Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL INCOME TAXES
The Fund's policy is to comply with the provisions of the Internal Revenue Code applicable to regulated
investment companies. The Fund is not subject to federal income or excise tax to the extent the Fund 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.
At April 30, 1996, the Fund, for federal income tax purposes, had a capital loss carryforward of $172, which
will expire on December 31, 2003.
The Fund uses the identified cost method for determining realized gain or loss on investments for both financial
statement and federal income tax reporting purposes.
DISTRIBUTION OF INCOME AND GAINS
Distributions to shareholders of net investment income are made quarterly. Distributions are recorded on the ex-
dividend date. Distributions of net realized gains are distributed annually. An additional distribution may be
necessary to avoid taxation of the Fund.
The timing and characterization of certain income and capital gains are determined in accordance with federal
income tax regulations which may differ from generally accepted accounting principles. The differences may be a
result of deferral of certain losses, character reclassification between net income and net gains or other tax
adjustments. As a result, net investment income (loss) and net investment gain (loss) on investment transactions
for a reporting period may differ significantly from distributions to shareholders during such period. As a result,
the Fund may periodically make reclassification among its capital accounts without impacting the Fund's net asset
3. TRANSACTIONS WITH AFFILIATES The Fund has an investment advisory agreement with Manning &
Napier Advisors, Inc. (the "Advisor"), for