1. real estate

Quarterly Newsletter – January 2015
FUND, INC.
Education and Insight for Fund Shareholders
Emerging Markets Series
International Series
Overseas Series
World Opportunities Series
Fixed Income Funds
Core Bond Series
Core Plus Bond Series
Diversified Tax Exempt Series
Global Fixed Income Series
High Yield Bond Series
New York Tax Exempt Series
Ohio Tax Exempt Series
For Questions and Service: Manning & Napier Fund, Inc. • Toll-Free: (800) 466-3863
For more information about any of the Manning & Napier Fund, Inc. Series, you may obtain a prospectus at www.manning-napier.com or by calling
(800) 466-3863. Before investing, carefully consider the objectives, risks, charges and expenses of the investment and read the prospectus carefully as
it contains this and other information about the investment company. For regulatory purposes, not all Series are offered in all states.
A Word About Real Estate Series Risk
Funds whose investments are concentrated in a specific industry or sector may be subject to a higher degree of market risk than funds whose investments are diversified among a variety of
sectors. The Real Estate Series is subject to risks associated with the direct ownership of real estate, including the potential for falling real estate prices and the possibility of being highly
leveraged; an investment in the Series will be closely aligned with the performance of the real estate markets. Additionally, like all derivatives, investments in options can be highly volatile
and involve risks in addition to the risks of the underlying instrument on which the derivative is based, such as counterparty, correlation and liquidity risk. Please note that diversification
does not assure a profit or protect against loss in a declining market.
The Manning & Napier Fund, Inc. is managed by Manning & Napier Advisors, LLC. Manning & Napier Investor Services, Inc., an affiliate of Manning & Napier Advisors,
LLC, is the distributor of the Fund shares.
This newsletter may contain factual business information concerning Manning & Napier, Inc. and is not intended for the use of investors or potential investors in Manning & Napier, Inc.
It is not an offer to sell securities and it is not soliciting an offer to buy any securities of Manning & Napier, Inc.
Approved FUND-PUB001.4 (1/15)
Lower gas prices effectively unshackle a portion of consumer
spending. This generally has positive near-term implications for
economic growth as consumers are likely to allocate resources that
would otherwise have been spent on energy to purchases in other
categories. However, given a change in the nature of global oil supply
over the past few years, specifically the substantial increase in U.S.
oil production from shale rock in regions such as the Bakken in North
Dakota, market watchers should also consider the potential negative
impact declining crude oil prices could have on the domestic economy.
Importantly, we believe any adverse consequences from lower oil
prices would not be enough to meaningfully impair the current slow
growth environment, but with the U.S. a more prominent contributor to
global oil supply in recent times, investors will want to pay attention
to this aspect of the economic growth equation.
The U.S. unemployment rate dipped below 6% earlier this year for
the first time since 2008. Some of the improvement in labor markets
since the financial crisis can be attributed to growth in domestic oil
production. If oil prices remain weak for too long, energy companies
may be forced to shutter production and reduce their workforce. This
could create headwinds in other areas of the economy and offset some
of the boost to growth that typically comes from lower energy costs.
Regarding inflation, lower energy prices are visible in the latest
headline consumer price index (CPI) data. Year-over-year growth in the
all items index has slowed modestly every month since May. In the
year through October, headline inflation rose just under 1.7%.
4
$120
3.5
$110
3
$100
2.5
$90
2
$80
1.5
Nov-14
Aug-14
Feb-14
May-14
Nov-13
Aug-13
Feb-13
May-13
Nov-12
Aug-12
Feb-12
May-12
Nov-11
0.5
Aug-11
1
$60
Feb-11
$70
May-11
Foreign Equity Funds
$130
Nov-10
Dividend Focus Series
Dynamic Opportunities Series
Equity Series
Equity Income Series
Focused Opportunities Series
Inflation Focus Equity Series
Real Estate Series
Tax Managed Series
Aug-10
Crude Oil Prices and U.S. Inflation
November 2009 - November 2014
Feb-10
The usual flow of monthly information on the domestic economy did
not reveal any major surprises over the past few weeks. U.S. retail
sales rose 0.3% during October, erasing declines from September
that were similar in magnitude. Of the 13 main retail categories
tracked by the Department of Commerce, 11 showed growth versus
the prior month. Sales at electronics and appliance stores as well
as gas stations represented the weak spots. Electronics sales were
strong in September coinciding with Apple’s release of new iPhone
models so the drop in October likely reflected a waning impact of that
recent sales boost. The decline in gas station sales is being driven by
the downward trend in global oil prices feeding into lower domestic
gasoline prices. The price per barrel of Brent crude oil was down
more than 30% from the end of June through late November and the
national average price for regular unleaded gasoline fell about onethird during that period as well.
May-10
Pro-Blend® Maximum Term Series
Pro-Blend® Extended Term Series
Pro-Blend® Moderate Term Series
Pro-Blend® Conservative Term Series
Target 2055 Series
Target 2050 Series
Target 2045 Series
Target 2040 Series
Target 2035 Series
Target 2030 Series
Target 2025 Series
Target 2020 Series
Target 2015 Series
Target 2010 Series
Target Income Series
Multi-Asset Class Funds
Strategic Income Moderate Series
Strategic Income Conservative Series
Equity Funds
Nov-09
Life Cycle Funds
Lower Gas Prices Unshackle Consumer Spending
USD
Manning & Napier Fund, Inc. offers a comprehensive suite of products
Brent Crude (price per barrel, left axis)
CPI - All Items (year-over-year change in %)
CPI - Core (year-over-year change in %)
Source: FactSet
The recent trend in core inflation, which removes energy and food
prices, has been flatter. Core prices increased 1.8% over the twelve
months through October, slightly faster than the prior month’s 1.7%
advance.
Lending growth has accelerated during recent months, signaling that
the build-up of ample reserves in the banking system from persistently
loose monetary policy is flowing into the economy.
On the domestic political front, 2014 has contrasted with the fanfare
and fireworks of last year that culminated with a 16 day federal
government shutdown. That being said, mid-term election results
could spur bickering anew as Republicans now hold majorities in both
houses of Congress and a Democrat continues to occupy the White
House.
We believe it is unlikely that any major policy moves will be made on
hot-button issues such as health care or tax reform prior to the 2016
elections. The president’s veto power contributes to this view. While
Republicans control both houses, they lack the two-thirds majority
needed to override a presidential veto. Additionally, with Democratic
support as weak as it has been recently, Republicans do not stand to
gain much by attempting to make significant changes at the moment.
Rather, we envision a scenario over the next two years in which
the GOP simply works to avoid making major missteps and focuses
on repeating their recent election success in the upcoming race for
president.
Continued on next page.
For Questions & Service:
Manning & Napier Fund, Inc.
Toll-Free: (800) 466-3863
FEATURED FUND
Manning & Napier Fund, Inc.
Real Estate Series
Eurozone and Japan Real GDP Growth
December 2009 - September 2014
Global Economy
While still weak in an absolute sense, Greece and Spain represented two
of the fastest growing European economies during the third quarter. Real
GDP in Spain grew 0.5% quarter-over-quarter and Greek GDP increased
0.7%. Encouragingly, after six long years of recession, recently revised
data show that Greece emerged from recession earlier this year.
The generally weak global economic news also extended to Japan.
Reports show that its economy continued to shrink during the third
quarter, still unable to overcome the sales tax hike from April and
subsequent blow to consumer spending. Japan is now in recession
for the third time since 2010. Real GDP fell 0.4% for the July through
September period following a 1.9% decline during the prior three months.
Responding to the weak economic performance, Prime Minister Abe
dissolved the lower house of parliament and announced a snap election
to take place in mid-December. This maneuver was meant to reaffirm
3
2.5
2
In November 2009, Manning & Napier Fund,
Inc. launched its Real Estate Series in an
effort to take advantage of opportunities in
the real estate markets in the aftermath of the
financial crisis.
1.5
1
Percent (%)
0.5
0
-0.5
-1
-1.5
Source: FactSet
Sep-14
Jun-14
Mar-14
Dec-13
Jun-13
Sep-13
Mar-13
Dec-12
Jun-12
Eurozone
Sep-12
Mar-12
Dec-11
Jun-11
Sep-11
Mar-11
Dec-10
Jun-10
Sep-10
Mar-10
-2
Dec-09
A bevy of recently released third quarter GDP reports confirm that some
of the world’s most important economies continue to struggle. The
pace of expansion in the 18-member Eurozone quickened relative to the
second quarter, but was barely positive in absolute terms. Real GDP rose
a meager 0.2% for the July through September period. Examining GDP
among individual countries, France’s economy returned to growth after
contracting during the second quarter. Real GDP in France advanced 0.3%
quarter-over-quarter. Germany also narrowly avoided entering recession
as contracting GDP during the second quarter gave way to a modest 0.1%
rate of expansion during the third quarter. Meanwhile, Italy’s recession
continued. Italian GDP shrank 0.1%. Italy’s economy has now contracted
in 12 of the past 13 quarters.
Japan
support for the prime minister’s “Abenomics” strategy. In the end, Abe’s
ruling Liberal Democratic Party was able to retain the majority in the lower
house it needed, and as such, he remains in power.
Along with the election news, Japan also said it will delay until 2017
another planned sales tax increase that was originally scheduled to occur in the fourth quarter of 2015. Regarding inflation, if we strip out the
impact from last year’s sales tax hike, the pace of growth in Japanese
CPI continues to run below the Bank of Japan’s (BOJ) 2% target. To help
combat this, in late October the BOJ announced plans to meaningfully
boost its monetary stimulus efforts. Yen weakness was exacerbated by the
news, with the currency down 5% relative to the U.S. dollar in a matter of
weeks. Overall, Japan’s economy is still clearly struggling to digest the tax
hike, and we believe ongoing stimulus efforts are highly likely.
TIPS TO SHARE
An Overview of Real Estate Investment Trusts
Real Estate Investment Trusts (REITs) are companies that own
and normally manage income-producing real estate or real
estate-related assets. Congress created REITs in 1960 to provide
a vehicle for individual investors to participate in the commercial
real estate market without having to purchase commercial real
estate themselves. REITs typically own assets such as office
buildings, shopping malls, apartments, hotels, warehouses,
and mortgages or loans. Most REITs focus on a single class of
real estate; for instance, there are office REITs, retail REITs, and
residential REITs. Unlike other real estate companies, which may
develop properties and then resell them, REITs have to acquire
and manage their properties primarily for the purpose of building
their own investment portfolios.
The foremost requirements for a company to qualify as a REIT
are: 1) to have the majority of its assets and income tied to real
estate investments; and 2) to distribute annually at least 90
percent of its taxable income to shareholders as dividends. Most
REITs are equity REITs, which typically own and manage incomeproducing real estate. There are also mortgage REITs and REITs
that utilize both equity and mortgage strategies, known as hybrid
REITs.
Another distinction between REITs is whether they are publiclytraded or non-traded. Publicly-traded REITs trade on a stock
exchange, follow SEC rules similar to those of a publicly-traded
corporation, and are managed by employees of the company.
Non-traded REITs also file reports with the SEC, but there is
no independent information available about their share value.
Typically non-traded REITs do not have employees and are
managed by a contracted third party.
Due to the fact that a majority of Real Estate funds are composed
of REITs, understanding the composition and purpose of a REIT will
give investors a better understanding of a fund before they decide
to invest.
The progress the housing market has been
making toward recovery stalled to a degree
over the last year, but improving economic
conditions point more toward a renewed
recovery than another downturn. We expect
improved job growth to spur demand for
housing and homeownership. We believe
increasing consumer activity will translate into
a greater need for commercial real estate as
businesses seek to expand. Some categories
of real estate investments might face volatility
in the near term as investors carefully weigh
the Federal Reserve’s intentions concerning
interest rates, which could create attractive
buying opportunities. In an effort to capture
such opportunities, the Series’ portfolio
management team is constantly evaluating the
numerous sectors of the real estate market
in an attempt to uncover overarching themes
that can serve as guidelines for stock selection
decisions.
Young people were particularly hard hit by
the financial crisis and ensuing economic
downturn. Unable to find jobs, many moved
in with their parents. The percentage of
millenials (roughly those currently 18 to 35)
living with their parents kept rising from 2008
to 2013, but that trend may be reversing.
Recent data show that the percentage of
millenials living at home is at its lowest level
since 2011, and the number of millenials
sharing housing with each other has declined
as well. As the labor market continues to
improve, we believe this pent-up demand
for housing should increasingly come out
of parents’ basements and into the market.
Despite mortgage rates having risen from
their lowest levels, first-time homebuyers
enter a market with rates that are still low by
historical standards, making it easier for them
to secure an affordable mortgage.
It is important to note that there is more to
real estate than simply residential housing.
Real estate includes a variety of sub-sectors
of the economy, and the holdings of the Real
Estate Series reflect that diversity. Real estate
offers investors exposure to sectors such as
retail, lodging and hotels, health care, office
space, self-storage, student housing, and
data centers. There are different types of real
estate investments as well, the most common
being Real Estate Investment Trusts (REITs;
see “Tips to Share” for definition). Over 80%
of the fund’s holdings are in REITs, as has been
the case throughout the fund’s history.
Generally, we favor publicly-financed
companies over their private counterparts for
the Series’ portfolio. Public companies have
more outlets through which to access capital,
and they have taken advantage of the current
environment to lock in low interest rates. The
debt level among U.S. REITs continues to be
very low, which, in our view, should give them
the ability to make investments and/or provide
a degree of financial stability if capital were to
become scarce at some point.
We also believe homebuilders and the
timber industry are positioned to benefit
from favorable supply/demand dynamics in
a renewed recovery in the housing market.
Construction of new single-family homes,
which account for the bulk of the housing
market, surged to a post-recession high
in October 2014 before falling slightly in
November.
ability to increase rents. Nevertheless, we
believe there is still space for additional
occupancy gains in the current cycle. Also,
new commercial property construction is
running well below average, and is likely to
remain subdued for several years.
As of the end of November, the Real Estate
Series’ largest holdings were in retail,
residential, lodging and hotels, and health
care. These four sectors accounted for more
than 50% of the fund’s holdings. Among
other sectors, the fund has an allocation to
data centers, a niche market. We believe this
market segment is positioned to benefit from
growing global internet traffic, the rise of
cloud computing, and increasing regulatory
requirements. Also, operating a niche property
type has allowed the owners and operators
of data centers to grow throughout the real
estate cycle.
In seeking to invest in companies that are
exposed to positive longer-term themes, our
analysts use three time-tested and disciplined
strategies to determine which securities
comprise the Real Estate Series. Manning
& Napier was founded more than 40 years
ago as an investment manager focused on
company and industry fundamentals. As the
real estate market evolves, the firm believes
that its disciplined, bottoms-up active
management philosophy enables it to adapt to
changing market conditions as they arise.
As with the residential market, we are looking
to take advantage of supply/demand dynamics
in some segments of the commercial real
estate market. Since the economic downturn,
there has been a steady absorption of
commercial space across all major real estate
sectors, which should enhance landlords’
Investment in real estate, including REITs, is subject to risks associated with the direct ownership of real estate: interest rate risk, liquidity risk, and changes in property value, among
others. Additionally, investments concentrated in a specific industry or sector may be less diversified and subject to a higher degree of risk than the overall market.
Analysis: Manning & Napier Advisors, LLC. Source: FactSet
All investments contain risk and may lose value. This material contains the opinions of Manning & Napier Advisors, LLC, which are subject to change based on evolving market and
economic conditions. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security,
strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.
Please reference final page for disclosures.
FEATURED FUND
Manning & Napier Fund, Inc.
Real Estate Series
Eurozone and Japan Real GDP Growth
December 2009 - September 2014
Global Economy
While still weak in an absolute sense, Greece and Spain represented two
of the fastest growing European economies during the third quarter. Real
GDP in Spain grew 0.5% quarter-over-quarter and Greek GDP increased
0.7%. Encouragingly, after six long years of recession, recently revised
data show that Greece emerged from recession earlier this year.
The generally weak global economic news also extended to Japan.
Reports show that its economy continued to shrink during the third
quarter, still unable to overcome the sales tax hike from April and
subsequent blow to consumer spending. Japan is now in recession
for the third time since 2010. Real GDP fell 0.4% for the July through
September period following a 1.9% decline during the prior three months.
Responding to the weak economic performance, Prime Minister Abe
dissolved the lower house of parliament and announced a snap election
to take place in mid-December. This maneuver was meant to reaffirm
3
2.5
2
In November 2009, Manning & Napier Fund,
Inc. launched its Real Estate Series in an
effort to take advantage of opportunities in
the real estate markets in the aftermath of the
financial crisis.
1.5
1
Percent (%)
0.5
0
-0.5
-1
-1.5
Source: FactSet
Sep-14
Jun-14
Mar-14
Dec-13
Jun-13
Sep-13
Mar-13
Dec-12
Jun-12
Eurozone
Sep-12
Mar-12
Dec-11
Jun-11
Sep-11
Mar-11
Dec-10
Jun-10
Sep-10
Mar-10
-2
Dec-09
A bevy of recently released third quarter GDP reports confirm that some
of the world’s most important economies continue to struggle. The
pace of expansion in the 18-member Eurozone quickened relative to the
second quarter, but was barely positive in absolute terms. Real GDP rose
a meager 0.2% for the July through September period. Examining GDP
among individual countries, France’s economy returned to growth after
contracting during the second quarter. Real GDP in France advanced 0.3%
quarter-over-quarter. Germany also narrowly avoided entering recession
as contracting GDP during the second quarter gave way to a modest 0.1%
rate of expansion during the third quarter. Meanwhile, Italy’s recession
continued. Italian GDP shrank 0.1%. Italy’s economy has now contracted
in 12 of the past 13 quarters.
Japan
support for the prime minister’s “Abenomics” strategy. In the end, Abe’s
ruling Liberal Democratic Party was able to retain the majority in the lower
house it needed, and as such, he remains in power.
Along with the election news, Japan also said it will delay until 2017
another planned sales tax increase that was originally scheduled to occur in the fourth quarter of 2015. Regarding inflation, if we strip out the
impact from last year’s sales tax hike, the pace of growth in Japanese
CPI continues to run below the Bank of Japan’s (BOJ) 2% target. To help
combat this, in late October the BOJ announced plans to meaningfully
boost its monetary stimulus efforts. Yen weakness was exacerbated by the
news, with the currency down 5% relative to the U.S. dollar in a matter of
weeks. Overall, Japan’s economy is still clearly struggling to digest the tax
hike, and we believe ongoing stimulus efforts are highly likely.
TIPS TO SHARE
An Overview of Real Estate Investment Trusts
Real Estate Investment Trusts (REITs) are companies that own
and normally manage income-producing real estate or real
estate-related assets. Congress created REITs in 1960 to provide
a vehicle for individual investors to participate in the commercial
real estate market without having to purchase commercial real
estate themselves. REITs typically own assets such as office
buildings, shopping malls, apartments, hotels, warehouses,
and mortgages or loans. Most REITs focus on a single class of
real estate; for instance, there are office REITs, retail REITs, and
residential REITs. Unlike other real estate companies, which may
develop properties and then resell them, REITs have to acquire
and manage their properties primarily for the purpose of building
their own investment portfolios.
The foremost requirements for a company to qualify as a REIT
are: 1) to have the majority of its assets and income tied to real
estate investments; and 2) to distribute annually at least 90
percent of its taxable income to shareholders as dividends. Most
REITs are equity REITs, which typically own and manage incomeproducing real estate. There are also mortgage REITs and REITs
that utilize both equity and mortgage strategies, known as hybrid
REITs.
Another distinction between REITs is whether they are publiclytraded or non-traded. Publicly-traded REITs trade on a stock
exchange, follow SEC rules similar to those of a publicly-traded
corporation, and are managed by employees of the company.
Non-traded REITs also file reports with the SEC, but there is
no independent information available about their share value.
Typically non-traded REITs do not have employees and are
managed by a contracted third party.
Due to the fact that a majority of Real Estate funds are composed
of REITs, understanding the composition and purpose of a REIT will
give investors a better understanding of a fund before they decide
to invest.
The progress the housing market has been
making toward recovery stalled to a degree
over the last year, but improving economic
conditions point more toward a renewed
recovery than another downturn. We expect
improved job growth to spur demand for
housing and homeownership. We believe
increasing consumer activity will translate into
a greater need for commercial real estate as
businesses seek to expand. Some categories
of real estate investments might face volatility
in the near term as investors carefully weigh
the Federal Reserve’s intentions concerning
interest rates, which could create attractive
buying opportunities. In an effort to capture
such opportunities, the Series’ portfolio
management team is constantly evaluating the
numerous sectors of the real estate market
in an attempt to uncover overarching themes
that can serve as guidelines for stock selection
decisions.
Young people were particularly hard hit by
the financial crisis and ensuing economic
downturn. Unable to find jobs, many moved
in with their parents. The percentage of
millenials (roughly those currently 18 to 35)
living with their parents kept rising from 2008
to 2013, but that trend may be reversing.
Recent data show that the percentage of
millenials living at home is at its lowest level
since 2011, and the number of millenials
sharing housing with each other has declined
as well. As the labor market continues to
improve, we believe this pent-up demand
for housing should increasingly come out
of parents’ basements and into the market.
Despite mortgage rates having risen from
their lowest levels, first-time homebuyers
enter a market with rates that are still low by
historical standards, making it easier for them
to secure an affordable mortgage.
It is important to note that there is more to
real estate than simply residential housing.
Real estate includes a variety of sub-sectors
of the economy, and the holdings of the Real
Estate Series reflect that diversity. Real estate
offers investors exposure to sectors such as
retail, lodging and hotels, health care, office
space, self-storage, student housing, and
data centers. There are different types of real
estate investments as well, the most common
being Real Estate Investment Trusts (REITs;
see “Tips to Share” for definition). Over 80%
of the fund’s holdings are in REITs, as has been
the case throughout the fund’s history.
Generally, we favor publicly-financed
companies over their private counterparts for
the Series’ portfolio. Public companies have
more outlets through which to access capital,
and they have taken advantage of the current
environment to lock in low interest rates. The
debt level among U.S. REITs continues to be
very low, which, in our view, should give them
the ability to make investments and/or provide
a degree of financial stability if capital were to
become scarce at some point.
We also believe homebuilders and the
timber industry are positioned to benefit
from favorable supply/demand dynamics in
a renewed recovery in the housing market.
Construction of new single-family homes,
which account for the bulk of the housing
market, surged to a post-recession high
in October 2014 before falling slightly in
November.
ability to increase rents. Nevertheless, we
believe there is still space for additional
occupancy gains in the current cycle. Also,
new commercial property construction is
running well below average, and is likely to
remain subdued for several years.
As of the end of November, the Real Estate
Series’ largest holdings were in retail,
residential, lodging and hotels, and health
care. These four sectors accounted for more
than 50% of the fund’s holdings. Among
other sectors, the fund has an allocation to
data centers, a niche market. We believe this
market segment is positioned to benefit from
growing global internet traffic, the rise of
cloud computing, and increasing regulatory
requirements. Also, operating a niche property
type has allowed the owners and operators
of data centers to grow throughout the real
estate cycle.
In seeking to invest in companies that are
exposed to positive longer-term themes, our
analysts use three time-tested and disciplined
strategies to determine which securities
comprise the Real Estate Series. Manning
& Napier was founded more than 40 years
ago as an investment manager focused on
company and industry fundamentals. As the
real estate market evolves, the firm believes
that its disciplined, bottoms-up active
management philosophy enables it to adapt to
changing market conditions as they arise.
As with the residential market, we are looking
to take advantage of supply/demand dynamics
in some segments of the commercial real
estate market. Since the economic downturn,
there has been a steady absorption of
commercial space across all major real estate
sectors, which should enhance landlords’
Investment in real estate, including REITs, is subject to risks associated with the direct ownership of real estate: interest rate risk, liquidity risk, and changes in property value, among
others. Additionally, investments concentrated in a specific industry or sector may be less diversified and subject to a higher degree of risk than the overall market.
Analysis: Manning & Napier Advisors, LLC. Source: FactSet
All investments contain risk and may lose value. This material contains the opinions of Manning & Napier Advisors, LLC, which are subject to change based on evolving market and
economic conditions. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security,
strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.
Please reference final page for disclosures.
Quarterly Newsletter – January 2015
FUND, INC.
Education and Insight for Fund Shareholders
Emerging Markets Series
International Series
Overseas Series
World Opportunities Series
Fixed Income Funds
Core Bond Series
Core Plus Bond Series
Diversified Tax Exempt Series
Global Fixed Income Series
High Yield Bond Series
New York Tax Exempt Series
Ohio Tax Exempt Series
For Questions and Service: Manning & Napier Fund, Inc. • Toll-Free: (800) 466-3863
For more information about any of the Manning & Napier Fund, Inc. Series, you may obtain a prospectus at www.manning-napier.com or by calling
(800) 466-3863. Before investing, carefully consider the objectives, risks, charges and expenses of the investment and read the prospectus carefully as
it contains this and other information about the investment company. For regulatory purposes, not all Series are offered in all states.
A Word About Real Estate Series Risk
Funds whose investments are concentrated in a specific industry or sector may be subject to a higher degree of market risk than funds whose investments are diversified among a variety of
sectors. The Real Estate Series is subject to risks associated with the direct ownership of real estate, including the potential for falling real estate prices and the possibility of being highly
leveraged; an investment in the Series will be closely aligned with the performance of the real estate markets. Additionally, like all derivatives, investments in options can be highly volatile
and involve risks in addition to the risks of the underlying instrument on which the derivative is based, such as counterparty, correlation and liquidity risk. Please note that diversification
does not assure a profit or protect against loss in a declining market.
The Manning & Napier Fund, Inc. is managed by Manning & Napier Advisors, LLC. Manning & Napier Investor Services, Inc., an affiliate of Manning & Napier Advisors,
LLC, is the distributor of the Fund shares.
This newsletter may contain factual business information concerning Manning & Napier, Inc. and is not intended for the use of investors or potential investors in Manning & Napier, Inc.
It is not an offer to sell securities and it is not soliciting an offer to buy any securities of Manning & Napier, Inc.
Approved FUND-PUB001.4 (1/15)
Lower gas prices effectively unshackle a portion of consumer
spending. This generally has positive near-term implications for
economic growth as consumers are likely to allocate resources that
would otherwise have been spent on energy to purchases in other
categories. However, given a change in the nature of global oil supply
over the past few years, specifically the substantial increase in U.S.
oil production from shale rock in regions such as the Bakken in North
Dakota, market watchers should also consider the potential negative
impact declining crude oil prices could have on the domestic economy.
Importantly, we believe any adverse consequences from lower oil
prices would not be enough to meaningfully impair the current slow
growth environment, but with the U.S. a more prominent contributor to
global oil supply in recent times, investors will want to pay attention
to this aspect of the economic growth equation.
The U.S. unemployment rate dipped below 6% earlier this year for
the first time since 2008. Some of the improvement in labor markets
since the financial crisis can be attributed to growth in domestic oil
production. If oil prices remain weak for too long, energy companies
may be forced to shutter production and reduce their workforce. This
could create headwinds in other areas of the economy and offset some
of the boost to growth that typically comes from lower energy costs.
Regarding inflation, lower energy prices are visible in the latest
headline consumer price index (CPI) data. Year-over-year growth in the
all items index has slowed modestly every month since May. In the
year through October, headline inflation rose just under 1.7%.
4
$120
3.5
$110
3
$100
2.5
$90
2
$80
1.5
Nov-14
Aug-14
Feb-14
May-14
Nov-13
Aug-13
Feb-13
May-13
Nov-12
Aug-12
Feb-12
May-12
Nov-11
0.5
Aug-11
1
$60
Feb-11
$70
May-11
Foreign Equity Funds
$130
Nov-10
Dividend Focus Series
Dynamic Opportunities Series
Equity Series
Equity Income Series
Focused Opportunities Series
Inflation Focus Equity Series
Real Estate Series
Tax Managed Series
Aug-10
Crude Oil Prices and U.S. Inflation
November 2009 - November 2014
Feb-10
The usual flow of monthly information on the domestic economy did
not reveal any major surprises over the past few weeks. U.S. retail
sales rose 0.3% during October, erasing declines from September
that were similar in magnitude. Of the 13 main retail categories
tracked by the Department of Commerce, 11 showed growth versus
the prior month. Sales at electronics and appliance stores as well
as gas stations represented the weak spots. Electronics sales were
strong in September coinciding with Apple’s release of new iPhone
models so the drop in October likely reflected a waning impact of that
recent sales boost. The decline in gas station sales is being driven by
the downward trend in global oil prices feeding into lower domestic
gasoline prices. The price per barrel of Brent crude oil was down
more than 30% from the end of June through late November and the
national average price for regular unleaded gasoline fell about onethird during that period as well.
May-10
Pro-Blend® Maximum Term Series
Pro-Blend® Extended Term Series
Pro-Blend® Moderate Term Series
Pro-Blend® Conservative Term Series
Target 2055 Series
Target 2050 Series
Target 2045 Series
Target 2040 Series
Target 2035 Series
Target 2030 Series
Target 2025 Series
Target 2020 Series
Target 2015 Series
Target 2010 Series
Target Income Series
Multi-Asset Class Funds
Strategic Income Moderate Series
Strategic Income Conservative Series
Equity Funds
Nov-09
Life Cycle Funds
Lower Gas Prices Unshackle Consumer Spending
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Manning & Napier Fund, Inc. offers a comprehensive suite of products
Brent Crude (price per barrel, left axis)
CPI - All Items (year-over-year change in %)
CPI - Core (year-over-year change in %)
Source: FactSet
The recent trend in core inflation, which removes energy and food
prices, has been flatter. Core prices increased 1.8% over the twelve
months through October, slightly faster than the prior month’s 1.7%
advance.
Lending growth has accelerated during recent months, signaling that
the build-up of ample reserves in the banking system from persistently
loose monetary policy is flowing into the economy.
On the domestic political front, 2014 has contrasted with the fanfare
and fireworks of last year that culminated with a 16 day federal
government shutdown. That being said, mid-term election results
could spur bickering anew as Republicans now hold majorities in both
houses of Congress and a Democrat continues to occupy the White
House.
We believe it is unlikely that any major policy moves will be made on
hot-button issues such as health care or tax reform prior to the 2016
elections. The president’s veto power contributes to this view. While
Republicans control both houses, they lack the two-thirds majority
needed to override a presidential veto. Additionally, with Democratic
support as weak as it has been recently, Republicans do not stand to
gain much by attempting to make significant changes at the moment.
Rather, we envision a scenario over the next two years in which
the GOP simply works to avoid making major missteps and focuses
on repeating their recent election success in the upcoming race for
president.
Continued on next page.
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