<PAGE> 1
- --------------------------------------------------------------------------------
To Our Variable Life Policyowners:
- --------------------------------------------------------------------------------
August 26, 1996
As an owner of a Provident Mutual variable life insurance policy, we are
pleased to send you the Semi-Annual Report for the Separate Accounts for our
Variable Life Insurance Policies.
Attached to the Separate Accounts Semi-Annual Report is the Semi-Annual
Report for the Market Street Fund, Inc. Under separate cover, you will be
receiving the Semi-Annual Reports for the other Fund groups underlying the
Separate Accounts to which you have elected to allocate your premiums.
Thank you for your confidence in Provident Mutual and your variable life
policy. Provident Mutual has continued its role as a leader in the variable life
insurance marketplace. We are obviously very pleased with this result and are
happy that you are a part of our success.
We're happy to be of service to you. If you have a question about your
policy, please contact your local agent or call Provident Mutual's Service
Center toll-free at 1-800-668-5177.
Sincerely,
[Sig]
Robert W. Kloss
President
<PAGE> 2
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE> 3
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Assets and Liabilities, June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
SEPARATE SEPARATE SEPARATE SEPARATE SEPARATE SEPARATE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
ASSETS
Investment in the Market Street
Fund, Inc., at market value:
Growth Portfolio................ $ 154,718,231
Money Market Portfolio.......... $ 19,411,622
Bond Portfolio.................. $ 10,320,594
Managed Portfolio............... $ 28,604,083
Aggressive Growth Portfolio..... $22,790,145
International Portfolio......... $28,492,467
Dividends receivable.............. 79,178
------------ ----------- ----------- ----------- ----------- -----------
Total Assets...................... 154,718,231 19,490,800 10,320,594 28,604,083 22,790,145 28,492,467
------------ ----------- ----------- ----------- ----------- -----------
LIABILITIES
Payable to Provident Mutual Life
Insurance Company............... 105,055 11,259 19,437 21,361
------------ ----------- ----------- ----------- ----------- -----------
NET ASSETS........................ $ 154,613,176 $ 19,479,541 $ 10,301,157 $ 28,582,722 $22,790,145 $28,492,467
============ =========== =========== =========== =========== ===========
Held for the benefit of
policyowners.................... $ 154,440,014 $ 19,329,398 $ 10,208,130 $ 28,444,878 $22,633,487 $28,428,853
Attributable to Provident Mutual
Life Insurance Company.......... 173,162 150,143 93,027 137,844 156,658 63,614
------------ ----------- ----------- ----------- ----------- -----------
$ 154,613,176 $ 19,479,541 $ 10,301,157 $ 28,582,722 $22,790,145 $28,492,467
============ =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
1
<PAGE> 4
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Assets and Liabilities, June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ZERO COUPON BOND
SEPARATE ACCOUNT
- ----------------------------------------------------------------------------------------------------------------
2006 SERIES
SUBACCOUNT
<S> <C>
- ----------------------------------------------------------------------------------------------------------------
ASSETS
Investment in the Stripped ("Zero") U.S. Treasury Securities Fund, Provident Mutual Series
A, at market value:
2006 Series............................................................................... $4,600,646
Receivable from Provident Mutual Life Insurance Company..................................... 15,460
----------
NET ASSETS.................................................................................. $4,616,106
==========
Held for the benefit of policyowners........................................................ $4,558,671
Attributable to Provident Mutual Life Insurance Company..................................... 57,435
----------
$4,616,106
==========
</TABLE>
See accompanying notes to financial statements
2
<PAGE> 5
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Assets and Liabilities, June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ------------------------------------------------------------------------------------------------------------------
FIDELITY FIDELITY
EQUITY- FIDELITY FIDELITY ASSET FIDELITY
INCOME GROWTH OVERSEAS MANAGER INDEX 500
SUBACCOUNT SUBACCOUNT FIDELITY SUBACCOUNT SUBACCOUNT SUBACCOUNT
HIGH
INCOME
SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
ASSETS
Investment in the Variable Insurance
Products Fund, at market value:
Equity-Income Portfolio.............. $47,732,304
Growth Portfolio..................... $64,952,268
High Income Portfolio................ $5,481,504
Overseas Portfolio................... $12,321,916
Investment in the Variable Insurance
Products Fund II, at market value:
Asset Manager Portfolio.............. $28,779,499
Index 500 Portfolio.................. $16,249,231
----------- ----------- ---------- ----------- ----------- -----------
NET ASSETS............................. $47,732,304 $64,952,268 $5,481,504 $12,321,916 $28,779,499 $16,249,231
=========== =========== ========== =========== =========== ===========
Held for the benefit of policyowners... $47,719,445 $64,849,598 $5,448,383 $12,283,486 $28,692,626 $16,228,955
Attributable to Provident Mutual Life
Insurance Company.................... 12,859 102,670 33,121 38,430 86,873 20,276
----------- ----------- ---------- ----------- ----------- -----------
$47,732,304 $64,952,268 $5,481,504 $12,321,916 $28,779,499 $16,249,231
=========== =========== ========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
3
<PAGE> 6
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Assets and Liabilities, June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
FIDELITY NEUBERGER NEUBERGER
INVESTMENT FIDELITY & BERMAN & BERMAN LIMITED
GRADE BOND CONTRAFUND GROWTH MATURITY BOND
SUBACCOUNT SUBACCOUNT NEUBERGER SUBACCOUNT SUBACCOUNT
& BERMAN
BALANCED
SUBACCOUNT
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
ASSETS
Investment in the Variable Insurance Products
Fund II, at market value:
Investment Grade Bond Portfolio.............. $3,421,853
Contrafund Portfolio......................... $610,633
Investment in the Neuberger & Berman Advisers
Management Trust, at market value:
Balanced Portfolio........................... $4,026,586
Growth Portfolio............................. $14,414,767
Limited Maturity Bond Portfolio.............. $1,583,530
----------- ----------- ---------- ----------- -----------
NET ASSETS..................................... $3,421,853 $610,633 $4,026,586 $14,414,767 $1,583,530
=========== =========== ========== =========== ===========
Held for the benefit of policyowners........... $3,393,484 $585,155 $3,976,595 $14,372,592 $1,555,257
Attributable to Provident Mutual Life Insurance
Company...................................... 28,369 25,478 49,991 42,175 28,273
----------- ----------- ---------- ----------- -----------
$3,421,853 $610,633 $4,026,586 $14,414,767 $1,583,530
=========== =========== ========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 7
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Assets and Liabilities, June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
VAN ECK VAN ECK ALGER AMERICAN
WORLDWIDE EMERGING SMALL
TCI GROWTH BOND MARKETS CAPITALIZATION
SUBACCOUNT SUBACCOUNT VAN ECK SUBACCOUNT SUBACCOUNT
GOLD AND
NATURAL
RESOURCES
SUBACCOUNT
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
ASSETS
Investment in TCI Portfolios, Inc., at market
value:
Growth Portfolio.............................. $7,693,536
Investment in the Van Eck Worldwide Insurance
Trust, at market value:
Worldwide Bond Portfolio...................... $2,485,893
Gold and Natural Resources Portfolio.......... $1,400,635
Emerging Markets Portfolio.................... $244,930
Investment in the Alger American Fund, at market
value:
Small Capitalization Portfolio................ $1,007,909
----------- ----------- ---------- ----------- -----------
NET ASSETS...................................... $7,693,536 $2,485,893 $1,400,635 $244,930 $1,007,909
=========== =========== ========== =========== ===========
Held for the benefit of policyowners............ $7,657,985 $2,459,869 $1,368,329 $218,395 $ 985,027
Attributable to Provident Mutual Life Insurance
Company....................................... 35,551 26,024 32,306 26,535 22,882
----------- ----------- ---------- ----------- -----------
$7,693,536 $2,485,893 $1,400,635 $244,930 $1,007,909
=========== =========== ========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 8
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Operations for the Six Months Ended June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
SEPARATE SEPARATE SEPARATE SEPARATE SEPARATE SEPARATE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends................................ $ 2,136,639 $ 454,902 $ 300,666 $ 492,282 $ 206,506 $ 289,229
EXPENSES
Mortality and expense risks.............. 459,742 62,617 32,312 86,534 71,478 89,811
Operating expense reimbursement.......... (2,569) (71) (584)
----------- -------- --------- ---------- ---------- ----------
Total expenses........................... 457,173 62,546 31,728 86,534 71,478 89,811
----------- -------- --------- ---------- ---------- ----------
Net investment income.................... 1,679,466 392,356 268,938 405,748 135,028 199,418
----------- -------- --------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain distributions reinvested... 6,799,388 1,102,736 2,080,731 1,172,472
Net realized gain from redemption of
investment shares...................... 1,735,743 9,862 301,588 159,838 119,808
----------- -------- --------- ---------- ---------- ----------
Net realized gain on investments......... 8,535,131 9,862 1,404,324 2,240,569 1,292,280
----------- -------- --------- ---------- ---------- ----------
Net unrealized appreciation
(depreciation)
of investments:
Beginning of period.................... 23,244,683 443,614 3,562,768 2,711,686 2,138,159
End of period.......................... 25,927,869 (27,367) 2,879,880 2,344,723 2,347,805
----------- -------- --------- ---------- ---------- ----------
Net unrealized appreciation
(depreciation) of investments during
the period............................. 2,683,186 (470,981) (682,888) (366,963) 209,646
----------- -------- --------- ---------- ---------- ----------
Net realized and unrealized gain (loss)
on investments......................... 11,218,317 (461,119) 721,436 1,873,606 1,501,926
----------- -------- --------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations.............. $ 12,897,783 $ 392,356 $ (192,181) $ 1,127,184 $2,008,634 $ 1,701,344
=========== ======== ========= ========== ========== ==========
</TABLE>
See accompanying notes to financial statements
6
<PAGE> 9
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Operations for the Six Months Ended June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ZERO COUPON BOND
SEPARATE ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
2006
1996 SERIES SERIES
SUBACCOUNT** SUBACCOUNT
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
EXPENSES
Mortality and expense risks......................................................... $ 4,977 $ 15,470
Asset charge........................................................................ 1,981 5,639
------- ---------
Net investment loss................................................................. (6,958) (21,109)
------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain from redemption of investment shares.............................. 230,888 82,959
------- ---------
Net realized gain on investments.................................................... 230,888 82,959
------- ---------
Net unrealized appreciation (depreciation) of investments:
Beginning of period............................................................... 195,315 910,239
End of period..................................................................... -- 470,974
------- ---------
Net unrealized depreciation of investments during the period........................ (195,315) (439,265)
------- ---------
Net realized and unrealized gain (loss) on investments.............................. 35,573 (356,306)
------- ---------
Net increase (decrease) in net assets resulting from operations..................... $ 28,615 $(377,415)
======= =========
</TABLE>
**For the period January 1, 1996 to May 15, 1996 (date of maturity).
See accompanying notes to financial statements
7
<PAGE> 10
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Operations for the Six Months Ended June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
FIDELITY FIDELITY FIDELITY
EQUITY- FIDELITY HIGH FIDELITY ASSET FIDELITY
INCOME GROWTH INCOME OVERSEAS MANAGER INDEX 500
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends........................... $ 55,033 $ 133,186 $289,256 $ 105,244 $ 989,396 $ 114,956
EXPENSES
Mortality and expense risks......... 142,489 192,692 15,443 35,585 96,573 43,650
---------- ---------- -------- -------- ---------- ----------
Net investment income (loss)........ (87,456) (59,506) 273,813 69,659 892,823 71,306
---------- ---------- -------- -------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Realized gain distributions
reinvested........................ 1,577,632 3,362,939 56,594 115,768 815,818 295,601
Net realized gain (loss) from
redemption of investment shares... 60,210 129,837 28,961 13,555 (57,732) 10,870
---------- ---------- -------- -------- ---------- ----------
Net realized gain on investments.... 1,637,842 3,492,776 85,555 129,323 758,086 306,471
---------- ---------- -------- -------- ---------- ----------
Net unrealized appreciation
(depreciation) of investments:
Beginning of period............... 5,231,207 8,695,334 207,596 502,338 2,425,055 1,377,575
End of period..................... 5,695,488 10,624,925 132,812 1,006,150 2,263,164 2,103,166
---------- ---------- -------- -------- ---------- ----------
Net unrealized appreciation
(depreciation) of investments
during the period................. 464,281 1,929,591 (74,784) 503,812 (161,891) 725,591
---------- ---------- -------- -------- ---------- ----------
Net realized and unrealized gain
on investments.................... 2,102,123 5,422,367 10,771 633,135 596,195 1,032,062
---------- ---------- -------- -------- ---------- ----------
Net increase in net assets resulting
from operations................... $2,014,667 $5,362,861 $284,584 $ 702,794 $1,489,018 $1,103,368
========== ========== ======== ======== ========== ==========
</TABLE>
See accompanying notes to financial statements
8
<PAGE> 11
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Operations for the Six Months Ended June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
FIDELITY NEUBERGER NEUBERGER NEUBERGER
INVESTMENT FIDELITY & BERMAN & BERMAN & BERMAN LIMITED
GRADE BOND CONTRAFUND BALANCED GROWTH MATURITY BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends................................... $ 122,049 $ 79,944 $ 4,468 $ 111,447
EXPENSES
Mortality and expense risks................. 9,698 $ 38 12,623 44,585 4,591
-------- ---- ------- -------- -------
Net investment income (loss)................ 112,351 (38) 67,321 (40,117) 106,856
-------- ---- ------- -------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain distributions reinvested...... 444,565 1,045,605
Net realized gain (loss) from redemption
of investment shares...................... 7,421 20,802 40,283 (9,409)
-------- ---- ------- -------- -------
Net realized gain (loss) on investments..... 7,421 465,367 1,085,888 (9,409)
-------- ---- ------- -------- -------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period....................... 173,631 337,802 1,140,571 44,695
End of period............................. 12,156 (11) (108,274) 657,714 (54,221)
-------- ---- ------- -------- -------
Net unrealized depreciation of investments
during the period......................... (161,475) (11) (446,076) (482,857) (98,916)
-------- ---- ------- -------- -------
Net realized and unrealized gain (loss)
on investments............................ (154,054) (11) 19,291 603,031 (108,325)
-------- ---- ------- -------- -------
Net increase (decrease) in net assets
resulting from operations................. $ (41,703) $(49) $ 86,612 $ 562,914 $ (1,469)
======== ==== ======= ======== =======
</TABLE>
See accompanying notes to financial statements
9
<PAGE> 12
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Operations for the Six Months Ended June 30, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ------------------------------------------------------------------------------------------------------------------
VAN ECK ALGER
VAN ECK GOLD AND VAN ECK AMERICAN
WORLDWIDE NATURAL EMERGING SMALL
TCI GROWTH BOND RESOURCES MARKETS CAPITALIZATION
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends....................................... $ 65,988 $ 12,742 $ 219 $ 95
EXPENSES
Mortality and expense risks..................... $ 22,618 7,204 3,999
------- -------- ------- ------ --------
Net investment income (loss).................... (22,618) 58,784 8,743 219 95
------- -------- ------- ------ --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain distributions reinvested.......... 728,835 12,496 95
Net realized gain (loss) from redemption of
investment shares............................. 28,925 7,226 11,775 9 (98)
------- -------- ------- ------ --------
Net realized gain (loss) on investments......... 757,760 7,226 24,271 9 (3)
------- -------- ------- ------ --------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period........................... 584,114 70,122 65,442
End of period................................. (85,400) (42,144) 107,557 4,485 (19,794)
------- -------- ------- ------ --------
Net unrealized appreciation (depreciation) of
investments during the period................. (669,514) (112,266) 42,115 4,485 (19,794)
------- -------- ------- ------ --------
Net realized and unrealized gain (loss)
on investments................................ 88,246 (105,040) 66,386 4,494 (19,797)
------- -------- ------- ------ --------
Net increase (decrease) in net assets resulting
from operations............................... $ 65,628 $ (46,256) $ 75,129 $4,713 $(19,702)
======= ======== ======= ====== ========
</TABLE>
See accompanying notes to financial statements
10
<PAGE> 13
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Changes in Net Assets for the Six Months Ended June 30, 1996
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
SEPARATE SEPARATE SEPARATE SEPARATE SEPARATE SEPARATE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income........... $ 1,679,466 $ 392,356 $ 268,938 $ 405,748 $ 135,028 $ 199,418
Net realized gain on
investments................... 8,535,131 9,862 1,404,324 2,240,569 1,292,280
Net unrealized appreciation
(depreciation) of investments
during the period............. 2,683,186 (470,981) (682,888) (366,963) 209,646
------------ ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in net
assets from operations........ 12,897,783 392,356 (192,181) 1,127,184 2,008,634 1,701,344
------------ ------------ ----------- ----------- ----------- -----------
FROM VARIABLE LIFE POLICY
TRANSACTIONS
Policyowners' net premiums...... 15,353,772 15,428,738 1,326,172 2,793,976 3,647,747 4,589,741
Cost of insurance and
administrative charges........ (5,398,927) (1,621,142) (435,625) (1,052,539) (1,163,228) (1,398,086)
Surrenders and forfeitures...... (4,907,656) (283,286) (300,804) (675,871) (487,564) (503,810)
Transfers between investment
portfolios.................... (4,065,315) (11,177,231) (254,263) (48,200) (305,265) 350,114
Net withdrawals due to
policy loans.................. (1,175,259) (67,387) (58,345) (532,507) (175,346) (192,383)
Withdrawals due to
death benefits................ (152,159) (5,086) (11,251) (5,327) (22,713) (20,845)
------------ ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in net
assets derived from policy
transactions.................. (345,544) 2,274,606 265,884 479,532 1,493,631 2,824,731
------------ ------------ ----------- ----------- ----------- -----------
Return of capital to Provident
Mutual Life Insurance
Company....................... (200,000) (200,000) (200,000)
------------ ------------ ----------- ----------- ----------- -----------
Total increase (decrease) in net
assets........................ 12,352,239 2,466,962 (126,297) 1,606,716 3,502,265 4,526,075
NET ASSETS
Beginning of period........... 142,260,937 17,012,579 10,427,454 26,976,006 19,287,880 23,966,392
------------ ------------ ----------- ----------- ----------- -----------
End of period................. $ 154,613,176 $ 19,479,541 $ 10,301,157 $ 28,582,722 $22,790,145 $28,492,467
============ ============ =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
11
<PAGE> 14
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Changes in Net Assets for the Six Months Ended June 30, 1996
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ZERO COUPON BOND
SEPARATE ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
2006
1996 SERIES SERIES
SUBACCOUNT** SUBACCOUNT
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment loss................................................................. $ (6,958) $ (21,109)
Net realized gain on investments.................................................... 230,888 82,959
Net unrealized depreciation of investments during the period........................ (195,315) (439,265)
---------- ----------
Net increase (decrease) in net assets from operations............................... 28,615 (377,415)
---------- ----------
FROM VARIABLE LIFE POLICY TRANSACTIONS
Policyowners' net premiums.......................................................... 132,101 706,184
Cost of insurance and administrative charges........................................ (52,993) (322,130)
Surrenders and forfeitures.......................................................... (65,525) (35,321)
Transfers between investment portfolios............................................. (1,960,049) (75,387)
Net withdrawals due to policy loans................................................. (2,799) (10,354)
Withdrawals due to death benefits................................................... (9,233)
---------- ----------
Net increase (decrease) in net assets derived from policy transactions.............. (1,949,265) 253,759
Return of capital to Provident Mutual Life Insurance Company........................ (105,952) (50,000)
---------- ----------
Total decrease in net assets........................................................ (2,026,602) (173,656)
NET ASSETS
Beginning of period............................................................... 2,026,602 4,789,762
---------- ----------
End of period..................................................................... -- $4,616,106
========== ==========
** For the period January 1, 1996 to May 15, 1996 (date of maturity).
</TABLE>
See accompanying notes to financial statements
12
<PAGE> 15
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Changes in Net Assets for the Six Months Ended June 30, 1996
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ------------------------------------------------------------------------------------------------------------------
FIDELITY
FIDELITY FIDELITY FIDELITY ASSET FIDELITY
EQUITY-INCOME GROWTH OVERSEAS MANAGER INDEX 500
SUBACCOUNT SUBACCOUNT FIDELITY SUBACCOUNT SUBACCOUNT SUBACCOUNT
HIGH
INCOME
SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss)..... $ (87,456) $ (59,506) $ 273,813 $ 69,659 $ 892,823 $ 71,306
Net realized gain on
investments.................... 1,637,842 3,492,776 85,555 129,323 758,086 306,471
Net unrealized appreciation
(depreciation) of investments
during the period.............. 464,281 1,929,591 (74,784) 503,812 (161,891) 725,591
----------- ----------- ---------- ----------- ----------- -----------
Net increase in net assets
from operations................ 2,014,667 5,362,861 284,584 702,794 1,489,018 1,103,368
----------- ----------- ---------- ----------- ----------- -----------
FROM VARIABLE LIFE POLICY
TRANSACTIONS
Policyowners' net premiums....... 10,210,096 13,660,148 1,310,022 2,515,012 4,630,430 4,797,409
Cost of insurance and
administrative charges......... (2,619,251) (3,576,680) (295,228) (646,993) (1,616,180) (1,035,242)
Surrenders and forfeitures....... (648,683) (915,436) (21,314) (143,316) (940,640) (124,259)
Transfers between investment
portfolios..................... 5,286,075 4,377,279 915,368 1,376,422 (1,712,856) 2,633,867
Net withdrawals due to policy
loans.......................... (225,851) (281,829) (12,006) (30,180) (184,290) (64,928)
Withdrawals due to death
benefits....................... (15,236) (10,804) (260) (3,533) (533) (3,971)
----------- ----------- ---------- ----------- ----------- -----------
Net increase in net assets
derived from policy
transactions................... 11,987,150 13,252,678 1,896,582 3,067,412 175,931 6,202,876
----------- ----------- ---------- ----------- ----------- -----------
Capital contribution from
Provident Mutual Life Insurance
Company........................ 10,000
----------- ----------- ---------- ----------- ----------- -----------
Total increase in net assets..... 14,001,817 18,615,539 2,181,166 3,770,206 1,664,949 7,316,244
NET ASSETS
Beginning of period............ 33,730,487 46,336,729 3,300,338 8,551,710 27,114,550 8,932,987
----------- ----------- ---------- ----------- ----------- -----------
End of period.................. $47,732,304 $64,952,268 $5,481,504 $12,321,916 $28,779,499 $16,249,231
=========== =========== ========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
13
<PAGE> 16
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Changes in Net Assets for the Six Months Ended June 30, 1996
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
FIDELITY NEUBERGER NEUBERGER
INVESTMENT FIDELITY & BERMAN & BERMAN LIMITED
GRADE BOND CONTRAFUND GROWTH MATURITY BOND
SUBACCOUNT SUBACCOUNT NEUBERGER SUBACCOUNT SUBACCOUNT
& BERMAN
BALANCED
SUBACCOUNT
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss)............... $ 112,351 $ (38) $ 67,321 $ (40,117) $ 106,856
Net realized gain (loss) on investments.... 7,421 465,367 1,085,888 (9,409)
Net unrealized depreciation of investments
during the period........................ (161,475) (11) (446,076) (482,857) (98,916)
---------- -------- ---------- ----------- ----------
Net increase (decrease) in net assets
from operations.......................... (41,703) (49) 86,612 562,914 (1,469)
---------- -------- ---------- ----------- ----------
FROM VARIABLE LIFE POLICY TRANSACTIONS
Policyowners' net premiums................. 1,123,373 74,359 817,115 3,481,196 346,971
Cost of insurance and administrative
charges.................................. (242,640) (6,532) (316,415) (956,481) (78,888)
Surrenders and forfeitures................. (26,715) (32,321) (181,034) (12,705)
Transfers between investment portfolios.... 265,851 517,855 269,417 1,067,532 219,833
Net repayments (withdrawals) due to policy
loans.................................... (340) (21,126) (161,221) 1,426
Withdrawals due to death benefits.......... (2,694) (4,044)
---------- -------- ---------- ----------- ----------
Net increase in net assets derived from
policy transactions...................... 1,116,835 585,682 716,670 3,245,948 476,637
---------- -------- ---------- ----------- ----------
Capital contribution from Provident Mutual
Life Insurance Company................... 25,000
---------- -------- ---------- ----------- ----------
Total increase in net assets............... 1,075,132 610,633 803,282 3,808,862 475,168
NET ASSETS
Beginning of period...................... 2,346,721 -- 3,223,304 10,605,905 1,108,362
---------- -------- ---------- ----------- ----------
End of period............................ $3,421,853 $610,633 $4,026,586 $14,414,767 $1,583,530
========== ======== ========== =========== ==========
</TABLE>
See accompanying notes to financial statements
14
<PAGE> 17
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Changes in Net Assets for the Six Months Ended June 30, 1996
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
VAN ECK VAN ECK ALGER AMERICAN
TCI WORLDWIDE EMERGING SMALL
GROWTH BOND MARKETS CAPITALIZATION
SUBACCOUNT SUBACCOUNT VAN ECK SUBACCOUNT SUBACCOUNT
GOLD AND
NATURAL
RESOURCES
SUBACCOUNT
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss).................... $ (22,618) $ 58,784 $ 8,743 $ 219 $ 95
Net realized gain (loss) on investments......... 757,760 7,226 24,271 9 (3)
Net unrealized appreciation (depreciation) of
investments during the period................. (669,514) (112,266) 42,115 4,485 (19,794)
---------- ---------- ---------- -------- ----------
Net increase (decrease) in net assets from
operations.................................... 65,628 (46,256) 75,129 4,713 (19,702)
---------- ---------- ---------- -------- ----------
FROM VARIABLE LIFE POLICY TRANSACTIONS
Policyowners' net premiums...................... 2,245,122 603,776 284,694 22,721 184,522
Cost of insurance and administrative charges.... (527,778) (132,533) (86,543) (1,492) (8,200)
Surrenders and forfeitures...................... (82,024) (25,961) (13,093)
Transfers between investment portfolios......... 976,875 278,386 246,227 194,886 826,837
Net withdrawals due to policy loans............. (16,001) (2,121) (7,059) (898) (548)
Withdrawals due to death benefits............... (62) (1,766)
---------- ---------- ---------- -------- ----------
Net increase in net assets derived from policy
transactions.................................. 2,596,132 719,781 424,226 215,217 1,002,611
---------- ---------- ---------- -------- ----------
Capital contribution from Provident Mutual Life
Insurance Company............................. 25,000 25,000
---------- ---------- ---------- -------- ----------
Total increase in net assets.................... 2,661,760 673,525 499,355 244,930 1,007,909
NET ASSETS
Beginning of period........................... 5,031,776 1,812,368 901,280 -- --
---------- ---------- ---------- -------- ----------
End of period................................. $7,693,536 $2,485,893 $1,400,635 $244,930 $1,007,909
========== ========== ========== ======== ==========
</TABLE>
See accompanying notes to financial statements
15
<PAGE> 18
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Changes in Net Assets for the Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
SEPARATE SEPARATE SEPARATE SEPARATE SEPARATE SEPARATE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss).... $ 2,947,592 $ 716,274 $ 494,496 $ 905,006 $ (106,115) $ (45,230)
Net realized gain on
investments................... 9,105,358 8,291 527,040 278,367 884,963
Net unrealized appreciation of
investments during the year... 19,484,567 1,104,331 3,731,246 1,711,032 1,765,475
------------ ------------ ----------- ----------- ----------- -----------
Net increase in net assets
from operations............... 31,537,517 716,274 1,607,118 5,163,292 1,883,284 2,605,208
------------ ------------ ----------- ----------- ----------- -----------
FROM VARIABLE LIFE POLICY
TRANSACTIONS
Policyowners' net premiums...... 31,018,881 25,991,971 2,748,728 5,437,753 6,979,778 9,246,142
Cost of insurance and
administrative charges........ (10,800,913) (2,892,532) (854,427) (2,184,118) (2,095,129) (2,653,024)
Surrenders and forfeitures...... (6,000,652) (483,482) (459,150) (1,593,554) (741,748) (749,885)
Transfers between investment
portfolios.................... (3,728,068) (18,394,049) (5,935) (1,219,218) 939,005 (706,696)
Net withdrawals due to
policy loans.................. (2,394,343) (216,018) (159,387) (166,162) (463,436) (428,384)
Withdrawals due to death
benefits...................... (179,253) (13) (742) (86,605) (962) (2,302)
------------ ------------ ----------- ----------- ----------- -----------
Net increase in net assets
derived from policy
transactions.................. 7,915,652 4,005,877 1,269,087 188,096 4,617,508 4,705,851
------------ ------------ ----------- ----------- ----------- -----------
Return of capital to Provident
Mutual Life Insurance
Company....................... (500,000)
------------ ------------ ----------- ----------- ----------- -----------
Total increase in net assets.... 39,453,169 4,222,151 2,876,205 5,351,388 6,500,792 7,311,059
NET ASSETS
Beginning of year............. 102,807,768 12,790,428 7,551,249 21,624,618 12,787,088 16,655,333
------------ ------------ ----------- ----------- ----------- -----------
End of year................... $ 142,260,937 $ 17,012,579 $ 10,427,454 $ 26,976,006 $19,287,880 $23,966,392
============ ============ =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
16
<PAGE> 19
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Changes in Net Assets for the Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ZERO COUPON BOND
SEPARATE ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
1996 2006
SERIES SERIES
SUBACCOUNT SUBACCOUNT
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment loss................................................................... $ (15,715) $ (33,081)
Net realized gain on investments...................................................... 46,689 103,889
Net unrealized appreciation of investments during the year............................ 105,560 942,915
---------- ----------
Net increase in net assets from operations............................................ 136,534 1,013,723
---------- ----------
FROM VARIABLE LIFE POLICY TRANSACTIONS
Policyowners' net premiums............................................................ 343,230 1,330,797
Cost of insurance and administrative charges.......................................... (138,727) (557,882)
Surrenders and forfeitures............................................................ (43,836) (118,177)
Transfers between investment portfolios............................................... 9,271 435,416
Net withdrawals due to policy loans................................................... (10,176) (42,959)
Withdrawals due to death benefits..................................................... (6,089) (13,021)
---------- ----------
Net increase in net assets derived from policy transactions........................... 153,673 1,034,174
---------- ----------
Total increase in net assets.......................................................... 290,207 2,047,897
NET ASSETS
Beginning of year................................................................... 1,736,395 2,741,865
---------- ----------
End of year......................................................................... $2,026,602 $4,789,762
========== ==========
</TABLE>
See accompanying notes to financial statements
17
<PAGE> 20
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Changes in Net Assets for the Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ------------------------------------------------------------------------------------------------------------------
FIDELITY FIDELITY FIDELITY FIDELITY
EQUITY- FIDELITY HIGH FIDELITY ASSET FIDELITY INVESTMENT
INCOME GROWTH INCOME OVERSEAS MANAGER INDEX 500 GRADE BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income
(loss)..................... $ 387,954 $ (110,156) $ 30,555 $ (25,173) $ 288,212 $ 14,660 $ 18,815
Net realized gain (loss)
on investments............. 679,147 50,953 6,119 20,298 (74,582) 96,656 11,650
Net unrealized appreciation
of investments during the
year....................... 5,151,173 8,635,155 208,946 579,620 3,538,801 1,357,316 175,696
----------- ----------- ---------- ---------- ----------- ---------- ----------
Net increase in net assets
from operations............ 6,218,274 8,575,952 245,620 574,745 3,752,431 1,468,632 206,161
----------- ----------- ---------- ---------- ----------- ---------- ----------
FROM VARIABLE LIFE POLICY
TRANSACTIONS
Policyowners' net premiums... 13,095,871 17,511,135 1,445,564 3,784,564 10,792,167 4,239,917 1,185,287
Cost of insurance and
administrative charges..... (3,309,981) (4,789,358) (294,993) (928,908) (3,421,593) (917,384) (302,207)
Surrenders and forfeitures... (472,892) (862,489) (37,516) (109,478) (1,270,363) (258,007) (19,498)
Transfers between investment
portfolios................. 6,941,542 6,044,742 1,436,977 2,186,754 (3,131,839) 2,120,394 724,450
Net withdrawals due to
policy loans............... (527,820) (732,057) (11,036) (116,872) (272,150) (126,445) (43,336)
Withdrawals due to
death benefits............. (944) (4,026) (1,606) (650) (842)
----------- ----------- ---------- ---------- ----------- ---------- ----------
Net increase in net assets
derived from policy
transactions............... 15,725,776 17,167,947 2,537,390 4,815,410 2,695,380 5,058,475 1,544,696
----------- ----------- ---------- ---------- ----------- ---------- ----------
Total increase in net
assets..................... 21,944,050 25,743,899 2,783,010 5,390,155 6,447,811 6,527,107 1,750,857
NET ASSETS
Beginning of year.......... 11,786,437 20,592,830 517,328 3,161,555 20,666,739 2,405,880 595,864
----------- ----------- ---------- ---------- ----------- ---------- ----------
End of year................ $33,730,487 $46,336,729 $3,300,338 $8,551,710 $27,114,550 $8,932,987 $2,346,721
=========== =========== ========== ========== =========== ========== ==========
</TABLE>
See accompanying notes to financial statements
18
<PAGE> 21
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Changes in Net Assets for the Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ------------------------------------------------------------------------------------------------------------------
NEUBERGER NEUBERGER VAN ECK VAN ECK
& BERMAN & BERMAN TCI WORLDWIDE GOLD AND NATURAL
BALANCED GROWTH GROWTH BOND RESOURCES
SUBACCOUNT SUBACCOUNT NEUBERGER SUBACCOUNT SUBACCOUNT SUBACCOUNT
& BERMAN LIMITED
MATURITY BOND
SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income
(loss)...................... $ 20,552 $ (37,491) $ 11,154 $ (17,326) $ 81,450 $ 2,502
Net realized gain (loss) on
investments................. 26,630 123,296 2,057 24,415 9,650 (2,771)
Net unrealized appreciation of
investments during the
year........................ 425,461 1,361,959 44,428 558,573 60,522 76,939
---------- ---------- -------- ---------- -------- --------
Net increase in net assets
from operations............. 472,643 1,447,764 57,639 565,662 151,622 76,670
---------- ---------- -------- ---------- -------- --------
FROM VARIABLE LIFE POLICY
TRANSACTIONS
Policyowners' net premiums.... 1,179,627 4,320,950 436,960 2,085,717 756,804 418,351
Cost of insurance and
administrative charges...... (478,895) (1,153,245) (99,801) (491,728) (179,695) (130,611)
Surrenders and forfeitures.... (151,809) (214,306) (1,233) (119,956) (36,252) (39,102)
Transfers between investment
portfolios.................. 415,228 2,575,178 495,684 1,896,269 507,453 179,444
Net withdrawals due to policy
loans....................... (56,816) (129,622) (2,306) (35,265) (25,846) (8,641)
Withdrawals due to death
benefits.................... (22) (5,466) (502)
---------- ---------- -------- ---------- -------- --------
Net increase in net assets
derived from policy
transactions................ 907,313 5,393,489 829,304 3,334,535 1,022,464 419,441
---------- ---------- -------- ---------- -------- --------
Total increase in net
assets...................... 1,379,956 6,841,253 886,943 3,900,197 1,174,086 496,111
NET ASSETS
Beginning of year........... 1,843,348 3,764,652 221,419 1,131,579 638,282 405,169
---------- ---------- -------- ---------- -------- --------
End of year................. $3,223,304 $10,605,905 $1,108,362 $5,031,776 $1,812,368 $ 901,280
========== ========== ======== ========== ======== ========
</TABLE>
See accompanying notes to financial statements
19
<PAGE> 22
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Growth, Money Market, Bond, Managed, Aggressive Growth, International,
Zero Coupon Bond and Variable Separate Accounts (Separate Accounts) were
established by Provident Mutual Life Insurance Company (Provident Mutual) under
the provisions of the Pennsylvania Insurance Law. Each Separate Account is a
separate investment account to which assets are allocated to support the
benefits payable under single premium, modified premium, scheduled premium and
flexible premium adjustable variable life insurance policies (the Policies). The
Aggressive Growth, International, and Variable Separate Accounts are not
available with single premium and scheduled premium policies. The Zero Coupon
Bond Separate Account is not available with scheduled premium policies.
The Policies are distributed principally through career agents and brokers.
Provident Mutual has structured the Separate Accounts as unit investment
trusts registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended.
The Growth, Money Market, Bond, Managed, Aggressive Growth and
International Separate Accounts invest in the corresponding portfolios of the
Market Street Fund, Inc.
The Zero Coupon Bond Separate Account is comprised of the 2006 Series
Subaccount. Funds are transferred to Merrill Lynch, Pierce, Fenner & Smith
(MLPFS), who serves as sponsor of The Stripped ("Zero") U.S. Treasury Securities
Fund, Provident Mutual Series A (Zero Coupon Trust). The 2006 Series Subaccount
invests in the 2006 Series Portfolio of the Zero Coupon Trust. On May 15, 1996,
a second Subaccount was terminated due to the maturity of the underlying series
of the Zero Coupon Trust.
The Variable Separate Account is comprised of sixteen Subaccounts: the
Fidelity Equity-Income, Fidelity Growth, Fidelity High Income and Fidelity
Overseas Subaccounts invest in the corresponding portfolios of the Variable
Insurance Products Fund; the Fidelity Asset Manager, Fidelity Contrafund,
Fidelity Index 500 and Fidelity Investment Grade Bond Subaccounts invest in the
corresponding portfolios of the Variable Insurance Products Fund II; the
Neuberger & Berman Balanced, Neuberger & Berman Growth and Neuberger & Berman
Limited Maturity Bond Subaccounts invest in the corresponding portfolios of the
Neuberger & Berman Advisers Management Trust; the TCI Growth Subaccount invests
in the corresponding portfolio of the TCI Portfolios, Inc.; the Van Eck
Worldwide Bond, Van Eck Gold and Natural Resources and Van Eck Emerging Markets
Subaccounts invest in the corresponding portfolios of the Van Eck Worldwide
Insurance Trust; and the Alger American Small Capitalization Subaccount invests
in the corresponding portfolio of the Alger American Fund.
Net premiums from in-force Policies are allocated to the Separate Accounts
in accordance with policyowner instructions and are recorded as variable life
policy transactions in the statements of changes in net assets. Such amounts are
used to provide money to pay benefits under the Policies (Note 4). Each Separate
Account's assets are the property of Provident Mutual.
20
<PAGE> 23
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
1. ORGANIZATION, CONTINUED:
Transfers between investment portfolios include transfers between the
Separate Accounts and the Guaranteed Account (not shown), which is part of
Provident Mutual's General Account.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed
by the Separate Accounts included in the financial statements.
Investment Valuation:
Investment shares are valued at the net asset values of the respective
Portfolios. Transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date.
Realized Gains and Losses:
Realized gains and losses on sales of investment shares are determined
using the specific identification basis for financial reporting and income tax
purposes.
Federal Income Taxes:
The operations of the Separate Accounts are included in the Federal income
tax return of Provident Mutual. Under the provisions of the Policies, Provident
Mutual has the right to charge the Separate Accounts for Federal income tax
attributable to the Separate Accounts. No charge is currently being made against
the Separate Accounts for such tax.
Estimates:
The preparation of the accompanying financial statements required
management to make estimates and assumptions that affect the reported values of
assets and liabilities as of June 30, 1996 and the reported amounts from
operations and policy transactions during the six months ended June 30, 1996 and
the year ended December 31, 1995. Actual results could differ from those
estimates.
21
<PAGE> 24
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS
At June 30, 1996, the investments of the respective Separate
Accounts/Subaccounts are as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES COST MARKET VALUE
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Market Street Fund, Inc.:
Growth Portfolio................................. 9,214,904 $128,790,362 $154,718,231
Money Market Portfolio........................... 19,411,622 $19,411,622 $19,411,622
Bond Portfolio................................... 981,045 $10,347,961 $10,320,594
Managed Portfolio................................ 2,049,003 $25,724,203 $28,604,083
Aggressive Growth Portfolio...................... 1,346,935 $20,445,422 $22,790,145
International Portfolio.......................... 2,201,891 $26,144,662 $28,492,467
The Stripped ("Zero") U.S. Treasury Securities
Fund,
Provident Mutual Series A:
2006 Series...................................... 8,655,152 $4,129,672 $4,600,646
Variable Insurance Products Fund:
Equity-Income Portfolio.......................... 2,450,324 $42,036,816 $47,732,304
Growth Portfolio................................. 2,160,754 $54,327,343 $64,952,268
High Income Portfolio............................ 465,323 $5,348,692 $5,481,504
Overseas Portfolio............................... 689,145 $11,315,766 $12,321,916
Variable Insurance Products Fund II:
Asset Manager Portfolio.......................... 1,841,299 $26,516,335 $28,779,499
Index 500 Portfolio.............................. 203,319 $14,146,065 $16,249,231
Investment Grade Bond Portfolio.................. 292,967 $3,409,697 $3,421,853
Contrafund Portfolio............................. 41,315 $610,644 $610,633
Neuberger & Berman Advisers Management Trust:
Balanced Portfolio............................... 262,318 $4,134,860 $4,026,586
Growth Portfolio................................. 577,052 $13,757,053 $14,414,767
Limited Maturity Bond Portfolio.................. 117,212 $1,637,751 $1,583,530
TCI Portfolios, Inc.:
TCI Growth Portfolio............................. 709,082 $7,778,936 $7,693,536
Van Eck Worldwide Insurance Trust:
Worldwide Bond Portfolio......................... 234,518 $2,528,037 $2,485,893
Gold and Natural Resources Portfolio............. 89,497 $1,293,078 $1,400,635
Emerging Markets Portfolio....................... 21,078 $240,445 $244,930
Alger American Fund
Small Capitalization Portfolio................... 23,811 $1,027,703 $1,007,909
</TABLE>
22
<PAGE> 25
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS, CONTINUED:
During the six months ended June 30, 1996 and the year ended December 31,
1995, transactions in investment shares were as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET STREET FUND, INC.
------------------------------------------------------------------------------------------------------------------
GROWTH PORTFOLIO MONEY MARKET PORTFOLIO BOND PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased.................... 461,074 1,059,897 8,585,391 13,655,624 79,442 192,313
Shares received from reinvestment
of:
Dividends......................... 134,434 256,696 375,724 871,001 28,168 53,908
Capital gain distributions........ 436,698 601,004
----------- ----------- ----------- ----------- ---------- ----------
Total shares acquired............... 1,032,206 1,917,597 8,961,115 14,526,625 107,610 246,221
Total shares redeemed............... (518,320) (565,932) (6,258,597) (10,536,224) (75,830) (74,556)
----------- ----------- ----------- ----------- ---------- ----------
Net increase in shares owned........ 513,886 1,351,665 2,702,518 3,990,401 31,780 171,665
Shares owned, beginning of period... 8,701,018 7,349,353 16,709,104 12,718,703 949,265 777,600
----------- ----------- ----------- ----------- ---------- ----------
Shares owned, end of period......... 9,214,904 8,701,018 19,411,622 16,709,104 981,045 949,265
=========== =========== =========== =========== ========== ==========
Cost of shares acquired............. $16,341,246 $27,059,436 $ 8,961,115 $ 14,526,625 $1,146,117 $2,538,587
=========== =========== =========== =========== ========== ==========
Cost of shares redeemed............. $ 6,654,847 $ 7,086,303 $ 6,258,597 $ 10,536,224 $ 796,461 $ 767,042
=========== =========== =========== =========== ========== ==========
</TABLE>
23
<PAGE> 26
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS, CONTINUED:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET STREET FUND, INC.
------------------------------------------------------------------------------------------------------------------
AGGRESSIVE
MANAGED PORTFOLIO GROWTH PORTFOLIO INTERNATIONAL PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased.......................... 123,276 208,590 136,470 336,867 271,360 524,968
Shares received from reinvestment of:
Dividends............................... 36,033 83,429 13,576 23,401 8,442
Capital gain distributions.............. 81,745 2,072 136,799 7,271 94,861 39,890
---------- ---------- ---------- ---------- ---------- ----------
Total shares acquired..................... 241,054 294,091 286,845 344,138 389,622 573,300
Total shares redeemed..................... (94,160) (204,288) (49,688) (62,003) (51,367) (141,765)
---------- ---------- ---------- ---------- ---------- ----------
Net increase in shares owned.............. 146,894 89,803 237,157 282,135 338,255 431,535
Shares owned, beginning of period......... 1,902,109 1,812,306 1,109,778 827,643 1,863,636 1,432,101
---------- ---------- ---------- ---------- ---------- ----------
Shares owned, end of period............... 2,049,003 1,902,109 1,346,935 1,109,778 2,201,891 1,863,636
========== ========== ========== ========== ========== ==========
Cost of shares acquired................... $3,290,268 $3,791,908 $4,514,040 $5,631,340 $4,844,272 $6,827,356
========== ========== ========== ========== ========== ==========
Cost of shares redeemed................... $ 994,221 $2,171,165 $ 644,812 $ 841,580 $ 527,843 $1,281,772
========== ========== ========== ========== ========== ==========
</TABLE>
24
<PAGE> 27
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS, CONTINUED:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE STRIPPED ("ZERO") U.S. TREASURY SECURITIES
FUND, PROVIDENT MUTUAL SERIES A VARIABLE INSURANCE
PRODUCTS FUND
------------------------------------------------------------------------------------------------------------------
1996 SERIES 2006 SERIES EQUITY-INCOME PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased....................... 118,128 364,596 969,855 2,903,418 627,721 937,870
Shares received from reinvestment of:
Dividends............................ 2,918 30,564
Capital gain distributions........... 83,650 42,404
----------- ---------- ---------- ---------- ----------- -----------
Total shares acquired.................. 118,128 364,596 969,855 2,903,418 714,289 1,010,838
Total shares redeemed.................. (2,181,298) (217,641) (676,793) (935,891) (15,161) (27,488)
----------- ---------- ---------- ---------- ----------- -----------
Net increase (decrease) in shares owned...(2,063,170) 146,955 293,062 1,967,527 699,128 983,350
Shares owned, beginning of period...... 2,063,170 1,916,215 8,362,090 6,394,563 1,751,196 767,846
----------- ---------- ---------- ---------- ----------- -----------
Shares owned, end of period............ 0 2,063,170 8,655,152 8,362,090 2,450,324 1,751,196
=========== ========== ========== ========== =========== ===========
Cost of shares acquired................ $ 117,132 $ 345,561 $ 525,347 $1,461,490 $13,756,058 $17,235,825
=========== ========== ========== ========== =========== ===========
Cost of shares redeemed................ $ 1,949,315 $ 160,308 $ 275,743 $ 353,785 $ 233,576 $ 427,894
=========== ========== ========== ========== =========== ===========
</TABLE>
25
<PAGE> 28
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS, CONTINUED:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND
------------------------------------------------------------------------------------------------------------------
HIGH INCOME
GROWTH PORTFOLIO PORTFOLIO OVERSEAS PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased........................ 469,080 659,784 202,005 232,086 184,680 316,944
Shares received from reinvestment of:
Dividends............................. 4,794 5,481 25,643 4,088 6,164 971
Capital gain distributions............ 121,056 5,017 6,782 971
----------- ----------- ---------- ---------- ---------- ----------
Total shares acquired................... 594,930 665,265 232,665 236,174 197,626 318,886
Total shares redeemed................... (21,545) (27,312) (42,451) (9,155) (10,048) (19,077)
----------- ----------- ---------- ---------- ---------- ----------
Net increase in shares owned............ 573,385 637,953 190,214 227,019 187,578 299,809
Shares owned, beginning of period....... 1,587,369 949,416 275,109 48,090 501,567 201,758
----------- ----------- ---------- ---------- ---------- ----------
Shares owned, end of period............. 2,160,754 1,587,369 465,323 275,109 689,145 501,567
=========== =========== ========== ========== ========== ==========
Cost of shares acquired................. $17,166,148 $17,731,718 $2,699,177 $2,687,554 $3,426,746 $5,114,360
=========== =========== ========== ========== ========== ==========
Cost of shares redeemed................. $ 494,653 $ 608,521 $ 457,948 $ 98,892 $ 160,352 $ 303,825
=========== =========== ========== ========== ========== ==========
</TABLE>
26
<PAGE> 29
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS, CONTINUED:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE INSURANCE PRODUCTS FUND II
------------------------------------------------------------------------------------------------------------------
ASSET MANAGER PORTFOLIO INDEX 500 PORTFOLIO INVESTMENT GRADE CONTRAFUND
BOND PORTFOLIO PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares purchased............. 164,401 489,727 80,352 88,644 106,197 148,445 41,315
Shares received from
reinvestment of:
Dividends.................. 65,523 33,935 1,532 868 10,256 2,620
Capital gain
distributions............ 54,028 3,938 119
---------- ----------- ---------- ---------- ---------- -------- -------
Total shares acquired........ 283,952 523,662 85,822 89,631 116,453 151,065 41,315
Total shares redeemed........ (159,851) (305,140) (493) (14,435) (11,525) (17,097)
---------- ----------- ---------- ---------- ---------- -------- -------
Net increase in shares
owned...................... 124,101 218,522 85,329 75,196 104,928 133,968 41,315
Shares owned, beginning
of period.................. 1,717,198 1,498,676 117,990 42,794 188,039 54,071
---------- ----------- ---------- ---------- ---------- -------- -------
Shares owned, end of
period..................... 1,841,299 1,717,198 203,319 117,990 292,967 188,039 41,315
========== =========== ========== ========== ========== ======== =======
Cost of shares acquired...... $4,334,025 $7,461,536 $6,618,051 $5,976,098 $1,363,784 $1,765,445 $610,644
========== =========== ========== ========== ========== ======== =======
Cost of shares redeemed...... $2,507,185 $4,552,526 $ 27,398 $ 806,307 $ 127,177 $ 190,284
========== =========== ========== ========== ========== ======== =======
</TABLE>
27
<PAGE> 30
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS, CONTINUED:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST TCI PORTFOLIOS, INC.
------------------------------------------------------------------------------------------------------------------
BALANCED PORTFOLIO GROWTH PORTFOLIO LIMITED MATURITY TCI GROWTH PORTFOLIO
BOND PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1995 1996 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares purchased..... 62,840 74,181 151,342 228,427 49,263 64,863 232,663 308,637
Shares received from
reinvestment of:
Dividends.......... 5,238 2,584 180 490 8,274 1,128 145
Capital gain
distributions.... 29,132 830 42,179 6,560 68,179
---------- ---------- ---------- ---------- -------- -------- ------- -------
Total shares
acquired........... 97,210 77,595 193,701 235,477 57,537 65,991 300,842 308,782
Total shares redeemed. (18,871) (20,656) (27,337) (10,148) (15,672) (6,437) (10,238) (13,168)
---------- ---------- ---------- ---------- -------- -------- ------- -------
Net increase in
shares owned....... 78,339 56,939 166,364 225,329 41,865 59,554 290,604 295,614
Shares owned,
beginning of
period............. 183,979 127,040 410,688 185,359 75,347 15,793 418,478 122,864
---------- ---------- ---------- ---------- -------- -------- ------- -------
Shares owned, end
of period.......... 262,318 183,979 577,052 410,688 117,212 75,347 709,082 418,478
========== ========== ========== ========== ======== ======== ======= =======
Cost of shares
acquired........... $1,546,203 $1,276,739 $4,935,144 $5,737,857 $793,548 $932,610 $3,405,784 $3,475,266
========== ========== ========== ========== ======== ======== ========= =========
Cost of shares
redeemed........... $ 296,845 $ 322,244 $ 657,903 $ 244,085 $219,464 $ 90,095 $ 89,578 $ 118,574
========== ========== ========== ========== ======== ======== ========= =========
</TABLE>
28
<PAGE> 31
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS, CONTINUED:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VAN ECK WORLDWIDE INSURANCE TRUST ALGER
AMERICAN
FUND
------------------------------------------------------------------------------------------------------------------
WORLDWIDE BOND GOLD AND NATURAL EMERGING SMALL
PORTFOLIO RESOURCES PORTFOLIO MARKETS CAPITALIZATION
PORTFOLIO PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995 1996 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased............................. 74,658 101,345 29,898 49,696 21,073 23,811
Shares received from reinvestment of:
Dividends.................................. 6,267 8,113 750 534 19
Capital gain distributions................. 735 2
---------- ---------- ---------- ---------- -------- --------
Total shares acquired........................ 80,925 109,458 31,383 50,230 21,092 23,813
Total shares redeemed........................ (9,097) (9,283) (4,388) (18,610) (14 ) (2)
---------- ---------- ---------- ---------- -------- --------
Net increase in shares owned................. 71,828 100,175 26,995 31,620 21,078 23,811
Shares owned, beginning of period............ 162,690 62,515 62,502 30,882
---------- ---------- ---------- ---------- -------- --------
Shares owned, end of period.................. 234,518 162,690 89,497 62,502 21,078 23,811
========== ========== ========== ========== ======== ========
Cost of shares acquired...................... $876,606 $1,204,346 $516,877 $674,277 $240,603 $1,027,805
========== ========== ========== ========== ======== ========
Cost of shares redeemed...................... $ 90,815 $ 90,782 $ 59,637 $255,105 $ 158 $ 102
========== ========== ========== ========== ======== ========
</TABLE>
29
<PAGE> 32
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
4. RELATED PARTY TRANSACTIONS
Provident Mutual makes certain deductions from premiums before amounts are
allocated to each Separate Account selected by the policyowner. The deductions
may include (1) administrative charges, (2) state premium taxes, (3) premium
processing charges, (4) premiums for supplementary benefits, (5) premiums for
extra mortality risks, (6) sales charges, (7) premiums for optional benefits,
and (8) a risk charge for the guaranteed minimum death benefit. See original
policy documents for specific charges assessed.
In addition to the aforementioned charges, each Separate Account is charged
for mortality and expense risks assumed by Provident Mutual. The annual rates
charged to cover these risks are:
For scheduled premium and single premium policies -- currently 0.35% of the
net assets held for the benefit of policyowners.
For modified premium policies -- currently 0.60% of the net assets held for
the benefit of policyowners.
For flexible premium adjustable policies ("OptionsPlus") -- currently 0.75%
of the net assets held for the benefit of policyowners, guaranteed not to
exceed 0.90%.
For flexible premium adjustable survivorship policies ("Survivor
OptionsPlus") -- currently 0.60% of the net assets held for the benefit of
policyowners, guaranteed not to exceed 0.90%.
For flexible premium adjustable policies (other than
"OptionsPlus") -- currently 0.75% of the net assets held for the benefit of
policyowners.
Each Separate Account is also charged by Provident Mutual for the cost of
insurance protection. For single premium policies, the charge is accrued daily
and deducted from the amount provided for investment annually. For scheduled
premium, modified premium and flexible premium adjustable policies, the charge
is deducted monthly. The amount of the charge is computed based upon the amount
of insurance provided during the year and the insured's attained age. Depending
upon the type of policy, additional monthly deductions may be made for (1)
administrative charges, (2) minimum death benefit charges, (3) first year policy
charges and (4) supplementary charges. See original policy documents for
additional monthly charges. These charges are included in the statements of
changes in net assets.
The policies provide for an initial free-look period. If a policy is
cancelled within certain time constraints, the policyowner will receive a refund
equal to the policy account value plus certain deductions made under the policy.
Where state law requires a minimum refund equal to gross premiums paid, the
refund will instead equal the gross premiums paid on the policy and will not
reflect investment experience.
30
<PAGE> 33
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Notes to Financial Statements (unaudited) -- concluded
- --------------------------------------------------------------------------------
4. RELATED PARTY TRANSACTIONS, CONTINUED
If a single premium or modified premium policy is surrendered within the
first nine policy years, a contingent deferred sales load charge and/or
contingent deferred administrative charge are assessed. These same charges are
assessed if a flexible premium adjustable policy is surrendered within the first
ten policy years. These charges are assessed if a flexible premium adjustable
survivorship policy is surrendered before the fifteenth policy year (twelfth
policy year for New York policies). These charges are recorded as administrative
charges in the statements of changes in net assets.
For scheduled premium and single premium policies, Provident Mutual has
agreed to make a daily adjustment to the net rate of return of the Growth, Money
Market and Bond Separate Accounts to offset completely all Market Street Fund,
Inc. expenses charged to the portfolios in which the Separate Accounts invest,
except for (1) all brokers' commissions, (2) transfer taxes, investment advisory
fees and other fees and expenses for services relating to purchases and sales of
portfolio investments, and (3) income tax liabilities. The total amounts
reimbursed for the Growth, Money Market and Bond Separate Accounts for the six
months ended June 30, 1996 were $2,569, $71 and $584, respectively. These
amounts are shown as an operating expense reimbursement reducing total expenses
in the statements of operations.
Provident Mutual makes a daily asset charge against the assets of the Zero
Coupon Bond Separate Account. The charge is to reimburse Provident Mutual for
the transaction charge paid directly by Provident Mutual to MLPFS on the sale of
the Zero Coupon Trust units to the Zero Coupon Bond Separate Account. Provident
Mutual pays these amounts from General Account assets. The amount of the asset
charge currently is equivalent to an effective annual rate of .25% of the
average daily net assets of each Subaccount. This amount may be increased in the
future, but in no event will it exceed an effective annual rate of .50%. The
charge will be cost based (taking into account the loss of interest) with no
anticipated element of profit for Provident Mutual.
31
<PAGE> 34
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Supplementary Information (unaudited)
- --------------------------------------------------------------------------------
The table below shows the net rates of return for the Separate
Accounts/Subaccounts. The net rate of return is applicable to net assets for a
variable life policy whose policy year commences with the beginning date of the
year shown and is not based on the average net assets in the Separate
Accounts/Subaccounts during the year.
The performance for each Separate Account/Subaccount is shown as the net
rate of return which reflects the Separate Accounts'/Subaccounts' investment
income and capital gains and losses, realized or unrealized, less charges
against the Separate Accounts'/Subaccounts' assets for the period shown.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY
GROWTH MARKET BOND MANAGED
SEPARATE SEPARATE SEPARATE SEPARATE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
SINGLE PREMIUM POLICY:
For the six months ended June 30, 1996....... 9.21% 2.38% (1.54)% 4.35%
For the year ended:
December 31, 1995........................... 30.21% 5.35% 20.18% 23.91%
December 31, 1994........................... 2.36% 3.70% (5.63)% (2.16)%
December 31, 1993........................... 10.27% 2.64% 10.38% 11.23%
December 31, 1992........................... 4.81% 3.23% 6.00% 11.57%
MODIFIED PREMIUM POLICY:
For the six months ended June 30, 1996....... 9.00% 2.20% (1.70)% 4.20%
For the year ended:
December 31, 1995........................... 29.61% 4.98% 19.62% 23.60%
December 31, 1994........................... 1.79% 3.18% (6.18)% (2.40)%
December 31, 1993........................... 9.55% 1.98% 9.66% 10.95%
December 31, 1992........................... 4.12% 2.56% 5.32% 11.29%
SCHEDULED PREMIUM POLICY:
For the six months ended June 30, 1996....... 9.21% 2.38% (1.54)% 4.35%
For the year ended:
December 31, 1995........................... 30.21% 5.35% 20.18% 23.91%
December 31, 1994........................... 2.36% 3.70% (5.63)% (2.16)%
December 31, 1993........................... 10.27% 2.64% 10.38% 11.23%
December 31, 1992........................... 4.81% 3.23% 6.00% 11.57%
FLEXIBLE PREMIUM ADJUSTABLE
("OPTIONSPLUS") POLICY:
For the six months ended June 30, 1996....... 9.00% 2.20% (1.80)% 4.10%
For the year ended:
December 31, 1995........................... 29.42% 4.82% 19.44% 23.42%
December 31, 1994........................... 1.64% 3.02% (6.32)% (2.55)%
December 31, 1993........................... 9.39% 1.83% 9.50% 10.78%
December 31, 1992........................... 3.96% 2.40% 5.16% 11.12%
FLEXIBLE PREMIUM ADJUSTABLE
SURVIVORSHIP POLICY:
For the six months ended June 30, 1996....... 9.00% 2.20% (1.70)% 4.20%
For the year ended:
December 31, 1995........................... 29.61% 4.98% 19.62% 23.60%
December 31, 1994........................... 1.79% 3.18% (6.18)% (2.40)%
December 31, 1993........................... 4.67%(23) 1.16%(24) 0.90% 4.48%(25)
FLEXIBLE PREMIUM ADJUSTABLE (OTHER
THAN "OPTIONSPLUS") POLICY:
For the six months ended June 30, 1996....... 9.00% 2.20% (1.80)% 4.10%
For the year ended:
December 31, 1995........................... 29.42% 4.82% 19.44% 23.42%
December 31, 1994........................... 1.64% 3.02% (6.32)% (2.55)%
December 31, 1993........................... 9.39% 1.83% 9.50% 10.78%
December 31, 1992........................... 3.96% 2.40% 5.16% 11.12%
<CAPTION>
ZERO COUPON BOND
AGGRESIVE SEPARATE ACCOUNT
GROWTH INTERNATIONAL ---------------------------
SEPARATE SEPARATE 1996 SERIES 2006 SERIES
ACCOUNT ACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
SINGLE PREMIUM POLICY:
For the six months ended June 30, 1996....... -- -- 1.58%(1) (7.49)%
For the year ended:
December 31, 1995........................... -- -- 7.78% 32.91%
December 31, 1994........................... -- -- (0.21)% (9.99)%
December 31, 1993........................... -- -- 7.83% 22.61%
December 31, 1992........................... -- -- 7.01% 9.90%
MODIFIED PREMIUM POLICY:
For the six months ended June 30, 1996....... 10.10 % 6.70% 1.49%(1) (7.60)%
For the year ended:
December 31, 1995........................... 12.80 % 13.63% 7.51% 32.58%
December 31, 1994........................... (0.60 )% (0.34)% (0.46)% (10.21)%
December 31, 1993........................... 4.57 % 35.30% 7.56% 22.31%
December 31, 1992........................... 1.96 % (8.04)% 6.74% 9.63%
SCHEDULED PREMIUM POLICY:
For the six months ended June 30, 1996....... -- -- -- --
For the year ended:
December 31, 1995........................... -- -- -- --
December 31, 1994........................... -- -- -- --
December 31, 1993........................... -- -- -- --
December 31, 1992........................... -- -- -- --
FLEXIBLE PREMIUM ADJUSTABLE
("OPTIONSPLUS") POLICY:
For the six months ended June 30, 1996....... 10.10 % 6.60% 1.43%(1) (7.70)%
For the year ended:
December 31, 1995........................... 12.63 % 13.46% 7.35% 32.38%
December 31, 1994........................... (0.75 )% (0.49)% (0.61)% (10.35)%
December 31, 1993........................... 4.42 % 35.10% 7.40% 22.12%
December 31, 1992........................... 1.81 % (8.18)% 6.58% 9.46%
FLEXIBLE PREMIUM ADJUSTABLE
SURVIVORSHIP POLICY:
For the six months ended June 30, 1996....... 10.10 % 6.70% 1.49%(1) (7.60)%
For the year ended:
December 31, 1995........................... 12.80 % 13.63% 7.51% 32.58%
December 31, 1994........................... (0.60 )% (0.34)% (0.46)% (10.21)%
December 31, 1993........................... 10.27 %(26) 16.61%(26) 0.20%(27) (1.61)%(28)
FLEXIBLE PREMIUM ADJUSTABLE (OTHER
THAN "OPTIONSPLUS") POLICY:
For the six months ended June 30, 1996....... 10.10 % 6.60% 1.43%(1) (7.70)%
For the year ended:
December 31, 1995........................... 12.63 % 13.46% 7.35% 32.38%
December 31, 1994........................... (0.75 )% (0.49)% (0.61)% (10.35)%
December 31, 1993........................... 4.42 % 35.10% 7.40% 22.12%
December 31, 1992........................... 1.81 % (8.18)% 6.58% 9.46%
<CAPTION>
FIDELITY
EQUITY- FIDELITY
INCOME GROWTH
SUBACCOUNT SUBACCOUNT
- -------------------------------------------------------------------------------------------
SINGLE PREMIUM POLICY:
For the six months ended June 30, 1996....... -- --
For the year ended:
December 31, 1995........................... -- --
December 31, 1994........................... -- --
December 31, 1993........................... -- --
December 31, 1992........................... -- --
MODIFIED PREMIUM POLICY:
For the six months ended June 30, 1996....... 5.50% 10.40%
For the year ended:
December 31, 1995........................... 34.29% 34.56%
December 31, 1994........................... 6.43% (0.62)%
December 31, 1993........................... 3.15%(8) 3.86%(9)
December 31, 1992........................... -- --
SCHEDULED PREMIUM POLICY:
For the six months ended June 30, 1996....... -- --
For the year ended:
December 31, 1995........................... -- --
December 31, 1994........................... -- --
December 31, 1993........................... -- --
December 31, 1992........................... -- --
FLEXIBLE PREMIUM ADJUSTABLE
("OPTIONSPLUS") POLICY:
For the six months ended June 30, 1996....... 5.50% 10.30%
For the year ended:
December 31, 1995........................... 34.09% 34.36%
December 31, 1994........................... 6.27% (0.76)%
December 31, 1993........................... 2.57%(16) 3.99%(8)
December 31, 1992........................... -- --
FLEXIBLE PREMIUM ADJUSTABLE
SURVIVORSHIP POLICY:
For the six months ended June 30, 1996....... 5.50% 10.40%
For the year ended:
December 31, 1995........................... 34.29% 34.56%
December 31, 1994........................... 6.43% (0.62)%
December 31, 1993........................... 2.81%(29) 2.90%(29)
FLEXIBLE PREMIUM ADJUSTABLE (OTHER
THAN "OPTIONSPLUS") POLICY:
For the six months ended June 30, 1996....... 5.50% 10.30%
For the year ended:
December 31, 1995........................... 34.09% 34.36%
December 31, 1994........................... 6.27% (0.76)%
December 31, 1993........................... 2.57%(16) 3.99%(8)
December 31, 1992........................... -- --
</TABLE>
(1) For the period January 1, 1996 to May 15, 1996 (date of maturity). The
net rate of return was calculated from the date policyowner funds were first
allocated to the Separate Account/Subaccount referenced above as follows: (2)
May 17, 1996, (3) May 10, 1994, (4) May 31, 1994, (5) May 3, 1994, (6) May 13,
1994, (7) June 16, 1994, (8) August 12, 1993, (9) August 10, 1993, (10) August
17, 1993, (11) August 13, 1993, (12) May 20, 1994, (13) May 19, 1994, (14) May
23, 1994, (15) May 9, 1994, (16) August 18, 1993, (17) August 23, 1993, (18)
August 24, 1994, (19) June 9, 1994, (20) June 29, 1994, (21) June 28, 1994, (22)
June 30, 1994, (23) June 29, 1993, (24) May 27, 1993, (25) June 14, 1993, (26)
July 8, 1993, (27) December 15, 1993, (28) August 30, 1993, (29) September 17,
1993, (30) September 25, 1993, (31) December 7, 1993, (32) October 21, 1993,
(33) June 21, 1994 and (34) July 7, 1994.
32
<PAGE> 35
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ---------------------------------------------------------------------------------------------------------------
FIDELITY FIDELITY
HIGH FIDELITY ASSET FIDELITY
INCOME OVERSEAS MANAGER INDEX 500
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
SINGLE PREMIUM POLICY:
For the six months ended June 30, 1996....... -- -- -- --
For the year ended:
December 31, 1995........................... -- -- -- --
December 31, 1994........................... -- -- -- --
December 31, 1993........................... -- -- -- --
December 31, 1992........................... -- -- -- --
MODIFIED PREMIUM POLICY:
For the six months ended June 30, 1996....... 7.00% 7.10% 5.50% 9.80%
For the year ended:
December 31, 1995........................... 19.88% 9.02% 16.26% 36.37%
December 31, 1994........................... (0.66)%(3) (2.50)%(3) (6.65)% 0.44%
December 31, 1993........................... -- -- 8.34%(8) 3.65%(10)
December 31, 1992........................... -- -- -- --
SCHEDULED PREMIUM POLICY:
For the six months ended June 30, 1996....... -- -- -- --
For the year ended:
December 31, 1995........................... -- -- -- --
December 31, 1994........................... -- -- -- --
December 31, 1993........................... -- -- -- --
December 31, 1992........................... -- -- -- --
FLEXIBLE PREMIUM ADJUSTABLE
("OPTIONSPLUS") POLICY:
For the six months ended June 30, 1996....... 6.90% 7.00% 5.40% 9.70%
For the year ended:
December 31, 1995........................... 19.71% 8.86% 16.08% 36.17%
December 31, 1994........................... (0.92)%(12) (4.25)%(13) (6.79)% 0.29%
December 31, 1993........................... -- -- 8.20%(11) 3.11%(17)
December 31, 1992........................... -- -- -- --
FLEXIBLE PREMIUM ADJUSTABLE
SURVIVORSHIP POLICY:
For the six months ended June 30, 1996....... 7.00% 7.10% 5.50% 9.80%
For the year ended:
December 31, 1995........................... 19.88% 9.02% 16.26% 36.37%
December 31, 1994........................... (0.40)%(18) (2.63)%(19) (6.65)% 0.44%
December 31, 1993........................... -- -- 6.69%(30) 0.05%(31)
FLEXIBLE PREMIUM ADJUSTABLE (OTHER
THAN "OPTIONSPLUS") POLICY:
For the six months ended June 30, 1996....... 6.90% 7.00% 5.40% 9.70%
For the year ended:
December 31, 1995........................... 19.71% 8.86% 16.08% 36.17%
December 31, 1994........................... (0.90)%(4) (0.65)%(33) (6.79)% 0.29%
December 31, 1993........................... -- -- 8.20%(11) 3.11%(17)
December 31, 1992........................... -- -- -- --
<CAPTION>
- ----
FIDELITY NEUBERGER NEUBERGER
INVESTMENT FIDELITY & BERMAN & BERMAN
GRADE BOND CONTRAFUND BALANCED GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
SINGLE PREMIUM POLICY:
For the six months ended June 30, 1996....... -- -- -- --
For the year ended:
December 31, 1995........................... -- -- -- --
December 31, 1994........................... -- -- -- --
December 31, 1993........................... -- -- -- --
December 31, 1992........................... -- -- -- --
MODIFIED PREMIUM POLICY:
For the six months ended June 30, 1996....... (1.80)% (0.87)%(2) 2.80% 5.40%
For the year ended:
December 31, 1995........................... 16.62% -- 23.02% 30.94%
December 31, 1994........................... (0.17)%(4) -- (3.94)% (5.56)%
December 31, 1993........................... -- -- 4.24%(11) 6.01%( 11)
December 31, 1992........................... -- -- -- --
SCHEDULED PREMIUM POLICY:
For the six months ended June 30, 1996....... -- -- -- --
For the year ended:
December 31, 1995........................... -- -- -- --
December 31, 1994........................... -- -- -- --
December 31, 1993........................... -- -- -- --
December 31, 1992........................... -- -- -- --
FLEXIBLE PREMIUM ADJUSTABLE
("OPTIONSPLUS") POLICY:
For the six months ended June 30, 1996....... (1.90)% (0.89)%(2) 2.70% 5.40%
For the year ended:
December 31, 1995........................... 16.45% -- 22.84% 30.75%
December 31, 1994........................... (0.36)%(14) -- (4.08)% (5.70)%
December 31, 1993........................... -- -- 3.50%(10) 4.72%( 10)
December 31, 1992........................... -- -- -- --
FLEXIBLE PREMIUM ADJUSTABLE
SURVIVORSHIP POLICY:
For the six months ended June 30, 1996....... (1.80)% (0.87)%(2) 2.80% 5.40%
For the year ended:
December 31, 1995........................... 16.62% -- 23.02% 30.94%
December 31, 1994........................... (0.21)%(20) -- (3.94)% (5.56)%
December 31, 1993........................... -- -- 0.20%(29) 2.14%( 32)
FLEXIBLE PREMIUM ADJUSTABLE (OTHER
THAN "OPTIONSPLUS") POLICY:
For the six months ended June 30, 1996....... (1.90)% (0.89)%(2) 2.70% 5.40%
For the year ended:
December 31, 1995........................... 16.45% -- 22.84% 30.75%
December 31, 1994........................... (0.26)%(4) -- (4.08)% (5.70)%
December 31, 1993........................... -- -- 3.50%(10) 4.72%( 10)
December 31, 1992........................... -- -- -- --
<CAPTION>
- ----
NEUBERGER VAN ECK ALGER
& BERMAN VAN ECK GOLD AND VAN ECK AMERICAN
LIMITED TCI WORLDWIDE NATURAL EMERGING SMALL
MATURITY BOND GROWTH BOND RESOURCES MARKETS CAPITALIZATION
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------------------------------------------------------------------------------------------------
SINGLE PREMIUM POLICY: <S> <C> <S> <C> <C> <C>
For the six months ended
June 30, 1996...................... -- -- -- -- -- --
For the year ended:
December 31, 1995................... -- -- -- -- -- --
December 31, 1994................... -- -- -- -- -- --
December 31, 1993...................
December 31, 1992...................
MODIFIED PREMIUM POLICY:
For the six months ended
June 30, 1996...................... 0.00% 1.10% (2.40)% 10.20% 4.41%(2) (7.42)%
For the year ended:
December 31, 1995................... 10.27% 30.32% 16.60% 10.33% -- --
December 31, 1994................... 1.05%(5) 2.98%(6) 4.70%(7) 1.28%(3) -- --
December 31, 1993................... -- -- -- -- -- --
December 31, 1992................... -- -- -- -- -- --
SCHEDULED PREMIUM POLICY:
For the six months ended
June 30, 1996 -- -- -- -- -- --
For the year ended:
December 31, 1995................... -- -- -- -- -- --
December 31, 1994................... -- -- -- -- -- --
December 31, 1993................... -- -- -- -- -- --
December 31, 1992................... -- -- -- -- -- --
FLEXIBLE PREMIUM ADJUSTABLE
("OPTIONSPLUS') POLICY:
For the six months ended
June 30, 1996...................... (0.10)% 1.00% (2.50)% 10.10% 4.39%(2) (7.43)%
For the year ended:
December 31, 1995................... 10.11% 30.12% 16.43% 10.17% -- --
December 31, 1994................... 0.84%(14) 2.88%(6) 1.45%(12) 0.80%(15) -- --
December 31, 1993................... -- -- -- -- -- --
December 31, 1992................... -- -- -- -- -- --
FLEXIBLE PREMIUM ADJUSTABLE
SURVIVORSHIP POLICY:
For the six months ended
June 30, 1996...................... 0.00% 1.10% (2.40)% 10.20% 4.41%(2) (7.42)%
For the year ended:
December 31, 1995................... 10.27% 30.32% 16.60% 10.33% -- --
December 31, 1994................... 0.63%(21) 2.33%(19) 2.51%(20) 0.38%(22) -- --
December 31, 1993................... -- -- -- -- -- --
FLEXIBLE PREMIUM ADJUSTABLE (OTHER
THAN "OPTIONSPLUS") POLICY:
For the six months ended
June 30, 1996...................... (0.10)% 1.00% (2.50)% 10.10% 4.39%(2) (7.43)%
For the year ended:
December 31, 1992................... 10.11% 30.12% 16.43% 10.17% -- --
December 31, 1992................... 0.50%(34) 2.25%(19) 3.60%(34) (4.12)%(33) -- --
December 31, 1992................... -- -- -- -- -- --
December 31, 1992................... -- -- -- -- -- --
</TABLE>
33
<PAGE> 36
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE> 37
- --------------------------------------------------------------------------------
To Our Variable Life Policyowners and Variable Annuity Contractowners:
- --------------------------------------------------------------------------------
We are pleased to send you the 1996 Semi-Annual Report for Market Street Fund,
Inc., its Growth, Money Market, Bond, Managed, Aggressive Growth, International,
Common Stock and Sentinel Growth Portfolios.
Economic Overview and Investment Perspective
Writing last January in the 1995 Annual Report for the Market Street Fund, I
said in part, "What will 1996 bring? With no hint of renewed inflation on the
horizon and the Federal Reserve Board leaning more towards easing than
tightening in order to avoid pushing an already weakening economy into
recession, both bond and equity markets should enjoy modestly positive rates of
return in 1996. While budget battles and the upcoming elections could produce
short term volatility, long term patient investors should have nothing to fear
from maintaining their market exposure. As to market timers, you are on your own
as always."
First the facts. Through the first 6 months of 1996, the equity markets
responded strongly to a growing, nearly inflation free economy. Rising profits
were sufficient to offset fears of rising interest rates. Total returns were
slightly above 10% for both the S&P 500 and the Russell 2000. For the fixed
income markets, the results were not as pleasant, with the Lehman Aggregate Bond
Index turning in a -1.2% total return and the 30 year U.S. Treasury Bond rate
averaging 6.06%, 6.60%, and 7.06% for the 4th quarter of 1995 and the first 2
quarters of 1996, respectively. While the Federal Reserve did not tighten, the
combination of a growing economy, persistent inflation fears, and the failure of
the new Congress and the President to make any progress on fundamental budget
reform were sufficient to cause the back-up in rates.
The outlook for the remainder of 1996 is cautiously optimistic for both the
equity and fixed income markets. July has already seen increased volatility in
both markets as equities sold off strongly, particularly technology issues, only
to bounce right back, at least partially; while 30 year Treasuries rallied
strongly to the 6.75% level. Markets will likely stabilize until the November
election, so long as inflation fears do not force the Fed's hand. December
should be exciting.
Review of Fund Portfolio Performance
The Semi-Annual Reviews and performance charts* for each Portfolio (other than
the Money Market Portfolio) contained in this Semi-Annual Report show the growth
of $10,000 over the period shown, assuming reinvestment of all dividends. The
performance is then compared to a relevant index. As always, it is important to
recall in interpreting these results that the advisers of the equity portfolios
of Market Street Fund do not engage in market timing. That is to say that in all
but times of great market turmoil, they endeavor to keep the vast majority of
portfolio assets invested in common stocks. Thus, they attempt to add value by
stock selection utilizing the methods and in the markets specified in the Fund
Prospectus. Their performance should be judged according to how well they do
relative to market indices measuring the same type of activity.
We appreciate the opportunity to have served you in the past and look forward to
serving you during the remainder of 1996 and many years into the future.
/s/ Stanley R. Reber
Stanley R. Reber
President
The Market Street Fund, Inc.
*Past performance is not predictive of future results. Moreover, the
relationship between the performance of the Fund Portfolios and the actual
increases or decreases in a policy's cash value is not directly proportional due
to certain charges deducted from premiums and under the policies which are not
reflected in the above figures. Please see the current prospectus for an
explanation of these charges and for illustrations which take such charges into
account in calculating cash values.
1
<PAGE> 38
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
1996 Semi-Annual Review
Newbold's Asset Management, Inc.
- --------------------------------------------------------------------------------
For the first six months of the year, the Market Street Fund Growth
Portfolio was up 9.4% compared with 10.1% for the Standard & Poor's 500 Index.
Newbold's is happy to report that its conservatively postured portfolios
fared quite well amidst all of this market volatility. In fact, the heightened
volatility is reflective of more normal markets than we have experienced over
the last several years and also of markets where risk levels continue to build.
These are the markets where Newbold's tends to build its relative performance
advantage.
Stock selection was good in the second quarter led by investments in US
Healthcare, which was acquired by Aetna and by Xerox which appreciated
dramatically. Retail holdings consisting of American Stores, Limited and Reebok
International all outperformed solidly. Basic industry stocks tended to lag in
our portfolios as well as in the overall market given prospects for firming
interest rates. Conversely, we were encouraged that our utilities produced
returns in line to modestly ahead of the market despite these firming rates.
Prospectively, Newbold's continues to be committed to participating in the
appreciation the equity markets offer through specific stock selection in an
overall diversified portfolio. However, we are always mindful of preserving the
above average appreciation of recent years in client portfolios through
disciplined risk control as demonstrated by our large capitalization, low P/E,
high yield process.
Jeffrey Van Orden
MARKET STREET FUND
Growth Portfolio
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Fund Index
<S> <C> <C>
Start 10000 10020
85 10177 10077 Growth Fund
86 11325 11941 Average Annual Total Return
87 11511 12540 Since Inception*
88 13641 14580 13.02%
89 17794 19131
90 18220 18485
91 21590 24115
92 22614 25948
93 24924 28558
94 25522 28933
95 33279 39811
95.5 36397 43832
</TABLE>
Past performance is not predictive of future performance.
+ The Index is the S&P 500 Index, an unmanaged index of 500 U.S. common stocks
that includes reinvestment of dividends.
* Inception date was December 12, 1985.
2
<PAGE> 39
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Schedule of Investments, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (97.4%)
Aerospace & Defense................................................... 4.1%
Boeing Co........................................................... 44,400 $ 3,868,350
United Technologies Corp............................................ 30,500 3,507,500
-----------
7,375,850
-----------
Alcohol............................................................... 0.9%
Anheuser-Busch Companies, Inc....................................... 20,500 1,537,500
-----------
Automotive & Equipment................................................ 1.2%
Genuine Parts Co.................................................... 48,000 2,196,000
-----------
Building & Building Supplies.......................................... 2.7%
Masco Corp.......................................................... 157,600 4,767,400
-----------
Business Services, Media, Etc......................................... 2.0%
Dun & Bradstreet Corp............................................... 57,300 3,581,250
-----------
Chemicals............................................................. 3.2%
Grace (W.R.) & Co................................................... 53,800 3,813,075
Great Lakes Chemical Corp........................................... 31,100 1,935,975
-----------
5,749,050
-----------
Diversified........................................................... 1.5%
Corning, Inc........................................................ 70,000 2,686,250
-----------
Drugs & Health Care................................................... 5.2%
Baxter International, Inc........................................... 44,600 2,107,350
Bristol-Meyers Squibb............................................... 58,700 5,283,000
Mallinckrodt Group, Inc............................................. 47,100 1,831,012
Warner Lambert Co................................................... 1,900 104,500
-----------
9,325,862
-----------
Electrical & Electronic............................................... 1.5%
Cooper Industries, Inc.............................................. 66,200 2,747,300
-----------
Finance--Banks........................................................ 3.1%
Fleet Financial Group, Inc.......................................... 81,200 3,532,200
Nations Bank Corp................................................... 24,400 2,016,050
-----------
5,548,250
-----------
Finance--Insurance.................................................... 9.0%
Aetna Life & Casualty Co............................................ 87,300 6,241,950
Chubb Corp.......................................................... 15,000 748,125
</TABLE>
3
<PAGE> 40
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Finance-Insurance (Continued)
General Re Corp..................................................... 18,300 $ 2,786,175
ITT Hartford Group Inc.............................................. 34,500 1,837,125
Providian Corp...................................................... 19,800 848,925
St. Paul Companies, Inc............................................. 69,000 3,691,500
-----------
16,153,800
-----------
Foods................................................................. 1.5%
Archer-Daniels Midland Co........................................... 139,765 2,673,006
-----------
Natural Gas........................................................... 3.3%
Panhandle Eastern Corp.............................................. 91,900 3,021,213
TransCanada Pipelines Ltd........................................... 197,900 2,919,025
-----------
5,940,238
-----------
Non-Ferrous Metals & Mining........................................... 2.4%
Aluminum Co. of America............................................. 76,700 4,400,662
-----------
Office Equipment & Supplies........................................... 3.2%
International Business Machines Corp................................ 17,500 1,732,500
Pitney Bowes, Inc................................................... 18,200 869,050
Xerox Corp.......................................................... 60,300 3,226,050
-----------
5,827,600
-----------
Oil................................................................... 2.0%
Mobil Corp.......................................................... 31,400 3,520,725
-----------
Oil Equipment & Services.............................................. 1.6%
Schlumberger Ltd.................................................... 33,900 2,856,075
-----------
Oil & Other Energy Sources............................................ 8.6%
Amoco Corp.......................................................... 48,900 3,539,137
Atlantic Richfield Co............................................... 29,500 3,495,750
Chevron Corp........................................................ 29,700 1,752,300
Exxon Corp.......................................................... 34,100 2,962,438
USX Marathon Group.................................................. 185,300 3,729,163
-----------
15,478,788
-----------
Paper & Forest Products............................................... 4.3%
International Paper Co.............................................. 44,500 1,640,937
James River Corp.................................................... 135,300 3,568,538
Mead Corp........................................................... 49,400 2,562,625
-----------
7,772,100
-----------
</TABLE>
4
<PAGE> 41
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Pollution Control..................................................... 3.7%
Browning-Ferris Industries, Inc..................................... 91,700 $ 2,659,300
WMX Technologies, Inc............................................... 122,600 4,015,150
-----------
6,674,450
-----------
Retail Food Chains.................................................... 1.7%
American Stores Co.................................................. 72,100 2,974,125
-----------
Retail Stores......................................................... 0.9%
Limited, Inc........................................................ 71,142 1,529,553
-----------
Telecommunications.................................................... 5.7%
AT&T Corp........................................................... 124,600 7,725,200
Sprint Corp......................................................... 60,400 2,536,800
-----------
10,262,000
-----------
Textiles & Apparel.................................................... 1.3%
Reebok International, Ltd........................................... 68,200 2,293,225
-----------
Tobacco............................................................... 4.4%
RJR Nabisco Holdings Corp........................................... 161,840 5,017,040
UST, Inc............................................................ 82,900 2,839,325
-----------
7,856,365
-----------
Utilities-Combination................................................. 4.0%
Baltimore Gas & Electric Co......................................... 51,100 1,449,963
Edison International................................................ 98,300 1,732,537
PECO Energy Co...................................................... 152,200 3,957,200
-----------
7,139,700
-----------
Utilities-Electric.................................................... 7.9%
Entergy Corp........................................................ 139,500 3,958,312
FPL Group, Inc...................................................... 92,700 4,264,200
General Public Utilities Corp....................................... 80,200 2,827,050
Pacificorp.......................................................... 85,200 1,895,700
Southern Co......................................................... 51,500 1,268,188
-----------
14,213,450
-----------
</TABLE>
5
<PAGE> 42
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Growth Portfolio
Schedule of Investments, June 30, 1996 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Utilities-Telephone................................................... 6.5%
GTE Corp............................................................ 99,600 $ 4,457,100
NYNEX Corp.......................................................... 154,000 7,315,000
-----------
11,772,100
-----------
TOTAL COMMON STOCK (COST $151,525,517)............................ 174,852,674
-----------
PREFERRED STOCK (0.4%)
RJR Nabisco Holdings Corp., 1/10 Convertible Series C, Preferred
(Cost $718,513)................................................... 106,400 691,600
-----------
SHORT-TERM INVESTMENTS (2.2%)
Temporary Investment Fund, Inc. -- TempCash (Cost $4,062,930)....... 4,062,930 4,062,930
-----------
TOTAL INVESTMENTS (100.0%) (COST $156,306,960)........................ $179,607,204
===========
</TABLE>
See accompanying notes to financial statements.
* Non-Income Producing.
6
<PAGE> 43
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Money Market Portfolio
Schedule of Investments, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE PRINCIPAL
OF PORTFOLIO MATURITY AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BANKERS' ACCEPTANCES (10.9%)
Bank of New York, 5.36%.................................. 09/18/96 $1,000,000 $ 988,238
CoreStates Bank, N.A., 5.26%............................. 08/23/96 2,000,000 1,984,512
NationsBank N.A., 5.28%.................................. 08/21/96 2,000,000 1,985,040
---------
TOTAL BANKERS' ACCEPTANCES (COST $4,957,790)........... 4,957,790
---------
COMMERCIAL PAPER (85.1%)
Agricultural Services...................................... 4.4%
Cargill, Inc., 5.30%..................................... 07/08/96 2,000,000 1,997,938
Finance.................................................... 80.7%
American Express Credit Corp., 5.28%..................... 07/01/96 1,000,000 1,000,000
American Express Credit Corp., 5.29%..................... 07/01/96 1,000,000 1,000,000
BankAmerica Corp., 5.26%................................. 07/31/96 1,000,000 995,617
BankAmerica Corp., 5.30%................................. 07/31/96 1,000,000 995,583
Bankers Trust N.Y. Corp., 5.34%.......................... 09/06/96 1,000,000 990,062
Beneficial Corp., 5.28%.................................. 07/03/96 2,000,000 1,999,413
C.I.T. Group Holdings Inc., 5.29%........................ 08/07/96 1,750,000 1,740,486
C.I.T. Group Holdings Inc., 5.33%........................ 08/07/96 250,000 248,630
Commercial Credit Corp., 5.29%........................... 07/19/96 2,000,000 1,994,710
Ford Motor Credit Co., 5.27%............................. 08/05/96 2,000,000 1,989,753
General Electric Capital Corp., 5.31%.................... 08/09/96 2,000,000 1,988,495
Household Finance Corp., 5.28%........................... 07/16/96 2,000,000 1,995,600
IBM Credit Corp., 5.27%.................................. 07/31/96 500,000 497,804
IBM Credit Corp., 5.32%.................................. 07/31/96 1,500,000 1,493,350
JC Penney Funding Corp., 5.32%........................... 07/29/96 2,000,000 1,991,724
John Deere Capital Corp., 5.36%.......................... 08/28/96 1,000,000 991,364
John Deere Capital Corp., 5.38%.......................... 09/03/96 1,000,000 990,436
Mellon Financial Co., 5.35%.............................. 09/03/96 2,000,000 1,980,978
Morgan J P & Co. Inc., 5.29%............................. 08/13/96 2,000,000 1,987,363
Norwest Corp., 5.28%..................................... 07/12/96 1,200,000 1,198,064
Norwest Financial Inc., 5.28%............................ 07/12/96 800,000 798,709
Pitney Bowes Credit Corp., 5.27%......................... 07/23/96 2,000,000 1,993,559
Prudential Funding Corp., 5.27%.......................... 07/26/96 1,900,000 1,893,047
Transamerica Financial Corp., 5.28%...................... 07/10/96 500,000 499,340
Transamerica Financial Corp., 5.30%...................... 07/10/96 1,500,000 1,498,013
Union Commercial Funding Corp., 5.34%.................... 08/16/96 1,900,000 1,887,036
---------
36,639,136
---------
TOTAL COMMERCIAL PAPER (COST $38,637,074).............. 38,637,074
---------
SHORT-TERM INVESTMENTS (4.0%)
Temporary Investment Fund, Inc.--TempCash
(Cost $1,837,176)...................................... 1,837,176 $ 1,837,176
---------
TOTAL INVESTMENTS (100.0%) (COST $45,432,040).......... $45,432,040
=========
</TABLE>
See accompanying notes to financial statements.
7
<PAGE> 44
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
1996 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
For the first half of 1996, the Market Street Bond Portfolio produced a
total return of -1.3%, compared to the Lehman Aggregate Bond index which
returned -1.2%. The Lehman Aggregate Bond Index is considered a good proxy for
the overall fixed-income market.
Six months ago, the markets were responding to a slowdown in the economy
that appeared to have the momentum to become a recession, the anticipated
loosening of credit by the Federal Reserve in response to the pending recession,
and, finally, the prospect of a balanced budget. By February, the markets
realized that the economy was rebounding, tell-tale inflationary pressures were
appearing, and there would be no balanced budget. The market reacted violently.
Interest rates rose sharply 80 to 110 basis points. Thirty-year Treasury Bonds
returned -8.00% for the half year. The fulcrum point between positive and
negative return was in the four year area. Mortgage-backed securities did
reasonably well in this environment because of their shorter average lives.
During the first half of 1996, the Portfolio shortened average maturity from
9.3 years to 7.3 years. Duration, a measure of volatility, was reduced from 5.2
years to 4.2 years. Corporate securities were sold with the proceeds redeployed
to government and agency securities. Average quality was improved from A1 to
Aa3.
Richard D. Temple
MARKET STREET FUND
Bond Portfolio
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Bond Index
<S> <C> <C>
Start 10000 10000
85 10225 10187 Bond Fund
86 11864 11742 Average Annual Total Return
87 11583 12066 Since Inception*
88 12330 13018 7.72%
89 13633 14909
90 14683 16245
91 16728 18844
92 17724 20239
93 19553 22564
94 18454 21892
95 22228 25941
95.5 21930 25630
</TABLE>
Past performance is not predictive of future performance.
+ The Index is the Lehman Aggregate Bond Index, an unmanaged index of bonds
reflecting average prices in the bond market.
* Inception date was December 12, 1985.
8
<PAGE> 45
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Schedule of Investments, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE PRINCIPAL
OF PORTFOLIO MATURITY AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. TREASURY NOTES (22.8%)
U.S Treasury Note, 5.50%.................................. 12/31/00 $ 250,000 $ 240,975
U.S Treasury Note, 6.00%.................................. 08/31/97 1,100,000 1,100,990
U.S Treasury Note, 6.375%................................. 01/15/00 500,000 500,060
U.S Treasury Note, 6.375%................................. 08/15/02 500,000 495,775
U.S Treasury Note, 7.50%.................................. 05/15/05 1,000,000 1,051,680
----------
TOTAL U.S. TREASURY NOTES (COST $3,421,691)............. 3,389,480
----------
AGENCY OBLIGATIONS (15.1%)
Collaterized Mortgage Obligation Trust, 7.95%............... 3.5% 05/01/17 502,000 510,667
----------
Federal Home Loan Bank...................................... 0.7%
Federal Home Loan Bank, 6.835%............................ 04/20/99 99,000 98,730
----------
Federal Home Loan Mortgage Corporation...................... 0.3%
Federal Home Loan Mortgage Corp., 9.00%................... 11/01/16 8,000 7,881
Federal Home Loan Mortgage Corp., 8.00%................... 03/01/17 43,000 43,332
----------
51,213
----------
Federal National Mortgage Association....................... 10.6%
Federal National Mortgage Association Principal Strip
Callable 10-10-96 @ 100, 8.04% Coupon If Not Called..... 10/10/01 925,000 908,872
Federal National Mortgage Association Principal Strip
Callable 11-01-96 @ 100, 7.99% Coupon If Not Called..... 11/01/01 680,000 664,914
----------
1,573,786
----------
TOTAL AGENCY OBLIGATIONS (COST $2,140,753).............. 2,234,396
----------
CORPORATE BONDS (59.2%)
Financial Institutions...................................... 14.1%
First Union National Bank, 6.18%.......................... 02/22/36 600,000 557,250
Lehman Brothers Holdings, 8.80%........................... 03/01/15 400,000 439,500
Midland Bank, 7.65%....................................... 05/01/25 500,000 513,750
Salomon Brothers, 6.875%.................................. 12/15/03 600,000 570,000
----------
2,080,500
----------
</TABLE>
9
<PAGE> 46
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Bond Portfolio
Schedule of Investments, June 30, 1996 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
PERCENTAGE NUMBER
OF PORTFOLIO MATURITY OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
Foreign.................................................... 10.5%
Banque Paribas Subordinate Notes, 6.875%................. 03/01/09 $500,000 $ 460,000
Santander Financial, 7.00%............................... 04/01/06 600,000 581,250
Swedish Export Credit Corp., 9.875%...................... 03/15/38 475,000 519,531
-----------
1,560,781
-----------
Insurance.................................................. 17.1%
Farmers Insurance Exchange, 8.50%........................ 08/01/04 600,000 606,000
Integon Corp., 9.50%..................................... 10/15/01 400,000 421,500
Liberty Mutual Insurance Co., 8.20%...................... 05/04/07 500,000 520,000
Pacific Mutual Life 144A Surplus Notes, 7.90%............ 12/30/23 500,000 493,750
Prudential Insurance Co. of America, 7.65%............... 07/01/07 500,000 495,625
-----------
2,536,875
-----------
Retail-Department Stores................................... 3.5%
May Department Stores Co., 9.125%........................ 12/01/16 500,000 525,000
-----------
Telecommunications......................................... 6.9%
Comsat Corp. Medium Term Note, 8.05%..................... 12/13/06 500,000 531,125
TCI Communications, Inc., 8.00%.......................... 08/01/05 500,000 488,125
-----------
1,019,250
-----------
Utilities--Electric........................................ 3.5%
Mississippi Power and Light Co., 8.80%................... 04/01/05 500,000 511,875
-----------
Utilities--Gas............................................. 3.6%
Consolidated Natural Gas Co., 8.625%..................... 12/01/11 500,000 526,875
-----------
TOTAL CORPORATE BONDS (COST $8,768,527)................ 8,761,156
-----------
SHORT-TERM INVESTMENTS (2.9%)
Temporary Investment Fund, Inc.--TempCash (Cost
$423,214)................................................ 423,214 423,214
-----------
TOTAL INVESTMENTS (100.0%) (COST $14,754,185).......... $14,808,246
===========
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 47
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
1996 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Managed Portfolio achieved a total return of 4.6% for
the first half of 1996, compared to 5.0% for the median Lipper balanced
portfolio.
The stock market has meaningfully outperformed the bond market thus far in
1996, with the Standard & Poor's 500 achieving a total return of 10.1% and the
Lehman Aggregate Bond Index down 1.2%. At the end of June, the asset allocation
of the Managed Portfolio was 52% common stocks, 36% fixed income and 12% cash.
This is slightly more defensive than the 53% common stocks, 41% fixed income and
6% cash positions as of the end of 1995.
While 1995's strong stock market rally continued into the first half of
1996, the internal dynamics of the advance were quite volatile. The tenor of the
market was extremely aggressive during the first four months of the year, but
investors shifted dramatically towards quality and conservatism as the period
drew to a close. The stock segment of the Managed Portfolio modestly
outperformed the Standard & Poor's 500 during the first half.
Interest rates increased during the first half of 1996 as economic growth
picked up and investors worried that inflation might increase as well.
Volatility increased during the period; in this environment, the Portfolio took
advantage of opportunities to shorten duration in its bond segment and reduce
exposure to lower-quality corporate bonds.
At present, the stock market appears to be somewhat overvalued, and entering
a more speculative/volatile late rally phase. The bond market, on the other
hand, has backed up meaningfully, and may present a more attractive opportunity
over the short-term. The Managed Portfolio continues to hold a fairly defensive
portfolio, both in terms of asset allocation and individual security holdings.
Given our outlook for a somewhat slower second half for the economy and for
corporate earnings growth, we would not feel inclined to increase the
Portfolio's exposure to common stocks unless there were a meaningful revaluation
(correction) in the market.
Rodney A. Buck, CFA
David M. Brownles, CFA
Richard A. Pender, CFA
MARKET STREET FUND
Managed Portfolio
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Fund LA Index* S&P Index+
<S> <C> <C> <C>
Start 10000 10000 10000
85 10299 10187 10077
86 11543 11742 11941 Managed Fund
87 11481 12066 12540 Average Annual Total Return
88 12631 13018 14580 Since Inception ++
89 14482 14909 19131 9.26%
90 13235 16245 18485
91 15947 18844 24115
92 17854 20239 25948
93 19928 22564 28558
94 19566 21892 28933
95 24346 25941 39811
95.5 25468 25630 43832
</TABLE>
Past performance is not predictive of future performance.
* The Index is the Lehman Aggregate Bond Index, an unmanaged index of bonds
reflecting average prices in the bond market.
+ The Index is the S&P 500 Index, an unmanaged index of 500 U.S. common stocks
that includes reinvestment of dividends.
++ Inception date was December 12, 1985.
11
<PAGE> 48
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Schedule of Investments, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (52.4%)
Automobiles & Auto Parts............................................... 1.6%
Echlin, Inc. ........................................................ 9,000 $ 340,875
Ford Motor Co. ...................................................... 9,000 291,375
----------
632,250
----------
Banks.................................................................. 4.5%
Banc One Corp. ...................................................... 5,007 170,238
Bank of New York Co., Inc. .......................................... 7,200 369,000
Bank America ........................................................ 3,000 227,250
Chase Manhattan Corp. ............................................... 3,640 257,075
Citicorp ............................................................ 3,500 289,188
First Union Corp. ................................................... 4,600 280,025
Morgan (J.P.) & Co., Inc. ........................................... 2,500 211,563
----------
1,804,339
----------
Beverages.............................................................. 0.6%
Coca-Cola Company ................................................... 5,000 244,375
----------
Building & Materials................................................... 0.9%
Sherwin Williams Co. ................................................ 8,000 372,000
----------
Chemicals.............................................................. 1.5%
Grace (W.R.) & Co. .................................................. 4,000 283,500
PPG Industries, Inc. ................................................ 6,500 316,875
----------
600,375
----------
Consumer & Business Services........................................... 1.2%
Omnicom Group, Inc. ................................................. 10,000 465,000
----------
Containers, Packagings................................................. 0.9%
Crown Cork & Seal Co., Inc. ......................................... 8,000 360,000
----------
Drugs.................................................................. 2.2%
American Homes Products Corp. ....................................... 8,000 481,000
Pfizer, Inc. ........................................................ 6,000 428,250
----------
909,250
----------
Electrical Equipment................................................... 3.4%
Emerson Electric Co. ................................................ 5,000 451,875
General Electric Co. ................................................ 6,000 519,000
Grainger (W.W.), Inc. ............................................... 5,000 387,500
----------
1,358,375
----------
</TABLE>
12
<PAGE> 49
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Electronics............................................................ 1.7%
AMP, Inc. ........................................................... 6,600 $ 264,825
Electronic Data Systems Corp. ....................................... 7,535 405,006
----------
669,831
----------
Energy................................................................. 5.8%
Amoco Corp. ......................................................... 5,700 412,537
Atlantic Richfield Co. .............................................. 3,100 367,350
Chevron Corp. ....................................................... 4,500 265,500
Exxon Corp. ......................................................... 5,000 434,375
Mobil Corp. ......................................................... 3,500 392,438
Royal Dutch Petroleum Co. ........................................... 3,000 461,250
----------
2,333,450
----------
Financial.............................................................. 0.9%
American Express Co. ................................................ 8,400 374,850
----------
Foods.................................................................. 2.6%
CPC International, Inc. ............................................. 6,000 432,000
Hannaford Bros. Co. ................................................. 7,000 228,375
Sara Lee Corp. ...................................................... 12,000 388,500
----------
1,048,875
----------
Healthcare Providers................................................... 1.1%
Columbia/HCA Healthcare Corp. ....................................... 8,500 453,687
----------
Industrial Diversified................................................. 2.7%
Dover Corp. ......................................................... 5,000 230,625
Parker-Hannifin Corp. ............................................... 6,200 262,725
Rockwell International Corp. ........................................ 7,000 400,750
Tenneco, Inc. ....................................................... 3,900 199,388
----------
1,093,488
----------
Insurance.............................................................. 3.8%
Allstate Corp. ...................................................... 10,562 481,891
American General Corp. .............................................. 7,700 280,087
American International Group, Inc. .................................. 4,200 414,225
Equitable of Iowa ................................................... 10,000 355,000
----------
1,531,203
----------
Medical Equipment & Supplies........................................... 1.1%
Johnson & Johnson ................................................... 9,000 445,500
----------
</TABLE>
13
<PAGE> 50
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Oil Field Equipment & Services......................................... 1.8%
Halliburton Co. ..................................................... 5,300 $ 294,150
Schlumberger Ltd. ................................................... 5,000 421,250
----------
715,400
----------
Paper & Forest Products................................................ 0.8%
Kimberly-Clark Corp. ................................................ 4,000 309,000
----------
Publishing............................................................. 1.6%
Gannett, Inc. ....................................................... 3,900 275,925
McGraw Hill, Inc. ................................................... 8,000 366,000
----------
641,925
----------
Railroads.............................................................. 1.8%
Canadian Pacific Ltd. ............................................... 3,200 70,400
Illinois Central Corp. Common Series A .............................. 11,250 319,219
Union Pacific Corp. ................................................. 5,000 349,375
----------
738,994
----------
Recreation............................................................. 0.5%
*Coleman Co., Inc. .................................................. 5,000 211,875
----------
Retail................................................................. 2.6%
May Department Stores Co............................................. 6,700 293,125
Nordstrom, Inc....................................................... 5,500 244,750
*Payless Shoesource.................................................. 800 25,400
Sears, Roebuck and Co................................................ 10,000 486,250
----------
1,049,525
----------
Telecommunications..................................................... 1.5%
AT&T Corp............................................................ 7,000 434,000
*U.S. West Media Group............................................... 10,000 182,500
----------
616,500
----------
Tobacco................................................................ 1.6%
American Brands, Inc................................................. 6,000 272,250
Philip Morris Company, Inc........................................... 3,500 364,000
----------
636,250
----------
Utilities -- Electric.................................................. 0.8%
FPL Group, Inc....................................................... 7,000 322,000
----------
</TABLE>
14
<PAGE> 51
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO MATURITY OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
Utilities -- Gas.......................................... 1.7%
Enron Corp.............................................. 8,000 $ 327,000
Sonat, Inc.............................................. 7,500 337,500
----------
664,500
----------
Utilities -- Telephone.................................... 1.2%
GTE, Corp............................................... 8,500 380,375
U.S. West Communications Group.......................... 3,300 105,187
----------
485,562
----------
TOTAL COMMON STOCK (COST $15,867,127)................. 21,088,379
----------
CORPORATE BONDS (14.4%)
Financial Institutions.................................... 5.1%
First Union National, 6.18%............................. 02/22/36 600,000 557,250
Lehman Brothers Holdings, 8.80%......................... 03/01/15 400,000 439,500
Midland Bank, 7.65%..................................... 05/01/25 550,000 565,125
Salomon Brothers, 6.875%................................ 12/15/03 500,000 475,000
----------
2,036,875
----------
Foreign Financial Institutions............................ 1.2%
Santander Financial, 7.00%.............................. 04/01/06 500,000 484,375
----------
Insurance................................................. 4.3%
Farmers Insurance Exchange, 8.50%....................... 08/01/04 700,000 707,000
Liberty Mutual, 8.20%................................... 05/04/07 500,000 520,000
Pacific Mutual Life, 7.90%.............................. 12/30/23 500,000 493,750
----------
1,720,750
----------
Retail.................................................... 1.3%
May Department Stores, 9.125%........................... 12/01/16 500,000 525,000
----------
Telecommunications........................................ 2.5%
Comsat Medium Term Note, 8.05%.......................... 12/13/06 500,000 531,125
TCI Communications, Inc., 8.00%......................... 08/01/05 500,000 488,125
----------
1,019,250
----------
TOTAL CORPORATE BONDS (COST $5,896,559)............... 5,786,250
----------
</TABLE>
15
<PAGE> 52
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Managed Portfolio
Schedule of Investments, June 30, 1996 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
PERCENTAGE NUMBER
OF PORTFOLIO MATURITY OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. TREASURY NOTES (16.0%)
U.S. Treasury Note, 6.00%................................ 08/31/97 $1,500,000 $ 1,501,350
U.S. Treasury Note, 6.375%............................... 01/15/00 500,000 500,060
U.S. Treasury Note, 6.25%................................ 08/31/00 2,500,000 2,481,950
U.S. Treasury Note, 5.50%................................ 12/31/00 550,000 530,145
U.S. Treasury Note, 7.50%................................ 02/15/05 500,000 525,840
U.S. Treasury Note, 5.625%............................... 02/15/06 1,000,000 927,280
-----------
TOTAL U.S. TREASURY NOTES (COST $6,531,741)............ 6,466,625
-----------
AGENCY OBLIGATIONS (5.3%)
Collateralized Mortgage Obligation Trust................... 1.3%
Collateralized Mortgage Obligation Trust, 7.95%.......... 05/01/17 502,000 510,667
-----------
Federal Home Loan Mortgage Corporation..................... 2.4%
Federal Home Loan Mortgage Corporation, 6.50%............ 01/01/11 993,000 960,269
-----------
Federal National Mortgage Association...................... 1.6%
Federal National Mortgage Association Principal Strip
Callable 10/10/96 @ 100, 8.04% Coupon If Not Called.... 10/10/01 380,000 373,374
Federal National Mortgage Association Principal Strip
Callable 11/01/96 @ 100, 7.99% Coupon If Not Called.... 11/01/01 280,000 273,788
-----------
647,162
-----------
TOTAL AGENCY OBLIGATIONS (COST $2,119,056)............. 2,118,098
-----------
SHORT-TERM INVESTMENTS (11.9%)
Beneficial Corp., 5.37%.................................. 07/09/96 1,200,000 1,198,571
IBM Credit Corp., 5.32%.................................. 07/02/96 1,200,000 1,199,823
Norwest Corp., 5.27%..................................... 07/15/96 950,000 947,964
Prudential Funding Corp., 5.36%.......................... 07/12/96 1,000,000 998,365
Temporary Investment Fund, Inc. -- TempCash.............. 462,985 462,985
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $4,807,708)......... 4,807,708
-----------
TOTAL INVESTMENTS (100.0%) (COST $35,222,280)............ $40,267,060
===========
</TABLE>
* Non-Income Producing.
See accompanying notes to financial statements.
16
<PAGE> 53
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
1996 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Aggressive Growth Portfolio achieved a total return
of 10.6% for the first half of 1996, compared to 12.9% for the median Lipper
Small Company Growth fund and 10.5% for the Russell 2000 index.
While the Portfolio produced returns well ahead of the Russell 2000 during
the first quarter, the below-average returns for the second quarter brought our
six-month results in line with the index. The Portfolio's lower relative
performance for the first half can be partially attributed to its relative low
risk profile, a function of its market-like P/E ratio, only market-like
weighting in the fast paced technology group, and still above average cash
position. Many of the recently top-performing small company funds have P/E
ratios and technology weightings significantly higher than those for the
Aggressive Growth Portfolio. While the Portfolio's lower risk profile can be
expected to cause it to lag its peer group during exceptionally strong momentum
driven markets for small cap stocks, it can also be expected to outperform its
peer group during flat and down markets. Not surprisingly, the Portfolio's
performance in the last half of June, a difficult period for small company
funds, was relatively good.
The Portfolio's 17.6% cash position as of June 30, 1996 is lower than the
24.7% as of year-end, 1995. We continue to strive to be "fully invested".
However, we believe our somewhat cautious pursuit of this goal is warranted,
given the current extended valuations of many high-quality small cap stocks.
Our outlook has changed little since the beginning of the year. We continue
to forecast weaker overall consumer spending and corporate profits. Rising food,
energy, and labor costs are beginning to materialize. Indeed, growing fears of
inflation and Fed tightening, as evidenced by rising short and long-term
interest rates, threaten to undermine the stock market's current valuation.
Accordingly, we continue to believe that our relatively low risk investment
approach that emphasizes owning a diverse group of promising, reasonably valued,
and financially strong small and mid-cap companies will serve our shareholders
well over the course of a full market cycle.
Keniston P. Merrill
Richard A. Pender, CFA
Scott T. Brayman, CFA
MARKET STREET FUND
Aggressive Growth Portfolio
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Fund Index+
<S> <C> <C>
Start 10000 10000
89 10558 10340 Aggressive Growth fund
90 11695 8324 Average Annual Total Return
91 18283 12161 Since Inception*
92 18755 14399 13.47%
93 19730 17120
94 19730 16808
95 22289 21599
95.5 24752 23866
</TABLE>
Past performance is not predictive of future performance.
+ The Index is the Russell 2000 Index, an unmanaged stock index of small
capitalization companies which includes reinvestment of all income.
* Inception date was May 1, 1980.
17
<PAGE> 54
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Schedule of Investments, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (82.2%)
Auto Parts & Repair.................................................... 2.0%
Pep Boys-Manny, Moe & Jack........................................... 17,000 $ 578,000
-----------
Communications......................................................... 6.0%
*California Microwave, Inc........................................... 27,500 419,375
*Dynatech Corp....................................................... 24,500 796,250
*Verifone, Inc....................................................... 12,300 519,675
-----------
1,735,300
-----------
Cosmetics & Toiletries................................................. 0.8%
*Bush Boake Allen, Inc............................................... 11,000 239,250
-----------
Electronics............................................................ 7.4%
*Amphenol Corp....................................................... 27,000 621,000
Harman International Industries, Inc................................. 11,160 549,630
Methode Electronics, Inc. Class A.................................... 36,100 613,700
Stewart & Stevenson Services, Inc.................................... 15,000 341,250
-----------
2,125,580
-----------
Energy................................................................. 6.6%
*Calenergy Co., Inc.................................................. 36,700 935,850
*Smith International, Inc............................................ 32,000 964,000
-----------
1,899,850
-----------
Environmental Control.................................................. 6.0%
*United States Filter Corp........................................... 12,000 417,000
*USA Waste Services, Inc............................................. 22,650 671,006
*Waste Management International Plc-ADR.............................. 58,000 645,250
-----------
1,733,256
-----------
Financial.............................................................. 5.9%
Duff & Phelps Credit Rating Co....................................... 12,500 265,625
First Commerce Corp.................................................. 6,000 212,250
ROC Communities...................................................... 26,000 620,750
Wilmington Trust Corp................................................ 18,800 609,825
-----------
1,708,450
-----------
</TABLE>
18
<PAGE> 55
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Food & Food Distributors............................................... 6.4%
Goodmark Foods, Inc.................................................. 25,700 $ 366,225
Hannaford Bros. Co................................................... 14,200 463,275
Smart & Final, Inc................................................... 24,700 632,937
Tootsie Roll Industries, Inc......................................... 10,655 379,584
-----------
1,842,021
-----------
Healthcare Providers................................................... 2.3%
*Advocat, Inc........................................................ 8,100 76,950
*Genesis Health Ventures............................................. 18,450 578,869
-----------
655,819
-----------
Industrial & Commercial Services....................................... 12.7%
Analysts International Corp.......................................... 8,000 336,000
Donaldson, Inc....................................................... 22,000 566,500
*Healthcare Services Group........................................... 48,500 436,500
Kelly Services, Inc.................................................. 15,600 456,300
Lawter International, Inc............................................ 51,500 643,750
*Material Sciences Corp.............................................. 38,800 669,300
Olsten Corp.......................................................... 18,950 556,656
-----------
3,665,006
-----------
Insurance.............................................................. 2.3%
American Travellers Corp............................................. 29,250 672,750
-----------
Medical--Equipment & Supplies.......................................... 10.2%
Allergan, Inc........................................................ 20,000 785,000
Hillenbrand Industries, Inc.......................................... 12,000 447,000
Minntech Corp........................................................ 26,100 283,838
*R.P. Scherer Corp................................................... 14,000 635,250
*Research Medical, Inc............................................... 23,400 517,725
*Respironics, Inc.................................................... 15,500 286,750
-----------
2,955,563
-----------
Metals................................................................. 1.4%
J & L Specialty Steel, Inc........................................... 28,000 416,500
-----------
Railroads.............................................................. 1.1%
Illinois Central Corp. Common Series A............................... 10,950 310,706
-----------
</TABLE>
19
<PAGE> 56
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Aggressive Growth Portfolio
Schedule of Investments, June 30, 1996 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
PERCENTAGE NUMBER
OF PORTFOLIO MATURITY OF SHARES VALUE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Restaurants............................................... 1.2%
Sbarro, Inc............................................. 13,700 $ 344,213
-------
Retail.................................................... 2.9%
*Ethan Allen Industries, Inc............................ 13,200 326,700
Talbots, Inc............................................ 15,300 495,338
-------
822,038
-------
Security Services......................................... 2.7%
*ADT Ltd................................................ 40,600 766,325
-------
Software.................................................. 3.4%
*Filenet Corp........................................... 8,100 295,650
*Landmark Graphics Corp................................. 24,000 462,000
System Software Associates, Inc......................... 13,300 226,100
-------
983,750
-------
Transportation............................................ 0.9%
Frozen Food Express Industries, Inc..................... 23,700 266,625
-------
TOTAL COMMON STOCK (COST $20,314,289)................. 23,721,002
----------
PREFERRED STOCK (0.2%)
Financial Institutions Phoenix Duff & Phelps Preferred
Convertible Series A, $1.50, (Cost $71,441)............. 2,500 64,375
-------
SHORT-TERM INVESTMENTS (17.6%)
Beneficial Corp., 5.36%................................. 07/16/96 $1,000,000 997,767
Household Finance Corp., 5.38%.......................... 07/19/96 800,000 797,848
IBM Credit Corp., 5.35%................................. 07/11/96 1,000,000 998,514
National City Credit Corp., 5.30%....................... 07/08/96 1,000,000 998,969
Norwest Corp., 5.32%.................................... 07/01/96 1,000,000 1,000,000
Temporary Investment Fund, Inc.--TempCash............... 267,064 267,064
----------
TOTAL SHORT-TERM INVESTMENTS (COST $5,060,162)........ 5,060,162
----------
TOTAL INVESTMENTS (100.0%) (COST $25,445,892)......... $28,845,539
===========
</TABLE>
* Non-Income Producing.
See accompanying notes to financial statements.
20
<PAGE> 57
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
1996 Semi-Annual Review
The Boston Company Asset Management, Inc.
- --------------------------------------------------------------------------------
The Market Street Fund International Portfolio had a return of 7.0% for the
first six months of 1996 compared with a 3.6% return for the EAFE index.
Since year end, the single greatest change in the portfolio has been the
shift in emphasis to Japan. Japanese stocks now account for six of the
portfolio's top ten holdings. This is in stark contrast to December 1995. At
that time Japanese stocks in the top ten numbered only two. Similarly, your
Portfolio's weighting in Japan has risen from 28% in December to 30% at the end
of the first half.
The shift in emphasis reflects an increased level of confidence that the
recovery under way in Japan is sustainable. GDF in the first quarter was
extremely strong, 12.7% on an annualized basis. This was largely due to
supplemental spending programs by the government. Strength in the consumer
sector was visible in the automobile sector, packaged goods & cosmetics, movies
& entertainment and in the broader based retailers. While few expect that GDP
will remain at double digits for the remainder of the year, we feel comfortable
that the economic environment will remain favorable in Japan for the foreseeable
future.
The first half also saw strong performance from your stocks in the
Netherlands. Some of the strong performers included ABN-Amro and ING (banking
and financial services), Stad Rotterdam (insurance), HBG (construction and
housing), and Hunter Douglas (conglomerate). We are encouraged by these actions
and feel that the market has yet to appreciate the restructuring potential at
the Company. Other movements in the portfolio included profit taking in Laird,
British Air and Boots in the United Kingdom, Renault in France and Adidas in
Germany.
Looking ahead we remain optimistic that our value oriented approach will
continue to outperform markets abroad. We consider it a privilege to be managing
funds on your behalf. We will continue to exert our best efforts to bring you a
rewarding return on your investment.
Sandor Cseh, CFA
MARKET STREET FUND
International Portfolio
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Fund Index
<S> <C> <C>
Start 10000 10000
91 9712 10030 International Fund
92 9003 8806 Average Annual Total Return
93 12254 11677 Since Inception*
94 12286 12585 9.81%
95 14044 13994
95.5 15028 14624
</TABLE>
Past performance is not predictive of future performance.
+ The Index is the Morgan Stanley Capital International Europe, Australia, Far
East (EAFE) Index, an unmanaged index of more than 900 companies from these
regions. The EAFE Index reflects the prices of these common stocks translated
into U.S. dollars with dividends reinvested net of any foreign taxes.
* Inception date was November 1, 1991.
21
<PAGE> 58
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Schedule of Investments, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (97.0%)
Austria.................................................................. 0.4%
Creditanstalt PS....................................................... 1,200 $ 166,858
-----------
Australia................................................................ 3.6%
Amcor Ltd.............................................................. 45,000 306,050
Boral Ltd.............................................................. 169,733 440,398
Goodman Fielder........................................................ 154,533 156,738
Southcorp Holdings..................................................... 110,000 272,438
Westpac Banking Corp................................................... 80,498 356,334
-----------
1,531,958
-----------
France................................................................... 6.0%
C.S.F. (Thomson-C.S.F.)................................................ 14,162 398,259
*Chargeurs............................................................. 1,450 405,791
Credit Local De........................................................ 2,700 219,862
Danone................................................................. 3,704 560,765
Guyenne Et Gascogne SA................................................. 1,000 357,788
Societe Generale....................................................... 5,748 632,274
-----------
2,574,739
-----------
Germany.................................................................. 8.3%
Bayer AG............................................................... 13,000 459,251
Deutsche Bank AG....................................................... 15,000 709,826
Henkel................................................................. 1,000 431,811
R.W.E. Deag AG Preferred............................................... 22,000 676,701
Siemens AG............................................................. 9,500 507,624
Tarkett................................................................ 15,000 316,464
Veba AG................................................................ 8,500 451,788
-----------
3,553,465
-----------
Hong Kong................................................................ 2.6%
Cheung Kong Holdings................................................... 57,000 410,589
HSBC Holdings Plc...................................................... 32,884 497,116
Yue Yuen Industrial.................................................... 750,000 213,192
-----------
1,120,897
-----------
Italy.................................................................... 1.5%
Fiat SPA............................................................... 70,000 234,017
Stet Di Risp........................................................... 160,000 419,271
-----------
653,288
-----------
</TABLE>
22
<PAGE> 59
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
Japan.................................................................... 29.4%
Canon, Inc............................................................. 35,000 $ 727,770
Chudenko Corp.......................................................... 7,000 254,081
Credit Saison Co....................................................... 35,000 845,873
Dai-Tokyo Fire and Marine Insurance.................................... 96,000 722,298
Hitachi Koki Co........................................................ 55,000 541,724
Hitachi Ltd............................................................ 65,000 604,651
Honda Motor Co. Ltd.................................................... 25,000 647,515
Ito-Yokado Co. Ltd..................................................... 11,000 663,110
Kao Corp............................................................... 55,000 742,362
Kyushu Electric Power Co., Inc......................................... 7,600 171,199
Mabuchi Motors......................................................... 10,000 636,571
Mikuni Coca-Cola Bottling Co., Ltd..................................... 40,000 601,915
Mitsubishi Heavy Industries, Ltd....................................... 80,000 695,303
Murata Manufacturing Co., Ltd.......................................... 18,000 682,900
Nishimatsu Construction................................................ 50,000 547,196
Ono Pharmaceutical..................................................... 15,000 512,996
Sankyo Co. Ltd......................................................... 10,600 406,019
Sekisui House.......................................................... 55,000 626,995
Toshiba Corp........................................................... 85,000 604,651
Toyota Motor Corp...................................................... 22,000 549,749
Yamanouchi Pharmaceuticals............................................. 17,000 368,992
Yamato Transportation.................................................. 43,000 505,882
-----------
12,659,752
-----------
Malaysia................................................................. 1.1%
Affin Holdings......................................................... 160,000 375,075
Malaysian International Shipping....................................... 32,000 99,379
-----------
474,454
-----------
Netherlands.............................................................. 4.9%
ABN- AMRO Holding...................................................... 8,005 429,376
Hollandsche Beton...................................................... 2,050 392,534
Hunter Douglas N.V..................................................... 6,456 440,417
International Nederlanden Group........................................ 6,565 195,671
Koninklijke K.N.P...................................................... 15,000 359,245
Stad Rotterdam......................................................... 8,376 303,110
-----------
2,120,353
-----------
</TABLE>
23
<PAGE> 60
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
New Zealand.............................................................. 1.1%
Air New Zealand........................................................ 48,000 $ 146,423
*Fletcher Energy....................................................... 150,000 331,097
-----------
477,520
-----------
Norway................................................................... 1.2%
Christiana Bank........................................................ 72,000 169,490
Orkla.................................................................. 7,500 364,643
-----------
534,133
-----------
Singapore................................................................ 2.1%
Development Bank....................................................... 30,000 374,468
Far East Levingston.................................................... 53,000 293,191
Malaysian International Shipping....................................... 78,000 229,021
-----------
896,680
-----------
Spain.................................................................... 1.5%
Gas y Electricidad SA Gesa............................................. 6,091 336,595
Iberdrola I............................................................ 30,000 307,482
-----------
644,077
-----------
Sweden................................................................... 0.8%
Marieberg.............................................................. 14,000 349,737
-----------
Switzerland.............................................................. 5.1%
Ciba-Geigy AG.......................................................... 430 523,762
Magazine Zum Globus.................................................... 100 60,703
Magazine Zum Globus Participating Certificates, Zurich................. 550 320,687
Nestle SA.............................................................. 300 342,412
Schweizerischer Bankverein............................................. 3,350 660,903
Zurich Versicherungs................................................... 1,000 272,364
-----------
2,180,831
-----------
United Kingdom........................................................... 9.9%
Abbey National Plc..................................................... 50,000 419,275
Boots Ordinary Plc..................................................... 35,046 314,520
BTR Orndinary Plc...................................................... 138,823 545,469
D.S. Smith............................................................. 70,000 296,748
Devro Plc.............................................................. 50,000 187,550
Laird Group Ordinary................................................... 65,000 470,503
</TABLE>
24
<PAGE> 61
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The International Portfolio
Schedule of Investments, June 30, 1996 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
United Kingdom (Continued)
National Westminster Bank.............................................. 57,338 $ 547,020
Powergen Plc........................................................... 80,903 588,124
RTZ Corp............................................................... 40,351 596,045
Scapa Group............................................................ 85,603 314,463
-----------
4,279,717
-----------
United States............................................................ 17.5%
AKZO N.V. Sponsored ADR................................................ 3,500 209,125
Alcatel Alsthom ADR.................................................... 22,092 389,371
British Airways Plc ADR................................................ 3,000 257,250
British Gas Plc ADR.................................................... 6,500 182,000
Corporacion Bancaria de Espanol ADR.................................... 29,000 638,000
Elf Aquitaine ADR...................................................... 18,751 689,099
Hanson Trust Plc ADR................................................... 33,000 470,250
Istituto Mobiliare Italiano ADR........................................ 19,000 484,500
Repsol ADR............................................................. 22,000 764,500
Rhone Poulenc S.A. Sponsored ADR....................................... 13,000 344,500
Royal Ptt Nederland N.V. ADR........................................... 8,724 329,317
Scania AB Class A...................................................... 3,000 83,250
Scania AB Class B...................................................... 3,000 82,875
*Swedish Match Co. AB-ADR.............................................. 1,000 30,875
Tele Danmark ADR....................................................... 17,500 444,063
Telecom Portugal S.A. ADR.............................................. 17,000 446,250
Telefonos De Mexico S.A.-ADR........................................... 7,500 251,250
Toyota Motor Corp. ADR................................................. 3,500 175,438
Unilever N.V........................................................... 4,000 580,500
Volvo AB-ADR........................................................... 10,000 225,000
YPF Sociedad Anonima ADR............................................... 20,000 450,000
-----------
7,527,413
-----------
TOTAL COMMON STOCK AND PREFERRED STOCK (COST $38,173,413)............ 41,745,872
-----------
SHORT-TERM INVESTMENTS (3.0%)
Temporary Investment Fund, Inc.--TempCash
(Cost $1,308,450).................................................... 1,308,450 1,308,450
-----------
TOTAL INVESTMENTS (100.0%) (COST $39,481,863)........................ $43,054,322
===========
</TABLE>
* Non-Income Producing.
See accompanying notes to financial statements.
25
<PAGE> 62
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Common Stock Portfolio
1996 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Common Stock Portfolio commenced operations on March
18, 1996. The Portfolio achieved a total return of 3.4% for the second quarter
of 1996, the first full measurement period since the Portfolio opened, compared
to 3.4% for the median Lipper growth & income fund.
The Standard & Poor's 500 gained 4.5% during the second quarter, the sixth
consecutive quarter of positive stock market returns. Market action during the
quarter was characterized by extreme volatility, with a highly speculative phase
in April and early May, followed by a massive flight to quality during the
closing weeks of the quarter. The Common Stock Portfolio lagged modestly during
the more speculative period, but performed strongly at the end. During the
quarter, the Portfolio's consumer staple holdings (foods, beverages and
pharmaceuticals) were particularly strong contributors, as were the diversified
industrial holdings and the large stake in energy-related securities. The
interest sensitive financials lagged modestly, but remain well positioned and
inexpensive stocks. Other areas of weakness in the Portfolio were selected
economically sensitive industrial and technology groups, which continue to be
underweighted in the Portfolio.
While economic reports continue to indicate better than anticipated growth,
we still expect a more subdued economy in the latter half of 1996. The stock
market appears to have entered a more speculative phase, with major inter-day
and intra-day swings in reaction to relatively minor changes in economic data
(which are often later revised), and with major stock price adjustments in
reaction to relatively insignificant short-term earnings estimate revisions. We,
as always, remain essentially fully invested. However, in this higher risk
market environment, we are as strongly committed to a defensive focus on
quality, consistency and stability in our stock selection process.
Keniston P. Merrill
Richard A. Pender, CFA
Daniel J. Manion, CFA
MARKET STREET FUND
Common Stock
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Fund Index
<S> <C> <C>
Start 10000 10000 Common Stock Fund
95.5 10390 10353 Average Annual Total Return
Since Inception*
3.90%
</TABLE>
* Inception date was March 18, 1996.
+ The Index is the S&P 500 Index, an unmanaged index of 500 U.S. common stocks
that includes reinvestment of dividends.
26
<PAGE> 63
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Common Stock Portfolio
Schedule of Investments, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (94.7%)
Automotive & Auto Parts............................................... 3.0%
Echlin, Inc......................................................... 2,500 $ 94,688
Ford Motor Co....................................................... 2,000 64,750
-----------
159,438
Banks................................................................. 10.7%
Banc One Corp....................................................... 1,000 34,000
Bank of New York Co., Inc........................................... 1,900 97,375
BankAmerica Corp.................................................... 900 68,175
Chase Manhattan Corp................................................ 1,300 91,813
Citicorp............................................................ 1,300 107,413
First Union Corp.................................................... 1,200 73,050
Morgan (J.P.) & Co., Inc............................................ 1,100 93,088
-----------
564,914
-----------
Beverages............................................................. 2.4%
Coca-Cola Co........................................................ 2,600 127,075
-----------
Building Materials.................................................... 1.6%
Sherwin Williams Co................................................. 1,800 83,700
-----------
Chemicals............................................................. 3.1%
Grace (W.R.) & Co................................................... 1,300 92,138
PPG Industries, Inc................................................. 1,500 73,125
-----------
165,263
-----------
Consumer & Business Services.......................................... 1.8%
Omnicom Group, Inc.................................................. 2,000 93,000
-----------
Containers, Packaging................................................. 1.5%
Crown Cork & Seal Co., Inc.......................................... 1,800 81,000
-----------
Cosmetics & Toiletries................................................ 2.2%
Gillette Co......................................................... 1,900 118,513
-----------
Drugs................................................................. 4.0%
American Home Products Corp......................................... 2,000 120,250
Pfizer, Inc......................................................... 1,300 92,788
-----------
213,038
-----------
Electrical Equipment.................................................. 5.9%
Emerson Electric Co................................................. 1,600 144,600
General Electric Co................................................. 1,900 164,350
-----------
308,950
-----------
</TABLE>
27
<PAGE> 64
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Common Stock Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Electronics........................................................... 2.5%
Amp, Inc............................................................ 1,600 $ 64,200
Electronic Data Systems Corp........................................ 1,300 69,875
-----------
134,075
-----------
Energy................................................................ 10.6%
Amoco Corp.......................................................... 1,200 86,850
Atlantic Richfield Co............................................... 400 47,400
Chevron Corp........................................................ 1,100 64,900
Exxon Corp.......................................................... 1,400 121,625
Mobil Corp.......................................................... 900 100,913
Royal Dutch Petroleum Co............................................ 900 138,375
-----------
560,063
-----------
Financial............................................................. 1.8%
American Express Co................................................. 2,100 93,713
-----------
Foods................................................................. 3.3%
CPC International, Inc.............................................. 1,000 72,000
Sara Lee Corp....................................................... 3,100 100,363
-----------
172,363
-----------
Healthcare Providers.................................................. 2.1%
Columbia Healthcare Corp............................................ 2,100 112,088
-----------
Industrial-Diversified................................................ 3.5%
Parker Hannifin Corp................................................ 1,500 63,563
Rockwell International Corp......................................... 1,400 80,150
Tenneco, Inc........................................................ 800 40,900
-----------
184,613
-----------
Insurance............................................................. 4.9%
Allstate Corp....................................................... 2,200 100,375
American General Corp............................................... 2,100 76,388
American International Group, Inc................................... 800 78,900
-----------
255,663
-----------
Medical-Equipment & Supplies.......................................... 2.1%
Johnson & Johnson................................................... 2,200 108,900
-----------
</TABLE>
28
<PAGE> 65
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Common Stock Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Oil Field Equipment & Services........................................ 3.0%
Halliburton Co...................................................... 1,200 $ 66,600
Schlumberger Ltd.................................................... 1,100 92,675
-----------
159,275
-----------
Paper & Forest Products............................................... 1.9%
Kimberly-Clark Corp................................................. 1,300 100,425
-----------
Publishing............................................................ 2.6%
Gannett, Inc........................................................ 1,000 70,750
McGraw-Hill, Inc.................................................... 1,400 64,050
-----------
134,800
-----------
Railroads............................................................. 2.1%
Canadian Pacific Ltd................................................ 800 17,600
Union Pacific Corp.................................................. 1,300 90,838
-----------
108,438
-----------
Retail................................................................ 4.4%
May Department Stores Co............................................ 1,600 70,000
Nordstrom, Inc...................................................... 1,100 48,950
*Payless Shoesource, Inc............................................ 200 6,350
Sears Roebuck & Co.................................................. 2,200 106,975
-----------
232,275
-----------
Telecommunications.................................................... 3.1%
American Telephone and Telegraph Co................................. 2,000 124,000
*U S West Media Group............................................... 2,200 40,150
-----------
164,150
-----------
Tobacco............................................................... 3.7%
American Brands, Inc................................................ 1,800 81,675
Philip Morris, Inc.................................................. 1,100 114,400
-----------
196,075
-----------
Utilities-Electric.................................................... 2.5%
Florida Progress Corp............................................... 1,600 55,600
FPL Group, Inc...................................................... 1,600 73,600
-----------
129,200
-----------
</TABLE>
29
<PAGE> 66
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Common Stock Portfolio
Schedule of Investments, June 30, 1996 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO MATURITY OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
Utilities-Gas................................................ 2.9%
Enron Corp. ............................................... 1,900 $ 77,663
Sonat, Inc. ............................................... 1,700 76,500
---------
154,163
---------
Utilities-Telephone.......................................... 1.5%
GTE Corp. ................................................. 1,200 53,700
U S West Communications, Inc. ............................. 800 25,500
---------
79,200
---------
TOTAL COMMON STOCK (COST $4,818,388)..................... 4,994,370
---------
AGENCY OBLIGATIONS (4.9%)
Federal National Mortgage Discount Notes, 5.29%............ 07/02/96 260,000 259,954
---------
(Cost $259,954).......................................... 259,954
---------
SHORT-TERM INVESTMENTS (0.4%)
Temporary Investment Fund, Inc. -- TempCash
(Cost $22,640)........................................... 22,640 22,640
---------
TOTAL INVESTMENTS (100.0%) (COST $5,100,982) .............. $5,276,964
=========
</TABLE>
* Non-Income Producing.
See accompanying notes to financial statements.
30
<PAGE> 67
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
1996 Semi-Annual Review
Sentinel Advisors Company
- --------------------------------------------------------------------------------
The Market Street Fund Sentinel Growth Portfolio commenced operations on
March 18, 1996. The Portfolio earned a total return of 2.9% during the second
quarter, the first full measurement period since the Portfolio opened, while the
median fund in the Lipper Growth universe earned a 4.2% return.
Investors' concerns about the strength of the economy caused the more
defensive sectors of the market, such as consumer staples and utilities, to
outperform, particularly in the last month of the quarter. Cyclical sectors,
such as basic materials, consumer cyclicals, and selected technology stocks,
underperformed the market.
Within the universe of growth portfolios, a renewed focus on earnings
momentum was evident during the period. Undervalued stocks without earnings
momentum underperformed the market, while some very high multiple stocks
(including most initial public offerings) continued to move higher in a very
speculative market environment.
As is the case for all of our portfolios, our strategy with the Sentinel
Growth Portfolio is to match our competitors in strong up markets and to
outperform the competition in down markets. We remain confident that our
approach, which focuses on owning stocks with above-average earnings growth
trading at modest price-earnings multiples, will produce superior long-term
results over a full market cycle.
Robert L. Lee, CFA
Kenneth I. Chodock
MARKET STREET FUND
Sentinel Growth
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Fund Index
<S> <C> <C>
Start 10000 10000 Sentinel Growth Fund
95.5 10190 10353 Average Annual Total Return
Since Inception*
1.90%
</TABLE>
* Inception date was March 18, 1996.
+ The Index is the S&P 500 Index, an unmanaged index of 500 U.S. common stocks
that includes reinvestment of dividends.
31
<PAGE> 68
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Schedule of Investments, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (96.4%)
Automobiles & Auto Parts................................................. 4.0%
Ford Motor............................................................. 1,400 $ 45,325
General Motors Corp.................................................... 2,000 104,750
Pep Boys-Manny Moe & Jack.............................................. 1,500 51,000
----------
201,075
----------
Banks.................................................................... 3.1%
Banc One Corp.......................................................... 1,400 47,600
BankAmerica Corp....................................................... 600 45,450
First Union Corp....................................................... 1,100 66,962
----------
160,012
----------
Beverages................................................................ 1.3%
Pepsico, Inc........................................................... 1,800 63,675
----------
Building Materials....................................................... 2.2%
Sherwin Williams Co.................................................... 2,400 111,600
----------
Consumer & Business Services............................................. 5.9%
First Data Corp........................................................ 2,400 191,100
Omnicom Group, Inc..................................................... 2,300 106,950
----------
298,050
----------
Chemicals................................................................ 4.3%
Air Products & Chemicals............................................... 1,300 75,075
W.R. Grace & Co........................................................ 2,000 141,750
----------
216,825
----------
Computers................................................................ 1.3%
Hewlett Packard Co..................................................... 700 69,737
----------
Containers & Packaging................................................... 3.4%
Crown Cork & Seal Co., Inc............................................. 3,900 175,500
----------
Drugs.................................................................... 4.5%
Pfizer................................................................. 800 57,100
Pharmacia Upjohn....................................................... 1,600 71,000
Schering Plough........................................................ 1,600 100,400
----------
228,500
----------
</TABLE>
32
<PAGE> 69
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Schedule of Investments, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Electronics.............................................................. 11.9%
AMP, Inc............................................................... 4,000 $ 160,500
Amphenol Corp.-Class A................................................. 2,300 52,900
Applied Material Inc................................................... 1,800 54,900
Electronic Data Systems Corp........................................... 2,400 129,000
Methode Electronics.................................................... 1,900 32,300
Motorola............................................................... 2,800 176,050
----------
605,650
----------
Environmental Control.................................................... 2.2%
*U.S. Filter Corp...................................................... 2,500 86,875
*Waste Management Int'l Plc............................................ 2,300 25,588
----------
112,463
----------
Energy................................................................... 2.0%
Amoco Corp............................................................. 700 50,663
Enron Corp............................................................. 1,200 49,050
----------
99,713
----------
Financial................................................................ 1.2%
Student Loan Marketing................................................. 800 59,200
----------
Food & Food Distributors................................................. 1.9%
CPC International...................................................... 800 57,600
Sysco Corp............................................................. 1,200 41,100
----------
98,700
----------
Healthcare Providers..................................................... 7.8%
*Caremark International................................................ 4,700 118,674
Columbia/HCA Healthcare................................................ 1,700 90,737
Healthcare Compare..................................................... 800 39,000
Integrated Health Services............................................. 3,900 92,625
Renal Treatment Centers................................................ 1,900 54,625
----------
395,661
----------
Insurance................................................................ 3.0%
Equitable of Iowa...................................................... 4,300 152,650
----------
Industrial-Diversified................................................... 3.5%
Donaldson Co........................................................... 4,400 113,300
Fluor Corp............................................................. 1,000 65,375
----------
178,675
----------
</TABLE>
33
<PAGE> 70
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
The Sentinel Growth Portfolio
Schedule of Investments, June 30, 1996 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE NUMBER
OF PORTFOLIO OF SHARES VALUE
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
Medical-Equipment & Supplies............................................. 4.7%
Dentsply International................................................. 1,900 $ 80,750
Johnson & Johnson...................................................... 3,200 158,400
-----------
239,150
-----------
Oil Field Equipment...................................................... 4.4%
Halliburton Co......................................................... 1,000 55,500
Schlumberger Ltd....................................................... 2,000 168,500
-----------
224,000
-----------
Railroads................................................................ 1.8%
Union Pacific Corp..................................................... 1,300 90,837
-----------
Retail................................................................... 9.1%
Home Depot............................................................. 1,900 102,600
Nordstrom, Inc......................................................... 2,000 89,000
Sears Roebuck.......................................................... 2,000 97,250
TJX Companies.......................................................... 5,100 172,125
-----------
460,975
-----------
Semiconductors & Software................................................ 6.5%
Intel.................................................................. 132,188
*Microsoft............................................................. 180,188
*Novell Inc............................................................ 23,588
-----------
335,964
-----------
Telecommunications....................................................... 4.0%
*Airtouch Communications............................................... 2,700 76,275
*Worldcom Inc.......................................................... 2,300 127,363
-----------
203,638
-----------
Tobacco.................................................................. 2.4%
Philip Morris.......................................................... 1,200 124,800
-----------
TOTAL COMMON STOCK (COST $4,805,160)................................. 4,907,050
-----------
SHORT-TERM INVESTMENTS (3.6%)
Temporary Investment Fund, Inc.--TempCash
(Cost $180,804)........................................................ 180,804 180,804
-----------
TOTAL INVESTMENTS (100.0%) (COST $4,985,964)......................... $5,087,854
===========
</TABLE>
* Non-Income Producing.
See accompanying notes to financial statements.
34
<PAGE> 71
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Assets and Liabilities, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (cost $156,306,960,
$45,432,040, $14,754,185, $35,222,280,
$25,445,892, $39,481,863, $5,100,982,
$4,985,964 respectively) (see accompanying
schedules)................................ $179,607,204 $45,432,040 $14,808,246 $40,267,060 $28,845,539 $43,054,322
Cash........................................ -- -- -- -- 1 1,338,942*
Interest receivable......................... 27,663 4,186 277,241 282,310 1,905 6,061
Dividends receivable........................ 458,611 -- -- 30,405 18,744 216,117
Foreign taxes receivable.................... -- -- -- -- -- 6,432
Receivable from affiliated insurance
company................................... -- -- -- -- -- 5,556
Prepaid expenses............................ -- -- -- -- -- 671
Receivable for investments sold............. 1,649,795 -- -- 206,535 -- --
Receivable for fund shares sold ............ 5,969 -- 14,605 18 59,181 33,957
------------ ----------- ----------- ----------- ----------- -----------
Total assets.............................. 181,749,242 45,436,226 15,100,092 40,786,328 28,925,370 44,662,058
------------ ----------- ----------- ----------- ----------- -----------
LIABILITIES
Accrued expenses............................ 203,619 36,682 16,600 42,827 27,773 39,522
Dividend payable............................ -- 183,850 -- -- -- --
Payable for investments purchased........... 1,486,029 -- -- 1,265,180 51,451 --
Payable for fund shares redeemed............ 357,398 -- -- 26,047 308 342
------------ ----------- ----------- ----------- ----------- -----------
Total liabilities......................... 2,047,046 220,532 16,600 1,334,054 79,532 39,864
------------ ----------- ----------- ----------- ----------- -----------
Net assets................................ $179,702,196 $45,215,694 $15,083,492 $39,452,274 $28,845,838 $44,622,194
============ =========== =========== =========== =========== ===========
Number of shares of $.01 par value common
stock, issued and outstanding............. 10,701,915 45,215,694 1,432,776 2,824,713 1,704,741 3,449,440
============ =========== =========== =========== =========== ===========
Net asset value, offering and redemption
price per share........................... $ 16.79 $ 1.00 $ 10.53 $ 13.97 $ 16.92 $ 12.94
============ =========== =========== =========== =========== ===========
<CAPTION>
COMMON SENTINEL
STOCK GROWTH
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at value (cost $156,306,960,
$45,432,040, $14,754,185, $35,222,280,
$25,445,892, $39,481,863, $5,100,982,
$4,985,964 respectively) (see accompanying
schedules)................................ $ 5,276,964 $ 5,087,854
Cash........................................ -- --
Interest receivable......................... 233 578
Dividends receivable........................ 7,180 4,936
Foreign taxes receivable.................... -- --
Receivable from affiliated insurance
company................................... 10,020 9,816
Prepaid expenses............................ -- --
Receivable for investments sold............. 49,501 --
Receivable for fund shares sold ............ 21,602 --
----------- -----------
Total assets.............................. 5,365,500 5,103,184
----------- -----------
LIABILITIES
Accrued expenses............................ 6,612 6,791
Dividend payable............................ -- --
Payable for investments purchased........... 106,930 --
Payable for fund shares redeemed............ -- --
----------- -----------
Total liabilities......................... 113,542 6,791
----------- -----------
Net assets................................ $ 5,251,958 $ 5,096,393
=========== ===========
Number of shares of $.01 par value common
stock, issued and outstanding............. 505,262 500,133
=========== ===========
Net asset value, offering and redemption
price per share........................... $ 10.39 $ 10.19
=========== ===========
</TABLE>
* Includes foreign currency with a cost of $1,279,346 and a value of $1,338,941.
See accompanying notes to financial statements.
35
<PAGE> 72
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Operations For the Six Months Ended June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.......................................... $ 2,603,652 $ -- $ -- $ 250,830 $ 90,331
Interest........................................... 301,878 1,090,644 471,950 541,034 146,400
Less: foreign taxes withheld..................... (25,573) -- -- (1,462) --
----------- ---------- --------- ---------- ---------
Total Income..................................... 2,879,957 1,090,644 471,950 790,402 236,731
----------- ---------- --------- ---------- ---------
EXPENSES:
Investment advisory fee............................ 285,237 49,845 26,462 74,933 62,966
Administration fee................................. 69,535 16,244 5,029 15,305 10,808
Directors' fee..................................... 1,945 1,091 309 636 668
Transfer agent fee................................. 3,132 1,305 953 1,273 1,118
Custodian fee...................................... 16,383 5,023 1,911 4,961 6,214
Legal fees......................................... 2,161 1,212 343 707 742
Audit fees......................................... 2,766 1,551 439 905 949
Printing........................................... 8,643 6,537 1,820 3,769 3,990
Taxes.............................................. -- -- -- -- --
Miscellaneous...................................... 6,367 2,859 1,637 2,332 2,543
----------- ---------- --------- ---------- ---------
396,169 85,667 38,903 104,821 89,998
Less: expenses reimbursed by affiliated insurance
company.......................................... -- -- -- -- --
----------- ---------- --------- ---------- ---------
Total expenses................................... 396,169 85,667 38,903 104,821 89,998
----------- ---------- --------- ---------- ---------
Net investment income (loss)..................... 2,483,788 1,004,977 433,047 685,581 146,733
----------- ---------- --------- ---------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments:.................................... 12,265,437 -- (175,469) 221,329 159,823
Foreign currency related transactions........... (25,972) -- -- -- --
----------- ---------- --------- ---------- ---------
12,239,465 -- (175,469) 221,329 159,823
----------- ---------- --------- ---------- ---------
Net change in unrealized appreciation
(depreciation) from:
Investment:..................................... 619,910.... -- (463,624) 769,236 2,292,942
Foreign currency related translations........... -- -- -- -- --
----------- ---------- --------- ---------- ---------
619,910 -- (463,624) 769,236 2,292,942
Net gain (loss) on investments and foreign currency
transactions..................................... 12,859,375 -- (639,093) 990,565 2,452,765
----------- ---------- --------- ---------- ---------
Net increase (decrease) in net assets resulting
from operations.................................. $15,343,163 $1,004,977 $ (206,046) $1,676,146 $2,599,498
=========== ========== ========= ========== ==========
<CAPTION>
COMMON SENTINEL
INTERNATIONAL STOCK GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.......................................... $ 576,259 $ 32,457 $ 19,210
Interest........................................... 59,230 6,942 4,812
Less: foreign taxes withheld..................... (51,664) -- --
---------- -------- --------
Total Income..................................... 583,825 39,399 24,022
---------- -------- --------
EXPENSES:
Investment advisory fee............................ 156,162 5,780 7,189
Administration fee................................. 25,959 12,819 12,755
Directors' fee..................................... 1,011 93 92
Transfer agent fee................................. 1,310 466 466
Custodian fee...................................... 17,082 1,413 1,252
Legal fees......................................... 1,124 103 102
Audit fees......................................... 1,438 132 131
Printing........................................... 6,030 246 245
Taxes.............................................. -- 3 3
Miscellaneous...................................... 2,968 557 557
---------- -------- --------
213,084 21,612 22,792
Less: expenses reimbursed by affiliated insurance
company.......................................... (5,547) (10,020) (9,816)
---------- -------- --------
Total expenses................................... 207,537 11,592 12,976
---------- -------- --------
Net investment income (loss)..................... 376,288 27,807 11,046
---------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments:.................................... 1,546,680 (5,870) (17,891)
Foreign currency related transactions........... (60,861) -- --
---------- -------- --------
1,485,819 (5,870) (17,891)
---------- -------- --------
Net change in unrealized appreciation
(depreciation) from:
Investment:..................................... 897,500 175,982 101,890
Foreign currency related translations........... 1,145 -- --
---------- -------- --------
898,645 175,982 101,890
Net gain (loss) on investments and foreign currency
transactions..................................... 2,384,464 170,112 83,999
---------- -------- --------
Net increase (decrease) in net assets resulting
from operations.................................. $ 2,760,752 $197,919 $ 95,045
========== ======== ========
</TABLE>
See accompanying notes to financial statements.
36
<PAGE> 73
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Changes in Net Assets for the Six Months Ended June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss).............. $ 2,483,788 $ 1,004,977 $ 433,047 $ 685,581 $ 146,733 $ 376,288
Net realized gain (loss) on investments and
foreign currency related transactions..... 12,239,465 -- (175,469) 221,329 159,823 1,485,819
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations.................... 619,910 -- (463,624) 769,236 2,292,942 898,645
Net increase (decrease) in net assets
resulting from operations................ 15,343,163 1,004,977 (206,046) 1,676,146 2,599,498 2,760,752
Distributions:
From net investment income................ (2,442,054) (1,004,977) (421,889) (660,115) (255,039) (442,343)
From net realized gains................... (7,732,422) -- -- (1,471,361) (2,569,743) (1,793,161)
Capital share transactions:
Net contributions from affiliated life
insurance companies...................... 12,634,558 10,600,542 1,309,072 3,905,238 5,248,691 7,454,864
------------ ----------- ----------- ----------- ----------- -----------
Total increase in net assets............. 17,803,245 10,600,542 681,137 3,449,908 5,023,407 7,980,112
NET ASSETS
Beginning of period......................... 161,898,951 34,615,152 14,402,355 36,002,366 23,822,431 36,642,082
------------ ----------- ----------- ----------- ----------- -----------
End of period (including undistributed net
investment income in the Growth Portfolio
of $1,279,516; Bond Portfolio $219,528;
Managed Portfolio $355,196; Aggressive
Portfolio $146,733 and International
Portfolio $315,427; Common Stock $27,807;
Sentinel Growth $11,046).................. $179,702,196 $45,215,694 $15,083,492 $39,452,274 $28,845,838 $44,622,194
============ =========== =========== =========== =========== ===========
<CAPTION>
COMMON SENTINEL
STOCK GROWTH
PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss).............. $ 27,807 $ 11,046
Net realized gain (loss) on investments and
foreign currency related transactions..... (5,870) (17,891)
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations.................... 175,982 101,890
Net increase (decrease) in net assets
resulting from operations................ 197,919 95,045
Distributions:
From net investment income................ -- --
From net realized gains................... -- --
Capital share transactions:
Net contributions from affiliated life
insurance companies...................... 5,054,039 5,001,348
----------- -----------
Total increase in net assets............. 5,251,958 5,096,393
NET ASSETS
Beginning of period......................... 0 0
----------- -----------
End of period (including undistributed net
investment income in the Growth Portfolio
of $1,279,516; Bond Portfolio $219,528;
Managed Portfolio $355,196; Aggressive
Portfolio $146,733 and International
Portfolio $315,427; Common Stock $27,807;
Sentinel Growth $11,046).................. $ 5,251,958 $ 5,096,393
=========== ===========
</TABLE>
See accompanying notes to financial statements.
37
<PAGE> 74
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Statements of Changes in Net Assets for the Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income (loss).. $ 4,474,620 $ 1,481,782 $ 776,497 $ 1,374,276 $ 255,039 $ 385,788
Net realized gain (loss) on
sale off investments........ 7,728,282 -- 503,141 1,471,361 2,569,743 1,849,716
Net change in unrealized
appreciation (depreciation)
on investments and foreign
currency translations....... 24,145,662 -- 950,760 4,221,556 (406,827) 2,023,172
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net
assets resulting from
operations.................. 36,348,564 1,481,782 2,230,398 7,067,193 2,417,955 4,258,676
Distributions:
From net investment income.... (4,157,531) (1,481,782) (736,126) (1,414,623) -- (148,141)
From net realized gains....... (8,715,516) -- -- (33,117) (131,841) (699,972)
Capital share transactions:
Net contributions from
affiliated life insurance
companies................... 23,232,447 13,575,595 2,810,449 1,019,709 6,106,674 7,019,658
------------ ----------- ----------- ----------- ----------- -----------
Total increase in net
assets.................... 46,707,964 13,575,595 4,304,721 6,639,162 8,392,788 10,430,221
NET ASSETS
Beginning of period............. 115,190,987 21,039,557 10,097,634 29,363,204 15,429,643 26,211,861
------------ ----------- ----------- ----------- ----------- -----------
End of period (including
undistributed net investment
income in the Growth Portfolio
of $963,142; Bond Portfolio
$168,000; Managed Portfolio
$370,077 and International
Portfolio $148,141)........... $161,898,951 $34,615,152 $14,402,355 $36,002,366 $23,822,431 $36,642,082
============ =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
38
<PAGE> 75
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91
TO TO TO TO TO TO
06/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period........ $16.36 $14.00 $14.09 $13.73 $13.88 $12.08
-------- -------- -------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income....................... .23 .47 .43 .38 .46 .50
Net realized and unrealized gain (loss) on
investments............................... 1.22 3.41 (.10 ) .94 .17 1.71
-------- -------- -------- -------- ------- -------
Total from investment operations........ 1.45 3.88 .33 1.32 .63 2.21
-------- -------- -------- -------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from
net investment income..................... (.24) (.46 ) (.41 ) (.39 ) (.46) (.41)
Dividends to shareholders from net capital
gains..................................... (.78) (1.06 ) (.01 ) (.35 ) (.32) (.00)
Dividends to shareholders in excess of net
investment income......................... -- -- -- (.22 ) -- --
-------- -------- -------- -------- ------- -------
Total distributions..................... (1.02) (1.52 ) (.42 ) (.96 ) (.78) (.41)
-------- -------- -------- -------- ------- -------
Net asset value, end of period.............. $16.79 $16.36 $14.00 $14.09 $13.73 $13.88
======== ======== ======== ======== ======= =======
Total return................................ 9.37%(2) 30.39% 2.40% 9.43% 4.74% 18.50%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)............ 179,702 161,899 115,191 109,534 82,881 55,357
Ratios of expenses to average net assets
(annualized)(1)........................... .46% .61% .63% .76% .79% .76%
Ratios of net investment income to average
net assets (annualized)................... 2.88% 3.20% 3.10% 2.86% 3.53% 3.91%
Portfolio turnover.......................... 32% 61% 63% 51% 35% 28%
Average commission rate(3).................. $0.0600 N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Expense ratios for the Growth Portfolio before reimbursement of expenses by
affiliated insurance company for the period ended June 30, 1996 and the years
ended December 31, 1995, 1994, 1993, 1992 and 1991 were as follows: 0.46%
(annualized), 0.61% , 0.67%, 0.76%, 0.82% and 0.98%, respectively.
2 Total returns for periods less then one year are not annualized.
3 Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. beginning 1996.
See accompanying notes to financial statements.
39
<PAGE> 76
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91
TO TO TO TO TO TO
06/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period........................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.............. .03 .05 .04 .03 .03 .06
-------- -------- -------- ------- ------- -------
Total from investment
operations................... .03 .05 .04 .03 .03 .06
-------- -------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income................ (.03) (.05 ) (.04 ) (.03) (.03) (.06)
-------- -------- -------- ------- ------- -------
Total distributions............ (.03) (.05 ) (.04 ) (.03) (.03) (.06)
-------- -------- -------- ------- ------- -------
Net asset value, end of period..... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======== ======= ======= =======
Total return....................... 2.54%(2) 5.61% 3.81% 2.59% 3.18% 5.69%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)... 45,216 34,615 21,040 12,506 8,138 7,047
Ratios of expenses to average net
assets (annualized)(1)........... .42% .50% .55% .65% .65% .53%
Ratios of net investment income to
average net assets (annualized).. 5.03% 5.47% 3.86% 2.56% 3.12% 5.49%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Expense ratios for the Money Market Portfolio before reimbursement of expenses
by affiliated insurance company for the period ended June 30, 1996 and the
years ended December 31, 1995, 1994, 1993, 1992 and 1991 were as follows:
0.42% (annualized), 0.50%, 0.59%, 0.65%, 0.73% and 0.86%, respectively.
2 Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
40
<PAGE> 77
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BOND PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91
TO TO TO TO TO TO
06/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period........................... $11.00 $9.73 $11.21 $10.73 $10.80 $10.04
-------- -------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.............. .31 .65 .62 .60 .64 .77
Net realized and unrealized gain
(loss) on investments............ (.47) 1.27 (1.23 ) .48 (.03) .57
-------- -------- -------- ------- ------- -------
Total from investment operations... (.16) 1.92 (.61 ) 1.08 .61 1.34
-------- -------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income................ (.31) (.65 ) (.60 ) (.60) (.68) (.58)
Dividends to shareholders from net
capital gains.................... (.00) (.00 ) (.27 ) (.00) (.00) (.00)
-------- -------- -------- ------- ------- -------
Total distributions............ (.31) (.65 ) (.87 ) (.60) (.68) (.58)
-------- -------- -------- ------- ------- -------
Net asset value, end of period..... $10.53 $11.00 $9.73 $11.21 $10.73 $10.80
======== ======== ======== ======= ======= =======
Total return................... (1.34)%(2) 20.45% (5.62 )% 10.32% 5.95% 13.93%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)... 15,083 14,402 10,098 10,160 6,710 4,365
Ratios of expenses to average net
assets (annualized)(1)........... .53% .60% .68% .75% .75% .63%
Ratios of net investment income to
average net assets (annualized).. 5.92% 6.36% 6.14% 5.53% 6.34% 7.58%
Portfolio turnover................. 84% 206% 1% 71% 4% 32%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Expense ratios for the Bond Portfolio before reimbursement of expenses by
affiliated insurance company for the period ended June 30, 1996 and the years
ended December 31, 1995, 1994, 1993, 1992 and 1991 were as follows: 0.52%
(annualized), 0.60%, 0.70%, 0.75%, 0.81% and 0.93%, respectively.
2 Total returns for periods less than one year are not annualized.
See accompanying notes to financial statements.
41
<PAGE> 78
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGED PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91
TO TO TO TO TO TO
06/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period........................... $14.19 $11.94 $13.27 $12.25 $11.40 $9.81
-------- -------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.............. .25 .55 .53 .40 .44 .51
Net realized and unrealized gain
(loss) on investments............ .36 2.28 (.77 ) 1.00 .88 1.47
-------- -------- -------- ------- ------- -------
Total from investment
operations................... .61 2.83 (.24 ) 1.40 1.32 1.98
-------- -------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income................ (.25) (.57 ) (.49 ) (.38) (.47) (.39)
Dividends to shareholders from net
capital gains.................... (.58) (.01 ) (.60 ) (.00) (.00) (.00)
-------- -------- -------- ------- ------- -------
Total distributions............ (.83) (.58 ) (1.09 ) (.38) (.47) (.39)
-------- -------- -------- ------- ------- -------
Net asset value, end of period..... $13.97 $14.19 $11.94 $13.27 $12.25 $11.40
======== ======== ======== ======= ======= =======
Total return....................... 4.61%(2) 24.43% (1.82 )% 11.62% 11.96% 20.49%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)... 39,452 36,002 29,363 28,984 15,946 12,564
Ratios of expenses to average net
assets (annualized)(1)........... .56% 6% .67% .80% .80% .68%
Ratios of net investment income to
average net assets (annualized).. 3.65% 4.22% 4.34% 3.36% 3.88% 4.74%
Portfolio turnover................. 76% 130% 75% 89% 32% 51%
Average commission rate(3)......... $0.0600 N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Expense ratios for the Managed Portfolio before reimbursement of expenses by
affiliated insurance company for the period ended June 30, 1996 and the years
ended December 31, 1995, 1994, 1993, 1992 and 1991 were as follows: 0.55%
(annualized), 0.66% , 0.73%, 0.80%, 0.84% and 0.95%, respectively.
2 Total returns for periods less then one year are not annualized.
3 Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. beginning 1996.
See accompanying notes to financial statements.
42
<PAGE> 79
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91
TO TO TO TO TO TO
06/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period........................... $17.38 $15.45 $15.45 $14.72 $16.68 $10.67
-------- -------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.............. .09 .20 (.01 ) (.01) .03 .08
Net realized and unrealized gain
(loss) on investments............ 1.51 1.86 .01 .77 .38 5.93
-------- -------- -------- ------- ------- -------
Total from investment
operations................... 1.60 2.06 .00 .76 .41 6.01
-------- -------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income................ (.19) (.00 ) (.00 ) (.03) (.07) (.00)
Dividends to shareholders from net
capital gains.................... (1.87) (.13 ) (.00 ) (.00) (2.30) (.00)
-------- -------- -------- ------- ------- -------
Total distributions............ (2.06) (.13 ) (.00 ) (.03) (2.37) (.00)
-------- -------- -------- ------- ------- -------
Net asset value, end of period..... $16.92 $17.38 $15.45 $15.45 $14.72 $16.68
======== ======== ======== ======= ======= =======
Total return....................... 10.55%(2) 13.48% 0.00 % 5.20% 2.58% 56.33%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)... 28,846 23,822 15,430 12,223 8,029 2,751
Ratios of expenses to average net
assets (annualized)(1)........... .68% .76% .86 % .90% .90% .79%
Ratios of net investment income to
average net assets (annualized).. 1.10% 1.32% (.10 )% (.07)% .37% .80%
Portfolio turnover................. 31% 89% 60 % 60% 18% 95%
Average commission rate(3)......... $0.0600 N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Expense ratios for the Aggressive Growth Portfolio before reimbursement of
expenses by affiliated insurance company for the period ended June 30, 1996
and the years ended December 31, 1995, 1994, 1993, 1992 and 1991 were as
follows: 0.67% (annualized) , 0.76%, 0.89%, 0.90%, 1.00% and 1.32%,
respectively.
2 Total returns for periods less then one year are not annualized.
3 Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission.This disclosure is required by the S.E.C. beginning 1996.
See accompanying notes to financial statements.
43
<PAGE> 80
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91(2)
TO TO TO TO TO TO
06/30/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period.......................... $12.86 $11.63 $11.87 $9.00 $9.74 $10.00
-------- -------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............. .09 .16 .05 .06 .08 .01
Net realized and unrealized gain
(loss) on investments........... .78 1.45 (.02 ) 3.09 (.81) (.27)
-------- -------- -------- ------- ------- -------
Total from investment
operations.................. .87 1.61 .03 3.15 (.73) (.26)
-------- -------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends to shareholders from net
investment income............... (.16) (.07 ) (.03 ) (.08) (.00) (.00)
Dividends to shareholders from net
capital gains................... (.63) (.31 ) (.24 ) (.20) (.01) (.00)
-------- -------- -------- ------- ------- -------
Total distributions........... (.79) (.38 ) (.27 ) (.28) (.01) (.00)
-------- -------- -------- ------- ------- -------
Net asset value, end of period.... $12.94 $12.86 $11.63 $11.87 $9.00 $9.74
======== ======== ======== ======= ======= =======
Total return...................... 7.01%(3) 14.31% .26% 36.11% (7.30)% (2.88)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
$(000).......................... 44,622 36,642 26,212 13,682 6,727 4,979
Ratios of expenses to average net
assets (annualized)(1).......... 1.03 1.15% 1.32% 1.50% 1.50% 1.48%
Ratios of net investment income to
average net assets (annualized). 1.87% 1.21% .72% .68% 1.05% .26%
Portfolio turnover................ 18% 45% 32% 37% 35% 1%
Average commission rate(4)........ $0.0360 N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Expense ratios for the International Portfolio before reimbursement of
expenses by affiliated insurance company for the period ended June 30, 1996
and the years ended December 31, 1995, 1994, 1993 and 1992 and the period
ended December 31, 1991 were as follows: 1.06% (annualized), 1.15%, 1.32%,
1.50%, 2.65% and 3.40%, respectively.
2 Commencement of operations.
3 Total returns for periods less than one year are not annualized.
4 Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. beginning 1996.
See accompanying notes to financial statements.
44
<PAGE> 81
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Continued
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON
STOCK
PORTFOLIO
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
03/18/96(2)
TO
06/30/96
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period............................................................ $10.00
--------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................................................................... .06
Net realized and unrealized gain (loss) on investments.......................................... .33
--------
Total from investment operations............................................................ .39
--------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment income............................................ (.00)
Dividends to shareholders from net capital gains................................................ (.00)
--------
Total distributions......................................................................... (.00)
--------
Net asset value, end of period.................................................................. $10.39
========
Total return.................................................................................... 3.90%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)................................................................ 5,252
Ratios of expenses to average net assets (annualized)(1)........................................ .79%
Ratios of net investment income to average net assets (annualized).............................. 1.90%
Portfolio turnover.............................................................................. 4%
Average commission rate(4)...................................................................... $0.0600
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Expense ratio for the Common Stock Portfolio before reimbursement of expenses
by affiliated insurance company for the period ended June 30, 1996 was as
follows: 1.48% (annualized).
2 Commencement of operations.
3 Total returns for periods less then one year are not annualized.
4 Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. beginning 1996.
See accompanying notes to financial statements.
45
<PAGE> 82
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Financial Highlights -- Concluded
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout the periods:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SENTINEL
GROWTH
PORTFOLIO
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
03/18/96(2)
TO
06/30/96
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period............................................................ $10.00
--------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................................................................... .02
Net realized and unrealized gain (loss) on investments.......................................... .17
--------
Total from investment operations............................................................ .19
--------
LESS DISTRIBUTIONS:
Dividends to shareholders from net investment income............................................ (.00)
Dividends to shareholders from net capital gains................................................ (.00)
--------
Total distributions......................................................................... (.00)
--------
Net asset value, end of period.................................................................. $10.19
========
Total return.................................................................................... 1.90%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $(000)................................................................ 5,096
Ratios of expenses to average net assets (annualized)(1)........................................ .89%
Ratios of net investment income to average net assets (annualized).............................. 76%
Portfolio turnover.............................................................................. 8%
Average commission rate(4)...................................................................... $0.0600
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Expense ratio for the Sentinel Growth Portfolio before reimbursement of
expenses by affiliated insurance company for the period ended June 30, 1996
was as follows: 1.57% (annualized).
2 Commencement of operations.
3 Total returns for periods less than one year are not annualized.
4 Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. beginning 1996.
See accompanying notes to financial statements.
46
<PAGE> 83
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Market Street Fund, Inc. (Fund) is registered as an open-end diversified
management company under the Investment Company Act of 1940, as amended. As a
"series" type of mutual fund, the Fund issues separate classes (or series) of
stock currently consisting of the Growth Portfolio, Money Market Portfolio, Bond
Portfolio, Managed Portfolio, Aggressive Growth Portfolio, International
Portfolio, Common Stock Portfolio and Sentinel Growth Portfolio. The Fund serves
as an investment medium for modified premium and flexible premium adjustable
variable life insurance policies and individual flexible premium deferred
variable annuity contracts (Policies) issued by Provident Mutual Life Insurance
Company (PMLIC) and by Providentmutual Life and Annuity Company of America
(PLACA) and individual flexible premium adjustable variable life insurance
policies issued by National Life Insurance Company of Vermont (NLICV). The Fund
also serves as the investment medium for single premium and scheduled premium
variable life insurance policies which are no longer being issued.
2. ACCOUNTING POLICIES
Valuation of Investments
Bonds are carried at market value based on the last bid price on a national
securities exchange or on quoted prices from a third-party pricing service.
Investments in common and preferred stocks primarily traded on recognized U.S.
or foreign securities exchanges are valued at the last sale price on exchanges
on the last business day of the period, or, if there was no sale, at the last
bid price on that day. Short-term investments with maturities of less than 60
days and Money Market Portfolio investments are valued at amortized cost which
approximates market value.
Investments
Security transactions are accounted for on the trade date. The cost of
investment securities sold is determined by use of the specific identification
method for both financial reporting and income tax purposes. Interest income is
recorded on the accrual basis; dividend income is recorded on the ex-dividend
date.
Foreign Currency Translations
Foreign currency amounts are translated into U.S. Dollars on the following
bases:
(i) Market value of investment securities, assets and liabilities, at the
daily rate of exchange;
(ii) Purchases and sales of investment securities, at the rate of exchange
prevailing on the respective dates of such transactions. Exchange gains or
losses are recognized upon settlement;
(iii) Income and expenses, at the rate of exchange prevailing on the
respective dates of such transactions. Exchange gains or losses are
recognized upon ultimate receipt or disbursement.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. dollar denominated
transactions as a result of, among other factors, the lack of governmental
supervision and regulation of foreign securities markets and the possibility of
political or economic instability.
47
<PAGE> 84
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Dividends to Shareholders
Dividends of investment income of the Money Market Portfolio are declared daily
and paid monthly. The Growth Portfolio, Bond Portfolio, Managed Portfolio, and
Common Stock Portfolio declare and pay dividends of investment income quarterly.
The Aggressive Growth Portfolio, International Portfolio, and Sentinel Growth
Portfolio declare and pay dividends of investment income annually. For all
Portfolios, distributions of capital gains are declared and paid annually.
Federal Income Taxes
No provision is made for Federal taxes as it is the Fund's intention to have
each Portfolio continue to qualify as a regulated investment company and to make
the requisite distributions to its shareholders which will be sufficient to
relieve it from Federal income taxes.
Management Estimates
The preparation of financial statements requires the use of management
estimates.
3. INVESTMENT ADVISORY FEES AND RELATED PARTY TRANSACTIONS
Investment advisory agreements have been approved, whereby Newbold's Asset
Management, Inc. (NAM) is adviser for the Growth Portfolio, Sentinel Advisors
Company (SAC), a Vermont General Partnership, for the Money Market, Bond,
Managed, Aggressive Growth, Common Stock and Sentinel Growth Portfolios. With
respect to the Growth Portfolio, NAM is compensated monthly at an effective
annual rate of 0.50% of the first $20 million of the average daily net assets of
the portfolio, 0.40% of the next $20 million and 0.30% of net assets in excess
of $40 million. SAC is compensated monthly at an effective annual rate of 0.25%
of the average daily net assets of the Money Market Portfolio. With respect to
the Bond Portfolio, SAC is compensated monthly at the effective annual rate of
0.35% of the first $100 million of the average daily net assets of the portfolio
and 0.30% of net assets in excess of $100 million. With respect to the Managed
Portfolio, SAC is compensated monthly at the effective annual rate of 0.40% of
the first $100 million of the average daily net assets of the portfolio and
0.35% of net assets in excess of $100 million. With respect to the Aggressive
Growth Portfolio, SAC is compensated monthly at the effective annual rate of
0.50% of the first $20 million of the average daily net assets of the portfolio,
0.40% of the next $20 million and 0.30% of net assets in excess of $40 million.
With respect to the Common Stock Portfolio, SAC is compensated monthly at the
effective annual rate of 0.40% of the first $100 million of the average daily
net assets of the portfolio and 0.35% of net assets in excess of $100 million.
With respect to the Sentinel Growth Portfolio, SAC is compensated monthly at an
effective annual rate of 0.50% of the first $20 million of the average daily net
assets of the portfolio, 0.40% of the next $20 million and 0.30% of the net
assets in excess of $40 million. PIMC is the adviser for the Interna-
48
<PAGE> 85
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
tional Portfolio and is compensated monthly at an effective annual rate of 0.75%
of the first $500 million of the average daily net assets of the portfolio and
0.60% of assets in excess of $500 million. The Boston Company Asset Management,
Inc. ("TBC") is sub-advisor to the International Portfolio.
PMLIC agrees to reimburse the Growth, Money Market, Bond, Managed, and
Aggressive Growth Portfolios for operating expenses, excluding investment
advisory fees, and costs of litigation and indemnification not covered by
insurance, in excess of an annual rate of 0.40% of the average daily net asset
values. The International Portfolio is reimbursed for such expenses in excess of
an annual rate of 0.75% of the average daily net asset value. NLICV agrees to
reimburse the Common Stock and Sentinel Growth Portfolio for operating expenses,
excluding investment advisory fees and costs of litigation and indemnification
not covered by insurance, in excess of an annual rate of .40% of the average net
asset values.
4. NET ASSETS
At June 30, 1996, the Portfolios' net assets consisted of:
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net contribution from shareholders.............. $142,908,573 $42,215,694 $15,034,257 $33,830,969 $25,139,635 $39,129,178
Undistributed net investment income............. 1,279,516 -- 219,528 355,196 146,733 315,427
Undistributed net realized gain................. 12,213,863 -- -- 221,329 159,823 1,546,680
Accumulated loss on investment transactions..... -- -- (224,354) -- -- --
Net unrealized appreciation (depreciation) on
investments.................................... 23,300,244 -- 54,061 5,044,780 3,399,647 3,630,909
------------ ----------- ----------- ----------- ----------- -----------
$179,702,196 $42,215,694 $15,083,492 $39,452,274 $28,845,838 $44,622,194
============ =========== =========== =========== =========== ===========
<CAPTION>
COMMON SENTINEL
STOCK GROWTH
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------
<S> <C> <C>
Net contribution from shareholders.............. $5,054,039 $5,001,348
Undistributed net investment income............. 27,807 11,046
Undistributed net realized gain................. (5,870) (17,891)
Accumulated loss on investment transactions..... -- --
Net unrealized appreciation (depreciation) on
investments.................................... 175,982 101,890
---------- ----------
$5,251,958 $5,096,393
========== ==========
</TABLE>
49
<PAGE> 86
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
5. PURCHASES AND SALES OF INVESTMENTS (EXCLUDING SHORT-TERM SECURITIES)
Purchases and proceeds on sales of investments for the portfolios, for the six
months ended June 30, 1996, were as follows:
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PURCHASES
U.S. Gov't Obligations........................... $ -- $ -- $ 6,754,723 $15,489,404 $ -- $ --
Corporate Bonds.................................. -- -- 4,746,003 8,826,898 -- --
Common Stock..................................... 75,669,595 -- -- 2,685,662 10,122,416 11,619,768
----------- ----------- ----------- ----------- ----------- -----------
Total Purchases.................................. $75,669,595 $ -- $11,500,726 $27,001,964 $10,122,416 $11,619,768
=========== =========== =========== =========== =========== ===========
SALES
U.S. Gov't Obligations........................... $ -- $ -- $ 3,296,750 $13,499,633 $ -- $ --
Corporate Bonds.................................. -- -- 9,424,699 10,801,453 -- --
Common Stock..................................... 51,319,823 -- -- 2,401,808 6,692,748 6,923,720
----------- ----------- ----------- ----------- ----------- -----------
Total Sales...................................... $51,319,823 $ -- $12,721,449 $26,702,894 $ 6,692,748 $ 6,923,720
=========== =========== =========== =========== =========== ===========
<CAPTION>
COMMON SENTINEL
STOCK GROWTH
PORTFOLIO PORTFOLIO
- -------------------------------------------------
<S> <C> <C>
PURCHASES
U.S. Gov't Obligations........................... $ -- $ --
Corporate Bonds.................................. -- --
Common Stock..................................... 4,979,872 5,906,962
---------- ----------
Total Purchases.................................. $4,979,872 $5,906,962
========== ==========
SALES
U.S. Gov't Obligations........................... $ -- $ --
Corporate Bonds.................................. -- --
Common Stock..................................... 155,622 373,315
---------- ----------
Total Sales...................................... $ 155,622 $ 373,315
========== ==========
</TABLE>
6. TAX BASIS OF INVESTMENTS
Investment information based on the cost of the securities for Federal income
tax purposes held at June 30, 1996 is as follows:
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggregate gross unrealized appreciation........ $ 23,469,756 $ -- $ 204,876 $ 5,318,608 $ 4,404,533 $ 4,802,731
Aggregate gross unrealized depreciation........ (221,085) -- (150,815) (273,828) (1,004,886) (1,230,272)
------------ ----------- ----------- ----------- ----------- -----------
Net unrealized appreciation (depreciation)..... $ 23,248,671 $ -- $ 54,061 $ 5,044,780 $ 3,399,647 $ 3,572,459
============ =========== =========== =========== =========== ===========
Aggregate cost of securities for federal income
tax purposes.................................. $156,255,387 $45,432,040 $14,754,185 $35,222,280 $25,445,892 $40,761,209
============ =========== =========== =========== =========== ===========
Capital loss carryover (available to offset
possible future capital gains.) The carryover
expires as follows: Bond Portfolio -- $48,885
in 2002....................................... $ -- $ -- $ (48,885) $ -- $ -- $ --
============ =========== =========== =========== =========== ===========
<CAPTION>
COMMON SENTINEL
STOCK GROWTH
PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------
<S> <C> <C>
Aggregate gross unrealized appreciation......... $ 246,555 $ 264,471
Aggregate gross unrealized depreciation......... (70,573) (162,581)
---------- ----------
Net unrealized appreciation (depreciation)...... $ 175,982 $ 101,890
========== ==========
Aggregate cost of securities for federal income
tax purposes................................... $5,100,982 $4,985,964
========== ==========
Capital loss carryover (available to offset
possible future capital gains.) The carryover
expires as follows: Bond Portfolio -- $48,885
in 2002........................................ $ -- $ --
========== ==========
</TABLE>
50
<PAGE> 87
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1996 -- Continued
(Unaudited)
- --------------------------------------------------------------------------------
7. AUTHORIZED CAPITAL STOCK AND CAPITAL STOCK TRANSACTIONS
On June 30, 1996, there were 200 million shares of $0.01 par value capital stock
authorized for the Fund. The shares of capital stock are divided into eight
series: Growth Portfolio, Money Market Portfolio, Bond Portfolio, Managed
Portfolio, Aggressive Growth Portfolio, International Portfolio, Common Stock
Portfolio and Sentinel Growth Portfolio. The Money Market Portfolio consists of
10 million shares; each of the other series consists of 5 million shares.
Transactions in capital stock for the six months ended June 30, 1996 were as
follows:
<TABLE>
<CAPTION>
GROWTH PORTFOLIO MONEY MARKET BOND PORTFOLIO MANAGED PORTFOLIO
PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold............ 702,183 $11,286,814 40,684,248 $40,684,248 181,124 $1,924,221 258,030 $3,548,298
Shares redeemed........ (545,522) (8,826,732) (31,060,760) (31,060,760) (97,669) (1,037,038) (128,653) (1,774,536)
Shares reinvested...... 650,255 10,174,476 977,054 977,054 39,534 421,889 157,385 2,131,476
-------- ----------- ----------- ----------- ------- ---------- -------- ----------
Net contributions from
affiliated insurance
companies............. 806,916 $12,634,558 10,600,542 $10,600,542 122,989 $1,309,072 286,762 $3,905,238
======== =========== =========== =========== ======= ========== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH INTERNATIONAL COMMON STOCK SENTINEL GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold................ 209,214 $3,412,275 506,494 $6,325,645 506,144 $5,063,237 500,135 $5,001,374
Shares redeemed............ (60,789) (988,366) (88,138) (1,106,285) (882) (9,198) (2) (26)
Shares reinvested.......... 185,719 2,824,782 180,866 2,235,504 -- -- -- --
------- ---------- ------- ---------- ------- ---------- ------- ----------
Net contributions from
affiliated insurance
companies................. 334,144 $5,248,691 599,222 $7,454,864 505,262 $5,054,039 500,133 $5,001,348
======= ========== ======= ========== ======= ========== ======= ==========
</TABLE>
Transactions in capital stock for the year ended December 31, 1995 were as
follows:
<TABLE>
<CAPTION>
GROWTH PORTFOLIO MONEY MARKET BOND PORTFOLIO MANAGED
PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares sold.................. 1,376,728 $20,320,117 52,460,129 $52,460,129 305,883 $3,174,938 340,442
Shares redeemed.............. (672,833) (9,960,717) (40,303,780) (40,303,780) (106,040) (1,100,615) (375,720)
Shares reinvested............ 961,190 12,873,047 1,419,246 1,419,246 72,305 736,126 114,456
--------- ------------ ----------- ------------ -------- ----------- -------
Net contributions from
affiliated insurance
companies................... 1,665,085 $23,232,447 13,575,595 $13,575,595 272,148 $2,810,449 79,178
========= ============ =========== ============ ======== =========== =======
<CAPTION>
AGGRESSIVE INTERNATIONAL
GROWTH PORTFOLIO
- ---------------------------------------------------------------------------------------------
AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shares sold.................. $4,456,504 489,394 $8,017,391 861,466 $10,317,408
Shares redeemed.............. (4,884,534) (125,984) (2,042,558) (341,090) (4,145,863)
Shares reinvested............ 1,447,739 8,772 131,841 76,064 848,113
----------- ------- ----------- -------- -----------
Net contributions from
affiliated insurance
companies................... $1,019,709 372,182 $6,106,674 596,440 $ 7,019,658
=========== ======= =========== ======== ===========
</TABLE>
51
<PAGE> 88
- --------------------------------------------------------------------------------
Market Street Fund, Inc.
Notes to Financial Statements, June 30, 1996 -- Concluded
(Unaudited)
- --------------------------------------------------------------------------------
7. AUTHORIZED CAPITAL STOCK AND CAPITAL STOCK TRANSACTIONS -- (CONTINUED)
Shares of the Fund are held by Provident Mutual Life Insurance Company's and
Providentmutual Life and Annuity Company of America's Variable Life and Variable
Annuity Separate Accounts and by National Life Insurance Company's Variable Life
Separate Account. At June 30, 1996, shares were owned by:
<TABLE>
<CAPTION>
MONEY AGGRESSIVE
GROWTH MARKET BOND MANAGED GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Growth Separate Account..................................... 9,214,903 -- -- -- --
Money Market Separate Account............................... -- 19,210,660 -- -- --
Bond Separate Account....................................... -- -- 981,045 -- --
Managed Separate Account.................................... -- -- -- 2,049,003 --
Aggressive Growth Separate Account.......................... -- -- -- -- 1,346,935
International Separate Account.............................. -- -- -- -- --
Providentmutual Variable Annuity Separate Account........... 1,378,150 22,618,179 410,568 730,656 323,306
Provident Mutual Life Variable Annuity Separate Account..... 90,457 2,484,417 32,175 40,857 17,340
Providentmutual Variable Life Separate Account.............. 18,405 310,614 8,554 3,850 16,577
National Life Insurance Company/Vermont Separate Account.... -- 591,824 434 347 583
National Life Insurance Company/Vermont Variable Life
Separate Account........................................... -- -- -- -- --
---------- ---------- --------- --------- ---------
Total.................................................... 10,701,915 45,215,694 1,432,776 2,824,713 1,704,741
========== ========== ========= ========= =========
<CAPTION>
COMMON SENTINEL
INTERNATIONAL STOCK GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Separate Account..................................... -- -- --
Money Market Separate Account............................... -- -- --
Bond Separate Account....................................... -- -- --
Managed Separate Account.................................... -- -- --
Aggressive Growth Separate Account.......................... -- -- --
International Separate Account.............................. 2,201,890 -- --
Providentmutual Variable Annuity Separate Account........... 1,118,615 --
Provident Mutual Life Variable Annuity Separate Account..... 109,363 -- --
Providentmutual Variable Life Separate Account.............. 18,368 -- --
National Life Insurance Company/Vermont Separate Account.... 1,204 500,000 500,000
National Life Insurance Company/Vermont Variable Life
Separate Account........................................... -- 5,262 133
--------- ------- -------
Total.................................................... 3,449,440 505,262 500,133
========= ======= =======
</TABLE>
8. PRINCIPAL UNDERWRITER
1717 Capital Management Company serves, without compensation, as the principal
underwriter for sale of the Fund shares to the Accounts. 1717 Capital Management
Company is an indirect wholly-owned subsidiary of PMLIC.
9. SUBSEQUENT DIVIDEND
On June 28, 1996 the Board of Directors declared the following net investment
income and capital gain dividends to shareholders of record on June 28, 1996,
ex-dividend date July 2, 1996, payable on July 3, 1996 as follows:
<TABLE>
<CAPTION>
TOTAL PER SHARE
------------------------ ---------------------
NET NET
INVESTMENT CAPITAL INVESTMENT CAPITAL
PORTFOLIO INCOME GAIN INCOME GAIN
- ---------------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Growth.......... $1,279,516 -- $.1196 --
Bond............ 219,528 -- .1532 --
Managed......... 355,185 -- .1257 --
Aggressive
Growth......... -- -- -- --
International... -- -- -- --
Common Stock.... 27,087 -- .0536 --
Sentinel
Growth......... -- -- -- --
</TABLE>
52
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<TABLE>
<S> <C>
[LOGO]
PROVIDENT MUTUAL
SECURITY THROUGH FINANCIAL SERVICES
1050 Westlakes Drive
Berwyn, PA 19312
1-800-668-5177
Variable Life Insurance policies SEMI-ANNUAL REPORT
issued by Provident Mutual are June 30, 1996
distributed by 1717 Capital ---------------------------------
Management Company, Wilmington, PROVIDENT MUTUAL LIFE
DE, a registered broker-dealer. INSURANCE COMPANY
VARIABLE SEPARATE ACCOUNTS
This report has been prepared for
policyowners. It is not authorized MARKET STREET FUND, INC.
for other distribution unless
preceded or accompanied by an VARIABLE LIFE INSURANCE POLICIES
effective prospectus. ---------------------------------
Form 15730 6.96
- ----------------
BULK RATE
U.S. POSTAGE
PAID
PHILADELPHIA, PA
PERMIT NO. 1
- ----------------
</TABLE>
