Notes to Financial Statements (unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
FEDERAL INCOME TAXES (continued)
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 required
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 value.
The preparation of the financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Fund has an investment advisory agreement with Manning & Napier Advisors, Inc. (the "Advisor"), for
which the Fund pays the Advisor a fee, computed daily and payable monthly, at an annual rate of 0.35% of the
Fund's average daily net assets. The fee a