Manning & Napier 2014 Shareholder Letter and Equity Series Fund Commentary

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Jan 04, 2015

Dear Shareholders:

The global economy remained on a slow growth path during the past year. Developed economies continued to support economic growth through accommodative monetary policy, and as the year progressed, central banks in areas such as Europe and Japan loosened policy further to combat persistent growth headwinds. Meanwhile, the U.S. economy slowed as it meandered through a very harsh winter, but recovered quickly during the spring and summer months of 2014. The Federal Reserve completed its third quantitative easing program, and market expectations for subsequent adjustment to domestic monetary policy during 2015 helped fuel a meaningful increase in the value of the dollar relative to other global currencies during the period. With the U.S. economy making positive strides, its equity markets generally performed strongly as well. Global markets were broadly weaker, although pockets of strength existed in certain emerging market countries where encouraging political developments and reform momentum helped lift investor sentiment. Looking ahead, we expect the slow global growth environment to remain in place for the foreseeable future.

As always, we appreciate your business.

Sincerely,

Manning & Napier Advisors, LLC

Equity Series

Fund Commentary

(unaudited)

Investment Objective

To provide long-term growth of capital by investing primarily in common stocks. The Series is designed to allow the pursuit of opportunities in large, mid, and small size companies within the U.S.

Performance Commentary

U.S. equity markets generally delivered positive absolute returns for the twelve-month period ended October 31, 2014. The S&P 500 Total Return Index gained 17.25% while the Russell 3000® index earned 16.07%. The Equity Series provided positive absolute returns as well; however, the Series’ returns of 13.23% trailed the broad market on a relative basis. Despite the near-term relative underperformance, the Equity Series continues to provide competitive absolute and relative returns over the current U.S. stock market cycle. The cycle includes a prolonged bear market from April 2000 to February 2009, a recovery, and the current bull market. Since the cycle began, the Equity Series has returned 7.58% annualized, outpacing the Russell 3000® Index’s annualized return of 4.47% and the S&P 500 Total Return Index’s 4.04% annualized return.

The Series’ underperformance relative to the Russell 3000® Index during the year was driven by stock selection. Sector allocation also detracted from relative returns. Regarding major detractors from relative performance, stock selection in Health Care, Energy, and Industrials challenged relative returns. Relative to the benchmark, the Series’ overweight allocations to Energy and Consumer Discretionary detracted from relative returns as well.

Offsetting a portion of the relative performance weakness were positive contributions to relative returns from stock selection in Information Technology, Materials, and Consumer Staples. The Series’ overweight to Information Technology relative to the benchmark also aided relative returns, as did an underweight to Consumer Staples, and a lack of exposure to Telecommunication Services.

In regards to current portfolio positioning, we are focused on finding companies with growth drivers that are not tied to the broad economy. We believe the key to generating attractive returns in the prevailing environment is the ability to identify individual businesses that can innovate and disrupt the competitive environment in which they operate. This involves finding businesses that are generating growth by creating new markets, expanding existing markets, or simply by taking share from their rivals.

Moving forward, we continue to believe that slow growth remains the most likely path for the U.S. economy. While uncertainty among investors regarding the pace of economic expansion and domestic monetary policy heightens the potential for new bouts of volatility, we would view short-term periods of weakness as a buying opportunity given the lack of excess in the market and economy we see today. That being said, a selective approach to investment selection is critical. While equity valuations do not appear to be overly expensive at present, they have moved broadly higher and are now at levels consistent with more moderate future market returns as compared to recent years. To be sure, opportunities at the individual company level still exist, but flexibility and discipline on price are essential in our effort to manage risk and capture return in the current market environment.

Please see the next page for additional performance information as of October 31, 2014.

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than that quoted; investors can obtain the most recent month-end performance at www.manning-napier.com or by calling (800) 466-3863.

The current stock market cycle is 04/01/2000 through current.

All investments involve risks, including possible loss of principal. As with any stock fund, the value of your investment will fluctuate in response to stock market movements. Investing in the Series will also involve a number of other risks, including issuer-specific risk, small-cap/mid-cap risk, and interest rate risk.