<PAGE> 1
- --------------------------------------------------------------------------------
To Our Variable Life Policyholders:
- --------------------------------------------------------------------------------
August 22, 1997
We are pleased to send you the attached semi-annual report, detailing separate
account information pertaining to our variable life insurance policies. In
addition, the semi-annual report for the Market Street Fund, Inc. is attached.
As the owner of a variable life policy, you allocate your premiums to various
investments of your choosing. If applicable, you'll be receiving under separate
cover additional semi-annual reports pertaining to the Funds you've selected
within your Provident Mutual variable insurance policy.
Your variable life policy is unique in that it combines the protection and tax
advantages of traditional life insurance with the growth potential of equity
investments. A leader in the variable products marketplace, Provident Mutual
also offers a wide variety of life insurance policies and annuity contracts
designed to help you meet your financial planning goals, including retirement
planning, college funding, and estate planning.
By selecting Provident Mutual Life Insurance Company, you have chosen a company
with a reputation for strength, stability and sound management. Our roots can be
traced back to 1717, giving us the distinction of serving America's life
insurance needs longer than any other company.
We appreciate your business. If you have a question about your policy, or would
like more information about our products and services, please contact your local
agent or our Customer Service Center at 1-800-688-5177.
Sincerely,
/s/ Robert W. Kloss
Robert W. Kloss
President
<PAGE> 2
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Assets and Liabilities, June 30, 1997 (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............... $190,232,256
Money Market Portfolio......... $24,999,870
Bond Portfolio................. $11,934,110
Managed Portfolio.............. $33,345,479
Aggressive Growth Portfolio.... $30,441,240
International Portfolio........ $38,458,935
Dividends receivable............. 109,346
Receivable from Provident Mutual
Life Insurance Company......... 410,207
------------ ----------- ----------- ----------- ----------- -----------
Total Assets..................... 190,232,256 25,519,423 11,934,110 33,345,479 30,441,240 38,458,935
------------ ----------- ----------- ----------- ----------- -----------
LIABILITIES
Payable to Provident Mutual Life
Insurance Company.............. 115,365 20,077 22,282
------------ ----------- ----------- ----------- ----------- -----------
NET ASSETS....................... $190,116,891 $25,519,423 $11,914,033 $33,323,197 $30,441,240 $38,458,935
============ =========== =========== =========== =========== ===========
Held for the benefit of
policyholders.................. $189,868,463 $25,371,518 $11,808,914 $33,153,507 $30,249,577 $38,383,572
Attributable to Provident Mutual
Life Insurance Company......... 248,428 147,905 105,119 169,690 191,663 75,363
------------ ----------- ----------- ----------- ----------- -----------
$190,116,891 $25,519,423 $11,914,033 $33,323,197 $30,441,240 $38,458,935
============ =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
2
<PAGE> 3
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Assets and Liabilities, June 30, 1997 (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................................................................................. $6,870,309
Receivable from Provident Mutual Life Insurance Company....................................... 5,700
----------
NET ASSETS.................................................................................... $6,876,009
==========
Held for the benefit of policyholders......................................................... $6,818,174
Attributable to Provident Mutual Life Insurance Company....................................... 57,835
----------
$6,876,009
==========
</TABLE>
See accompanying notes to financial statements
3
<PAGE> 4
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Assets and Liabilities, June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ------------------------------------------------------------------------------------------------------------------
FIDELITY FIDELITY
FIDELITY FIDELITY HIGH FIDELITY ASSET FIDELITY
EQUITY-INCOME GROWTH INCOME OVERSEAS MANAGER INDEX 500
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
ASSETS
Investment in the Variable
Insurance Products Fund, at
market value:
Equity-Income Portfolio...... $77,722,246
Growth Portfolio............. $94,065,235
High Income Portfolio........ $11,069,410
Overseas Portfolio........... $22,156,183
Investment in the Variable
Insurance Products Fund II,
at market value:
Asset Manager Portfolio...... $36,652,988
Index 500 Portfolio.......... $51,209,386
----------- ----------- ---------- ----------- ----------- -----------
NET ASSETS..................... $77,722,246 $94,065,235 $11,069,410 $22,156,183 $36,652,988 $51,209,386
=========== =========== ========== =========== =========== ===========
Held for the benefit of
policyholders................ $77,697,855 $93,926,857 $11,032,331 $22,113,772 $36,534,260 $51,161,146
Attributable to Provident
Mutual Life Insurance
Company...................... 24,391 138,378 37,079 42,411 118,728 48,240
----------- ----------- ---------- ----------- ----------- -----------
$77,722,246 $94,065,235 $11,069,410 $22,156,183 $36,652,988 $51,209,386
=========== =========== ========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
4
<PAGE> 5
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Assets and Liabilities, June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ------------------------------------------------------------------------------------------------------------------
FIDELITY NEUBERGER NEUBERGER
INVESTMENT FIDELITY & BERMAN & BERMAN
GRADE BOND CONTRAFUND BALANCED GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT NEUBERGER
& BERMAN
LIMITED
MATURITY BOND
SUBACCOUNT
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
ASSETS
Investment in the Variable Insurance Products
Fund II, at market value:
Investment Grade Bond Portfolio............ $5,966,720
Contrafund Portfolio....................... $15,795,239
Investment in the Neuberger & Berman Advisers
Management Trust, at market value:
Balanced Portfolio......................... $5,087,294
Growth Portfolio........................... $20,883,453
Limited Maturity Bond Portfolio............ $ 3,194,297
---------- ----------- ---------- ----------- ----------
NET ASSETS................................... $5,966,720 $15,795,239 $5,087,294 $20,883,453 $ 3,194,297
========== =========== ========== =========== ==========
Held for the benefit of policyholders........ $5,953,997 $15,779,828 $5,029,812 $20,825,134 $ 3,164,461
Attributable to Provident Mutual Life
Insurance Company.......................... 12,723 15,411 57,482 58,319 29,836
---------- ----------- ---------- ----------- ----------
$5,966,720 $15,795,239 $5,087,294 $20,883,453 $ 3,194,297
========== =========== ========== =========== ==========
</TABLE>
See accompanying notes to financial statements
5
<PAGE> 6
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Assets and Liabilities, June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ------------------------------------------------------------------------------------------------------------------
AMERICAN VAN ECK
CENTURY VP VAN ECK VAN ECK WORLDWIDE ALGER AMERICAN
CAPITAL WORLDWIDE WORLDWIDE EMERGING SMALL
APPRECIATION BOND HARD ASSETS MARKETS CAPITALIZATION
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
ASSETS
Investment in American Century Variable
Portfolios, Inc., at market value:
American Century VP Capital Appreciation
Portfolio............................. $7,883,122
Investment in the Van Eck Worldwide
Insurance Trust, at market value:
Van Eck Worldwide Bond Portfolio........ $3,678,076
Van Eck Worldwide Hard Assets
Portfolio............................. $2,090,566
Van Eck Worldwide Emerging Markets
Portfolio............................. $6,280,428
Investment in the Alger American Fund, at
market value:
Alger American Small Capitalization
Portfolio............................. $ 12,869,608
---------- ---------- ---------- ---------- -----------
NET ASSETS................................ $7,883,122 $3,678,076 $2,090,566 $6,280,428 $ 12,869,608
========== ========== ========== ========== ===========
Held for the benefit of policyholders..... $7,852,753 $3,650,039 $2,057,338 $6,225,364 $ 12,838,199
Attributable to Provident Mutual Life
Insurance Company....................... 30,369 28,037 33,228 55,064 31,409
---------- ---------- ---------- ---------- -----------
$7,883,122 $3,678,076 $2,090,566 $6,280,428 $ 12,869,608
========== ========== ========== ========== ===========
</TABLE>
See accompanying notes to financial statements
6
<PAGE> 7
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Operations for the Six Months Ended June 30, 1997 (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................................. $ 1,935,851 $633,017 $357,281 $ 536,779 $ 248,042 $ 268,402
EXPENSES
Mortality and expense risks............... 547,482 86,634 36,689 98,219 91,711 116,823
Operating expense reimbursement........... (2,542) (37) (451)
------------ --------- --------- ---------- ---------- ----------
Total expenses............................ 544,940 86,597 36,238 98,219 91,711 116,823
------------ --------- --------- ---------- ---------- ----------
Net investment income..................... 1,390,911 546,420 321,043 438,560 156,331 151,579
------------ --------- --------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Realized gain distributions reinvested.... 19,579,907 242,281 49,195 2,101,304
Net realized gain (loss) from redemption
of investment shares.................... 1,666,879 (6,180) 479,208 213,922 213,532
------------ --------- --------- ---------- ---------- ----------
Net realized gain (loss) on investments... 21,246,786 (6,180) 721,489 263,117 2,314,836
------------ --------- --------- ---------- ---------- ----------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period..................... 36,782,658 143,144 4,034,365 4,227,761 3,295,188
End of period........................... 35,969,342 77,394 6,222,527 6,848,245 5,358,623
------------ --------- --------- ---------- ---------- ----------
Net unrealized appreciation (depreciation)
of investments during the period........ (813,316) (65,750) 2,188,162 2,620,484 2,063,435
------------ --------- --------- ---------- ---------- ----------
Net realized and unrealized gain (loss) on
investments............................. 20,433,470 (71,930) 2,909,651 2,883,601 4,378,271
------------ --------- --------- ---------- ---------- ----------
Net increase in net assets resulting from
operations.............................. $21,824,381 $546,420 $249,113 $3,348,211 $3,039,932 $ 4,529,850
============ ========= ========= ========== ========== ==========
</TABLE>
See accompanying notes to financial statements
7
<PAGE> 8
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Operations for the Six Months Ended June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ZERO COUPON BOND
SEPARATE ACCOUNT
- ----------------------------------------------------------------------------------------------------------------
2006 SERIES
SUBACCOUNT
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
EXPENSES
Mortality and expense risks................................................................... $ 21,978
Asset charge.................................................................................. 8,018
---------
Net investment loss........................................................................... (29,996)
---------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from redemption of investment shares........................................ 137,951
---------
Net realized gain on investments.............................................................. 137,951
---------
Net unrealized appreciation of investments:
Beginning of period......................................................................... 744,136
End of period............................................................................... 753,963
---------
Net unrealized appreciation of investments during the period.................................. 9,827
---------
Net realized and unrealized gain on investments............................................... 147,778
---------
Net increase in net assets resulting from operations.......................................... $117,782
=========
</TABLE>
See accompanying notes to financial statements
8
<PAGE> 9
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Operations for the Six Months Ended June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ------------------------------------------------------------------------------------------------------------------
FIDELITY FIDELITY
FIDELITY FIDELITY HIGH FIDELITY ASSET FIDELITY
EQUITY-INCOME GROWTH INCOME OVERSEAS MANAGER INDEX 500
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends........................ $ 1,044,885 $ 527,324 $626,782 $ 290,204 $1,122,466 $ 358,610
----------- ----------- --------- ---------- ----------- ----------
EXPENSES
Mortality and expense risks...... 229,641 284,715 33,536 63,242 116,242 135,804
----------- ----------- --------- ---------- ----------- ----------
Net investment income............ 815,244 242,609 593,246 226,962 1,006,224 222,806
----------- ----------- --------- ---------- ----------- ----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Realized gain distributions
reinvested..................... 5,253,449 2,360,401 77,467 1,152,021 2,815,676 727,665
Net realized gain from redemption
of investment shares........... 231,232 764,376 51,415 46,917 106,603 403,402
----------- ----------- --------- ---------- ----------- ----------
Net realized gain on
investments.................... 5,484,681 3,124,777 128,882 1,198,938 2,922,279 1,131,067
----------- ----------- --------- ---------- ----------- ----------
Net unrealized appreciation
(depreciation) of investments:
Beginning of period............ 9,654,194 12,974,029 471,856 1,745,917 4,535,884 4,431,677
End of period.................. 13,560,342 20,431,731 452,877 3,258,917 4,141,975 10,216,494
----------- ----------- --------- ---------- ----------- ----------
Net unrealized appreciation
(depreciation) of investments
during the period.............. 3,906,148 7,457,702 (18,979) 1,513,000 (393,909) 5,784,817
----------- ----------- --------- ---------- ----------- ----------
Net realized and unrealized gain
on investments................. 9,390,829 10,582,479 109,903 2,711,938 2,528,370 6,915,884
----------- ----------- --------- ---------- ----------- ----------
Net increase in net assets
resulting from operations...... $10,206,073 $10,825,088 $703,149 $2,938,900 $3,534,594 $7,138,690
=========== =========== ========= ========== =========== ==========
</TABLE>
See accompanying notes to financial statements
9
<PAGE> 10
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Operations for the Six Months Ended June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
NEUBERGER
FIDELITY NEUBERGER NEUBERGER & BERMAN
INVESTMENT FIDELITY & BERMAN & BERMAN LIMITED
GRADE BOND CONTRAFUND BALANCED GROWTH MATURITY BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends..................................... $ 307,980 $ 64,609 $ 77,242 $ 153,994
--------- ---------- -------- ---------- ---------
EXPENSES
Mortality and expense risks................... 19,258 42,436 15,980 $ 64,258 9,840
--------- ---------- -------- ---------- ---------
Net investment income (loss).................. 288,722 22,173 61,262 (64,258) 144,154
--------- ---------- -------- ---------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Realized gain distributions reinvested........ 170,752 198,255 1,531,297
Net realized gain (loss) from redemption of
investment shares........................... 2,007 65,451 85,160 279,860 (5,178)
--------- ---------- -------- ---------- ---------
Net realized gain (loss) on investments....... 2,007 236,203 283,415 1,811,157 (5,178)
--------- ---------- -------- ---------- ---------
Net unrealized appreciation (depreciation) of
investments:
Beginning of period......................... 155,266 477,324 71,201 1,243,267 19,157
End of period............................... 1,094 1,541,422 224,267 2,419,716 (45,563)
--------- ---------- -------- ---------- ---------
Net unrealized appreciation (depreciation) of
investments during the period............... (154,172) 1,064,098 153,066 1,176,449 (64,720)
--------- ---------- -------- ---------- ---------
Net realized and unrealized gain (loss) on
investments................................. (152,165) 1,300,301 436,481 2,987,606 (69,898)
--------- ---------- -------- ---------- ---------
Net increase in net assets resulting from
operations.................................. $ 136,557 $1,322,474 $497,743 $2,923,348 $ 74,256
========= ========== ======== ========== =========
</TABLE>
See accompanying notes to financial statements
10
<PAGE> 11
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Operations for the Six Months Ended June 30, 1997 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ------------------------------------------------------------------------------------------------------------------
AMERICAN VAN ECK
CENTURY VP VAN ECK VAN ECK WORLDWIDE ALGER AMERICAN
CAPITAL WORLDWIDE WORLDWIDE EMERGING SMALL
APPRECIATION BOND HARD ASSETS MARKETS CAPITALIZATION
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends................................... $ 105,223 $ 45,568 $ 9,541
----------- --------- --------- -------- ---------
EXPENSES
Mortality and expense risks................. $ 26,490 11,379 4,267 8,481 $ 33,545
----------- --------- --------- -------- ---------
Net investment income (loss)................ (26,490) 93,844 41,301 1,060 (33,545)
----------- --------- --------- -------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Realized gain distributions reinvested...... 171,163 33,634 449,342
----------- --------- --------- -------- ---------
Net realized gain (loss) from redemption of
investment shares......................... (44,989) 4,540 43,383 7,217 (23,412)
----------- --------- --------- -------- ---------
Net realized gain on investments............ 126,174 4,540 77,017 7,217 425,930
----------- --------- --------- -------- ---------
Net unrealized appreciation (depreciation)
of investments:
Beginning of period....................... (633,726) 70,532 187,278 90,708 173,011
End of period............................. (1,074,083) (62,995) 62,268 899,113 37,439
----------- --------- --------- -------- ---------
Net unrealized appreciation (depreciation)
of investments during the period.......... (440,357) (133,527) (125,010) 808,405 (135,572)
----------- --------- --------- -------- ---------
Net realized and unrealized gain (loss) on
investments............................... (314,183) (128,987) (47,993) 815,622 290,358
----------- --------- --------- -------- ---------
Net increase (decrease) in net assets
resulting from operations................. $ (340,673) $ (35,143) $ (6,692) $816,682 $ 256,813
=========== ========= ========= ======== =========
</TABLE>
See accompanying notes to financial statements
11
<PAGE> 12
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Changes in Net Assets for the Six Months Ended June 30, 1997
(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........... $ 1,390,911 $ 546,420 $ 321,043 $ 438,560 $ 156,331 $ 151,579
Net realized gain (loss) on
investments................... 21,246,786 (6,180) 721,489 263,117 2,314,836
Net unrealized appreciation
(depreciation) of investments
during the period............. (813,316) (65,750) 2,188,162 2,620,484 2,063,435
------------ ----------- ----------- ----------- ----------- -----------
Net increase in net assets from
operations.................... 21,824,381 546,420 249,113 3,348,211 3,039,932 4,529,850
------------ ----------- ----------- ----------- ----------- -----------
FROM VARIABLE LIFE POLICY
TRANSACTIONS
Policyholders' net premiums..... 14,353,294 19,044,128 1,273,548 2,467,339 3,834,075 4,720,644
Cost of insurance and
administrative charges........ (5,628,371) (2,006,660) (478,464) (1,072,543) (1,278,919) (1,544,931)
Surrenders and forfeitures...... (4,758,494) (345,532) (166,683) (1,032,027) (611,234) (669,217)
Transfers between investment
portfolios.................... (1,731,444) (16,084,723) (32,587) (576,495) (108,166) (338,764)
Net withdrawals due to policy
loans......................... (2,525,836) (254,421) (81,600) (281,674) (325,139) (219,812)
Withdrawals due to death
benefits...................... (207,189) (505) (19,603) (45,300) (7,235) (9,020)
------------ ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net
assets derived from policy
transactions.................. (498,040) 352,287 494,611 (540,700) 1,503,382 1,938,900
------------ ----------- ----------- ----------- ----------- -----------
Total increase in net assets.... 21,326,341 898,707 743,724 2,807,511 4,543,314 6,468,750
NET ASSETS
Beginning of period........... 168,790,550 24,620,716 11,170,309 30,515,686 25,897,926 31,990,185
------------ ----------- ----------- ----------- ----------- -----------
End of period................. $190,116,891 $ 25,519,423 $11,914,033 $33,323,197 $30,441,240 $38,458,935
============ =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
12
<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, 1997
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ZERO COUPON BOND
SEPARATE ACCOUNT
- ----------------------------------------------------------------------------------------------------------------
2006 SERIES
SUBACCOUNT
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
FROM OPERATIONS
Net investment loss........................................................................... $ (29,996)
Net realized gain on investments.............................................................. 137,951
Net unrealized appreciation of investments during the period.................................. 9,827
---------
Net increase in net assets from operations.................................................... 117,782
---------
FROM VARIABLE LIFE POLICY TRANSACTIONS
Policyholders' net premiums................................................................... 749,986
Cost of insurance and administrative charges.................................................. (380,354)
Surrenders and forfeitures.................................................................... (98,977)
Transfers between investment portfolios....................................................... 101,051
Net withdrawals due to policy loans........................................................... (26,076)
---------
Net increase in net assets derived from policy transactions................................... 345,630
---------
Total increase in net assets.................................................................. 463,412
NET ASSETS
Beginning of period......................................................................... 6,412,597
---------
End of period............................................................................... $6,876,009
=========
</TABLE>
See accompanying notes to financial statements
13
<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, 1997
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ------------------------------------------------------------------------------------------------------------------
FIDELITY FIDELITY
FIDELITY FIDELITY HIGH FIDELITY ASSET FIDELITY
EQUITY-INCOME GROWTH INCOME OVERSEAS MANAGER INDEX 500
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income............ $ 815,244 $ 242,609 $ 593,246 $ 226,962 $1,006,224 $ 222,806
Net realized gain on
investments.................... 5,484,681 3,124,777 128,882 1,198,938 2,922,279 1,131,067
Net unrealized appreciation
(depreciation) of investments
during the period.............. 3,906,148 7,457,702 (18,979) 1,513,000 (393,909) 5,784,817
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets from
operations..................... 10,206,073 10,825,088 703,149 2,938,900 3,534,594 7,138,690
----------- ----------- ----------- ----------- ----------- -----------
FROM VARIABLE LIFE POLICY
TRANSACTIONS
Policyholders' net premiums...... 11,538,866 14,729,244 1,714,881 3,329,933 4,168,901 9,928,708
Cost of insurance and
administrative charges......... (3,468,408) (4,586,428) (492,502) (881,819) (1,600,194) (2,324,041)
Surrenders and forfeitures....... (807,891) (1,468,778) (109,636) (250,388) (689,304) (300,094)
Transfers between investment
portfolios..................... 1,758,747 (1,660,119) 780,933 1,357,982 (367,093) 8,726,227
Net withdrawals due to policy
loans.......................... (417,045) (668,294) (2,230) (141,709) (99,753) (391,861)
Withdrawals due to death
benefits....................... (25,894) (10,537) (5,636) (4,404) (8,012) (2,300)
----------- ----------- ----------- ----------- ----------- -----------
Net increase in net assets
derived from policy
transactions................... 8,578,375 6,335,088 1,885,810 3,409,595 1,404,545 15,636,639
----------- ----------- ----------- ----------- ----------- -----------
Total increase in net assets..... 18,784,448 17,160,176 2,588,959 6,348,495 4,939,139 22,775,329
NET ASSETS
Beginning of period............ 58,937,798 76,905,059 8,480,451 15,807,688 31,713,849 28,434,057
----------- ----------- ----------- ----------- ----------- -----------
End of period.................. $77,722,246 $94,065,235 $11,069,410 $22,156,183 $36,652,988 $51,209,386
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
14
<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, 1997
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ------------------------------------------------------------------------------------------------------------------
NEUBERGER
FIDELITY NEUBERGER NEUBERGER & BERMAN
INVESTMENT FIDELITY & BERMAN & BERMAN LIMITED
GRADE BOND CONTRAFUND BALANCED GROWTH MATURITY BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss).................... $ 288,722 $ 22,173 $ 61,262 $ (64,258) $ 144,154
Net realized gain (loss) on investments......... 2,007 236,203 283,415 1,811,157 (5,178)
Net unrealized appreciation (depreciation) of
investments during the period................. (154,172) 1,064,098 153,066 1,176,449 (64,720)
---------- ----------- ---------- ----------- ----------
Net increase in net assets from operations...... 136,557 1,322,474 497,743 2,923,348 74,256
---------- ----------- ---------- ----------- ----------
FROM VARIABLE LIFE POLICY TRANSACTIONS
Policyholders' net premiums..................... 1,133,978 3,757,641 882,709 3,441,942 485,994
Cost of insurance and administrative charges.... (354,575) (694,195) (301,501) (1,142,353) (123,042)
Surrenders and forfeitures...................... (85,949) (118,796) (63,370) (348,924) (11,911)
Transfers between investment portfolios......... 161,029 5,437,241 (527,034) (883,058) 257,401
Net withdrawals due to policy loans............. (20,829) (92,319) (28,959) (149,937) (6,289)
Withdrawals due to death benefits............... (472) (169) (10,354)
---------- ----------- ---------- ----------- ----------
Net increase (decrease) in net assets derived
from policy transactions...................... 833,182 8,289,403 (38,155) 907,316 602,153
---------- ----------- ---------- ----------- ----------
Total increase in net assets.................... 969,739 9,611,877 459,588 3,830,664 676,409
NET ASSETS
Beginning of period........................... 4,996,981 6,183,362 4,627,706 17,052,789 2,517,888
---------- ----------- ---------- ----------- ----------
End of period................................. $5,966,720 $15,795,239 $5,087,294 $20,883,453 $ 3,194,297
========== =========== ========== =========== ==========
</TABLE>
See accompanying notes to financial statements
15
<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, 1997
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ------------------------------------------------------------------------------------------------------------------
AMERICAN VAN ECK
CENTURY VP VAN ECK VAN ECK WORLDWIDE ALGER AMERICAN
CAPITAL WORLDWIDE WORLDWIDE EMERGING SMALL
APPRECIATION BOND HARD ASSETS MARKETS CAPITALIZATION
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss)............... $ (26,490) $ 93,844 $ 41,301 $ 1,060 $ (33,545)
Net realized gain on investments........... 126,174 4,540 77,017 7,217 425,930
Net unrealized appreciation (depreciation)
of investments during the period......... (440,357) (133,527) (125,010) 808,405 (135,572)
---------- ---------- ---------- ---------- -----------
Net increase (decrease) in net assets from
operations............................... (340,673) (35,143) (6,692) 816,682 256,813
---------- ---------- ---------- ---------- -----------
FROM VARIABLE LIFE POLICY TRANSACTIONS
Policyholders' net premiums................ 1,986,242 638,182 391,545 1,230,995 3,071,064
Cost of insurance and administrative
charges.................................. (597,354) (176,993) (116,796) (249,639) (702,982)
Surrenders and forfeitures................. (113,918) (45,275) (11,756) (25,742) (71,503)
Transfers between investment portfolios.... (1,091,467) 176,218 94,143 2,329,081 2,445,460
Net withdrawals due to policy loans........ (48,603) (25,641) (15,911) (34,615) (83,744)
Withdrawals due to death benefits.......... (3,564) (449) (19) (2,715) (9,572)
---------- ---------- ---------- ---------- -----------
Net increase in net assets derived from
policy transactions...................... 131,336 566,042 341,206 3,247,365 4,648,723
---------- ---------- ---------- ---------- -----------
Total increase (decrease) in net assets.... (209,337) 530,899 334,514 4,064,047 4,905,536
NET ASSETS
Beginning of period...................... 8,092,459 3,147,177 1,756,052 2,216,381 7,964,072
---------- ---------- ---------- ---------- -----------
End of period............................ $ 7,883,122 $3,678,076 $2,090,566 $6,280,428 $ 12,869,608
========== ========== ========== ========== ===========
</TABLE>
See accompanying notes to financial statements
16
<PAGE> 17
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Changes in Net Assets for the Year Ended December 31, 1996
- --------------------------------------------------------------------------------
<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........... $ 3,374,296 $ 883,372 $ 540,990 $ 838,684 $ 55,425 $ 97,842
Net realized gain (loss) on
investments................... 9,852,978 (2,425) 1,731,006 2,540,903 1,445,495
Net unrealized appreciation
(depreciation) of investments
during the year............... 13,537,975 (300,470) 471,597 1,516,075 1,157,029
------------ ------------ ----------- ----------- ----------- -----------
Net increase in net assets from
operations.................... 26,765,249 883,372 238,095 3,041,287 4,112,403 2,700,366
------------ ------------ ----------- ----------- ----------- -----------
FROM VARIABLE LIFE POLICY
TRANSACTIONS
Policyholders' net premiums..... 30,021,490 38,804,263 2,684,818 5,312,990 7,299,202 8,944,269
Cost of insurance and
administrative charges........ (10,923,039) (3,577,047) (907,984) (2,141,363) (2,409,140) (2,851,005)
Surrenders and forfeitures...... (8,868,122) (807,207) (593,919) (1,485,140) (1,084,540) (949,465)
Transfers between investment
portfolios.................... (6,972,133) (27,374,079) (359,010) (488,185) (814,283) 567,594
Net withdrawals due to policy
loans......................... (2,932,321) (111,880) (106,211) (604,659) (468,999) (321,175)
Withdrawals due to death
benefits...................... (361,511) (9,285) (12,934) (95,250) (24,597) (66,791)
------------ ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in net
assets derived from policy
transactions.................. (35,636) 6,924,765 704,760 498,393 2,497,643 5,323,427
------------ ------------ ----------- ----------- ----------- -----------
Return of capital to Provident
Mutual Life Insurance
Company....................... (200,000) (200,000) (200,000)
------------ ------------ ----------- ----------- ----------- -----------
Total increase in net assets.... 26,529,613 7,608,137 742,855 3,539,680 6,610,046 8,023,793
NET ASSETS
Beginning of year............. 142,260,937 17,012,579 10,427,454 26,976,006 19,287,880 23,966,392
------------ ------------ ----------- ----------- ----------- -----------
End of year................... $ 168,790,550 $ 24,620,716 $ 11,170,309 $ 30,515,686 $25,897,926 $31,990,185
============ ============ =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
17
<PAGE> 18
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Changes in Net Assets for the Year Ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ZERO COUPON BOND
SEPARATE ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
2006
1996 SERIES SERIES
SUBACCOUNT** SUBACCOUNT
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS
Net investment loss................................................................. $ (6,959) $ (45,568)
Net realized gain on investments.................................................... 230,886 132,042
Net unrealized depreciation of investments during the year.......................... (195,315) (166,103)
---------- ----------
Net increase (decrease) in net assets from operations............................... 28,612 (79,629)
---------- ----------
FROM VARIABLE LIFE POLICY TRANSACTIONS
Policyholders' net premiums......................................................... 134,184 1,694,055
Cost of insurance and administrative charges........................................ (53,122) (662,460)
Surrenders and forfeitures.......................................................... (64,059) (111,668)
Transfers between investment portfolios............................................. (1,958,937) 932,017
Net withdrawals due to policy loans................................................. (2,908) (90,247)
Withdrawals due to death benefits................................................... (9,233)
---------- ----------
Net increase (decrease) in net assets derived from policy transactions.............. (1,944,842) 1,752,464
---------- ----------
Return of capital to Provident Mutual Life Insurance Company........................ (110,372) (50,000)
---------- ----------
Total increase (decrease) in net assets............................................. (2,026,602) 1,622,835
NET ASSETS
Beginning of year................................................................. 2,026,602 4,789,762
---------- ----------
End of year....................................................................... -- $6,412,597
========== ==========
</TABLE>
** For the period January 1, 1996 to May 15, 1996 (date of maturity).
See accompanying notes to financial statements
18
<PAGE> 19
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Changes in Net Assets for the Year Ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ------------------------------------------------------------------------------------------------------------------
FIDELITY FIDELITY
FIDELITY FIDELITY HIGH FIDELITY ASSET FIDELITY
EQUITY-INCOME GROWTH INCOME OVERSEAS MANAGER INDEX 500
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss)..... $ (269,872) $ (302,178) $ 248,670 $ 21,833 $ 793,090 $ 7,976
Net realized gain on
investments.................... 1,870,111 3,823,966 192,860 187,975 858,187 404,196
Net unrealized appreciation of
investments during the year.... 4,422,987 4,278,695 264,260 1,243,579 2,110,829 3,054,102
----------- ----------- ---------- ---------- ----------- ----------
Net increase in net assets from
operations..................... 6,023,226 7,800,483 705,790 1,453,387 3,762,106 3,466,274
----------- ----------- ---------- ---------- ----------- ----------
FROM VARIABLE LIFE POLICY
TRANSACTIONS
Policyholders' net premiums...... 20,410,261 27,775,181 3,074,003 5,377,187 8,617,164 11,388,269
Cost of insurance and
administrative charges......... (5,694,885) (7,871,429) (690,043) (1,404,523) (3,144,049) (2,553,289)
Surrenders and forfeitures....... (1,264,322) (1,872,916) (55,762) (332,401) (1,388,200) (317,366)
Transfers between investment
portfolios..................... 6,265,641 5,416,680 2,218,407 2,222,639 (2,961,158) 7,671,836
Net withdrawals due to policy
loans.......................... (479,134) (618,794) (72,022) (55,225) (258,013) (159,156)
Withdrawals due to death
benefits....................... (53,476) (60,875) (260) (5,086) (28,551) (5,498)
----------- ----------- ---------- ---------- ----------- ----------
Net increase in net assets
derived from policy
transactions................... 19,184,085 22,767,847 4,474,323 5,802,591 837,193 16,024,796
----------- ----------- ---------- ---------- ----------- ----------
Capital contribution from
Provident Mutual Life Insurance
Company........................ 10,000
----------- ----------- ---------- ---------- ----------- ----------
Total increase in net assets..... 25,207,311 30,568,330 5,180,113 7,255,978 4,599,299 19,501,070
NET ASSETS
Beginning of year.............. 33,730,487 46,336,729 3,300,338 8,551,710 27,114,550 8,932,987
----------- ----------- ---------- ---------- ----------- ----------
End of year.................... $58,937,798 $76,905,059 $8,480,451 $15,807,688 $31,713,849 $28,434,057
=========== =========== ========== ========== =========== ==========
</TABLE>
See accompanying notes to financial statements
19
<PAGE> 20
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Changes in Net Assets for the Year Ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ------------------------------------------------------------------------------------------------------------------
NEUBERGER
FIDELITY NEUBERGER NEUBERGER & BERMAN
INVESTMENT FIDELITY & BERMAN & BERMAN LIMITED
GRADE BOND CONTRAFUND BALANCED GROWTH MATURITY BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss)................... $ 81,754 $ (9,544) $ 52,328 $ (94,132) $ 100,104
Net realized gain (loss) on investments........ 34,895 3,778 459,414 1,142,403 (8,673)
Net unrealized appreciation (depreciation) of
investments during the year.................. (18,365) 477,324 (266,601) 102,696 (25,538)
----------- ----------- ---------- ---------- -----------
Net increase in net assets from operations..... 98,284 471,558 245,141 1,150,967 65,893
----------- ----------- ---------- ---------- -----------
FROM VARIABLE LIFE POLICY TRANSACTIONS
Policyholders' net premiums.................... 2,130,821 1,896,133 1,626,992 6,888,258 785,194
Cost of insurance and administrative charges... (507,709) (242,291) (624,216) (2,046,331) (171,297)
Surrenders and forfeitures..................... (104,535) (16,144) (154,980) (371,468) (24,959)
Transfers between investment portfolios........ 1,064,874 4,057,384 346,579 1,059,064 758,312
Net withdrawals due to policy loans............ (28,781) (8,278) (35,100) (226,752) (3,617)
Withdrawals due to death benefits.............. (2,694) (14) (6,854)
----------- ----------- ---------- ---------- -----------
Net increase in net assets derived from policy
transactions................................. 2,551,976 5,686,804 1,159,261 5,295,917 1,343,633
----------- ----------- ---------- ---------- -----------
Capital contribution from Provident Mutual Life
Insurance Company............................ 25,000
----------- ----------- ---------- ---------- -----------
Total increase in net assets................... 2,650,260 6,183,362 1,404,402 6,446,884 1,409,526
NET ASSETS
Beginning of year............................ 2,346,721 -- 3,223,304 10,605,905 1,108,362
----------- ----------- ---------- ---------- -----------
End of year.................................. $4,996,981 $6,183,362 $4,627,706 $17,052,789 $ 2,517,888
=========== =========== ========== ========== ===========
</TABLE>
See accompanying notes to financial statements
20
<PAGE> 21
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Statements of Changes in Net Assets for the Year Ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
- ------------------------------------------------------------------------------------------------------------------
VAN ECK VAN ECK GOLD VAN ECK
WORLDWIDE AND NATURAL EMERGING
TCI GROWTH BOND RESOURCES MARKETS
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ALGER AMERICAN
SMALL
CAPITALIZATION
SUBACCOUNT
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss)............... $ (49,667) $ 50,532 $ 1,932 $ (3,826) $ (17,270)
Net realized gain (loss) on investments.... 856,050 20,012 52,636 470 (59,161)
Net unrealized appreciation (depreciation)
of investments during the year........... (1,217,840) 410 121,836 90,708 173,011
------------ ----------- ---------- ----------- -----------
Net increase (decrease) in net assets from
operations............................... (411,457) 70,954 176,404 87,352 96,580
------------ ----------- ---------- ----------- -----------
FROM VARIABLE LIFE POLICY TRANSACTIONS
Policyholders' net premiums................ 4,409,737 1,208,131 620,876 591,991 2,284,400
Cost of insurance and administrative
charges.................................. (1,147,704) (293,018) (188,073) (84,624) (343,153)
Surrenders and forfeitures................. (213,245) (71,799) (66,529) (9,852) (29,701)
Transfers between investment portfolios.... 472,972 425,637 330,253 1,616,051 5,942,776
Net withdrawals due to policy loans........ (49,208) (3,329) (17,924) (9,537) (11,830)
Withdrawals due to death benefits.......... (412) (1,767) (235)
------------ ----------- ---------- ----------- -----------
Net increase in net assets derived from
policy transactions...................... 3,472,140 1,263,855 678,368 2,104,029 7,842,492
------------ ----------- ---------- ----------- -----------
Capital contribution from Provident Mutual
Life Insurance Company................... 25,000 25,000
------------ ----------- ---------- ----------- -----------
Total increase in net assets............... 3,060,683 1,334,809 854,772 2,216,381 7,964,072
NET ASSETS
Beginning of year........................ 5,031,776 1,812,368 901,280 -- --
------------ ----------- ---------- ----------- -----------
End of year.............................. $8,092,459 $3,147,177 $1,756,052 $2,216,381 $7,964,072
============ =========== ========== =========== ===========
</TABLE>
See accompanying notes to financial statements
21
<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 Index 500,
Fidelity Investment Grade Bond and Fidelity Contrafund 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 American Century VP Capital
Appreciation (formerly TCI Growth) Subaccount invests in the corresponding
portfolio of the American Century Variable Portfolios, Inc. (formerly TCI
Portfolios, Inc.); the Van Eck Worldwide Bond, Van Eck Worldwide Hard Assets
(formerly Van Eck Gold and Natural Resources) and Van Eck Worldwide Emerging
Markets (formerly 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 policyholder 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.
22
<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 and the reported amounts from operations and policy
transactions during the period. Actual results could differ from those
estimates.
23
<PAGE> 24
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Notes to Financial Statements (unaudited) -- continued
- --------------------------------------------------------------------------------
3. INVESTMENTS
At June 30, 1997, 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................................. 10,621,566 $154,262,914 $190,232,256
Money Market Portfolio........................... 24,999,870 $24,999,870 $24,999,870
Bond Portfolio................................... 1,126,922 $11,856,716 $11,934,110
Managed Portfolio................................ 2,090,626 $27,122,952 $33,345,479
Aggressive Growth Portfolio...................... 1,490,026 $23,592,995 $30,441,240
International Portfolio.......................... 2,721,793 $33,100,312 $38,458,935
The Stripped ("Zero") U.S. Treasury Securities
Fund, Provident Mutual Series A:
2006 Series...................................... 11,889,434 $6,116,346 $6,870,309
Variable Insurance Products Fund:
Equity-Income Portfolio.......................... 3,523,221 $64,161,904 $77,722,246
Growth Portfolio................................. 2,750,445 $73,633,504 $94,065,235
High Income Portfolio............................ 890,540 $10,616,533 $11,069,410
Overseas Portfolio............................... 1,105,598 $18,897,266 $22,156,183
Variable Insurance Products Fund II:
Asset Manager Portfolio.......................... 2,208,011 $32,511,013 $36,652,988
Index 500 Portfolio.............................. 494,204 $40,992,892 $51,209,386
Investment Grade Bond Portfolio.................. 503,946 $5,965,626 $5,966,720
Contrafund Portfolio............................. 880,939 $14,253,817 $15,795,239
Neuberger & Berman Advisers Management Trust:
Balanced Portfolio............................... 306,833 $4,863,027 $5,087,294
Growth Portfolio................................. 752,828 $18,463,737 $20,883,453
Limited Maturity Bond Portfolio.................. 234,530 $3,239,860 $3,194,297
American Century Variable Portfolios, Inc.:
American Century VP Capital Appreciation
Portfolio..................................... 816,058 $8,957,205 $7,883,122
Van Eck Worldwide Insurance Trust:
Van Eck Worldwide Bond Portfolio................. 345,684 $3,741,071 $3,678,076
Van Eck Worldwide Hard Assets Portfolio.......... 131,152 $2,028,298 $2,090,566
Van Eck Worldwide Emerging Markets Portfolio..... 410,754 $5,381,315 $6,280,428
Alger American Fund:
Alger American Small Capitalization Portfolio.... 325,566 $12,832,169 $12,869,608
</TABLE>
24
<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, 1997 and the year ended December 31,
1996, transactions in investment shares were as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET STREET FUND, INC.
------------------------------------------------------------------------------------------------------------------
GROWTH PORTFOLIO MONEY MARKET PORTFOLIO BOND PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased..................... 423,107 831,901 10,917,299 19,129,435 89,314 168,569
Shares received from reinvestment of:
Dividends.......................... 121,775 265,374 523,671 1,024,419 34,462 57,612
Capital gain distributions......... 1,229,894 436,699
----------- ----------- ----------- ----------- ---------- ----------
Total shares acquired................ 1,774,776 1,533,974 11,440,970 20,153,854 123,776 226,181
Total shares redeemed................ (484,192) (904,010) (10,325,797) (12,978,261) (45,084) (127,216)
----------- ----------- ----------- ----------- ---------- ----------
Net increase in shares owned......... 1,290,584 629,964 1,115,173 7,175,593 78,692 98,965
Shares owned, beginning of period.... 9,330,982 8,701,018 23,884,697 16,709,104 1,048,230 949,265
----------- ----------- ----------- ----------- ---------- ----------
Shares owned, end of period.......... 10,621,566 9,330,982 24,999,870 23,884,697 1,126,922 1,048,230
=========== =========== =========== =========== ========== ==========
Cost of shares acquired.............. $ 28,584,941 $ 24,791,248 $ 11,440,970 $ 20,153,854 $ 1,293,730 $ 2,391,808
=========== =========== =========== =========== ========== ==========
Cost of shares redeemed.............. $ 6,430,134 $ 11,787,104 $ 10,325,797 $ 12,978,261 $ 478,480 $ 1,348,647
=========== =========== =========== =========== ========== ==========
</TABLE>
25
<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 GROWTH
MANAGED PORTFOLIO PORTFOLIO INTERNATIONAL PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased............................ 88,403 221,107 123,185 263,500 293,073 520,713
Shares received from reinvestment of:
Dividends................................. 37,186 73,728 13,532 13,575 21,751 23,400
Capital gain distributions................ 16,767 81,745 2,684 136,800 170,284 94,861
---------- ---------- ---------- ---------- ---------- ----------
Total shares acquired....................... 142,356 376,580 139,401 413,875 485,108 638,974
Total shares redeemed....................... (131,595) (198,824) (47,751) (125,277) (148,862) (117,063)
---------- ---------- ---------- ---------- ---------- ----------
Net increase in shares owned................ 10,761 177,756 91,650 288,598 336,246 521,911
Shares owned, beginning of period........... 2,079,865 1,902,109 1,398,376 1,109,778 2,385,547 1,863,636
---------- ---------- ---------- ---------- ---------- ----------
Shares owned, end of period................. 2,090,626 2,079,865 1,490,026 1,398,376 2,721,793 2,385,547
========== ========== ========== ========== ========== ==========
Cost of shares acquired..................... $ 2,113,333 $ 5,201,624 $ 2,607,445 $ 6,735,426 $ 6,085,428 $ 8,077,706
========== ========== ========== ========== ========== ==========
Cost of shares redeemed..................... $ 1,488,442 $ 2,131,719 $ 684,615 $ 1,641,455 $ 1,680,113 $ 1,210,942
========== ========== ========== ========== ========== ==========
</TABLE>
26
<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 VARIABLE INSURANCE
SECURITIES FUND PROVIDENT MUTUAL SERIES PRODUCTS FUND
A
------------------------------------------------------------------------------------------------------------------
1996 SERIES 2006 SERIES EQUITY-INCOME PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1996 1997 1996 1997 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shares purchased................................ 118,128 2,234,585 4,208,650 448,846 1,036,625
Shares received from reinvestment of:
Dividends..................................... 52,772 2,918
Capital gain distributions.................... 265,326 83,648
----------- ----------- ----------- ----------- -----------
Total shares acquired........................... 118,128 2,234,585 4,208,650 766,944 1,123,191
Total shares redeemed........................... (2,181,298) (1,692,123) (1,223,768) (46,290) (71,820)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in shares owned......... (2,063,170) 542,462 2,984,882 720,654 1,051,371
Shares owned, beginning of period............... 2,063,170 11,346,972 8,362,090 2,802,567 1,751,196
----------- ----------- ----------- ----------- -----------
Shares owned, end of period..................... 11,889,434 11,346,972 3,523,221 2,802,567
=========== =========== =========== =========== ===========
Cost of shares acquired......................... $ 117,132 $ 1,254,379 $ 2,317,522 $15,586,058 $21,875,240
=========== =========== =========== =========== ===========
Cost of shares redeemed......................... $ 1,949,315 $ 807,092 $ 528,531 $ 707,938 $ 1,105,790
=========== =========== =========== =========== ===========
</TABLE>
27
<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
------------------------------------------------------------------------------------------------------------------
GROWTH PORTFOLIO HIGH INCOME OVERSEAS PORTFOLIO
PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares purchased......................... 276,990 826,059 239,741 479,606 207,057 372,206
Shares received from reinvestment of:
Dividends.............................. 4,794 53,162 25,643 16,746 6,165
Capital gain distributions............. 91,499 121,056 6,571 5,016 66,475 6,782
----------- ----------- ---------- ---------- ---------- ----------
Total shares acquired.................... 368,489 951,909 299,474 510,265 290,278 385,153
Total shares redeemed.................... (87,699) (69,623) (86,286) (108,022) (23,729) (47,671)
----------- ----------- ---------- ---------- ---------- ----------
Net increase in shares owned............. 280,790 882,286 213,188 402,243 266,549 337,482
Shares owned, beginning of period........ 2,469,655 1,587,369 677,352 275,109 839,049 501,567
----------- ----------- ---------- ---------- ---------- ----------
Shares owned, end of period.............. 2,750,445 2,469,655 890,540 677,352 1,105,598 839,049
=========== =========== ========== ========== ========== ==========
Cost of shares acquired.................. $11,695,751 $27,880,379 $3,595,054 $6,055,847 $5,223,911 $6,786,632
=========== =========== ========== ========== ========== ==========
Cost of shares redeemed.................. $ 1,993,277 $ 1,605,197 $ 987,116 $1,154,715 $ 388,416 $ 774,233
=========== =========== ========== ========== ========== ==========
</TABLE>
28
<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 PORTFOLIO
BOND PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996 1997 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares purchased......... 154,696 313,935 175,471 200,784 169,490 260,720 527,653 378,323
Shares received from
reinvestment of:
Dividends............... 72,745 65,522 3,902 1,531 26,504 10,256 3,925
Capital gain
distributions......... 182,481 54,028 7,916 3,938 10,374
---------- ---------- ----------- ----------- ---------- ---------- ---------- ----------
Total shares acquired.... 409,922 433,485 187,289 206,253 195,994 270,976 541,952 378,323
Total shares redeemed.... (75,145) (277,449) (12,103) (5,225) (100,298) (50,765) (34,404) (4,932)
---------- ---------- ----------- ----------- ---------- ---------- ---------- ----------
Net increase in shares
owned................... 334,777 156,036 175,186 201,028 95,696 220,211 507,548 373,391
Shares owned, beginning
of period............... 1,873,234 1,717,198 319,018 117,990 408,250 188,039 373,391
---------- ---------- ----------- ----------- ---------- ---------- ---------- ----------
Shares owned, end of
period.................. 2,208,011 1,873,234 494,204 319,018 503,946 408,250 880,939 373,391
========== ========== =========== =========== ========== ========== ========== ==========
Cost of shares
acquired................ $6,422,983 $6,753,590 $17,668,473 $16,732,487 $2,280,594 $3,229,467 $9,055,824 $5,779,392
========== ========== =========== =========== ========== ========== ========== ==========
Cost of shares
redeemed................ $1,089,935 $4,265,120 $ 677,961 $ 285,519 $1,156,683 $ 560,842 $ 508,045 $ 73,354
========== ========== =========== =========== ========== ========== ========== ==========
</TABLE>
29
<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 AMERICAN CENTURY
MANAGEMENT TRUST VARIABLE PORTFOLIOS,
INC.
------------------------------------------------------------------------------------------------------------------
BALANCED PORTFOLIO GROWTH PORTFOLIO LIMITED MATURITY AMERICAN CENTURY VP
BOND PORTFOLIO CAPITAL APPRECIATION
PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996 1997 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares purchased........... 50,888 108,736 80,918 263,886 59,604 116,412 138,115 384,291
Shares received from
reinvestment of:
Dividends................ 4,936 5,238 180 11,526 8,274
Capital gain
distributions.......... 12,668 29,133 60,028 42,178 19,340 68,178
---------- ---------- ---------- ---------- -------- ---------- ---------- ----------
Total shares acquired...... 68,492 143,107 140,946 306,244 71,130 124,686 157,455 452,469
Total shares redeemed...... (52,344) (36,401) (49,591) (55,459) (15,809) (20,824) (131,676) (80,668)
---------- ---------- ---------- ---------- -------- ---------- ---------- ----------
Net increase in shares
owned.................... 16,148 106,706 91,355 250,785 55,321 103,862 25,779 371,801
Shares owned, beginning of
period................... 290,685 183,979 661,473 410,688 179,209 75,347 790,279 418,478
---------- ---------- ---------- ---------- -------- ---------- ---------- ----------
Shares owned, end of
period................... 306,833 290,685 752,828 661,473 234,530 179,209 816,058 790,279
========== ========== ========== ========== ========= ========== ========== ==========
Cost of shares acquired.... $1,086,367 $2,241,958 $3,671,029 $7,625,308 $960,433 $1,724,884 $1,502,765 $4,986,969
========== ========== ========== ========== ========= ========== ========== ==========
Cost of shares redeemed.... $ 779,845 $ 570,955 $1,016,814 $1,295,598 $219,304 $ 289,820 $1,271,745 $ 723,514
========== ========== ========== ========== ========= ========== ========== ==========
</TABLE>
30
<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
------------------------------------------------------------------------------------------------------------------
VAN ECK WORLDWIDE VAN ECK WORLDWIDE VAN ECK WORLDWIDE ALGER AMERICAN
BOND PORTFOLIO HARD ASSETS EMERGING MARKETS SMALL CAPITALIZATION
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996 1997 1996
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares purchased.............. 63,681 140,460 35,726 54,502 236,165 177,883 126,227 207,020
Shares received from
reinvestment of:
Dividends................... 9,965 6,267 2,862 749 702 19 12,008 2
Capital gain
distributions............. 2,113 735
-------- ---------- -------- -------- ---------- ---------- ---------- ----------
Total shares acquired......... 73,646 146,727 40,701 55,986 236,867 177,902 138,235 207,022
Total shares redeemed......... (11,491) (25,888) (14,576) (13,461) (3,565) (450) (7,342) (12,349)
-------- ---------- -------- -------- ---------- ---------- ---------- ----------
Net increase in shares
owned....................... 62,155 120,839 26,125 42,525 233,302 177,452 130,893 194,673
Shares owned, beginning of
period...................... 283,529 162,690 105,027 62,502 177,452 194,673
-------- ---------- -------- -------- ---------- ---------- ---------- ----------
Shares owned, end of period... 345,684 283,529 131,152 105,027 410,754 177,452 325,566 194,673
========= ========== ========= ========= ========== ========== ========== ==========
Cost of shares acquired....... $781,754 $1,593,168 $642,239 $909,495 $3,295,277 $2,130,602 $5,347,446 $8,338,053
========= ========== ========= ========= ========== ========== ========== ==========
Cost of shares redeemed....... $117,328 $ 258,769 $182,715 $176,559 $ 39,635 $ 4,929 $ 306,338 $ 546,992
========= ========== ========= ========= ========== ========== ========== ==========
</TABLE>
31
<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 policyholder. 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. Premiums
adjusted for these deductions are recorded as net premiums in the statement of
changes in net assets. 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 policyholders.
For modified premium policies -- currently 0.60% of the net assets held for
the benefit of policyholders.
For flexible premium adjustable policies ("OptionsPlus") -- currently 0.75%
of the net assets held for the benefit of policyholders, 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
policyholders, 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
policyholders.
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 policyholder 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.
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
32
<PAGE> 33
- --------------------------------------------------------------------------------
The Variable Separate Accounts
of Provident Mutual Life Insurance Company
Notes to Financial Statements (unaudited) -- concluded
- --------------------------------------------------------------------------------
4. RELATED PARTY TRANSACTIONS, CONTINUED
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, 1997 were $2,542, $37, and $451, 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.
33
<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 year shown.
- --------------------------------------------------------------------------------
<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>
SINGLE PREMIUM POLICY:
For the six months ended:
June 30, 1997.......................... 13.13% 2.40% 2.35% 11.28% -- --
For the year ended:
December 31, 1996...................... 19.21% 4.85% 2.71% 11.56% -- --
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, 1997.......................... 12.95% 2.27% 2.16% 11.14% 11.26% 13.51%
For the year ended:
December 31, 1996...................... 18.90% 4.60% 2.30% 11.30% 20.20% 10.20%
December 31, 1995...................... 29.61% 4.98% 19.62% 23.60% 12.80% 13.63%
December 31, 1994...................... 1.79% 3.18% (6.18)% (2.40)% (0.60)% (0.34)%
December 31, 1993...................... 9.55% 1.98% 9.66% 10.95% 4.57% 35.30%
December 31, 1992...................... 4.12% 2.56% 5.32% 11.29% 1.96% (8.04)%
SCHEDULED PREMIUM POLICY:
For the six months ended:
June 30, 1997.......................... 13.13% 2.40% 2.35% 11.28% -- --
For the year ended:
December 31, 1996...................... 19.21% 4.85% 2.71% 11.56% -- --
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, 1997.......................... 12.86% 2.19% 2.08% 11.06% 11.18% 13.43%
For the year ended:
December 31, 1996...................... 18.70% 4.40% 2.20% 11.10% 20.00% 10.10%
December 31, 1995...................... 29.42% 4.82% 19.44% 23.42% 12.63% 13.46%
December 31, 1994...................... 1.64% 3.02% (6.32)% (2.55)% (0.75)% (0.49)%
December 31, 1993...................... 9.39% 1.83% 9.50% 10.78% 4.42% 35.10%
December 31, 1992...................... 3.96% 2.40% 5.16% 11.12% 1.81% (8.18)%
FLEXIBLE PREMIUM ADJUSTABLE SURVIVORSHIP POLICY:
For the six months ended:
June 30, 1997.......................... 12.95% 2.27% 2.16% 11.14% 11.26% 13.51%
For the year ended:
December 31, 1996...................... 18.90% 4.60% 2.30% 11.30% 20.20% 10.20%
December 31, 1995...................... 29.61% 4.98% 19.62% 23.60% 12.80% 13.63%
December 31, 1994...................... 1.79% 3.18% (6.18)% (2.40)% (0.60)% (0.34)%
December 31, 1993...................... 4.67%(23) 1.16%(24) 0.90%(10) 4.48%(25) 10.27%(26) 16.61%(26)
FLEXIBLE PREMIUM ADJUSTABLE (OTHER THAN "OPTIONSPLUS") POLICY:
For the six months ended:
June 30, 1997.......................... 12.86% 2.19% 2.08% 11.06% 11.18% 13.43%
For the year ended:
December 31, 1996...................... 18.70% 4.40% 2.20% 11.10% 20.00% 10.10%
December 31, 1995...................... 29.42% 4.82% 19.44% 23.42% 12.63% 13.46%
December 31, 1994...................... 1.64% 3.02% (6.32)% (2.55)% (0.75)% (0.49)%
December 31, 1993...................... 9.39% 1.83% 9.50% 10.78% 4.42% 35.10%
December 31, 1992...................... 3.96% 2.40% 5.16% 11.12% 1.81% (8.18)%
<CAPTION>
ZERO COUPON BOND
SEPARATE ACCOUNT VARIABLE SEPARATE ACCOUNT
FIDELITY FIDELITY
2006 EQUITY- FIDELITY HIGH
1996 SERIES SERIES INCOME GROWTH INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SINGLE PREMIUM POLICY:
For the six months ended:
June 30, 1997.......................... -- 1.94% -- -- --
For the year ended:
December 31, 1996...................... 1.58% (1) (1.93)% -- -- --
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, 1997.......................... -- 1.81% 16.05% 13.49% 7.38%
For the year ended:
December 31, 1996...................... 1.49% (1) (2.20)% 13.60% 14.00% 13.30%
December 31, 1995...................... 7.51% 32.58% 34.29% 34.56% 19.88%
December 31, 1994...................... (0.46)% (10.21)% 6.43% (0.62)% (0.66)%(3)
December 31, 1993...................... 7.56% 22.31% 3.15%(8) 3.86%(9) --
December 31, 1992...................... 6.74% 9.63% -- -- --
SCHEDULED PREMIUM POLICY:
For the six months ended:
June 30, 1997.......................... -- -- -- -- --
For the year ended:
December 31, 1996...................... -- -- -- -- --
December 31, 1995...................... -- -- -- -- --
December 31, 1994...................... -- -- -- -- --
December 31, 1993...................... -- -- -- -- --
December 31, 1992...................... -- -- -- -- --
FLEXIBLE PREMIUM ADJUSTABLE ("OPTIONSPLUS")
POLICY:
For the six months ended:
June 30, 1997.......................... -- 1.73% 15.96% 13.41% 7.30%
For the year ended:
December 31, 1996...................... 1.43% (1) (2.30)% 13.40% 13.80% 13.20%
December 31, 1995...................... 7.35% 32.38% 34.09% 34.36% 19.71%
December 31, 1994...................... (0.61)% (10.35)% 6.27% (0.76)% (0.92)%(12)
December 31, 1993...................... 7.40% 22.12% 2.57%(16) 3.99%(8) --
December 31, 1992...................... 6.58% 9.46% -- -- --
FLEXIBLE PREMIUM ADJUSTABLE SURVIVORSHIP POLICY:
For the six months ended:
June 30, 1997.......................... -- 1.81% 16.05% 13.49% 7.38%
For the year ended:
December 31, 1996...................... 1.49% (1) (2.20)% 13.60% 14.00% 13.30%
December 31, 1995...................... 7.51% 32.58% 34.29% 34.56% 19.88%
December 31, 1994...................... (0.46)% (10.21)% 6.43% (0.62)% (0.40)%(18)
December 31, 1993...................... 0.20% (27) (1.61)%(28) 2.81%(29) 2.90%(29) --
FLEXIBLE PREMIUM ADJUSTABLE (OTHER THAN "OPTIONPLUS") POLICY:
For the six months ended:
June 30, 1997.......................... -- 1.73% 15.96% 13.41% 7.30%
For the year ended:
December 31, 1996...................... 1.43% (1) (2.30)% 13.40% 13.80% 13.20%
December 31, 1995...................... 7.35% 32.38% 34.09% 34.36% 19.71%
December 31, 1994...................... (0.61)% (10.35)% 6.27% (0.76)% (0.90)%(4)
December 31, 1993...................... 7.40% 22.12% 2.57%(16) 3.99%(8) --
December 31, 1992...................... 6.58% 9.46% -- -- --
</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 policyholder 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.
34
<PAGE> 35
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE SEPARATE ACCOUNT
------------------------------------------------------------------------------------------------------------------
FIDELITY FIDELITY NEUBERGER NEUBERGER
FIDELITY ASSET FIDELITY INVESTMENT FIDELITY & BERMAN & BERMAN
OVERSEAS MANAGER INDEX 500 GRADE BOND CONTRAFUND BALANCED GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT NEUBERGER
& BERMAN
LIMITED
MATURITY BOND
SUBACCOUNT
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
16.09% 10.87% 19.85% 2.50% 11.30% 10.94% 16.83% 2.66%
12.50% 13.90% 22.10% 2.60% 10.73%(2) 6.20% 8.50% 3.70%
9.02% 16.26% 36.37% 16.62% -- 23.02% 30.94% 10.27%
(2.50)%(3) (6.65)% 0.44% (0.17)%(4) -- (3.94)% (5.56)% 1.05%(5)
-- 8.34%(8) 3.65%(10) -- -- 4.24%(11) 6.01%(11) --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
16.00% 10.79% 19.76% 2.43% 11.21% 10.85% 16.74% 2.58%
12.40% 13.70% 21.90% 2.40% 10.62%(2) 6.10% 8.30% 3.50%
8.86% 16.08% 36.17% 16.45% -- 22.84% 30.75% 10.11%
(4.25)%(13) (6.79)% 0.29% (0.36)%(14) -- (4.08)% (5.70)% 0.84%(14)
-- 8.20%(11) 3.11%(17) -- -- 3.50%(10) 4.72%(10) --
-- -- -- -- -- -- -- --
16.09% 10.87% 19.85% 2.50% 11.30% 10.94% 16.83% 2.66%
12.50% 13.90% 22.10% 2.60% 10.73%(2) 6.20% 8.50% 3.70%
9.02% 16.26% 36.37% 16.62% -- 23.02% 30.94% 10.27%
(2.63)%(19) (6.65)% 0.44% (0.21)%(20) -- (3.94)% (5.56)% 0.63%(21)
-- 6.69%(30) 0.05%(31) -- -- 0.20%(29) 2.14%(32) --
16.00% 10.79% 19.76% 2.43% 11.21% 10.85% 16.74% 2.58%
12.40% 13.70% 21.90% 2.40% 10.62%(2) 6.10% 8.30% 3.50%
8.86% 16.08% 36.17% 16.45% -- 22.84% 30.75% 10.11%
(0.65)%(33) (6.79)% 0.29% (0.26)%(4) -- (4.08)% (5.70)% 0.50%(34)
-- 8.20%(11) 3.11%(17) -- -- 3.50%(10) 4.72%(10) --
-- -- -- -- -- -- -- --
<CAPTION>
AMERICAN VAN ECK VAN ECK ALGER
CENTURY VP VAN ECK WORLDWIDE WORLDWIDE AMERICAN
CAPITAL WORLDWIDE HARD EMERGING SMALL
APPRECIATION BOND ASSETS MARKETS CAPITALIZATION
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
(3.74)% (1.17)% (0.60)% 22.51% 0.35%
(4.90)% 1.90% 17.30% 11.88%(2) (10.80)%(2)
30.32% 16.60% 10.33% -- --
2.98%(6) 4.70%(7) 1.28%(3) -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
(3.82)% (1.24)% (0.67)% 22.41% 0.27%
(5.00)% 1.80% 17.20% 11.78%(2) (10.88)%(2)
30.12% 16.43% 10.17% -- --
2.88%(6) 1.45%(12) 0.80%(15) -- --
-- -- -- -- --
-- -- -- -- --
(3.74)% (1.17)% (0.60)% 22.51% 0.35%
(4.90)% 1.90% 17.30% 11.88%(2) (10.80)%(2)
30.32% 16.60% 10.33% -- --
2.33%(19) 2.51%(20) 0.38%(22) -- --
-- -- -- -- --
(3.82)% (1.24)% (0.67)% 22.41% 0.27%
(5.00)% 1.80% 17.20% 11.78%(2) (10.88)%(2)
30.12% 16.43% 10.17% -- --
2.25%(19) 3.60%(34) (4.12)%(33) -- --
-- -- -- -- --
-- -- -- -- --
</TABLE>
35
<PAGE> 36
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 37
SEMI-ANNUAL REPORT
June 30, 1997
- --------------------------
PROVIDENT MUTUAL LIFE
INSURANCE COMPANY
VARIABLE SEPARATE ACCOUNTS
MARKET STREET FUND, INC.
VARIABLE LIFE INSURANCE POLICIES
- --------------------------
[PROVIDENT MUTUAL LOGO]
Variable Life Insurance policies issued by
Provident Mutual are distributed by
1717 Capital Management Company,
Wilmington, DE, a registered broker-dealer.
This report has been prepared for
policyholders. It is not authorized for other
distribution unless preceded or
accompanied by an effective prospectus.
Form 15730 6.97
- ---------------
BULK RATE
U.S. POSTAGE
PAID
WILMINGTON, DE
PERMIT NO. 1387
- ---------------
