 5.0%
*As a percentage of net assets.
TOP TEN STOCK HOLDINGS*
WebMD Corp. 9.9%
Lonza Group AG (Switzerland) 4.6%
Omnicell, Inc. 4.2%
Schering AG (Germany) 3.2%
Millennium Pharmaceuticals, Inc. 2.9%
Schering-Plough Corp. 2.9%
PerkinElmer, Inc. 2.8%
Advanced Neuromodulation Systems, Inc. 2.8%
Novartis AG - ADR (Switzerland) 2.8%
McKesson Corp. 2.8%
*As a percentage of total investments.
2
<page>
Investment Portfolio - June 30, 2005 (unaudited)
VALUE
SHARES (NOTE 2)
--------- ------------
COMMON STOCKS - 95.0%
HEALTH CARE - 88.5%
BIOTECHNOLOGY - 11.2%
BioMarin Pharmaceutical, Inc.* 600,000 $ 4,494,000
Caliper Life Sciences, Inc.* 507,050 2,839,480
Diversa Corp.* 635,000 3,308,350
Millennium Pharmaceuticals, Inc.* 620,000 5,747,400
Neurocrine Biosciences, Inc.* 48,000 2,018,880
Xenogen Corp.* 933,500 3,500,625
------------
21,908,735
------------
HEALTH CARE EQUIPMENT & SUPPLIES - 14.3%
Advanced Neuromodulation Systems, Inc.* 140,000 5,555,200
DENTSPLY International, Inc. 100,000 5,400,000
Millipore Corp.* 42,000 2,382,660
PerkinElmer, Inc. 300,000 5,670,000
Thermo Electron Corp.* 107,000 2,875,090
Viasys Healthcare, Inc.* 92,000 2,078,280
Zoll Medical Corp.* 150,000 3,817,500
------------
27,778,730
------------
HEALTH CARE PROVIDERS & SERVICES - 41.5%
Allscripts Healthcare Solutions, Inc.* 180,000 2,989,800
American Healthways, Inc.* 46,000 1,944,420
AmerisourceBergen Corp. 72,000 4,978,800
AMICAS, Inc.* 862,350 3,906,445
AMN Healthcare Services, Inc.* 322,000 4,839,660
Cardinal Health, Inc. 67,000 3,857,860
Cross Country Healthcare, Inc.* 225,000 3,825,000
Eclipsys Corp.* 242,250 3,408,457
Express Scripts, Inc.* 82,000 4,098,360
HCA, Inc. 65,000 3,683,550
IDX Systems Corp.* 130,000 3,918,200
McKesson Corp. 123,000 5,509,170
Medical Staffing Network Holdings, Inc.* 207,000 1,024,650
Omnicell, Inc.* 953,000 8,386,400
Triad Hospitals, Inc.* 90,000 4,917,600
WebMD Corp.* 1,910,000 19,615,700
------------
80,904,072
------------
PHARMACEUTICALS - 21.5%
AstraZeneca plc - ADR (United Kingdom) (Note 7) 45,000 1,856,700
Bristol-Myers Squibb Co. 144,000 3,597,120
GlaxoSmithKline plc (United Kingdom) (Note 7) 196,000 4,746,299
Merck & Co., Inc. 111,000 3,418,800
Novartis AG - ADR (Switzerland) (Note 7) 117,000 5,550,480
Pfizer, Inc. 103,000 2,840,740
The accompanying notes are an integral part of the financial statements.
3
<page>
Investment Portfolio - June 30, 2005 (unaudited)
SHARES/ VALUE
PRINCIPAL AMOUNT (NOTE 2)
----------------- -------------
HEALTH CARE (continued)
PHARMACEUTICALS (continued)
Roche Holding AG - ADR (Switzerland) (Note 7) 33,500 $ 2,120,717
Sanofi-Aventis - ADR (France) (Note 7) 43,000 1,762,570
Schering AG (Germany) (Note 7) 104,000 6,421,308
Schering-Plough Corp. 300,000 5,718,000
Wyeth 86,000 3,827,000
-------------
41,859,734
-------------
TOTAL HEALTH CARE 172,451,271
-------------
INDUSTRIALS - 0.5%
COMMERCIAL SERVICES & SUPPLIES - 0.5%
On Assignment, Inc.* 173,000 861,540
-------------
INFORMATION TECHNOLOGY - 1.3%
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.3%
Mettler-Toledo International, Inc.* (Switzerland) (Note 7) 54,000 2,515,320
-------------
MATERIALS - 4.7%
CHEMICALS - 4.7%
Lonza Group AG (Switzerland) (Note 7) 165,921 9,186,184
-------------
TOTAL COMMON STOCKS
(Identified Cost $167,064,006) 185,014,315
-------------
SHORT-TERM INVESTMENTS - 7.1%
Dreyfus Treasury Cash Management - Institutional Shares 4,953,653 4,953,653
Fannie Mae Discount Note, 7/11/2005 $ 4,000,000 3,996,711
Freddie Mac Discount Note, 8/5/2005 5,000,000 4,985,174
-------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $13,935,538) 13,935,538
-------------
TOTAL INVESTMENTS - 102.1%
(Identified Cost $180,999,544) 198,949,853
LIABILITIES, LESS OTHER ASSETS - (2.1%) (4,127,795)
-------------
NET ASSETS - 100% $194,822,058
=============
*Non-income producing security
ADR - American Depository Receipt
The accompanying notes are an integral part of the financial statements.
4
<page>
Statement of Assets and Liabilities (unaudited)
June 30, 2005
ASSETS:
Investments, at value (identified cost $180,999,544) (Note 2) $198,949,853
Receivable for fund shares sold 383,187
Dividends receivable 172,650
Foreign tax reclaims receivable 79,658
-------------
TOTAL ASSETS 199,585,348
-------------
LIABILITIES:
Accrued management fees (Note 3) 157,335
Accrued fund accounting and transfer agent fees (Note 3) 24,812
Accrued Chief Compliance Officer services fees (Note 3) 1,062
Payable for securities purchased 4,155,534
Payable for fund shares repurchased 407,503
Audit fees payable 16,613
Other payables and accrued expenses 431
-------------
TOTAL LIABILITIES 4,763,290
-------------
TOTAL NET ASSETS $194,822,058
=============
NET ASSETS CONSIST OF:
Capital stock $ 159,148
Additional paid-in-capital 168,144,607
Undistributed net investment loss (109,785)
Accumulated net realized gain on investments, foreign currency,
and other assets and liabilities 8,681,145
Net unrealized appreciation on investments, foreign currency,
and other assets and liabilities 17,946,943
-------------
TOTAL NET ASSETS $194,822,058
=============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE ($194,822,058/15,914,837 shares) $ 12.24
=============
The accompanying notes are an integral part of the financial statements.
5
<page>
Statement of Operations (unaudited)
For the Six Months Ended June 30, 2005
INVESTMENT INCOME:
Dividends (net of foreign tax withheld, $88,623) $ 860,479
Interest 99,823
------------
Total Investment Income 960,302
------------
EXPENSES:
Management fees (Note 3) 906,673
Fund accounting and transfer agent fees (Note 3) 118,906
Directors' fees (Note 3) 3,459
Chief Compliance Officer services fees (Note 3) 2,988
Custodian fees 14,580
Miscellaneous 34,756
------------
Total Expenses 1,081,362
Less reduction of expenses (Note 3) (11,275)
------------
Net Expenses 1,070,087
------------
NET INVESTMENT LOSS (109,785)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on -
Investments 7,426,303
Foreign currency and other assets and liabilities 1,826
------------
7,428,129
------------
Net change in unrealized appreciation on -
Investments (1,763,834)
Foreign currency and other assets and liabilities (10,628)
------------
(1,774,462)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS 5,653,667
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 5,543,882
============
The accompanying notes are an integral part of the financial statements.
6
<page>
Statements of Changes in Net Assets
FOR SIX
MONTHS ENDED FOR THE
6/30/05 YEAR ENDED
(UNAUDITED) 12/31/04
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss $ (109,785) $ (1,061,324)
Net realized gain on investments 7,428,129 6,475,588
Net change in unrealized appreciation on
investments (1,774,462) 129,524
-------------- -------------
Net increase from operations 5,543,882 5,543,788
-------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 9):
From net realized gain on investments - (6,350,085)
-------------- -------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase from capital share transactions (Note 5) 3,791,187 21,303,459
-------------- -------------
Net increase in net assets 9,335,069 20,497,162
NET ASSETS:
Beginning of period 185,486,989 164,989,827
-------------- -------------
END OF PERIOD (including undistributed net investment
loss of $109,785 and $0, respectively) $ 194,822,058 $185,486,989
============== =============
The accompanying notes are an integral part of the financial statements.
7
<page>
Financial Highlights
FOR THE SIX
MONTHS ENDED
6/30/05 FOR THE YEARS ENDED
(UNAUDITED) 12/31/04 12/31/03 12/31/02 12/31/01
-------------- --------------------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 11.89 $ 11.96 $ 9.35 $ 12.52 $ 12.69
-------------- --------------------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment loss (0.01) (0.07) (0.02) (0.02) (0.04)
Net realized and unrealized gain (loss) on
investments 0.36 0.43 2.76 (2.23) 1.47
-------------- --------------------- ---------- ---------- ----------
Total from investment operations 0.35 0.36 2.74 (2.25) 1.43
-------------- --------------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income - - - --2 (0.05)
From net realized gain on investments - (0.43) (0.13) (0.92) (1.55)
-------------- --------------------- ---------- ---------- ----------
Total distributions to shareholders - (0.43) (0.13) (0.92) (1.60)
-------------- --------------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 12.24 $ 11.89 $ 11.96 $ 9.35 $ 12.52
============== ===================== ========== ========== ==========
Total return1 2.94% 3.03% 29.39% (17.93%) 11.70%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 1.18%3 1.18% 1.18% 1.20% 1.14%
Net investment loss (0.12%)3 (0.62%) (0.19%) (0.25%) (0.36%)
Portfolio turnover 49% 109% 86% 76% 120%
NET ASSETS - END OF PERIOD (000's omitted) $ 194,822 $ 185,487 $ 164,990 $ 120,245 $ 141,039
============== ===================== ========== ========== ==========
FOR THE YEAR ENDED
12/31/00
----------
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.80
----------
Income (loss) from investment operations:
Net investment loss (0.03)
Net realized and unrealized gain (loss) on
investments 9.00
----------
Total from investment operations 8.97
----------
Less distributions to shareholders:
From net investment income --2
From net realized gain on investments (7.08)
----------
Total distributions to shareholders (7.08)
----------
NET ASSET VALUE - END OF PERIOD $ 12.69
==========
Total return1 87.31%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 1.11%
Net investment loss (0.30%)
Portfolio turnover 162%
NET ASSETS - END OF PERIOD (000's omitted) $ 138,063
==========
*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:
0.01%3 0.04% 0.01% N/A N/A N/A
1Represents aggregate total return for the period indicated, and assumes
reinvestment of all distributions. Total return would have been lower had
certain expenses not been waived during certain periods. Periods less than one
year are not annualized.
2Less than $0.01 per share.
3Annualized.
The accompanying notes are an integral part of the financial statements.
8
<page>
Note to Financial Statements (unaudited)
1. ORGANIZATION
Life Sciences 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 by investing
principally in the common stocks of companies in the life sciences industry.
The Fund's Advisor is Manning & Napier Advisors, Inc. (the "Advisor"), doing
business as Exeter Asset Management. On November 5, 1999, the Series resumed
sales of shares to advisory clients and employees of the Advisor and its
affiliates. On May 1, 2001, the Series began offering shares directly to
investors. Previously, the Series was available from time to time to advisory
clients and employees of the Advisor.
The total authorized capital stock of the Fund consists of 1.7 billion shares of
common stock each having a par value of $0.01. As of June 30, 2005, 1.16
billion shares have been designated in total among 21 series, of which 50
million have been designated as Life Sciences Series common stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities,
exchange-traded funds 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. Investments in open-end investment
companies are valued at their net asset value per share on valuation date, with
the exception of exchange-traded funds as noted above.
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.
9
<page>
Note to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES (continued)
The Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
FOREIGN CURRENCY TRANSLATION
The books and records of the Series are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the current exchange rates. Purchases and sales of investment
securities and income and expenses are translated on the respective dates of
such transactions. The Series does not isolate realized and unrealized gains
and losses attributable to changes in the exchange rates from gains and losses
that arise from changes in the market value of investments. Such fluctuations
are included with net realized and unrealized gain or loss on investments. Net
realized foreign currency gains and losses represent foreign currency gains and
losses between trade date and settlement date on securities transactions, gains
and losses on disposition of foreign currencies and the difference between the
amount of income and foreign withholding taxes recorded on the books of the
Series and the amounts actually received or paid.
FEDERAL TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent that the Series distributes to
shareholders each year its taxable income, including any net realized gains on
investments, in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income and net realized gains
are made annually. An additional distribution may be necessary to avoid
taxation of the Series. Distributions are recorded on the ex-dividend date.
OTHER
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of 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 (except a percentage of the Fund's
Chief Compliance Officer's salary, which is paid by the Fund, and the Special
Assistant Secretary's salary, which is paid by BISYS Fund Services Ohio, Inc.
("BISYS")),
10
<page>
Note to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
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 attended.
The Advisor has voluntarily agreed, until at least December 31, 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 1.18% of average daily
net assets each year. Accordingly, the Advisor waived fees of $11,275 for the
six months ended June 30, 2005, 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 pays the Advisor an annual fee of 0.15% of the Fund's average daily net
assets up to $900 million, 0.11% for the Fund's average daily net assets between
$900 million and $1.5 billion, and 0.07% for the Fund's average daily net assets
over $1.5 billion. These fee rates are scheduled to be reduced each year
through 2007. Additionally, certain transaction and account-based fees and
out-of-pocket expenses, including charges for reporting relating to the Fund's
Compliance Program, are charged. Expenses not directly attributable to a series
are allocated based on each series' relative net assets or number of accounts,
depending on the expense. The Advisor has an agreement with BISYS under which
BISYS serves as sub-accounting services and sub-transfer agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2005, purchases and sales of securities, other
than short-term securities, were $96,263,920 and $82,862,325, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Life Sciences Series were:
FOR THE SIX MONTHS FOR THE YEAR
ENDED 6/30/05 ENDED 12/31/04
------------------------------------- --------------------------
Shares Amount Shares Amount
------------------- ---------------- ----------- -------------
Sold 1,371,006 $ 16,011,960 2,466,963 $ 29,405,513
Reinvested - - 524,650 6,204,989
Repurchased (1,050,087) (12,220,773) (1,193,444) (14,307,043)
------------------- ---------------- ----------- -------------
Total 320,919 $ 3,791,187 1,798,169 $ 21,303,459
=================== ================ =========== =============
Substantially all of the Series' shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
11
<page>
Note to Financial Statements (unaudited)
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing exposure
to various market risks. These financial instruments include written options,
forward foreign currency exchange contracts and futures contracts and may
involve, to a varying degree, elements of risk in excess of the amounts
recognized for financial statement purposes. No such investments were held by
the Series on June 30, 2005.
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. LIFE SCIENCES SECURITIES
The Series may focus its investments in certain related life sciences
industries; hence, the Series may subject itself to a greater degree of risk
than a series that is more diversified.
9. FEDERAL INCOME TAX INFORMATION
The amount and characterization of certain income and capital gains to be
distributed are determined in accordance with federal income tax regulations,
which may differ from accounting principles generally accepted in the United
States of America. The Series may periodically make reclassifications among its
capital accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations, without
impacting the Series' net asset value. Any such reclassifications are not
reflected in the financial highlights.
The tax character of distributions paid for the year ended December 31, 2004
were as follows:
Ordinary income $1,420,127
Long-term capital gains 4,929,958
For the year ended December 31, 2004, the Series elected to defer $165,944 of
capital losses attributable to Post-October losses.
At June 30, 2005, the identified cost of investments for federal income tax
purposes, the resulting gross unrealized appreciation and depreciation, and the
net unrealized appreciation were as follows:
Cost for federal income tax purposes $180,999,544
Unrealized appreciation $ 23,616,371
Unrealized depreciation (5,666,062)
-------------
Net unrealized appreciation $ 17,950,309
=============
12
<page>
[This page intentionally left blank]
13
<page>
Literature Requests (unaudited)
PROXY VOTING POLICIES AND PROCEDURES
- --------------------------------------------------------------------------------
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available, without charge,
upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission's (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30th is available,
without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
QUARTERLY PORTFOLIO HOLDINGS
- --------------------------------------------------------------------------------
The Series' complete schedule of portfolio holdings for the 1st and 3rd quarters
of each fiscal year are provided on Form N-Q, and are available, without charge,
upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
The Series' Form N-Q may be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION (SAI)
- --------------------------------------------------------------------------------
The prospectus and SAI provide additional information about each Series,
including charges, expenses and risks. These documents are available, without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
On the Advisor's web site
http://www.manningnapieradvisors.com/www/exeter_fund.asp
ADDITIONAL INFORMATION AVAILABLE AT
WWW.MANNINGNAPIERADVISORS.COM/WWW/EXETER_FUND.ASP
- --------------------------------------------------------------------------------
1. Fund Holdings - month-end
2. Fund Holdings - quarter-end
3. Shareholder Report - Annual
4. Shareholder Report - Semi-Annual
14
<page>
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2005
Small Cap Series
<page>
<page>
Shareholder Expense Example (unaudited)
As a shareholder of the Series, you may incur two types of costs: (1)
transaction costs, including potential wire charges on redemptions and (2)
ongoing costs, including management fees and other Series expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Series and to compare these costs with the ongoing costs of
investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2005 to June 30, 2005).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as potential
wire charges on redemptions. Therefore, the second line of the table is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds. In addition, if these transaction costs
were included, your costs would have been higher.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
1/1/05 6/30/05 1/1/05-6/30/05
-------------- -------------- ---------------
Actual $ 1,000.00 $ 1,022.00 $ 6.02
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,018.84 $ 6.01
*Expenses are equal to the Series' annualized expense ratio (for the six-month
period) of 1.20%, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period). Expenses are based
on the most recent fiscal half year.
1
<page>
Portfolio Composition as of June 30, 2005 (unaudited)
<graphic>
<pie chart>
SECTOR ALLOCATION*
Consumer Discretionary 15.4%
Consumer Staples 5.9%
Energy 15.1%
Financials 4.8%
Health Care 10.7%
Industrials 19.6%
Information Technology 11.0%
Materials 7.3%
Utilities 6.6%
Cash, short-term investments, and other assets, less liabilities 3.6%
*As a percentage of net assets.
MARKET CAPITALIZATION
Average $1,085 Million
Median 705 Million
Weighted Average 1,617 Million
TOP TEN STOCK HOLDINGS*
National-Oilwell Varco, Inc. 4.8%
Pride International, Inc. 3.8%
Allegheny Energy, Inc. 3.8%
Sappi Ltd. - ADR 3.1%
Helmerich & Payne, Inc. 3.0%
Minerals Technologies, Inc. 2.9%
Forest Oil Corp. 2.6%
Pathmark Stores, Inc. 2.3%
Aquila, Inc. 2.0%
AMN Healthcare Services, Inc. 1.9%
*As a percentage of total investments.
2
<page>
Investment Portfolio - June 30, 2005 (unaudited)
VALUE
SHARES (NOTE 2)
--------- ------------
COMMON STOCKS - 96.4%
CONSUMER DISCRETIONARY - 15.4%
AUTO COMPONENTS - 0.9%
Azure Dynamics Corp.* (Canada) (Note 7) 1,938,000 $ 1,487,361
------------
DIVERSIFIED CONSUMER SERVICES - 1.8%
Corinthian Colleges, Inc. 237,000 3,026,490
------------
HOTELS, RESTAURANTS & LEISURE - 2.2%
Alliance Gaming Corp.* 59,000 827,180
Club Mediterranee S.A.* (France) (Note 7) 35,000 1,652,542
Mikohn Gaming Corp.* 84,000 1,236,900
------------
3,716,622
------------
HOUSEHOLD DURABLES - 2.0%
Interface, Inc. - Class A* 379,000 3,050,950
Libbey, Inc. 24,000 379,440
------------
3,430,390
------------
LEISURE EQUIPMENT & PRODUCTS - 2.2%
Hasbro, Inc. 90,000 1,871,100
K2, Inc.* 48,000 608,640
Leapfrog Enterprises, Inc. - Class A* 102,900 1,162,770
------------
3,642,510
------------
MEDIA - 3.3%
Acme Communications, Inc.* 396,000 1,591,960
Belo Corp. - Class A 100,000 2,397,000
Harris Interactive, Inc.* 311,000 1,514,570
------------
5,503,530
------------
SPECIALTY RETAIL - 3.0%
Build-A-Bear-Workshop, Inc.* 87,000 2,040,150
Douglas Holding AG (Germany) (Note 7) 48,200 1,747,688
Foot Locker, Inc. 50,000 1,361,000
------------
5,148,838
------------
TOTAL CONSUMER DISCRETIONARY 25,955,741
------------
CONSUMER STAPLES - 5.9%
BEVERAGES - 0.3%
National Beverage Corp.* 62,000 494,760
------------
FOOD & STAPLES RETAILING - 2.2%
Pathmark Stores, Inc.* 436,000 3,819,360
------------
FOOD PRODUCTS - 2.7%
Chiquita Brands International, Inc. 33,925 931,580
The Hain Celestial Group, Inc.* 83,000 1,618,500
J&J Snack Foods Corp. 13,300 696,255
Lancaster Colony Corp. 12,200 523,624
Ralcorp Holdings, Inc. 18,500 761,275
------------
4,531,234
------------
The accompanying notes are an integral part of the financial statements.
3
<page>
Investment Portfolio - June 30, 2005 (unaudited)
VALUE
SHARES (NOTE 2)
------- ------------
CONSUMER STAPLES (continued)
PERSONAL PRODUCTS - 0.7%
Playtex Products, Inc.* 108,000 $ 1,162,080
------------
TOTAL CONSUMER STAPLES 10,007,434
------------
ENERGY - 15.1%
ENERGY EQUIPMENT & SERVICES - 12.5%
Atwood Oceanics, Inc.* 28,000 1,723,680
Helmerich & Payne, Inc. 106,000 4,973,520
National-Oilwell Varco, Inc.* 168,313 8,001,600
Pride International, Inc.* 246,000 6,322,200
------------
21,021,000
------------
OIL, GAS & CONSUMABLE FUELS - 2.6%
Forest Oil Corp.* 104,000 4,368,000
------------
TOTAL ENERGY 25,389,000
------------
FINANCIALS - 4.8%
COMMERCIAL BANKS - 3.5%
Bancshares of Florida, Inc.* 26,500 450,500
Chemical Financial Corp. 16,485 545,818
Citizens & Northern Corp. 23,937 747,792
Croghan Bancshares, Inc. 11,500 411,125
F&M Bank Corp. 6,300 158,130
First Community Bancorp 9,600 456,000
First Financial Corp. 18,300 525,759
Juniata Valley Financial Corp. 1,800 84,600
National Bankshares, Inc. 13,000 578,890
Northrim BanCorp, Inc. 17,300 406,204
Omega Financial Corp. 18,400 571,320
Potomac Bancshares, Inc. 29,600 503,200
Tower Bancorp, Inc. 8,825 432,425
------------
5,871,763
------------
CONSUMER FINANCE - 0.7%
MoneyGram International, Inc. 60,000 1,147,200
------------
THRIFTS & MORTGAGE FINANCE - 0.6%
Flagstar Bancorp, Inc. 55,000 1,041,150
------------
TOTAL FINANCIALS 8,060,113
------------
HEALTH CARE - 10.7%
BIOTECHNOLOGY - 1.1%
BioMarin Pharmaceutical, Inc.* 258,000 1,932,420
------------
HEALTH CARE EQUIPMENT & SUPPLIES - 1.1%
Advanced Neuromodulation Systems, Inc.* 47,000 1,864,960
------------
HEALTH CARE PROVIDERS & SERVICES - 8.5%
AMICAS, Inc.* 390,000 1,766,700
The accompanying notes are an integral part of the financial statements.
4
<page>
Investment Portfolio - June 30, 2005 (unaudited)
VALUE
SHARES (NOTE 2)
------- ------------
HEALTH CARE (continued)
HEALTH CARE PROVIDERS & SERVICES (continued)
AMN Healthcare Services, Inc.* 211,000 $ 3,171,330
Cross Country Healthcare, Inc.* 152,000 2,584,000
Eclipsys Corp.* 105,000 1,477,350
Omnicell, Inc.* 343,000 3,018,400
WebMD Corp.* 218,000 2,238,860
------------
14,256,640
------------
TOTAL HEALTH CARE 18,054,020
------------
INDUSTRIALS - 19.6%
AIRLINES - 3.9%
AirTran Holdings, Inc.* 255,000 2,353,650
AMR Corp.* 103,000 1,247,330
Continental Airlines, Inc. - Class B* 88,500 1,175,280
JetBlue Airways Corp.* 71,000 1,451,240
Northwest Airlines Corp.* 88,500 403,560
------------
6,631,060
------------
COMMERCIAL SERVICES & SUPPLIES - 3.8%
BWT AG (Austria) (Note 7) 45,000 1,512,349
Herman Miller, Inc. 66,000 2,035,440
Tomra Systems ASA (Norway) (Note 7) 681,000 2,814,093
------------
6,361,882
------------
CONSTRUCTION & ENGINEERING - 1.7%
Infrasource Services, Inc.* 115,000 1,198,300
Insituform Technologies, Inc. - Class A* 107,000 1,715,210
------------
2,913,510
------------
ELECTRICAL EQUIPMENT - 2.5%
General Cable Corp.* 61,000 904,630
Global Power Equipment Group, Inc.* 197,000 1,566,150
Plug Power, Inc.* 245,000 1,678,250
------------
4,149,030
------------
MACHINERY - 7.7%
AGCO Corp.* 138,000 2,638,560
Albany International Corp. - Class A 50,000 1,605,500
Gardner Denver, Inc.* 54,000 1,894,320
The Greenbrier Companies, Inc. 57,000 1,544,700
Lindsay Manufacturing Co. 69,000 1,627,020
Trinity Industries, Inc. 27,400 877,622
Wabtec Corp. 130,000 2,792,400
------------
12,980,122
------------
TOTAL INDUSTRIALS 33,035,604
------------
The accompanying notes are an integral part of the financial statements.
5
<page>
Investment Portfolio - June 30, 2005 (unaudited)
VALUE
SHARES (NOTE 2)
------- ------------
INFORMATION TECHNOLOGY - 11.0%
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.6%
DTS, Inc.* 61,000 $ 1,087,630
------------
INTERNET SOFTWARE & SERVICES - 1.5%
Corillian Corp.* 475,000 1,472,500
Online Resources Corp.* 88,000 995,280
------------
2,467,780
------------
IT SERVICES - 0.9%
The BISYS Group, Inc.*1 99,000 1,479,060
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 4.0%
Cabot Microelectronics Corp.* 95,000 2,754,050
Cymer, Inc.* 71,000 1,870,850
Zoran Corp.* 153,000 2,033,370
------------
6,658,270
------------
SOFTWARE - 4.0%
Activision, Inc.* 51,000 842,520
Blackbaud, Inc. 175,000 2,362,500
Take-Two Interactive Software, Inc.* 37,500 954,375
THQ, Inc.* 36,000 1,053,720
Verity, Inc.* 177,000 1,552,290
------------
6,765,405
------------
TOTAL INFORMATION TECHNOLOGY 18,458,145
------------
MATERIALS - 7.3%
CHEMICALS - 2.9%
Minerals Technologies, Inc. 79,000 4,866,400
------------
PAPER & FOREST PRODUCTS - 4.4%
Aracruz Celulose S.A. - ADR (Brazil) (Note 7) 43,500 1,511,625
Domtar, Inc. (Canada) (Note 7) 87,000 642,930
Sappi Ltd. - ADR (South Africa) (Note 7) 482,000 5,215,240
------------
7,369,795
------------
TOTAL MATERIALS 12,236,195
------------
UTILITIES - 6.6%
ELECTRIC UTILITIES - 4.7%
Allegheny Energy, Inc.* 250,000 6,305,000
Westar Energy, Inc. 67,400 1,619,622
------------
7,924,622
------------
MULTI-UTILITIES - 1.9%
Aquila, Inc.* 902,100 3,256,581
------------
TOTAL UTILITIES 11,181,203
------------
The accompanying notes are an integral part of the financial statements.
6
<page>
Investment Portfolio - June 30, 2005 (unaudited)
SHARES/ VALUE
PRINCIPAL AMOUNT (NOTE 2)
----------------- -------------
TOTAL COMMON STOCKS
(Identified Cost $136,968,335) $162,377,455
-------------
SHORT-TERM INVESTMENTS - 2.1%
Dreyfus Treasury Cash Management - Institutional Shares 1,634,587 1,634,587
Fannie Mae Discount Note, 7/11/2005 $ 2,000,000 1,998,350
-------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $3,632,937) 3,632,937
-------------
TOTAL INVESTMENTS - 98.5%
(Identified Cost $140,601,272) 166,010,392
OTHER ASSETS, LESS LIABILITIES - 1.5% 2,444,478
-------------
NET ASSETS - 100% $168,454,870
=============
*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
(See Note 4 to Financial Statements).
ADR - American Depository Receipt
The accompanying notes are an integral part of the financial statements.
7
<page>
Statement of Assets and Liabilities (unaudited)
June 30, 2005
ASSETS:
Investments, at value (identified cost $140,601,272) (Note 2) $166,010,392
Receivable for securities sold 2,353,661
Receivable for fund shares sold 199,435
Dividends receivable 77,206
Foreign tax reclaims receivable 3,391
-------------
TOTAL ASSETS 168,644,085
-------------
LIABILITIES:
Accrued management fees (Note 3) 136,975
Accrued fund accounting and transfer agent fees (Note 3) 22,648
Accrued Chief Compliance Officer services fees (Note 3) 1,062
Audit fees payable 16,411
Payable for fund shares repurchased 11,280
Other payables and accrued expenses 839
-------------
TOTAL LIABILITIES 189,215
-------------
TOTAL NET ASSETS $168,454,870
=============
NET ASSETS CONSIST OF:
Capital stock $ 109,808
Additional paid-in-capital 125,967,585
Undistributed net investment loss (274,097)
Accumulated net realized gain on investments, foreign currency,
and other assets and liabilities 17,242,531
Net unrealized appreciation on investments, foreign currency,
and other assets and liabilities 25,409,043
-------------
TOTAL NET ASSETS $168,454,870
=============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE - CLASS A ($168,454,870/10,980,813 shares) $ 15.34
=============
The accompanying notes are an integral part of the financial statements.
8
<page>
Statement of Operations (unaudited)
For the Six Months Ended June 30, 2005
INVESTMENT INCOME:
Dividends (net of foreign tax withheld, $44,739) $ 642,010
Interest 34,210
------------
Total Investment Income 676,220
------------
EXPENSES:
Management fees (Note 3) 789,426
Fund accounting and transfer agent fees (Note 3) 105,641
Directors' fees (Note 3) 3,459
Chief Compliance Officer services fees (Note 3) 2,988
Custodian fees 14,896
Miscellaneous 33,907
------------
Total Expenses 950,317
------------
NET INVESTMENT LOSS (274,097)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on -
Investments 11,682,294
Foreign currency and other assets and liabilities (2,939)
------------
11,679,355
------------
Net change in unrealized appreciation on -
Investments (8,213,706)
Foreign currency and other assets and liabilities (229)
------------
(8,213,935)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS 3,465,420
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 3,191,323
============
The accompanying notes are an integral part of the financial statements.
9
<page>
Statements of Changes in Net Assets
FOR THE SIX
MONTHS ENDED FOR THE
6/30/05 YEAR ENDED
(UNAUDITED) 12/31/04
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss $ (274,097) $ (787,002)
Net realized gain on investments 11,679,355 17,028,436
Net change in unrealized appreciation on
investments (8,213,935) 11,923,212
-------------- -------------
Net increase from operations 3,191,323 28,164,646
-------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 8):
From net realized gain on investments - (7,406,958)
-------------- -------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase (decrease) from capital share
transactions (Note 5) (4,173,962) 8,770,332
-------------- -------------
Net increase (decrease) in net assets (982,639) 29,528,020
NET ASSETS:
Beginning of period 169,437,509 139,909,489
-------------- -------------
END OF PERIOD (including undistributed net
investment loss of $274,097 and $0, respectively) $ 168,454,870 $169,437,509
============== =============
The accompanying notes are an integral part of the financial statements.
10
<page>
Financial Highlights
FOR THE SIX
MONTHS ENDED
6/30/05 FOR THE YEARS ENDED
(UNAUDITED) 12/31/04 12/31/03 12/31/02 12/31/01
-------------- --------------------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $15.01 $13.12 $9.52 $11.49 $10.57
-------------- --------------------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income (loss) (0.03) (0.07) (0.04) (0.03) --2
Net realized and unrealized gain (loss) on investments 0.36 2.66 3.64 (1.94) 2.26
-------------- --------------------- ---------- ---------- ----------
Total from investment operations 0.33 2.59 3.60 (1.97) 2.26
-------------- --------------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income - - - - --2
From net realized gain on investments - (0.70) - - (1.34)
-------------- --------------------- ---------- ---------- ----------
Total distributions to shareholders - (0.70) - - (1.34)
-------------- --------------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $15.34 $15.01 $13.12 $9.52 $11.49
============== ===================== ========== ========== ==========
Total return1 2.20% 19.81% 37.82% (17.15%) 22.05%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL
DATA:
Expenses* 1.20%3 1.22% 1.22% 1.24% 1.19%
Net investment income (loss) (0.35%)3 (0.54%) (0.39%) (0.28%) 0.01%
Portfolio turnover 30% 61% 42% 70% 88%
NET ASSETS - END OF PERIOD (000's omitted) $168,455 $169,438 $139,909 $95,772 $108,525
============== ===================== ========== ========== ==========
FOR THE YEAR ENDED
12/31/00
----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $10.53
----------
Income (loss) from investment operations:
Net investment income (loss) 0.03
Net realized and unrealized gain (loss) on investments 0.90
----------
Total from investment operations 0.93
----------
Less distributions to shareholders:
From net investment income (0.09)
From net realized gain on investments (0.80)
----------
Total distributions to shareholders (0.89)
----------
NET ASSET VALUE - END OF PERIOD $10.57
==========
Total return1 9.43%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL
DATA:
Expenses* 1.14%
Net investment income (loss) 0.24%
Portfolio turnover 56%
NET ASSETS - END OF PERIOD (000's omitted) $94,748
==========
*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:
N/A 0.01% 0.01% N/A N/A N/A
1Represents aggregate total return for the period indicated, and assumes
reinvestment of all distributions. Total return would have been lower had
certain expenses not been waived during certain periods. Periods less than one
year are not annualized.
2Less than $0.01 per share.
3Annualized.
The accompanying notes are an integral part of the financial statements.
11
<page>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Small Cap Series (the "Series") is a no-load diversified series of Exeter Fund,
Inc. (the "Fund"). The Fund is organized in Maryland and is registered under
the Investment Company Act of 1940 (the "1940 Act"), as amended, as an open-end
management investment company.
The Series' investment objective is to provide long-term growth by investing
principally in the common stocks of companies with small market capitalizations.
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.
The Fund's Advisor is Manning & Napier Advisors, Inc. (the "Advisor"), doing
business as Exeter Asset Management. Shares of the Series are offered to
investors, clients and employees of the Advisor and its affiliates. The total
authorized capital stock of the Fund consists of 1.7 billion shares of common
stock each having a par value of $0.01. As of June 30, 2005, 1.16 billion
shares have been designated in total among 21 series, of which 37.5 million have
been designated as Small Cap Series Class A common stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities,
exchange-traded funds 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. Investments in open-end investment
companies are valued at their net asset value per share on valuation date, with
the exception of exchange-traded funds as noted above.
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.
12
<page>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES (continued)
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. 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 accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of 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 main-
13
<page>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
tain 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 (except a percentage of the Fund's Chief Compliance
Officer's salary, which is paid by the Fund, and the Special Assistant
Secretary's salary which is paid by BISYS Fund Services Ohio, Inc. ("BISYS")),
and of all Directors who are "affiliated persons" of the Fund, or of the
Advisor, and all personnel of the Fund, or of the Advisor, performing services
relating to research, statistical and investment activities, are paid by the
Advisor. Each "non-affiliated" Director receives an annual stipend, which is
allocated among all the active series of the Fund. In addition, these Directors
also receive a per meeting fee for each active series of the Fund plus a fee for
each committee meeting attended.
The Advisor has voluntarily agreed, until at least December 31, 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 1.22% of average daily
net assets each year. For the six months ended June 30, 2005, the Advisor did
not waive its management fee or reimburse any expenses of the Series.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
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 pays the Advisor an annual fee of 0.15% of the Fund's average daily net
assets up to $900 million, 0.11% for the Fund's average daily net assets between
$900 million and $1.5 billion, and 0.07% for the Fund's average daily net assets
over $1.5 billion. These fee rates are scheduled to be reduced each year
through 2007. Additionally, certain transaction and account-based fees and
out-of-pocket expenses, including charges for reporting relating to the Fund's
Compliance Program, are charged. Expenses not directly attributable to a series
are allocated based on each series' relative net assets or number of accounts,
depending on the expense. The Advisor has an agreement with BISYS under which
BISYS serves as sub-accounting services and sub-transfer agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2005, purchases and sales of securities, other
than short-term securities, were $46,883,408 and $47,749,064, respectively.
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 1940 Act. There were no purchases, sales, or income transactions
in shares of The BISYS Group, Inc. for the six months ended June 30, 2005.
14
<page>
Notes to Financial Statements (unaudited)
5. CAPITAL STOCK TRANSACTIONS
Transactions in Class A shares of Small Cap Series were:
FOR THE SIX MONTHS FOR THE YEAR
ENDED 6/30/05 ENDED 12/31/04
------------------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
------------------- ---------------- ----------- -------------
Sold 676,024 $ 9,841,938 1,498,249 $ 20,578,866
Reinvested - - 491,034 7,247,666
Repurchased (983,217) (14,015,900) (1,365,637) (19,056,200)
------------------- ---------------- ----------- -------------
Total (307,193) $ (4,173,962) 623,646 $ 8,770,332
=================== ================ =========== =============
Substantially all of the Series' shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options,
forward foreign currency exchange contracts and futures contracts and may
involve, to a varying degree, elements of risk in excess of the amounts
recognized for financial statement purposes. No such investments were held by
the Series on June 30, 2005.
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 accounting principles generally accepted in the United
States of America. The Series may periodically make reclassifications among its
capital accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations, without
impacting the Series' net asset value. Any such reclassifications are not
reflected in the financial highlights.
The tax character of distributions paid for the year ended December 31, 2004
were as follows:
Long-term capital gains $7,406,958
15
<page>
Notes to Financial Statements (unaudited)
8. FEDERAL INCOME TAX INFORMATION (continued)
At June 30, 2005, the identified cost of investments for federal income tax
purposes, the resulting gross unrealized appreciation and depreciation, and the
net unrealized appreciation were as follows:
Cost for federal income tax purposes $140,601,272
Unrealized appreciation $ 31,634,833
Unrealized depreciation (6,225,713)
-------------
Net unrealized appreciation $ 25,409,120
=============
16
<page>
[This page intentionally left blank]
17
<page>
Literature Requests (unaudited)
PROXY VOTING POLICIES AND PROCEDURES
- --------------------------------------------------------------------------------
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available, without charge,
upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission's (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30th is available,
without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
QUARTERLY PORTFOLIO HOLDINGS
- --------------------------------------------------------------------------------
The Series' complete schedule of portfolio holdings for the 1st and 3rd quarters
of each fiscal year are provided on Form N-Q, and are available, without charge,
upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
The Series' Form N-Q may be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION (SAI)
- --------------------------------------------------------------------------------
The prospectus and SAI provide additional information about each Series,
including charges, expenses and risks. These documents are available, without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
On the Advisor's web site
http://www.manningnapieradvisors.com/www/exeter_fund.asp
ADDITIONAL INFORMATION AVAILABLE AT
WWW.MANNINGNAPIERADVISORS.COM/WWW/EXETER_FUND.ASP
- --------------------------------------------------------------------------------
1. Fund Holdings - month-end
2. Fund Holdings - quarter-end
3. Shareholder Report - Annual
4. Shareholder Report - Semi-Annual
18
<page>
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2005
World Opportunities Series
<page>
<page>
Shareholder Expense Example (unaudited)
As a shareholder of the Series, you may incur two types of costs: (1)
transaction costs, including potential wire charges on redemptions and (2)
ongoing costs, including management fees and other Series expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Series and to compare these costs with the ongoing costs of
investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2005 to June 30, 2005).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as potential
wire charges on redemptions. Therefore, the second line of the table is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds. In addition, if these transaction costs
were included, your costs would have been higher.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
1/1/05 6/30/05 1/1/05-6/30/05
-------------- -------------- ---------------
Actual $ 1,000.00 $ 1,004.80 $ 6.06
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,018.74 $ 6.11
*Expenses are equal to the Series' annualized expense ratio (for the six-month
period) of 1.22%, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period). Expenses are based
on the most recent fiscal half year.
1
<page>
Portfolio Composition as of June 30, 2005 (unaudited)
<graphic>
<pie chart>
COUNTRY ALLOCATION*
Brazil 6.0%
Finland 2.2%
France 14.2%
Germany 7.1%
Japan 3.8%
Mexico 4.1%
Netherlands 4.5%
Norway 5.4%
Switzerland 11.8%
Taiwan 2.1%
United Kingdom 18.6%
United States 2.1%
Miscellaneous** 7.9%
Cash, short-term investments, and liabilities, less other assets 10.2%
*As a percentage of net assets.
**Miscellaneous
Austria (0.6%)
Canada (2.0%)
Guernsey (2.0%)
South Africa (1.9%)
Spain (1.4%)
<graphic>
<pie chart>
SECTOR ALLOCATION*
Consumer Discretionary 15.0%
Consumer Staples 23.5%
Energy 11.0%
Health Care 9.8%
Industrials 12.6%
Information Technology 8.5%
Materials 7.0%
Telecommunication Services 2.4%
Cash, short-term investments, and liabilities, less other assets 10.2%
*As a percentage of net assets.
2
<page>
Investment Portfolio - June 30, 2005 (unaudited)
VALUE
SHARES (NOTE 2)
--------- ------------
COMMON STOCKS - 89.8%
CONSUMER DISCRETIONARY - 15.0%
HOTELS, RESTAURANTS & LEISURE - 3.1%
Club Mediterranee S.A.* (France) 107,900 $ 5,094,552
------------
HOUSEHOLD DURABLES - 2.0%
Sony Corp. - ADR (Japan) 94,000 3,237,360
------------
MEDIA - 7.9%
News Corp. - Class A 212,000 3,430,160
Pearson plc (United Kingdom) 242,000 2,852,034
Reed Elsevier plc - ADR (United Kingdom) 93,500 3,620,320
VNU N.V. (Netherlands) 113,645 3,174,080
------------
13,076,594
------------
SPECIALTY RETAIL - 2.0%
Douglas Holding AG (Germany) 92,400 3,350,339
------------
TOTAL CONSUMER DISCRETIONARY 24,758,845
------------
CONSUMER STAPLES - 23.5%
FOOD & STAPLES RETAILING - 3.0%
Carrefour S.A. (France) 101,950 4,949,389
------------
FOOD PRODUCTS - 9.2%
Cadbury Schweppes plc (United Kingdom) 342,000 3,267,360
Nestle S.A. (Switzerland) 22,800 5,835,661
Unilever plc - ADR (United Kingdom) 158,249 6,147,974
------------
15,250,995
------------
HOUSEHOLD PRODUCTS - 6.0%
Henkel KGaA (Germany) 36,400 3,259,254
Kimberly-Clark de Mexico S.A. de C.V. - ADR (Mexico) 391,000 6,689,932
------------
9,949,186
------------
PERSONAL PRODUCTS - 5.3%
Clarins S.A. (France) 83,231 5,592,398
Shiseido Co. Ltd. (Japan) 246,000 3,106,061
------------
8,698,459
------------
TOTAL CONSUMER STAPLES 38,848,029
------------
ENERGY - 11.0%
ENERGY EQUIPMENT & SERVICES - 8.3%
Abbot Group plc (United Kingdom) 1,169,550 5,335,194
Compagnie Generale de Geophysique S.A. (CGG)* (France) 50,500 4,279,661
Smedvig ASA - Class A (Norway) 202,000 4,096,328
------------
13,711,183
------------
The accompanying notes are an integral part of the financial statements.
3
<page>
Investment Portfolio - June 30, 2005 (unaudited)
VALUE
SHARES (NOTE 2)
--------- ------------
ENERGY (continued)
OIL, GAS & CONSUMABLE FUELS - 2.7%
Petroleo Brasileiro S.A. (Petrobras) - ADR (Brazil) 98,000 $ 4,511,920
------------
TOTAL ENERGY 18,223,103
------------
HEALTH CARE - 9.8%
PHARMACEUTICALS - 9.8%
GlaxoSmithKline plc (United Kingdom) 168,000 4,068,256
Novartis AG - ADR (Switzerland) 147,500 6,997,400
Schering AG (Germany) 82,000 5,062,954
------------
TOTAL HEALTH CARE 16,128,610
------------
INDUSTRIALS - 12.6%
AEROSPACE & DEFENSE - 2.2%
Empresa Brasileira de Aeronautica S.A. (Embraer) - ADR (Brazil) 110,000 3,637,700
------------
COMMERCIAL SERVICES & SUPPLIES - 6.4%
Aggreko plc (United Kingdom) 450,000 1,496,236
BWT AG (Austria) 27,000 907,409
Quebecor World, Inc. (Canada) 172,000 3,381,520
Tomra Systems ASA (Norway) 1,175,000 4,855,446
------------
10,640,611
------------
CONSTRUCTION & ENGINEERING - 2.6%
Koninklijke Boskalis Westminster N.V. (Netherlands) 108,327 4,229,474
------------
ELECTRICAL EQUIPMENT - 1.4%
Gamesa Corporacion Tecnologica S.A. (Spain) 167,000 2,266,429
------------
TOTAL INDUSTRIALS 20,774,214
------------
INFORMATION TECHNOLOGY - 8.5%
COMMUNICATIONS EQUIPMENT - 2.2%
Nokia Oyj - ADR (Finland) 223,000 3,710,720
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.1%
Taiwan Semiconductor Manufacturing Co. Ltd. - ADR (Taiwan) 381,150 3,476,088
------------
SOFTWARE - 4.2%
Amdocs Ltd.* (Guernsey) 126,000 3,330,180
Business Objects S.A. - ADR* (France) 134,425 3,535,377
------------
6,865,557
------------
TOTAL INFORMATION TECHNOLOGY 14,052,365
------------
MATERIALS - 7.0%
CHEMICALS - 4.0%
Lonza Group AG (Switzerland) 120,000 6,643,777
------------
The accompanying notes are an integral part of the financial statements.
4
<page>
Investment Portfolio - June 30, 2005 (unaudited)
SHARES/ VALUE
PRINCIPAL AMOUNT (NOTE 2)
----------------- -------------
MATERIALS (continued)
PAPER & FOREST PRODUCTS - 3.0%
Aracruz Celulose S.A. - ADR (Brazil) 49,000 $ 1,702,750
Sappi Ltd. - ADR (South Africa) 296,700 3,210,294
-------------
4,913,044
-------------
TOTAL MATERIALS 11,556,821
-------------
TELECOMMUNICATION SERVICES - 2.4%
WIRELESS TELECOMMUNICATION SERVICES - 2.4%
Vodafone Group plc - ADR (United Kingdom) 163,000 3,964,160
-------------
TOTAL COMMON STOCKS
(Identified Cost $121,288,973) 148,306,147
-------------
SHORT-TERM INVESTMENTS - 12.6%
Dreyfus Treasury Cash Management - Institutional Shares 7,831,330 7,831,330
Fannie Mae Discount Note, 8/5/2005 $ 7,000,000 6,979,175
Federal Home Loan Bank Discount Note, 7/11/2005 4,000,000 3,996,689
U.S. Treasury Bill, 8/11/2005 2,000,000 1,993,292
-------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $20,800,486) 20,800,486
-------------
TOTAL INVESTMENTS - 102.4%
(Identified Cost $142,089,459) 169,106,633
LIABILITIES, LESS OTHER ASSETS - (2.4%) (3,989,726)
-------------
NET ASSETS - 100% $165,116,907
=============
*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 - 18.6%; France - 14.2%; Switzerland -
11.8%.
The accompanying notes are an integral part of the financial statements.
5
<page>
Statement of Assets and Liabilities (unaudited)
June 30, 2005
ASSETS:
Investments, at value (identified cost $142,089,459) (Note 2) $169,106,633
Cash 850,000
Foreign currency, at value (cost $26,823) 26,823
Receivable for fund shares sold 311,545
Dividends receivable 308,111
Foreign tax reclaims receivable 118,218
------------
TOTAL ASSETS 170,721,330
------------
LIABILITIES:
Accrued management fees (Note 3) 130,620
Accrued fund accounting and transfer agent fees (Note 3) 20,386
Accrued Chief Compliance Officer services fees (Note 3) 1,062
Payable for securities purchased 5,395,031
Payable for fund shares repurchased 34,858
Audit fees payable 18,818
Other payables and accrued expenses 3,648
------------
TOTAL LIABILITIES 5,604,423
------------
TOTAL NET ASSETS $165,116,907
============
NET ASSETS CONSIST OF:
Capital stock $ 197,240
Additional paid-in-capital 127,094,743
Undistributed net investment income 2,074,983
Accumulated net realized gain on investments, foreign currency,
and other assets and liabilities 8,739,014
Net unrealized appreciation on investments, foreign currency,
and other assets and liabilities 27,010,927
------------
TOTAL NET ASSETS $165,116,907
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE - CLASS A ($165,116,907/19,723,993 shares) $ 8.37
============
The accompanying notes are an integral part of the financial statements.
6
<page>
Statement of Operations (unaudited)
For the Six Months Ended June 30, 2005
INVESTMENT INCOME:
Dividends (net of foreign tax withheld, $275,302) $ 2,435,844
Interest 88,879
------------
Total Investment Income 2,524,723
------------
EXPENSES:
Management fees (Note 3) 769,037
Fund accounting and transfer agent fees (Note 3) 104,399
Directors' fees (Note 3) 3,459
Chief Compliance Officer services fees (Note 3) 2,988
Custodian fees 23,801
Miscellaneous 38,303
------------
Total Expenses 941,987
------------
NET INVESTMENT INCOME 1,582,736
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on -
Investments 5,507,403
Foreign currency and other assets and liabilities (20,681)
------------
5,486,722
------------
Net change in unrealized appreciation on -
Investments (6,752,222)
Foreign currency and other assets and liabilities (12,424)
------------
(6,764,646)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (1,277,924)
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 304,812
============
The accompanying notes are an integral part of the financial statements.
7
<page>
Statements of Changes in Net Assets
FOR THE SIX
MONTHS ENDED FOR THE
6/30/05 YEAR ENDED
(UNAUDITED) 12/31/04
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,582,736 $ 1,013,053
Net realized gain on investments 5,486,722 15,138,378
Net change in unrealized appreciation on investments (6,764,646) 15,968,837
-------------- -------------
Net increase from operations 304,812 32,120,268
-------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 8):
From net investment income - (1,129,987)
From net realized gain on investments - (3,309,862)
-------------- -------------
Total distributions to shareholders - (4,439,849)
-------------- -------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase from capital share transactions
(Note 5) 3,917,487 13,368,907
-------------- -------------
Net increase in net assets 4,222,299 41,049,326
NET ASSETS:
Beginning of period 160,894,608 119,845,282
-------------- -------------
END OF PERIOD (including undistributed net investment
income of $2,074,983 and $492,247, respectively) $ 165,116,907 $160,894,608
============== =============
The accompanying notes are an integral part of the financial statements.
8
<page>
Financial Highlights
FOR THE SIX
MONTHS ENDED
6/30/05 FOR THE YEARS ENDED
(UNAUDITED) 12/31/04 12/31/03 12/31/02 12/31/01
-------------- --------------------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 8.33 $ 6.84 $ 5.28 $ 5.98 $ 6.18
-------------- --------------------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.08 0.05 0.06 0.06 0.06
Net realized and unrealized gain (loss) on
investments (0.04) 1.68 1.56 (0.71) (0.09)
-------------- --------------------- ---------- ---------- ----------
Total from investment operations 0.04 1.73 1.62 (0.65) (0.03)
-------------- --------------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income - (0.06) (0.06) - (0.17)
From net realized gain on investments - (0.18) --2 (0.05) -
-------------- --------------------- ---------- ---------- ----------
Total distributions to shareholders - (0.24) (0.06) (0.05) (0.17)
-------------- --------------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 8.37 $ 8.33 $ 6.84 $ 5.28 $ 5.98
============== ===================== ========== ========== ==========
Total return1 0.48% 25.42% 30.80% (10.78%) (0.30%)
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses 1.22%3 1.26% 1.27%* 1.30% 1.21%
Net investment income 2.06%3 0.75% 1.25% 1.10% 0.95%
Portfolio turnover 15% 42% 31% 41% 42%
NET ASSETS - END OF PERIOD (000's omitted) $ 165,117 $ 160,895 $ 119,845 $ 78,772 $ 83,196
============== ===================== ========== ========== ==========
FOR THE YEAR ENDED
12/31/00
----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 9.30
----------
Income (loss) from investment operations:
Net investment income 0.42
Net realized and unrealized gain (loss) on
investments 0.27
----------
Total from investment operations 0.69
----------
Less distributions to shareholders:
From net investment income (0.99)
From net realized gain on investments (2.82)
----------
Total distributions to shareholders (3.81)
----------
NET ASSET VALUE - END OF PERIOD $ 6.18
==========
Total return1 7.96%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses 1.19%
Net investment income 1.61%
Portfolio turnover 52%
NET ASSETS - END OF PERIOD (000's omitted) $ 83,843
==========
*The investment advisor did not impose all of its management fee. If these
expenses had been incurred by the Series, the expense ratio (to average net
assets) for the year ended 12/31/03 would have been increased by 0.01%.
1Represents aggregate total return for the period indicated, and assumes
reinvestment of all distributions. Total return would have been lower had
certain expenses not been waived during the year ended 12/31/03. Periods less
than one year are not annualized.
2Less than $0.01 per share.
3Annualized.
The accompanying notes are an integral part of the financial statements.
9
<page>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
World Opportunities Series (the "Series") is a no-load 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 by investing
principally in the common stocks of companies located around the world.
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.
The Fund's Advisor is Manning & Napier Advisors, Inc. (the "Advisor"), doing
business as Exeter Asset Management. Shares of the Series are offered to
investors, clients and employees of the Advisor and its affiliates. The total
authorized capital stock of the Fund consists of 1.7 billion shares of common
stock each having a par value of $0.01. As of June 30, 2005, 1.16 billion
shares have been designated in total among 21 series, of which 37.5 million have
been designated as World Opportunities Series Class A common stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities,
exchange-traded funds 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. Investments in open-end investment
companies are valued at their net asset value per share on valuation date, with
the exception of exchange-traded funds as noted above.
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.
10
<page>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES (continued)
The Series uses the identified cost method for determining realized gain or loss
on investments for both financial statement and federal income tax reporting
purposes.
FOREIGN CURRENCY TRANSLATION
The books and records of the Series are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the current exchange rates. Purchases and sales of investment
securities and income and expenses are translated on the respective dates of
such transactions. The Series does not isolate realized and unrealized gains
and losses attributable to changes in the exchange rates from gains and losses
that arise from changes in the market value of investments. Such fluctuations
are included with net realized and unrealized gain or loss on investments. Net
realized foreign currency gains and losses represent foreign currency gains and
losses between trade date and settlement date on securities transactions, gains
and losses on disposition of foreign currencies and the difference between the
amount of income and foreign withholding taxes recorded on the books of the
Series and the amounts actually received or paid.
FEDERAL TAXES
The Series' policy is to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. The Series is not subject to
federal income or excise tax to the extent that the Series distributes to
shareholders each year its taxable income, including any net realized gains on
investments, in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income and net realized gains
are made annually. An additional distribution may be necessary to avoid
taxation of the Series. Distributions are recorded on the ex-dividend date.
OTHER
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of 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 (except a percentage of the Fund's
Chief Compliance Officer's salary, which is paid for by the Fund, and the
Special Assistant Secretary's salary, which is paid by BISYS Fund Services Ohio,
Inc. ("BISYS")),
11
<page>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
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 attended.
The Advisor has voluntarily agreed, until at least December 31, 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 1.27% of average daily
net assets each year. For the six months ended June 30, 2005, the Advisor did
not waive its management fee or reimburse any expenses of the Series.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
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 pays the Advisor an annual fee of 0.15% of the Fund's average daily net
assets up to $900 million, 0.11% for the Fund's average daily net assets between
$900 million and $1.5 billion, and 0.07% for the Fund's average daily net assets
over $1.5 billion. These fee rates are scheduled to be reduced each year
through 2007. Additionally, certain transaction and account-based fees and
out-of-pocket expenses, including charges for reporting relating to the Fund's
Compliance Program, are charged. Expenses not directly attributable to a series
are allocated based on each series' relative net assets or number of accounts,
depending on the expense. The Advisor has an agreement with BISYS under which
BISYS serves as sub-accounting services and sub-transfer agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2005, purchases and sales of securities, other
than short-term securities, were $21,418,447 and $24,491,747, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in Class A shares of World Opportunities Series were:
FOR THE SIX MONTHS FOR THE YEAR
ENDED 6/30/05 ENDED 12/31/04
------------------------------------- --------------------------
Shares Amount Shares Amount
------------------- ---------------- ----------- -------------
Sold 2,520,999 $ 20,963,235 3,334,982 $ 24,736,131
Reinvested - - 544,382 4,361,918
Repurchased (2,105,882) (17,045,748) (2,088,851) (15,729,142)
------------------- ---------------- ----------- -------------
Total 415,117 $ 3,917,487 1,790,513 $ 13,368,907
=================== ================ =========== =============
Substantially all of the Series' shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
12
<page>
Notes to Financial Statements (unaudited)
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options,
forward foreign currency exchange contracts and futures contracts and may
involve, to a varying degree, elements of risk in excess of the amounts
recognized for financial statement purposes. No such investments were held by
the Series on June 30, 2005.
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 accounting principles generally accepted in the United
States of America. The Series may periodically make reclassifications among its
capital accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations, without
impacting the Series' net asset value. Any such reclassifications are not
reflected in the financial highlights.
The tax character of distributions paid for the year ended December 31, 2004
were as follows:
Ordinary income $1,129,987
Long-term capital gains 3,309,862
At June 30, 2005, the identified cost of investments for federal income tax
purposes, the resulting gross unrealized appreciation and depreciation, and the
net unrealized appreciation were as follows:
Cost for federal income tax purposes $142,089,459
Unrealized appreciation $ 27,535,223
Unrealized depreciation (518,049)
-------------
Net unrealized appreciation $ 27,017,174
=============
13
<page>
Literature Requests (unaudited)
PROXY VOTING POLICIES AND PROCEDURES
- --------------------------------------------------------------------------------
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available, without charge,
upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission's (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30th is available,
without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
QUARTERLY PORTFOLIO HOLDINGS
- --------------------------------------------------------------------------------
The Series' complete schedule of portfolio holdings for the 1st and 3rd quarters
of each fiscal year are provided on Form N-Q, and are available, without charge,
upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
The Series' Form N-Q may be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION (SAI)
- --------------------------------------------------------------------------------
The prospectus and SAI provide additional information about each Series,
including charges, expenses and risks. These documents are available, without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
On the Advisor's web site
http://www.manningnapieradvisors.com/www/exeter_fund.asp
ADDITIONAL INFORMATION AVAILABLE AT
WWW.MANNINGNAPIERADVISORS.COM/WWW/EXETER_FUND.ASP
- --------------------------------------------------------------------------------
1. Fund Holdings - month-end
2. Fund Holdings - quarter-end
3. Shareholder Report - Annual
4. Shareholder Report - Semi-Annual
14
<page>
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2005
International Series
<page>
<page>
Shareholder Expense Example (unaudited)
As a shareholder of the Series, you may incur two types of costs: (1)
transaction costs, including potential wire charges on redemptions and (2)
ongoing costs, including management fees and other Series expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Series and to compare these costs with the ongoing costs of
investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2005 to June 30, 2005).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as potential
wire charges on redemptions. Therefore, the second line of the table is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds. In addition, if these transaction cost
were included, your costs would have been higher.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
1/1/05 6/30/05 1/1/05-6/30/05
-------------- -------------- ---------------
Actual $ 1,000.00 $ 996.80 $ 6.19
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,018.60 $ 6.26
*Expenses are equal to the Series' annualized expense ratio (for the six-month
period) of 1.25%, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period). Expenses are based
on the most recent fiscal half year.
1
<page>
Portfolio Composition as of June 30, 2005 (unaudited)
<graphic>
<pie chart>
COUNTRY ALLOCATION*
France 13.4%
Germany 34.5%
Italy 11.4%
Japan 7.4%
Malaysia 1.3%
Mexico 3.3%
Netherlands 4.3%
Philippines 3.2%
Portugal 6.0%
United Kingdom 10.2%
Cash, short-term investments, and other assets, less liabilities 5.0%
*As a percentage of net assets.
<graphic>
<pie chart>
SECTOR ALLOCATION*
Consumer Discretionary 15.1%
Consumer Staples 12.6%
Energy 6.7%
Financials 26.1%
Health Care 4.0%
Industrials 9.0%
Information Technology 4.5%
Materials 5.5%
Telecommunication Services 6.5%
Utilities 5.0%
Cash, short-term investments, and other assets, less liabilities 5.0%
*As a percentage of net assets.
2
<page>
INVESTMENT PORTFOLIO - JUNE 30, 2005 (UNAUDITED)
VALUE
SHARES (NOTE 2)
------- ------------
COMMON STOCKS - 95.0%
CONSUMER DISCRETIONARY - 15.1%
AUTO COMPONENTS - 0.3%
Michelin (CGDE) - B (France) 8,413 $ 512,826
------------
AUTOMOBILES - 1.1%
Bayerische Motoren Werke AG (BMW) (Germany) 38,200 1,750,448
------------
HOUSEHOLD DURABLES - 1.2%
Corporacion GEO S.A. de C.V. - Series B* (Mexico) 770,000 1,949,013
------------
LEISURE EQUIPMENT & PRODUCTS - 1.6%
Sega Sammy Holdings, Inc. (Japan) 41,550 2,548,160
------------
MEDIA - 7.0%
Impresa S.A. (SGPS)* (Portugal) 264,000 1,674,770
Media Capital S.A. (SGPS)* (Portugal) 300,000 2,444,310
PT Multimedia S.A. (SGPS) (Portugal) 128,000 1,346,634
Reed Elsevier plc - ADR (United Kingdom) 33,600 1,300,992
VNU N.V. (Netherlands) 78,000 2,178,523
Wolters Kluwer N.V. (Netherlands) 128,000 2,451,525
------------
11,396,754
------------
MULTILINE RETAIL - 0.6%
Don Quijote Co. Ltd. (Japan) 18,600 1,013,203
------------
SPECIALTY RETAIL - 1.7%
Douglas Holding AG (Germany) 45,900 1,664,292
KOMERI Co. Ltd. (Japan) 40,000 1,078,644
------------
2,742,936
------------
TEXTILES, APPAREL & LUXURY GOODS - 1.6%
LVMH S.A. (Louis Vuitton Moet Hennessy) (France) 32,320 2,500,300
------------
TOTAL CONSUMER DISCRETIONARY 24,413,640
------------
CONSUMER STAPLES - 12.6%
BEVERAGES - 2.1%
Diageo plc (United Kingdom) 76,000 1,121,133
Grupo Modelo S.A. de C.V. - Series C (Mexico) 384,000 1,201,117
Scottish & Newcastle plc (United Kingdom) 135,000 1,122,177
------------
3,444,427
------------
FOOD & STAPLES RETAILING - 3.2%
Carrefour S.A. (France) 38,832 1,885,185
Metro AG (Germany) 41,700 2,069,350
Tesco plc (United Kingdom) 220,000 1,256,946
------------
5,211,481
------------
The accompanying notes are an integral part of the financial statements.
3
<page>
Investment Portfolio - June 30, 2005 (unaudited)
VALUE
SHARES (NOTE 2)
--------- ------------
CONSUMER STAPLES (continued)
FOOD PRODUCTS - 3.9%
Cadbury Schweppes plc (United Kingdom) 120,000 $ 1,146,442
Groupe Danone (France) 15,976 1,406,120
Suedzucker AG (Germany) 72,400 1,459,395
Unilever plc - ADR (United Kingdom) 60,000 2,331,000
------------
6,342,957
------------
HOUSEHOLD PRODUCTS - 2.1%
Kao Corp. (Japan) 47,000 1,108,451
Kimberly-Clark de Mexico S.A. de C.V. - ADR (Mexico) 61,875 1,058,669
Reckitt Benckiser plc (United Kingdom) 38,500 1,135,195
------------
3,302,315
------------
PERSONAL PRODUCTS - 1.3%
Clarins S.A. (France) 30,666 2,060,488
------------
TOTAL CONSUMER STAPLES 20,361,668
------------
ENERGY - 6.7%
OIL, GAS & CONSUMABLE FUELS - 6.7%
BP plc (United Kingdom) 114,000 1,187,202
Eni S.p.A. (Italy) 219,554 5,664,281
Shell Transport & Trading Co. plc (United Kingdom) 145,000 1,410,625
Total S.A. (France) 11,290 2,655,747
------------
TOTAL ENERGY 10,917,855
------------
FINANCIALS - 26.1%
CAPITAL MARKETS - 3.1%
Deutsche Bank AG (Germany) 64,800 5,074,170
------------
COMMERCIAL BANKS - 14.0%
Banca Intesa S.p.A. (Italy) 509,327 2,333,902
Banca Monte dei Paschi di Siena S.p.A. (Italy) 181,000 639,307
Banco BPI S.A. (Portugal) 383,000 1,460,593
Banco Espirito Santo S.A. (BES) (Portugal) 68,000 1,061,162
Bayerische Hypo-und Vereinsbank AG (HVB Group)* (Germany) 179,300 4,667,010
BNP Paribas S.A. (France) 26,000 1,784,746
Commerzbank AG (Germany) 169,000 3,684,855
Hong Leong Bank Berhad (Malaysia) 560,000 766,417
Metropolitan Bank & Trust Co. (Philippines) 3,582,150 1,858,360
SanPaolo IMI S.p.A. (Italy) 51,300 705,530
Societe Generale (France) 11,312 1,152,427
UniCredito Italiano S.p.A. (Italy) 489,000 2,585,602
------------
22,699,911
------------
CONSUMER FINANCE - 0.7%
Takefuji Corp. (Japan) 16,050 1,085,633
------------
The accompanying notes are an integral part of the financial statements.
4
<page>
Investment Portfolio - June 30, 2005 (unaudited)
VALUE
SHARES (NOTE 2)
---------- ------------
FINANCIALS (continued)
DIVERSIFIED FINANCIAL SERVICES - 1.4%
ING Groep N.V. (Netherlands) 80,000 $ 2,263,438
------------
INSURANCE - 5.9%
Allianz AG (Germany) 19,620 2,261,288
Assicurazioni Generali S.p.A. (Italy) 85,804 2,680,077
Axa (France) 110,292 2,759,971
Muenchener Rueckver AG (Germany) 17,200 1,834,528
------------
9,535,864
------------
REAL ESTATE - 1.0%
SM Prime Holdings, Inc. (Philippines) 12,655,000 1,697,898
------------
TOTAL FINANCIALS 42,356,914
------------
HEALTH CARE - 4.0%
PHARMACEUTICALS - 4.0%
AstraZeneca plc (United Kingdom) 22,300 923,737
GlaxoSmithKline plc (United Kingdom) 48,000 1,162,359
Sanofi-Aventis (France) 21,083 1,733,094
Shire Pharmaceuticals Group plc (United Kingdom) 115,000 1,261,516
Takeda Pharmaceutical Co. Ltd. (Japan) 28,000 1,388,889
------------
TOTAL HEALTH CARE 6,469,595
------------
INDUSTRIALS - 9.0%
AIRLINES - 1.2%
Deutsche Lufthansa AG* (Germany) 164,800 2,027,080
------------
CONSTRUCTION & ENGINEERING - 1.0%
Hochtief AG (Germany) 44,500 1,554,268
------------
INDUSTRIAL CONGLOMERATES - 4.2%
Pirelli & C. S.p.A. (Italy) 213,333 222,631
Siemens AG (Germany) 66,525 4,864,540
Sonae S.A. (SGPS) (Portugal) 1,200,000 1,656,174
------------
6,743,345
------------
MACHINERY - 2.6%
FANUC Ltd. (Japan) 15,500 985,525
MAN AG (Germany) 79,000 3,289,116
------------
4,274,641
------------
TOTAL INDUSTRIALS 14,599,334
------------
INFORMATION TECHNOLOGY - 4.5%
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.1%
KEYENCE Corp. (Japan) 4,500 1,008,929
Mabuchi Motor Co. Ltd. (Japan) 12,800 737,662
------------
1,746,591
------------
The accompanying notes are an integral part of the financial statements.
5
<page>
Investment Portfolio - June 30, 2005 (unaudited)
VALUE
SHARES (NOTE 2)
------- -------------
INFORMATION TECHNOLOGY (continued)
OFFICE ELECTRONICS - 0.7%
Canon, Inc. (Japan) 20,000 $ 1,053,391
-------------
SOFTWARE - 2.7%
SAP AG (Germany) 25,350 4,428,577
-------------
TOTAL INFORMATION TECHNOLOGY 7,228,559
-------------
MATERIALS - 5.5%
CHEMICALS - 5.1%
Air Liquide S.A. (France) 12,258 2,090,983
Bayer AG (Germany) 107,350 3,589,597
Degussa AG (Germany) 38,200 1,564,535
Lanxess* (Germany) 43,875 979,485
-------------
8,224,600
-------------
CONSTRUCTION MATERIALS - 0.4%
Italcementi S.p.A. (Italy) 43,264 676,196
-------------
TOTAL MATERIALS 8,900,796
-------------
TELECOMMUNICATION SERVICES - 6.5%
DIVERSIFIED TELECOMMUNICATION SERVICES - 5.2%
Deutsche Telekom AG (Germany) 186,200 3,448,983
Philippine Long Distance Telephone Co. (Philippines) 28,300 820,143
Telecom Italia S.p.A. (Italy) 971,924 3,035,792
Telefonos de Mexico S.A. de C.V. (Telmex) - ADR (Mexico) 61,000 1,152,290
-------------
8,457,208
-------------
WIRELESS TELECOMMUNICATION SERVICES - 1.3%
Globe Telecom, Inc. (Philippines) 56,200 804,293
Maxis Communications Berhad (Malaysia) 500,000 1,276,484
-------------
2,080,777
-------------
TOTAL TELECOMMUNICATION SERVICES 10,537,985
-------------
UTILITIES - 5.0%
ELECTRIC UTILITIES - 3.5%
E.ON AG (Germany) 63,837 5,694,322
-------------
MULTI-UTILITIES - 1.5%
National Grid Transco plc (United Kingdom) 127,000 1,231,529
Suez S.A. (France) 43,340 1,176,896
-------------
2,408,425
-------------
TOTAL UTILITIES 8,102,747
-------------
TOTAL COMMON STOCKS
(Identified Cost $109,895,050) 153,889,093
-------------
The accompanying notes are an integral part of the financial statements.
6
<page>
Investment Portfolio - June 30, 2005 (unaudited)
SHARES/ VALUE
PRINCIPAL AMOUNT (NOTE 2)
----------------- -------------
SHORT-TERM INVESTMENTS - 4.5%
Dreyfus Treasury Cash Management - Institutional Shares 2,341,703 $ 2,341,703
Fannie Mae Discount Note, 8/5/2005 $ 5,000,000 4,985,125
-------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $7,326,828) 7,326,828
-------------
TOTAL INVESTMENTS - 99.5%
(Identified Cost $117,221,878) 161,215,921
OTHER ASSETS, LESS LIABILITIES - 0.5% 824,555
-------------
NET ASSETS - 100% $162,040,476
=============
*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: Germany - 34.5%; France - 13.4%; Italy - 11.4%; United
Kingdom - 10.2%.
The accompanying notes are an integral part of the financial statements.
7
<page>
Statement of Assets and Liabilities (unaudited)
June 30, 2005
ASSETS:
Investments, at value (identified cost $117,221,878) (Note 2) $161,215,921
Foreign currency, at value (cost $43,325) 43,324
Cash 10,731
Receivable for securities sold 765,972
Receivable for fund shares sold 255,136
Dividends receivable 144,477
Foreign tax reclaims receivable 110,388
------------
TOTAL ASSETS 162,545,949
------------
LIABILITIES:
Accrued management fees (Note 3) 132,910
Accrued fund accounting and transfer agent fees (Note 3) 22,276
Accrued Chief Compliance Officer services fees (Note 3) 1,062
Payable for fund shares repurchased 323,280
Audit fees payable 19,280
Other payables and accrued expenses 6,665
------------
TOTAL LIABILITIES 505,473
------------
TOTAL NET ASSETS $162,040,476
============
NET ASSETS CONSIST OF:
Capital stock $ 170,797
Additional paid-in-capital 106,321,840
Undistributed net investment income 2,080,587
Accumulated net realized gain on investments, foreign currency,
and other assets and liabilities 9,480,476
Net unrealized appreciation on investments, foreign currency,
and other assets and liabilities 43,986,776
------------
TOTAL NET ASSETS $162,040,476
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE ($162,040,476/17,079,744 shares) $ 9.49
============
The accompanying notes are an integral part of the financial statements.
8
<page>
Statement of Operations (unaudited)
For the Six Months Ended June 30, 2005
INVESTMENT INCOME:
Dividends (net of foreign tax withheld, $461,897) $ 2,866,848
Interest 102,880
-------------
Total Investment Income 2,969,728
-------------
EXPENSES:
Management fees (Note 3) 790,134
Fund accounting and transfer agent fees (Note 3) 105,580
Directors' fees (Note 3) 3,459
Chief Compliance Officer services fees (Note 3) 2,988
Custodian fees 52,682
Miscellaneous 35,562
-------------
Total Expenses 990,405
-------------
NET INVESTMENT INCOME 1,979,323
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on -
Investments 9,688,862
Foreign currency and other assets and liabilities (20,434)
-------------
9,668,428
-------------
Net change in unrealized appreciation on -
Investments (12,471,740)
Foreign currency and other assets and liabilities (13,661)
-------------
(12,485,401)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (2,816,973)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ (837,650)
=============
The accompanying notes are an integral part of the financial statements.
9
<page>
Statements of Changes in Net Assets
FOR THE SIX
MONTHS ENDED FOR THE
6/30/05 YEAR ENDED
(UNAUDITED) 12/31/04
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,979,323 $ 1,223,724
Net realized gain on investments 9,668,428 8,965,946
Net change in unrealized appreciation on investments (12,485,401) 14,295,027
-------------- -------------
Net increase (decrease) from operations (837,650) 24,484,697
-------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 8):
From net investment income - (1,267,156)
From net realized gain on investments - (11,878,815)
-------------- -------------
Total distributions to shareholders - (13,145,971)
-------------- -------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase (decrease) from capital share transactions (Note 5) (3,038,560) 25,099,237
-------------- -------------
Net increase (decrease) in net assets (3,876,210) 36,437,963
NET ASSETS:
Beginning of period 165,916,686 129,478,723
-------------- -------------
END OF PERIOD (including undistributed net investment
income of $2,080,587 and $101,264, respectively) $ 162,040,476 $165,916,686
============== =============
The accompanying notes are an integral part of the financial statements.
10
<page>
Financial Highlights
FOR THE SIX
MONTHS ENDED
6/30/2005 FOR THE YEARS ENDED
(UNAUDITED) 12/31/04 12/31/03 12/31/02 12/31/01
-------------- --------------------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 9.52 $ 8.83 $ 6.67 $ 7.89 $ 10.40
-------------- --------------------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.12 0.08 0.07 0.07 0.05
Net realized and unrealized gain (loss) on investments (0.15) 1.44 2.72 (1.20) (2.18)
-------------- --------------------- ---------- ---------- ----------
Total from investment operations (0.03) 1.52 2.79 (1.13) (2.13)
-------------- --------------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income - (0.08) (0.06) (0.07) (0.05)
From net realized gain on investments - (0.75) (0.57) (0.02) (0.33)
-------------- --------------------- ---------- ---------- ----------
Total distributions to shareholders - (0.83) (0.63) (0.09) (0.38)
-------------- --------------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 9.49 $ 9.52 $ 8.83 $ 6.67 $ 7.89
============== ===================== ========== ========== ==========
Total return1 (0.32%) 17.67% 42.10% (14.30%) (20.48%)
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses 1.25%2 1.29% 1.30%* 1.32% 1.28%
Net investment income 2.51%2 0.86% 0.94% 0.96% 0.54%
Portfolio turnover 16% 19% 46% 5% 6%
NET ASSETS - END OF PERIOD (000's omitted) $ 162,040 $ 165,917 $ 129,479 $ 80,945 $ 84,124
============== ===================== ========== ========== ==========
FOR THE YEAR ENDED
12/31/00
----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 17.43
----------
Income (loss) from investment operations:
Net investment income 0.04
Net realized and unrealized gain (loss) on investments (0.83)
----------
Total from investment operations (0.79)
----------
Less distributions to shareholders:
From net investment income (0.03)
From net realized gain on investments (6.21)
----------
Total distributions to shareholders (6.24)
----------
NET ASSET VALUE - END OF PERIOD $ 10.40
==========
Total return1 (3.03%)
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses 1.19%
Net investment income 0.28%
Portfolio turnover 3%
NET ASSETS - END OF PERIOD (000's omitted) $ 119,132
==========
*The investment advisor did not impose all of its management fee. If these
expenses had been incurred by the Series, the expense ratio (to average net
assets) for the year ended 12/31/03 would have been increased by 0.02%.
1Represents aggregate total return for the period indicated, and assumes
reinvestment of all distributions. Total return would have been lower had
certain expenses not been waived during the year ended 12/31/03. Periods less
than one year are not annualized.
2Annualized.
The accompanying notes are an integral part of the financial statements.
11
<page>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
International Series (the "Series") is a no-load diversified series of Exeter
Fund, Inc. (the "Fund"). The Fund is organized in Maryland and is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company.
The Series' investment objective is to provide long-term growth by investing
principally in the common stocks of companies located outside the United States.
The Fund's Advisor is Manning & Napier Advisors, Inc. (the "Advisor"), doing
business as Exeter Asset Management. Shares of the Series are offered to
investors, clients and employees of the Advisor and its affiliates. The Series
resumed offering shares directly to investors on May 18, 2004, as it had done
previously from time to time. The total authorized capital stock of the Fund
consists of 1.7 billion shares of common stock each having a par value of $0.01.
As of June 30, 2005, 1.16 billion shares have been designated in total among 21
series, of which 50 million have been designated as International Series common
stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Portfolio securities, including domestic equities, foreign equities,
exchange-traded funds 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. Investments in open-end investment
companies are valued at their net asset value per share on valuation date, with
the exception of exchange-traded funds as noted above.
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.
12
<page>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
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 accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of 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 (except a percentage of the Fund's
Chief Compliance Officer's salary, which is paid by the Fund, and the Special
Assistant Secretary's salary, which is paid by BISYS Fund Services Ohio, Inc.
("BISYS")), and of all Directors who are "affiliated persons" of the Fund, or of
the Advisor, and all personnel of the Fund, or of the Advisor, performing
services relating to research, statistical and investment activities, are paid
by the Advisor. Each "non-affiliated" Director receives an annual stipend,
which is allocated among all the active series of the Fund. In addition, these
13
<page>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
Directors also receive a per meeting fee for each active series of the Fund plus
a fee for each committee meeting attended.
The Advisor has voluntarily agreed, until at least December 31, 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 1.30% of average daily
net assets each year. For the six months ended June 30, 2005, the Advisor did
not waive its management fee or reimburse any expenses of the Series.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
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 pays the Advisor an annual fee of 0.15% of the Fund's average daily net
assets up to $900 million, 0.11% for the Fund's average daily net assets between
$900 million and $1.5 billion, and 0.07% for the Fund's average daily net assets
over $1.5 billion. These fee rates are scheduled to be reduced each year
through 2007. Additionally, certain transaction and account-based fees and
out-of-pocket expenses, including charges for reporting relating to the Fund's
Compliance Program, are charged. Expenses not directly attributable to a series
are allocated based on each series' relative net assets or number of accounts,
depending on the expense. The Advisor has an agreement with BISYS under which
BISYS serves as sub-accounting services and sub-transfer agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2005, purchases and sales of securities, other
than short-term securities, were $24,108,716 and $25,374,427, respectively.
The Series held shares of iShares MSCI Malaysia Index Fund and iShares MSCI
Singapore Index Fund in 2003 and 2004; such investments were not consistent with
the investment restrictions of the Series. The securities were subsequently
sold at a gain of $541,572 during 2004. For 2004, 0.37% of the Series' total
return consisted of the realized gain on these investments.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of International Series were:
FOR THE SIX MONTHS FOR THE YEAR
ENDED 6/30/05 ENDED 12/31/04
------------------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
------------------- ---------------- ----------- -------------
Sold 1,257,286 $ 11,977,704 2,658,744 $ 24,222,900
Reinvested - - 1,409,860 12,949,803
Repurchased (1,601,420) (15,016,264) (1,309,069) (12,073,466)
------------------- ---------------- ----------- -------------
Total (344,134) $ (3,038,560) 2,759,535 $ 25,099,237
=================== ================ =========== =============
Substantially all of the Series' shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
14
<page>
Notes to Financial Statements (unaudited)
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing exposure
to various market risks. These financial instruments include written options,
forward foreign currency exchange contracts and futures contracts and may
involve, to a varying degree, elements of risk in excess of the amounts
recognized for financial statement purposes. No such investments were held by
the Series on June 30, 2005.
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 accounting principles generally accepted in the United
States of America. The Series may periodically make reclassifications among its
capital accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations, without
impacting the Series' net asset value. Any such reclassifications are not
reflected in the financial highlights.
The tax character of distributions paid for the year ended December 31, 2004
were as follows:
Ordinary income $4,558,474
Long-term capital gains 8,587,497
For the year ended December 31, 2004, the Series elected to defer $40,062 of
capital losses attributable to Post-October losses.
At June 30, 2005, the identified cost of investments for federal income tax
purposes, the resulting gross unrealized appreciation and depreciation, and the
net unrealized appreciation were as follows:
Cost for federal income tax purposes $117,320,315
Unrealized appreciation $ 45,635,657
Unrealized depreciation (1,740,051)
------------
Net unrealized appreciation $ 43,895,606
============
15
<page>
[This page intentionally left blank]
16
<page>
[This page intentionally left blank]
17
<page>
Literature Requests (unaudited)
PROXY VOTING POLICIES AND PROCEDURES
- --------------------------------------------------------------------------------
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available, without charge,
upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission's (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30th is available,
without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
QUARTERLY PORTFOLIO HOLDINGS
- --------------------------------------------------------------------------------
The Series' complete schedule of portfolio holdings for the 1st and 3rd quarters
of each fiscal year are provided on Form N-Q, and are available, without charge,
upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
The Series' Form N-Q may be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION (SAI)
- --------------------------------------------------------------------------------
The prospectus and SAI provide additional information about each Series,
including charges, expenses and risks. These documents are available, without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
On the Advisor's web site
http://www.manningnapieradvisors.com/www/exeter_fund.asp
ADDITIONAL INFORMATION AVAILABLE AT
WWW.MANNINGNAPIERADVISORS.COM/WWW/EXETER_FUND.ASP
- --------------------------------------------------------------------------------
1. Fund Holdings - month-end
2. Fund Holdings - quarter-end
3. Shareholder Report - Annual
4. Shareholder Report - Semi-Annual
18
<page>
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2005
Core Bond Series
<page>
Shareholder Expense Example (unaudited)
As a shareholder of the Series, you may incur two types of costs: (1)
transaction costs, including potential wire charges on redemptions and (2)
ongoing costs, including management fees and other Series expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Series and to compare these costs with the ongoing costs of
investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (April 21, 2005 (commencement of
operations) to June 30, 2005).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as potential
wire charges on redemptions. Therefore, the second line of the table is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds. In addition, if these transaction costs
were included, your costs would have been higher.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
4/21/05 6/30/05 4/21/05-6/30/05
-------------- -------------- ----------------
Actual $ 1,000.00 $ 1,013.00 $ 1.57
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,008.17 $ 1.56
*Expenses are equal to the Series' annualized expense ratio (for the period
April 21, 2005 (commencement of operations) to June 30, 2005) of 0.80%,
multiplied by the average account value over the period, multiplied by 71/365
(to reflect the period from April 21, 2005 (commencement of operations) to June
30, 2005). Expenses are based on the most recent fiscal period. The Series'
total return would have been lower had certain expenses not been waived during
the period.
1
<page>
Portfolio Composition as of June 30, 2005 (unaudited)
<graphic>
<pie chart>
SECTOR ALLOCATION*
Consumer Discretionary 6.6%
Consumer Staples 1.2%
Energy 2.9%
Financials 9.2%
Health Care 1.3%
Industrials 6.7%
Information Technology 0.9%
Materials 0.9%
Telecommunication Services 3.3%
Utilities 3.0%
U.S. Government Agencies 56.0%
Cash, short-term investments, and liabilities, less other assets 8.0%
*As a percentage of net assets.
<graphic>
<pie chart>
CREDIT QUALITY RATINGS1,2
Aaa 5.5%
Aa 17.6%
A 35.3%
Baa 41.6%
1As a percentage of total corporate bonds.
2Based on ratings from Moody's. The Series may use different ratings provided by
other rating agencies for purposed of determining compliance with the Series'
investment policies.
2
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING1 PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
CORPORATE BONDS - 36.0%
CONSUMER DISCRETIONARY - 6.6%
MEDIA - 3.0%
AOL Time Warner (now known as Time Warner, Inc.), 6.75%, 4/15/2011 Baa1 $ 325,000 $ 360,160
Comcast Cable Communications, Inc., 6.75%, 1/30/2011 Baa2 280,000 308,911
The Walt Disney Co., 6.375%, 3/1/2012 Baa1 140,000 154,824
-----------
823,895
-----------
MULTILINE RETAIL - 1.7%
Target Corp., 5.875%, 3/1/2012 A2 415,000 450,607
-----------
SPECIALTY RETAIL - 1.9%
The Gap, Inc.2, 9.55%, 12/15/2008 Baa3 175,000 201,779
Lowe's Companies, Inc., 8.25%, 6/1/2010 A2 270,000 317,438
-----------
519,217
-----------
TOTAL CONSUMER DISCRETIONARY 1,793,719
-----------
CONSUMER STAPLES - 1.2%
FOOD & STAPLES RETAILING - 0.3%
The Kroger Co., 7.25%, 6/1/2009 Baa2 90,000 98,740
-----------
FOOD PRODUCTS - 0.4%
General Mills, Inc., 6.00%, 2/15/2012 Baa2 95,000 103,281
-----------
HOUSEHOLD PRODUCTS - 0.5%
The Procter & Gamble Co., 4.85%, 12/15/2015 Aa3 125,000 128,514
-----------
TOTAL CONSUMER STAPLES 330,535
-----------
ENERGY - 2.9%
ENERGY EQUIPMENT & SERVICES - 1.9%
Transocean Sedco (now known as Transocean, Inc.), 6.625%, 4/15/2011
(Cayman Islands) (Note 7) Baa2 460,000 516,663
-----------
OIL, GAS & CONSUMABLE FUELS - 1.0%
Anadarko Finance Co., 6.75%, 5/1/2011 (Canada) (Note 7) Baa1 230,000 255,555
-----------
TOTAL ENERGY 772,218
-----------
FINANCIALS - 9.2%
CAPITAL MARKETS - 2.1%
The Goldman Sachs Group, Inc., 6.875%, 1/15/2011 Aa3 170,000 189,555
Lehman Brothers Holdings, Inc., 6.625%, 1/18/2012 A1 170,000 189,870
Merrill Lynch & Co., Inc., 6.00%, 2/17/2009 Aa3 180,000 189,884
-----------
569,309
-----------
COMMERCIAL BANKS - 6.4%
Bank of America Corp., 7.40%, 1/15/2011 Aa3 440,000 503,571
PNC Funding Corp., 7.50%, 11/1/2009 A3 180,000 201,943
The accompanying notes are an integral part of the financial statements.
3
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING1 PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
FINANCIALS (continued)
COMMERCIAL BANKS (continued)
U.S. Bank National Association, 6.375%, 8/1/2011 Aa2 $ 465,000 $ 513,031
Wachovia Corp., 5.25%, 8/1/2014 A1 495,000 516,724
-----------
1,735,269
-----------
DIVERSIFIED FINANCIAL SERVICES - 0.7%
Citigroup, Inc., 5.00%, 9/15/2014 Aa2 190,000 194,360
-----------
TOTAL FINANCIALS 2,498,938
-----------
HEALTH CARE - 1.3%
PHARMACEUTICALS - 1.3%
Abbott Laboratories, 3.50%, 2/17/2009 A1 195,000 191,130
Schering-Plough Corp.2, 5.55%, 12/1/2013 Baa1 145,000 153,736
-----------
TOTAL HEALTH CARE 344,866
-----------
INDUSTRIALS - 6.7%
AEROSPACE & DEFENSE - 1.6%
Boeing Capital Corp., 6.50%, 2/15/2012 A3 230,000 257,277
Honeywell International, Inc., 7.50%, 3/1/2010 A2 170,000 193,705
-----------
450,982
-----------
AIR FREIGHT & LOGISTICS - 0.7%
FedEx Corp., 3.50%, 4/1/2009 Baa2 195,000 190,053
-----------
AIRLINES - 0.5%
Southwest Airlines Co., 5.25%, 10/1/2014 Baa1 130,000 130,745
-----------
INDUSTRIAL CONGLOMERATES - 2.0%
General Electric Capital Corp., 6.75%, 3/15/2032 Aaa 435,000 536,785
-----------
MACHINERY - 0.7%
John Deere Capital Corp., 7.00%, 3/15/2012 A3 165,000 189,303
-----------
ROAD & RAIL - 1.2%
CSX Corp., 6.75%, 3/15/2011 Baa2 175,000 193,194
Union Pacific Corp., 6.65%, 1/15/2011 Baa2 115,000 127,936
-----------
321,130
-----------
TOTAL INDUSTRIALS 1,818,998
-----------
INFORMATION TECHNOLOGY - 0.9%
IT SERVICES - 0.9%
First Data Corp., 3.90%, 10/1/2009 A1 260,000 255,965
-----------
MATERIALS - 0.9%
METALS & MINING - 0.9%
Alcoa, Inc., 7.375%, 8/1/2010 A2 225,000 255,947
-----------
The accompanying notes are an integral part of the financial statements.
4
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING1 PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
TELECOMMUNICATION SERVICES - 3.3%
DIVERSIFIED TELECOMMUNICATION SERVICES - 3.3%
AT&T Wireless (now known as New Cingular Wireless Services, Inc.),
7.875%, 3/1/2011 Baa2 $ 385,000 $ 447,434
Verizon Wireless Capital LLC, 5.375%, 12/15/2006 A3 430,000 438,222
-----------
TOTAL TELECOMMUNICATION SERVICES 885,656
-----------
UTILITIES - 3.0%
ELECTRIC UTILITIES - 1.6%
American Electric Power Co., Inc., 5.375%, 3/15/2010 Baa3 250,000 259,442
TXU Energy Co., 7.00%, 3/15/2013 Baa2 170,000 189,589
-----------
449,031
-----------
MULTI-UTILITIES - 1.4%
Duke Energy Field Services Corp., 7.875%, 8/16/2010 Baa2 165,000 189,417
Sempra Energy, 7.95%, 3/1/2010 Baa1 165,000 187,369
-----------
376,786
-----------
TOTAL UTILITIES 825,817
-----------
TOTAL CORPORATE BONDS
(Identified Cost $9,680,944) 9,782,659
-----------
U.S. GOVERNMENT AGENCIES - 56.0%
Fannie Mae, Pool #795855, 5.50%, 9/1/2019 493,100 506,511
Fannie Mae, Pool #786281, 6.50%, 7/1/2034 729,393 755,109
Fannie Mae, Pool #815409, 4.50%, 2/1/2035 259,692 254,113
Fannie Mae, TBA3, 4.50%, 7/1/2020 835,000 831,086
Fannie Mae, TBA3, 5.00%, 7/15/2020 705,000 712,711
Fannie Mae, TBA3, 5.00%, 7/1/2035 1,485,000 1,485,000
Fannie Mae, TBA3, 6.00%, 7/1/2035 1,010,000 1,035,250
Fannie Mae, TBA3, 5.50%, 8/1/2035 2,270,000 2,296,956
Federal Home Loan Mortgage Corp., Pool #M90974, 4.50%, 3/1/2010 105,812 106,334
Federal Home Loan Mortgage Corp., Pool #B16835, 5.50%, 10/1/2019 443,166 455,117
Federal Home Loan Mortgage Corp., Pool #A27705, 6.50%, 10/1/2034 289,715 299,984
Federal Home Loan Mortgage Corp., Pool #G01782, 6.50%, 2/1/2035 144,245 149,400
Federal Home Loan Mortgage Corp., TBA3, 4.50%, 7/1/2020 895,000 890,804
Federal Home Loan Mortgage Corp., TBA3, 5.00%, 8/15/2020 580,000 585,619
Federal Home Loan Mortgage Corp., TBA3, 5.50%, 7/1/2035 1,340,000 1,358,425
Federal Home Loan Mortgage Corp., TBA3, 6.00%, 7/1/2035 505,000 517,783
The accompanying notes are an integral part of the financial statements.
5
<page>
Investment Portfolio - June 30, 2005 (unaudited)
PRINCIPAL
AMOUNT/ VALUE
SHARES (NOTE 2)
---------- -------------
U.S. GOVERNMENT AGENCIES (continued)
Federal Home Loan Mortgage Corp., TBA3, 5.00%, 8/1/2035 $1,040,000 $ 1,037,724
GNMA, Pool #487193, 5.00%, 4/15/2020 124,507 126,781
GNMA, Pool #563559, 6.50%, 4/15/2032 119,677 125,122
GNMA, Pool #631703, 6.50%, 9/15/2034 295,458 308,811
GNMA, TBA3, 5.50%, 7/15/2035 635,000 648,296
GNMA, TBA3, 6.00%, 7/15/2035 380,000 391,875
GNMA, TBA3, 5.00%, 9/15/2035 324,000 325,418
-------------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $15,146,665) 15,204,229
-------------
SHORT-TERM INVESTMENTS - 51.8%
Dreyfus Treasury Cash Management - Institutional Shares 702,105 702,105
Fannie Mae Discount Note, 8/1/2005 $1,500,000 1,495,983
Fannie Mae Discount Note, 8/11/2005 1,050,000 1,046,329
Federal Home Loan Bank Discount Note, 7/13/2005 2,930,000 2,927,080
Federal Home Loan Bank Discount Note, 7/18/2005 1,730,000 1,727,614
Federal Home Loan Bank Discount Note, 7/20/2005 1,041,000 1,039,335
Federal Home Loan Bank Discount Note, 8/10/2005 2,270,000 2,262,355
Freddie Mac Discount Note, 7/12/2005 1,485,000 1,483,018
Freddie Mac Discount Note, 9/20/2005 325,000 322,543
Freddie Mac Discount Note, 2/27/2006 1,100,000 1,073,785
-------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $14,082,150) 14,080,147
-------------
TOTAL INVESTMENTS - 143.8%
(Identified Cost $38,909,759) 39,067,035
LIABILITIES, LESS OTHER ASSETS - (43.8%) (11,897,978)
-------------
NET ASSETS - 100% $ 27,169,057
=============
1Credit ratings from Moody's (unaudited).
2The coupon rate will increase with every ratings downgrade and decrease with
every ratings upgrade. The coupon rate stated is the rate as of June 30, 2005.
3Security purchased on a forward commitment or when-issued basis. TBA - to be
announced.
The accompanying notes are an integral part of the financial statements.
6
<page>
Statement of Assets and Liabilities (unaudited)
June 30, 2005
ASSETS:
Investments, at value (identified cost, $38,909,759) (Note 2) $39,067,035
Interest receivable 208,096
Dividends receivable 2,462
-----------
TOTAL ASSETS 39,277,593
-----------
LIABILITIES:
Accrued management fees (Note 3) 6,662
Accrued fund accounting and transfer agent fees (Note 3) 5,401
Accrued Chief Compliance Officer services fees (Note 3) 672
Payable for securities purchased 12,084,277
Audit fees payable 6,697
Accrued registration and filing fees 2,586
Other payables and accrued expenses 2,241
-----------
TOTAL LIABILITIES 12,108,536
-----------
TOTAL NET ASSETS $27,169,057
===========
NET ASSETS CONSIST OF:
Capital stock $ 26,828
Additional paid-in-capital 26,815,506
Undistributed net investment income 122,747
Accumulated net realized gain on investments 46,700
Net unrealized appreciation on investments 157,276
-----------
TOTAL NET ASSETS $27,169,057
===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE ($27,169,057/2,682,834 shares) $ 10.13
===========
The accompanying notes are an integral part of the financial statements.
7
<page>
Statement of Operations (unaudited)
For the Period April 21, 2005 (commencement of operations) to June 30, 2005
INVESTMENT INCOME:
Interest $155,779
Dividends 5,960
---------
Total Investment Income 161,739
---------
EXPENSES:
Management fees (Note 3) 29,248
Fund accounting and transfer agent fees (Note 3) 9,042
Directors' fees (Note 3) 1,491
Chief Compliance Officer services fees (Note 3) 1,016
Audit fees 6,697
Registration and filing fees 2,756
Custodian fees 2,736
Miscellaneous 1,399
---------
Total Expenses 54,385
Less reduction of expenses (Note 3) (15,393)
---------
Net Expenses 38,992
---------
NET INVESTMENT INCOME 122,747
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 46,700
Net change in unrealized appreciation on investments 157,276
---------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS 203,976
---------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $326,723
=========
The accompanying notes are an integral part of the financial statements.
8
<page>
Statement of Changes in Net Assets (unaudited)
FOR THE PERIOD 4/21/05
(COMMENCEMENT OF
OPERATIONS) TO 6/30/05
-----------------------
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income $ 122,747
Net realized gain on investments 46,700
Net change in unrealized appreciation on investments 157,276
-----------------------
Net increase from operations 326,723
-----------------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share transactions (Note 5) 26,842,334
-----------------------
Net increase in net assets 27,169,057
NET ASSETS:
Beginning of period -
-----------------------
END OF PERIOD (including undistributed net investment income of
122,747) $ 27,169,057
=======================
The accompanying notes are an integral part of the financial statements.
9
<page>
Financial Highlights (unaudited)
FOR THE PERIOD
4/21/05 1 TO 6/30/05
--------------------
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT
THE PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.00
--------------------
Income from investment operations:
Net investment income 0.05
Net realized and unrealized gain on investments 0.08
--------------------
Total from investment operations 0.13
--------------------
NET ASSET VALUE - END OF PERIOD $ 10.13
====================
Total return2 1.30%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 0.80%3
Net investment income 2.52%3
Portfolio turnover 65%
NET ASSETS - END OF PERIOD (000's omitted) $ 27,169
====================
*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 by 0.32%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 during the period. Periods less than one year
are not annualized.
3Annualized.
The accompanying notes are an integral part of the financial statements.
10
<page>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Core Bond Series (the "Series") is a no-load non-diversified series of Exeter
Fund, Inc. (the "Fund"). The Fund is organized in Maryland and is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company.
The Series' investment objective is to provide long-term total returns by
investing primarily in corporate fixed income securities and pass-through
securities.
The Fund's Advisor is Manning & Napier Advisors, Inc. (the "Advisor"), doing
business as Exeter Asset Management. Shares of the Series are offered to
investors, clients and employees of the Advisor and its affiliates. The total
authorized capital stock of the Fund consists of 1.7 billion shares of common
stock each having a par value of $0.01. As of June 30, 2005, 1.16 billion
shares have been designated in total among 21 series, of which 75 million have
been designated as Core Bond Series common stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Debt securities, including government bonds, sovereign bonds, corporate bonds
and mortgage backed securities, will normally be valued on the basis of
evaluated bid prices provided by the Fund's pricing service.
Securities for which representative valuations or prices are not available from
the Fund's pricing service may be valued at fair value as determined in good
faith by the Advisor under procedures approved by and under the general
supervision and responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value. Investments in open-end investment
companies are valued at their net asset value per share on valuation date.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on trade date. Dividend income is
recorded on the ex-dividend date. Interest income, including amortization of
premium and accretion of discounts, is earned from settlement date and accrued
daily. 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. 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
11
<page>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FOREIGN CURRENCY TRANSLATION (continued)
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.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT
The Series may purchase securities on a when-issued basis or forward commitment.
These transactions involve a commitment by the Series to purchase securities for
a predetermined price with payment and delivery taking place beyond the
customary settlement period. When such purchases are outstanding, the Series
will designate liquid assets in an amount sufficient to meet the purchase price.
When purchasing a security on a delayed delivery basis, the Series assumes the
rights and risks of ownership of the security, including the risk of price and
yield fluctuations, and takes such fluctuations into account when determining
its net asset value. The Series may sell the when-issued securities before they
are delivered, which may result in a capital gain or loss.
In connection with its ability to purchase or sell securities on a forward
commitment basis, the Series may enter into forward roll transactions
principally using To Be Announced (TBA) securities. Forward roll transactions
require the sale of securities for delivery in the current month, and a
simultaneous agreement to repurchase substantially similar (same type, coupon
and maturity) securities on a specified future date. Risks of entering into
forward roll transactions include the potential inability of the counterparty to
meet the terms of the agreement; the potential of the Series to receive inferior
securities at redelivery as compared to the securities sold to the counterparty;
counterparty credit risk; and the potential pay down speed variance between the
mortgage-backed pools. During the roll period, the Series forgoes principal and
interest paid on the securities.
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 accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
12
<page>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory Agreement (the "Agreement") with the
Advisor, for which the Series pays a fee, computed daily and payable monthly, at
an annual rate of 0.60% of the Series' average daily net assets.
Under the Agreement, personnel of the Advisor provide the Series with advice and
assistance in the choice of investments and the execution of securities
transactions, and otherwise maintain the Series' organization. The Advisor also
provides the Fund with necessary office space and fund administration services.
The salaries of all officers of the Fund (except a percentage of the Fund's
Chief Compliance Officer's salary, which is paid by the Fund, and the Special
Assistant Secretary's salary, which is paid by BISYS Fund Services Ohio, Inc.
("BISYS")), and of all Directors who are "affiliated persons" of the Fund, or of
the Advisor, and all personnel of the Fund, or of the Advisor, performing
services relating to research, statistical and investment activities, are paid
by the Advisor. Each "non-affiliated" Director receives an annual stipend, which
is allocated among all the active series of the Fund. In addition, these
Directors also receive a per meeting fee for each active series of the Fund plus
a fee for each committee meeting attended.
The Advisor has contractually agreed, until at least April 30, 2006, to waive
its fee and, if necessary, pay other operating expenses of the Series in order
to maintain total expenses for the Series at no more than 0.80% of average daily
net assets each year. Accordingly, the Advisor waived fees of $15,393 for the
period April 21, 2005 (commencement of operations) to June 30, 2005, 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 pays the Advisor an annual fee of 0.15% of the Fund's average daily net
assets up to $900 million, 0.11% for the Fund's average daily net assets between
$900 million and $1.5 billion, and 0.07% for the Fund's average daily net assets
over $1.5 billion. These fee rates are scheduled to be reduced each year
through 2007. Additionally, certain transaction and account-based fees and
out-of-pocket expenses, including charges for reporting relating to the Fund's
Compliance Program, are charged. Expenses not directly attributable to a series
are allocated based on each series' relative net assets or number of accounts,
depending on the expense. The Advisor has an agreement with BISYS under which
BISYS serves as sub-accounting services and sub-transfer agent.
4. PURCHASES AND SALES OF SECURITIES
For the period April 21, 2005 (commencement of operations) to June 30, 2005,
purchases and sales of securities, other than United States Government
securities and short-term securities, were $9,700,064 and $0, respectively.
Purchases and sales of United States Government securities, other than
short-term securities, were $26,429,434 and $11,327,665, respectively.
13
<page>
Notes to Financial Statements (unaudited)
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Core Bond Series were:
FOR THE PERIOD 4/21/05 (COMMENCEMENT
OF OPERATIONS) TO 6/30/05
--------------------------------------------------
Shares Amount
------------------------------------ ------------
Sold 2,724,027 $27,257,868
Repurchased (41,193 (415,534)
------------------------------------ ------------
Total 2,682,834 $26,842,334
==================================== ============
Substantially all of the Series' shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options,
forward foreign currency exchange contracts and futures contracts and may
involve, to a varying degree, elements of risk in excess of the amounts
recognized for financial statement purposes. No such investments were held by
the Series on June 30, 2005.
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 accounting principles generally accepted in the United
States of America. The Series may periodically make reclassifications among its
capital accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations, without
impacting the Series' net asset value. Any such reclassifications are not
reflected in the financial highlights.
At June 30, 2005, the identified cost of investments for federal income tax
purposes, the resulting gross unrealized appreciation and depreciation, and the
net unrealized appreciation were as follows:
Cost for federal income tax purposes $38,909,759
Unrealized appreciation $ 166,738
Unrealized depreciation (9,462)
------------
Net unrealized appreciation $ 157,276
============
14
<page>
Literature Requests (unaudited)
PROXY VOTING POLICIES AND PROCEDURES
- --------------------------------------------------------------------------------
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available, without charge,
upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission's (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30th is available,
without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
QUARTERLY PORTFOLIO HOLDINGS
- --------------------------------------------------------------------------------
The Series' complete schedule of portfolio holdings for the 1st and 3rd quarters
of each fiscal year are provided on Form N-Q, and are available, without charge,
upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
The Series' Form N-Q may be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION (SAI)
- --------------------------------------------------------------------------------
The prospectus and SAI provide additional information about each Series,
including charges, expenses and risks. These documents are available, without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
On the Advisor's web site
http://www.manningnapieradvisors.com/www/exeter_fund.asp
ADDITIONAL INFORMATION AVAILABLE AT
WWW.MANNINGNAPIERADVISORS.COM/WWW/EXETER_FUND.ASP
- --------------------------------------------------------------------------------
1. Fund Holdings - month-end
2. Fund Holdings - quarter-end
3. Shareholder Report - Annual
4. Shareholder Report - Semi-Annual
15
<page>
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2005
Core Plus Bond Series
<page>
<page>
Shareholder Expense Example (unaudited)
As a shareholder of the Series, you may incur two types of costs: (1)
transaction costs, including potential wire charges on redemptions and (2)
ongoing costs, including management fees and other Series expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Series and to compare these costs with the ongoing costs of
investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (April 21, 2005 (commencement of
operations) to June 30, 2005).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as potential
wire charges on redemptions. Therefore, the second line of the table is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds. In addition, if these transaction costs
were included, your costs would have been higher.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
4/21/05 6/30/05 4/21/05-6/30/05
-------------- -------------- ----------------
Actual $ 1,000.00 $ 1,014.00 $ 1.72
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,008.17 $ 1.72
*Expenses are equal to the Series' annualized expense ratio (for the period
April 21, 2005 (commencement of operations) to June 30, 2005) of 0.88%,
multiplied by the average account value over the period, multiplied by 71/365
(to reflect the period from April 21, 2005 (commencement of operations) to June
30, 2005). Expenses are based on the most recent fiscal period. The Series'
total return would have been lower had certain expenses not been waived during
the period.
1
<page>
Portfolio Composition as of June 30, 2005 (unaudited)
<graphic>
<pie chart>
SECTOR ALLOCATION*
Consumer Discretionary 10.7%
Consumer Staples 1.5%
Energy 2.9%
Financials 9.7%
Health Care 1.5%
Industrials 6.9%
Information Technology 1.5%
Materials 1.0%
Telecommunication Services 2.9%
Utilities 3.2%
U.S. Government Agencies 55.9%
Cash, short-term investments, and liabilities, less other assets 2.3%
*As a percentage of net assets.
<graphic>
<pie chart>
CREDIT QUALITY RATINGS1,2
Aaa 4.9%
Aa 15.7%
A 30.2%
Baa 39.2%
Ba 8.9%
B 1.1%
1As a percentage of total corporate bonds.
2Based on ratings from Moody's. The Series may use different ratings
provided by other rating agencies for purposes of determining compliance
with the Series' investment policies.
2
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING1 VALUE
(UNAUDITED) PRINCIPAL AMOUNT (NOTE 2)
----------- ----------------- ------------
CORPORATE BONDS - 41.8%
CONSUMER DISCRETIONARY - 10.7%
AUTOMOBILES - 2.9%
General Motors Acceptance Corp., 6.125%, 9/15/2006 Baa2 $ 5,060,000 $ 5,063,623
------------
MEDIA - 3.9%
AOL Time Warner (now known as Time Warner, Inc.), 6.75%,
4/15/2011 Baa1 2,655,000 2,942,231
Comcast Cable Communications, Inc., 6.75%, 1/30/2011 Baa2 2,285,000 2,520,938
The Walt Disney Co., 6.375%, 3/1/2012 Baa1 1,150,000 1,271,765
------------
6,734,934
------------
MULTILINE RETAIL - 2.2%
JC Penney Co., Inc., 8.00%, 3/1/2010 Ba1 1,465,000 1,611,500
Target Corp., 5.875%, 3/1/2012 A2 1,945,000 2,111,881
------------
3,723,381
------------
SPECIALTY RETAIL - 1.7%
The Gap, Inc.2, 9.55%, 12/15/2008 Baa3 1,090,000 1,256,794
Lowe's Companies, Inc., 8.25%, 6/1/2010 A2 1,420,000 1,669,488
------------
2,926,282
------------
TOTAL CONSUMER DISCRETIONARY 18,448,220
------------
CONSUMER STAPLES - 1.5%
BEVERAGES - 0.3%
Diageo Finance BV, 3.875%, 4/1/2011 (Netherlands) (Note 7) A2 430,000 420,557
------------
FOOD & STAPLES RETAILING - 0.5%
The Kroger Co., 7.25%, 6/1/2009 Baa2 750,000 822,834
------------
FOOD PRODUCTS - 0.2%
General Mills, Inc., 6.00%, 2/15/2012 Baa2 418,559
------------
HOUSEHOLD PRODUCTS - 0.5%
The Procter & Gamble Co., 4.85%, 12/15/2015 Aa3 835,000 858,470
------------
TOTAL CONSUMER STAPLES 2,520,420
------------
ENERGY - 2.9%
ENERGY EQUIPMENT & SERVICES - 1.9%
Transocean Sedco (now known as Transocean, Inc.), 6.625%, 4/15/2011
(Cayman Islands) (Note 7) Baa2 3,010,000 3,380,775
------------
OIL, GAS & CONSUMABLE FUELS - 1.0%
Amerada Hess Corp., 6.65%, 8/15/2011 Ba1 1,560,000 1,716,657
------------
TOTAL ENERGY 5,097,432
------------
The accompanying notes are an integral part of the financial statements.
3
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING1 VALUE
(UNAUDITED) PRINCIPAL AMOUNT (NOTE 2)
----------- ----------------- ------------
FINANCIALS - 9.7%
CAPITAL MARKETS - 2.2%
The Goldman Sachs Group, Inc., 6.875%, 1/15/2011 Aa3 $ 1,125,000 $ 1,254,411
Lehman Brothers Holdings, Inc., 6.625%, 1/18/2012 A1 1,125,000 1,256,495
Merrill Lynch & Co., Inc., 6.00%, 2/17/2009 Aa3 1,180,000 1,244,797
------------
3,755,703
------------
COMMERCIAL BANKS - 6.8%
Bank of America Corp., 7.40%, 1/15/2011 Aa3 2,895,000 3,313,267
PNC Funding Corp., 7.50%, 11/1/2009 A3 1,490,000 1,671,639
U.S. Bank National Association, 6.375%, 8/1/2011 Aa2 3,045,000 3,359,527
Wachovia Corp., 5.25%, 8/1/2014 A1 3,250,000 3,392,633
------------
11,737,066
------------
DIVERSIFIED FINANCIAL SERVICES - 0.7%
Citigroup, Inc., 5.00%, 9/15/2014 Aa2 1,245,000 1,273,568
------------
TOTAL FINANCIALS 16,766,337
------------
HEALTH CARE - 1.5%
PHARMACEUTICALS - 1.5%
Abbott Laboratories, 3.50%, 2/17/2009 A1 1,270,000 1,244,797
Schering-Plough Corp.2, 5.55%, 12/1/2013 Baa1 1,205,000 1,277,603
------------
TOTAL HEALTH CARE 2,522,400
------------
INDUSTRIALS - 6.9%
AEROSPACE & DEFENSE - 1.2%
Boeing Capital Corp., 6.50%, 2/15/2012 A3 1,135,000 1,269,604
Honeywell International, Inc., 7.50%, 3/1/2010 A2 735,000 837,487
------------
2,107,091
------------
AIR FREIGHT & LOGISTICS - 0.7%
FedEx Corp., 3.50%, 4/1/2009 Baa2 1,275,000 1,242,651
------------
AIRLINES - 0.5%
Southwest Airlines Co., 5.25%, 10/1/2014 Baa1 845,000 849,844
------------
INDUSTRIAL CONGLOMERATES - 2.6%
General Electric Capital Corp., 6.75%, 3/15/2032 Aaa 2,845,000 3,510,696
Tyco International Group S.A., 6.375%, 10/15/2011
(Luxembourg) (Note 7) Baa3 775,000 851,186
------------
4,361,882
------------
MACHINERY - 0.7%
John Deere Capital Corp., 7.00%, 3/15/2012 A3 1,095,000 1,256,285
------------
The accompanying notes are an integral part of the financial statements.
4
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING1 VALUE
(UNAUDITED) PRINCIPAL AMOUNT (NOTE 2)
----------- ----------------- ------------
INDUSTRIALS (continued)
ROAD & RAIL - 1.2%
CSX Corp., 6.75%, 3/15/2011 Baa2 $ 1,135,000 $ 1,253,001
Union Pacific Corp., 6.65%, 1/15/2011 Baa2 760,000 845,489
------------
2,098,490
------------
TOTAL INDUSTRIALS 11,916,243
------------
INFORMATION TECHNOLOGY - 1.5%
COMMUNICATIONS EQUIPMENT - 0.5%
Corning, Inc., 5.90%, 3/15/2014 Ba2 880,000 904,347
------------
IT SERVICES - 1.0%
First Data Corp., 3.90%, 10/1/2009 A1 1,695,000 1,668,697
------------
TOTAL INFORMATION TECHNOLOGY 2,573,044
------------
MATERIALS - 1.0%
METALS & MINING - 1.0%
Alcoa, Inc., 7.375%, 8/1/2010 A2 1,465,000 1,666,501
------------
TELECOMMUNICATION SERVICES - 2.9%
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.9%
AT&T Wireless (now known as New Cingular Wireless Services, Inc.),
7.875%, 3/1/2011 Baa2 1,450,000 1,685,141
Verizon Wireless Capital LLC, 5.375%, 12/15/2006 A3 1,620,000 1,650,974
------------
3,336,115
------------
WIRELESS TELECOMMUNICATION SERVICES - 1.0%
Vodafone Group plc, 7.75%, 2/15/2010 (United Kingdom) (Note 7) A2 1,460,000 1,667,006
------------
TOTAL TELECOMMUNICATION SERVICES 5,003,121
------------
UTILITIES - 3.2%
ELECTRIC UTILITIES - 2.7%
Allegheny Energy Supply Co. LLC3, 8.25%, 4/15/2012 Ba3 1,180,000 1,321,600
American Electric Power Co., Inc., 5.375%, 3/15/2010 Baa3 1,230,000 1,276,453
CenterPoint Energy Resources Corp., 7.875%, 4/1/2013 Ba1 710,000 843,360
TXU Energy Co., 7.00%, 3/15/2013 Baa2 1,125,000 1,254,636
------------
4,696,049
------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 0.5%
NRG Energy, Inc.3, 8.00%, 12/15/2013 B1 790,000 833,450
------------
TOTAL UTILITIES 5,529,499
------------
TOTAL CORPORATE BONDS
(Identified Cost $71,162,495) 72,043,217
------------
U.S. GOVERNMENT AGENCIES - 55.9%
Fannie Mae, Pool #244510, 5.50%, 12/1/2008 19,845 20,301
Fannie Mae, Pool #190549, 5.50%, 1/1/2009 22,052 22,567
Fannie Mae, Pool #50972, 5.50%, 1/1/2009 19,452 19,899
The accompanying notes are an integral part of the financial statements.
5
<page>
Investment Portfolio - June 30, 2005 (unaudited)
VALUE
PRINCIPAL AMOUNT (NOTE 2)
----------------- ------------
U.S. GOVERNMENT AGENCIES (continued)
Fannie Mae, Pool #663794, 5.50%, 9/1/2017 $ 185,202 $ 190,247
Fannie Mae, Pool #555389, 5.50%, 4/1/2018 774,883 795,989
Fannie Mae, Pool #697020, 5.50%, 5/1/2018 69,328 71,210
Fannie Mae, Pool #741610, 5.50%, 9/1/2018 782,143 803,376
Fannie Mae, Pool #761280, 5.50%, 2/1/2019 190,822 196,012
Fannie Mae, Pool #725793, 5.50%, 9/1/2019 886,181 910,239
Fannie Mae, Pool #B815122, 5.50%, 10/1/2019 1,554,049 1,595,956
Fannie Mae, Pool #741552, 6.50%, 9/1/2033 966,026 1,000,368
Fannie Mae, Pool #747607, 6.50%, 11/1/2033 125,390 129,848
Fannie Mae, Pool #776452, 6.50%, 1/1/2034 133,870 138,629
Fannie Mae, Pool #765848, 6.50%, 2/1/2034 146,113 151,265
Fannie Mae, Pool #766304, 6.50%, 3/1/2034 155,607 161,093
Fannie Mae, Pool #725686, 6.50%, 7/1/2034 273,916 283,953
Fannie Mae, Pool #782769, 6.50%, 7/1/2034 1,079,775 1,117,844
Fannie Mae, Pool #786281, 6.50%, 7/1/2034 123,622 127,981
Fannie Mae, Pool #786692, 6.50%, 8/1/2034 192,601 199,391
Fannie Mae, Pool #799657, 6.50%, 11/1/2034 1,191,919 1,233,942
Fannie Mae, Pool #812185, 4.50%, 2/1/2035 479,143 468,850
Fannie Mae, Pool #815409, 4.50%, 2/1/2035 238,634 233,507
Fannie Mae, Pool #815926, 4.50%, 4/1/2035 997,238 975,815
Fannie Mae, TBA4, 4.50%, 7/1/2020 5,465,000 5,439,380
Fannie Mae, TBA4, 5.00%, 7/15/2020 4,460,000 4,508,783
Fannie Mae, TBA4, 5.00%, 7/1/2035 9,710,000 9,710,000
Fannie Mae, TBA4, 6.00%, 7/1/2035 5,945,000 6,093,625
Fannie Mae, TBA4, 5.50%, 8/1/2035 14,920,000 15,097,175
Federal Home Loan Mortgage Corp., Pool #M90974, 4.50%, 3/1/2010 702,204 705,674
Federal Home Loan Mortgage Corp., TBA4, 4.50%, 7/1/2020 5,880,000 5,852,435
Federal Home Loan Mortgage Corp., TBA4, 5.00%, 8/15/2020 3,620,000 3,655,071
Federal Home Loan Mortgage Corp., TBA4, 5.50%, 7/1/2035 7,945,000 8,054,244
Federal Home Loan Mortgage Corp., TBA4, 6.00%, 7/1/2035 2,975,000 3,050,303
Federal Home Loan Mortgage Corp., TBA4, 5.00%, 8/1/2035 6,125,000 6,111,598
Federal Home Loan Mortgage Corp., Pool #E00593, 5.50%, 11/1/2013 26,569 27,295
Federal Home Loan Mortgage Corp., Pool #E91213, 5.50%, 9/1/2017 116,989 120,114
Federal Home Loan Mortgage Corp., Pool #B11112, 5.50%, 11/1/2018 627,911 644,815
Federal Home Loan Mortgage Corp., Pool #B11862, 5.50%, 1/1/2019 339,525 348,665
The accompanying notes are an integral part of the financial statements.
6
<page>
Investment Portfolio - June 30, 2005 (unaudited)
PRINCIPAL AMOUNT/ VALUE
SHARES (NOTE 2)
------------------ -------------
U.S. GOVERNMENT AGENCIES (continued)
Federal Home Loan Mortgage Corp., Pool #B16144, 5.50%, 8/1/2019 $ 209,354 $ 214,999
Federal Home Loan Mortgage Corp., Pool #A22067, 5.50%, 4/1/2020 239,100 245,591
Federal Home Loan Mortgage Corp., Pool #A25775, 6.50%, 5/1/2034 23,739 24,580
Federal Home Loan Mortgage Corp., Pool #G01741, 6.50%, 8/1/2034 987,804 1,022,817
Federal Home Loan Mortgage Corp., Pool #G01782, 6.50%, 10/1/2034 964,492 999,964
Federal Home Loan Mortgage Corp., Pool #487193, 6.50%, 2/1/2035 817,392 846,601
GNMA, Pool #487193, 5.00%, 4/15/2020 811,630 826,456
GNMA, Pool #563559, 6.50%, 4/15/2032 1,240,621 1,297,070
GNMA, Pool #552765, 6.50%, 9/15/2032 1,538,998 1,609,023
GNMA, TBA4, 5.50%, 7/15/2035 4,164,000 4,251,186
GNMA, TBA4, 6.00%, 7/15/2035 2,493,000 2,570,906
GNMA, TBA4, 5.00%, 9/15/2035 2,121,000 2,130,279
-------------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $95,926,302) 96,306,931
-------------
SHORT-TERM INVESTMENTS - 45.7%
Dreyfus Treasury Cash Management - Institutional Shares 4,664,819 4,664,819
Fannie Mae Discount Note, 8/11/2005 $ 6,125,000 6,103,585
Federal Home Loan Bank Discount Note, 7/13/2005 23,100,000 23,076,977
Federal Home Loan Bank Discount Note, 7/18/2005 11,345,000 11,329,357
Federal Home Loan Bank Discount Note, 7/20/2005 6,819,000 6,808,095
Federal Home Loan Bank Discount Note, 8/10/2005 14,920,000 14,841,721
Freddie Mac Discount Note, 7/12/2005 9,710,000 9,685,811
Freddie Mac Discount Note, 9/20/2005 2,122,000 2,105,958
-------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $78,660,498) 78,616,323
-------------
TOTAL INVESTMENTS - 143.4%
(Identified Cost $245,749,295) 246,966,471
LIABILITIES, LESS OTHER ASSETS - (43.4%) (74,741,051)
-------------
NET ASSETS - 100% $172,225,420
=============
1Credit ratings from Moody's (unaudited).
2The coupon rate will increase with every ratings downgrade and decrease with
every ratings upgrade. The coupon rate stated is the rate as of June 30, 2005.
3Represents securities sold under Rule 144A, which are exempt from registration
under the Securities Act of 1933, as amended. These securities have been
determined to be liquid under guidelines established by the Board of Directors.
These securities amount to $2,155,050, or 1.3%, of the Series' net assets as of
June 30, 2005.
4Security purchased on a forward commitment or when-issued basis. TBA - to be
announced.
The accompanying notes are an integral part of the financial statements.
7
<page>
Statement of Assets and Liabilities (unaudited)
June 30, 2005
ASSETS:
Investments, at value (identified cost, $245,749,295) (Note 2) $246,966,471
Cash 23,908
Interest receivable 1,510,557
Receivable for fund shares sold 146,045
Dividends receivable 11,002
------------
TOTAL ASSETS 248,657,983
------------
LIABILITIES:
Accrued management fees (Note 3) 98,453
Accrued fund accounting and transfer agent fees (Note 3) 18,459
Accrued Chief Compliance Officer services fees (Note 3) 672
Payable for securities purchased 76,306,015
Audit fees payable 6,697
Other payables and accrued expenses 2,267
------------
TOTAL LIABILITIES 76,432,563
------------
TOTAL NET ASSETS $172,225,420
============
NET ASSETS CONSIST OF:
Capital stock $ 169,870
Additional paid-in-capital 169,715,140
Undistributed net investment income 817,340
Accumulated net realized gain on investments 305,894
Net unrealized appreciation on investments 1,217,176
------------
TOTAL NET ASSETS $172,225,420
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE ($172,225,420/16,987,044 shares) $ 10.14
============
The accompanying notes are an integral part of the financial statements.
8
<page>
Statement of Operations (unaudited)
For the Period April 21, 2005 (commencement of operations) to June 30, 2005
INVESTMENT INCOME:
Interest $1,074,219
Dividends 29,053
----------
Total Investment Income 1,103,272
----------
EXPENSES:
Management fees (Note 3) 227,476
Fund accounting and transfer agent fees (Note 3) 40,088
Directors' fees (Note 3) 1,491
Chief Compliance Officer services fees (Note 3) 1,016
Custodian fees 3,776
Miscellaneous 12,085
----------
Total Expenses 285,932
----------
NET INVESTMENT INCOME 817,340
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 305,894
Net change in unrealized appreciation on investments 1,217,176
----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS 1,523,070
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $2,340,410
==========
The accompanying notes are an integral part of the financial statements.
9
<page>
Statement of Changes in Net Assets (unaudited)
FOR THE PERIOD 4/21/05
(COMMENCEMENT OF
OPERATIONS) TO 6/30/05
-----------------------
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income $ 817,340
Net realized gain on investments 305,894
Net change in unrealized appreciation on investments 1,217,176
-----------------------
Net increase from operations 2,340,410
-----------------------
CAPITAL STOCK ISSUED AND REPURCHASED:
Net increase from capital share transactions (Note 5) 169,885,010
-----------------------
Net increase in net assets 172,225,420
NET ASSETS:
Beginning of period -
-----------------------
END OF PERIOD (including undistributed net investment income of
817,340) $ 172,225,420
=======================
The accompanying notes are an integral part of the financial statements.
10
<page>
Financial Highlights (unaudited)
FOR THE PERIOD
4/21/05 1 TO 6/30/05
---------------------
PER SHARE DATA (FOR A SHARE OUTSTANDING THROUGHOUT
THE PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.00
---------------------
Income from investment operations:
Net investment income 0.05
Net realized and unrealized gain on investments 0.09
---------------------
Total from investment operations 0.14
---------------------
NET ASSET VALUE - END OF PERIOD $ 10.14
=====================
Total return2 1.40%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses 0.88%3
Net investment income 2.52%3
Portfolio turnover 63%
NET ASSETS - END OF PERIOD (000's omitted) $ 172,225
=====================
1Commencement of operations.
2Represents aggregate total return for the period indicated, and assumes
reinvestment of all distributions. Periods less than one year are not
annualized.
3Annualized.
The accompanying notes are an integral part of the financial statements.
11
<page>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Core Plus Bond Series (the "Series") is a no-load non-diversified series of
Exeter Fund, Inc. (the "Fund"). The Fund is organized in Maryland and is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
The Series' investment objective is to provide long-term total returns by
investing primarily in corporate fixed income securities and pass-through
securities.
The Fund's Advisor is Manning & Napier Advisors, Inc. (the "Advisor"), doing
business as Exeter Asset Management. Shares of the Series are offered to
investors, clients and employees of the Advisor and its affiliates. The total
authorized capital stock of the Fund consists of 1.7 billion shares of common
stock each having a par value of $0.01. As of June 30, 2005, 1.16 billion
shares have been designated in total among 21 series, of which 75 million have
been designated as Core Plus Bond Series common stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Debt securities, including government bonds, sovereign bonds, corporate bonds
and mortgage backed securities, will normally be valued on the basis of
evaluated bid prices provided by the Fund's pricing service.
Securities for which representative valuations or prices are not available from
the Fund's pricing service may be valued at fair value as determined in good
faith by the Advisor under procedures approved by and under the general
supervision and responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value. Investments in open-end investment
companies are valued at their net asset value per share on valuation date.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on trade date. Dividend income is
recorded on the ex-dividend date. Interest income, including amortization of
premium and accretion of discounts, is earned from settlement date and accrued
daily. 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. 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
12
<page>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FOREIGN CURRENCY TRANSLATION (continued)
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.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT
The Series may purchase securities on a when-issued basis or forward commitment.
These transactions involve a commitment by the Series to purchase securities for
a predetermined price with payment and delivery taking place beyond the
customary settlement period. When such purchases are outstanding, the Series
will designate liquid assets in an amount sufficient to meet the purchase price.
When purchasing a security on a delayed delivery basis, the Series assumes the
rights and risks of ownership of the security, including the risk of price and
yield fluctuations, and takes such fluctuations into account when determining
its net asset value. The Series may sell the when-issued securities before they
are delivered, which may result in a capital gain or loss.
In connection with its ability to purchase or sell securities on a forward
commitment basis, the Series may enter into forward roll transactions
principally using To Be Announced (TBA) securities. Forward roll transactions
require the sale of securities for delivery in the current month, and a
simultaneous agreement to repurchase substantially similar (same type, coupon
and maturity) securities on a specified future date. Risks of entering into
forward roll transactions include the potential inability of the counterparty to
meet the terms of the agreement; the potential of the Series to receive inferior
securities at redelivery as compared to the securities sold to the counterparty;
counterparty credit risk; and the potential pay down speed variance between the
mortgage-backed pools. During the roll period, the Series forgoes principal and
interest paid on the securities.
RESTRICTED SECURITIES
Restricted securities are purchased in private placement transactions, are not
registered under the Securities Act of 1933, as amended, and may have
contractual restrictions on resale. Information regarding restricted securities
is included at the end of the Series' Investment Portfolio.
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 accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
13
<page>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory Agreement (the "Agreement") with the
Advisor, for which the Series pays a fee, computed daily and payable monthly, at
an annual rate of 0.70% 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 (except a percentage of the Fund's
Chief Compliance Officer's salary, which is paid by the Fund, and the Special
Assistant Secretary's salary, which is paid by BISYS Fund Services Ohio, Inc.
("BISYS")), and of all Directors who are "affiliated persons" of the Fund, or of
the Advisor, and all personnel of the Fund, or of the Advisor, performing
services relating to research, statistical and investment activities, are paid
by the Advisor. Each "non-affiliated" Director receives an annual stipend, which
is allocated among all the active series of the Fund. In addition, these
Directors also receive a per meeting fee for each active series of the Fund plus
a fee for each committee meeting attended.
The Advisor has contractually agreed, until at least April 30, 2006, to waive
its fee and, if necessary, pay other operating expenses of the Series in order
to maintain total expenses for the Series at no more than 0.90% of average daily
net assets each year. For the period April 21, 2005 (commencement of operations)
to June 30, 2005, the Advisor did not waive its management fee or reimburse any
expenses of the Series.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
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 pays the Advisor an annual fee of 0.15% of the Fund's average daily net
assets up to $900 million, 0.11% for the Fund's average daily net assets between
$900 million and $1.5 billion, and 0.07% for the Fund's average daily net assets
over $1.5 billion. These fee rates are scheduled to be reduced each year
through 2007. Additionally, certain transaction and account-based fees and
out-of-pocket expenses, including charges for reporting relating to the Fund's
Compliance Program, are charged. Expenses not directly attributable to a series
are allocated based on each series' relative net assets or number of accounts,
depending on the expense. The Advisor has an agreement with BISYS under which
BISYS serves as sub-accounting services and sub-transfer agent.
4. PURCHASES AND SALES OF SECURITIES
For the period April 21, 2005 (commencement of operations) to June 30, 2005,
purchases and sales of securities, other than United States Government
securities and short-term securities, were $71,280,409 and $0, respectively.
Purchases and sales of United States Government securities, other than
short-term securities, were $170,399,141 and $74,750,201, respectively.
14
<page>
Notes to Financial Statements (unaudited)
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Core Plus Bond Series were:
FOR THE PERIOD 4/21/05 (COMMENCEMENT
OF OPERATIONS) TO 6/30/05
----------------------------------------------------
Shares Amount
------------------------------------- -------------
Sold 17,078,488 $170,802,297
Repurchased (91,444) (917,287)
------------------------------------- -------------
Total 16,987,044 $169,885,010
===================================== =============
Substantially all of the Series' shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options,
forward foreign currency exchange contracts and futures contracts and may
involve, to a varying degree, elements of risk in excess of the amounts
recognized for financial statement purposes. No such investments were held by
the Series on June 30, 2005.
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 accounting principles generally accepted in the United
States of America. The Series may periodically make reclassifications among its
capital accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations, without
impacting the Series' net asset value. Any such reclassifications are not
reflected in the financial highlights.
At June 30, 2005, the identified cost of investments for federal income tax
purposes, the resulting gross unrealized appreciation and depreciation, and the
net unrealized appreciation were as follows:
Cost for federal income tax purposes $245,749,295
Unrealized appreciation $ 1,304,803
Unrealized depreciation (87,627)
------------
Net unrealized appreciation $ 1,217,176
============
15
<page>
[This page intentionally left blank]
16
<page>
[This page intentionally left blank]
17
<page>
Literature Requests (unaudited)
PROXY VOTING POLICIES AND PROCEDURES
- --------------------------------------------------------------------------------
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available, without charge,
upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission's (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30th is available,
without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
QUARTERLY PORTFOLIO HOLDINGS
- --------------------------------------------------------------------------------
The Series' complete schedule of portfolio holdings for the 1st and 3rd quarters
of each fiscal year are provided on Form N-Q, and are available, without charge,
upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
The Series' Form N-Q may be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION (SAI)
- --------------------------------------------------------------------------------
The prospectus and SAI provide additional information about each Series,
including charges, expenses and risks. These documents are available, without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
On the Advisor's web site
http://www.manningnapieradvisors.com/www/exeter_fund.asp
ADDITIONAL INFORMATION AVAILABLE AT
WWW.MANNINGNAPIERADVISORS.COM/WWW/EXETER_FUND.ASP
- --------------------------------------------------------------------------------
1. Fund Holdings - month-end
2. Fund Holdings - quarter-end
3. Shareholder Report - Annual
4. Shareholder Report - Semi-Annual
18
<page>
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2005
Ohio Tax Exempt Series
<page>
Shareholder Expense Example (unaudited)
As a shareholder of the Series, you may incur two types of costs: (1)
transaction costs, including potential wire charges on redemptions and (2)
ongoing costs, including management fees and other Series expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Series and to compare these costs with the ongoing costs of
investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2005 to June 30, 2005).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as potential
wire charges on redemptions. Therefore, the second line of the table is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds. In addition, if these transaction costs
were included, your costs would have been higher.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
1/1/05 6/30/05 1/1/05-6/30/05
-------------- -------------- ---------------
Actual $ 1,000.00 $ 1,023.40 $ 4.26
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,020.58 $ 4.26
.. *Expenses are equal to the Series' annualized expense ratio (for the six-month
period) of 0.85%, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period). Expenses are based
on the most recent fiscal half year. The Series' total return would have been
lower had certain expenses not been waived during the period.
1
<page>
Portfolio Composition as of June 30, 2005 (unaudited)
<graphic>
<pie chart>
BOND TYPES1
General Obligation Bonds 87.3%
Revenue Bonds 10.0%
Cash, short-term investments, and liabilities, less other assets 2.7%
1As a percentage of net assets.
<graphic>
<pie chart>
CREDIT QUALITY RATINGS2,3
Aaa 85.2%
Aa 12.1%
Unrated Investments, such as cash, short-term investments, and liabilities, less other assets 2.7%
2As a percentage of net assets.
3Based on ratings from Moody's. The Series may use different ratings provided by other
rating agencies for purposes of determining compliance with the Series' investment policies.
2
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- ---------
OHIO MUNICIPAL SECURITIES - 97.3%
Amherst Exempt Village School District, G.O. Bond, FGIC, 4.75%, 12/1/2010 Aaa $ 200,000 $216,186
Bedford Heights, G.O. Bond, Series A, AMBAC, 5.65%, 12/1/2014 Aaa 60,000 65,761
Big Walnut Local School District, Delaware County, School Facilities Construction & Impt.
G.O. Bond, FSA, 4.50%, 12/1/2029 Aaa 200,000 201,216
Chagrin Falls Exempt Village School District, G.O. Bond,
5.55%, 12/1/2022 Aa3 100,000 107,420
Chillicothe Water System, Revenue Bond, MBIA, 4.00%, 12/1/2009 Aaa 125,000 130,046
Cincinnati, Various Purposes, G.O. Bond, Series A, 5.00%, 12/1/2011 Aa1 200,000 220,334
Cleveland Heights & University Heights County School District,
Library Impt., G.O. Bond, 5.125%, 12/1/2026 Aa3 200,000 213,126
Cleveland Waterworks, Prerefunded Balance, Revenue Bond, Series I,
FSA, 5.00%, 1/1/2028 Aaa 110,000 116,754
Cleveland Waterworks, Unrefunded Balance, Revenue Bond, Series I,
FSA, 5.00%, 1/1/2028 Aaa 155,000 162,021
Delaware City School District, G.O. Bond, FSA, 5.00%, 12/1/2025 Aaa 300,000 317,238
Dublin City School District, School Facilities Construction & Impt.,
G.O. Bond, 5.375%, 12/1/2017 Aa2 350,000 391,090
Eaton City School District, G.O. Bond, FGIC, 5.00%, 12/1/2029 Aaa 200,000 212,408
Erie County, G.O. Bond, FGIC, 4.75%, 10/1/2019 Aaa 175,000 182,373
Euclid, G.O. Bond, MBIA, 4.25%, 12/1/2023 Aaa 465,000 466,781
Fairfield County, Building Impt., G.O. Bond, 5.00%, 12/1/2018 Aa3 250,000 271,985
Field Local School District, School Facilities Construction & Impt., G.O. Bond,
AMBAC, 5.00%, 12/1/2026 Aaa 200,000 215,388
Garfield Heights City School District, School Impt., G.O. Bond, MBIA, 5.00%, 12/15/2026 Aaa 250,000 263,372
Genoa Area Local School District, G.O. Bond, FGIC, 5.40%, 12/1/2027 Aaa 150,000 165,150
Greene County Sewer System, Governmental Enterprise, Revenue Bond,
AMBAC, 5.625%, 12/1/2025 Aaa 235,000 266,589
Highland Local School District, School Impt., G.O. Bond, FSA, 5.00%, 12/1/2009 Aaa 190,000 205,230
Hilliard School District, G.O. Bond, Series A, FGIC, 5.00%, 12/1/2020 Aaa 225,000 234,490
Jackson Local School District, Stark & Summit Counties, G.O. Bond, FGIC,
3.50%, 12/1/2011 Aaa 210,000 213,223
The accompanying notes are an integral part of the financial statements.
3
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- ---------
OHIO MUNICIPAL SECURITIES (continued)
Jackson Local School District, Stark & Summit Counties, Construction & Impt.,
G.O. Bond, FGIC, 5.00%, 12/1/2030 Aaa $ 200,000 $213,328
Kettering City School District, School Impt., Prerefunded Balance, G.O. Bond,
FGIC, 5.25%, 12/1/2022 Aaa 60,000 61,268
Kings Local School District, Prerefunded Balance, G.O. Bond, FGIC, 5.50%, 12/1/2021 Aaa 115,000 116,180
Lakota Local School District, G.O. Bond, AMBAC, 5.75%, 12/1/2006 Aaa 50,000 50,665
Licking County Joint Vocational School District, School Facilities Construction & Impt.,
G.O. Bond, MBIA, 5.00%, 12/1/2007 Aaa 500,000 525,945
Lorain City School District, Classroom Facilities Impt., G.O. Bond, MBIA, 4.75%, 12/1/2025 Aaa 400,000 416,304
Loveland City School District, G.O. Bond, Series A, MBIA, 5.00%, 12/1/2024 Aaa 200,000 218,216
Mansfield City School District, Various Purposes, G.O. Bond, MBIA, 5.75%, 12/1/2022 Aaa 250,000 276,640
Marysville Exempt Village School District, Prerefunded Balance, G.O. Bond,
MBIA, 5.75%, 12/1/2023 Aaa 315,000 322,349
Maumee, G.O. Bond, MBIA, 4.125%, 12/1/2018 Aaa 375,000 382,159
Maumee City School District, School Facilities Construction & Impt., G.O. Bond,
FSA, 4.60%, 12/1/2031 Aaa 260,000 263,580
Medina City School District, G.O. Bond, FGIC, 5.00%, 12/1/2018 Aaa 150,000 158,575
Mentor, G.O. Bond, 5.25%, 12/1/2017 Aa3 100,000 105,056
Minster Local School District, G.O. Bond, FSA, 4.25%, 12/1/2018 AAA1 250,000 255,892
Mississinawa Valley Local School District, Classroom Facilities, G.O. Bond, FSA,
5.75%, 12/1/2022 Aaa 205,000 233,384
North Olmsted, G.O. Bond, AMBAC, 5.00%, 12/1/2016 Aaa 125,000 131,601
Northwood Local School District, G.O. Bond, AMBAC, 5.55%, 12/1/2006 Aaa 65,000 67,545
Ohio State, Common Schools Capital Facilities, G.O. Bond, Series A, 4.75%, 6/15/2020 Aa1 250,000 260,178
Ohio State, Infrastructure Impt., G.O. Bond, Series A, 5.00%, 8/1/2009 Aa1 200,000 215,350
Ohio State, Infrastructure Impt., Prerefunded Balance, G.O. Bond, 5.20%, 8/1/2010 Aa1 50,000 52,963
Ohio State Turnpike Commission, Prerefunded Balance, Revenue Bond, Series A,
MBIA, 5.70%, 2/15/2017 Aaa 125,000 129,870
The accompanying notes are an integral part of the financial statements.
4
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- ---------
OHIO MUNICIPAL SECURITIES (continued)
Ohio State Water Development Authority, Fresh Water, Revenue
Bond, FSA, 5.125%, 12/1/2023 Aaa $ 300,000 $321,717
Ohio State Water Development Authority, Pollution Control,
Revenue Bond, 5.25%, 12/1/2015 Aaa 200,000 229,636
Ohio State Water Development Authority, Pure Water,
Revenue Bond, Series I, AMBAC, 6.00%, 12/1/2016 Aaa 40,000 46,245
Ontario Local School District, G.O. Bond, FSA, 5.00%, 12/1/2023 AAA1 350,000 370,346
Orange City School District, G.O. Bond, 5.00%, 12/1/2023 Aaa 305,000 324,368
Painesville City School District, School Impt., G.O. Bond, FGIC, 4.50%, 12/1/2025 Aaa 170,000 173,001
Plain Local School District, G.O. Bond, FGIC, 5.00%, 12/1/2025 Aaa 315,000 335,236
Plain Local School District, G.O. Bond, FGIC, 5.00%, 12/1/2029 Aaa 225,000 236,808
Plain Local School District, G.O. Bond, FGIC, 5.00%, 12/1/2030 Aaa 140,000 147,879
Sidney City School District, School Impt., G.O. Bond,
Series B, FGIC, 5.10%, 12/1/2019 Aaa 150,000 164,942
South-Western City School District, Franklin & Pickway County, G.O. Bond,
AMBAC, 4.75%, 12/1/2026 Aaa 175,000 178,486
Tallmadge City School Disctrict, School Facilities, G.O. Bond, FSA, 5.00%, 12/1/2031 AAA1 200,000 214,374
Tecumseh Local School District, School Impt., G.O. Bond, FGIC, 4.75%, 12/1/2027 Aaa 195,000 202,344
Toledo, Prerefunded Balance, G.O. Bond, AMBAC, 5.95%, 12/1/2015 Aaa 175,000 180,938
Toledo Sewer System, Unrefunded Balance, Revenue Bond, AMBAC, 6.35%, 11/15/2017 Aaa 150,000 153,434
Troy City School District, School Impt., G.O. Bond, FSA, 4.00%, 12/1/2014 Aaa 250,000 258,995
Twinsburg Local School District, Prerefunded Balance, G.O. Bond, FGIC, 5.90%, 12/1/2021 Aaa 325,000 345,888
Upper Arlington City School District, Capital Appreciation, G.O. Bond, MBIA,
5.25%, 12/1/2022 Aaa 255,000 266,638
Van Buren Local School District, School Facilities Construction & Impt., G.O. Bond,
FSA, 5.25%, 12/1/2016 Aaa 300,000 331,029
Van Wert City School District, School Impt., G.O. Bond, FGIC, 5.00%, 12/1/2020 Aaa 500,000 537,455
Vandalia, G.O. Bond, AMBAC, 5.00%, 12/1/2015 Aaa 235,000 261,336
Warren, Prerefunded Balance, G.O. Bond, AMBAC, 5.20%, 11/15/2013 Aaa 15,000 15,148
The accompanying notes are an integral part of the financial statements.
5
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT PRINCIPAL
RATING* AMOUNT/ VALUE
(UNAUDITED) SHARES (NOTE 2)
----------- ---------- ------------
OHIO MUNICIPAL SECURITIES (continued)
Westerville City School District, G.O. Bond, MBIA, 5.00%, 12/1/2027 Aaa $ 200,000 $ 209,584
Wood County, G.O. Bond, 5.40%, 12/1/2013 Aa3 50,000 50,357
Wyoming City School District, G.O. Bond, Series B, FGIC, 5.15%, 12/1/2027 Aaa 300,000 318,984
------------
TOTAL OHIO MUNICIPAL SECURITIES
(Identified Cost $14,454,095) 15,170,397
------------
SHORT-TERM INVESTMENTS - 2.8%
Dreyfus Municipal Reserves - Class R
(Identified Cost $440,075) 440,075 440,075
------------
TOTAL INVESTMENTS - 100.1%
(Identified Cost $14,894,170) 15,610,472
LIABILITIES, LESS OTHER ASSETS - (0.1%) (10,013)
------------
NET ASSETS - 100% $15,600,459
============
KEY:
G.O. Bond - General Obligation Bond
Impt. - Improvement
Scheduled principal and interest payments are guaranteed by:
AMBAC (AMBAC Assurance Corp.)
FGIC (Financial Guaranty Insurance Co.)
FSA (Financial Security Assurance)
MBIA (MBIA, Inc.)
The insurance does not guarantee the market value of the municipal bonds.
*Credit ratings from Moody's (unaudited)
1Credit ratings from S&P (unaudited)
The Series' portfolio holds, as a percentage of net assets, greater than 10% in
bonds insured by the following companies: FGIC - 27.2%; MBIA - 23.1%; FSA -
20.8%; AMBAC - 10.5%.
The accompanying notes are an integral part of the financial statements.
6
<page>
Statement of Assets and Liabilities (unaudited)
June 30, 2005
ASSETS:
Investments, at value (identified cost $14,894,170) (Note 2) $15,610,472
Interest receivable 75,128
Dividends receivable 835
-----------
TOTAL ASSETS 15,686,435
-----------
LIABILITIES:
Accrued management fees (Note 3) 4,554
Accrued fund accounting and transfer agent fees (Note 3) 2,435
Accrued Chief Compliance Officer services fees (Note 3) 1,062
Payable for fund shares repurchased 62,235
Audit fees payable 14,350
Other payables and accrued expenses 1,340
-----------
TOTAL LIABILITIES 85,976
-----------
TOTAL NET ASSETS $15,600,459
===========
NET ASSETS CONSIST OF:
Capital stock $ 14,645
Additional paid-in-capital 14,800,690
Undistributed net investment income 59,696
Accumulated net realized gain on investments 9,126
Net unrealized appreciation on investments 716,302
-----------
TOTAL NET ASSETS $15,600,459
===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE ($15,600,459/1,464,512 shares) $ 10.65
===========
The accompanying notes are an integral part of the financial statements.
7
<page>
Statement of Operations (unaudited)
For the Six Months Ended June 30, 2005
INVESTMENT INCOME:
Interest $321,485
Dividends 3,731
---------
Total Investment Income 325,216
---------
EXPENSES:
Management fees (Note 3) 36,834
Fund accounting and transfer agent fees (Note 3) 14,507
Directors' fees (Note 3) 3,459
Chief Compliance Officer services fees (Note 3) 2,988
Audit fees 11,530
Custodian fees 1,488
Miscellaneous 3,442
---------
Total Expenses 74,248
Less reduction of expenses (Note 3) (11,594)
---------
Net Expenses 62,654
---------
NET INVESTMENT INCOME 262,562
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized loss on investments (1,045)
Net change in unrealized appreciation on investments 86,981
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS 85,936
---------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $348,498
=========
The accompanying notes are an integral part of the financial statements.
8
<page>
Statements of Changes in Net Assets
FOR THE SIX
MONTHS ENDED FOR THE
6/30/05 YEAR ENDED
(UNAUDITED) 12/31/04
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 262,562 $ 467,775
Net realized gain (loss) on investments (1,045) 36,500
Net change in unrealized appreciation on
investments 86,981 (59,316)
-------------- ------------
Net increase from operations 348,498 444,959
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 8):
From net investment income (262,595) (591,068)
From net realized gain on investments - (17,784)
-------------- ------------
Total distributions to shareholders (262,595) (608,852)
-------------- ------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase from capital share transactions
(Note 5) 1,394,599 2,191,949
-------------- ------------
Net increase in net assets 1,480,502 2,028,056
NET ASSETS:
Beginning of period 14,119,957 12,091,901
-------------- ------------
END OF PERIOD (including undistributed net investment
income of $59,696 and $59,729, respectively) $ 15,600,459 $14,119,957
============== ============
The accompanying notes are an integral part of the financial statements.
9
<page>
Financial Highlights
FOR THE SIX
MONTHS ENDED
6/30/05 FOR THE YEARS ENDED
(UNAUDITED) 12/31/04 12/31/03 12/31/02 12/31/01
-------------- --------------------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.59 $ 10.75 $ 10.74 $ 10.31 $ 10.29
-------------- --------------------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.18 0.38 0.42 0.41 0.46
Net realized and unrealized gain (loss) on
investments 0.07 (0.04) 0.03 0.43 (0.03)
-------------- --------------------- ---------- ---------- ----------
Total from investment operations 0.25 0.34 0.45 0.84 0.43
-------------- --------------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.19) (0.49) (0.39) (0.40) (0.41)
From net realized gain on investments - (0.01) (0.05) (0.01) -
-------------- --------------------- ---------- ---------- ----------
Total distributions to shareholders (0.19) (0.50) (0.44) (0.41) (0.41)
-------------- --------------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 10.65 $ 10.59 $ 10.75 $ 10.74 $ 10.31
============== ===================== ========== ========== ==========
Total return1 2.34% 3.28% 4.23% 8.22% 4.18%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 0.85%2 0.85% 0.85% 0.85% 0.85%
Net investment income 3.56%2 3.64% 3.91% 4.09% 4.27%
Portfolio turnover 2% 7% 14% 8% 9%
NET ASSETS - END OF PERIOD (000's omitted) $ 15,600 $ 14,120 $ 12,092 $ 11,785 $ 9,833
============== ===================== ========== ========== ==========
FOR THE YEAR ENDED
12/31/00
----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 9.56
----------
Income (loss) from investment operations:
Net investment income 0.44
Net realized and unrealized gain (loss) on
investments 0.70
----------
Total from investment operations 1.14
----------
Less distributions to shareholders:
From net investment income (0.41)
From net realized gain on investments -
----------
Total distributions to shareholders (0.41)
----------
NET ASSET VALUE - END OF PERIOD $ 10.29
==========
Total return1 12.21%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses* 0.85%
Net investment income 4.57%
Portfolio turnover 14%
NET ASSETS - END OF PERIOD (000's omitted) $ 9,431
==========
*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:
0.16%2 0.20% 0.59% 0.68% 0.74% 0.43%
1Represents aggregate total return for the period indicated, and assumes
reinvestment of all distributions. Total return would have been lower had
certain expenses not been waived or reimbursed during the period. Periods less
than one year are not annualized.
2Annualized.
The accompanying notes are an integral part of the financial statements.
10
<page>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Ohio Tax Exempt Series (the "Series") is a no-load diversified series of Exeter
Fund, Inc. (the "Fund"). The Fund is organized in Maryland and is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company.
The Series' investment objective is to provide as high a level of current income
exempt from federal income tax and Ohio State personal income tax as the Advisor
believes is consistent with the preservation of capital.
The Fund's Advisor is Manning & Napier Advisors, Inc. (the "Advisor"), doing
business as Exeter Asset Management. Shares of the Series are offered to
investors, clients and employees of the Advisor and its affiliates. The total
authorized capital stock of the Fund consists of 1.7 billion shares of common
stock each having a par value of $0.01. As of June 30, 2005, 1.16 billion
shares have been designated in total among 21 series, of which 50 million have
been designated as Ohio Tax Exempt Series common stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Municipal securities will normally be valued on the basis of market valuations
provided by an independent pricing service (the "Service"). The Service
utilizes the latest price quotations and a matrix system (which considers such
factors as security prices of similar securities, yields, maturities and
ratings). The Service has been approved by the Fund's Board of Directors.
Securities for which representative valuations or prices are not available from
the Fund's pricing service may be valued at fair value as determined in good
faith by the Advisor under procedures approved by and under the general
supervision and responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value. Investments in open-end investment
companies are valued at their net asset value per share on valuation date.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on trade date. Interest income,
including amortization of premium and accretion of discounts, is earned from
settlement date and accrued daily. 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 gains on
investments, in accordance with requirements of the Internal Revenue
11
<page>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL TAXES (continued)
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 quarterly.
Distributions of net realized gains are made annually. An additional
distribution may be necessary to avoid taxation of the Series. Distributions
are recorded on the ex-dividend date.
OTHER
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of 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 0.50% of the Series' average daily net assets.
Under the Agreement, personnel of the Advisor provide the Series with advice and
assistance in the choice of investments and the execution of securities
transactions, and otherwise maintain the Series' organization. The Advisor also
provides the Fund with necessary office space and fund administration services.
The salaries of all officers of the Fund (except a percentage of the Fund's
Chief Compliance Officer's salary, which is paid by the Fund, and the Special
Assistant Secretary's salary, which is paid by BISYS Fund Services Ohio, Inc.
("BISYS")), and of all Directors who are "affiliated persons" of the Fund, or of
the Advisor, and all personnel of the Fund, or of the Advisor, performing
services relating to research, statistical and investment activities, are paid
by the Advisor. Each "non-affiliated" Director receives an annual stipend, which
is allocated among all the active series of the Fund. In addition, these
Directors also receive a per meeting fee for each active series of the Fund plus
a fee for each committee meeting attended.
The Advisor has contractually agreed, until at least April 30, 2006, to waive
its fee and, if necessary, pay other operating expenses of the Series in order
to maintain total expenses for the Series at no more than 0.85% of average daily
net assets each year. Accordingly, the Advisor waived fees of $11,594 for the
six months ended June 30, 2005, 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 pays the Advisor an annual fee of 0.15% of the Fund's average daily net
assets up to $900 million, 0.11% for the
12
<page>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
Fund's average daily net assets between $900 million and $1.5 billion, and 0.07%
for the Fund's average daily net assets over $1.5 billion. These fee rates are
scheduled to be reduced each year through 2007. Additionally, certain
transaction and account-based fees and out-of-pocket expenses, including charges
for reporting relating to the Fund's Compliance Program, are charged. Expenses
not directly attributable to a series are allocated based on each series'
relative net assets or number of accounts, depending on the expense. The
Advisor has an agreement with BISYS under which BISYS serves as sub-accounting
services and sub-transfer agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2005, purchases and sales of securities, other
than short-term securities, were $1,561,728 and $266,999, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Ohio Tax Exempt Series were:
FOR THE SIX MONTHS FOR THE YEAR
ENDED 6/30/05 ENDED 12/31/04
------------------------------------- -----------------------
Shares Amount Shares Amount
------------------- ---------------- --------- ------------
Sold 170,388 $ 1,808,603 272,911 $ 2,874,653
Reinvested 24,560 258,559 57,048 605,147
Repurchased (63,319) (672,563) (122,075) (1,287,851)
------------------- ---------------- --------- ------------
Total 131,629 $ 1,394,599 207,884 $ 2,191,949
=================== ================ ========= ============
Substantially all of the Series' shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options and
futures contracts and may involve, to a varying degree, elements of risk in
excess of the amounts recognized for financial statement purposes. No such
investments were held by the Series on June 30, 2005.
7. CONCENTRATION OF CREDIT
The Series primarily invests in debt obligations issued by the State of Ohio and
its political subdivisions, agencies and public authorities to obtain funds for
various public purposes. The Series is more susceptible to factors adversely
affecting issues of Ohio municipal securities than is a municipal bond fund that
is not concentrated in these issues to the same extent.
8. FEDERAL INCOME TAX INFORMATION
The amount and characterization of certain income and capital gains to be
distributed are determined in accordance with federal income tax regulations,
which may differ from accounting principles generally accepted in the United
States of America. The Series may periodically make reclassifications among its
capital accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations,
13
<page>
Notes to Financial Statements (unaudited)
8. FEDERAL INCOME TAX INFORMATION (continued)
without impacting the Series' net asset value. Any such reclassifications are
not reflected in the financial highlights.
The final determination of the tax character of current year distributions will
be made at the conclusion of the fiscal year. The tax character of
distributions paid for the year ended December 31, 2004 were as follows:
Ordinary income $ 25,550
Tax exempt income 565,518
Long-term capital gains 17,784
At June 30, 2005, the identified cost of investments for federal income tax
purposes, the resulting gross unrealized appreciation and depreciation, and the
net unrealized appreciation were as follows:
Cost for federal income tax purposes $14,886,231
Unrealized appreciation $ 742,462
Unrealized depreciation (18,221)
------------
Net unrealized appreciation $ 724,241
============
14
<page>
Literature Requests (unaudited)
PROXY VOTING POLICIES AND PROCEDURES
- --------------------------------------------------------------------------------
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available, without charge,
upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission's (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30th is available,
without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
QUARTERLY PORTFOLIO HOLDINGS
- --------------------------------------------------------------------------------
The Series' complete schedule of portfolio holdings for the 1st and 3rd quarters
of each fiscal year are provided on Form N-Q, and are available, without charge,
upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
The Series' Form N-Q may be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION (SAI)
- --------------------------------------------------------------------------------
The prospectus and SAI provide additional information about each Series,
including charges, expenses and risks. These documents are available, without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
On the Advisor's web site
http://www.manningnapieradvisors.com/www/exeter_fund.asp
ADDITIONAL INFORMATION AVAILABLE AT
WWW.MANNINGNAPIERADVISORS.COM/WWW/EXETER_FUND.ASP
- --------------------------------------------------------------------------------
1. Fund Holdings - month-end
2. Fund Holdings - quarter-end
3. Shareholder Report - Annual
4. Shareholder Report - Semi-Annual
15
<page>
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2005
New York Tax Exempt Series
<page>
<page>
Shareholder Expense Example (unaudited)
As a shareholder of the Series, you may incur two types of costs: (1)
transaction costs, including potential wire charges on redemptions and (2)
ongoing costs, including management fees and other Series expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Series and to compare these costs with the ongoing costs of
investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2005 to June 30, 2005).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as potential
wire charges on redemptions. Therefore, the second line of the table is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds. In addition, if these transaction costs
were included, your costs would have been higher.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
1/1/05 6/30/05 1/1/05-6/30/05
-------------- -------------- ---------------
Actual $ 1,000.00 $ 1,019.60 $ 3.66
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,021.17 $ 3.66
*Expenses are equal to the Series' annualized expense ratio (for the six-month
period) of 0.73%, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period). Expenses are based
on the most recent fiscal half year.
1
<page>
Portfolio Composition as of June 30, 2005 (unaudited)
<graphic>
<pie chart>
BOND TYPES1
Certificate of Participation 0.3%
General Obligation Bonds 62.2%
Revenue Bonds 32.3%
Cash, short-term investments, and other assets, less liabilities 5.2%
1As a percentage of net assets.
<graphic>
<pie chart>
CREDIT QUALITY RATINGS2,3
Aaa 88.2%
Aa 4.2%
A 2.0%
Baa 0.4%
Unrated investments, such as cash, short-term investments, and other assets, less liabilities 5.2%
2As a percentage of net assets.
3Based on ratings from Moody's. The Series may use different ratings provided by other
rating agencies for purposes of determining compliance with the Series' investment policies.
2
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
NEW YORK MUNICIPAL SECURITIES - 94.8%
Amherst, Public Impt., G.O. Bond, FGIC, 4.625%, 3/1/2007 Aaa $ 200,000 $ 206,214
Arlington Central School District, G.O. Bond, MBIA, 4.625%, 12/15/2024 Aaa 845,000 873,375
Arlington Central School District, G.O. Bond, MBIA, 4.625%, 12/15/2025 Aaa 365,000 376,465
Auburn City School District, G.O. Bond, FGIC, 4.55%, 12/1/2006 Aaa 385,000 395,407
Bayport-Blue Point Union Free School District, G.O. Bond, FGIC, 5.60%, 6/15/2012 Aaa 250,000 261,590
Beacon City School District, G.O. Bond, MBIA, 5.60%, 7/15/2019 Aaa 500,000 555,320
Brighton Central School District, G.O. Bond, FSA, 5.40%, 6/1/2012 Aaa 250,000 261,377
Brookhaven, Public Impt., G.O. Bond, FGIC, 4.00%, 5/1/2023 Aaa 900,000 886,410
Brookhaven, Public Impt., G.O. Bond, FGIC, 4.00%, 5/1/2024 Aaa 815,000 799,091
Broome County, Public Safety Facility, Certificate of Participation, MBIA, 5.00%, 4/1/2006 Aaa 250,000 253,445
Buffalo, G.O. Bond, Series A, MBIA, 5.00%, 12/1/2009 Aaa 150,000 154,422
Buffalo, G.O. Bond, Series A, AMBAC, 5.20%, 2/1/2010 Aaa 250,000 263,810
Buffalo Municipal Water Finance Authority, Water Systems, Revenue Bond,
Series A, FGIC, 5.00%, 7/1/2028 Aaa 750,000 791,422
Cattaraugus County, Public Impt., G.O. Bond, AMBAC, 5.00%, 8/1/2007 Aaa 300,000 313,692
Clyde-Savannah Central School District, G.O. Bond, FGIC, 5.00%, 6/1/2013 Aaa 500,000 554,570
Colonie, G.O. Bond, MBIA, 5.20%, 8/15/2008 Aaa 100,000 102,306
Dryden Central School District, G.O. Bond, FSA, 5.50%, 6/15/2011 Aaa 200,000 206,294
East Aurora Union Free School District, G.O. Bond, FGIC, 5.20%, 6/15/2011 Aaa 300,000 309,399
Eastchester, Public Impt., G.O. Bond, Series B, FSA, 4.90%, 10/15/2011 Aaa 385,000 395,110
Ellenville Central School District, G.O. Bond, FSA, 5.375%, 5/1/2009 Aaa 210,000 218,652
Ellenville Central School District, G.O. Bond, AMBAC, 5.70%, 5/1/2011 Aaa 700,000 748,349
Erie County, G.O. Bond, Series B, FGIC, 5.50%, 6/15/2009 Aaa 100,000 102,774
Erie County, G.O. Bond, Series B, FGIC, 5.50%, 6/15/2025 Aaa 400,000 410,428
Erie County, Public Impt., G.O. Bond, Series A, FGIC, 4.00%, 3/15/2006 Aaa 1,500,000 1,514,400
Erie County, Public Impt., G.O. Bond, Series A, FGIC, 5.00%, 9/1/2014 Aaa 500,000 551,065
The accompanying notes are an integral part of the financial statements.
3
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
NEW YORK MUNICIPAL SECURITIES (continued)
Erie County, Public Impt., G.O. Bond, Series A, FGIC, 4.75%, 10/1/2016 Aaa $ 550,000 $ 583,203
Fairport Central School District, G.O. Bond, FSA, 5.00%, 6/1/2019 Aaa 500,000 547,975
Franklin Square Union Free School District, G.O. Bond, FGIC, 5.00%, 1/15/2021 Aaa 520,000 556,270
Freeport, G.O. Bond, Series A, FGIC, 4.00%, 1/15/2014 Aaa 540,000 558,770
Greece Central School District, G.O. Bond, FSA, 4.60%, 6/15/2018 Aaa 180,000 187,578
Hamburg Central School District, G.O. Bond, FGIC, 5.375%, 6/1/2014 Aaa 600,000 641,712
Hempstead Town, Prerefunded Balance, G.O. Bond, Series B, FGIC, 5.625%, 2/1/2010 AAA1 35,000 36,321
Hempstead Town, Unrefunded Balance, G.O. Bond, Series B, FGIC, 5.625%, 2/1/2010 Aaa 165,000 171,036
Huntington, G.O. Bond, MBIA, 5.875%, 9/1/2009 Aaa 45,000 45,690
Islip, Public Impt., G.O. Bond, FGIC, 5.375%, 6/15/2015 Aaa 1,555,000 1,719,939
Jamesville-Dewitt Central School District, G.O. Bond, AMBAC, 5.75%, 6/15/2009 Aaa 420,000 464,352
Johnson City Central School District, G.O. Bond, FGIC, 4.25%, 6/15/2024 Aaa 500,000 502,215
Johnson City Central School District, G.O. Bond, FGIC, 4.375%, 6/15/2028 Aaa 1,000,000 1,005,880
Johnson City Central School District, G.O. Bond, FGIC, 4.375%, 6/15/2030 Aaa 985,000 986,428
Le Roy Central School District, G.O. Bond, FGIC, 0.10%, 6/15/2008 Aaa 350,000 321,135
Longwood Central School District at Middle Island, G.O. Bond, FSA, 5.00%, 6/15/2017 Aaa 250,000 270,127
Longwood Central School District at Middle Island, G.O. Bond, FSA, 5.00%, 6/15/2018 Aaa 250,000 270,127
Metropolitan Transportation Authority, Service Contract, Revenue Bond,
Series B, FGIC, 5.50%, 7/1/2011 Aaa 1,000,000 1,124,710
Metropolitan Transportation Authority, Transportation Facilities, Revenue Bond,
Series B, AMBAC, 5.00%, 7/1/2018 Aaa 1,500,000 1,659,240
Metropolitan Transportation Authority, Dedicated Tax Fund, Revenue Bond, Series A,
MBIA, 5.00%, 11/15/2030 Aaa 750,000 794,017
Middletown City School District, G.O. Bond, Series A, AMBAC, 5.50%, 11/15/2005 Aaa 175,000 176,890
Monroe County, Water Impt., G.O. Bond, 5.25%, 2/1/2017 Baa1 320,000 329,280
Monroe County Water Authority, Revenue Bond, 5.00%, 8/1/2019 Aa3 1,700,000 1,806,675
Mount Morris Central School District, G.O. Bond, FGIC, 4.125%, 6/15/2013 Aaa 790,000 831,491
The accompanying notes are an integral part of the financial statements.
4
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
NEW YORK MUNICIPAL SECURITIES (continued)
Nassau County, Combined Sewer Districts, G.O. Bond, Series F, MBIA,
5.35%, 7/1/2008 Aaa $1,500,000 $1,604,955
Nassau County, General Impt., G.O. Bond, Series C, FSA, 5.125%, 1/1/2014 Aaa 500,000 550,730
Nassau County, General Impt., G.O. Bond, Series U, AMBAC, 5.25%, 11/1/2014 Aaa 335,000 352,209
Nassau County, General Impt., G.O. Bond, Series V, AMBAC, 5.25%, 3/1/2015 Aaa 385,000 408,165
Nassau County Interim Financial Authority, Sales Tax Secured, Revenue Bond,
Series A, AMBAC, 4.75%, 11/15/2023 Aaa 1,000,000 1,043,480
New York, G.O. Bond, Series I, MBIA, 5.00%, 5/15/2028 Aaa 1,900,000 1,995,494
New York, G.O. Bond, Series K, FSA, 5.375%, 8/1/2020 Aaa 1,000,000 1,081,440
New York City Municipal Water Finance Authority, Revenue Bond,
Series E, FGIC, 5.00%, 6/15/2026 Aaa 750,000 788,183
New York City Municipal Water Finance Authority, Water & Sewer Systems,
Revenue Bond, Series B, FGIC, 5.125%, 6/15/2030 Aaa 2,000,000 2,087,200
New York City Municipal Water Finance Authority, Water & Sewer Systems,
Revenue Bond, Series A, AMBAC, 5.00%, 6/15/2035 Aaa 750,000 795,428
New York City Transitional Finance Authority, Revenue Bond, Series A, 5.50%, 2/15/2011 Aa1 1,000,000 1,117,270
New York State, G.O. Bond, Series A, 4.60%, 3/15/2013 A1 475,000 506,920
New York State, G.O. Bond, Series B, 5.125%, 3/1/2018 A1 1,000,000 1,068,990
New York State, G.O. Bond, Series C, FSA, 5.00%, 4/15/2012 AAA1 700,000 771,526
New York State, G.O. Bond, Series D, AMBAC, 5.00%, 7/15/2015 Aaa 500,000 536,420
New York State Dormitory Authority, Columbia University,
Revenue Bond, Series A, 5.00%, 7/1/2025 Aaa 500,000 532,745
New York State Environmental Facilities Corp., Clean Water & Drinking,
Revenue Bond, MBIA, 5.00%, 6/15/2021 Aaa 600,000 643,272
New York State Environmental Facilities Corp., Clean Water & Drinking,
Revenue Bond, Series B, 5.00%, 6/15/2027 Aaa 1,000,000 1,062,070
New York State Environmental Facilities Corp., Pollution
Control, Revenue Bond, Series B, 6.65%, 9/15/2013 Aaa 250,000 250,825
New York State Environmental Facilities Corp., Pollution
Control, Revenue Bond, Series E, MBIA, 5.00%, 6/15/2012 Aaa 200,000 209,844
New York State Environmental Facilities Corp., Pollution Control,
Prerefunded Balance, Revenue Bond, Series A, 4.65%, 6/15/2007 Aaa 135,000 140,333
The accompanying notes are an integral part of the financial statements.
5
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
NEW YORK MUNICIPAL SECURITIES (continued)
New York State Environmental Facilities Corp., Pollution Control,
Unrefunded Balance, Revenue Bond, Series A, 4.65%, 6/15/2007 Aaa $ 115,000 $ 119,012
New York State Environmental Facilities Corp., Pollution Control,
Unrefunded Balance, Revenue Bond, Series B, 5.20%, 5/15/2014 Aaa 440,000 491,898
New York State Environmental Facilities Corp., Pollution Control,
Prerefunded Balance, Revenue Bond, Series A, 5.20%, 6/15/2015 Aaa 225,000 235,051
New York State Environmental Facilities Corp., Pollution Control,
Unrefunded Balance, Revenue Bond, Series A, 5.20%, 6/15/2015 Aaa 25,000 26,064
New York State Housing Finance Agency, State University
Construction, Revenue Bond, Series A, 8.00%, 5/1/2011 Aaa 250,000 295,728
New York State Thruway Authority, Highway & Bridge,
Revenue Bond, Series A, FGIC, 5.50%, 4/1/2015 Aaa 320,000 357,997
New York State Thruway Authority, Highway & Bridge,
Revenue Bond, Series A, AMBAC, 5.25%, 4/1/2017 Aaa 555,000 588,056
New York State Thruway Authority, Highway & Bridge,
Revenue Bond, Series B, MBIA, 5.75%, 4/1/2006 Aaa 100,000 102,250
New York State Thruway Authority, Highway & Bridge,
Revenue Bond, Series B, MBIA, 5.25%, 4/1/2016 Aaa 300,000 331,188
New York State Thruway Authority, Highway & Bridge,
Revenue Bond, Series C, MBIA, 5.25%, 4/1/2011 Aaa 1,000,000 1,108,270
New York State Thruway Authority, Highway & Bridge,
Revenue Bond, Series C, AMBAC, 5.00%, 4/1/2020 Aaa 750,000 802,658
New York State Thruway Authority, Personal Income Tax,
Revenue Bond, Series A, FSA, 5.00%, 3/15/2014 Aaa 500,000 551,045
New York State Thruway Authority, Personal Income Tax,
Revenue Bond, Series A, MBIA, 5.00%, 3/15/2016 Aaa 300,000 327,192
New York State Urban Development Corp., Revenue Bond, 5.375%, 7/1/2022 Aaa 400,000 417,916
New York State Urban Development Corp., Correctional Capital Facilities, Revenue Bond,
Series A, FSA, 5.25%, 1/1/2014 Aaa 500,000 560,645
Niagara County, G.O. Bond, MBIA, 5.20%, 1/15/2011 Aaa 400,000 405,364
North Hempstead, G.O. Bond, Series A, FGIC, 4.75%, 1/15/2023 Aaa 1,000,000 1,034,340
Norwich City School District, G.O. Bond, FSA, 5.00%, 6/15/2010 Aaa 250,000 272,068
Panama Central School District, G.O. Bond, FGIC, 5.00%, 6/15/2019 Aaa 595,000 637,537
The accompanying notes are an integral part of the financial statements.
6
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
NEW YORK MUNICIPAL SECURITIES (continued)
Patchogue-Medford Union Free School District, G.O. Bond, Series A, FGIC, 3.50%, 7/1/2012 AAA1 $ 805,000 $ 819,538
Pavilion Central School District, G.O. Bond, FSA, 5.625%, 6/15/2018 Aaa 880,000 972,030
Phelps-Clifton Springs Central School District, G.O. Bond, Series B, MBIA, 5.00%, 6/15/2021 Aaa 850,000 925,157
Phelps-Clifton Springs Central School District, G.O. Bond, Series B, MBIA, 5.00%, 6/15/2022 Aaa 450,000 488,178
Ravena Coeymans Selkirk Central School District, G.O. Bond, FSA, 4.25%, 6/15/2014 Aaa 1,180,000 1,248,652
Rochester, G.O. Bond, Series A, AMBAC, 4.70%, 8/15/2006 Aaa 10,000 10,237
Rochester, Unrefunded Balance, G.O. Bond, Series A, AMBAC, 4.70%, 8/15/2006 Aaa 240,000 245,438
Rochester, G.O. Bond, Series A, AMBAC, 5.00%, 8/15/2020 Aaa 250,000 282,413
Rochester, G.O. Bond, Series A, AMBAC, 5.00%, 8/15/2022 Aaa 95,000 107,324
Rondout Valley Central School District, G.O. Bond, FSA, 5.375%, 3/1/2020 Aaa 500,000 556,335
Schenectady, G.O. Bond, MBIA, 5.30%, 2/1/2011 Aaa 250,000 264,180
Scotia Glenville Central School District, G.O. Bond, FGIC, 5.50%, 6/15/2020 Aaa 1,025,000 1,132,871
South Country Central School District of Brookhaven, G.O. Bond,
FGIC, 5.50%, 9/15/2007 Aaa 380,000 382,219
South Glens Falls Central School District, Prerefunded Balance,
G.O. Bond, FGIC, 5.375%, 6/15/2018 Aaa 605,000 665,863
South Glens Falls Central School District, Unrefunded Balance,
G.O. Bond, FGIC, 5.375%, 6/15/2018 Aaa 95,000 104,055
South Huntington Union Free School District, G.O. Bond, FGIC, 5.00%, 9/15/2016 Aaa 325,000 350,633
South Huntington Union Free School District, G.O. Bond, FGIC, 5.10%, 9/15/2017 Aaa 100,000 108,307
Steuben County, Public Impt., G.O. Bond, AMBAC, 5.60%, 5/1/2006 Aaa 500,000 501,190
Suffolk County, G.O. Bond, Series A, FGIC, 4.75%, 8/1/2019 Aaa 895,000 938,613
Suffolk County Water Authority, Revenue Bond, MBIA, 5.10%, 6/1/2009 Aaa 250,000 269,753
Suffolk County Water Authority, Revenue Bond, Series A, AMBAC, 5.00%, 6/1/2017 Aaa 400,000 422,616
Sullivan County, Public Impt., G.O. Bond, MBIA, 5.125%, 3/15/2013 Aaa 330,000 330,667
Syracuse, Public Impt., G.O. Bond, Series C, AMBAC, 5.40%, 8/1/2017 Aaa 700,000 775,257
Syracuse, Public Impt., G.O. Bond, Series C, AMBAC, 5.50%, 8/1/2018 Aaa 850,000 945,336
The accompanying notes are an integral part of the financial statements.
7
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
NEW YORK MUNICIPAL SECURITIES (continued)
Three Village Central School District, G.O. Bond, FSA, 5.375%, 6/15/2007 Aaa $ 230,000 $ 240,203
Tompkins County, Public Impt., G.O. Bond, Series B,
5.10%, 4/1/2020 Aa2 400,000 415,512
Triborough Bridge & Tunnel Authority, General Purposes, Revenue Bond,
Series A, MBIA, 4.75%, 1/1/2019 Aaa 300,000 328,479
Triborough Bridge & Tunnel Authority, General Purposes, Revenue Bond,
Series A, MBIA, 5.00%, 1/1/2032 Aaa 2,000,000 2,103,000
Triborough Bridge & Tunnel Authority, Revenue Bond, Subordinate Bonds,
FGIC, 5.00%, 11/15/2032 Aaa 1,000,000 1,063,940
Warwick Valley Central School District, G.O. Bond, FSA, 5.60%, 1/15/2018 Aaa 575,000 636,071
Warwick Valley Central School District, G.O. Bond, FSA, 5.625%, 1/15/2022 Aaa 380,000 420,079
Wayne County, Public Impt., G.O. Bond, MBIA, 4.125%, 6/1/2024 Aaa 500,000 501,200
West Seneca Central School District, G.O. Bond, FSA, 5.00%, 5/1/2011 Aaa 300,000 328,863
Westchester County, G.O. Bond, Series A, 4.75%, 12/15/2008 Aaa 185,000 188,767
Westchester County, G.O. Bond, Series A, 4.75%, 12/15/2008 Aaa 60,000 62,135
Westchester County, Unrefunded Balance, G.O. Bond, Series A, 4.75%, 12/15/2008 Aaa 5,000 5,097
Westchester County, G.O. Bond, Series A, 4.75%, 12/15/2009 Aaa 180,000 183,665
Westchester County, G.O. Bond, Series A, 4.75%, 12/15/2009 Aaa 65,000 67,313
Westchester County, Unrefunded Balance, G.O. Bond, Series A, 4.75%, 12/15/2009 Aaa 5,000 5,097
Westchester County, G.O. Bond, Series B, 4.30%, 12/15/2011 Aaa 15,000 15,106
Westchester County, G.O. Bond, Series B, 3.70%, 12/15/2015 Aaa 1,000,000 1,015,770
Western Nassau County Water Authority, Water Systems, Revenue Bond,
AMBAC, 5.65%, 5/1/2026 Aaa 350,000 364,564
William Floyd Union Free School District of the Mastics-Moriches-Shirley,
G.O. Bond, AMBAC, 5.70%, 6/15/2008 Aaa 405,000 436,043
Williamsville Central School District, G.O. Bond, MBIA, 5.00%, 6/15/2012 Aaa 490,000 540,862
Wyandanch Union Free School District, G.O. Bond, FSA, 5.60%, 4/1/2017 Aaa 500,000 529,850
The accompanying notes are an integral part of the financial statements.
8
<page>
Investment Portfolio - June 30, 2005 (unaudited)
VALUE
SHARES (NOTE 2)
--------- ------------
TOTAL NEW YORK MUNICIPAL SECURITIES
(Identified Cost $72,141,285) $75,606,704
------------
SHORT-TERM INVESTMENTS - 4.1%
Dreyfus BASIC New York Municipal Money Market Fund
(Identified Cost $3,298,540) 3,298,540 3,298,540
------------
TOTAL INVESTMENTS - 98.9%
(Identified Cost $75,439,825) 78,905,244
OTHER ASSETS, LESS LIABILITIES - 1.1% 863,624
------------
NET ASSETS - 100% $79,768,868
============
KEY:
G.O. Bond - General Obligation Bond
Impt. - Improvement
Scheduled principal and interest payments are guaranteed by:
AMBAC (AMBAC Assurance Corp.)
FGIC (Financial Guaranty Insurance Co.)
FSA (Financial Security Assurance)
MBIA (MBIA, Inc.)
The insurance does not guarantee the market value of the municipal bonds.
*Credit ratings from Moody's (unaudited)
1Credit ratings from S&P (unaudited)
The Series' portfolio holds, as a percentage of net assets, greater than 10% in
bonds insured by the following companies: FGIC - 33.0%; MBIA - 19.6%; AMBAC -
15.3%; FSA - 13.9%.
The accompanying notes are an integral part of the financial statements.
9
<page>
Statement of Assets and Liabilities (unaudited)
June 30, 2005
ASSETS:
Investments, at value (identified cost $75,439,825) (Note 2) $78,905,244
Interest receivable 830,691
Receivable for fund shares sold 97,922
Dividends receivable 5,740
-----------
TOTAL ASSETS 79,839,597
-----------
LIABILITIES:
Accrued management fees (Note 3) 32,385
Accrued fund accounting and transfer agent fees (Note 3) 9,761
Accrued Chief Compliance Officer services fees (Note 3) 1,062
Audit fees payable 15,010
Payable for fund shares repurchased 12,242
Other payables and accrued expenses 269
-----------
TOTAL LIABILITIES 70,729
-----------
TOTAL NET ASSETS $79,768,868
===========
NET ASSETS CONSIST OF:
Capital stock $ 75,286
Additional paid-in-capital 75,837,352
Undistributed net investment income 300,469
Accumulated net realized gain on investments 90,342
Net unrealized appreciation on investments 3,465,419
-----------
TOTAL NET ASSETS $79,768,868
===========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE ($79,768,868/7,528,566 shares) $ 10.60
===========
The accompanying notes are an integral part of the financial statements.
10
<page>
Statement of Operations (unaudited)
For the Six Months Ended June 30, 2005
INVESTMENT INCOME:
Interest $1,622,141
Dividends 27,237
----------
Total Investment Income 1,649,378
----------
EXPENSES:
Management fees (Note 3) 192,557
Fund accounting and transfer agent fees (Note 3) 56,628
Directors' fees (Note 3) 3,459
Chief Compliance Officer services fees (Note 3) 2,988
Custodian fees 5,951
Miscellaneous 18,344
----------
Total Expenses 279,927
----------
NET INVESTMENT INCOME 1,369,451
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 71,551
Net change in unrealized appreciation on investments 3,821
----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS 75,372
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $1,444,823
==========
The accompanying notes are an integral part of the financial statements.
11
<page>
Statements of Changes in Net Assets
FOR THE SIX
MONTHS ENDED FOR THE
6/30/05 YEAR ENDED
(UNAUDITED) 12/31/04
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,369,451 $ 2,517,497
Net realized gain on investments 71,551 113,033
Net change in unrealized appreciation on investments 3,821 (621,898)
-------------- ------------
Net increase from operations 1,444,823 2,008,632
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 8):
From net investment income (1,361,504) (3,015,370)
From net realized gain on investments - (223,458)
-------------- ------------
Total distributions to shareholders (1,361,504) (3,238,828)
-------------- ------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase from capital share transactions (Note 5) 3,865,645 12,857,412
-------------- ------------
Net increase in net assets 3,948,964 11,627,216
NET ASSETS:
Beginning of period 75,819,904 64,192,688
-------------- ------------
END OF PERIOD (including undistributed net investment
income of $300,469 and $292,522, respectively) $ 79,768,868 $75,819,904
============== ============
The accompanying notes are an integral part of the financial statements.
12
<page>
Financial Highlights
FOR THE SIX
MONTHS ENDED
6/30/05 FOR THE YEARS ENDED
(UNAUDITED) 12/31/04 12/31/03 12/31/02 12/31/01
-------------- --------------------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.58 $ 10.77 $ 10.89 $ 10.36 $ 10.36
-------------- --------------------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.18 0.36 0.42 0.46 0.46
Net realized and unrealized gain (loss) on
investments 0.03 (0.07) -2 0.54 (0.05)
-------------- --------------------- ---------- ---------- ----------
Total from investment operations 0.21 0.29 0.42 1.00 0.41
-------------- --------------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.19) (0.45) (0.41) (0.42) (0.41)
From net realized gain on investments - (0.03) (0.13) (0.05) -
-------------- --------------------- ---------- ---------- ----------
Total distributions to shareholders (0.19) (0.48) (0.54) (0.47) (0.41)
-------------- --------------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 10.60 $ 10.58 $ 10.77 $ 10.89 $ 10.36
============== ===================== ========== ========== ==========
Total return1 1.96% 2.83% 3.90% 9.81% 3.96%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses 0.73%3 0.75% 0.75%* 0.73% 0.72%
Net investment income 3.56%3 3.57% 3.80% 4.20% 4.23%
Portfolio turnover 4% 7% 17% 6% 7%
NET ASSETS - END OF PERIOD (000's omitted) $ 79,769 $ 75,820 $ 64,193 $ 63,961 $ 66,295
============== ===================== ========== ========== ==========
FOR THE YEAR ENDED
12/31/00
----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 9.62
----------
Income (loss) from investment operations:
Net investment income 0.43
Net realized and unrealized gain (loss) on
investments 0.73
----------
Total from investment operations 1.16
----------
Less distributions to shareholders:
From net investment income (0.42)
From net realized gain on investments -
----------
Total distributions to shareholders (0.42)
----------
NET ASSET VALUE - END OF PERIOD $ 10.36
==========
Total return1 12.24%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Expenses 0.68%
Net investment income 4.51%
Portfolio turnover 8%
NET ASSETS - END OF PERIOD (000's omitted) $ 66,443
==========
*The investment advisor did not impose all of its management fee. If these
expenses had been incurred by the Series, the expense ratio (to average net
assets) for the year ended 12/31/03 would have been increased by 0.00%4.
1Represents aggregate total return for the period indicated, and assumes
reinvestment of all distributions. Total return would have been lower had
certain expenses not been waived during the year ended 12/31/03. Periods less
than one year are not annualized.
2Less than $0.01 per share.
3Annualized.
4Less than 0.01%.
The accompanying notes are an integral part of the financial statements.
13
<page>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
New York Tax Exempt Series (the "Series") is a no-load diversified series of
Exeter Fund, Inc. (the "Fund"). The Fund is organized in Maryland and is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
The Series' investment objective is to provide as high a level of current income
exempt from federal income tax and New York State personal income tax as the
Advisor believes is consistent with the preservation of capital.
The Fund's Advisor is Manning & Napier Advisors, Inc. (the "Advisor"), doing
business as Exeter Asset Management. Shares of the Series are offered to
investors, clients and employees of the Advisor and its affiliates. The total
authorized capital stock of the Fund consists of 1.7 billion shares of common
stock each having a par value of $0.01. As of June 30, 2005, 1.16 billion
shares have been designated in total among 21 series, of which 50 million have
been designated as New York Tax Exempt Series common stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Municipal securities will normally be valued on the basis of market valuations
provided by an independent pricing service (the "Service"). The Service
utilizes the latest price quotations and a matrix system (which considers such
factors as security prices of similar securities, yields, maturities and
ratings). The Service has been approved by the Fund's Board of Directors.
Securities for which representative valuations or prices are not available from
the Fund's pricing service may be valued at fair value as determined in good
faith by the Advisor under procedures approved by and under the general
supervision and responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value. Investments in open-end investment
companies are valued at their net asset value per share on valuation date.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on trade date. Interest income,
including amortization of premium and accretion of discounts, is earned from
settlement date and accrued daily. 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 gains on
investments, in accordance with requirements of the Internal Revenue Code.
Accordingly, no provision for federal income tax or excise tax has been made in
the financial statements.
14
<page>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made quarterly.
Distributions of net realized gains are made annually. An additional
distribution may be necessary to avoid taxation of the Series. Distributions
are recorded on the ex-dividend date.
OTHER
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of 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 0.50% of the Series' average daily net assets.
Under the Agreement, personnel of the Advisor provide the Series with advice and
assistance in the choice of investments and the execution of securities
transactions, and otherwise maintain the Series' organization. The Advisor also
provides the Fund with necessary office space and fund administration services.
The salaries of all officers of the Fund (except a percentage of the Fund's
Chief Compliance Officer's salary, which is paid by the Fund, and the Special
Assistant Secretary's salary, which is paid by BISYS Fund Services Ohio, Inc.
("BISYS")), and of all Directors who are "affiliated persons" of the Fund, or of
the Advisor, and all personnel of the Fund, or of the Advisor, performing
services relating to research, statistical and investment activities, are paid
by the Advisor. Each "non-affiliated" Director receives an annual stipend, which
is allocated among all the active series of the Fund. In addition, these
Directors also receive a per meeting fee for each active series of the Fund plus
a fee for each committee meeting attended.
The Advisor has voluntarily agreed, until at least December 31, 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 0.75% of average daily
net assets each year. For the six months ended June 30, 2005, the Advisor did
not waive its management fee or reimburse any expenses of the Series.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
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 pays the Advisor an annual fee of 0.15% of the Fund's average daily net
assets up to $900 million, 0.11% for the Fund's average daily net assets between
$900 million and $1.5 billion, and 0.07% for the Fund's average daily net assets
over $1.5 billion. These fee rates are scheduled to be reduced each year
through 2007. Additionally, certain transaction and account-based fees and
out-of-pocket expenses, including charges for reporting relating to the Fund's
Compliance Program, are charged. Expenses not directly attributable to a series
are allocated based on each series'
15
<page>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
relative net assets or number of accounts, depending on the expense. The
Advisor has an agreement with BISYS under which BISYS serves as sub-accounting
services and sub-transfer agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2005, purchases and sales of securities, other
than short-term securities, were $6,958,223 and $3,195,900, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of New York Tax Exempt Series were:
FOR THE SIX MONTHS FOR THE YEAR
ENDED 6/30/05 ENDED 12/31/04
------------------------------------- ------------------------
Shares Amount Shares Amount
------------------- ---------------- ---------- ------------
Sold 635,207 $ 6,732,006 1,344,216 $14,370,660
Reinvested 122,178 1,282,365 288,035 3,053,897
Repurchased (392,546) (4,148,726) (430,022) (4,567,145)
------------------- ---------------- ---------- ------------
Total 364,839 $ 3,865,645 1,202,229 $12,857,412
=================== ================ ========== ============
Substantially all of the Series' shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options and
futures contracts and may involve, to a varying degree, elements of risk in
excess of the amounts recognized for financial statement purposes. No such
investments were held by the Series on June 30, 2005.
7. CONCENTRATION OF CREDIT
The Series primarily invests in debt obligations issued by the State of New York
and its political subdivisions, agencies and public authorities to obtain funds
for various public purposes. The Series is more susceptible to factors
adversely affecting issues of New York municipal securities than is a municipal
bond fund that is not concentrated in these issues to the same extent.
8. FEDERAL INCOME TAX INFORMATION
The amount and characterization of certain income and capital gains to be
distributed are determined in accordance with federal income tax regulations,
which may differ from accounting principles generally accepted in the United
States of America. The Series may periodically make reclassifications among its
capital accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations, without
impacting the Series' net asset value. Any such reclassifications are not
reflected in the financial highlights.
16
<page>
Notes to Financial Statements (unaudited)
8. FEDERAL INCOME TAX INFORMATION (continued)
The final determination of the tax character of current year distributions will
be made at the conclusion of the fiscal year. The tax character of
distributions paid for the year ended December 31, 2004 were as follows:
Ordinary income $ 25,857
Tax exempt income 2,989,513
Long-term capital gains 223,458
At June 30, 2005, the identified cost of investments for federal income tax
purposes, the resulting gross unrealized appreciation and depreciation, and the
net unrealized appreciation were as follows:
Cost for federal income tax purposes $75,394,283
Unrealized appreciation $ 3,629,329
Unrealized depreciation (118,368)
------------
Net unrealized appreciation $ 3,510,961
============
17
<page>
Literature Requests (unaudited)
PROXY VOTING POLICIES AND PROCEDURES
- --------------------------------------------------------------------------------
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available, without charge,
upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission's (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30th is available,
without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
QUARTERLY PORTFOLIO HOLDINGS
- --------------------------------------------------------------------------------
The Series' complete schedule of portfolio holdings for the 1st and 3rd quarters
of each fiscal year are provided on Form N-Q, and are available, without charge,
upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
The Series' Form N-Q may be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION (SAI)
- --------------------------------------------------------------------------------
The prospectus and SAI provide additional information about each Series,
including charges, expenses and risks. These documents are available, without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
On the Advisor's web site
http://www.manningnapieradvisors.com/www/exeter_fund.asp
ADDITIONAL INFORMATION AVAILABLE AT
WWW.MANNINGNAPIERADVISORS.COM/WWW/EXETER_FUND.ASP
- --------------------------------------------------------------------------------
1. Fund Holdings - month-end
2. Fund Holdings - quarter-end
3. Shareholder Report - Annual
4. Shareholder Report - Semi-Annual
18
<page>
Exeter Fund, Inc.
Semi-Annual Report
June 30, 2005
Diversified Tax Exempt
<page>
<page>
Shareholder Expense Example (unaudited)
As a shareholder of the Series, you may incur two types of costs: (1)
transaction costs, including potential wire charges on redemptions and (2)
ongoing costs, including management fees and other Series expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Series and to compare these costs with the ongoing costs of
investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (January 1, 2005 to June 30, 2005).
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Series' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Series' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid
during the period. You may use this information to compare the ongoing costs of
investing in the Series and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as potential
wire charges on redemptions. Therefore, the second line of the table is useful
in comparing ongoing costs only, and will not help you determine the relative
total costs of owning different funds. In addition, if these transaction costs
were included, your costs would have been higher.
Beginning Ending Expenses Paid
Account Value Account Value During Period*
1/1/05 6/30/05 1/1/05-6/30/05
-------------- -------------- ---------------
Actual $ 1,000.00 $ 1,023.50 $ 3.66
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,021.17 $ 3.66
*Expenses are equal to the Series' annualized expense ratio (for the six-month
period) of 0.73%, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period). Expenses are based
on the most recent fiscal half year.
1
<page>
Portfolio Composition as of June 30, 2005 (unaudited)
<graphic>
<pie chart>
BOND TYPES1
General Obligation Bonds 65.2%
Revenue Bonds 26.1%
Certificate of Participation 1.7%
Tax Allocation 1.6%
Special Tax 0.5%
Cash, short-term investments, and other assets, less liabilities 4.9%
1As a percentage of net assets.
CREDIT QUALITY RATINGS2,3
Aaa 81.6%
Aa 12.2%
A 1.3%
Unrated investments, such as, cash, short-term investments, and other assets, less liabilities 4.9%
2As a percentage of net assets.
3Based on ratings from Moody's. The Series may use different ratings provided by other
rating agencies for purposes of determining compliance with the Series' investment policies.
TOP TEN STATES4
Pennsylvania 6.0%
California 4.7%
Florida 4.7%
Texas 4.6%
New Jersey 4.6%
Massachusetts 4.5%
Georgia 4.1%
New York 4.0%
Tennessee 4.0%
Illinois 3.9%
4As a percentage of total investments.
2
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
MUNICIPAL SECURITIES - 95.1%
ALABAMA - 2.7%
Bessemer Governmental Utility Services Corp., Water Supply,
Revenue Bond, MBIA, 5.20%, 6/1/2024 Aaa $ 500,000 $ 533,860
Fort Payne Waterworks Board, Revenue Bond, AMBAC,
3.50%, 7/1/2015 Aaa 665,000 656,156
Hoover Board of Education, Capital Outlay Warrants,
Special Tax Warrants, MBIA, 5.25%, 2/15/2017 Aaa 500,000 545,370
Mobile County Board of School Commissioners, Capital Outlay Warrants, G.O. Bond,
Series B, AMBAC, 5.00%, 3/1/2018 Aaa 500,000 539,310
Odenville Utilities Board Water, Revenue Bond, MBIA,
4.30%, 8/1/2028 Aaa 500,000 499,840
-----------
2,774,536
-----------
ARIZONA - 1.6%
Salt River Project, Agricultural Impt. & Power
District, Certificate of Participation, MBIA, 5.00%, 12/1/2011 Aaa 1,500,000 1,647,030
-----------
CALIFORNIA - 4.6%
California State, G.O. Bond, 5.25%, 2/1/2023 A3 500,000 566,140
California State, G.O. Bond, 4.75%, 12/1/2028 A3 795,000 805,081
Chula Vista Elementary School District, G.O. Bond,
Series F, MBIA, 4.80%, 8/1/2024 Aaa 435,000 454,462
Chula Vista Elementary School District, G.O. Bond,
Series F, MBIA, 4.875%, 8/1/2025 Aaa 425,000 445,812
Oak Grove School District, G.O. Bond, FSA, 5.25%, 8/1/2024 Aaa 500,000 519,150
Richmond Joint Powers Financing Authority, Tax Allocation, Series A, MBIA,
5.25%, 9/1/2025 Aaa 1,570,000 1,697,578
Wiseburn School District, G.O. Bond, Series A, FGIC, 5.25%, 8/1/2016 Aaa 330,000 353,843
-----------
4,842,066
-----------
COLORADO - 1.9%
Broomfield Water Activity, Enterprise Water, Revenue
Bond, MBIA, 5.00%, 12/1/2015 Aaa 700,000 767,109
Denver City & County School District No. 1, G.O. Bond, FGIC, 5.00%, 12/1/2023 Aaa 1,000,000 1,069,900
El Paso County School District No. 020, G.O. Bond, Series A, MBIA,
6.20%, 12/15/2007 Aaa 160,000 172,930
-----------
2,009,939
-----------
DELAWARE - 1.0%
Delaware Transportation Authority, Revenue Bond, MBIA, 5.00%, 7/1/2011 Aaa 1,000,000 1,101,040
-----------
The accompanying notes are an integral part of the financial statements.
3
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
FLORIDA - 4.6%
Florida State, Jacksonville Transportation, Prerefunded Balance, G.O. Bond,
Series A, 5.00%, 7/1/2027 Aa1 $ 710,000 $ 748,354
Florida State Board of Education, Capital Outlay, G.O. Bond, Series A,
5.00%, 6/1/2027 Aa1 750,000 788,917
Florida State Board of Education, Capital Outlay, Public Education, G.O. Bond,
Series C, AMBAC, 5.00%, 6/1/2011 Aaa 425,000 466,306
Florida State Board of Education, Capital Outlay, Public Education, G.O. Bond,
Series A, FSA, 4.50%, 6/1/2025 Aa1 1,280,000 1,303,565
Hillsborough County, Capital Impt. Program, County Center Project, Revenue Bond,
Series B, MBIA, 5.125%, 7/1/2022 Aaa 400,000 415,512
Miami-Dade County, Educational Facilities Authority, Revenue Bond, Series A,
AMBAC, 5.00%, 4/1/2015 Aaa 510,000 563,978
Tohopekaliga Water Authority, Utility System, Revenue
Bond, Series A, FSA, 5.00%, 10/1/2028 Aaa 510,000 543,303
-----------
4,829,935
-----------
GEORGIA - 4.1%
Atlanta, Prerefunded Balance, G.O. Bond, 5.60%, 12/1/2018 Aa3 350,000 364,511
Atlanta, Water & Wastewater, Revenue Bond, Series A, MBIA, 5.00%, 11/1/2033 Aaa 310,000 324,775
Atlanta, Water & Wastewater, Revenue Bond, FSA, 5.00%, 11/1/2043 Aaa 1,500,000 1,583,505
Georgia State, G.O. Bond, Series B, 5.65%, 3/1/2012 Aaa 200,000 229,210
Georgia State, G.O. Bond, Series B, 4.00%, 3/1/2022 Aaa 1,270,000 1,265,352
Rockdale County, Water & Sewer Authority, Revenue Bond, FSA, 5.00%, 7/1/2022 Aaa 450,000 478,395
-----------
4,245,748
-----------
HAWAII - 0.3%
Hawaii State, G.O. Bond, Series CH, 6.00%, 11/1/2007 Aa2 260,000 278,658
-----------
ILLINOIS - 3.8%
Chicago, G.O. Bond, FGIC, 5.25%, 1/1/2027 Aaa 250,000 265,727
Chicago, G.O. Bond, MBIA, Series A, 5.00%, 1/1/2034 Aaa 830,000 870,720
Chicago Neighborhoods Alive 21 Program, G.O. Bond, FGIC, 5.375%, 1/1/2026 Aaa 500,000 537,745
Cook County, G.O. Bond, Series A, FGIC, 5.00%, 11/15/2022 Aaa 750,000 793,147
Illinois State, Certificate of Participation, Series 1995 A, MBIA, 5.60%, 7/1/2010 Aaa 100,000 102,236
Illinois State, G.O. Bond, 5.00%, 12/1/2027 Aa3 600,000 631,872
The accompanying notes are an integral part of the financial statements.
4
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
ILLINOIS (continued)
Madison & St. Clair Counties School District No. 010 Collinsville, School Building,
Prerefunded Balance, G.O. Bond, FGIC, 5.125%, 2/1/2019 Aaa $ 500,000 $ 549,750
Rock Island County School District No. 041 Rock Island,
G.O. Bond, FSA, 5.125%, 12/1/2015 Aaa 200,000 212,304
-----------
3,963,501
-----------
INDIANA - 1.4%
Avon Community School Building Corp., Prerefunded Balance, Revenue Bond,
AMBAC, 5.25%, 1/1/2022 Aaa 310,000 324,186
Avon Community School Building Corp., Unrefunded Balance, Revenue Bond,
AMBAC, 5.25%, 1/1/2022 Aaa 615,000 639,852
La Porte County, G.O. Bond, FGIC, 5.20%, 1/15/2018 Aaa 300,000 331,074
Monroe County Community School Corp., Prerefunded Balance, Revenue Bond, MBIA,
5.25%, 7/1/2016 Aaa 125,000 132,065
-----------
1,427,177
-----------
IOWA - 1.1%
Indianola Community School District, G.O. Bond, FGIC, 5.20%, 6/1/2021 Aaa 425,000 467,730
Iowa City, Sewer, Revenue Bond, MBIA, 5.75%, 7/1/2021 Aaa 250,000 257,130
Iowa City Community School District, G.O. Bond, FSA, 4.00%, 6/1/2018 Aaa 425,000 427,571
-----------
1,152,431
-----------
KANSAS - 1.4%
Derby, Prerefunded Balance, G.O. Bond, Series A, FSA, 5.00%, 6/1/2015 Aaa 275,000 281,011
Johnson County Unified School District No. 229, G.O.
Bond, Series A, 5.00%, 10/1/2014 Aa1 220,000 230,782
Johnson County Unified School District No. 231, Prerefunded Balance, G.O.
Bond, Series A, FGIC, 5.75%, 10/1/2016 Aaa 500,000 554,700
Wyandotte County School District No. 204 Bonner Springs, G.O. Bond,
Series A, FSA, 5.375%, 9/1/2015 Aaa 400,000 439,528
-----------
1,506,021
-----------
KENTUCKY - 0.6%
Jefferson County School District Finance Corp., School
Building, Prerefunded Balance, Revenue Bond, Series A, MBIA, 5.00%, 2/1/2011 Aaa 300,000 310,131
Kentucky State Turnpike Authority, Economic Development, Revenue Bond, AMBAC,
6.50%, 7/1/2008 Aaa 250,000 275,702
-----------
585,833
-----------
The accompanying notes are an integral part of the financial statements.
5
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
LOUISIANA - 3.2%
Caddo Parish Parishwide School District, G.O. Bond, MBIA, 4.35%, 3/1/2026 Aaa $ 660,000 $ 661,360
Caddo Parish Parishwide School District, G.O. Bond, MBIA, 4.375%, 3/1/2027 Aaa 1,090,000 1,093,532
Lafayette Public Power Authority, Revenue Bond, Series A, AMBAC, 5.00%, 11/1/2012 Aaa 730,000 807,884
New Orleans Sewage Service, Revenue Bond, FGIC, 5.25%, 6/1/2012 Aaa 300,000 315,999
Orleans Parish, Parishwide School District, G.O. Bond,
Series A, FGIC, 5.125%, 9/1/2016 Aaa 400,000 420,268
-----------
3,299,043
-----------
MAINE - 0.8%
Kennebec Water District, Revenue Bond, FSA, 5.125%, 12/1/2021 Aaa 750,000 790,665
-----------
MARYLAND - 0.3%
Baltimore, Water Project, Revenue Bond, Series A, FGIC, 5.55%, 7/1/2009 Aaa 260,000 285,347
-----------
MASSACHUSETTS - 4.4%
Boston, G.O. Bond, Series A, MBIA, 4.125%, 1/1/2021 Aaa 1,000,000 1,005,350
Boston, G.O. Bond, Series A, MBIA, 4.125%, 1/1/2022 Aaa 410,000 410,439
Lowell, State Qualified, G.O. Bond, AMBAC, 5.00%, 2/1/2020 Aaa 500,000 541,260
Massachusetts Bay Transportation Authority, General Transportation System,
Prerefunded Balance, Revenue Bond, Series B, FSA, 5.25%, 3/1/2026 Aaa 315,000 323,338
Massachusetts Bay Transportation Authority, General Transportation System,
Prerefunded Balance, Revenue Bond, Series B, FSA, 5.25%, 3/1/2026 Aaa 185,000 190,086
Massachusetts State, G.O. Bond, Series C, AMBAC, 5.75%, 8/1/2010 Aaa 400,000 448,612
Massachusetts State, G.O. Bond, Series D, 5.25%, 10/1/2014 Aa2 1,000,000 1,131,340
Plymouth, G.O. Bond, MBIA, 5.25%, 10/15/2020 Aaa 100,000 109,417
Richmond, G.O. Bond, MBIA, 5.00%, 4/15/2021 Aaa 400,000 430,208
-----------
4,590,050
-----------
MICHIGAN - 3.3%
Comstock Park Public Schools, G.O. Bond, FSA, 5.50%, 5/1/2011 Aaa 150,000 153,603
Detroit City School District, School Building & Site Impt., G.O. Bond,
Series B, FGIC, 5.00%, 5/1/2033 Aaa 750,000 792,233
Holly Area School District, G.O. Bond, FGIC, 5.00%, 5/1/2022 Aaa 500,000 526,865
Hudsonville Public Schools, G.O. Bond, FGIC, 5.15%, 5/1/2027 Aaa 225,000 235,550
The accompanying notes are an integral part of the financial statements.
6
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
MICHIGAN (continued)
Lincoln Park School District, G.O. Bond, FGIC, 5.00%, 5/1/2026 Aaa $ 480,000 $ 499,522
Muskegon Water, Revenue Bond, FSA, 4.75%, 5/1/2019 Aaa 565,000 579,701
Oakland County, George W. Kuhn Drain District,
G.O. Bond, Series B, 5.375%, 4/1/2021 Aaa 475,000 506,901
St. Joseph County, Sewer Disposal Systems - Constantine,
G.O. Bond, FSA, 5.00%, 4/1/2012 AAA1 100,000 102,640
-----------
3,397,015
-----------
MINNESOTA - 1.5%
Albert Lea Independent School District No. 241, G.O. Bond, MBIA,
5.00%, 2/1/2018 Aaa 500,000 505,650
Big Lake Independent School District No. 727, G.O. Bond, MBIA,
5.50%, 2/1/2014 Aaa 500,000 521,845
Minneapolis, G.O. Bond, Series B, 5.20%, 3/1/2013 Aa1 300,000 301,305
Western Minnesota Municipal Power Agency, Revenue
Bond, 6.625%, 1/1/2016 Aaa 175,000 209,451
-----------
1,538,251
-----------
MISSISSIPPI - 1.6%
Biloxi Public School District, Revenue Bond, MBIA, 5.00%, 4/1/2017 Aaa 500,000 539,830
De Soto County School District, G.O. Bond, FSA, 5.00%, 2/1/2013 Aaa 1,000,000 1,095,220
-----------
1,635,050
-----------
MISSOURI - 0.6%
Metropolitan St. Louis Sewer District Wastewater System, Revenue Bond,
Series A, MBIA, 3.60%, 5/1/2013 Aaa 600,000 608,586
-----------
NEVADA - 2.4%
Clark County Transportation, G.O. Bond, Series A, FGIC, 4.50%, 12/1/2019 Aaa 500,000 509,410
Clark County Public Facilities, G.O. Bond, Series C, FGIC, 5.00%, 6/1/2024 Aaa 425,000 448,307
Nevada State, Project Nos. 66 & 67, Prerefunded Balance, G.O. Bond, Series A,
FGIC, 5.00%, 5/15/2028 Aaa 625,000 661,819
Nevada State, Project Nos. 66 & 67, Unrefunded Balance, G.O. Bond, Series A,
FGIC, 5.00%, 5/15/2028 Aaa 125,000 130,150
Truckee Meadows, Water Authority, Revenue Bond, Series A, FSA, 5.00%, 7/1/2025 Aaa 750,000 794,182
-----------
2,543,868
-----------
NEW JERSEY - 4.5%
East Brunswick Township Board of Education, G.O. Bond, FSA, 4.50%, 11/1/2028 Aaa 835,000 848,076
The accompanying notes are an integral part of the financial statements.
7
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
NEW JERSEY (continued)
East Brunswick Township Board of Education, G.O. Bond, FSA, 4.50%, 11/1/2029 Aaa $1,000,000 $1,014,830
Essex County, G.O. Bond, Series A, MBIA, 4.50%, 5/1/2031 Aaa 500,000 505,525
Jersey City Water, Prerefunded Balance, G.O. Bond, FSA, 5.50%, 3/15/2011 Aaa 225,000 239,706
Morris County Impt. Authority, School District, Morris Hills Regional District,
Revenue Bond, 3.70%, 10/1/2018 Aaa 540,000 535,615
North Hudson Sewerage Authority, Revenue Bond, FGIC, 5.25%, 8/1/2016 AAA1 250,000 258,678
South Brunswick Township Board of Education, G.O. Bond, MBIA, 4.125%, 8/1/2012 Aaa 1,200,000 1,257,660
-----------
4,660,090
-----------
NEW MEXICO - 0.7%
New Mexico Finance Authority, Public Project Revolving Fund, Revenue Bond,
Series A, MBIA, 3.25%, 6/1/2013 Aaa 805,000 787,081
-----------
NEW YORK - 4.0%
Erie County, Public Impt., G.O. Bond, Series A, FGIC, 5.00%, 9/1/2014 Aaa 380,000 418,809
Mount Morris Central School District, G.O. Bond, FGIC, 4.125%, 6/15/2014 Aaa 1,290,000 1,363,943
New York City Municpal Water Finance Authority, Revenue Bond, Series E,
FGIC, 5.00%, 6/15/2026 Aaa 750,000 788,182
Orange County, G.O. Bond, 5.125%, 9/1/2024 Aa1 500,000 530,375
Orange County, G.O. Bond, Series A, 3.00%, 11/1/2006 Aa1 500,000 502,580
Spencerport Central School District, G.O. Bond, FSA, 5.00%, 11/15/2012 Aaa 350,000 374,507
Westchester County, G.O. Bond, 4.75%, 11/15/2016 Aaa 15,000 15,582
Westchester County, Unrefunded Balance, G.O. Bond, 4.75%, 11/15/2016 Aaa 135,000 138,455
-----------
4,132,433
-----------
NORTH CAROLINA - 3.1%
Cary, G.O. Bond, 5.00%, 3/1/2018 Aaa 700,000 769,741
Mecklenburg County, Public Impt., G.O. Bond, Series A, 4.125%, 2/1/2022 Aaa 1,455,000 1,462,406
Raleigh, G.O. Bond, 4.40%, 6/1/2017 Aaa 250,000 259,497
Union County, Prerefunded Balance, G.O. Bond, Series B, FGIC, 5.30%, 3/1/2013 Aaa 250,000 274,798
Wilson, G.O. Bond, AMBAC, 5.10%, 6/1/2019 Aaa 400,000 439,248
-----------
3,205,690
-----------
OHIO - 2.5%
Cleveland, Various Purposes, G.O. Bond, MBIA, 5.00%, 12/1/2012 Aaa 1,140,000 1,262,402
The accompanying notes are an integral part of the financial statements.
8
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
OHIO (continued)
Newark City School District, School Impt., G.O. Bond, FGIC, 4.25%, 12/1/2027 Aaa $ 500,000 $ 494,990
Oak Hills Local School District, G.O. Bond, MBIA, 5.125%, 12/1/2025 Aaa 490,000 515,039
Springfield City School District, G.O. Bond, FGIC, 5.20%,
12/1/2023 Aaa 325,000 359,437
-----------
2,631,868
-----------
OKLAHOMA - 0.7%
Oklahoma State Turnpike Authority, Revenue Bond,
Series A, FGIC, 5.00%, 1/1/2023 Aaa 750,000 787,035
-----------
OREGON - 3.1%
Josephine County Unit School District Three Rivers, G.O.
Bond, FSA, 5.25%, 6/15/2017 Aaa 825,000 917,210
Oregon State Board of Higher Education, G.O. Bond, Series B, 5.00%, 8/1/2033 Aa3 1,500,000 1,545,135
Salem, Pedestrian Safety Impts., Prerefunded Balance, G.O. Bond, FGIC, 5.50%, 5/1/2010 Aaa 255,000 261,125
Washington County School District No. 015 Forest Grove, G.O. Bond,
FSA, 5.50%, 6/15/2017 Aaa 500,000 562,620
-----------
3,286,090
-----------
PENNSYLVANIA - 5.9%
Beaver County, G.O. Bond, MBIA, 5.15%, 10/1/2017 Aaa 300,000 313,734
Cambria County, Prerefunded Balance, G.O. Bond, Series A, FGIC, 6.10%, 8/15/2016 Aaa 65,000 66,474
Jenkintown School District, G.O. Bond, Series A, FGIC, 4.50%, 5/15/2032 Aaa 1,000,000 1,004,650
Pennsylvania State, G.O. Bond, MBIA, 5.00%, 1/1/2011 Aaa 1,500,000 1,640,790
Pennsylvania State Turnpike Commission, Revenue Bond, AMBAC,
5.375%, 7/15/2019 Aaa 530,000 589,206
Philadelphia, Water & Wastewater, Revenue Bond,
MBIA, 5.60%, 8/1/2018 Aaa 20,000 20,505
Philadelphia, Water & Wastewater, Unrefunded Balance, Revenue Bond,
MBIA, 5.60%, 8/1/2018 Aaa 130,000 132,938
Plum Boro School District, G.O. Bond, Series A, FGIC, 4.50%, 9/15/2030 AAA1 855,000 861,199
Uniontown Area School District, G.O. Bond, FSA, 4.35%, 10/1/2034 AAA1 1,500,000 1,476,465
-----------
6,105,961
-----------
RHODE ISLAND - 1.0%
Rhode Island Clean Water Finance Agency, Revenue Bond,
Series A, MBIA, 5.00%, 10/1/2035 Aaa 1,000,000 1,051,680
-----------
The accompanying notes are an integral part of the financial statements.
9
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- -----------
SOUTH CAROLINA - 3.3%
Beaufort County School District, G.O. Bond, Series A, 5.00%, 3/1/2020 Aa1 $ 500,000 $ 547,580
Orangeburg County Consolidated School District 5, G.O. Bond,
5.625%, 3/1/2019 Aa1 800,000 879,112
South Carolina, Transportation Infrastructure Bank, Revenue Bond,
Series A, AMBAC, 5.25%, 10/1/2021 Aaa 1,500,000 1,617,600
South Carolina State Highway, Prerefunded Balance, G.O. Bond, Series B,
5.625%, 7/1/2010 Aaa 350,000 367,342
----------
3,411,634
-----------
SOUTH DAKOTA - 0.6%
Rapid City Area School District No. 51-4, Capital Outlay Certificates, G.O. Bond,
FSA, 4.75%, 1/1/2018 Aaa 650,000 671,359
-----------
TENNESSEE - 3.9%
Cleveland Water & Sewer, Prerefunded Balance, G.O. Bond, FGIC, 5.35%, 9/1/2023 Aaa 450,000 474,624
Johnson City School Sales Tax, Prerefunded Balance, G.O. Bond, AMBAC, 6.70%, 5/1/2021 Aaa 350,000 361,858
Rhea County, G.O. Bond, MBIA, 5.00%, 4/1/2018 Aaa 950,000 1,025,677
Shelby County, G.O. Bond, Series A, 5.50%, 3/1/2010 Aa2 2,000,000 2,211,660
----------
4,073,819
-----------
TEXAS - 4.5%
Brazoria County, G.O. Bond, FGIC, 4.75%, 9/1/2011 Aaa 445,000 466,396
Brazos River Authority, Revenue Bond, Series B, FGIC, 4.25%, 12/1/2017 Aaa 1,125,000 1,150,132
McKinney Waterworks & Sewer, Revenue Bond, FGIC,
4.75%, 3/15/2024 Aaa 1,000,000 1,030,090
North Texas Municipal Water District, Regional Wastewater, Revenue Bond,
FSA, 5.00%, 6/1/2012 Aaa 150,000 155,770
Richardson Independent School District, G.O. Bond, Series B, 5.00%,
2/15/2021 Aaa 500,000 516,455
San Patricio Municipal Water District, Revenue Bond, FSA, 5.20%, 7/10/2028 Aaa 490,000 519,601
Southlake Waterworks & Sewer System, G.O. Bond, AMBAC, 5.30%,
2/15/2011 Aaa 350,000 355,491
Waller Consolidated Independent School District, G.O. Bond, 4.75%,
2/15/2023 Aaa 500,000 512,115
----------
4,706,050
-----------
UTAH - 2.6%
Alpine School District, Prerefunded Balance, G.O. Bond, FGIC, 5.375%, 3/15/2009 Aaa 250,000 258,150
Mountain Regional Water Special Service District, Revenue Bond, MBIA, 5.00%,
12/15/2030 Aaa 1,240,000 1,316,334
The accompanying notes are an integral part of the financial statements.
10
<page>
Investment Portfolio - June 30, 2005 (unaudited)
CREDIT
RATING* PRINCIPAL VALUE
(UNAUDITED) AMOUNT (NOTE 2)
----------- ---------- ------------
UTAH (continued)
St. George, Parks and Recreation, G.O. Bond, AMBAC, 4.00%, 8/1/2019 Aaa $ 795,000 $ 795,580
Utah State Building Ownership Authority, Revenue Bond, Series
C, FSA, 5.50%, 5/15/2011 Aaa 300,000 335,451
------------
2,705,515
------------
VIRGINIA - 1.2%
Norfolk, Capital Impt., G.O. Bond, MBIA, 4.375%, 3/1/2024 Aaa 685,000 694,412
Richmond, G.O. Bond, Series B, FSA, 4.75%, 7/15/2023 Aaa 400,000 417,652
Spotsylvania County Water & Sewer Systems, Revenue
Bond, MBIA, 5.25%, 6/1/2016 Aaa 130,000 138,609
------------
1,250,673
------------
WASHINGTON - 3.1%
Franklin County, G.O. Bond, FGIC, 5.125%, 12/1/2022 Aaa 1,000,000 1,084,260
King County, G.O. Bond, Series B, MBIA, 5.00%, 1/1/2030 Aaa 400,000 413,800
King County, Sewer, Revenue Bond, Series A, MBIA, 4.50%, 1/1/2032 Aaa 1,070,000 1,070,000
Seattle, Prerefunded Balance, G.O. Bond, Series A, 5.75%, 1/15/2020 Aa1 230,000 233,892
Washington State, G.O. Bond, Series A, 5.00%, 1/1/2023 Aa1 410,000 424,215
------------
3,226,167
------------
WISCONSIN - 3.2%
East Troy School District, G.O. Bond, Series A, MBIA, 4.625%,
10/1/2011 Aaa 400,000 406,780
Kenosha, G.O. Bond, Series B, FSA, 5.00%, 9/1/2011 Aaa 765,000 840,429
Oshkosh, Corporate Purposes, G.O. Bond, Series A, FGIC, 5.05%, 12/1/2021 Aaa 450,000 484,096
Stoughton Area School District, G.O. Bond, FGIC, 4.875%, 4/1/2016 Aaa 500,000 530,695
Two Rivers Public School District, Prerefunded Balance, G.O. Bond, FSA, 5.625%, 3/1/2019 Aaa 415,000 461,488
Washington County, Workforce Development Center, G.O. Bond, 3.75%, 3/1/2007 Aa2 25,000 25,373
West De Pere School District, G.O. Bond, Series A, FSA, 5.25%, 10/1/2017 Aaa 500,000 546,140
------------
3,295,001
------------
TOTAL MUNICIPAL SECURITIES
(Identified Cost $94,808,862) 99,039,936
------------
The accompanying notes are an integral part of the financial statements.
11
<page>
Investment Portfolio - June 30, 2005 (unaudited)
VALUE
SHARES (NOTE 2)
--------- -------------
SHORT-TERM INVESTMENTS - 3.2%
Dreyfus Municipal Reserves - Class R
(Identified Cost $3,308,888) 3,308,888 $ 3,308,888
-------------
TOTAL INVESTMENTS - 98.3%
(Identified Cost $98,117,750) 102,348,824
OTHER ASSETS, LESS LIABILITIES - 1.7% 1,819,448
-------------
NET ASSETS - 100% $104,168,272
=============
KEY:
G.O. Bond - General Obligation Bond
Impt. - Improvement
No. - Number
Scheduled principal and interest payments are guaranteed by:
AMBAC (AMBAC Assurance Corp.)
FGIC (Financial Guaranty Insurance Co.)
FSA (Financial Security Assurance)
MBIA (MBIA, Inc.)
The insurance does not guarantee the market value of the municipal bonds.
*Credit ratings from Moody's (unaudited)
1Credit ratings from S&P (unaudited)
The Series' portfolio holds, as a percentage of net assets, greater than 10% in
bonds insured by the following companies: MBIA - 27.6%; FGIC - 21.3%; FSA -
18.4%.
The accompanying notes are an integral part of the financial statements.
12
<page>
Statement of Assets and Liabilities (unaudited)
June 30, 2005
ASSETS:
Investments, at value (identified cost $98,117,750) (Note 2) $102,348,824
Interest receivable 1,277,840
Receivable for fund shares sold 608,238
Dividends receivable 4,049
------------
TOTAL ASSETS 104,238,951
------------
LIABILITIES:
Accrued management fees (Note 3) 42,155
Accrued fund accounting and transfer agent fees (Note 3) 12,171
Accrued Chief Compliance Officer services fees (Note 3) 1,062
Audit fees payable 14,812
Other payables and accrued expenses 479
------------
TOTAL LIABILITIES 70,679
------------
TOTAL NET ASSETS $104,168,272
============
NET ASSETS CONSIST OF:
Capital stock $ 94,163
Additional paid-in-capital 99,349,227
Undistributed net investment income 389,959
Accumulated net realized gain on investments 103,849
Net unrealized appreciation on investments 4,231,074
------------
TOTAL NET ASSETS $104,168,272
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE ($104,168,272/9,416,319 shares) $ 11.06
============
The accompanying notes are an integral part of the financial statements.
13
<page>
Statement of Operations (unaudited)
For the Six Months Ended June 30, 2005
INVESTMENT INCOME:
Interest $2,016,052
Dividends 37,470
----------
Total Investment Income 2,053,522
----------
EXPENSES:
Management fees (Note 3) 237,340
Fund accounting and transfer agent fees (Note 3) 68,486
Directors' fees (Note 3) 3,459
Chief Compliance Officer services fees (Note 3) 2,988
Custodian fees 6,365
Miscellaneous 27,594
----------
Total Expenses 346,232
----------
NET INVESTMENT INCOME 1,707,290
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 99,349
Net change in unrealized appreciation on investments 544,389
----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS 643,738
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $2,351,028
==========
The accompanying notes are an integral part of the financial statements.
14
<page>
Statements of Changes in Net Assets
FOR THE SIX
MONTHS ENDED FOR THE
6/30/05 YEAR ENDED
(UNAUDITED 12/31/04
-------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,707,290 $ 2,770,680
Net realized gain on investments 99,349 79,105
Net change in unrealized appreciation on
investments 544,389 85,958
-------------- ------------
Net increase from operations 2,351,028 2,935,743
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 7):
From net investment income (1,658,346) (3,183,863)
From net realized gain on investments - (64,781)
-------------- ------------
Total distributions to shareholders (1,658,346) (3,248,644)
-------------- ------------
CAPITAL STOCK ISSUED AND
REPURCHASED:
Net increase from capital share transactions (Note 5) 17,034,586 23,000,395
-------------- ------------
Net increase in net assets 17,727,268 22,687,494
NET ASSETS:
Beginning of period 86,441,004 63,753,510
-------------- ------------
END OF PERIOD (including undistributed net investment
income of $389,959 and $341,015, respectively) $ 104,168,272 $86,441,004
============== ============
The accompanying notes are an integral part of the financial statements.
15
<page>
Financial Highlights
FOR THE SIX
MONTHS ENDED
6/30/05 FOR THE YEARS ENDED
(UNAUDITED) 12/31/04 12/31/03 12/31/02 12/31/01
-------------- --------------------- ---------- ---------- ----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 10.99 $ 11.04 $ 11.00 $ 10.54 $ 10.57
-------------- --------------------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income 0.18 0.37 0.41 0.44 0.45
Net realized and unrealized gain (loss) on
investments 0.08 0.04 0.10 0.51 (0.06)
-------------- --------------------- ---------- ---------- ----------
Total from investment operations 0.26 0.41 0.51 0.95 0.39
-------------- --------------------- ---------- ---------- ----------
Less distributions to shareholders:
From net investment income (0.19) (0.45) (0.41) (0.41) (0.41)
From net realized gain on investments - (0.01) (0.06) (0.08) (0.01)
-------------- --------------------- ---------- ---------- ----------
Total distributions to shareholders (0.19) (0.46) (0.47) (0.49) (0.42)
-------------- --------------------- ---------- ---------- ----------
NET ASSET VALUE - END OF PERIOD $ 11.06 $ 10.99 $ 11.04 $ 11.00 $ 10.54
============== ===================== ========== ========== ==========
Total return1 2.35% 3.80% 4.65% 9.21% 3.72%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL
DATA:
Expenses 0.73%2 0.77% 0.78% 0.82% 0.78%
Net investment income 3.60%2 3.63% 3.83% 4.07% 4.26%
Portfolio turnover 2% 5% 7% 11% 3%
NET ASSETS - END OF PERIOD (000's omitted) $ 104,168 $ 86,441 $ 63,754 $ 55,169 $ 53,266
============== ===================== ========== ========== ==========
FOR THE YEAR ENDED
12/31/00
----------
PER SHARE DATA (FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD):
NET ASSET VALUE - BEGINNING OF PERIOD $ 9.74
----------
Income (loss) from investment operations:
Net investment income 0.43
Net realized and unrealized gain (loss) on
investments 0.81
----------
Total from investment operations 1.24
----------
Less distributions to shareholders:
From net investment income (0.41)
From net realized gain on investments -
----------
Total distributions to shareholders (0.41)
----------
NET ASSET VALUE - END OF PERIOD $ 10.57
==========
Total return1 12.92%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL
DATA:
Expenses 0.76%
Net investment income 4.55%
Portfolio turnover 1%
NET ASSETS - END OF PERIOD (000's omitted) $ 46,649
==========
1Represents aggregate total return for the period indicated, and assumes
reinvestment of all distributions. Periods less than one year are not
annualized.
2Annualized.
The accompanying notes are an integral part of the financial statements.
16
<page>
Notes to Financial Statements (unaudited)
1. ORGANIZATION
Diversified Tax Exempt Series (the "Series") is a no-load diversified series of
Exeter Fund, Inc. (the "Fund"). The Fund is organized in Maryland and is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company.
The Series' investment objective is to provide as high a level of current income
exempt from federal income tax as the Advisor believes is consistent with the
preservation of capital.
The Fund's Advisor is Manning & Napier Advisors, Inc. (the "Advisor"), doing
business as Exeter Asset Management. Shares of the Series are offered to
investors, clients and employees of the Advisor and its affiliates. The total
authorized capital stock of the Fund consists of 1.7 billion shares of common
stock each having a par value of $0.01. As of June 30, 2005, 1.16 billion
shares have been designated in total among 21 series, of which 50 million have
been designated as Diversified Tax Exempt Series common stock.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Municipal securities will normally be valued on the basis of market valuations
provided by an independent pricing service (the "Service"). The Service
utilizes the latest price quotations and a matrix system (which considers such
factors as security prices of similar securities, yields, maturities and
ratings). The Service has been approved by the Fund's Board of Directors.
Securities for which representative valuations or prices are not available from
the Fund's pricing service may be valued at fair value as determined in good
faith by the Advisor under procedures approved by and under the general
supervision and responsibility of the Fund's Board of Directors.
Short-term investments that mature in sixty days or less are valued at amortized
cost, which approximates market value. Investments in open-end investment
companies are valued at their net asset value per share on valuation date.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND EXPENSES
Security transactions are accounted for on trade date. Interest income,
including amortization of premium and accretion of discounts, is earned from
settlement date and accrued daily. 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 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.
17
<page>
Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
DISTRIBUTIONS OF INCOME AND GAINS
Distributions to shareholders of net investment income are made quarterly.
Distributions of net realized gains are made annually. An additional
distribution may be necessary to avoid taxation of the Series. Distributions
are recorded on the ex-dividend date.
OTHER
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of 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 0.50% of the Series' average daily net assets.
Under the Agreement, personnel of the Advisor provide the Series with advice and
assistance in the choice of investments and the execution of securities
transactions, and otherwise maintain the Series' organization. The Advisor also
provides the Fund with necessary office space and fund administration services.
The salaries of all officers of the Fund (except a percentage of the Fund's
Chief Compliance Officer's salary, which is paid by the Fund, and the Special
Assistant Secretary's salary, which is paid by BISYS Fund Services Ohio, Inc.
("BISYS")), and of all Directors who are "affiliated persons" of the Fund, or of
the Advisor, and all personnel of the Fund, or of the Advisor, performing
services relating to research, statistical and investment activities, are paid
by the Advisor. Each "non-affiliated" Director receives an annual stipend, which
is allocated among all the active series of the Fund. In addition, these
Directors also receive a per meeting fee for each active series of the Fund plus
a fee for each committee meeting attended.
The Advisor has voluntarily agreed, until at least December 31, 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 0.78% of average daily
net assets each year. For the six months ended June 30, 2005, the Advisor did
not waive its management fee or reimburse any expenses of the Series.
Manning & Napier Investor Services, Inc., a registered broker-dealer affiliate
of the Advisor, acts as distributor for the Fund's shares. The services of
Manning & Napier Investor Services, Inc. are provided at no additional cost to
the Series.
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 pays the Advisor an annual fee of 0.15% of the Fund's average daily net
assets up to $900 million, 0.11% for the Fund's average daily net assets between
$900 million and $1.5 billion, and 0.07% for the Fund's average daily net assets
over $1.5 billion. These fee rates are scheduled to be reduced each year
through 2007. Additionally, certain transaction and account-based fees and
out-of-pocket expenses, including charges for reporting relating to the Fund's
Compliance Program,
18
<page>
Notes to Financial Statements (unaudited)
3. TRANSACTIONS WITH AFFILIATES (continued)
are charged. Expenses not directly attributable to a series are allocated based
on each series' relative net assets or number of accounts, depending on the
expense. The Advisor has an agreement with BISYS under which BISYS serves as
sub-accounting services and sub-transfer agent.
4. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2005, purchases and sales of securities, other
than short-term securities, were $16,914,087 and $1,499,350, respectively.
5. CAPITAL STOCK TRANSACTIONS
Transactions in shares of Diversified Tax Exempt Series were:
FOR THE SIX MONTHS FOR THE YEAR
ENDED 6/30/05 ENDED 12/31/04
------------------------------------- ------------------------
Shares Amount Shares Amount
------------------- ---------------- ---------- ------------
Sold 1,910,897 $ 21,036,339 2,625,078 $28,823,549
Reinvested 143,462 1,565,607 281,111 3,071,337
Repurchased (506,384) (5,567,360) (815,090) (8,894,491)
------------------- ---------------- ---------- ------------
Total 1,547,975 $ 17,034,586 2,091,099 $23,000,395
=================== ================ ========== ============
Substantially all of the Series' shares represent investments by fiduciary
accounts over which the Advisor has sole investment discretion.
6. FINANCIAL INSTRUMENTS
The Series may trade in financial instruments with off-balance sheet risk in the
normal course of its investing activities to assist in managing exposure to
various market risks. These financial instruments include written options and
futures contracts and may involve, to a varying degree, elements of risk in
excess of the amounts recognized for financial statement purposes. No such
investments were held by the Series on June 30, 2005.
7. FEDERAL INCOME TAX INFORMATION
The amount and characterization of certain income and capital gains to be
distributed are determined in accordance with federal income tax regulations,
which may differ from accounting principles generally accepted in the United
States of America. The Series may periodically make reclassifications among its
capital accounts to reflect income and gains available for distribution (or
available capital loss carryovers) under income tax regulations, without
impacting the Series' net asset value. Any such reclassifications are not
reflected in the financial highlights.
The final determination of the tax character of current year distributions will
be made at the conclusion of the fiscal year. The tax character of
distributions paid for the year ended December 31, 2004 were as follows:
Ordinary income $ 40,000
Tax exempt income 3,143,863
Long-term capital gains 64,781
19
<page>
Notes to Financial Statements (unaudited)
7. FEDERAL INCOME TAX INFORMATION (continued)
At June 30, 2005, the identified cost of investments for federal income tax
purposes, the resulting gross unrealized appreciation and depreciation, and the
net unrealized appreciation were as follows:
Cost for federal income tax purposes $98,078,914
Unrealized appreciation $ 4,294,299
Unrealized depreciation (24,389)
------------
Net unrealized appreciation $ 4,269,910
============
20
<page>
[This page intentionally left blank]
21
<page>
Literature Requests (unaudited)
PROXY VOTING POLICIES AND PROCEDURES
- --------------------------------------------------------------------------------
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available, without charge,
upon request:
By phone 1-800-466-3863
On the Securities and Exchange
Commission's (SEC) web site http://www.sec.gov
PROXY VOTING RECORD
- --------------------------------------------------------------------------------
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30th is available,
without charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
QUARTERLY PORTFOLIO HOLDINGS
- --------------------------------------------------------------------------------
The Series' complete schedule of portfolio holdings for the 1st and 3rd quarters
of each fiscal year are provided on Form N-Q, and are available, without charge,
upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
The Series' Form N-Q may be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C. Information on the operation of the Public Reference
Room may be obtained by calling 1-800-SEC-0330.
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION (SAI)
- --------------------------------------------------------------------------------
The prospectus and SAI provide additional information about each Series,
including charges, expenses and risks. These documents are available, without
charge, upon request:
By phone 1-800-466-3863
On the SEC's web site http://www.sec.gov
On the Advisor's web site
http://www.manningnapieradvisors.com/www/exeter_fund.asp
ADDITIONAL INFORMATION AVAILABLE AT
WWW.MANNINGNAPIERADVISORS.COM/WWW/EXETER_FUND.ASP
- --------------------------------------------------------------------------------
1. Fund Holdings - month-end
2. Fund Holdings - quarter-end
3. Shareholder Report - Annual
4. Shareholder Report - Semi-Annual
22
<page>
ITEM 2: CODE OF ETHICS
NOT APPLICABLE FOR SEMI-ANNUAL REPORTS.
ITEM 3: AUDIT COMMITTEE FINANCIAL EXPERT
NOT APPLICABLE FOR SEMI-ANNUAL REPORTS.
ITEM 4: PRINCIPAL ACCOUNTANT FEES AND SERVICES
NOT APPLICABLE FOR SEMI-ANNUAL REPORTS.
ITEM 5: AUDIT COMMITTEE OF LISTED REGISTRANTS
NOT APPLICABLE.
ITEM 6: SCHEDULE OF INVESTMENTS
SEE INVESTMENT PORTFOLIOS UNDER ITEM 1 ON THIS FORM N-CSR.
ITEM 7: DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES
NOT APPLICABLE.
ITEM 8: PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
NOT APPLICABLE.
ITEM 9: PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
NOT APPLICABLE.
ITEM 10: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
THERE HAVE BEEN NO MATERIAL CHANGES TO THE PROCEDURE BY WHICH SHAREHOLDERS MAY
RECOMMEND NOMINEES TO THE REGISTRANT'S BOARD OF DIRECTORS.
ITEM 11: CONTROLS AND PROCEDURES
(a) Based on their evaluation of the Funds' disclosure controls and procedures,
as of a date within 90 days of the filing date, the Funds' Principal Executive
Officer and Principal Financial Officer have concluded that the Funds'
disclosure controls and procedures are: (i) reasonably designed to ensure that
information required to be disclosed in this report is appropriately
communicated to the Funds' officers to allow timely decisions regarding
disclosures required in this report; (ii) reasonably designed to ensure that
information required to be disclosed in this report is recorded, processed,
summarized and reported in a timely manner; and (iii) are effective in achieving
the goals described in (i) and (ii) above.
(b) During the second fiscal quarter of the period covered by this report,
there have been no changes in the Funds' internal control over financial
reporting that the above officers believe to have materially affected, or to be
reasonably likely to materially affect, the Funds' internal control over
financial reporting.
ITEM 12: EXHIBITS
(A)(1) NOT APPLICABLE FOR SEMI-ANNUAL REPORTS.
(A)(2) SEPARATE CERTIFICATIONS FOR THE REGISTRANT'S PRINCIPAL EXECUTIVE
OFFICER AND PRINCIPAL FINANCIAL OFFICER, AS REQUIRED BY SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002 AND RULE 30A-2(A) UNDER THE INVESTMENT COMPANY
ACT OF 1940, ARE ATTACHED AS EX-99.CERT.
(A)(3) NOT APPLICABLE.
(B) A CERTIFICATION OF THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICER AND
PRINCIPAL FINANCIAL OFFICER, AS REQUIRED BY 18 U.S.C SECTION 1350, AS
ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, AND
RULE 30A-2(B) UNDER THE INVESTMENT COMPANY ACT OF 1940, IS ATTACHED AS
EX-99.906CERT. THE CERTIFICATION FURNISHED PURSUANT TO THIS PARAGRAPH IS
NOT DEEMED TO BE "FILED" FOR PURPOSES OF SECTION 18 OF THE SECURITIES
EXCHANGE ACT OF 1934, OR OTHERWISE SUBJECT TO THE LIABILITY OF THAT SECTION.
SUCH CERTIFICATION IS NOT DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY
FILING UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934,
EXCEPT TO THE EXTENT THAT THE REGISTRANT SPECIFICALLY INCORPORATES THEM BY
REFERENCE.
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.
August 29, 2005
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 Ausptiz
B. Reuben Auspitz
President & Principal Executive Officer of Exeter Fund, Inc.
August 29, 2005
/s/ Christine Glavin
Christine Glavin
Chief Financial Officer & Principal Financial Officer of Exeter Fund, Inc.
August 29, 2005